Document:

Exhibit 10.2

 

GUARANTY
AND PLEDGE AGREEMENT

 

 

DATED AS OF

JUNE 15, 2005

 

 

MADE
BY

 

 

WHITTIER
ENERGY CORPORATION

AND

EACH
OF THE OTHER OBLIGORS (AS DEFINED HEREIN)

 

 

IN
FAVOR OF

 

 

BNP
PARIBAS,

AS
ADMINISTRATIVE AGENT

 

 

TABLE
OF CONTENTS

 

 

	
  ARTICLE I Definitions

  	
   

  
	
  Section 1.01

  	
  Definitions

  	
   

  
	
  Section 1.02

  	
  Other
  Definitional Provisions

  	
   

  
	
  Section 1.03

  	
  Rules of
  Interpretation

  	
   

  
	
  ARTICLE II Guarantee

  	
   

  
	
  Section 2.01

  	
  Guarantee

  	
   

  
	
  Section 2.02

  	
  Right
  of Contribution

  	
   

  
	
  Section 2.03

  	
  No
  Subrogation

  	
   

  
	
  Section 2.04

  	
  Guaranty
  Amendments, Etc. with respect to the Borrower Obligations

  	
   

  
	
  Section 2.05

  	
  Waivers

  	
   

  
	
  Section 2.06

  	
  Guaranty
  Absolute and Unconditional

  	
   

  
	
  Section 2.07

  	
  Reinstatement

  	
   

  
	
  Section 2.08

  	
  Payments

  	
   

  
	
  ARTICLE III Grant of Security Interest

  	
   

  
	
  Section 3.01

  	
  Grant
  of Security Interest

  	
   

  
	
  Section 3.02

  	
  Transfer
  of Pledged Securities

  	
   

  
	
  ARTICLE IV Representations and
  Warranties

  	
   

  
	
  Section 4.01

  	
  Representations
  in Credit Agreement

  	
   

  
	
  Section 4.02

  	
  Title;
  No Other Liens

  	
   

  
	
  Section 4.03

  	
  Perfected
  First Priority Liens

  	
   

  
	
  Section 4.04

  	
  Obligor
  Information

  	
   

  
	
  Section 4.05

  	
  Pledged
  Securities

  	
   

  
	
  Section 4.06

  	
  Benefit
  to the Guarantor

  	
   

  
	
  Section 4.07

  	
  Solvency

  	
   

  
	
  ARTICLE V Covenants

  	
   

  
	
  Section 5.01

  	
  Maintenance
  of Perfected Security Interest; Further Documentation

  	
   

  
	
  Section 5.02

  	
  Changes
  in Locations, Name, Etc.

  	
   

  
	
  Section 5.03

  	
  Pledged
  Securities

  	
   

  
	
  ARTICLE VI Remedial Provisions

  	
   

  
	
  Section 6.01

  	
  Code
  and Other Remedies

  	
   

  
	
  Section 6.02

  	
  Pledged
  Securities

  	
   

  
	
  Section 6.03

  	
  Private
  Sales of Pledged Securities

  	
   

  
	
  Section 6.04

  	
  Waiver;
  Deficiency

  	
   

  
	
  Section 6.05

  	
  Non-Judicial
  Enforcement

  	
   

  
	
  ARTICLE VII The Administrative Agent

  	
   

  
	
  Section 7.01

  	
  Administrative
  Agent’s Appointment as Attorney-in-Fact, Etc

  	
   

  
	
  Section 7.02

  	
  Duty
  of Administrative Agent

  	
   

  
	
  Section 7.03

  	
  Execution
  of Financing Statements

  	
   

  
	
  Section 7.04

  	
  Authority
  of Administrative Agent

  	
   

  
	
  ARTICLE VIII Subordination of
  Indebtedness

  	
   

  

 

i

 

	
  Section 8.01

  	
  Subordination
  of All Obligor Claims

  	
   

  
	
  Section 8.02

  	
  Claims
  in Bankruptcy

  	
   

  
	
  Section 8.03

  	
  Payments
  Held in Trust

  	
   

  
	
  Section 8.04

  	
  Liens
  Subordinate

  	
   

  
	
  Section 8.05

  	
  Notation
  of Records

  	
   

  
	
  ARTICLE IX Miscellaneous

  	
   

  
	
  Section 9.01

  	
  Waiver

  	
   

  
	
  Section 9.02

  	
  Notices

  	
   

  
	
  Section 9.03

  	
  Payment
  of Expenses, Indemnities, Etc

  	
   

  
	
  Section 9.04

  	
  Amendments
  in Writing

  	
   

  
	
  Section 9.05

  	
  Successors
  and Assigns

  	
   

  
	
  Section 9.06

  	
  Survival;
  Revival; Reinstatement

  	
   

  
	
  Section 9.07

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  
	
  Section 9.08

  	
  Severability

  	
   

  
	
  Section 9.09

  	
  Set-Off

  	
   

  
	
  Section 9.10

  	
  Governing
  Law; Submission to Jurisdiction

  	
   

  
	
  Section 9.11

  	
  Headings

  	
   

  
	
  Section 9.12

  	
  Acknowledgments

  	
   

  
	
  Section 9.13

  	
  Additional
  Obligors and Pledgors

  	
   

  
	
  Section 9.14

  	
  Releases

  	
   

  
	
  Section 9.15

  	
  Acceptance

  	
   

  

 

	
  SCHEDULES:

  	
   

  
	
  1

  	
  Notice Addresses of Obligors

  	
   

  
	
  2

  	
  Description of Pledged Securities

  	
   

  
	
  3

  	
  Filings and Other Actions Required to Perfect Security Interests

  	
   

  
	
  4

  	
  Location of Jurisdiction of Organization
  and Chief Executive Office

  	
   

  
	
   

  	
   

  	
   

  
	
  ANNEXES:

  	
   

  
	
  I

  	
  Form of Assumption Agreement

  	
   

  
	
  II

  	
  Form of Supplement

  	
   

  

 

ii

 

This GUARANTY AND
PLEDGE AGREEMENT, dated as of June 15, 2005, is made by WHITTIER ENERGY
CORPORATION, a Nevada corporation (the “Borrower”), and each of the
signatories hereto (the Borrower and each of the signatories hereto, together
with any other Subsidiary of the Borrower that becomes a party hereto from time
to time after the date hereof, the “Obligors”),
in favor of BNP PARIBAS as administrative agent (in such capacity, together
with its successors in such capacity, the “Administrative
Agent”), for the banks and other financial institutions (the “Lenders”)
from time to time parties to the Credit Agreement, dated of even date herewith
(as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the
Lenders, the Administrative Agent, and the other Agents party thereto.

 

R E
C I T A L S

 

A.                                   The Borrower has entered into
that certain Credit Agreement dated as of the date hereof among the Borrower,
the Lenders, the Administrative Agent for the Lenders, and the other Agents
party thereto (as the same may be from time to time amended, supplemented or
restated, the “Credit Agreement”).

 

B.                                     It is a condition precedent to
the obligation of the Lenders to make their respective extensions of credit to
the Borrower under the Credit Agreement that the Obligors shall have executed
and delivered this Agreement to the Administrative Agent for the ratable
benefit of the Lenders.

 

C.                                     Now, therefore, in consideration
of the premises herein and to induce the Administrative Agent and the Lenders
to enter into the Credit Agreement and to induce the Lenders to make their
respective extensions of credit to the Borrower thereunder, each Obligor hereby
agrees with the Administrative Agent, for the ratable benefit of the Lenders,
as follows:

 

ARTICLE I
Definitions

 

Section 1.01                                Definitions.

 

(a)                                  Unless otherwise defined herein,
terms defined in the Credit Agreement and used herein have the meanings given
to them in the Credit Agreement, and all uncapitalized terms which are defined
in the UCC on the date hereof are used herein as so defined.

 

(b)                                 The following terms have the
following meanings:

 

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

 

“Assumption Agreement” means an Assumption
Agreement substantially in the form attached hereto as Annex I.

 

“Bankruptcy Code”
means title 11, United States Code, as amended from time to time.

 

 

“Borrower
Obligations” means the collective reference to the payment and performance
of all Indebtedness and all obligations of the Borrower and its Subsidiaries
under the Guaranteed Documents, including, without limitation, the unpaid
principal of and interest on the Loans and the LC Exposure and all other
obligations and liabilities of the Borrower and its Subsidiaries (including,
without limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and LC Exposure and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating to
the Borrower, whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) to the Guaranteed Creditors, whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Guaranteed Documents, whether on account of principal, interest, reimbursement
obligations, payments in respect of an early termination date, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Guaranteed Creditors that are required
to be paid by the Borrower pursuant to the terms of any Guaranteed Documents).

 

“Collateral”
has the meaning assigned such term in Section 3.01.

 

“Guaranteed
Creditors” means the collective reference to the Administrative Agent, the
Lenders and the Affiliates of Lenders that are parties to Guaranteed Swap
Agreements.

 

“Guaranteed
Documents” means the collective reference to the Credit Agreement, the
other Loan Documents, each Guaranteed Swap Agreement and any other document
made, delivered or given in connection with any of the foregoing.

 

“Guaranteed Swap
Agreement” means any Swap Agreement between the Borrower or any of its
Subsidiaries and any Lender or any Affiliate of any Lender while such Person
(or, in the case of an Affiliate of a Lender, the Person affiliated therewith)
is a Lender regardless of when such Swap Agreement was entered into.  For the avoidance of doubt, a Swap Agreement
ceases to be a Guaranteed Swap Agreement if the Person that is the counterparty
to the Borrower or one of its Subsidiaries under a Swap Agreement ceases to be
a Lender under the Credit Agreement (or, in the case of an Affiliate of a
Lender, the Person affiliated therewith ceases to be a Lender under the Credit
Agreement).

 

“Guarantor
Obligations” means with respect to any Guarantor, the collective reference
to (a) the Borrower Obligations and (b) all obligations and
liabilities of such Guarantor which may arise under or in connection with any
Guaranteed Document to which such Guarantor is a party, in each case, whether
on account of principal, interest, guarantee obligations, reimbursement
obligations, payments in respect of an early termination date, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to any Guaranteed Creditor under any
Guaranteed Document).

 

“Guarantors”
means the collective reference to each Obligor other than the Borrower.

 

“Issuers”
means the collective reference to each issuer of a Pledged Security.

 

“LLC” means,
with respect to each Pledgor, each limited liability company described or
referred to in Schedule 2 in which such Pledgor has an interest.

 

2

 

“LLC Agreement”
means, with respect to each Pledgor, each operating agreement relating to an
LLC, as each agreement has heretofore been, and may hereafter be, amended,
restated, supplemented or otherwise modified from time to time.

 

“Obligations”
means:  (a) in the case of the
Borrower, the Borrower Obligations and (b) in the case of each Guarantor,
its Guarantor Obligations.

 

“Obligor Claims” has the meaning assigned to
such term in Section 8.01.

 

“Partnership”
means, with respect to each Pledgor, each partnership described or referred to
in Schedule 2 in which such Pledgor has an interest.

 

“Partnership
Agreement” means, with respect to each Pledgor, each partnership agreement
governing a Partnership, as each such agreement has heretofore been, and may
hereafter be, amended, restated, supplemented or otherwise modified.

 

“Pledged LLC
Interests” means, with respect to each Pledgor, all right, title and interest
of such Pledgor as a member of each LLC and all right, title and interest of
any Pledgor in, to and under each LLC Agreement.

 

“Pledged
Partnership Interests” means, with respect to each Pledgor, all right,
title and interest of such Pledgor as a limited or general partner in all
Partnerships and all right, title and interest of any Pledgor in, to and under
the Partnership Agreements.

 

“Pledged
Securities” means: (a) the Equity Interests described or referred to
in Schedule 2 (as the same may be supplemented from time to time pursuant
to a Supplement); and (b) (i) the certificates or instruments, if
any, representing such Equity Interests, (ii) all dividends (cash, Equity
Interests or otherwise), cash, instruments, rights to subscribe, purchase or
sell and all other rights and Property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of such
securities, (iii) all replacements, additions to and substitutions for any
of the Property referred to in this definition, including, without limitation,
claims against third parties, (iv) the proceeds, interest, profits and
other income of or on any of the Property referred to in this definition, (v) all
security entitlements in respect of any of the foregoing, if any and (vi) all
books and records relating to any of the Property referred to in this
definition.

 

“Pledgor”
means any Obligor that now or hereafter pledges Pledged Securities hereunder.

 

“Proceeds”
means all “proceeds” as such term is defined in Section 9.102(64) of the Uniform Commercial Code in effect
in the State of Texas on the date hereof and, in any event, shall include,
without limitation, all dividends or other income from the Pledged Securities,
collections thereon or distributions or payments with respect thereto.

 

“Securities Act”
shall mean the Securities Act of 1933, as amended.

 

“Supplement” means a Supplement substantially
in the form attached hereto as Annex II.

 

3

 

“UCC” means
the Uniform Commercial Code as from time to time in effect in the State of
Texas; provided, however, that, in the event that, by reason of mandatory
provisions of law, any of the attachment, perfection or priority of the
Administrative Agent’s and the Guaranteed Creditors’ security interest in any
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of Texas, the term “UCC” shall mean the
Uniform Commercial Code as in effect in such other jurisdiction for purposes of
the provisions hereof relating to such attachment, perfection, the effect
thereof or priority and for purposes of definitions related to such provisions.

 

Section 1.02                                Other Definitional
Provisions.  Where the context
requires, terms relating to the Collateral or any part thereof, when used in
relation to a Pledgor, refer to such Pledgor’s Collateral or the relevant part
thereof.

 

Section 1.03                                Rules of
Interpretation.  Section 1.04
and Section 1.05 of the Credit Agreement are hereby incorporated herein by
reference and shall apply to this Agreement, mutatis
mutandis.

 

ARTICLE II
Guarantee

 

Section 2.01                                Guarantee.

 

(a)                                  Each of the Guarantors hereby
jointly and severally, unconditionally and irrevocably, guarantees to the
Guaranteed Creditors and each of their respective successors, indorsees,
transferees and assigns, the prompt and complete payment in cash and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.  This is a guarantee of payment and not
collection and the liability of each Guarantor is primary and not secondary.

 

(b)                                 Anything herein or in any other
Loan Document to the contrary notwithstanding, the maximum liability of each
Guarantor hereunder and under the other Loan Documents shall in no event exceed
the amount which can be guaranteed by such Guarantor under applicable federal
and state laws relating to the insolvency of debtors (after giving effect to
the right of contribution established in Section 2.02).

 

(c)                                  Each Guarantor agrees that the
Borrower Obligations may at any time and from time to time exceed the amount of
the liability of such Guarantor hereunder without impairing the guarantee
contained in this ARTICLE II or affecting the rights and remedies of any Guaranteed
Creditor hereunder.

 

(d)                                 Each Guarantor agrees that if
the maturity of the Borrower Obligations is accelerated by bankruptcy or
otherwise, such maturity shall also be deemed accelerated for the purpose of
this guarantee without demand or notice to such Guarantor.  The guarantee contained in this ARTICLE II
shall remain in full force and effect until all the Borrower Obligations shall
have been satisfied by payment in full in cash, no Letter of Credit shall be
outstanding and all of the Commitments are terminated, notwithstanding that
from time to time during the term of the Credit Agreement, no Borrower
Obligations may be outstanding.

 

4

 

(e)                                  No payment made by any Obligor,
any other guarantor or any other Person or received or collected by any
Guaranteed Creditor from the Borrower, any of the Guarantors, any other
guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid
in full in cash, no Letter of Credit shall be outstanding and all of the
Commitments are terminated.

 

Section 2.02                                Right of
Contribution.  Each Guarantor hereby
agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 2.03.  The provisions of this Section 2.02
shall in no respect limit the obligations and liabilities of any Guarantor to
the Guaranteed Creditors, and each Guarantor shall remain liable to the
Guaranteed Creditors for the full amount guaranteed by such Guarantor
hereunder.

 

Section 2.03                                No Subrogation.  Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
any Guaranteed Creditor, no Guarantor shall be entitled to be subrogated to any
of the rights of any Guaranteed Creditor against the Borrower or any other
Guarantor or any collateral security or guarantee or right of offset held by
any Guaranteed Creditor for the payment of the Borrower Obligations, nor shall
any Guarantor seek or be entitled to seek any indemnity, exoneration,
participation, contribution or reimbursement from the Borrower or any other
Guarantor in respect of payments made by such Guarantor hereunder, until all
amounts owing to the Guaranteed Creditors by the Borrower on account of the
Borrower Obligations are irrevocably and indefeasibly paid in full in cash, no
Letter of Credit shall be outstanding and all of the Commitments are
terminated.  If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been irrevocably and indefeasibly paid
in full in cash, any Letter of Credit shall be outstanding or any of the
Commitments are in effect, such amount shall be held by such Guarantor in trust
for the Guaranteed Creditors, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in accordance with Section 10.02(c) of
the Credit Agreement.

 

Section 2.04                                Guaranty Amendments,
Etc. with respect to the Borrower Obligations.  Each Guarantor shall remain obligated
hereunder, and such Guarantor’s obligations hereunder shall not be released,
discharged or otherwise affected, notwithstanding that, without any reservation
of rights against any Guarantor and without notice to, demand upon or further
assent by any Guarantor (which notice, demand and assent requirements are
hereby expressly waived by such Guarantor), (a) any demand for payment of
any of the Borrower Obligations made by any Guaranteed Creditor may be
rescinded by such Guaranteed Creditor or otherwise and any of

 

5

 

the Borrower Obligations continued; (b) the Borrower Obligations,
the liability of any other Person upon or for any part thereof or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released by, or any
indulgence or forbearance in respect thereof granted by, any Guaranteed
Creditor; (c) any Guaranteed Document may be amended, modified,
supplemented or terminated, in whole or in part, as the Guaranteed Creditors
may deem advisable from time to time; (d) any collateral security,
guarantee or right of offset at any time held by any Guaranteed Creditor for
the payment of the Borrower Obligations may be sold, exchanged, waived,
surrendered or released; (e) any additional guarantors, makers or
endorsers of the Borrower’s Obligations may from time to time be obligated on
the Borrower’s Obligations or any additional security or collateral for the
payment and performance of the Borrower’s Obligations may from time to time
secure the Borrower’s Obligations; or (f) any other event shall occur
which constitutes a defense or release of sureties generally.  No Guaranteed Creditor shall have any
obligation to protect, secure, perfect or insure any Lien at any time held by
it as security for the Borrower Obligations or for the guarantee contained in
this ARTICLE II or any Property subject thereto.

