Document:

exv10w1

 

 

 

Loan Agreement

Dated as of September 29, 2006

among

COPANO ENERGY, L.L.C.,

as the Borrower,

BANC OF AMERICA BRIDGE LLC,

as Administrative Agent

and

The Other Lenders Party Hereto

BANC OF AMERICA SECURITIES LLC,

as

Sole Lead Arranger and Sole Book Manager

 

 

 

 

Table of Contents

	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 	 	 	 	 
	ARTICLE I. DEFINITIONS AND ACCOUNTING TERMS	 	 	1	 
	     1.01
	 	Defined Terms	 	 	1	 
	     1.02
	 	Other Interpretive Provisions	 	 	32	 
	     1.03
	 	Accounting Terms	 	 	33	 
	     1.04
	 	Rounding	 	 	34	 
	     1.05
	 	Times of Day	 	 	34	 
	ARTICLE II. THE LOAN FACILITY	 	 	34	 
	     2.01
	 	The Loans	 	 	34	 
	     2.02
	 	Prepayments	 	 	34	 
	     2.03
	 	Reduction of Commitments	 	 	36	 
	     2.04
	 	Repayment of Loans	 	 	36	 
	     2.05
	 	Interest	 	 	36	 
	     2.06
	 	Fees	 	 	37	 
	     2.07
	 	Computation of Interest and Fees	 	 	37	 
	     2.08
	 	Evidence of Debt	 	 	37	 
	     2.09
	 	Payments Generally; Administrative Agent’s Clawback	 	 	37	 
	     2.10
	 	Sharing of Payments by Lenders	 	 	39	 
	ARTICLE III. TAXES, YIELD PROTECTION AND ILLEGALITY	 	 	40	 
	     3.01
	 	Taxes	 	 	40	 
	     3.02
	 	Illegality	 	 	42	 
	     3.03
	 	Inability to Determine Rates	 	 	42	 
	     3.04
	 	Increased Costs; Reserves on Loans	 	 	43	 
	     3.05
	 	Compensation for Losses	 	 	44	 
	     3.06
	 	Mitigation Obligations; Replacement of Lenders	 	 	44	 
	     3.07
	 	Survival	 	 	45	 
	ARTICLE IV. CONDITIONS PRECEDENT TO LOANS	 	 	45	 
	     4.01
	 	Conditions Precedent to Loans	 	 	45	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES	 	 	48	 
	     5.01
	 	Existence, Qualification and Power; Compliance with Laws	 	 	48	 
	     5.02
	 	Authorization; No Contravention	 	 	48	 
	     5.03
	 	Governmental Authorization; Other Consents	 	 	48	 
	     5.04
	 	Binding Effect	 	 	49	 
	     5.05
	 	Financial Statements; No Material Adverse Effect; No Internal Control Event	 	 	49	 
	     5.06
	 	Litigation	 	 	49	 
	     5.07
	 	No Default	 	 	50	 
	     5.08
	 	Ownership of Property; Liens	 	 	50	 
	     5.09
	 	Environmental Compliance	 	 	50	 
	     5.10
	 	Insurance	 	 	50	 
	     5.11
	 	Taxes	 	 	50	 
	     5.12
	 	ERISA Compliance	 	 	50	 
	     5.13
	 	Subsidiaries; Equity Interests	 	 	51	 
	     5.14
	 	Margin Regulations; Investment Company Act	 	 	51	 

i

 

	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 	 	 	 	 
	     5.15
	 	Disclosure	 	 	51	 
	     5.16
	 	Compliance with Laws	 	 	52	 
	     5.17
	 	Intellectual Property; Licenses, Etc	 	 	52	 
	     5.18
	 	Labor Disputes and Acts of God	 	 	52	 
	     5.19
	 	Solvency	 	 	52	 
	ARTICLE VI. AFFIRMATIVE COVENANTS	 	 	52	 
	     6.01
	 	Financial Statements	 	 	53	 
	     6.02
	 	Certificates; Other Information	 	 	54	 
	     6.03
	 	Notices	 	 	56	 
	     6.04
	 	Payment of Obligations	 	 	57	 
	     6.05
	 	Preservation of Existence, Etc	 	 	57	 
	     6.06
	 	Maintenance of Properties	 	 	57	 
	     6.07
	 	Maintenance of Insurance	 	 	57	 
	     6.08
	 	Compliance with Laws	 	 	57	 
	     6.09
	 	Books and Records	 	 	57	 
	     6.10
	 	Inspection Rights	 	 	58	 
	     6.11
	 	Use of Proceeds	 	 	58	 
	     6.12
	 	Additional Guarantors	 	 	58	 
	     6.13
	 	Environmental Matters; Environmental Reviews	 	 	58	 
	     6.14
	 	Compliance with Agreements	 	 	59	 
	     6.15
	 	Unrestricted Subsidiaries	 	 	59	 
	     6.16
	 	Forecasts	 	 	59	 
	ARTICLE VII. NEGATIVE COVENANTS	 	 	59	 
	     7.01
	 	Limitation on Restricted Payments	 	 	59	 
	     7.02
	 	Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries	 	 	62	 
	     7.03
	 	Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock	 	 	64	 
	     7.04
	 	Limitation on Asset Sales	 	 	67	 
	     7.05
	 	Limitation on Transactions With Affiliates	 	 	68	 
	     7.06
	 	Limitation on Liens	 	 	69	 
	     7.07
	 	Permitted Business Activities	 	 	69	 
	     7.08
	 	Sale and Leaseback Transactions	 	 	69	 
	     7.09
	 	Merger, Consolidation and Sale of Assets	 	 	70	 
	     7.10
	 	Designation of Restricted and Unrestricted Subsidiaries	 	 	72	 
	     7.11
	 	Financial Covenant	 	 	72	 
	     7.12
	 	Use of Proceeds	 	 	73	 
	ARTICLE VIII. EVENTS OF DEFAULT AND REMEDIES	 	 	73	 
	     8.01
	 	Events of Default	 	 	73	 
	     8.02
	 	Remedies Upon Event of Default	 	 	75	 
	     8.03
	 	Application of Funds	 	 	75	 
	ARTICLE IX. ADMINISTRATIVE AGENT	 	 	76	 
	     9.01
	 	Appointment and Authority	 	 	76	 
	     9.02
	 	Rights as a Lender	 	 	76	 
	     9.03
	 	Exculpatory Provisions	 	 	76	 
	     9.04
	 	Reliance by Administrative Agent	 	 	77	 
	     9.05
	 	Delegation of Duties	 	 	77	 

ii

 

	 	 	 	 	 	 	 
	Section	 	 	 	Page	 
	 	 	 	 	 
	     9.06
	 	Resignation of Administrative Agent	 	 	77	 
	     9.07
	 	Non-Reliance on Administrative Agent and Other Lenders	 	 	78	 
	     9.08
	 	No Other Duties, Etc	 	 	78	 
	     9.09
	 	Administrative Agent May File Proofs of Claim	 	 	78	 
	     9.10
	 	Guaranty Matters	 	 	79	 
	ARTICLE X. MISCELLANEOUS	 	 	79	 
	     10.01
	 	Amendments, Etc	 	 	79	 
	     10.02
	 	Notices; Effectiveness; Electronic Communication	 	 	80	 
	     10.03
	 	No Waiver; Cumulative Remedies	 	 	82	 
	     10.04
	 	Expenses; Indemnity; Damage Waiver	 	 	82	 
	     10.05
	 	Payments Set Aside	 	 	84	 
	     10.06
	 	Successors and Assigns.	 	 	85	 
	     10.07
	 	Treatment of Certain Information; Confidentiality	 	 	88	 
	     10.08
	 	Right of Setoff	 	 	89	 
	     10.09
	 	Interest Rate Limitation	 	 	90	 
	     10.10
	 	Counterparts; Integration; Effectiveness	 	 	90	 
	     10.11
	 	Survival of Representations and Warranties	 	 	90	 
	     10.12
	 	Severability	 	 	90	 
	     10.13
	 	Replacement of Lenders	 	 	91	 
	     10.14
	 	Governing Law; Jurisdiction; Etc	 	 	91	 
	     10.15
	 	Waiver of Jury Trial	 	 	92	 
	     10.16
	 	No Advisory or Fiduciary Responsibility	 	 	93	 
	     10.17
	 	USA Patriot Act Notice	 	 	93	 
	     10.18
	 	ENTIRE AGREEMENT	 	 	93	 

iii

 

	 	 	 	 	 	 	 
	SCHEDULES	 	 	 	 
	 
	 	 	 	 	 	 
	     2.01
	 	Commitments and Applicable Percentages	 	 	 	 
	     5.05
	 	Additional Material Indebtedness and Other Liabilities	 	 	 	 
	     5.09
	 	Environmental Matters	 	 	 	 
	     5.13
	 	Subsidiaries; Other Equity Investments	 	 	 	 
	     10.02
	 	Administrative Agent’s Office; Certain Addresses for Notices	 	 	 	 
	     10.06
	 	Processing and Recordation Fees	 	 	 	 
	 
	 	 	 	 	 	 
	EXHIBITS	 	 	 	 
	 
	 	 	 	 	 	 
	     A
	 	[Reserved]	 	 	 	 
	     B
	 	Note	 	 	 	 
	     C
	 	[Reserved]	 	 	 	 
	     D
	 	Compliance Certificate	 	 	 	 
	     E
	 	Assignment and Assumption	 	 	 	 
	     F
	 	Guaranty	 	 	 	 
	     G
	 	Opinion Matters	 	 	 	 
	     H
	 	Solvency Certificate	 	 	 	 

iv

 

LOAN AGREEMENT

     This LOAN AGREEMENT (“Agreement”) is entered into as of September 29, 2006, among
COPANO ENERGY, L.L.C., a Delaware limited liability company (the “Borrower”), each lender
from time to time party hereto (collectively, the “Lenders” and individually, a
“Lender”), and BANC OF AMERICA BRIDGE LLC, as Administrative Agent.