 

Section 2.05                                Waivers.  Each Guarantor hereby waives any and all
notice of the creation, renewal, extension or accrual of any of the Borrower
Obligations and notice of or proof of reliance by any Guaranteed Creditor upon
the guarantee contained in this ARTICLE II or acceptance of the guarantee
contained in this ARTICLE II; the Borrower Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred, or
renewed, extended, amended or waived, in reliance upon the guarantee contained
in this ARTICLE II and no notice of creation of the Borrower Obligations
or any extension of credit already or hereafter contracted by or extended to
the Borrower need be given to any Guarantor; and all dealings between the
Borrower and any of the Guarantors, on the one hand, and the Guaranteed
Creditors, on the other hand, likewise shall be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this ARTICLE II.  Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or any of the Guarantors with respect to the Borrower Obligations.

 

Section 2.06                                Guaranty Absolute
and Unconditional.

 

(a)                                  Each Guarantor understands and
agrees that the guarantee contained in this ARTICLE II is, and shall be
construed as, a continuing, completed, absolute and unconditional guarantee of
payment, and each Guarantor hereby waives any defense of a surety or guarantor
or any other obligor on any obligations arising in connection with or in
respect of any of the following and hereby agrees that its obligations
hereunder shall not be discharged or otherwise affected as a result of any of
the following:

 

(i)                                     the invalidity or
unenforceability of any Guaranteed Document, any of the Borrower Obligations or
any other collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by any Guaranteed
Creditor;

 

(ii)                                  any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower or any other Person against
any Guaranteed Creditor;

 

6

 

(iii)                               the insolvency, bankruptcy
arrangement, reorganization, adjustment, composition, liquidation, disability,
dissolution or lack of power of the Borrower or any other Guarantor or any
other Person at any time liable for the payment of all or part of the
Obligations, including any discharge of, or bar or stay against collecting, any
Obligation (or any part of them or interest therein) in or as a result of such
proceeding;

 

(iv)                              any sale, lease or transfer of
any or all of the assets of the Borrower or any other Guarantor, or any changes
in the shareholders of the Borrower or any other Guarantor;

 

(v)                                 any change in the corporate
existence (including its constitution, laws, rules, regulations or power),
structure or ownership of any Obligor or in the relationship between the
Borrower and any Obligor;

 

(vi)                              the fact that any Collateral or
Lien contemplated or intended to be given, created or granted as security for
the repayment of the Obligations shall not be properly perfected or created, or
shall prove to be unenforceable or subordinate to any other Lien, it being
recognized and agreed by each of the Guarantors that it is not entering into
this Agreement in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectability or value of any of the Collateral for
the Obligations;

 

(vii)                           the absence of any attempt to
collect the Obligations or any part of them from any Obligor;

 

(viii)                        (A) any Guaranteed Creditor’s
election, in any proceeding instituted under chapter 11 of the Bankruptcy Code,
of the application of Section 1111(b)(2) of the Bankruptcy Code; (B) any
borrowing or grant of a Lien by the Borrower, as debtor-in-possession, or
extension of credit, under Section 364 of the Bankruptcy Code; (C) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any
portion of any Guaranteed Creditor’s claim (or claims) for repayment of the
Obligations; (D) any use of cash collateral under Section 363 of the
Bankruptcy Code; (E) any agreement or stipulation as to the provision of
adequate protection in any bankruptcy proceeding; (F) the avoidance of any
Lien in favor of the Guaranteed Creditors or any of them for any reason; or (G) failure
by any Guaranteed Creditor to file or enforce a claim against the Borrower or
its estate in any bankruptcy or insolvency case or proceeding; or

 

(ix)                                any other circumstance or act
whatsoever, including any action or omission of the type described in Section 2.04
(with or without notice to or knowledge of the Borrower or such Guarantor),
which constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for the Borrower Obligations, or of such Guarantor
under the guarantee contained in this ARTICLE II, in bankruptcy or in any
other instance.

 

(b)                                 When making any demand hereunder
or otherwise pursuing its rights and remedies hereunder against any Guarantor,
any Guaranteed Creditor may, but shall be under no obligation to, join or make
a similar demand on or otherwise pursue or exhaust such rights and remedies as
it may have against the Borrower, any other Guarantor or any other Person or
against any collateral security or guarantee for the Borrower Obligations or
any right of offset

 

7

 

with
respect thereto, and any failure by any Guaranteed Creditor to make any such
demand, to pursue such other rights or remedies or to collect any payments from
the Borrower, any other Guarantor or any other Person or to realize upon any
such collateral security or guarantee or to exercise any such right of offset,
or any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of law, of any Guaranteed Creditor against any Guarantor.  For the purposes hereof “demand” shall
include the commencement and continuance of any legal proceedings.

 

Section 2.07                                Reinstatement.  The guarantee contained in this ARTICLE II
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is rescinded
or must otherwise be restored or returned by any Guaranteed Creditor upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its Property, or
otherwise, all as though such payments had not been made.

 

Section 2.08                                Payments.  Each Guarantor hereby guarantees that
payments hereunder will be paid to the Administrative Agent, for the ratable
benefit of the Guaranteed Creditors, without set-off, deduction or
counterclaim, in dollars, in immediately available funds, at the offices of the
Administrative Agent specified in Section 12.01 of the Credit Agreement.

 

ARTICLE III
Grant of
Security Interest

 

Section 3.01                                Grant of Security
Interest.  Each Pledgor hereby
pledges, assigns and transfers to the Administrative Agent, and hereby grants
to the Administrative Agent, for the ratable benefit of the Guaranteed
Creditors, a security interest in all of the following Property now owned or at
any time hereafter acquired by such Pledgor or in which such Pledgor now has or
at any time in the future may acquire any right, title or interest (collectively,
the “Collateral”), as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Pledgor’s Obligations:

 

(1)                                  all Pledged Securities;

 

(2)                                  all books and records pertaining
to the Collateral; and

 

(3)                                  to the extent not otherwise
included, all Proceeds and products of any and all of the foregoing and all
collateral security and guarantees given by any Person with respect to any of
the foregoing.

 

Section 3.02                                Transfer of Pledged
Securities.  To the extent the Pledge
Securities constitute “securities” under Article 8 of the UCC, all
certificates or instruments representing or evidencing such Pledged Securities
shall be delivered to and held pursuant hereto by the Administrative Agent or a
Person designated by the Administrative Agent and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of

 

8

 

transfer or assignment in blank, and accompanied by any required
transfer tax stamps to effect the pledge of the Pledged Securities to the
Administrative Agent.  Notwithstanding
the preceding sentence, at the Administrative Agent’s reasonable discretion, to
the extent the Pledge Securities constitute “securities” under Article 8
of the UCC, all such Pledged Securities must be delivered or transferred in
such manner as to permit the Administrative Agent to be a “protected purchaser”
to the extent of its security interest as provided in Section 8.303 of the
UCC (if the Administrative Agent otherwise qualifies as a protected purchaser).
During the continuance of an Event of Default, the Administrative Agent shall
have the right, at any time in its discretion and without notice, to transfer
to or to register in the name of the Administrative Agent or any of its
nominees any or all of the Pledged Securities, subject only to the revocable
rights specified in Section 6.03. 
In addition, during the continuance of an Event of Default, the
Administrative Agent shall have the right at any time to exchange certificates
or instruments representing or evidencing Pledged Securities for certificates
or instruments of smaller or larger denominations.

 

ARTICLE IV
Representations
and Warranties

 

To induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective extensions of credit to the
Borrower thereunder and to induce the Lenders (and their Affiliates) to enter
into Swap Agreements with the Borrower and its Subsidiaries, each Obligor
hereby represents and warrants to the Administrative Agent and each Lender
that:

 

Section 4.01                                Representations in
Credit Agreement.  In the case of
each Guarantor, the representations and warranties set forth in Article VII
of the Credit Agreement as they relate to such Guarantor or to the Loan
Documents to which such Guarantor is a party are true and correct in all
material respects, provided that each reference in each such representation and
warranty to the Borrower’s knowledge shall, for the purposes of this Section 4.01,
be deemed to be a reference to such Guarantor’s knowledge.

 

Section 4.02                                Title;
No Other Liens.  Except for the
security interest granted to the Administrative Agent for the ratable benefit
of the Guaranteed Creditors pursuant to this Agreement, such Pledgor is the
record and beneficial owner of its respective items of the Collateral free and
clear of any and all Liens and has rights in or the power to transfer each item
of the Collateral in which a Lien is granted by it hereunder, free and clear of
any Lien.  No financing statement or
other public notice with respect to all or any part of the Collateral is on
file or of record in any public office, except such as have been filed in favor
of the Administrative Agent, for the ratable benefit of the Guaranteed
Creditors, pursuant to this Agreement or the Security Instruments.

 

Section 4.03                                Perfected
First Priority Liens.  The security
interests granted pursuant to this Agreement (a) upon the completion of
the filings and the other actions specified on Schedule 3 constitute valid
perfected security interests in all of the Collateral in favor of the
Administrative Agent, for the ratable benefit of the Guaranteed Creditors, as
collateral security for such Pledgor’s Obligations, enforceable in accordance
with the terms hereof against all creditors of such Pledgor and any Persons
purporting to purchase any Collateral from such Pledgor and (b) are prior
to all other Liens on the Collateral in existence on the date hereof.

 

9

 

Section 4.04                                Obligor
Information.  On the date hereof, the
correct legal name of such Obligor, all names and trade names that such Obligor
has used in the last five years, such Obligor’s jurisdiction of organization
and each jurisdiction of organization of such Obligor over the last five years,
organizational number, taxpayor identification number, and the location(s) of
such Obligor’s chief executive office or sole place of business over the last
five years are specified on Schedule 4.

 

Section 4.05                                Pledged
Securities.

 

(a)                                  The Pledged Securities required
to be pledged hereunder and under the Credit Agreement by such Pledgor are
listed in Schedule 2.  The shares of
Pledged Securities pledged by such Pledgor hereunder constitute all the issued
and outstanding shares of all classes of the Equity Interests of each Issuer
owned by such Pledgor.  All the shares of
the Pledged Securities have been duly and validly issued and are fully paid and
nonassessable; and such Pledgor is the record and beneficial owner of, and has
good title to, the Pledged Securities pledged by it hereunder, free of any and
all Liens or options in favor of, or claims of, any other Person, except the security
interest created by this Agreement, and has rights in or the power to transfer
the Pledged Securities in which a Lien is granted by it hereunder, free and
clear of any Lien.

 

(b)                                 There are no restrictions on
transfer (that have not been waived or otherwise consented to) in the LLC
Agreement governing any Pledged LLC Interest and the Partnership Agreement
governing any Pledged Partnership Interest or any other agreement relating
thereto which would limit or restrict (i) the grant of a security interest
in the Pledged LLC Interests and the Pledged Partnership Interests, (ii) the
perfection of such security interest or (iii) the exercise of remedies in
respect of such perfected security interest in the Pledged LLC Interests and
the Pledged Partnership Interests, in each case, as contemplated by this
Agreement.  Upon the exercise of remedies
in respect of the Pledged LLC Interests and the Pledged Partnership Interests,
a transferee or assignee of a membership interest or partnership interest, as
the case may be, of such LLC or Partnership, as the case may be, shall become a
member or partner, as the case may be, of such LLC or Partnership, as the case
may be, entitled to participate in the management thereof and, upon the
transfer of the entire interest of such Pledgor, such Pledgor ceases to be a
member or partner, as the case may be.

 

Section 4.06                                Benefit
to the Guarantor.  The Borrower is a
member of an affiliated group of companies that includes each Guarantor, and
the Borrower and the other Guarantors are engaged in related businesses.  Each Guarantor is a Subsidiary of the
Borrower and its guaranty and surety obligations pursuant to this Agreement
reasonably may be expected to benefit, directly or indirectly, it; and it has
determined that this Agreement is necessary and convenient to the conduct,
promotion and attainment of the business of such Guarantor and the Borrower.

 

Section 4.07                                Solvency.  Each Obligor (a) is not insolvent as of
the date hereof and will not be rendered insolvent as a result of this
Agreement (after giving effect to Section 2.02), (b) is not engaged
in business or a transaction, or about to engage in a business or a
transaction, for which any Property remaining with it constitutes unreasonably
small capital, and (c) does not intend to incur, or believe it will incur,
Debt that will be beyond its ability to pay as such Debt matures.

 

10

 

ARTICLE V
Covenants

 

Each Obligor
covenants and agrees with the Administrative Agent and the Lenders that, from
and after the date of this Agreement until the Borrower Obligations shall have
been paid in full in cash, no Letter of Credit shall be outstanding and all of
the Commitments shall have terminated:

 

Section 5.01                                Covenants
in Credit Agreement.  In the case of
each Guarantor, such Guarantor shall take, or shall refrain from taking, as the
case may be, each action that is necessary to be taken or not taken, as the
case may be, so that no Default is caused by the failure to take such action or
to refrain from taking such action by such Guarantor or any of its
Subsidiaries.

 

Section 5.02                                Maintenance
of Perfected Security Interest; Further Documentation.  Each Pledgor agrees that:

 

(a)                                  it shall maintain the security
interest created by this Agreement as a perfected security interest having at
least the priority described in Section 4.03 and shall defend such
security interest against the claims and demands of all Persons whomsoever.

 

(b)                                 it will furnish to the
Administrative Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.

 

(c)                                  At any time and from time to
time, upon the written request of the Administrative Agent, and at the sole
expense of such Pledgor, it will promptly and duly execute and deliver, and
have recorded, such further instruments and documents and take such further
actions as the Administrative Agent may reasonably deem necessary for the
purpose of obtaining or preserving the full benefits of this Agreement and of
the rights and powers herein granted, including, without limitation, the
delivery of certificated securities  and
the filing of any financing or continuation statements under the UCC (or other
similar laws) in effect in any jurisdiction with respect to the security
interests created hereby.

 

Section 5.03                                Changes
in Locations, Name, Etc.  Such
Obligor recognizes that financing statements pertaining to the Collateral have
been or may be filed where such Obligor maintains any Collateral or is
organized.  Without limitation of Section 8.01(m)
of the Credit Agreement or any other covenant herein, such Obligor will not
cause or permit any change in its (a) corporate name or in any trade name
used to identify it in the conduct of its business or in the ownership of its
Properties, (b) the location of its chief executive office or principal
place of business, (c) its identity or corporate structure or in the jurisdiction
in which it is incorporated or formed, (d) its jurisdiction of
organization or its organizational identification number in such jurisdiction
of organization or (e) its federal taxpayer identification number, unless,
in each case, such Obligor shall have first (i) notified the
Administrative Agent of such change at least thirty (30) days prior to the
effective date of such change, and (ii) taken all action reasonably
requested by the Administrative Agent for the purpose of maintaining the
perfection and priority of the

 

11

 

Administrative Agent’s security interests under this Agreement.  In any notice furnished pursuant to this Section 5.03,
such Obligor will expressly state in a conspicuous manner that the notice is
required by this Agreement and contains facts that may require additional
filings of financing statements or other notices for the purposes of continuing
perfection of the Administrative Agent’s security interest in the
Collateral.  At the request of the
Administrative Agent, on or prior to the occurrence of such event, the Borrower
will provide to the Administrative Agent and the Lenders an opinion of counsel,
in form and substance reasonably satisfactory to the Administrative Agent, to the
effect that such event will not impair the validity of the security interests
hereunder, the perfection and priority thereof, the enforceability of the Loan
Documents, and such other matters as may be reasonably requested by the
Administrative Agent.

 

Section 5.04                                Pledged
Securities.

 

(a)                                  If such Pledgor shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Equity Interests of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Securities, or otherwise in respect thereof, such Pledgor shall accept
the same as the agent of the Guaranteed Creditors, hold the same in trust for
the Guaranteed Creditors, segregated from other Property of such Pledgor, and
deliver the same forthwith to the Administrative Agent in the exact form
received, duly indorsed by such Pledgor to the Administrative Agent, if
required, together with an undated stock power covering such certificate duly
executed in blank by such Pledgor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations.

 

(b)                                 Without the prior written
consent of the Administrative Agent, such Pledgor will not (i) unless
otherwise expressly permitted hereby or under the other Loan Documents, vote to
enable, or take any other action to permit, any Issuer to issue any Equity
Interests of any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any Equity Interests of any
nature of any Issuer, (ii) sell, assign, transfer, exchange, or otherwise
dispose of, or grant any option with respect to, the Pledged Securities or
Proceeds thereof (except pursuant to a transaction expressly permitted by the
Credit Agreement), (iii) create, incur or permit to exist any Lien or
option in favor of, or any claim of any Person with respect to, any of the
Pledged Securities or Proceeds thereof, or any interest therein, except for the
security interests created by this Agreement or (iv) enter into any
agreement or undertaking restricting the right or ability of such Pledgor or
the Administrative Agent to sell, assign or transfer any of the Pledged
Securities or Proceeds thereof.

 

(c)                                  In the case of each Pledgor that
is an Issuer, such Issuer agrees that (i) it will be bound by the terms of
this Agreement relating to the Pledged Securities issued by it and will comply
with such terms insofar as such terms are applicable to it, (ii) it will
notify the Administrative Agent promptly in writing of the occurrence of any of
the events described in Section 5.04(a) with respect to the Pledged
Securities issued by it and (iii) the terms of Sections Section 6.02(a) and
Section 6.03 shall apply to it, mutatis mutandis, with respect to
all actions

 

12

 

that
may be required of it pursuant to Section 6.02(d) or Section 6.03
with respect to the Pledged Securities issued by it.

 

(d)                                 In the case of each Pledgor that
is a partner in a Partnership, such Pledgor hereby consents to the extent
required by the applicable Partnership Agreement to the pledge by each other
Pledgor, pursuant to the terms hereof, of the Pledged Partnership Interests in
such Partnership and, after the occurrence and during the continuance of an
Event of Default, to the transfer of such Pledged Partnership Interests to the
Administrative Agent or its nominee and to the substitution of the
Administrative Agent or its nominee as a substituted partner in such
Partnership with all the rights, powers and duties of a general partner or a
limited partner, as the case may be.  In
the case of each Pledgor member of an LLC, such Pledgor hereby consents to the
extent required by the applicable LLC Agreement to the pledge by each other
Pledgor, pursuant to the terms hereof, of the Pledged LLC Interests in such LLC
and, after the occurrence and during the continuance of an Event of Default, to
the transfer of such Pledged LLC Interests to the Administrative Agent or its
nominee and to the substitution of the Administrative Agent or its nominee as a
substituted member of the LLC with all the rights, powers and duties of a
member of the LLC in question.

 

(e)                                  Such Pledgor shall not agree to
any amendment of a Partnership Agreement or LLC Agreement that in any way
adversely affects the perfection of the security interest of the Administrative
Agent in the Pledged Partnership Interests or Pledged LLC Interests pledged by
such Pledgor hereunder, including any amendment electing to treat the
membership interest or partnership interest of such Pledgor as a security under
Section 8-103 of the UCC.

 

(f)                                    Each Pledgor shall furnish to
the Administrative Agent such stock powers and other instruments as may be
required by the Administrative Agent to assure the transferability of the
Pledged Securities when and as often as may be reasonably requested by the
Administrative Agent.

 

(g)                                 The Pledged Securities will at
all times constitute not less than 100% of the Equity Interests of the Issuer
thereof owned by any Pledgor.  Each
Pledgor will not permit any Issuer of any of the Pledged Securities to issue
any new shares of any class of Equity Interests of such Issuer without the
prior written consent of the Administrative Agent.

 

ARTICLE VI
Remedial
Provisions

 

Section 6.01                                Code
and Other Remedies.

 

(a)                                  Upon the occurrence and during
the continuance of an Event of Default, the Administrative Agent, on behalf of
the Guaranteed Creditors, may exercise, in addition to all other rights and
remedies granted to them in this Agreement, the other Loan Documents and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the UCC or any
other applicable law or otherwise available at law or equity.  Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or

 

13

 

notice
of any kind (except any notice required by law referred to below) to or upon
any Pledgor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize upon the Collateral, or any
part thereof, and/or may forthwith sell, lease, assign, give option or options
to purchase, or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more parcels at
public or private sale or sales, at any exchange, broker’s board or office of
any Guaranteed Creditor or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk.  Any Guaranteed Creditor shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in any Pledgor,
which right or equity is hereby waived and released.  If applicable to any particular item of
Collateral, each Pledgor further agrees, at the Administrative Agent’s request,
to assemble the Collateral and make it available to the Administrative Agent at
places which the Administrative Agent shall reasonably select, whether at such
Pledgor’s premises or elsewhere.  Any
such sale or transfer by the Administrative Agent either to itself or to any
other Person shall be absolutely free from any claim of right by Pledgor,
including any equity or right of redemption, stay or appraisal which Pledgor
has or may have under any rule of law, regulation or statute now existing
or hereafter adopted (and such Pledgor hereby waives any rights it may have in
respect thereof).  Upon any such sale or
transfer, the Administrative Agent shall have the right to deliver, assign and
transfer to the purchaser or transferee thereof the Collateral so sold or
transferred.  The Administrative Agent
shall apply the net proceeds of any action taken by it pursuant to this Section 6.01,
after deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Guaranteed Creditors hereunder, including, without
limitation, reasonable attorneys’ fees and disbursements, to the payment in
whole or in part of the Obligations, in accordance with Section 10.02(c) of
the Credit Agreement, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9.615 of the UCC, need the
Administrative Agent account for the surplus, if any, to any Pledgor.  To the extent permitted by applicable law,
each Pledgor waives all claims, damages and demands it may acquire against the
Administrative Agent or any Guaranteed Creditor arising out of the exercise by
them of any rights hereunder except to the extent caused by the gross
negligence or willful misconduct of the Administrative Agent or such Guaranteed
Creditor or their respective agents.  If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.

 

(b)                                 In the event that the
Administrative Agent elects not to sell the Collateral, the Administrative
Agent retains its rights to dispose of or utilize the Collateral or any part or
parts thereof in any manner authorized or permitted by law or in equity, and to
apply the proceeds of the same towards payment of the Obligations.  Each and every method of disposition of the
Collateral described in this Agreement shall constitute disposition in a
commercially reasonable manner.

 

(c)                                  The Administrative Agent may
appoint any Person as agent to perform any act or acts necessary or incident to
any sale or transfer of the Collateral.

 

14

 

Section 6.02                                Pledged
Securities.

 

(a)                                  Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Pledgor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 6.02(c), each Pledgor shall
be permitted to receive all cash dividends paid in respect of the Pledged
Securities paid in the normal course of business of the relevant Issuer (other
than liquidating or distributing dividends), to the extent permitted in the
Credit Agreement.  Any sums paid upon or
in respect of any Pledged Securities upon the liquidation or dissolution of any
issuer of any Pledged Securities, any distribution of capital made on or in
respect of any Pledged Securities or any property distributed upon or with
respect to any Pledged Securities pursuant to the recapitalization or reclassification
of the capital of any issuer of Pledged Collateral or pursuant to the
reorganization thereof shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations.  If any sum
of money or property so paid or distributed in respect of any Pledged
Securities shall be received by such Pledgor, such Pledgor shall, until such
money or property is paid or delivered to the Administrative Agent, hold such
money or property in trust for the Administrative Agent, segregated from other
funds of such Pledgor, as additional security for the Obligations.

 

(b)                                 Unless an Event of Default shall
have occurred and be continuing and the Administrative Agent shall have given
notice to the relevant Pledgor of the Administrative Agent’s intent to exercise
its corresponding rights pursuant to Section 6.02(c), each Pledgor shall
be entitled to exercise all voting, consent and corporate, partnership or
limited liability rights with respect to the Pledged Securities; provided,
however, that no vote shall be cast, consent given or right exercised or other
action taken by such Pledgor that would impair the Collateral, be inconsistent
with or result in any violation of any provision of the Credit Agreement, this
Agreement or any other Loan Document or, without the prior consent of the
Administrative Agent and the Lenders, enable or permit any issuer of Pledged
Collateral to issue any Equity Interest or to issue any other securities
convertible into or granting the right to purchase or exchange for any Stock of
any issuer of Pledged Collateral other than as permitted by the Credit
Agreement.

 

(c)                                  Upon the occurrence and during
the continuance of an Event of Default, upon notice by the Administrative Agent
of its intent to exercise such rights to the relevant Pledgor or Pledgors, (i) the
Administrative Agent shall have the right to receive any and all cash
dividends, payments, Property or other Proceeds paid in respect of the Pledged
Securities and make application thereof to the Borrower Obligations in
accordance with Section 10.02(c) of the Credit Agreement, and (ii) any
or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and (iii) the Administrative Agent or
its nominee may exercise (A) all voting, consent, corporate, partnership
or limited liability and other rights pertaining to such Pledged Securities at
any meeting of shareholders, partners or members (or other equivalent body), as
the case may be, of the relevant Issuer or Issuers or otherwise and (B) any
and all rights of conversion, exchange and subscription and any other rights,
privileges or options pertaining to such Pledged Securities as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Securities upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in

 

15

 

the
organizational structure of any Issuer, or upon the exercise by any Pledgor or
the Administrative Agent of any right, privilege or option pertaining to such
Pledged Securities, and in connection therewith, the right to deposit and
deliver any and all of the Pledged Securities with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and
conditions as the Administrative Agent may determine), all without liability
except to account for Property actually received by it, but the Administrative
Agent shall have no duty to any Pledgor to exercise any such right, privilege
or option and shall not be responsible for any failure to do so or delay in so
doing.

 

(d)                                 Upon the occurrence and during
the continuance of an Event of Default, in order to permit the Administrative
Agent to exercise the voting and other consensual rights that it may be
entitled to exercise pursuant hereto and to receive all dividends and other
distributions that it may be entitled to receive hereunder, (i) each
Pledgor shall promptly execute and deliver (or cause to be executed and
delivered) to the Administrative Agent all such proxies, dividend payment
orders and other instruments as the Administrative Agent may from time to time
reasonably request and (ii) without limiting the effect of clause (i) above,
such Pledgor hereby grants to the Administrative Agent an irrevocable proxy to
vote all or any part of the Pledged Securities and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Securities would be entitled (including giving or withholding written consents
of shareholders, partners or members, as the case may be, calling special meetings
of shareholders, partners or members, as the case may be, and voting at such
meetings), which proxy shall be effective, automatically and without the
necessity of any action (including any transfer of any Pledged Securities on
the record books of the Issuer thereof) by any other Person (including the
Issuer of such Pledged Collateral or any officer or agent thereof).

 

(e)                                  Each Pledgor hereby authorizes
and instructs each Issuer of any Pledged Securities pledged by such Pledgor
hereunder to (i) comply with any instruction received by it from the
Administrative Agent in writing that (A) states that an Event of Default
has occurred and is continuing and (B) is otherwise in accordance with the
terms of this Agreement, without any other or further instructions from such
Pledgor, and each Pledgor agrees that each Issuer shall be fully protected in
so complying, and (ii) unless otherwise expressly permitted hereby, pay
any dividends or other payments with respect to the Pledged Securities directly
to the Administrative Agent.

 

(f)                                    Upon the occurrence and during
the continuance of an Event of Default, if the Issuer of any Pledged Securities
is the subject of bankruptcy, insolvency, receivership, custodianship or other
proceedings under the supervision of any Governmental Authority, then all
rights of the Pledgor in respect thereof to exercise the voting and other
consensual rights which such Pledgor would otherwise be entitled to exercise
with respect to the Pledged Securities issued by such Issuer shall cease, and
all such rights shall thereupon become vested in the Administrative Agent who
shall thereupon have the sole right to exercise such voting and other
consensual rights, but the Administrative Agent shall have no duty to exercise
any such voting or other consensual rights and shall not be responsible for any
failure to do so or delay in so doing.

 

16

 

Section 6.03                                Private
Sales of Pledged Securities.

 

(a)                                  Each Pledgor recognizes that the
Administrative Agent may be unable to effect a public sale of any or all the
Pledged Securities, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or otherwise or may
determine that a public sale is impracticable or not commercially reasonable
and, accordingly, may resort to one or more private sales thereof to a
restricted group of purchasers which will be obliged to agree, among other
things, to acquire such securities for their own account for investment and not
with a view to the distribution or resale thereof.  Each Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  The Administrative
Agent shall be under no obligation to delay a sale of any of the Pledged
Securities for the period of time necessary to permit the Issuer thereof to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if such Issuer would agree to do so.

 

(b)                                 Each Pledgor agrees to use
commercially reasonable efforts to do or cause to be done all such other acts
as may reasonably be necessary to make such sale or sales of all or any portion
of the Pledged Securities pursuant to this Section 6.03 valid and binding
and in compliance with any and all other applicable Governmental
Requirements.  Each Pledgor further
agrees that a breach of any of the covenants contained in this Section 6.03
will cause irreparable injury to the Guaranteed Creditors, that the Guaranteed
Creditors have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.03
shall be specifically enforceable against such Pledgor, and such Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred or is continuing under the Credit Agreement.

 

Section 6.04                                Waiver; Deficiency.  Each Pledgor shall remain liable for any
deficiency if the proceeds of any sale or other disposition of the Collateral
are insufficient to pay its Obligations and the fees and disbursements of any
attorneys employed by the Administrative Agent or any Guaranteed Creditor to
collect such deficiency.

 

Section 6.05                                Non-Judicial
Enforcement.  The Administrative
Agent may enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law, each Pledgor expressly
waives any and all legal rights which might otherwise require the
Administrative Agent to enforce its rights by judicial process.

 

ARTICLE VII
The
Administrative Agent

 

Section 7.01                                Administrative Agent’s
Appointment as Attorney-in-Fact, Etc.

 

(a)                                  Each Pledgor hereby irrevocably
constitutes and appoints the Administrative Agent and any officer or agent
thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of such Pledgor and in the name of such Pledgor or in its own name, for
the purpose of carrying out

 

17

 

the
terms of this Agreement, to take any and all reasonably appropriate action and
to execute any and all documents and instruments which may be reasonably
necessary or desirable to accomplish the purposes of this Agreement, and,
without limiting the generality of the foregoing, each Pledgor hereby gives the
Administrative Agent the power and right, on behalf of such Pledgor, without
notice to or assent by such Pledgor, to do any or all of the following:

 

(i)                                     in the name of such Pledgor or
its own name, or otherwise, take possession of and indorse and collect any
check, draft, note, acceptance or other instrument for the payment of moneys
due with respect to any Collateral and file any claim or take any other action
or proceeding in any court of law or equity or otherwise deemed appropriate by
the Administrative Agent for the purpose of collecting any such moneys due with
respect to any other Collateral whenever payable;

 

(ii)                                  unless being disputed under Section 8.04
of the Credit Agreement, pay or discharge Taxes and Liens levied or placed on
or threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement or any other Loan Document and pay
all or any part of the premiums therefor and the costs thereof;

 

(iii)                               execute, in connection with any
sale provided for in Section 6.01 or Section 6.03, any endorsements,
assignments or other instruments of conveyance or transfer with respect to the
Collateral; and

 

(iv)                              (A) direct any party liable
for any payment under any of the Collateral to make payment of any and all
moneys due or to become due thereunder directly to the Administrative Agent or
as the Administrative Agent shall direct; (B) ask or demand for, collect,
and receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of any
Collateral; (C) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the Collateral
or any portion thereof and to enforce any other right in respect of any
Collateral; (D) defend any suit, action or proceeding brought against such
Pledgor with respect to any Collateral; (E) settle, compromise or adjust
any such suit, action or proceeding and, in connection therewith, give such
discharges or releases as the Administrative Agent may deem appropriate; and (F) generally,
sell, transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the Administrative
Agent were the absolute owner thereof for all purposes, and do, at the
Administrative Agent’s option and such Pledgor’s expense, at any time, or from
time to time, all acts and things which the Administrative Agent deems
necessary to protect, preserve or realize upon the Collateral and the
Administrative Agent’s and the Guaranteed Creditors’ security interests therein
and to effect the intent of this Agreement, all as fully and effectively as
such Pledgor might do.

 

Anything in this Section 7.01(a) to
the contrary notwithstanding, the Administrative Agent agrees that it will not
exercise any rights under the power of attorney provided for in this Section 7.01(a) unless
an Event of Default shall have occurred and be continuing.

 

(b)                                 If any Obligor fails to perform
or comply with any of its agreements contained herein within the applicable
grace periods, the Administrative Agent, at its option, but

 

18

 

without
any obligation so to do, may perform or comply, or otherwise cause performance
or compliance, with such agreement.

 

(c)                                  The expenses of the
Administrative Agent incurred in connection with actions undertaken as provided
in this Section 7.01, together with interest thereon at a rate per annum
equal to the post-default rate specified in Section 3.02(c) of the
Credit Agreement, but in no event to exceed the Highest Lawful Rate, from the
date of payment by the Administrative Agent to the date reimbursed by the
relevant Obligor, shall be payable by such Obligor to the Administrative Agent
on demand.

 

(d)                                 Each Obligor hereby ratifies all
that said attorneys shall lawfully do or cause to be done by virtue and in
compliance hereof.  All powers,
authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated.

 

Section 7.02                                Duty
of Administrative Agent.  The
Administrative Agent’s sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9.207
of the UCC or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar Property for its own account and shall
be deemed to have exercised reasonable care in the custody and preservation of
the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which comparable secured parties accord comparable
collateral.  Neither the Administrative
Agent, any Guaranteed Creditor nor any of their Related Parties shall be liable
for failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of any Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.  The powers conferred on the
Administrative Agent and the Guaranteed Creditors hereunder are solely to
protect the Administrative Agent’s and the Guaranteed Creditors’ interests in
the Collateral and shall not impose any duty upon the Administrative Agent or
any Guaranteed Creditor to exercise any such powers.  The Administrative Agent and the Guaranteed
Creditors shall be accountable only for amounts that they actually receive as a
result of the exercise of such powers, and neither they nor any of their
Related Parties shall be responsible to any Obligor for any act or failure to
act hereunder, except for their own gross negligence or willful
misconduct.  To the fullest extent
permitted by applicable law, the Administrative Agent shall be under no duty
whatsoever to make or give any presentment, notice of dishonor, protest, demand
for performance, notice of non-performance, notice of intent to accelerate,
notice of acceleration, or other notice or demand in connection with any
Collateral or the Obligations, or to take any steps necessary to preserve any
rights against any Pledgor or other Person or ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not it has or is deemed to have
knowledge of such matters.  Each Obligor,
to the extent permitted by applicable law, waives any right of marshaling in
respect of any and all Collateral, and waives any right to require the
Administrative Agent or any Guaranteed Creditor to proceed against any Obligor
or other Person, exhaust any Collateral or enforce any other remedy which the
Administrative Agent or any Guaranteed Creditor now has or may hereafter have
against any Obligor or other Person.

 

19

 

 

Section 7.03           Execution of Financing Statements.  Pursuant to the UCC and any other applicable
law, each Pledgor authorizes the Administrative Agent to file or record
financing statements and other filing or recording documents or instruments
with respect to the Collateral without the signature of such Pledgor in such
form and in such offices as the Administrative Agent reasonably determines
appropriate to perfect the security interests of the Administrative Agent under
this Agreement.  A photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or
other filing or recording document or instrument for filing or recording in any
jurisdiction.

 

Section 7.04           Authority of Administrative Agent.  Each Obligor acknowledges that the rights and
responsibilities of the Administrative Agent under this Agreement with respect
to any action taken by the Administrative Agent or the exercise or non-exercise
by the Administrative Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Administrative Agent and the Guaranteed
Creditors, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Administrative Agent and the Obligors, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Guaranteed Creditors with
full and valid authority so to act or refrain from acting, and no Obligor shall
be under any obligation, or entitlement, to make any inquiry respecting such
authority.