     The Borrower has requested that the Lenders lend to the Borrower $100,000,000 hereunder, and
the Lenders are willing to do so on the terms and conditions set forth herein.

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

ARTICLE I.

DEFINITIONS AND ACCOUNTING TERMS

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

     “Acquired Debt” means, with respect to any specified Person:

     (a) Indebtedness of any other Person existing at the time such other Person was merged
with or into or became a Subsidiary of such specified Person, whether or not such
Indebtedness is incurred in connection with, or in contemplation of, such other Person
merging with or into, or becoming a Subsidiary of, such specified Person, but excluding
Indebtedness which is extinguished, retired or repaid in connection with such Person merging
with or becoming a Subsidiary or such specified Person; and

     (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified
Person.

     “Acquisition Bridge” has the meaning specified in Section 2.02(b)(iii).

     “Act” has the meaning specified in Section 10.17.

     “Administrative and Operating Services Agreement” means the Administrative and
Operating Services Agreement, dated as of November 1, 2004, by and among Copano/Operations, Inc., a
Texas corporation, the Borrower and the additional entities named therein.

     “Administrative Agent” means Banc of America Bridge in its capacity as administrative
agent under this Agreement, or any successor administrative agent.

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

 

 

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

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

     “Affiliate Transaction” has the meaning specified in Section 7.05.

     “Agent Parties” has the meaning specified in Section 10.02(c).

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

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

     “Applicable Percentage” means, with respect to any Lender at any time, the percentage
(carried out to the ninth decimal place) of the Aggregate Commitments represented by (a) on or
prior to the Closing Date, such Lender’s Commitment at such time and (b) thereafter, the principal
amount of such Lender’s Loans at such time. The initial Applicable Percentage of each Lender is
set forth opposite the name of such Lender on Schedule 2.01 or in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable.

     “Applicable Rate” means a per annum rate equal, for each day on which any Loan is
outstanding, to (a) during the period from the Closing Date to but not including December 15, 2006,
300 basis points, (b) during the period from December 15, 2006 to but not including March 15, 2007,
350 basis points, (c) during the period from March 15, 2007 to but not including June 15, 2007, 400
basis points, and (d) during the period from and after June 15, 2007, 450 basis points;
provided that the amounts set forth in clauses (a), (b), (c) and (d) will increase by an
additional 50 basis points over the rates set forth in clauses (a), (b), (c) and (d), respectively,
at any time that the Consolidated Total Leverage Ratio for the prior four quarters is greater than
4.25 to 1.0. For purposes of the foregoing, (i) the Applicable Rate shall be determined as of the
end of each fiscal quarter of the Borrower based upon the Borrower’s annual or quarterly
consolidated financial statements delivered pursuant to Section 6.01 and (ii) each change
in the Applicable Rate resulting from a change in the Consolidated Total Leverage Ratio shall be
effective during the period commencing on and including the date of delivery to the Administrative
Agent of such consolidated financial statements indicating such change and ending on the date
immediately preceding the effective date of the next such change; provided that the
Consolidated Total Leverage Ratio shall be deemed to be greater than 4.25 to 1.0 at the option of
the Administrative Agent or at the request of the Required Lenders if the Borrower fails to deliver
the annual or quarterly consolidated financial statements required to be delivered by it pursuant
to Section 6.01, during the period from the expiration of the time for delivery thereof
until such consolidated financial statements are delivered.

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

2

 

     “Arranger” means Banc of America Securities LLC, in its capacity as sole lead arranger
and sole book manager.

     “Asset Sale” means:

     (a) the sale, lease, conveyance or other disposition of any properties or assets
(including by way of a sale and leaseback transaction); provided, however,
that the disposition of all or substantially all of the properties or assets of the Borrower
and its Restricted Subsidiaries taken as a whole will be governed by the provisions of
Section 2.02(c) and/or the provisions of Section 7.09 and not by the
provisions of Section 7.04; and

     (b) the issuance of Equity Interests in any of the Borrower’s Restricted Subsidiaries
or the sale of Equity Interests in any of its Restricted Subsidiaries.

     Notwithstanding the preceding, the following items will not be deemed to be Asset Sales:

     (1) any single transaction or series of related transactions that involves properties
or assets having a fair market value of less than $10.0 million;

     (2) a transfer of assets between or among any of the Borrower and its Restricted
Subsidiaries;

     (3) an issuance or sale of Equity Interests by a Restricted Subsidiary to the Borrower
or to another Restricted Subsidiary;

     (4) the sale, lease or other disposition of equipment, inventory, accounts receivable
or other properties or assets in the ordinary course of business;

     (5) the sale or other disposition of cash or Cash Equivalents, Hedging Contracts or
other financial instruments in the ordinary course of business;

     (6) a Restricted Payment that is permitted by Section 7.01 or a Permitted
Investment;

     (7) any trade or exchange by the Borrower or any Restricted Subsidiary of properties or
assets for properties or assets owned or held by another Person, provided that the
fair market value of the properties or assets traded or exchanged by the Borrower or such
Restricted Subsidiary (together with any cash) is reasonably equivalent to the fair market
value of the properties or assets (together with any cash) to be received by the Borrower or
such Restricted Subsidiary, and provided further, that any net cash received
must be applied in accordance with the provisions of Section 7.04;

     (8) the creation or perfection of a Lien that is not prohibited by Section
7.06;

     (9) dispositions in connection with Permitted Liens;

3

 

     (10) surrender or waiver of contract rights or the settlement, release or surrender of
contract, tort or other claims of any kind; and

     (11) the grant in the ordinary course of business of any non-exclusive license of
patents, trademarks, registrations therefor and other similar intellectual property.

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

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

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

     “Attributable Debt” in respect of a sale and leaseback transaction means, at the time
of determination, the present value of the obligation of the lessee for net rental payments during
the remaining term of the lease included in such sale and leaseback transaction including any
period for which such lease has been extended or may, at the option of the lessor, be extended.
Such present value shall be calculated using a discount rate equal to the rate of interest implicit
in such transaction, determined in accordance with GAAP. As used in the preceding sentence, the
“net rental payments” under any lease for any such period shall mean the sum of rental and other
payments required to be paid with respect to such period by the lessee thereunder, excluding any
amounts required to be paid by such lessee on account of maintenance and repairs, insurance, taxes,
assessments, water rates or similar charges. In the case of any lease that is terminable by the
lessee upon payment of penalty, such net rental payment shall also include the amount of such
penalty, but no rent shall be considered as required to be paid under such lease subsequent to the
first date upon which it may be so terminated.

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

     “Available Cash” has the meaning assigned to such term in the Borrower LLC Agreement,
as in effect on the date of this Agreement.

     “Banc of America Bridge” means Banc of America Bridge LLC and its successors.

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

4

 

     “BBA LIBOR” has the meaning specified in Section 1.01 under the definition of
“Eurodollar Rate”.

     “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5
under the Exchange Act, except that in calculating the beneficial ownership of any particular
“person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be
deemed to have beneficial ownership of all securities that such “person” has the right to acquire
by conversion or exercise of other securities, whether such right is currently exercisable or is
exercisable only upon the occurrence of a subsequent condition. The terms “Beneficially Owns” and
“Beneficially Owned” have correlative meanings.

     “Board of Directors” means:

     (a) with respect to the Borrower, the Board of Directors of the Borrower or any
authorized committee thereof; and

     (b) with respect to any other Person, the board or committee of such Person serving a
similar function.

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

     “Borrower LLC Agreement” means the Second Amended and Restated Limited Liability
Company Agreement of the Borrower dated as of November 15, 2004, as amended by Amendment No. 1 to
Second Amended and Restated Limited Liability Company Agreement of the Borrower dated as of August
1, 2005 and Amendment No. 2 to Second Amended and Restated Limited Liability Company Agreement of
Borrower dated as of August 24, 2005.

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

     “Borrowing” means a borrowing consisting of simultaneous Loans made by each of the
Lenders pursuant to Section 2.01(a).

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

     “Capital Lease Obligation” means, at the time any determination is to be made, the
amount of the liability in respect of a capital lease that would at that time be required to be
capitalized on a balance sheet in accordance with GAAP.

     “Capital Stock” means:

     (a) in the case of a corporation, corporate stock;

5

 

     (b) in the case of an association or business entity, any and all shares, interests,
participations, rights or other equivalents (however designated) of corporate stock;

     (c) in the case of a partnership or limited liability company, partnership or
membership interests (whether general or limited); and

     (d) any other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing Person.

     “Cash Equivalents” means:

     (a) Dollars;

     (b) securities issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality of the United States government
(provided that the full faith and credit of the United States is pledged in support
of those securities) having maturities of not more than six months from the date of
acquisition;

     (c) certificates of deposit and eurodollar time deposits with maturities of one year or
less from the date of acquisition, bankers’ acceptances with maturities not exceeding one
year and overnight bank deposits, in each case, with any lender party to the Credit
Agreement or with any domestic commercial bank having capital and surplus in excess of
$500.0 million and a Thomson Bank Watch Rating of “B” or better;

     (d) repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clauses (b) and (c) above entered into with any
financial institution meeting the qualifications specified in clause (c) above;

     (e) commercial paper having the highest rating obtainable from Moody’s or S&P and in
each case maturing within six months after the date of acquisition; and

     (f) money market funds at least 95% of the assets of which constitute Cash Equivalents
of the kinds described in clauses (a) through (e) of this definition.

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

     “Change of Control” means the occurrence of any of the following:

     (a) the direct or indirect sale, lease, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the properties or assets (including Capital Stock of the
Restricted Subsidiaries) of the Borrower and its Restricted Subsidiaries taken as a whole,

6

 

to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act), which
occurrence is followed by a Rating Decline within 90 days of the consummation of such
transaction;

     (b) the adoption of a plan relating to the liquidation or dissolution of the Borrower;

     (c) the consummation of any transaction (including, without limitation, any merger or
consolidation) the result of which is that any “person” (as that term is used in Section
13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the Voting Stock of the Borrower, measured by voting power rather than number of
            shares, units or the like, which occurrence is followed by a Rating Decline within 90 days
thereof; or

     (d) the first day on which a majority of the members of the Board of Directors of the
Borrower are not Continuing Directors, which occurrence is followed by a Rating Decline
within 90 days thereof.

     Notwithstanding the preceding, a conversion of the Borrower or any of its Restricted
Subsidiaries from a limited liability company, corporation, limited partnership or other form of
entity to a limited liability company, corporation, limited partnership or other form of entity or
an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests
for another form of entity shall not constitute a Change of Control, so long as following such
conversion or exchange the “persons” (as that term is used in Section 13(d)(3) of the Exchange Act)
who Beneficially Owned the Capital Stock of the Borrower immediately prior to such transactions
continue to Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or
continue to Beneficially Own sufficient Equity Interests in such entity to elect a majority of its
directors, managers, trustees or other persons serving in a similar capacity for such entity, and,
in either case no “person” Beneficially Owns more than 50% of the Voting Stock of such entity.

     “Change of Control Notice” has the meaning specified in Section 2.02(c).

     “Change of Control Offer” has the meaning specified in Section 2.02(c).

     “Change of Control Payment” has the meaning specified in Section 2.02(c).

     “Change of Control Payment Date” has the meaning specified in Section 2.02(c).

     “Closing Date” means the first date all the conditions precedent in Section
4.01 are satisfied or waived in accordance with Section 10.01 and the Loans are made
pursuant to Section 2.01.

     “Closing Date Material Adverse Effect” has the meaning specified in Section
4.01(e).

     “Code” means the Internal Revenue Code of 1986.

7

 

     “Commitment” means, as to each Lender, its obligation to make Loans to the Borrower
pursuant to Section 2.01 in the aggregate principal amount at any one time outstanding not
to exceed the amount set forth opposite such Lender’s name on Schedule 2.01 or in the
Assignment and Assumption pursuant to which such Lender becomes a party hereto, as applicable, as
such amount may be adjusted from time to time in accordance with this Agreement.

     “Commitment Letter” means the letter agreement, dated August 29, 2006, among the
Borrower, the Administrative Agent, and the Arranger.

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

     “Consolidated Cash Flow” means, with respect to any specified Person for any period,
the Indenture Consolidated Net Income of such Person for such period plus:

     (a) an amount equal to any net loss realized by such Person or any of its Restricted
Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in
computing such Indenture Consolidated Net Income; plus

     (b) provision for taxes based on income or profits of such Person and its Restricted
Subsidiaries for such period, to the extent that such provision for taxes was deducted in
computing such Indenture Consolidated Net Income; plus

     (c) consolidated interest expense of such Person and its Restricted Subsidiaries for
such period, whether paid or accrued and whether or not capitalized (including, without
limitation, amortization of debt issuance costs and original issue discount, non-cash
interest payments, the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges incurred in
respect of letter of credit or bankers’ acceptance financings), and net of the effect of all
payments made or received pursuant to interest rate Hedging Contracts, to the extent that
any such expense was deducted in computing such Indenture Consolidated Net Income;
plus

     (d) depreciation and amortization (including amortization of intangibles but excluding
amortization of prepaid cash expenses that were paid in a prior period), impairment and
other non-cash expenses (excluding any such non-cash expense to the extent that it
represents an accrual of or reserve for cash expenses in any future period or amortization
of a prepaid cash expense that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation and amortization,
impairment and other non-cash expenses were deducted in computing such Indenture
Consolidated Net Income; plus

     (e) unrealized non-cash losses resulting from foreign currency balance sheet
adjustments required by GAAP to the extent such losses were deducted in computing such
Indenture Consolidated Net Income; plus

     (f) all extraordinary, unusual or non-recurring items of gain or loss, or revenue or
expense; minus

8

 

     (g) non-cash items increasing such Indenture Consolidated Net Income for such period,
other than items that were accrued in the ordinary course of business;

in each case, on a consolidated basis and determined in accordance with GAAP.

     “Consolidated EBITDA” means, for any period, for the Borrower and its Restricted
Subsidiaries on a consolidated basis, an amount equal to Consolidated Net Income for such period
plus (a) the following to the extent deducted in calculating such Consolidated Net Income:
(i) Consolidated Interest Charges for such period, (ii) the provision for Federal, state, local and
foreign income taxes payable by the Borrower and its Restricted Subsidiaries for such period, (iii)
depreciation and amortization expense and (iv) other expenses of the Borrower and its Restricted
Subsidiaries reducing such Consolidated Net Income which do not represent a cash item in such
period or any future period and minus (b) the following to the extent included in
calculating such Consolidated Net Income: (i) Federal, state, local and foreign income tax credits
of the Borrower and its Restricted Subsidiaries for such period and (ii) all non-cash items
increasing Consolidated Net Income for such period; provided that for the purposes of
Section 7.11, if the Borrower or any Restricted Subsidiary shall acquire or dispose of any
material property or a Subsidiary shall be redesignated as either an Unrestricted Subsidiary or a
Restricted Subsidiary, in any case, during the period of four fiscal quarters ending on the last
day of the fiscal quarter immediately preceding the date of determination for which financial
statements are available and up to and including the date of the consummation of such acquisition,
disposition or redesignation, then Consolidated EBITDA shall be calculated, in a manner
satisfactory to the Administrative Agent in its reasonable discretion, after giving pro forma
effect to such acquisition (including the revenues of the properties acquired), merger, disposition
or redesignation, as if such acquisition, merger, disposition or redesignation had occurred on the
first day of such period.

     “Consolidated Funded Indebtedness” means, as of any date of determination, for the
Borrower and its Restricted Subsidiaries on a consolidated basis, the sum of (a) the outstanding
principal amount of all obligations, whether current or long-term, for borrowed money (including
Obligations hereunder) and all obligations evidenced by bonds, debentures, notes, loan agreements
or other similar instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’ acceptances, bank
guaranties, surety bonds and similar instruments, (d) all obligations in respect of the deferred
purchase price of property or services (other than trade accounts payable in the ordinary course of
business), (e) Attributable Indebtedness in respect of capital leases and Synthetic Lease
Obligations, (f) without duplication, all guarantees with respect to outstanding Indebtedness of
the types specified in clauses (a) through (e) above of Persons other than the Borrower or any
Restricted Subsidiary, and (g) all Indebtedness of the types referred to in clauses (a) through (f)
above of any partnership or joint venture (other than a joint venture that is itself a corporation
or limited liability company) in which the Borrower or a Restricted Subsidiary is a general partner
or joint venturer, unless such Indebtedness is expressly made non-recourse to the Borrower or such
Restricted Subsidiary.

     “Consolidated Interest Charges” means, for any period, for the Borrower and its
Restricted Subsidiaries on a consolidated basis, the sum of (a) all interest, premium payments,
debt discount, fees, charges and related expenses of the Borrower and its Restricted Subsidiaries

9

 

in connection with borrowed money (including capitalized interest) or in connection with the
deferred purchase price of assets, in each case to the extent treated as interest in accordance
with GAAP, excluding (i) distributions and payments to the Borrower’s preferred unitholders and
warrantholders prior to November 15, 2004 and (ii) one-time charges in respect of loan origination
or similar fees and non-cash amortized amounts with respect thereto, and (b) the
portion of rent expense of the Borrower and its Restricted Subsidiaries with respect to such
period under capital leases that is treated as interest in accordance with GAAP.

     “Consolidated Net Income” means, for any period, for the Borrower and its Restricted
Subsidiaries’ gross revenues for such period, including any cash dividends or distributions
actually received from any other Person during such period, minus the Borrower’s and its Restricted
Subsidiaries’ expenses and other proper charges against income (including taxes on income to the
extent imposed), determined on a consolidated basis in accordance with GAAP consistently applied
after eliminating earnings or losses attributable to outstanding minority interests and excluding
the net earnings of any Person other than a Restricted Subsidiary in which the Borrower or any of
its Subsidiaries has an ownership interest. Consolidated Net Income shall not include (i) any gain
or loss from the Disposition of assets, (ii) any extraordinary gains or losses or (iii) any
non-cash gains or losses resulting from mark to market activity as a result of the implementation
of Statement of Financial Accounting Standards 133, “Accounting for Derivative Instruments and
Hedging Activities” (“SFAS 133”).

     “Consolidated Net Tangible Assets” means, with respect to any Person at any date of
determination, the aggregate amount of total assets included in such Person’s most recent quarterly
or annual consolidated balance sheet prepared in accordance with GAAP less applicable reserves
reflected in such balance sheet, after deducting the following amounts: (a) all current
liabilities reflected in such balance sheet, and (b) all goodwill, trademarks, patents, unamortized
debt discounts and expenses and other like intangibles reflected in such balance sheet.

     “Consolidated Total Leverage Ratio” means, as of any date of determination, the ratio
of (a) Consolidated Funded Indebtedness as of such date to (b) Consolidated EBITDA for the four
fiscal quarters of the Borrower most recently ended on or prior to such date.

     “Continuing Directors” means, as of any date of determination, any member of the Board
of Directors of the Borrower who:

     (a) was a member of such Board of Directors on the date of this Agreement; or

     (b) was nominated for election or elected to such Board of Directors with the approval
of a majority of the Continuing Directors who were members of such Board at the time of such
nomination or election.