 

ARTICLE VIII
Subordination
of Indebtedness

 

Section 8.01           Subordination of All Obligor
Claims.  As used herein, the term “Obligor Claims” shall mean all debts and
obligations of the Borrower or any other Obligor to any other Obligor, whether
such debts and obligations now exist or are hereafter incurred or arise, or
whether the obligation of the debtor thereon be direct, contingent, primary, secondary,
several, joint and several, or otherwise, and irrespective of whether such
debts or obligations be evidenced by note, contract, open account, or
otherwise, and irrespective of the Person or Persons in whose favor such debts
or obligations may, at their inception, have been, or may hereafter be created,
or the manner in which they have been or may hereafter be acquired.  After the occurrence and during the
continuation of an Event of Default, no Obligor shall receive or collect,
directly or indirectly, from any other obligor in respect thereof any amount
upon the Obligor Claims.

 

Section 8.02           Claims in Bankruptcy.  In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings
involving any Obligor, the Administrative Agent on behalf of the Administrative
Agent and the Guaranteed Creditors shall have the right to prove their claim in
any proceeding, so as to establish their rights hereunder and receive directly
from the receiver, trustee or other court custodian, dividends and payments
which would otherwise be payable upon Obligor Claims.  Each Obligor hereby assigns such dividends
and payments to the Administrative Agent for the benefit of the Administrative
Agent and the Guaranteed Creditors for application against the Borrower
Obligations as provided under Section 10.02(c) of the Credit
Agreement.  Should any Agent or
Guaranteed Creditor receive, for application upon the Obligations, any such
dividend or payment which is otherwise payable to any Obligor, and which, as
between such Obligors, shall constitute a credit upon the

 

20

 

Obligor Claims, then upon payment in full in cash of the Borrower
Obligations, the expiration of all Letters of Credit outstanding under the
Credit Agreement and the termination of all of the Commitments, the intended
recipient shall become subrogated to the rights of the Administrative Agent and
the Guaranteed Creditors to the extent that such payments to the Administrative
Agent and the Guaranteed Creditors on the Obligor Claims have contributed
toward the liquidation of the Obligations, and such subrogation shall be with
respect to that proportion of the Obligations which would have been unpaid if
the Administrative Agent and the Guaranteed Creditors had not received
dividends or payments upon the Obligor Claims.

 

Section 8.03           Payments Held in Trust.  In the event that, notwithstanding Section 8.01
and Section 8.02, any Obligor should receive any funds, payments, claims
or distributions which is prohibited by such Sections, then it agrees: (a) to
hold in trust for the Administrative Agent and the Guaranteed Creditors an
amount equal to the amount of all funds, payments, claims or distributions so
received, and (b) that it shall have absolutely no dominion over the
amount of such funds, payments, claims or distributions except to pay them
promptly to the Administrative Agent, for the benefit of the Guaranteed
Creditors; and each Obligor covenants promptly to pay the same to the
Administrative Agent.

 

Section 8.04           Liens Subordinate.  Each Obligor agrees that, until the Borrower
Obligations are paid in full in cash, no Letter of Credit shall be outstanding
and the termination of all of the Commitments, any Liens securing payment of
the Obligor Claims shall be and remain inferior and subordinate to any Liens
securing payment of the Obligations, regardless of whether such encumbrances in
favor of such Obligor, the Administrative Agent or any Guaranteed Creditor
presently exist or are hereafter created or attach.  Without the prior written consent of the
Administrative Agent, no Obligor, during the period in which any of the
Borrower Obligations are outstanding or the Commitments are in effect, shall (a) exercise
or enforce any creditor’s right it may have against any debtor in respect of
the Obligor Claims, or (b) foreclose, repossess, sequester or otherwise
take steps or institute any action or proceeding (judicial or otherwise,
including without limitation the commencement of or joinder in any liquidation,
bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce
any Lien securing payment of the Obligor Claims held by it.

 

Section 8.05           Notation of Records.  Upon the request of the Administrative Agent,
all promissory notes and all accounts receivable ledgers or other evidence of
the Obligor Claims accepted by or held by any Obligor shall contain a specific
written notice thereon that the indebtedness evidenced thereby is subordinated
under the terms of this Agreement.

 

ARTICLE IX
Miscellaneous

 

Section 9.01           Waiver.  No failure on the part of the Administrative
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, privilege or remedy or any abandonment
or discontinuance of steps to enforce such right, power, privilege or remedy
under this Agreement or any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power,
privilege or remedy under this Agreement or any other Loan Document preclude or
be construed as a waiver of any other or further exercise thereof or the
exercise of any other right, power, privilege or remedy.

 

21

 

The remedies provided herein are cumulative and not exclusive of any
remedies provided by law or equity.

 

Section 9.02           Notices.  All notices and other communications provided
for herein shall be given in the manner and subject to the terms of Section 12.01
of the Credit Agreement; provided that any such notice, request or demand to or
upon any Guarantor shall be addressed to such Guarantor at its notice address
set forth on Schedule 1.

 

Section 9.03           Payment of Expenses, Indemnities,
Etc.

 

(a)           Each Guarantor
agrees to pay or reimburse each Guaranteed Creditor and the Administrative
Agent for all out-of-pocket expenses incurred by such Person, including the
reasonable fees, charges and disbursements of any counsel for the
Administrative Agent or any Guaranteed Creditor, in connection with the
enforcement or protection of its rights in connection with this Agreement or
any other Loan Document, including, without limitation, all costs and expenses
incurred in collecting against such Guarantor under the guarantee contained in ARTICLE II
or otherwise enforcing or preserving any rights under this Agreement and the
other Loan Documents to which such Guarantor is a party.

 

(b)           Each Guarantor
agrees to pay, and to save the Administrative Agent and the Guaranteed
Creditors harmless from, any and all liabilities with respect to, or resulting
from any delay in paying, any and all Other Taxes which may be payable or
determined to be payable with respect to any of the Collateral or in connection
with any of the transactions contemplated by this Agreement.

 

(c)           Each Guarantor
agrees to pay, and to save the Administrative Agent and the Guaranteed
Creditors harmless from, any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement to the extent the Borrower
would be required to do so pursuant to Section 12.03 of the Credit
Agreement.

 

Section 9.04           Amendments in Writing.  None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 12.02 of the Credit Agreement.

 

Section 9.05           Successors and Assigns.  The provisions of this Agreement shall be
binding upon the Obligors and their successors and assigns and shall inure to
the benefit of the Administrative Agent and the Guaranteed Creditors and their
respective successors and assigns; provided that except as set forth in Section 9.11
of the Credit Agreement, no Obligor may assign, transfer or delegate any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent and the Lenders, and any such purported assignment,
transfer or delegation shall be null and void.

 

Section 9.06           Survival; Revival; Reinstatement.

 

(a)           All covenants,
agreements, representations and warranties made by any Obligor herein and in
the certificates or other instruments delivered in connection with or

 

22

 

pursuant
to this Agreement or any other Loan Document to which it is a party shall be
considered to have been relied upon by the Administrative Agent, the other
Agents, the Issuing Bank and the Lenders and shall survive the execution and
delivery of this Agreement and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the other
Agents, the Issuing Bank or any Lender may have had notice or knowledge of any
Default or incorrect representation or warranty at the time any credit is
extended under any Loan Document, and shall continue in full force and effect
as long as the principal of or any accrued interest on any Loan or any fee or
any other amount payable under the Credit Agreement is outstanding and unpaid
or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated.  The provisions of
Section 9.03 shall survive and remain in full force and effect regardless
of the consummation of the transactions contemplated hereby, the repayment of
the Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement, any other Loan Document or
any provision hereof or thereof.

 

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

 

Section 9.07           Counterparts; Integration; Effectiveness.

 

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

 

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

 

(c)           This Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties

 

23

 

hereto,
and thereafter shall be binding upon and inure to the benefit of the parties
hereto, the Lenders and their respective successors and assigns.  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.

 

Section 9.08           Severability.  Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

Section 9.09           Set-Off.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitations obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
any Obligor against any of and all the obligations of the Obligor owed to such
Lender now or hereafter existing under this Agreement or any other Loan
Document, irrespective of whether or not such Lender shall have made any demand
under this Agreement or any other Loan Document and although such obligations
may be unmatured.  The rights of each
Lender under this Section 9.09 are in addition to other rights and
remedies (including other rights of setoff) which such Lender or its Affiliates
may have.

 

Section 9.10           Governing Law; Submission to
Jurisdiction.

 

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

 

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

 

(c)           EACH PARTY
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR

 

24

 

CERTIFIED
MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OF
THE CREDIT AGREEMENT (OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01
OF THE CREDIT AGREEMENT) OR SCHEDULE 1 HERETO, AS APPLICABLE, SUCH SERVICE
TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY
IN ANY OTHER JURISDICTION.

 

(d)           EACH PARTY HEREBY (1) IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2) IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM
OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (4) ACKNOWLEDGES THAT IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.10.

 

Section 9.11           Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

Section 9.12           Acknowledgments.  Each Obligor hereby acknowledges that:

 

(a)           it has been advised
by counsel in the negotiation, execution and delivery of this Agreement and the
other Loan Documents to which it is a party;

 

(b)           neither the
Administrative Agent nor any Guaranteed Creditor has any fiduciary relationship
with or duty to any Obligor arising out of or in connection with this Agreement
or any of the other Loan Documents, and the relationship between the Obligors,
on the one hand, and the Administrative Agent and Guaranteed Creditors, on the
other hand, in connection herewith or therewith is solely that of debtor and
creditor; and

 

(c)           no joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Guaranteed Creditors or among
the Obligors and the Guaranteed Creditors.

 

25

 

(d)           Each of the parties
hereto specifically agrees that it has a duty to read this Agreement, the
Security Instruments and the other Loan Documents and agrees that it is charged
with notice and knowledge of the terms of this Agreement, the Security Instruments
and the other Loan Documents; that it has in fact read this Agreement, the
Security Instruments and the other Loan Documents and is fully informed and has
full notice and knowledge of the terms, conditions and effects thereof; that it
has been represented by independent legal counsel of its choice throughout the
negotiations preceding its execution of this Agreement and the Security
Instruments; and has received the advice of its attorney in entering into this
Agreement and the Security Instruments; and that it recognizes that certain of
the terms of this Agreement and the Security Instruments result in one party
assuming the liability inherent in some aspects of the transaction and
relieving the other party of its responsibility for such liability.  EACH PARTY
HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR
ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITY
INSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH
PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 9.13           Additional Obligors and Pledgors.  Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 8.14 of
the Credit Agreement shall become an Obligor for all purposes of this Agreement
upon execution and delivery by such Subsidiary of an Assumption Agreement and
shall thereafter have the same rights, benefits and obligations as an Obligor
party hereto on the date hereof.  Each
Guarantor that is required to pledge Equity Interests of its Subsidiaries shall
execute and deliver a Supplement, if such Equity Interests were not previously
pledged.

 

Section 9.14           Releases.

 

(a)           Release Upon
Payment in Full.  The grant of a
security interest hereunder and all rights, powers and remedies in connection
herewith shall remain in full force and effect until the Administrative Agent
has (i) retransferred and delivered all Collateral in its possession to
the Pledgors, and (ii) executed a written release or termination statement
and reassigned to the Pledgors without recourse or warranty any remaining
Collateral and all rights conveyed hereby. 
Upon the complete payment of the Borrower Obligations, the termination
of all of the Commitments and the compliance by the Obligors with all covenants
and agreements hereof, the Administrative Agent, at the expense of the
Borrower, will promptly release, reassign and transfer the Collateral to the
Pledgors and declare this Agreement to be of no further force or effect.

 

(b)           Partial Releases.  If any of the Collateral shall be sold,
transferred or otherwise disposed of by any Pledgor in a transaction permitted
by the Credit Agreement, then the Administrative Agent, at the request and sole
expense of such Pledgor, shall promptly execute and deliver to such Pledgor all
releases or other documents reasonably necessary or desirable for the release
of the Liens created hereby on such Collateral and the Equity Interests of the
Issuer thereof.  At the request and sole
expense of the Borrower, a Guarantor shall be released from its obligations
hereunder in the event that all the Equity Interests of such Guarantor shall be
sold, transferred or otherwise disposed of in a transaction permitted by the
Credit Agreement; provided that the Borrower shall have delivered to the
Administrative Agent,

 

26

 

at
least ten Business Days prior to the date of the proposed release, a written
request of a Responsible Officer of the Borrower for release identifying the
relevant Guarantor and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection therewith,
together with a certification by the Borrower stating that such transaction is
in compliance with the Credit Agreement and the other Loan Documents.

 

(c)           Retention in
Satisfaction.  Except as may be
expressly applicable pursuant to Section 9.620 of the UCC, no action taken or omission to act by
the Administrative Agent or the Guaranteed Creditors hereunder, including, without
limitation, any exercise of voting or consensual rights or any other action
taken or inaction, shall be deemed to constitute a retention of the Collateral
in satisfaction of the Obligations or otherwise to be in full satisfaction of
the Obligations, and the Obligations shall remain in full force and effect,
until the Administrative Agent and the Guaranteed Creditors shall have applied
payments (including, without limitation, collections from Collateral) towards
the Obligations in the full amount then outstanding or until such subsequent
time as is provided in Section 9.14(a).

 

Section 9.15           Acceptance.  Each Obligor hereby expressly waives notice
of acceptance of this Agreement, acceptance on the part of the Administrative
Agent and the Guaranteed Creditors being conclusively presumed by their request
for this Agreement and delivery of the same to the Administrative Agent.

 

[Remainder of page intentionally left
blank; signature page follows]

 

27

 

IN WITNESS WHEREOF, each of the undersigned
has caused this Guaranty and Pledge Agreement to be duly executed and delivered
as of the date first above written.

 

	
  BORROWER:

  	
  WHITTIER
  ENERGY CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  GUARANTORS:

  	
  WHITTIER
  ENERGY COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WHITTIER
  OPERATING, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  OLYMPIC
  RESOURCES (ARIZONA)

  LTD.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RIMCO
  PRODUCTION COMPANY,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  VAQUERO
  GAS COMPANY,

  INCORPORATED

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

Signature Page – Guaranty and Pledge Agreement

 

 

	
   

  	
  RIMCO
  ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Michael B. Young

  	
   

  
	
   

  	
  Name:

  	
  Michael B. Young

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  

 

2

 

Acknowledged and Agreed to as

of the date hereof by:

 

	
  ADMINISTRATIVE
  AGENT:

  	
  BNP
  PARIBAS

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ David Dodd

  	
   

  
	
   

  	
  Name:

  	
  David Dodd

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Betsy Jocher

  	
   

  
	
   

  	
  Name:

  	
  Betsy Jocher

  
	
   

  	
  Title:

  	
  Vice President

  

 

Signature Page – Guaranty and Pledge Agreement

 

 

Schedule 1

 

NOTICE ADDRESSES OF OBLIGORS

 

Whittier Energy Corporation

333 Clay Street, Suite 1100

Houston, Texas 77002

 

Whittier Energy Company

333 Clay Street, Suite 1100

Houston, Texas 77002

 

Olympic Resources (Arizona) Ltd.

333 Clay Street, Suite 1100

Houston, Texas 77002

 

RIMCO Production Company, Inc.

333 Clay Street, Suite 1100

Houston, Texas 77002

 

Vaquero Gas Company, Incorporated

333 Clay Street, Suite 1100

Houston, Texas 77002

 

Whittier Operating, Inc.

333 Clay Street, Suite 1100

Houston, Texas 77002

 

RIMCO Energy, Inc.

333 Clay Street, Suite 1100

Houston, Texas 77002

 

1

 

Schedule 2

 

DESCRIPTION OF PLEDGED SECURITIES

 

Pledged Securities:

 

	
  Owner

  	
   

  	
  Issuer

  	
   

  	
  Percentage

  Owned

  	
   

  	
  Percentage

  Pledged

  	
   

  	
  Class of

  Stock or

  other

  Equity

  Interest

  	
   

  	
  No. of

  Shares

  	
   

  	
  Certificate

  No.

  	
   

  
	
  Whittier Energy Corporation

  	
   

  	
  Whittier
  Energy Company

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Common

  	
   

  	
  1,000

  	
   

  	
  1

  	
   

  
	
  Whittier Energy Company

  	
   

  	
  Whittier
  Operating, Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Common

  	
   

  	
  100,000

  	
   

  	
  148

  	
   

  
	
  Whittier Energy Corporation

  	
   

  	
  RIMCO
  Production Company Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Common

  	
   

  	
  1,000

  	
   

  	
  C-1

  	
   

  
	
  RIMCO Production Company Inc.

  	
   

  	
  Vaquero Gas
  Company, Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Common

  	
   

  	
  819,252

  	
   

  	
  10

  	
   

  
	
  RIMCO Production Company, Inc.

  	
   

  	
  RIMCO
  Energy, Inc.

  	
   

  	
  100%

  	
   

  	
  100%

  	
   

  	
  Common

  	
   

  	
  960

  	
   

  	
  6

  	
   

  

 

1

 

Schedule 3

 

FILINGS AND OTHER ACTIONS

REQUIRED TO PERFECT SECURITY INTERESTS

 

1.                                       Filing
of UCC-1 Financing Statements with respect to the Collateral of the Borrower
with the Secretary of State of the State of Nevada and with respect to the
Collateral of RIMCO Production Company, Inc. with the Secretary of State
of the State of Delaware.

 

2.                                       Delivery to the Administrative
Agent of all Pledged Securities consisting of certificated securities, in each
case properly endorsed for transfer or in blank.

 

1

 

Schedule 4

 

LOCATION OF JURISDICTION OF ORGANIZATION

AND CHIEF
EXECUTIVE OFFICE

 

Legal name of the Borrower:  Whittier Energy Corporation

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  Olympic Resources, Ltd., a
Wyoming corporation, which corporation was merged into Whittier Energy
Corporation on 12.23.03

Jurisdictions of organization over the last five years:  Nevada; qualified to do business in the
states of Texas and Nevada

Current jurisdiction of organization: 
Nevada; registered agent office in the State of Nevada is 202 South
Minnesota Street, Carson City, Nevada 89703; and qualified to do business in
the state of Texas

Organizational number:  C28115-2003

Taxpayer identification number: 
20-0539412

Location of chief executive office or sole place of business over the
last five years:

333 Clay Street, Suite 1100, Houston, Texas 77002

 

Legal name of the Obligor:  Whittier Energy Company

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  WEC Acquisition, Inc., a
Wyoming corporation, which corporation was merged into Whittier Energy Company
on 09.10.03

Jurisdictions of organization over the last five years:  Nevada; ; registered agent office in the
state of Nevada is 202 South Minnesota Street, Carson City, Nevada 89703, and
qualified to do business in the state of California

Current jurisdiction of organization: 
Nevada

Organizational number:  C11607-1991

Taxpayer identification number: 
95-4367452

Location of chief executive office or sole place of business over the
last five years:

P.O. Box 7770 El Camino
Real, Carlsbad, California 92009

 

Legal name of the Obligor:  Olympic Resources (Arizona) Ltd.