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

10

 

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

     “Credit Agreement” means that certain Credit Agreement, dated as of August 1, 2005,
among the Borrower, Bank of America, N.A., as Administrative Agent and L/C Issuer, and the other
lenders party thereto, including any related notes, guarantees, collateral documents, instruments
and agreements executed in connection therewith, and in each case as amended, restated, modified,
renewed, refunded, replaced or refinanced from time to time.

     “Credit Facilities” means one or more debt facilities (including, without limitation,
the Credit Agreement), commercial paper facilities or secured capital markets financings, in each
case with banks or other institutional lenders or institutional investors providing for revolving
credit loans, term loans, receivables financing (including through the sale of receivables to such
lenders or to special purpose entities formed to borrow from such lenders against such
receivables), letters of credit or secured capital markets financings, in each case, as amended,
restated, modified, renewed, refunded, replaced or refinanced (including refinancing with any
capital markets transaction) in whole or in part from time to time.

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

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

     “Default Rate” means an interest rate equal to the interest rate (including the
Applicable Rate) otherwise applicable to the Loans plus 2.00% per annum.

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

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

     “Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of
any security into which it is convertible, or for which it is exchangeable, in each case at the
option of the holder of the Capital Stock), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the
option of

11

 

the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91
days after the Maturity Date. Notwithstanding the preceding sentence, any Capital Stock that would
constitute Disqualified Stock solely because the holders of the Capital Stock have the right to
require the Borrower to repurchase or redeem such Capital Stock upon the occurrence of a change of
control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock
provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such
provisions unless such repurchase or redemption complies with Section 7.01.

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

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

     “Engagement Letter” means the letter agreement, dated August 29, 2006, between the
Borrower and the Arranger.

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

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

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

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

     “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and

12

 

Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).

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

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

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

     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of the Borrower or any
other Loan Party hereunder or under any other Loan Document, (a) taxes imposed on or measured by
its net income (however denominated), and franchise taxes imposed on it, by the United States or by
the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is
organized or resident or in which its principal office is located or in which it is doing or has
done business or, in the case of any Lender, in which its applicable Lending Office is located or
in which it is doing or has done business, (b) any branch profits taxes imposed by the United
States or any similar tax imposed by any other jurisdiction (or any political subdivision thereof)
in which the Borrower is located and (c) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Borrower under Section 10.13), any

13

 

withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party
hereto (or designates a new Lending Office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply
with Section 3.01(e), except to the extent that such Foreign Lender (or its assignor,
if any) was entitled, at the time of designation of a new Lending Office (or assignment), to
receive additional amounts from the Borrower with respect to such withholding tax pursuant to
Section 3.01(a).

     “Existing Indebtedness” means the aggregate principal amount of Indebtedness of the
Borrower and its Restricted Subsidiaries (other than Indebtedness under the Credit Agreement which
is considered incurred under the first paragraph of Section 7.03 and other than
intercompany indebtedness) in existence on the date of this Agreement, until such amounts are
repaid.

     “Existing Senior Notes” means the 8.125% senior unsecured notes issued by the Borrower
and Copano Energy Finance Corporation in February 2006.

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

     “Fee Letter” means the letter agreement, dated August 29, 2006, among the Borrower,
the Administrative Agent, the Arranger, and Banc of America.

     “FERC Subsidiary” means a Restricted Subsidiary of the Borrower that is subject to the
regulatory jurisdiction of the Federal Energy Regulatory Commission (or any successor thereof).

     “Fixed Charge Coverage Ratio” means with respect to any specified Person for any
four-quarter reference period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that the specified Person
or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases or redeems
any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems
preferred stock subsequent to the commencement of the applicable four-quarter reference period and
on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage
Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be
calculated giving pro forma effect to such incurrence, assumption, guarantee, repayment, repurchase
or redemption of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and
the use of the proceeds therefrom as if the same had occurred at the beginning of such period.

     In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

14

 

     (a) acquisitions that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers, consolidations or otherwise (including acquisitions
of assets used in a Permitted Business), and including in each case
any related financing transactions (including repayment of Indebtedness) during the
four-quarter reference period or subsequent to such reference period and on or prior to the
Calculation Date, will be given pro forma effect as if they had occurred on the first day of
the four-quarter reference period, including any Consolidated Cash Flow and any pro forma
expense and cost reductions that have occurred or are reasonably expected to occur, in the
reasonable judgment of the chief financial or accounting officer of the Borrower (regardless
of whether those cost savings or operating improvements could then be reflected in pro forma
financial statements in accordance with Regulation S-X promulgated under the Securities Act
or any other regulation or policy of the SEC related thereto);

     (b) the Consolidated Cash Flow attributable to discontinued operations, as determined
in accordance with GAAP, and operations or businesses disposed of prior to the Calculation
Date, will be excluded;

     (c) the Fixed Charges attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of prior to the Calculation
Date, will be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the specified Person or any of its Restricted
Subsidiaries following the Calculation Date; and

     (d) interest income reasonably anticipated by such Person to be received during the
applicable four-quarter period from cash or Cash Equivalents held by such Person or any
Restricted Subsidiary of such Person, which cash or Cash Equivalents exist on the
Calculation Date or will exist as a result of the transaction giving rise to the need to
calculate the Fixed Charge Coverage Ratio, will be included.

     “Fixed Charges” means, with respect to any specified Person for any period, the sum,
without duplication, of:

     (a) the consolidated interest expense of such Person and its Restricted Subsidiaries
for such period, whether paid or accrued (including, without limitation, amortization of
debt issuance costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to Attributable
Debt, commissions, discounts and other fees and charges incurred in respect of letter of
credit or bankers’ acceptance financings), and net of the effect of all payments made or
received pursuant to interest rate Hedging Contracts; plus

     (b) the consolidated interest expense of such Person and its Restricted Subsidiaries
that was capitalized during such period; plus

     (c) any interest expense on Indebtedness of another Person that is guaranteed by such
Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such

15

 

Person or one of its Restricted Subsidiaries, whether or not such guarantee or Lien is called upon;
plus

     (d) all dividends on any series of preferred securities of such Person or any of its
Restricted Subsidiaries, whether paid or accrued and whether or not in cash, other than
dividends on Equity Interests payable solely in Equity Interests of the Borrower (other than
Disqualified Stock) or to the Borrower or a Restricted Subsidiary of the Borrower,

in each case, on a consolidated basis and in accordance with GAAP.

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

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

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

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

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

     “Granting Lender” has the meaning specified in Section 10.06(h).

     The term “guarantee” means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or indirect, in any manner
including, without limitation, by way of a pledge of assets or through letters of credit or
reimbursement agreements in respect thereof, of all or any part of any Indebtedness. When used as
a verb, “guarantee” has a correlative meaning.

     “Guarantors” means, collectively, each Restricted Subsidiary of the Borrower.

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

16

 

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

     “Hedging Contracts” means, with respect to any specified Person:

     (a) interest rate swap agreements, interest rate cap agreements and interest rate
collar agreements entered into with one of more financial institutions and designed to
protect the Person or any of its Restricted Subsidiaries entering into the agreement against
fluctuations in interest rates with respect to Indebtedness incurred;

     (b) foreign exchange contracts and currency protection agreements entered into with one
of more financial institutions and designed to protect the Person or any of its Restricted
Subsidiaries entering into the agreement against fluctuations in currency exchanges rates
with respect to Indebtedness incurred and not for purposes of speculation;

     (c) any commodity futures contract, commodity option or other similar agreement or
arrangement designed to protect against fluctuations in the price of Hydrocarbons used,
produced, processed or sold by that Person or any of its Restricted Subsidiaries at the
time; and

     (d) other agreements or arrangements designed to protect such Person or any of its
Restricted Subsidiaries against fluctuations in interest rates, commodity prices or currency
exchange rates,

and in each case are entered into only in the normal course of business and not for speculative
purposes.

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

     “Hydrocarbons” means crude oil, natural gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents,
elements or compounds thereof and products refined or processed therefrom.

     “Incremental Funds” has the meaning specified in Section 7.01.

     “Indebtedness” means, with respect to any specified Person, any indebtedness of such
Person, whether or not contingent:

17

 

     (a) in respect of borrowed money;

     (b) evidenced by bonds, notes, debentures or similar instruments or letters of credit
(or reimbursement agreements in respect thereof);

     (c) in respect of bankers’ acceptances;

     (d) representing Capital Lease Obligations;

     (e) representing the balance deferred and unpaid of the purchase price of any property,
except any such balance that constitutes an accrued expense or trade payable; or

     (f) representing any obligations under Hedging Contracts,

if and to the extent any of the preceding items (other than letters of credit and obligations under
Hedging Contracts) would appear as a liability upon a balance sheet of the specified Person
prepared in accordance with GAAP. In addition, the term “Indebtedness” includes all Indebtedness
of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness
is assumed by the specified Person) and, to the extent not otherwise included, the guarantee by the
specified Person of any Indebtedness of any other Person. For the avoidance of doubt, the term
“Indebtedness” excludes any obligation arising from any agreement providing for indemnities,
purchase price adjustments, holdbacks, contingency payment obligations based on the performance of
the acquired or disposed assets or similar obligations (other than guarantees of Indebtedness)
incurred by the Borrower or any of its Restricted Subsidiaries in connection with the acquisition
or disposition of assets.

     The amount of any Indebtedness outstanding as of any date will be:

     (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with
original issue discount;

     (2) in the case of obligations under any Hedging Contracts, the termination value of
the agreement or arrangement giving rise to such obligations that would be payable by such
Person at such date; and

     (3) the principal amount of the Indebtedness, together with any interest on the
Indebtedness that is more than 30 days past due, in the case of any other Indebtedness.

     “Indemnified Taxes” means Taxes other than Excluded Taxes.