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  No others

Jurisdictions of organization over the last five years:  Arizona; registered agent office in the state
of Arizona is 815 N. 1st, Suite 4, Phoenix, Arizona, and
qualified to do business in the state of California

Current jurisdiction of organization: 
Arizona

Organizational number:  0787302-0

Taxpayer identification number: 
98-0188488

Location of chief executive office or sole place of business over the
last five years:

2325 East Broadway Boulevard, Suite 200, Tucson, Arizona 85716-5303

 

1

 

Legal name of the Obligor:  RIMCO Production Company, Inc.

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  Boston Oil & Gas U.S.
Inc. a Delaware corporation, RIMCO Associates, Inc., a Connecticut
corporation, which corporations were merged into RIMCO Production Company, Inc.
on 03.30.01, and RIMCO Partners, L.P. II, a Delaware limited partnership, RIMCO
Partners, L.P. III, a Delaware limited partnership, and RIMCO Partners, L.P.
IV, a Delaware limited partnership, which limited partnerships were merged into
RIMCO Production Company, Inc. on 03.30.01

Jurisdictions of organization over the last five years:  Delaware; registered agent office in the
state of Delaware is 2711 Centerville Road, Suite 400, Wilmington,
Delaware 19808, and qualified to do business in the states of Texas,
Mississippi, Louisiana and Alabama

Current jurisdiction of organization: 
Delaware

Organizational number:  2163479

Taxpayer identification number: 
06-1239350

Location of chief executive office or sole place of business over the
last five years:

600 Travis, Suite 7050, Houston, Texas 77002

 

Legal name of the Obligor:  Vaquero Gas Company, Incorporated

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  No others

Jurisdictions of organization over the last five years:  Texas; registered agent office is 600 Travis,
Suite 7050, Houston, Texas 77002, and qualified to do business in the
states of New Mexico and Louisiana

Current jurisdiction of organization: 
Texas

Organizational number:  122165300

Taxpayer identification number: 
17-603600556

Location of chief executive office or sole place of business over the
last five years:

600 Travis, Suite 7050, Houston, Texas 77002

 

Legal name of the Obligor:  Whittier Operating, Inc.

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  No others

Jurisdictions of organization over the last five years:  Texas; registered agent office is 800 Brazos,
Suite 1100, Austin, Texas 78701, and qualified to do business in the state
of Louisiana

Current jurisdiction of organization: 
Texas

Organizational number:  800065850

Taxpayer identification number: 
10-205683559

Location of chief executive office or sole place of business over the
last five years:

333 Clay Street, Suite 1100, Houston, Texas 77002

 

2

 

Legal name of the Borrower:  RIMCO Energy, Inc.

Address:  333 Clay Street, Suite 1100,
Houston, Texas 77002

All names and trade names that the Borrower has used in the last five
years:  No others

Jurisdictions of organization over the last five years:  Texas; registered agent office in the state
of Texas is 600 Travis, Suite 6875, Houston, Texas 77002

Current jurisdiction of organization: 
Texas

Organizational number:  131300800

Taxpayer identification number: 
30-117237914

Location of chief executive office or sole place of business over the
last five years:

600 Travis, Suite 7050, Houston, Texas 77002

 

3

 

ACKNOWLEDGMENT AND CONSENT

 

The undersigned
hereby acknowledges receipt of a copy of the Guaranty and Pledge Agreement
dated as of June 15, 2005 (the “Guaranty and Pledge
Agreement”), made by the Obligors parties thereto for the benefit of
BNP PARIBAS, as Administrative Agent. 
The undersigned agrees for the benefit of the Administrative Agent and
the Guaranteed Creditors as follows:

 

1.             The undersigned will be bound by
the terms of the Guaranty and Pledge Agreement and will comply with such terms
insofar as such terms are applicable to the undersigned.

 

2.             The terms of Section 6.01(a) and
Section 6.03 of the Guaranty and Pledge Agreement shall apply to it, mutatis mutandis,
with respect to all actions that may be required of it pursuant to Section 6.02(a) or
Section 6.03 of the Guaranty and Pledge Agreement.

 

	
   

  	
  [NAME OF
  ISSUER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  Address for
  Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Fax:

  	
   

  	
   

  
					

 

*                             This consent is
necessary only with respect to any Issuer which is not also an Obligor.  This consent may be modified or eliminated
with respect to any Issuer that is not controlled by a Obligor.

 

 

Annex I

 

Assumption Agreement

 

ASSUMPTION
AGREEMENT, dated as of [                 ],
200[   ], made by
[                 ],
a [                 ]
(the “Additional Obligor”), in favor of
BNP PARIBAS, as administrative agent (in such capacity, the “Administrative Agent”) for the Guaranteed
Creditors (used herein as defined in the Guaranty and Pledge Agreement referred
to below).  All capitalized terms not
defined herein shall have the meaning ascribed to them in the Credit Agreement
referred to below.

 

W I T N E S S E T H:

 

WHEREAS, Whittier
Energy Corporation, a Nevada corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
that certain Credit Agreement, dated as of June 15, 2005 (as amended,
restated, supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, in
connection with the Credit Agreement, the Borrower and certain of its
Affiliates (other than the Additional Obligor) have entered into an Guaranty
and Pledge Agreement, dated as of June 15, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty and Pledge Agreement”) in favor of
the Administrative Agent for the benefit of the Guaranteed Creditors;

 

WHEREAS, the Credit
Agreement requires the Additional Obligor to become a party to the Guaranty and
Pledge Agreement; and

 

WHEREAS, the
Additional Obligor has agreed to execute and deliver this Assumption Agreement
in order to become a party to the Guaranty and Pledge Agreement;

 

NOW, THEREFORE, IT
IS AGREED:

 

1.             Guaranty
and Pledge Agreement.  By
executing and delivering this Assumption Agreement, the Additional Obligor, as
provided in Section 9.13 of the Guaranty and Pledge Agreement, hereby
becomes a party to the Guaranty and Pledge Agreement as an Obligor thereunder
with the same force and effect as if originally named therein as an Obligor
and, without limiting the generality of the foregoing, hereby expressly assumes
all obligations and liabilities of an Obligor thereunder and expressly grants
to the Administrative Agent, for the benefit of the Guaranteed Creditors, a
security interest in all Collateral owned by such Additional Obligor to secure
all of such Additional Obligor’s obligations and liabilities thereunder.  The information set forth in Annex 1-A hereto
is hereby added to the information set forth in Schedules 1 through 4 to the
Guaranty and Pledge Agreement.  The
Additional Obligor hereby represents and warrants that each of the
representations and warranties contained in ARTICLE IV of the Guaranty and
Pledge Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.

 

1

 

2.             Governing
Law.  This Assumption
Agreement shall be governed by, and construed in accordance with, the laws of
the State of Texas.

 

IN WITNESS WHEREOF,
the undersigned has caused this Assumption Agreement to be duly executed and
delivered as of the date first above written.

 

	
   

  	
  [ADDITIONAL OBLIGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

2

 

Annex II

 

Supplement

 

SUPPLEMENT, dated as
of
[                 ],
200[   ], made by
[                 ],
a
[                 ]
(the “Additional Pledgor”), in favor of
BNP PARIBAS, as administrative agent (in such capacity, the “Administrative Agent”) for the Guaranteed
Creditors (used herein as defined in the Guaranty and Pledge Agreement referred
to below).  All capitalized terms not
defined herein shall have the meaning ascribed to them in such Credit Agreement.

 

W I T N E S S E T H:

 

WHEREAS, Whittier
Energy Corporation, a Nevada corporation (the “Borrower”),
the Administrative Agent, and certain financial institutions have entered into
an Credit Agreement, dated as of June 15, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the “Credit Agreement”);

 

WHEREAS, in
connection with the Credit Agreement, the Borrower and certain of its
Affiliates (other than the Additional Pledgor) have entered into an Guaranty
and Pledge Agreement, dated as of June 15, 2005 (as amended, restated,
supplemented or otherwise modified from time to time, the “Guaranty and Pledge Agreement”) in favor of
the Administrative Agent for the benefit of the Guaranteed Creditors;

 

WHEREAS, the Credit
Agreement requires the Additional Pledgor to pledge the Equity Interests
described hereto on Schedule 2-S; and

 

WHEREAS, the
Additional Pledgor has agreed to execute and deliver this Supplement in order
to pledge such Equity Interests;

 

NOW, THEREFORE, IT
IS AGREED:

 

1.             Guaranty
and Pledge Agreement.  By
executing and delivering this Supplement, the Additional Pledgor, as provided
in Section 9.13 of the Guaranty and Pledge Agreement, hereby becomes a
party to the Guaranty and Pledge Agreement as an Obligor thereunder with the
same force and effect as if originally named as an Obligor therein, and without
limiting the generality of the foregoing, hereby pledges and grants a security
interest in (a) the securities described or referred to in Schedule 2-S
and (b) (i) the certificates or instruments, if any, representing
such securities, (ii) all dividends (cash, Equity Interests or otherwise),
cash, instruments, rights to subscribe, purchase or sell and all other rights
and Property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such securities, (iii) all
replacements, additions to and substitutions for any of the Property referred
to in this definition, including, without limitation, claims against third
parties, (iv) the proceeds, interest, profits and other income of or on
any of the Property referred to in this definition, (v) all security
entitlements in respect of any of the foregoing, if any, (vi) all books
and records relating to any of the Property referred to in this definition and (vii) all
proceeds of any of the foregoing (collectively, the “Collateral”).  Upon execution of this Supplement, such

 

1

 

securities will constitute “Pledged
Securities” for purposes of the Guaranty and Pledge Agreement with the same
force and effect as if originally listed on Schedule 2 thereto and,
without limiting the generality of the foregoing, the Additional Pledgor hereby
expressly assumes all obligations and liabilities of a Pledgor thereunder and
expressly grants to the Administrative Agent, for the benefit of the Guaranteed
Creditors, a security interest in all Collateral owned by such Additional
Pledgor to secure all of such its obligations and liabilities thereunder.  The information set forth in Schedule 2-S
hereto is hereby added to the information set forth in Schedule 2 to the
Guaranty and Pledge Agreement.  The
Additional Pledgor hereby represents and warrants that each of the
representations and warranties contained in ARTICLE IV of the Guaranty and
Pledge Agreement is true and correct on and as the date hereof (after giving
effect to this Supplement) as if made on and as of such date.

 

2.             Governing
Law.  This Supplement shall be
governed by, and construed in accordance with, the laws of the State of Texas.

 

IN WITNESS WHEREOF,
the undersigned has caused this Supplement to be duly executed and delivered as
of the date first above written.

 

	
   

  	
  [ADDITIONAL PLEDGOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

2EXHIBIT 10.3

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this
“Agreement”) is made and entered into
as of June 15, 2005, by and among Whittier Energy Corporation, a Nevada
corporation (the “Company”), on the one hand,
and Friedman, Billings, Ramsey & Co., Inc., a Delaware
corporation (“FBR”), for the benefit of the
Holders (as hereinafter defined), on the other hand.

 

W
I T N E S S E T H :

 

WHEREAS, the Company and FBR entered into that
certain Placement Agreement dated as of June 7, 2005 (the “Placement Agreement”), in connection
with which on June 15, 2005, the Company sold 852,912 newly issued shares (the
“Preferred Shares”) of its Series A
8% Automatically Convertible Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), each
of which is convertible into 30 shares (the “Common
Shares”) of the Company’s common stock, par value $0.001 (the “Common Stock”), with FBR acting as
placement agent;

 

WHEREAS, to induce FBR to enter into the
Placement Agreement, the Company has agreed to provide the registration rights
provided for in this Agreement for the holders of Registrable Shares (as
defined below); and

 

WHEREAS, the execution of this Agreement is a
condition to the closing of the transactions contemplated by the Placement
Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants of the parties hereto,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:

 

1.                                       Definitions.  As used in this Agreement, the
following terms shall have the following meanings:

 

“Additional Payments”
is defined in Section 7(a).

 

“Additional Shares”
means shares or other securities issued in respect of the Shares by
reason of or in connection with any stock dividend, stock distribution, stock
split or similar issuance.

 

“Agreement” is
defined in the introductory paragraph of this Agreement.

 

“Affiliate” means,
as to any specified Person, (i) any Person that directly, or
indirectly through one or more intermediaries, controls or is controlled by, or
is under common control with, the specified Person, (ii) any executive
officer, director, trustee or general partner of the specified Person and (iii) any
legal entity for which the specified Person acts as an executive officer,
director, trustee or general partner. 
For purposes of this definition, “control” (including the correlative
meanings of the terms “controlled by” and “under common control with”), as used
with respect to any Person, means the possession, directly, or indirectly
through one or more intermediaries, of the power to direct or cause the
direction of the management and policies

 

1

 

of such Person, whether by contract, through the
ownership of voting securities, partnership interests or other equity interests
or otherwise.

 

“Business
Day” means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in New York, New York
are authorized or obligated by applicable law, regulation or executive order to
close.

 

“Closing
Date” means the Closing Date as defined in the Placement
Agreement.

 

“Commission”
means the Securities and Exchange Commission.

 

“Common Shares” is defined in
the first recital clause of
this Agreement.

 

“Common
Stock” is defined in the first recital clause of this Agreement.

 

“Company”
is defined in the introductory paragraph of this Agreement, and any
successor thereto.

 

“Controlling
Person” is defined in Section 6(a).

 

“End of
Suspension Notice” is defined in Section 5(b).

 

“Exchange
Act” means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated by the Commission
pursuant thereto.

 

“FBR”
is defined in the introductory paragraph of this Agreement, and any
successor thereto.

 

“FBR Merchant Banking” means Friedman,
Billings, Ramsey Group, Inc. and any successor thereto.

 

“FBR Mandatory Shelf Registration Statement”
is defined in Section 2(a).

 

“Holder”
means each record owner of any Registrable Shares from time to time but
including Preferred Shares before December 31, 2005.

 

“Holders Mandatory Shelf Registration
Statement” is defined in Section 2(a).

 

“Indemnified
Party” is defined in Section 6(c).

 

“Indemnifying
Party” is defined in Section 6(c).

 

“Liabilities”
is defined in Section 6(a).

 

“Mandatory
Registration Statement” means any Mandatory Shelf
Registration Statement or any Subsequent Shelf Registration Statement.

 

2

 

“Mandatory Shelf Registration Statement”
is defined in Section 2(a).

 

“NASD”
means the National Association of Securities Dealers, Inc.

 

“Person”
means an individual, limited liability company, partnership,
corporation, trust, unincorporated organization, government or agency or
political subdivision thereof, or any other legal entity.

 

“Piggyback
Registration Statement” is defined in Section 2(b).

 

“Placement
Agreement” is defined in the first recital clause of this
Agreement.

 

“Preferred Shares” is defined in the first recital clause of this Agreement.

 

“Prior
Holder” means an investor a party to or other beneficiary
of the Registration Rights Agreement, dated September 9, 2003, between the
Company and Whittier Energy Company, the Registration Rights Agreement dated June 16,
2004, among the Company, Texas Independent Exploration Limited, Gulfcoast
Acquisitions Limited, and Frederick W. Zimmerman, or any Subscription Agreement
related to the Company’s June 2004 private placement of Common Stock and
warrants to purchase Common Stock, between the Company and the investors party
thereto, in each case that has not waived its rights under the applicable
agreement and holding “Registrable Securities” or “Registrable Common Stock”,
as the case may be (as defined in the applicable agreement).

 

“Prospectus”
means the prospectus included in any Registration Statement, including
any preliminary prospectus, and all other amendments and supplements to any
such prospectus, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference, if any, in
such prospectus.

 

“Purchaser
Indemnitee” is defined in Section 6(a).

 

“Registrable
Shares” means each of (a) the Common Shares issued
or issuable upon conversion of the Preferred Shares and any Additional Shares
in respect thereof, and (b) if and only if the Preferred Shares have not
automatically converted into Common Stock by December 31, 2005, the
Preferred Shares and any Additional Shares in respect thereof, in each case, upon
original issuance thereof other than the Common Shares which are Registrable
Shares from the date hereof, and at all times subsequent thereto, including
upon the transfer thereof by the original holder or any subsequent holder,
until, in the case of any such Shares or Additional Shares, as applicable, the
earliest to occur of:

 

(i)                                     the date on which they have been sold pursuant to a
Registration Statement or sold pursuant to Rule 144;

 

(ii)                                  the date on which they are saleable, in the opinion
of counsel to the Company, without registration under the Securities Act,
pursuant to Rule 144(k);

 

3

 

(iii)                               the date on which they are saleable, without
restriction, pursuant to an available exemption from registration under the
Securities Act; or

 

(iv)                              the date on which they are sold to the Company or
its subsidiaries.

 

“Registration
Default” is defined in Section 7(a).

 

“Registration
Expenses” means any and all expenses incident to the
performance of or compliance with this Agreement, including:  (i) all Commission, securities exchange,
NASD registration, listing, inclusion and filing fees (including those of FBR,
FBR Merchant Banking and Holders associated or affiliated with FBR), (ii) all
fees and expenses incurred in connection with compliance with international,
federal or state securities or blue sky laws (including any registration,
listing and filing fees and reasonable fees and disbursements of counsel in
connection with blue sky qualification of any of the Registrable Shares and the
preparation of a blue sky memorandum and compliance with the rules of the
NASD), (iii) all expenses of any Persons in preparing or assisting in
preparing, word processing, duplicating, printing, delivering and distributing
any Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements, certificates
and any other documents relating to the performance under and compliance with
this Agreement, (iv) all fees and expenses incurred in connection with the
listing or inclusion of any of the Registrable Shares on the NASDAQ Stock
Market pursuant to Section 4(n) of this Agreement, (v) the fees and
disbursements of counsel for the Company and of the independent public accountants
of the Company (including the expenses of any special audit and “cold comfort”
letters required by or incident to such performance), and (vi) any fees
and disbursements customarily paid in issues and sales of securities (including
the fees and expenses of any experts retained by the Company in connection with
any Registration Statement), provided,
however, that Registration Expenses shall
exclude brokers’ or underwriters’ discounts and commissions and transfer taxes,
if any, relating to the sale or disposition of Registrable Shares by a Holder
and the fees and disbursements of any counsel to the Holders other than as
provided for in clause (v) above.

 

“Registration
Statement” means any Mandatory Registration Statement or
Piggyback Registration Statement.

 

“Rule 144”,
“Rule 158”, “Rule 415”,
or “Rule 424”,
respectively, means such specified rule promulgated by the
Commission pursuant to the Securities Act, as such rule may be amended
from time to time, or any similar rule or regulation hereafter adopted by
the Commission as a replacement thereto having substantially the same effect as
such rule.

 

“Securities
Act” means the Securities Act of 1933, as amended, and
the rules and regulations promulgated by the Commission thereunder.

 

“Series A
Preferred Stock” is defined in the first recital clause of this
Agreement.

 

“Shares”
means the Common Shares and the Preferred Shares.

 

4

 

“Subsequent
Shelf Registration Statement” is defined in Section 2(c).

 

“Suspension
Event” is defined in Section 5(b).

 

“Suspension
Notice” is defined in Section 5(b).

 

“Underwritten
Offering” means a sale of securities of the Company to an
underwriter or underwriters for reoffering to the public.

 

2.                                       Registration Rights.

 

(a)                                  Mandatory Shelf Registration.  As set forth in Section 4,
the Company agrees to file with the Commission as soon as reasonably
practicable, but in no event later than 60 days following the Closing Date, (A) a
shelf registration statement on Form SB-2 or such other form under the
Securities Act then available to the Company providing for the resale pursuant
to Rule 415 from time to time by the Holders, other than those Holders
covered by (B), of any and all of such Holders’ Registrable Shares consisting
of (i) Common Shares and all Additional Shares in respect thereof, and (ii) if
and only if the Preferred Shares have not automatically converted into Common
Stock by December 31, 2005, the Preferred Shares and all Additional Shares
issued in respect thereof (in each case including any
Additional Shares that are issued prior to the effectiveness of such shelf
registration statement) (including the Prospectus, amendments and supplements
to such registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
the “Holders Mandatory Shelf Registration Statement”),
and (B) a shelf registration statement on Form SB-2 or such other
form under the Securities Act then available to the Company providing for the
resale pursuant to Rule 415 from time to time by FBR, FBR Merchant Banking
and any Holder that is associated or affiliated with FBR of any and all of such
Holders’ Registrable Shares consisting of (i) Common Shares and all
Additional Shares in respect thereof, and (ii) if and only if the
Preferred Shares have not automatically converted into Common Stock by December 31,
2005, the Preferred Shares and all Additional Shares issued in respect thereof
(in each case including any Additional Shares
that are issued prior to the effectiveness of such shelf registration
statement) (including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
the “FBR Mandatory Shelf Registration Statement”;
both the Holders Mandatory Shelf Registration and the FBR Mandatory Shelf
Registration Statement may be referred to herein without distinction as a “Mandatory Shelf Registration Statement”).  The fact that the Preferred Shares have not automatically
converted into Common Stock by December 31, 2005 shall not affect the
Company’s continuing obligation to use its best efforts to cause such automatic
conversion or to register the sale of such shares hereunder.  If
the Company has an effective Holders Mandatory Shelf Registration Statement on Form SB-2
under the Securities Act and becomes eligible to use Form S-3 or such
other short-form

 

5

 

registration statement form under the Securities Act,
the Company shall promptly give notice of such eligibility to the Holders covered
thereby and may, or at the request of such Holders with a majority of such Registrable
Shares (on an as converted basis) shall, promptly convert such Holders Mandatory
Shelf Registration Statement on Form SB-2 to a Registration Statement on Form S-3
or such other short-form registration statement by means of a post-effective
amendment or otherwise, unless any Holder with Registrable Shares under the
initial Holders Mandatory Shelf Registration Statement notifies the Company
within 10 Business Days of receipt of the Company notice that such conversion would
interfere with its distribution of Registrable Shares already in progress and
provides a reasonable explanation therefor, in which case the Company will
delay the conversion of the Holders Mandatory Shelf Registration Statement for
a reasonable time after receipt of the first such notice, not to exceed 30 days
in the aggregate, for all Holders requesting such suspension (unless the
Company, at such time as the conversion from Form SB-2 to Form S-3 or
such other short-form registration statement may occur, would otherwise be
required to amend the Holders Mandatory Shelf Registration Statement and
require that Holders suspend sales under Section 4(i) or Section 5).  If
the Company has an effective FBR Mandatory Shelf Registration Statement on Form SB-2
under the Securities Act and becomes eligible to use Form S-3 or such
other short-form registration statement form under the Securities Act, the
Company shall promptly give notice of such eligibility to the Holders covered
thereby and may (unless FBR or FBR Merchant Banking reasonably objects), or at
the request of FBR or FBR Merchant Banking shall, promptly convert such FBR
Mandatory Shelf Registration Statement on Form SB-2 to a Registration
Statement on Form S-3 or such other short-form registration statement by
means of a post-effective amendment or otherwise.

 

(i)                                     Effectiveness and Scope.  The
Company shall use its commercially reasonable efforts to cause any Mandatory
Registration Statement to be declared effective by the Commission as soon as reasonably
practicable following such filing, and to remain effective until the date on
which all Shares and any Additional Shares in respect thereof cease to be Registrable
Shares.  The Company may include any
shares of Common Stock owned by a Prior Holder (including upon exercise or
conversion) in the Holders Mandatory Shelf Registration Statement, but not in
the FBR Mandatory Shelf Registration Statement. 
Other than Prior Holders, no other Person would have the right to
include securities on a Mandatory Shelf Registration Statement.  Any Mandatory Shelf Registration Statement
shall provide for the resale from time to time, and pursuant to any method or
combination of methods legally available (including an Underwritten Offering, a
direct sale to purchasers, a sale through brokers or agents, or a sale over the
internet) by the Holders of any and all Registrable Shares.

 

(ii)                                  Underwriting.  If any Holder proposes to conduct an
Underwritten Offering under a Mandatory Shelf Registration Statement, such
Holder shall advise the Company, all other Holders, if applicable, and any
Prior Holders, if applicable, whose securities are included in such Mandatory
Shelf Registration Statement, of the managing
underwriters for such proposed Underwritten Offering (which may be FBR or an
Affiliate thereof), such managing underwriters to be subject to the approval of
the Company, not to be unreasonably withheld. 
In such event, the Company shall enter into an underwriting agreement in
customary form with the managing underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section 6,
and shall take all such other reasonable actions as are requested by the
managing underwriter in order to expedite or facilitate the registration and
disposition of the Registrable Shares included in such Underwritten Offering;
provided, however, that the Company shall be required to cause appropriate
officers of the Company or its Affiliates to participate in a “road show” or
similar marketing effort being conducted by such underwriter with respect to
such Underwritten Offering only if the Holders reasonably anticipate gross
proceeds from such Underwritten Offering of at least $10 million.

 

6

 

All Holders proposing to distribute their Registrable
Shares through such Underwritten Offering and, if a Prior Holder, if
applicable, elects to distribute its shares of Common Stock through such
Underwritten Offering, such Prior Holder, shall enter
into an underwriting agreement in customary form with the managing underwriters
selected for such underwriting and complete and execute any questionnaires,
powers of attorney, indemnities, securities escrow agreements and other
documents reasonably required under the terms of such underwriting, and furnish
to the Company such information in writing as the Company may reasonably
request for inclusion in the Registration Statement; provided, however, that neither any Holder nor any Prior
Holder, if applicable, shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements as are customary and reasonably
requested by the underwriters. 
Notwithstanding any other provision of this Agreement, with respect to
an Underwritten Offering in connection with the Holders Mandatory Shelf
Registration Statement, if the managing underwriters determine in good faith
that marketing factors require a limitation on the number of shares to be
included in such Underwritten Offering, then the managing underwriters may
exclude shares (including Registrable Shares) from the Underwritten Offering, and
any shares included in the Underwritten Offering shall be allocated first,
to each of the Holders requesting inclusion of their Registrable Shares in such
Underwritten Offering on a pro rata
basis based on the total number of Registrable Shares requested to be included,
and second, to any Prior Holders requesting inclusion of their shares in
such Underwritten Offering.  In the case
of the FBR Mandatory Shelf Registration Statement, such exclusion shall be
negotiated by FBR, FBR Merchant Banking and the underwriters.

 

(iii)                               Selling Stockholder
Questionnaires. Each Holder agrees, by its acquisition of Preferred Shares,
that if such Holder wishes to sell Registrable Shares pursuant to the Mandatory
Shelf Registration Statement and related Prospectus, it will do so only in
accordance with this Section 2(a)(iii). Each Holder wishing to sell
Registrable Shares pursuant to a Mandatory Shelf Registration Statement and
related Prospectus agrees to deliver a written notice, substantially in form
and substance of Annex A (a “Notice and Questionnaire”),
to the Company. The Company shall mail the Notice and Questionnaire to the
Holders no later than the date of initial filing of the Mandatory Shelf
Registration Statement with the Commission. No Holder shall be entitled to be
named as a selling securityholder in the Mandatory Shelf Registration Statement
as of the initial effective date of the Mandatory Shelf Registration Statement,
and no Holder may use the Prospectus forming a part thereof for resales of
Registrable Shares at any time, unless such Holder has returned a completed and
signed Notice and Questionnaire to the Company by the deadline for response set
forth therein; provided, however, Holders shall have at least 20 calendar days
from the date on which the Notice and Questionnaire is first mailed to such
Holders to return a completed and signed Notice and Questionnaire to the
Company. Notwithstanding the foregoing, (x) upon the request of any Holder that
did not return a Notice and Questionnaire on a timely basis or did not receive
a Notice and Questionnaire because it was a subsequent transferee of
Registrable Shares after the Company mailed the Notice and Questionnaire, the
Company shall distribute a Notice and Questionnaire to such Holders at the
address set forth in the request and (y) upon receipt of a properly completed
Notice and Questionnaire from such Holder, the Company shall use all
commercially reasonable efforts to name such Holder as a selling securityholder
in the Mandatory Shelf Registration Statement by means of a pre-effective
amendment, by means of a post-effective amendment or, if permitted by the
Commission, by means of a Prospectus supplement to the Mandatory Shelf
Registration

 

7

 

Statement; provided, however, that the Company will
have no obligation to add Holders to the Shelf Mandatory Registration Statement
as selling securityholders more frequently than one time per every 30 calendar
days.

 

(b)                                 Piggyback Registration.  If, after the date hereof,
the Company proposes to file a registration statement under the Securities Act
providing for a public offering of the Company’s securities, other than the
Holders Mandatory Shelf Registration Statement, the FBR Mandatory Shelf
Registration Statement or a registration statement on Form S-8 or Form S-4
or any similar form hereafter adopted by the Commission as a replacement
therefor (including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
the “Piggyback Registration Statement”),
the Company will notify each Holder of the proposed filing if clause (i) of
the following sentence applies, or only those affected Holders if clause (ii) or
(iii) of the following sentence applies. 
If (i) the Piggyback Registration Statement relates to an
Underwritten Offering, (ii) the applicable Mandatory Shelf Registration
Statement is not then effective or (iii) Registrable Shares eligible for
inclusion on a Mandatory Shelf Registration Statement when initially declared
effective were not included in the Mandatory Shelf Registration Statement (unless
such shares can and will be added to the Mandatory Registration Statement at
such time), then each Holder in the case of clause (i), and each such affected Holder
in the case of clause (ii) and (iii), shall be given an opportunity to
include in such Piggyback Registration Statement all or any part of such Holder’s
Registrable Shares.  Each such Holder
desiring to include in any such Piggyback Registration Statement all or part of
such Holder’s Registrable Shares shall, within ten days after delivery of the
above-described notice by the Company, so notify the Company in writing, and in
such notice shall inform the Company of the number of Registrable Shares such
Holder wishes to include in such Piggyback Registration Statement and provide,
as a condition to such inclusion, such information regarding itself, its Registrable
Shares and the intended method of disposition of such securities as is required
pursuant to Regulation S-K promulgated under the Securities Act to effect the
registration of the Registrable Shares. 
Any election by any Holder to include any Registrable Shares in such
Piggyback Registration Statement will not affect the inclusion of such
Registrable Shares in the Mandatory Shelf Registration Statement until such
Registrable Shares have been sold under the Piggyback Registration Statement; provided, however, that
at such time, the Company may remove from the Mandatory Shelf Registration
Statement the Registrable Shares sold pursuant to the Piggyback Registration
Statement.

 

(i)                                     Right to Terminate Piggyback Registration.  At any time, the Company may
terminate or withdraw any Piggyback Registration Statement referred to in this Section 2(b),
and without any obligation to any such Holder whether or not any Holder has
elected to include Registrable Shares in such registration.  The Company may suspend the effectiveness and
use of any Piggyback Registration Statement at any time for an unlimited amount
of time whether or not any Holder has elected to include Registrable Shares in
such registration.

 

(ii)                                  Underwriting.  The
Company shall advise the Holders of the managing underwriters for any Underwritten
Offering proposed under the Piggyback Registration Statement.  The right of any such Holder’s Registrable
Shares to be included in any Piggyback Registration Statement pursuant to this Section 2(b) shall
be conditioned upon such Holder’s

 

8

 

participation in such Underwritten Offering and the
inclusion of such Holder’s Registrable Shares in the Underwritten Offering to
the extent provided herein.  All Holders
proposing to distribute their Registrable Shares through such Underwritten
Offering shall enter into an underwriting agreement in customary form with the
managing underwriters selected for such underwriting and complete and execute
any questionnaires, powers of attorney, indemnities, securities escrow
agreements and other documents reasonably required under the terms of such
underwriting, and furnish to the Company such information in writing as the Company
may reasonably request for inclusion in the Registration Statement; provided, however, that no Holder shall be required to
make any representations or warranties to or agreements with the Company or the
underwriters other than representations, warranties or agreements as are
customary and reasonably requested by the underwriters.  Notwithstanding any other provision of this
Agreement, if the managing underwriters determine in good faith that marketing
factors require a limitation on the number of shares to be included, then the
managing underwriters may exclude shares (including Registrable Shares) from
the Piggyback Registration Statement and the Underwritten Offering, and any
Shares included in the Piggyback Registration Statement and the Underwritten
Offering shall be allocated, first, to the Company, and second,
to each of the Holders and the Prior Holder(s) requesting inclusion of their
Registrable Shares (or equivalent term under the applicable agreement with such
Prior Holder) in such Piggyback Registration Statement on a pro rata basis based on the total number of such shares
requested to be included.  If any Holder
disapproves of the terms of any Underwritten Offering, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least 10 Business Days prior to the effective date of the
Piggyback Registration Statement.  Any
Registrable Shares excluded or withdrawn from such Underwritten Offering shall
be excluded and withdrawn from the Piggyback Registration Statement.

 

(iii)                               Hold-Back Agreement.  By
electing to include Registrable Shares in the Piggyback Registration Statement,
if any, the Holder shall be deemed to have agreed not to effect any sale or
distribution of securities of the Company of the same or similar class or
classes of the securities included in the Registration Statement or any
securities convertible into or exchangeable or exercisable for such securities,
including a sale pursuant to Rule 144 under the Securities Act, during such
periods as reasonably requested (but in no event for a period longer than 60
days following the effective date of the Piggyback Registration Statement,
provided each of the executive officers and directors of the Company that hold
shares of Common Stock of the Company or securities convertible into or
exchangeable or exercisable for shares of Common Stock of the Company are
subject to the same restriction for the entire time period required of the
Holders hereunder) by the representatives of the underwriters, if an
Underwritten Offering.

 

(iv)                              Mandatory Shelf Registration not Impacted by
Piggyback Registration Statement. 
The Company’s obligation to file any Mandatory Shelf
Registration Statement shall not be affected by the filing or effectiveness of
the Piggyback Registration Statement.

 

(c)                                  Subsequent Shelf Registration for Additional
Shares Issued after Effectiveness of the Mandatory Shelf Registration Statement.  If any Additional Shares are issued or
distributed to Holders after the effectiveness of the applicable Mandatory
Shelf Registration Statement, or such Additional Shares were otherwise not
included in a prior Registration Statement, then the Company shall as soon as
practicable file an additional shelf registration statement (including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including

 

9

 

pre- and post-effective amendments, all exhibits
thereto and all material incorporated by reference or deemed to be incorporated
by reference, if any, in such registration statement, a “Subsequent
Shelf Registration Statement”) covering such Additional Shares
on behalf of the Holders thereof (other than FBR, FBR Merchant Banking and
Holders affiliated or associated with FBR) and/or a separate Subsequent Shelf
Registration Statement solely on behalf of FBR, FBR Merchant Banking and
Holders affiliated or associated with FBR, as the case may be, in the same
manner, and subject to the same provisions in this Agreement as each Mandatory
Shelf Registration Statement.

 

(d)                                 Expenses.  The Company shall pay all Registration
Expenses (including those of FBR, FBR Merchant Banking and Holders affiliated
or associated with FBR) in connection with the registration of the Registrable
Shares pursuant to this Agreement.  Each
Holder participating in a registration pursuant to this Section 2 shall
bear such Holder’s proportionate share (based on the total number of
Registrable Shares sold in such registration) of all discounts and commissions
payable to underwriters or brokers and all transfer taxes in connection with a
registration of Registrable Shares pursuant to this Agreement and any other
expense of the Holders not specifically allocated to the Company pursuant to
this Agreement relating to the sale or disposition of such Holder’s Registrable
Shares pursuant to any Registration Statement.

 

3.                                       Rule 144 Reporting.

 

With a view to making available the benefits of certain rules and
regulations of the Commission that may permit the sale of the Registrable
Shares to the public without registration, the Company agrees to, so long as
any Holder owns any Registrable Shares:

 

(a)                                  make
and keep public information available, as those terms are understood and
defined in Rule 144(c) under the Securities Act;

 

(b)                                 use
its commercially reasonable efforts to file with the Commission in a timely
manner all reports and other documents required to be filed by the Company
under the Securities Act and the Exchange Act; and

 

(c)                                  furnish
to any Holder promptly upon request a written statement by the Company as to
its compliance with the reporting requirements of Rule 144 and of the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company, and take such
reasonable further actions consistent with this Section 3, as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such Registrable Shares without
registration.