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

     “Indenture Consolidated Net Income” means, with respect to any specified Person for
any period, the aggregate of the Indenture Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP, provided
that:

18

 

     (a) the Indenture Net Income (but not loss) of any Person that is not a Restricted
Subsidiary or that is accounted for by the equity method of accounting will be
included, but only to the extent of the amount of dividends or distributions paid in
cash to the specified Person or a Restricted Subsidiary of the Person;

     (b) the Indenture Net Income of any Restricted Subsidiary will be excluded to the
extent that the declaration or payment of dividends or similar distributions by that
Restricted Subsidiary of that Indenture Net Income is not at the date of determination
permitted without any prior governmental approval (that has not been obtained) or, directly
or indirectly, by operation of the terms of its charter or any judgment, decree, order,
statute, rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders, partners or members;

     (c) the cumulative effect of a change in accounting principles will be excluded;

     (d) unrealized losses and gains under derivative instruments included in the
determination of Indenture Consolidated Net Income, including, without limitation those
resulting from the application of Statement of Financial Accounting Standards No. 133 will
be excluded; and

     (e) any nonrecurring charges relating to any premium or penalty paid, write off of
deferred finance costs or other charges in connection with redeeming or retiring any
Indebtedness prior to its Stated Maturity will be excluded.

     “Indenture Net Income” means, with respect to any specified Person, the net income
(loss) of such Person, determined in accordance with GAAP and before any reduction in respect of
preferred stock dividends, excluding, however:

     (a) any gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with: (a) any Asset Sale; or (b) the disposition of
any securities by such Person or the extinguishment of any Indebtedness of such Person; and

     (b) any extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).

     “Information” has the meaning specified in Section 10.07.

     “Initial Financial Statements” means:

     (a) the Audited Financial Statements;

     (b) the audited consolidated financial statements of the Borrower as of December 31,
2003 and December 31, 2004; and

     (c) the unaudited consolidated financial statements of the Borrower as of March 31,
2006 and June 30, 2006.

19

 

     “Interest Payment Date” means the last day of each Interest Period and the applicable
Maturity Date.

     “Interest Period” means each successive three-month period commencing on the Closing
Date; provided that:

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

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

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

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

     “Investments” means, with respect to any Person, all direct or indirect investments by
such Person in other Persons (including Affiliates) in the forms of loans (including guarantees or
other obligations), advances or capital contributions (excluding (1) commission, travel and similar
advances to officers and employees made in the ordinary course of business and (2) advances to
customers in the ordinary course of business that are recorded as accounts receivable on the
balance sheet of the lender), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP. If the Borrower or any Restricted
Subsidiary of the Borrower sells or otherwise disposes of any Equity Interests of any direct or
indirect Restricted Subsidiary of the Borrower such that, after giving effect to any such sale or
disposition, such Person is no longer a Restricted Subsidiary of the Borrower, the Borrower will be
deemed to have made an Investment on the date of any such sale or disposition in an amount equal to
the fair market value of the Equity Interests of such Restricted Subsidiary not sold or disposed of
in an amount determined as provided in the final paragraph of Section 7.01. The
acquisition by the Borrower or any Subsidiary of the Borrower of a Person that holds an Investment
in a third Person will be deemed to be an Investment made by the Borrower or such Subsidiary in
such third Person in an amount equal to the fair market value of the Investment held by the
acquired Person in such third Person on the date of any such acquisition in an amount determined as
provided in the final paragraph of Section 7.01.

     “IP Rights” has the meaning specified in Section 5.17.

     “IRS” means the United States Internal Revenue Service.

20

 

     “Joint Venture” means any Person that is not a direct or indirect Subsidiary of the
Borrower in which the Borrower or any of its Restricted Subsidiaries makes any Investment.

     “Kinder Morgan Gas Processing Agreement” means that certain Amended and Restated Gas
Processing Contract dated as of February 1, 2006, between Copano Processing, L.P. and Kinder Morgan
Texas Pipeline, L.P., and that certain related Letter Agreement between Copano Processing, L.P. and
Kinder Morgan Texas Pipeline, L.P., regarding prepayment of carbon dioxide handling fees, together
with all amendments and modifications thereto permitted to be made by this Agreement.

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

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

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

     “Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security
interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or
otherwise perfected under applicable Law, including any conditional sale or other title retention
agreement, any lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing statement under the
Uniform Commercial Code (or equivalent statutes) of any jurisdiction other than a precautionary
financing statement respecting a lease not intended as a security agreement.

     “Loan” has the meaning specified in Section 2.01.

     “Loan Documents” means this Agreement, each Note, the Fee Letter, the Engagement
Letter, the Guaranty and all other agreements, certificates, documents, instruments and writings at
any time delivered in connection herewith (exclusive of term sheets and commitment letters).

     “Loan Facility” means, at any time, (a) prior to the Borrowing, the Aggregate
Commitments, and (b) after the Borrowing, the aggregate amount of Loans of all Lenders at such
time.

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

     “Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties, liabilities (actual or contingent) or
condition (financial or otherwise) of the Borrower or the Borrower and its Restricted Subsidiaries
taken as a whole; (b) a material impairment of the ability of any Loan Party to perform its
obligations

21

 

under any Loan Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to
which it is a party.

     “Material Contracts” means (a) the Kinder Morgan Gas Processing Agreement, (b) the New
Dominion Gas Purchase Agreement, and (c) any other contract or arrangement to which the Borrower or
any of its Restricted Subsidiaries is a party (other than the Loan Documents) that constitutes ten
percent (10%) or more of the aggregate revenue of the Loan Parties on a consolidated basis.

     “Maturity Date” means November 1, 2010.

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

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

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

     “Net Cash Proceeds” means the remainder of (a) the gross proceeds received by any Loan
Party from the issuance or incurrence of any Indebtedness or the issuance of any Equity Interests,
as applicable, less (b) underwriter discounts and commissions, investment banking fees, legal,
accounting and other professional fees and expenses, and other usual and customary transaction
costs, in each case only to the extent paid or payable by a Loan Party in cash and related to such
issuance or incurrence of Indebtedness or issuance of Equity Interests, as applicable.

     “Net Proceeds” means the aggregate cash proceeds received by the Borrower or any of
its Restricted Subsidiaries in respect of any Asset Sale (including, without limitation, any cash
received upon the sale or other disposition of any non-cash consideration received in any Asset
Sale), net of:

     (a) the direct costs relating to such Asset Sale, including, without limitation, legal,
accounting and investment banking fees, and sales commissions, and any relocation expenses
incurred as a result of the Asset Sale,

     (b) taxes paid or payable as a result of the Asset Sale, in each case, after taking
into account any available tax credits or deductions and any tax sharing arrangements,

     (c) amounts required to be applied to the repayment of Indebtedness secured by a Lien
on the properties or assets that were the subject of such Asset Sale, and

     (d) any amounts to be set aside in any reserve established in accordance with GAAP or
any amount placed in escrow, in either case for adjustment in respect of the sale price of
such properties or assets or for liabilities associated with such Asset Sale and retained by
the Borrower or any of its Restricted Subsidiaries until such time as such

22

 

reserve is reversed or such escrow arrangement is terminated, in which case Net
Proceeds shall include only the amount of the reserve so reversed or the amount returned to
the Borrower or its Restricted Subsidiaries from such escrow arrangement, as the case may
be.

     “New Dominion Gas Purchase Agreement” means that certain Amended and Restated Gas
Purchase and Processing Agreement dated May 1, 2005 between ScissorTail, Buyer/Processor, and New
Dominion, L.L.C., Supplier.

     “Non-Recourse Debt” means Indebtedness:

     (a) as to which neither the Borrower nor any of its Restricted Subsidiaries (i)
provides credit support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (ii) is directly or indirectly liable as a guarantor or
otherwise, or (iii) is the lender;

     (b) no default with respect to which (including any rights that the holders of the
Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would
permit upon notice, lapse of time or both any holder of any other Indebtedness (other than
the Notes) of the Borrower or any of its Restricted Subsidiaries to declare a default on
such other Indebtedness or cause the payment of the Indebtedness to be accelerated or
payable prior to its Stated Maturity; and

     (c) as to which the lenders have been notified in writing that they will not have any
recourse to the stock or assets of the Borrower or any of its Restricted Subsidiaries except
as contemplated by clause (i) of the definition of Permitted Liens.

     For purposes of determining compliance with Section 7.03, in the event that any
Non-Recourse Debt of any of the Borrower’s Unrestricted Subsidiaries ceases to be Non-Recourse Debt
of such Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of
Indebtedness by a Restricted Subsidiary of the Borrower.

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

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

     “Officers’ Certificate” means a certificate signed on behalf of the Borrower by two of
its Responsible Officers, one of whom must be the principal executive officer, the principal
financial officer, the treasurer or the principal accounting officer of the Borrower, that meets
the requirements of Section 11.05 of the indenture governing the Existing Senior Notes.

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     “Operating Surplus” has the meaning assigned to such term in the Borrower LLC
Agreement, as in effect on the date of this Agreement.

     “Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable
to the Administrative Agent. The counsel may be an employee of or counsel to the Borrower, any
Subsidiary of the Borrower or the Administrative Agent.

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

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

     “Outstanding Amount” means, with respect to Loans on any date, the aggregate
outstanding principal amount thereof after giving effect to any borrowings and prepayments or
repayments of Loans, as the case may be, occurring on such date.

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

     “PBGC” means the Pension Benefit Guaranty Corporation.

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

     “Permitted Business” means either (a) gathering, transporting, treating, processing,
marketing, distributing, storing or otherwise handling Hydrocarbons, or activities or services
reasonably related or ancillary thereto including entering into Hedging Contracts to support these
businesses, or (b) any other business that generates gross income that constitutes “qualifying
income” under Section 7704(d) of the Code.