 

4.                                       Registration Procedures.

 

In connection with the obligations of the Company with
respect to any registration pursuant to this Agreement, the Company shall:

 

(a)                                  notify
FBR, in writing, at least 10 Business Days prior to filing a Registration
Statement, of its intention to file a Registration Statement with the
Commission and, at least 5 Business Days prior to filing, provide a copy of the
Registration Statement to FBR; prepare and file with the Commission, as
specified in this Agreement, each Registration Statement, which

 

10

 

Registration Statement shall comply as to form in all
material respects with the requirements of the applicable form and include all
financial statements required by the Commission to be filed therewith and shall
be acceptable to FBR; notify FBR at least 5 Business Days prior to filing of
any amendment or supplement to such Registration Statement and, at least 3
Business Days prior to filing, provide a copy of such amendment or supplement
to FBR for review and comment; promptly following receipt from the Commission,
provide to FBR copies of any comments made by the staff of the Commission
relating to such Registration Statement and the Company’s responses thereto for
review and comment; and use its commercially reasonable efforts to cause any
Mandatory Registration Statement to become and remain effective as set forth in
Section 2(a)(i); provided, however, that the Company shall not be
required to cause any Piggyback Registration Statement to become or remain
effective;

 

(b)                                 subject
to Section 4(i), (i) prepare and file with the Commission such
amendments and post-effective amendments to each such Registration Statement as
may be necessary to keep such Registration Statement effective for the period
described in Section 2(a)(i), (ii) cause each Prospectus contained
therein to be supplemented by any required Prospectus supplement, and as so
supplemented to be filed pursuant to Rule 424 or any similar rule that
may be adopted under the Securities Act, and (iii) comply in all material
respects with the provisions of the Securities Act with respect to the
disposition of all securities covered by each Registration Statement during the
applicable period in accordance with the intended method or methods of
distribution by the selling Holders thereof;

 

(c)                                  furnish
to the Holders, without charge, as many copies of each Prospectus, including
each preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder may reasonably request, in order to facilitate
the public sale or other disposition of the Registrable Shares; the Company hereby
consenting to the use of such Prospectus, including each preliminary
Prospectus, by the Holders, if any, in connection with the offering and sale of
the Registrable Shares covered by any such Prospectus;

 

(d)                                 use
its commercially reasonable efforts to register or qualify, or obtain exemption
from registration or qualification for, all Registrable Shares by the time the
applicable Registration Statement is declared effective by the Commission under
all applicable state securities or “blue sky” laws of such domestic
jurisdictions as FBR or any Holder covered by a Registration Statement shall
reasonably request in writing, keep each such registration or qualification or
exemption effective during the period such Registration Statement is required
to be kept effective pursuant to Section 4(a) and do any and all
other acts and things that may be reasonably necessary or advisable to enable such
Holder to consummate the disposition in each such jurisdiction of such
Registrable Shares owned by such Holder; provided, however, that the
Company shall not be required to (i) qualify generally to do business in
any jurisdiction or to register as a broker or dealer in such jurisdiction
where it would not otherwise be required to qualify but for this Section 4(d),
(ii) subject itself to taxation in any such jurisdiction, or (iii) submit
to the general service of process in any such jurisdiction;

 

(e)                                  use
its commercially reasonable efforts to cause all Registrable Shares covered by
such Registration Statement to be registered and approved by such other
domestic governmental agencies or authorities, if any, as may be necessary to
enable the Holders thereof to consummate the disposition of such Registrable
Shares;

 

11

 

(f)                                    notify
FBR and each Holder with Registrable Shares covered by a Registration Statement
promptly and, if requested by FBR or any such Holder, confirm such advice in
writing (i) when such Registration Statement has become effective and when
any post-effective amendments and supplements thereto become effective, (ii) of
the issuance by the Commission or any state securities authority of any stop
order suspending the effectiveness of such Registration Statement or the
initiation of any proceedings for that purpose, (iii) of any request by
the Commission or any other federal or state governmental authority for
amendments or supplements to such Registration Statement or related Prospectus
or for additional information, and (iv) of the happening of any event
during the period such Registration Statement is effective as a result of which
such Registration Statement or the related Prospectus or any document
incorporated by reference therein contains any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading (which information
shall be accompanied by an instruction to suspend the use of the Registration
Statement and the Prospectus until the requisite changes have been made);

 

(g)                                 during
the period of time referred to in Section 2(a)(i), use its commercially
reasonable efforts to avoid the issuance of, or if issued, to obtain the
withdrawal of, any order enjoining or suspending the use or effectiveness of a
Registration Statement or suspending the qualification (or exemption from
qualification) of any of the Registrable Shares for sale in any jurisdiction,
as promptly as practicable;

 

(h)                                 upon
request, furnish to each requesting Holder with Registrable Shares covered by a
Registration Statement, without charge, at least one conformed copy of such
Registration Statement and any post-effective amendment or supplement thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested);

 

(i)                                     except
as provided in Section 5, upon the occurrence of any event contemplated by
Section 4(f)(iv), use its commercially reasonable efforts to promptly
prepare a supplement or post-effective amendment to a Registration Statement or
the related Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares, such Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, and, upon
request, promptly furnish to each requesting Holder covered by such
Registration Statement a reasonable number of copies of each such supplement or
post-effective amendment;

 

(j)                                     if
requested by the representative of the underwriters, if any, or any Holders of
Registrable Shares being sold in connection with an Underwritten Offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment such
material information as the representative of the underwriters, if any, or such
Holders indicate relates to them or otherwise reasonably request be included
therein and (ii) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment;

 

12

 

(k)                                  in
the case of an Underwritten Offering, use its commercially reasonable efforts
to furnish or caused to be furnished to each Holder of Registrable Shares
covered by such Registration Statement and the underwriters a signed
counterpart, addressed to each such Holder and the underwriters, of:  (i) an opinion of counsel for the
Company, dated the date of each closing under the underwriting agreement,
reasonably satisfactory to the underwriters; (ii) a “comfort” letter,
dated the effective date of such Registration Statement and the date of each
closing under the underwriting agreement, signed by the independent public
accountants who have certified the Company’s financial statements included in
such Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included therein) and
with respect to events subsequent to the date of such financial statements, as
are customarily covered in accountants’ letters delivered to underwriters in
underwritten public offerings of securities, and such other financial matters
as the underwriters may reasonably request and customarily obtained by underwriters
in underwritten offerings, provided that, to be an addressee of the comfort
letter, each Holder may be required to confirm that it is in the category of
persons to whom a comfort letter may be delivered in accordance with applicable
accounting literature; and (iii) a “comfort” letter, dated the effective
date of such Registration Statement and the date of each closing under the
underwriting agreement, signed by the independent petroleum engineering
consultants who have evaluated the Company’s oil and gas reserves included in
such Registration Statement, covering substantially the same matters with
respect to such Registration Statement (and the Prospectus included therein)
and with respect to events subsequent to the date of its evaluation of such oil
and gas reserves, as are customarily covered in engineers’ letters delivered to
underwriters in underwritten public offerings of securities, and such other related
matters as the underwriters may reasonably request and customarily obtained by
underwriters in underwritten offerings.

 

(l)                                     enter
into customary agreements (including in the case of an Underwritten Offering,
an underwriting agreement in customary form) and take all other action in
connection therewith to expedite or facilitate the distribution of the
Registrable Shares included in such Registration Statement and, in the case of
an Underwritten Offering, make representations and warranties to the
underwriters in such form and scope as are customarily made by issuers to
underwriters in underwritten offerings and confirm the same to the extent
customary if and when requested;

 

(m)                               in
connection with an Underwritten Offering, use its commercially reasonable
efforts to make available for inspection by the representative of any
underwriters participating in any disposition pursuant to a Registration
Statement, all financial and other records, pertinent corporate documents and
properties of the Company and cause the respective officers, directors and
employees of the Company to supply all information reasonably requested by any
such representatives, the representative of the underwriters, counsel thereto
or accountants in connection with a Registration Statement; provided, however, that such
records, documents or information that the Company determines, in good faith,
to be confidential and notifies such representatives, representative of the
underwriters, counsel thereto or accountants are confidential shall not be
disclosed by the representatives, representative of the underwriters, counsel
thereto or accountants unless (i) the disclosure of such records,
documents or information is necessary to avoid or correct a misstatement or
omission in a Registration Statement or Prospectus, (ii) the release of
such records, documents or information is ordered pursuant to a subpoena or
other order from a court of competent jurisdiction, or (iii) such

 

13

 

records, documents or information have been generally
made available to the public; provided further, that to the extent practicable,
the foregoing inspection and information gathering shall be coordinated on
behalf of the Holders and the other parties entitled thereto by one counsel
designated by and on behalf of the Holders and the other parties, which counsel
the Company determines in good faith is reasonably acceptable;

 

(n)                                 use
its commercially reasonable efforts (including seeking to cure in the Company’s
listing or inclusion application any deficiencies cited by the exchange or
market) to list or include all Registrable Shares on any securities exchange or
the Nasdaq Stock Market on which the Common Stock is then listed or included
and thereafter maintain the listing on such exchange or market;

 

(o)                                 prepare
and file in a timely manner all documents and reports required by the Exchange
Act and, to the extent the Company’s obligation to file such reports pursuant
to Section 15(d) of the Exchange Act expires prior to the expiration
of the effectiveness period of the Registration Statement as required by Section 2(a)(i),
the Company shall register the Registrable Shares under the Exchange Act and
shall maintain such registration through the effectiveness period required by Section 2(a)(i);

 

(p)                                 (i) otherwise
use its commercially reasonable efforts to comply in all material respects with
all applicable rules and regulations of the Commission, (ii) make
generally available to its stockholders, as soon as reasonably practicable,
earnings statements covering at least 12 months that satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 thereunder, and (iii) delay filing
any Registration Statement or Prospectus or amendment or supplement to such
Registration Statement or Prospectus to which any Holder of Registrable Shares
covered by any such Registration Statement shall have reasonably objected on
the grounds that such Registration Statement or Prospectus or amendment or
supplement does not comply in all material respects with the requirements of
the Securities Act, such Holder having been furnished with a copy thereof at
least three Business Days before the filing thereof, provided that the Company
may file such Registration Statement or Prospectus or amendment or supplement
following such time as the Company shall have made a good faith effort to
resolve any such issue with the objecting Holder and shall have advised the
Holder in writing of its reasonable belief that such filing complies in all
material respects with the requirements of the Securities Act;

 

(q)                                 cause
to be maintained a registrar and transfer agent for all Registrable Shares
covered by any Registration Statement from and after a date not later than the
effective date of such Registration Statement; and

 

(r)                                    in
connection with any sale or transfer of the Registrable Shares (whether or not
pursuant to a Registration Statement) that will result in the securities being
delivered no longer constituting Registrable Shares, cooperate with the Holders
and the representative of the underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing the Registrable Shares to
be sold, which certificates shall not bear any transfer restrictive legends
(other than as required by the Company’s charter), and to enable such
Registrable Shares to be in such denominations and registered in such names as
the representative of the underwriters, if

 

14

 

any, or the Holders may request at least three
Business Days prior to any sale of the Registrable Shares.

 

The Company may require the Holders to furnish to the
Company such information regarding the proposed distribution by such Holder as
the Company may from time to time reasonably request in writing or as shall be
required to effect the registration of the Registrable Shares, and no Holder
shall be entitled to be named as a selling stockholder in any Registration
Statement and no Holder shall be entitled to use the Prospectus forming a part
thereof if such Holder does not provide such information to the Company.  Each Holder further agrees to furnish
promptly to the Company in writing all information required from time to time
to make the information previously furnished by such Holder not misleading.

 

Each Holder agrees that, upon receipt of any notice
from the Company of the happening of any event of the kind described in Section 4(f)(ii),
4(f)(iii) or 4(f)(iv), such Holder will immediately discontinue
disposition of Registrable Shares pursuant to a Registration Statement until (i) any
such stop order is vacated or (ii) if an event described in Section 4(f)(iii) or
4(f)(iv) occurs, such Holder’s receipt of the copies of the supplemented
or amended Prospectus.  If so directed by
the Company, such Holder will deliver to the Company (at the reasonable expense
of the Company) all copies in its possession, other than permanent file copies
then in such Holder’s possession, of the Prospectus covering such Registrable
Shares current at the time of receipt of such notice.

 

5.                                       Suspension Period.

 

(a)                                  Subject
to the provisions of this Section 5 and a good faith determination by a
majority of the Board of Directors of the Company that it is in the best
interests of the Company to suspend the use of any Mandatory Registration
Statement, following the effectiveness of such Mandatory Registration Statement
(and the filings with any international, federal or state securities
commissions), the Company, by written notice to FBR and the affected Holders,
may direct such Holders to suspend sales of the Registrable Shares pursuant to
such Mandatory Registration Statement for such times as the Company reasonably
may determine is necessary and advisable (but in no event for more than 45 days
in any 90-day period or more than 60 days in any 12-month period), if any of
the following events shall occur: pending discussions relating to, or the
consummation of, a transaction or the occurrence of an event (x) that would
require additional disclosure of material non-public information by the Company
in the Mandatory Registration Statement (or such filings) not otherwise
required to be disclosed under applicable law and which has not been so
disclosed, (y) as to which the Company has a bona fide business purpose for
preserving confidentiality, or (z) that renders the Company unable to comply
with Commission requirements, in each case under circumstances that would make
it impractical or inadvisable to promptly amend or supplement such Mandatory
Registration Statement on a post-effective basis, as applicable.  Upon the earlier to occur of (i) the
Company delivering to the affected Holders and FBR an End of Suspension Notice,
as hereinafter defined, or (ii) the end of the maximum permissible
suspension period, the Company shall use its commercially reasonable efforts to
promptly amend or supplement such Mandatory Registration Statement on a
post-effective basis, if necessary, or to take such action as is necessary to
make resumed use of such Mandatory Registration Statement compatible with the
Company’s best interests, as applicable, so as to permit the affected Holders
to resume sales of the Registrable Shares as soon as possible.

 

15

 

The Company may suspend the effectiveness and use of
any Piggyback Registration Statement at any time for an unlimited amount of
time.

 

(b)                                 In
the case of an event that causes the Company to suspend the use of a
Registration Statement (a “Suspension Event”),
the Company shall give written notice (a “Suspension Notice”)
to the affected Holders to suspend sales of the Registrable Shares included on
such Registration Statement, and such notice shall state that such suspension
shall continue only for so long as the Suspension Event or its effect is
continuing and the Company is using its best efforts and taking all reasonable
steps to terminate suspension of the effectiveness of the Registration
Statement as promptly as possible.  The
Holders shall not effect any sales of the Registrable Shares pursuant to such
Registration Statement (or such filings) at any time after it has received a
Suspension Notice from the Company and prior to receipt of an End of Suspension
Notice (as defined below) with respect to such Registration Statement.  If so directed by the Company, each affected Holder
will deliver to the Company (at the expense of the Company) all copies other
than permanent file copies then in such Holder’s possession of the Prospectus
covering the Registrable Shares at the time of receipt of the Suspension
Notice.  The Holders may recommence
effecting sales of the Registrable Shares pursuant to such Registration
Statement (or such filings) following further notice to such effect (an “End of Suspension Notice”) from the
Company, which End of Suspension Notice shall be given by the Company to the affected
Holders and FBR in the manner described above promptly following the conclusion
of any Suspension Event and its effect.

 

(c)                                  Notwithstanding
any provision herein to the contrary, subject to any Suspension Events or as
contemplated by Section 4(f)(iv), each Registration Statement shall be
maintained effective pursuant to this Agreement until the Shares and Additional
Shares are not Registrable Shares.

 

6.                                       Indemnification and Contribution.

 

(a)                                  The
Company agrees to indemnify and hold harmless (i) FBR and each Holder and
any underwriter (as determined in the Securities Act) for such Holder
(including, if applicable, FBR), (ii) each Person, if any, who controls
(within the meaning of Section 15 of the Securities Act or Section 20(a) of
the Exchange Act) any of the foregoing (a “Controlling Person”),
and (iii) the respective officers, directors, partners, members, employees,
representatives and agents of any such Person or any Controlling Person (any
Person referred to in clause (i), (ii) or (iii) may hereinafter be
referred to as an “Purchaser Indemnitee”) from
and against any and all losses, claims, damages, judgments, actions, reasonable
out-of-pocket expenses, and other liabilities, including, as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of outside counsel to any Purchaser Indemnitee, joint or
several (the “Liabilities”), directly or
indirectly related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement or Prospectus (as amended or supplemented if the
Company shall have furnished to such Purchaser Indemnitee any amendments or
supplements thereto), or any preliminary Prospectus or any other document
prepared by the Company used to sell the Registrable Shares, or any omission or
alleged omission to state therein a material fact required

 

16

 

to be stated therein or necessary to make the
statements therein (in the case of a Prospectus, in light of the circumstances
under which they were made), not misleading, except insofar as such Liabilities
arise out of or are based upon (i) any untrue statement or omission or
alleged untrue statement or omission made in reliance upon and in conformity
with information relating to any Purchaser Indemnitee furnished to the Company
or any underwriter in writing by such Purchaser Indemnitee expressly for use
therein, (ii) any untrue statement contained in or omission from a
preliminary Prospectus if a copy of the Prospectus (as then amended or
supplemented, if the Company shall have furnished to or on behalf of the Holder
participating in the distribution relating to the relevant Registration
Statement any amendments or supplements thereto) was not sent or given by or on
behalf of such Holder to the Person asserting any such Liabilities who
purchased Shares, if such Prospectus (or Prospectus as amended or supplemented)
is required by law to be sent or given at or prior to the written confirmation
of the sale of such Shares to such Person and the untrue statement contained in
or omission from such preliminary Prospectus was corrected in the Prospectus
(or the Prospectus as amended or supplemented), or (iii) any sales by any
Holder after the delivery by the Company to such Holder of a Suspension Notice
and before the delivery by the Company of an End of Suspension Notice.  The Company shall notify the Holders promptly
of the institution, threat or assertion of any claim, proceeding (including any
governmental investigation), or litigation which it shall have become aware in
connection with the matters addressed by this Agreement which involves the
Company or a Purchaser Indemnitee.  The
indemnity provided for herein shall remain in full force and effect regardless
of any investigation made by or on behalf of any Purchaser Indemnitee.