     “Permitted Business Investments” means Investments by the Borrower or any of its
Restricted Subsidiaries in any Unrestricted Subsidiary of the Borrower or in any Joint Venture,
provided that:

24

 

     (a) either (i) at the time of such Investment and immediately thereafter, the Borrower
could incur $1.00 of additional Indebtedness under the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 7.03 or (ii) such Investment does not exceed
the aggregate amount of Incremental Funds not previously expended at the time of making such
Investment;

     (b) if such Unrestricted Subsidiary or Joint Venture has outstanding Indebtedness at
the time of such Investment, either (i) all such Indebtedness is Non-Recourse Debt or (ii)
any such Indebtedness of such Unrestricted Subsidiary or Joint Venture that is recourse to
the Borrower or any of its Restricted Subsidiaries (which shall include, without limitation,
all Indebtedness of such Unrestricted Subsidiary or Joint Venture for which the Borrower or
any of its Restricted Subsidiaries may be directly or indirectly, contingently or otherwise,
obligated to pay, whether pursuant to the terms of such Indebtedness, by law or pursuant to
any guarantee, including, without limitation, any “claw-back,” “make-well” or “keep-well”
arrangement) could, at the time such Investment is made, be incurred at that time by the
Borrower and its Restricted Subsidiaries under the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 7.03; and

     (c) such Unrestricted Subsidiary’s or Joint Venture’s activities are not outside the
scope of the Permitted Business.

     “Permitted Debt” has the meaning specified in Section 7.03.

     “Permitted Investments” means:

     (a) any Investment in the Borrower or in a Restricted Subsidiary of the Borrower;

     (b) any Investment in Cash Equivalents;

     (c) any Investment by the Borrower or any Restricted Subsidiary of the Borrower in a
Person, if as a result of such Investment:

     (i) such Person becomes a Restricted Subsidiary of the Borrower; or

     (ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its properties or assets to, or is
liquidated into, the Borrower or a Restricted Subsidiary of the Borrower;

     (d) any Investment made as a result of the receipt of non-cash consideration from:

     (i) an Asset Sale that was made pursuant to and in compliance with Section
7.04;

     (ii) pursuant to clause (7) of the items deemed not to be Asset Sales under the
definition of “Asset Sale;”

25

 

     (e) any Investment in any Person solely in exchange for the issuance of Equity
Interests (other than Disqualified Stock) of the Borrower;

     (f) any Investments received in compromise of obligations of trade creditors or
customers that were incurred in the ordinary course of business, including pursuant to any
plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade
creditor or customer, or as a result of a foreclosure by the Borrower or any of its
Restricted Subsidiaries with respect to any secured Investment in default;

     (g) Hedging Contracts;

     (h) Permitted Business Investments; and

     (i) other Investments in any Person having an aggregate fair market value (measured on
the date each such Investment was made and without giving effect to subsequent changes in
value), when taken together with all other Investments made pursuant to this clause (i) that
are at the time outstanding, not to exceed the greater of $25.0 million or 4.0% of the
Borrower’s Consolidated Net Tangible Assets.

     “Permitted Liens” means:

     (a) Liens securing any Indebtedness under any of the Credit Facilities;

     (b) Liens in favor of the Borrower or the Guarantors;

     (c) Liens on property of a Person existing at the time such Person is merged with or
into or consolidated with the Borrower or any Restricted Subsidiary of the Borrower,
provided that such Liens were in existence prior to the contemplation of such merger
or consolidation and do not extend to any assets other than those of the Person merged into
or consolidated with the Borrower or the Restricted Subsidiary;

     (d) Liens on property existing at the time of acquisition of the property by the
Borrower or any Restricted Subsidiary of the Borrower, provided that such Liens were
in existence prior to the contemplation of such acquisition;

     (e) any interest or title of a lessor to the property subject to a Capital Lease
Obligation;

     (f) Liens on any property or asset acquired, constructed or improved by the Borrower or
any of its Restricted Subsidiaries (a “Purchase Money Lien”), which (a) are in
favor of the seller of such property or assets, in favor of the Person developing,
constructing, repairing or improving such asset or property, or in favor of the Person that
provided the funding for the acquisition, development, construction, repair or improvement
cost, as the case may be, of such asset or property, (b) are created within 360 days after
the acquisition, development, construction, repair or improvement, (c) secure the purchase
price or development, construction, repair or improvement cost, as the case may be, of such
asset or property in an amount up to 100% of the fair market value (as determined by the
Board of Directors of the Borrower if such fair market value

26

 

is $15.0 million or more) of such acquisition, construction or improvement of such
asset or property, and (d) are limited to the asset or property so acquired, constructed or
improved (including the proceeds thereof, accessions thereto and upgrades thereof);

     (g) Liens existing on the date of this Agreement other than Liens securing the Credit
Facilities;

     (h) Liens to secure the performance of tenders, bids, statutory obligations, surety or
appeal bonds, government contracts, performance bonds or other obligations of a like nature
incurred in the ordinary course of business;

     (i) Liens on and pledges of the Equity Interests of any Unrestricted Subsidiary or any
Joint Venture owned by the Borrower or any Restricted Subsidiary of the Borrower to the
extent securing Non-Recourse Debt or other Indebtedness of such Unrestricted Subsidiary or
Joint Venture;

     (j) Liens on pipelines or pipeline facilities that arise by operation of law;

     (k) Liens arising under operating agreements, joint venture agreements, partnership
agreements, oil and gas leases, farmout agreements, division orders, contracts for sale,
transportation or exchange of crude oil and natural gas, unitization and pooling
declarations and agreements, area of mutual interest agreements and other agreements arising
in the ordinary course of business of the Borrower and its Restricted Subsidiaries that are
customary in the Permitted Business;

     (l) Liens upon specific items of inventory, receivables or other goods or proceeds of
the Borrower or any of its Restricted Subsidiaries securing such Person’s obligations in
respect of bankers’ acceptances or receivables securitizations issued or created for the
account of such Person to facilitate the purchase, shipment or storage of such inventory,
receivables or other goods or proceeds and permitted by Section 7.03;

     (m) Liens securing Obligations of the Borrower or any Guarantor under the Notes or the
Guaranty, as the case may be;

     (n) Liens securing any Indebtedness equally and ratably with all Obligations due under
the Loans or the Guaranty pursuant to a contractual covenant that limits Liens in a manner
substantially similar to Section 7.06;

     (o) Liens to secure performance of Hedging Contracts of the Borrower or any of its
Restricted Subsidiaries;

     (p) Liens incurred in the ordinary course of business of the Borrower or any Restricted
Subsidiary of the Borrower, provided that, after giving effect to any such
incurrence, the aggregate principal amount of all Indebtedness then outstanding and secured
by any Liens incurred pursuant to this clause (p) does not exceed the greater of $15.0
million or 2.5% of the Borrower’s Consolidated Net Tangible Assets; and

27

 

     (q) any Lien renewing, extending, refinancing or refunding a Lien permitted by clauses
(a) through (o) above, provided that (i) the principal amount of the Indebtedness
secured by such Lien is not increased and (ii) no assets encumbered by any such Lien other
than the assets permitted to be encumbered immediately prior to such renewal, extension,
refinance or refund are encumbered thereby.

     “Permitted Refinancing Indebtedness” means any Indebtedness of the Borrower or any of
its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund other Indebtedness of the Borrower or any of
its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

     (a) the principal amount of such Permitted Refinancing Indebtedness does not exceed the
principal amount of the Indebtedness being extended, refinanced, renewed, replaced, defeased
or refunded (plus all accrued interest on the Indebtedness and the amount of all expenses
and premiums incurred in connection therewith);

     (b) such Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than
the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded;

     (c) if the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Loans or the Guaranty, such Permitted
Refinancing Indebtedness is subordinated in right of payment to the Loans or the Guaranty on
terms at least as favorable to the Lenders as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded; and

     (d) such Indebtedness is not incurred by a Restricted Subsidiary of the Borrower if the
Borrower is the obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded.

     Notwithstanding the preceding, any Indebtedness incurred under Credit Facilities pursuant to
Section 7.03 shall be subject only to the refinancing provision in the definition of Credit
Facilities and not pursuant to the requirements set forth in the definition of Permitted
Refinancing Indebtedness.

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

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

     “Platform” has the meaning specified in Section 6.02.

     “Pre-Commitment Information” has the meaning specified for such term in the Commitment
Letter.

28

 

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

     “Rating Category” means:

     (a) with respect to S&P, any of the following categories: AAA, AA, A, BBB, BB, B, CCC,
CC, C and D (or equivalent successor categories); and

     (b) with respect to Moody’s, any of the following categories: Aaa, Aa, A, Baa, Ba, B,
Caa, Ca, C and D (or equivalent successor categories).

     “Rating Decline” means a decrease in the rating of the Existing Senior Notes by either
Moody’s or S&P by one or more gradations (including gradations within Rating Categories as well as
between Rating Categories). In determining whether the rating of the Existing Senior Notes has
decreased by one or more gradations, gradations within Rating Categories, namely + or – for S&P,
and 1, 2, and 3 for Moody’s, will be taken into account; for example, in the case of S&P, a rating
decline either from BB+ to BB or BB- to B+ will constitute a decrease of one gradation.

     “Refinancing” means permanently repaying a portion of the Indebtedness outstanding
under the Credit Agreement with all of the net proceeds of the Loans.

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

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

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

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

     “Reporting Default” means the failure by the Borrower to comply with the provisions of
Section 6.01 for 90 days after notice to the Borrower by the Administrative Agent or the
Required Lenders of such failure.

     “Required Lenders” means, as of any date of determination, Lenders holding more than
50% of the sum of the Outstanding Amounts.

     “Responsible Officer” means the chief executive officer, president, chief financial
officer, vice president, manager, treasurer or assistant treasurer of a Loan Party (or any general
partner, managing member or Person in a similar capacity with respect thereto). Any document
delivered hereunder that is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or other action on the
part of such Loan Party and such Responsible Officer shall be conclusively presumed to have acted
on behalf of such Loan Party.

29

 

     “Restricted Investment” means an Investment other than a Permitted Investment.

     “Restricted Payment” has the meaning specified in Section 7.01.

     “Restricted Subsidiary” means each Subsidiary of the Borrower that is not an
Unrestricted Subsidiary.

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

     “Sale and Leaseback Transaction” means an arrangement relating to property owned by
the Borrower or a Restricted Subsidiary on the Closing Date or thereafter acquired by the Borrower
or a Restricted Subsidiary whereby the Borrower or a Restricted Subsidiary transfers such property
to a Person and the Borrower or a Restricted Subsidiary leases it from such Person.

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

     “ScissorTail” means ScissorTail Energy, LLC, a Delaware limited liability company.

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

     “Securities Act” means the Securities Act of 1933, as amended.

     “Securities Laws” means the Securities Act, the Exchange Act, Sarbanes-Oxley and the
applicable accounting and auditing principles, rules, standards and practices promulgated, approved
or incorporated by the SEC or the Public Company Accounting Oversight Board, as each of the
foregoing may be amended and in effect on any applicable date hereunder.

     “Senior Debt” means

     (a) all Indebtedness of the Borrower or any of its Restricted Subsidiaries outstanding
under the Credit Facilities and all obligations under Hedging Contracts with respect
thereto;

     (b) any other Indebtedness of the Borrower or any of its Restricted Subsidiaries
permitted to be incurred under the terms of this Agreement, unless the instrument under
which such Indebtedness is incurred expressly provides that it is subordinated in right of
payment to the Loans or the Guaranty; and

     (c) all Obligations with respect to the items listed in the preceding clauses (a) and (b).

     Notwithstanding anything to the contrary in the preceding sentence, Senior Debt will not
include:

     (1) any intercompany Indebtedness of the Borrower or any of its Restricted Subsidiaries
to the Borrower or any of its Affiliates; or

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     (2) any Indebtedness that is incurred in violation of this Agreement.

For the avoidance of doubt, “Senior Debt” will not include any trade payables or taxes owed or
owing by the Borrower or any Restricted Subsidiary.

     “Solvent” and “Solvency” mean, with respect to any Person on a particular
date, that on such date both (a) (i) the fair value of the property of such Person is greater than
the total amount of liabilities, including, without limitation, contingent liabilities, of such
Person, (ii) the present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay such debts and liabilities as
they mature, and (iv) such Person is not engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person’s property would constitute an
unreasonably small capital, and (b) such Loan Party is “solvent” within the meaning given that term
and similar terms under applicable laws relating to fraudulent transfers and conveyances. The
amount of contingent liabilities at any time shall be computed as the amount that, in the light of
all the facts and circumstances existing at such time, represents the amount that can reasonably be
expected to become an actual or matured liability (irrespective of whether such contingent
liabilities meet the criteria for accrual under Statement of Financial Accounting Standard No. 5).

     “Southern Dome” means Southern Dome, LLC, a Delaware limited liability company, in
which Borrower owns, directly or indirectly, a majority interest.

     “SPC” has the meaning specified in Section 10.06(h).

     “Specified Default” means any Event of Default under Section 8.01(a), (f) or
(g).

     “Stated Maturity” means, with respect to any installment of interest or principal on
any series of Indebtedness, the date on which the payment of interest or principal was scheduled to
be paid in the original documentation governing such Indebtedness, and will not include any
contingent obligations to repay, redeem or repurchase any such interest or principal prior to the
date originally scheduled for the payment thereof.

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

     “Syndication Information” means any written marketing materials, including all
financial information and data, and any information memorandum used by the Arranger in connection
with the syndication of the Loan Facility.

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

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

     “Threshold Amount” means $5,000,000.

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

     “Uniform Commercial Code” means the New York Uniform Commercial Code as in effect from
time to time.

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

     “Unrestricted Subsidiary” means Estes Cove Facilities, L.L.C., Nueces Gathering,
L.L.C., Southern Dome, Webb/Duval Gatherers, or any other Subsidiary of the Borrower designated as
such on Schedule 5.13 or which the Borrower has designated in writing to the Administrative
Agent to be an Unrestricted Subsidiary pursuant to Section 7.10.

     “Voting Stock” of any Person as of any date means the Capital Stock of such Person
that is at the time entitled (without regard to the occurrence of any contingency) to vote in the
election of the Board of Directors of such Person.

     “Weighted Average Life to Maturity” means, when applied to any Indebtedness at any
date, the number of years obtained by dividing:

     (a) the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect of the Indebtedness, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between such date
and the making of such payment; by

     (b) the then outstanding principal amount of such Indebtedness.

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

     (a) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and

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

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

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

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

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

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     (c) Consolidation of Variable Interest Entities. All references herein to
consolidated financial statements of the Borrower and its Subsidiaries or to the determination of
any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference
shall, in each case, be deemed to include each variable interest entity that the Borrower is
required to consolidate pursuant to FASB Interpretation No. 46 – Consolidation of Variable Interest
Entities: an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a
Subsidiary as defined herein.

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

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

ARTICLE II.

THE LOAN FACILITY

     2.01 The Loans. (a) Subject to the terms and conditions set forth herein, each Lender
severally agrees to make a loan (each a “Loan”) to the Borrower on the Closing Date in the
amount of such Lender’s Commitment. The Borrowing shall consist of Loans made simultaneously by
the Lenders in accordance with their respective Applicable Percentage of the Loan Facility.
Amounts borrowed under this Section 2.01 and repaid or prepaid may not be reborrowed.

     (b) Each Lender shall make the amount of its Loan available to the Administrative Agent in
immediately available funds at the Administrative Agent’s Office not later than 1:00 p.m. on the
Closing Date. Upon satisfaction of the conditions set forth in Section 4.01, the
Administrative Agent shall make all funds so received available to the Borrower in like funds as
received by the Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of such funds, in each
case in accordance with instructions provided to (and reasonably acceptable to) the Administrative
Agent by the Borrower.

     (c) The Administrative Agent shall promptly notify the Borrower and the Lenders of the
interest rate applicable to any Interest Period upon determination of such interest rate.

     2.02 Prepayments. (a) Optional. The Borrower may, upon notice to the Administrative
Agent, at any time or from time to time voluntarily prepay Loans, in whole or in part, without
premium or penalty; provided that (i) such notice must be received by the Administrative
Agent not later than 11:00 a.m. three Business Days prior to any date of prepayment of the Loans
and (ii) any prepayment of the Loans shall be in a principal amount of $5,000,000 or a whole
multiple of $1,000,000 in excess thereof or, if less, the entire principal amount thereof then
outstanding. Each such notice shall specify the date and amount of such prepayment. The
Administrative Agent will promptly notify each Lender of its receipt of each

34

 

such notice, and of the amount of such Lender’s ratable portion of such prepayment (based on
such Lender’s Applicable Percentage). If such notice is given by the Borrower, the Borrower shall
make such prepayment and the payment amount specified in such notice shall be due and payable on
the date specified therein. Any prepayment of a Loan shall be accompanied by all accrued interest
thereon, together with any additional amounts required pursuant to Section 3.05.

     (b) Mandatory.

     (i) Upon the sale or issuance by any Loan Party of any of its Equity Interests (other
than any sales or issuances of Equity Interests by the Borrower to any directors, officers
or employees of the Borrower or any of its Subsidiaries), the Borrower shall prepay the
Loans, without premium or penalty, together with accrued interest to the prepayment date,
with 100% of all Net Cash Proceeds received therefrom immediately upon receipt thereof.

     (ii) Within three (3) Business Days after the incurrence or issuance by any Loan Party
of any Indebtedness (other than any additional Indebtedness incurred under the Credit
Agreement as in effect on the Closing Date or as amended solely to increase the commitment
amount thereunder), the Borrower shall prepay the Loans, without premium or penalty,
together with accrued interest to the prepayment date, with 100% of all Net Cash Proceeds
received therefrom.

     (iii) In the event that (A) the Borrower or any of its Affiliates enters into a
commitment letter or other agreement for the provision of committed bridge or interim
financing with respect to a material acquisition (the “Acquisition Bridge”) by the
Borrower or any of its Subsidiaries, (B) the Borrower or any of its Affiliates executes the
definitive purchase agreement related to such material acquisition, and (C) after giving pro
forma effect to the incurrence of Indebtedness under the Acquisition Bridge (whether or not
funds under the Acquisition Bridge are borrowed or anticipated to be borrowed) the Borrower
and its Subsidiaries, as of the twelve month period ending with the most recently completed
fiscal quarter, would have a Consolidated Total Leverage Ratio in excess of 4.75 to 1.00,
then, at the option of the Arranger, the Borrower will promptly execute the definitive
documentation related to the Acquisition Bridge and fund a portion of the Acquisition Bridge
and prepay the Loans in full, without premium or penalty, together with accrued interest to
the prepayment date, with borrowings under the Acquisition Bridge.

     (c) Change of Control. (i) Within 30 days after the occurrence of a Change of
Control, the Borrower shall either repay all obligations under the Credit Agreement or obtain any
required consents under the Credit Agreement to make the offer described below (the “Change of
Control Offer”).

     (ii) Upon the occurrence of a Change of Control, each Lender will have the right to
require the Borrower to prepay all or any part of such Lender’s Loans pursuant to the Change
of Control Offer at a prepayment price in cash equal to 101% of the aggregate principal
amount thereof plus accrued and unpaid interest thereon, if any, to the date of prepayment
(the “Change of Control Payment”). Within 10 days following any Change

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of Control, the Borrower will deliver a written notice (the “Change of Control
Notice”) to the Administrative Agent in the manner provided for notices in Section
10.02 and the Administrative Agent will promptly forward such Change of Control Notice
to each Lender in such manner. The Change of Control Notice shall describe the transaction
or transactions that constituted the Change of Control and offer to repay the Loans on the
date specified in such Change of Control Notice, which date shall be no earlier than 30 days
but no later than 60 days from the date of the occurrence of the Change of Control (the
“Change of Control Payment Date”), pursuant to the procedures set forth below.