 

(b)                                 In
connection with any Registration Statement in which a Holder is participating,
such Holder agrees, severally and not jointly, to indemnify and hold harmless FBR,
the Company, each Person who controls the Company or FBR within the meaning of Section 15
of the Securities Act or Section 20(a) of the Exchange Act, and the
respective officers, directors, partners, members, representatives, employees
and agents of such Person or Controlling Person to the same extent as the
foregoing indemnity from the Company to each Purchaser Indemnitee, but only
with reference to (i) untrue statements or omissions or alleged untrue
statements or omissions made in reliance upon and in strict conformity with
information relating to such Holder furnished to the Company in writing by such
Holder expressly for use in any Registration Statement or Prospectus, any
amendment or supplement thereto, or any preliminary Prospectus and (ii) any
sales by any Holder after the delivery by the Company to such Holder of a Suspension
Notice and before the delivery by the Company of an End of Suspension
Notice.  The liability of any Holder
pursuant to clause (i) of the immediately preceding sentence shall in no
event exceed the net proceeds received by such Holder from sales of Registrable
Shares giving rise to such obligations.  If
a Holder elects to include Registrable Shares in an Underwritten Offering, the
Holder shall be required to agree to such customary indemnification provisions
as may reasonably be required by the underwriter in connection with such
Underwritten Offering.

 

(c)                                  If
any suit, action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against any Person
in respect of which indemnity may be sought pursuant to Section 6(a) or
6(b), such Person (the “Indemnified Party”),
shall promptly notify the Person against whom such indemnity may be sought (the
“Indemnifying Party”), in writing (to
the extent legally advisable) of the commencement thereof (but the failure to
so notify an Indemnifying Party shall not relieve it from any Liability which
it

 

17

 

may have under this Section 6, except to the
extent the Indemnifying Party is materially prejudiced by the failure to give
notice), and the Indemnifying Party, upon request of the Indemnified Party,
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
reasonably designate in such proceeding and shall assume the defense of such
proceeding and pay the fees and expenses actually incurred by such counsel
related to such proceeding. 
Notwithstanding the foregoing, in any such proceeding, any Indemnified
Party may retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party, unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed in
writing to the contrary, (ii) the Indemnifying Party failed within a
reasonable time after notice of commencement of the action to assume the
defense and employ counsel reasonably satisfactory to the Indemnified Party, (iii) the
Indemnifying Party and its counsel do not pursue in a reasonable manner the
defense of such action or (iv) the named parties to any such action
(including any impleaded parties) include both such Indemnified Party and the
Indemnifying Party, or any affiliate of the Indemnifying Party, and such
Indemnified Party shall have been reasonably advised by counsel that, either
(x) there may be one or more legal defenses available to it which are different
from or additional to those available to the Indemnifying Party or such
affiliate of the Indemnifying Party or (y) a conflict may exist between such
Indemnified Party and the Indemnifying Party or such affiliate of the
Indemnifying Party, in which event the Indemnifying Party may not assume or
direct the defense of such action on behalf of such Indemnified Party, it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or separate but substantially similar or related actions
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (in addition to
any local counsel) for all such Indemnified Parties, which firm shall be
designated in writing by those Indemnified Parties who sold a majority of the
Registrable Shares sold by all such Indemnified Parties and any such separate
firm for the Company, the directors, the officers and such control Persons of
the Company as shall be designated in writing by the Company.  The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent,
which consent shall not be unreasonably withheld or delayed, but if settled
with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify any Indemnified Party from and against any
Liability by reason of such settlement or judgment to the extent provided in
this Section 6 without reference to this sentence.  No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
pending or threatened proceeding in respect of which any Indemnified Party is
or could have been a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional
release of such Indemnified Party from all Liability on claims that are the
subject matter of such proceeding.

 

(d)                                 If
the indemnification provided for in Section 6(a) or 6(b) is for
any reason held to be unavailable to an Indemnified Party in respect of any
Liabilities referred to therein (other than by reason of the exceptions
provided therein) or is insufficient to hold harmless a party indemnified
thereunder, then each Indemnifying Party under such sections, in lieu of
indemnifying such Indemnified Party thereunder, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Liabilities (i) in
such proportion as is appropriate to reflect the relative benefits of the
Indemnified Party on the one hand and the Indemnifying Parties on the other in
connection with the statements or omissions that resulted in such

 

18

 

Liabilities, or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Indemnifying Parties
and the Indemnified Party, as well as any other relevant equitable
considerations.  The relative fault of
the Company, on the one hand, and any Purchaser Indemnitees, on the other,
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
such Purchaser Indemnitees and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.

 

(e)                                  The
parties agree that it would not be just and equitable if contribution pursuant
to this Section 6 were determined by pro rata allocation
(even if such Indemnified Parties were treated as one entity for such purpose),
or by any other method of allocation that does not take account of the
equitable considerations referred to in Section  6(d).  The amount paid or payable by an Indemnified
Party as a result of any Liabilities referred to in Section 6(d) shall
be deemed to include, subject to the limitations set forth above, any
reasonable legal or other expenses actually incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.  Notwithstanding the provisions of this Section 6,
in no event shall a Purchaser Indemnitee be required to contribute any amount
in excess of the amount by which proceeds received by such Purchaser Indemnitee
from sales of Registrable Shares exceeds the amount of any damages that such
Purchaser Indemnitee has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.  For purposes of this Section 6, each
Person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act) FBR or a Holder shall have the
same rights to contribution as FBR or such Holder, as the case may be, and each
Person, if any, who controls (within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act) the Company, and each officer,
director, partner, member, employee, representative, agent or manager of the
Company shall have the same rights to contribution as the Company.  Any party entitled to contribution will,
promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from
whom contribution may be sought, but the omission to so notify such party or
parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have under this Section 6 or
otherwise, except to the extent that any party is materially prejudiced by the
failure to give notice.  No Person guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act), shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

 

(f)                                    The
indemnity and contribution agreements contained in this Section 6 will be
in addition to any Liability which the indemnifying parties may otherwise have
to the indemnified parties referred to above. 
Each Purchaser Indemnitee’s obligations to contribute pursuant to this Section 6
are not joint but are several in the proportion that the number of Shares sold
by such Purchaser Indemnitee bears to the number of Shares sold by all
Purchaser Indemnities.

 

19

 

7.                                       Additional
Payments Under Certain Circumstances.

 

(a)                                  Additional
payments (“Additional Payments”) with
respect to the Shares shall be assessed as follows if any of the following
events occur (each such event in clauses (i) through (iii) below
being herein called a “Registration Default”):

 

(i)   either Mandatory Shelf Registration Statement
has not been filed with the Commission before August 15, 2005 or
declared effective by the Commission before December 12, 2005;

 

(ii) the Company fails,
with respect to a Holder that supplies a Notice and Questionnaire described in Section 2(a)(iii),
to cause an amendment to the already effective Mandatory Shelf Registration
Statement to be filed or, if permitted by the Commission, to prepare a
Prospectus supplement to such Mandatory Shelf Registration Statement and
distribute such supplement to Holders, in each case within the time period set
forth in section 2(a)(iii) to name such Holder as an additional
selling securityholder; or

 

(iii)  any Mandatory
Shelf Registration Statement is declared effective by the Commission but (A) a
Mandatory Shelf Registration Statement thereafter ceases to be effective during
the period contemplated by Section 2(a)(i) or (B) as specified
in Section 5(a), a Mandatory Shelf Registration Statement or the
Prospectus ceases to be usable in connection with resales of Registrable Shares
during the periods specified herein and the Company fails to (1) cure such
Mandatory Shelf Registration Statement within five business days by a
post-effective amendment or a report filed pursuant to the Exchange Act or (2) if
applicable, terminate the suspension period described in Section 5(a) by
the 45/th or the 60/th day, as applicable.

 

Each of the foregoing will constitute a Registration
Default whatever the reason for any such event and whether it is voluntary or
involuntary or is beyond the Company’s control or pursuant to operation of law
or as a result of any action or inaction by the Commission.

 

(b)                                 Additional
Payments shall accrue on the Shares from and including the date on which any
such Registration Default occurs to but excluding the date on which all such
Registration Defaults have been cured, (i) in the case of Preferred Shares,
$1.20 per Preferred Share per annum, and (ii) with respect to any
Preferred Shares that have been converted to Common Shares, $0.04 per Common
Share per annum (subject to adjustment for splits, recombinations and similar
matters); provided, however, that in no event shall Additional Payments accrue on
any Shares for more than one Registration Default at any one time, and in the
case of a Registration Default the Company’s obligation to pay Additional
Payments extends only to the affected Registrable Shares. Other than the
obligation of payment of any Additional Payments in accordance with the terms
hereof, the Company will have no other liabilities for monetary damages with
respect to its registration obligations. With respect to each Holder, the Company’s
obligations to pay Additional Payments remain in effect only so long as the securities
held or issuable upon conversion of securities held by the Holder are
Registrable Shares.

 

20

 

(c)                                  A
Registration Default referred to in Section 5(a)(iii) shall be deemed
not to have occurred and be continuing, and no Additional Payments shall accrue
as a result thereof, in relation to a Mandatory Shelf Registration Statement or
the related prospectus if (i) (A) such Registration Default has
occurred solely as a result of material events, with respect to the Company that
would need to be described in such Mandatory Shelf Registration Statement or
the related prospectus or (B) the Registration Default relates to any
information supplied or failed to be supplied by a Holder of Registrable Shares
and (ii) the Company is proceeding promptly and in good faith to amend or
supplement the Mandatory Shelf Registration Statement and related prospectus to
describe such events as required by Section 5; provided, however, that in
any case if such Registration Default occurs for a continuous period in excess
of 30 days beyond any permitted 45 or 60 day suspension period (as provided by Section 5),
Additional Payments shall be payable in accordance with the above paragraph
from the day such Registration Default occurs until such Registration Default
is cured.

 

(d)                                 In
the case of the Preferred Shares, any amounts of Additional Payments due
pursuant to Section 5(a) will be payable in cash on the regular dividend
payment dates described the certificate of designations for the Preferred
Shares. In the case of the Common Shares, any amounts of Additional Payments
pursuant to Section 5(a) will be payable in cash on the regular dividend
payment dates described in the certificate of designation with respect to the
Preferred Shares as if it were still in effect and related to the Common Shares.
The amount of Additional Payments will be determined on the basis of a 360-day
year comprised of twelve 30-day months, and the actual number of days on which Additional
Payments accrued during such period.

 

8.                                       Termination of the Company’s Obligations.

 

The Company shall have no further obligations pursuant
to this Agreement at such time as no Registrable Shares are outstanding after
their original issuance, provided, however, that the Company’s obligations
under Sections 3, 6 and 10 (and any related definitions) shall remain in full
force and effect following such time.

 

9.                                       Limitations on Subsequent Registration Rights.

 

From and after the date of this Agreement, the Company
shall not, without the prior written consent of the Holders (excluding FBR, FBR
Merchant Banking and Holders affiliated or associated with FBR with respect to
the Holders Mandatory Shelf Registration Statement) of a majority of the
Registrable Shares of such Holders (on an as converted basis), enter into any
agreement with any holder or prospective holder of any securities of the
Company that would allow such holder or prospective holder to include such
securities in a Holders Mandatory Shelf Registration Statement or Piggyback
Registration Statement, if any, filed pursuant to the terms hereof, unless
under the terms of such agreement, such holder or prospective holder may include
such securities on the Holders Mandatory Shelf Registration Statement or such
Piggyback Registration Statement only to the extent that the inclusion of his
securities will not reduce the amount of Registrable Shares of the Holders that
is included on the Holders Mandatory Shelf Registration Statement or such
Piggyback Registration Statement.  From
and after the date of this Agreement, the Company shall not, without the prior
written consent of FBR or FBR Merchant Banking, enter into any agreement with any
holder or prospective holder of any

 

21

 

securities of the Company that would allow such holder
or prospective holder to include such securities in the FBR Mandatory Shelf
Registration Statement.

 

10.                                 Miscellaneous.

 

(a)                                  Remedies.  In the event of a breach by the Company of
any of its obligations under this Agreement, each Holder, in addition to being
entitled to exercise all rights provided herein or, in the case of FBR, in the
Placement Agreement, or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement.  Subject to Section 6 and Section 7,
the Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of any of the provisions of this
Agreement and hereby further agrees that, in the event of any action for
specific performance in respect of such breach, it shall waive the defense that
a remedy at law would be adequate.

 

(b)                                 Amendments
and Waivers.  This Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not be given, without the written consent of the
Company and Holders beneficially owning a majority of the Registrable Shares
(on an as converted basis); provided,
however, that for purposes of this
Agreement, Registrable Shares owned, directly or indirectly, by an entity that
is an Affiliate of the Company due to the Company’s owning an interest in such entity
shall not be deemed to be outstanding. 
Notwithstanding the foregoing, a waiver or consent to or departure from
the provisions hereof with respect to a matter that relates exclusively to (i) a
Holders Mandatory Shelf Registration Statement or FBR Mandatory Shelf
Registration Statement may be given only with the consent of a majority of
Registrable Shares covered thereby and (ii) the rights of a Holder whose
securities are being sold pursuant to a Registration Statement and that does
not directly or indirectly affect, impair, limit or compromise the rights of
other Holders may be given by such Holder; provided that
the provisions of this sentence may not be amended, modified or supplemented
except in accordance with the provisions of the immediately preceding sentence.

 

(c)                                  Notices.  All notices and other communications,
provided for or permitted hereunder shall be made in writing and delivered by
facsimile (with receipt confirmed), overnight courier or registered or
certified mail, return receipt requested, or by telegram, addressed as follows:

 

(i)                                     if
to a Holder, at the most current address given by the transfer agent and
registrar of the Shares to the Company;

 

(ii)                                  if
to the Company, at the offices of the Company at 333 Clay Street, Suite 100,
Houston, Texas  77002, Attention:  Michael B. Young (facsimile (713)850-1879);
with copies (which shall not constitute notice) to Thompson & Knight
LLP, 333 Clay Street, Suite 3300, Houston, Texas  77002, Attention:  Dallas Parker, Esq. (facsimile (832)397-8110);
and

 

(iii)                               if
to FBR, at the offices of FBR at 1001 Nineteenth Street North, Arlington,
Virginia 22209, Attention:  William
Ginivan, Esq. (facsimile (703) 312-9698); with a copy (which shall not
constitute notice)  to Akin Gump Strauss
Hauer & Feld LLP, 1111 Louisiana St., Houston, Texas 77002,
Attention:  Julien R. Smythe, Esq.
(facsimile (713) 236-0822).

 

22

 

(d)                                 Successors
and Assigns; Third Party Beneficiaries. 
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of each of the parties hereto and shall inure to the
benefit of each Holder.  The Company
agrees that the Holders shall be third party beneficiaries to the agreements
made hereunder by FBR and the Company, and each Holder shall have the right to
enforce such agreements directly to the extent it deems such enforcement
necessary or advisable to protect its rights hereunder; provided, however, that such Holder fulfills all of its
obligations hereunder.

 

(e)                                  Counterparts.  This Agreement may be executed in any number
of counterparts and by the parties hereto 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.

 

(f)                                    Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.  EACH OF
THE PARTIES HERETO HEREBY IRREVOCABLY SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK OR THE
SUPREME COURT OF THE STATE OF NEW YORK OR SITTING IN NEW YORK COUNTY IN RESPECT
OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT,
AND IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS.  EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM
THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.

 

(g)                                 Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their commercially reasonable efforts to find and
employ an alternative means to achieve the same or substantially the same
result as that contemplated by such term, provision, covenant or
restriction.  It is hereby stipulated and
declared to be the intention of the parties hereto that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereafter declared invalid, illegal, void or
unenforceable.

 

(h)                                 Entire
Agreement.  This Agreement, together
with the Placement Agreement, is intended by the parties hereto as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect
of the subject matter contained herein and therein.  All of the obligations, agreements,

 

23

 

covenants, representations and warranties under the
engagement letter, dated April 18, 2005, between the Company and FBR (the “Engagement Letter”) shall survive
the execution, delivery and termination and the performance of this Agreement
and the consummation of the transactions contemplated hereby without any
modification thereof; provided,  that to the extent there is a conflict between the
provisions of the Engagement Letter and the provisions of this Agreement, this
Agreement shall prevail to that extent.

 

(i)                                     Registrable
Shares Held by the Company or its Affiliates.  Whenever the consent or approval of Holders
of a specified percentage of Registrable Shares is required hereunder,
Registrable Shares (or securities convertible into Registrable Shares) held by
the Company or entities that are Affiliates of the Company due to the Company’s
owning an interest in such entities shall not be
counted in determining whether such consent or approval was given by the
Holders of such required percentage.

 

(j)                                     Survival.  This Agreement is intended to survive the
consummation of the transactions contemplated by the Placement Agreement.  The indemnification and contribution obligations
under Section 6 of this Agreement shall survive the termination of the
Company’s obligations under Section 2 of this Agreement.

 

(k)                                  Headings.  The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
provisions of this Agreement.  All
references made in this Agreement to “Section” refer to such Section of
this Agreement, unless expressly stated otherwise.

 

(l)                                     Adjustment
for Stock Splits, etc.  Wherever in
this Agreement there is a reference to a specific number of shares with respect
to any securities, then upon the occurrence of any subdivision, combination, or
stock dividend of such shares, the specific number of shares with respect to
any securities so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the effect on the outstanding shares of such
class or series of stock by such subdivision, combination, or stock dividend.

 

[Remainder of
this Page Intentionally Left Blank]

 

24

 

IN WITNESS WHEREOF, the
parties have executed this Agreement as of the date first above written.

 

	
   

  	
  WHITTIER
  ENERGY CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  FRIEDMAN,
  BILLINGS, RAMSEY & CO.,

  INC. (for the benefit of the Holders)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

25

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00086-of-00352.parquet"}]]