     (iii) The Change of Control Offer shall remain open from the time of mailing of the
Change of Control Notice until ten Business Days prior to the anticipated Change of Control
Payment Date. The Change of Control Notice shall contain all instructions and materials
necessary to enable the Lenders to elect to be prepaid pursuant to the Change of Control
Offer. To accept the Change of Control Offer, in whole or in part, a Lender shall notify
the Borrower in writing (with a copy to the Administrative Agent) in the manner provided for
notices in Section 10.02 or as otherwise provided in the Change of Control Offer not
later than ten Business Days prior to the anticipated Change of Control Payment Date.

     (iv) On the Change of Control Payment Date, the Borrower shall (A) make the Change of
Control Payment for each Loan (or portion thereof) elected to be repaid pursuant to the
Change of Control Offer by delivering the Change of Control Payments to the Administrative
Agent for transmittal to the applicable Lenders (such delivery by the Borrower constituting
the satisfaction of its obligations to make such Change of Control Payments) and (B) deliver
to each such Lender a new Note (if requested) equal in principal amount (excluding premiums,
if any) to the unpurchased portion of the corresponding Note surrendered by such Lender, if
any. Each Lender requesting a new Note shall, as a condition to the issuance of a new Note
deliver its existing Note to the Borrower or to the Administrative Agent on the Borrower’s
behalf in which case the Administrative Agent shall deliver such Note to the Borrower upon
the Borrower’s issuance of the new Note. The Administrative Agent will notify the remaining
Lenders of the results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

     2.03 Reduction of Commitments. The aggregate Commitments shall be automatically and
permanently reduced to zero immediately following the Borrowing.

     2.04 Repayment of Loans. The Loans will mature on the Maturity Date. The Borrower shall
repay to the Administrative Agent for the ratable account of the Lenders the aggregate principal
amount of the Loans on the Maturity Date.

     2.05 Interest. (a) Subject to the provisions of Section 2.05(b), each Loan shall bear
and accrue interest on the outstanding principal amount thereof for each Interest Period at a rate
equal to the Eurodollar Rate for such Interest Period (as determined pursuant to Section
2.07) plus the Applicable Rate.

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     (b) Upon the occurrence and during the continuance of any Specified Default, the Borrower
shall pay interest on all outstanding Obligations under the Loan Documents at a rate per annum
equal to the Default Rate to the fullest extent permitted by applicable Laws.

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

     2.06 Fees. The Borrower shall pay to the Arranger and the Administrative Agent for their own
respective accounts fees in the amounts and at the times specified in the Fee Letter. The Borrower
shall pay to the Administrative Agent such fees as shall have been separately agreed upon in
writing in the amounts and at the times so specified. Such fees shall be fully earned when paid
and shall not be refundable for any reason whatsoever.

     2.07 Computation of Interest and Fees. The Administrative Agent shall determine the
Eurodollar Rate no more than 3 Business Days, and no less than 1 Business Day, prior to the Closing
Date and thereafter, the first day of each subsequent Interest Period. Upon such determination,
the Administrative Agent shall notify the Borrower and each Lender of such determination. All
computations of fees and interest shall be made on the basis of a 360-day year and actual days
elapsed (which results in more fees or interest, as applicable, being paid than if computed on the
basis of a 365-day year). Interest shall accrue on each Loan for the day on which the Loan is
made, and shall not accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day on which it is made
shall, subject to Section 2.09(a), bear interest for one day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive and binding for all
purposes, absent manifest error.

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

     2.09 Payments Generally; Administrative Agent’s Clawback. (a) General. All payments
to be made by the Borrower shall be made without condition or deduction for any counterclaim,
defense, recoupment or setoff. Except as otherwise expressly provided herein, all

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payments by the Borrower hereunder shall be made to the Administrative Agent, for the account
of the respective Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date specified herein.
The Administrative Agent will promptly distribute to each Lender its Applicable Percentage (or
other applicable share as provided herein) of such payment in like funds as received by wire
transfer to such Lender’s Lending Office. All payments received by the Administrative Agent after
2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest
or fee shall continue to accrue. If any payment to be made by the Borrower shall come due on a day
other than a Business Day, payment shall be made on the next following Business Day, and such
extension of time shall be included in computing interest or fees, as the case may be.

     (b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the Closing Date that such
Lender will not make available to the Administrative Agent such Lender’s share of the Loans, the
Administrative Agent may assume that such Lender has made such share available on such date in
accordance with Section 2.01 and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of
the Loans available to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and including the date such
amount is made available to the Borrower to but excluding the date of payment to the Administrative
Agent, at (A) in the case of a payment to be made by such Lender, the greater of the Federal Funds
Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation, plus any administrative, processing or similar fees customarily charged by
the Administrative Agent in connection with the foregoing, and (B) in the case of a payment to be
made by the Borrower, the then applicable interest rate payable pursuant to Section 2.05 on
Loans. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the
same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the
amount of such interest paid by the Borrower for such period. If such Lender pays its share of the
Loans to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loans.
Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a
Lender that shall have failed to make such payment to the Administrative Agent.

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

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rate determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.

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

     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to the
Administrative Agent funds for its Loan to be made by such Lender as provided in the foregoing
provisions of this Article II, and such funds are not made available to the Borrower by the
Administrative Agent because the conditions to the borrowing of Loans set forth in Article
IV are not satisfied or waived in accordance with the terms hereof, the Administrative Agent
shall return such funds (in like funds as received from such Lender) to such Lender, without
interest.

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

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

     (f) Insufficient Payment. Whenever any payment received by the Administrative Agent
under this Agreement or any of the other Loan Documents is insufficient to pay in full all amounts
due and payable to the Administrative Agent and the Lenders under or in respect of this Agreement
and the other Loan Documents on any date, such payment shall be distributed by the Administrative
Agent and applied by the Administrative Agent and the Lenders in the order of priority set forth in
Section 8.03.

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

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

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     (ii) the provisions of this Section 2.10 shall not be construed to apply to (A)
any payment made by the Borrower pursuant to and in accordance with the express terms of
this Agreement or (B) any payment obtained by a Lender as consideration for the assignment
of or sale of a participation in any of its Loans to any assignee or participant, other than
to the Borrower or any Subsidiary thereof (as to which the provisions of this Section
2.10 shall apply).

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

ARTICLE III.

TAXES, YIELD PROTECTION AND ILLEGALITY

     3.01 Taxes.

     (a) Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if
the Borrower shall be required by applicable Law to deduct any Indemnified Taxes (including any
Other Taxes) from such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to additional sums payable
under this Section 3.01) the Administrative Agent or Lender, as the case may be, receives
an amount equal to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable Law.

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

     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent and each Lender, within 10 days after demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 3.01) paid by the Administrative Agent
or such Lender, as the case may be, and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as
to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to
the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.

     (d) Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver

40

 

to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent.

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

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

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

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

     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (B) a holder of ten percent (10%) or more of the capital or profit interests of the
Borrower within the meaning of section 871(h)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (y) duly completed
copies of Internal Revenue Service Form W-8BEN, or

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

     (f) United States Lenders. Upon request of the Borrower or the Administrative Agent,
a Lender that is a United States person within the meaning of Section 7701(a)(30) of the Code shall
deliver to such requesting party (in such number of copies as shall be requested

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thereby) duly completed copies of Internal Revenue Service Form W-9, or any successor or other
applicable form.

     (g) Treatment of Certain Refunds. If the Administrative Agent or any Lender
determines, in its sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the Borrower has paid
additional amounts pursuant to this Section 3.01, it shall pay to the Borrower an amount
equal to such refund (but only to the extent of indemnity payments made, or additional amounts
paid, by the Borrower under this Section 3.01 with respect to the Taxes or Other Taxes
giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender, as the case may be, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the Administrative Agent or such
Lender is required to repay such refund to such Governmental Authority. This subsection shall not
be construed to require the Administrative Agent or any Lender to make available its tax returns
(or any other information relating to its taxes that it deems confidential) to the Borrower or any
other Person.

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

     3.03 Inability to Determine Rates. If the Required Lenders determine that for any reason in
connection with any Loans that (a) Dollar deposits are not being offered to banks in the London
interbank eurodollar market for the applicable amount and Interest Period of such Loans, (b)
adequate and reasonable means do not exist for determining the Eurodollar Rate for any Interest
Period with respect to a Loan, or (c) the Eurodollar Rate for any Interest Period with respect to a
Loan does not adequately and fairly reflect the cost to such Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Borrower and each Lender. In such event, the rate
of interest for the applicable Interest Period shall be a rate per annum determined by the
Administrative Agent, in consultation with the Borrower, to reasonably approximate the rate of
interest that would apply for such Interest Period if the applicable condition set forth in clause
(a), (b) or (c) of this Section 3.03 was not satisfied, plus the Applicable Rate.

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     3.04 Increased Costs; Reserves on Loans.

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

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

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

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

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

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

     (c) Certificates for Reimbursement. A certificate of a Lender setting forth the
amount or amounts necessary to compensate such Lender or its holding company, as the case may be,
as specified in subsection (a) or (b) of this Section 3.04 and delivered to the Borrower
shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as
due on any such certificate within 10 days after receipt thereof.

     (d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to the foregoing provisions of this Section 3.04 shall not constitute
a waiver of such Lender’s right to demand such compensation, provided that the Borrower
shall not be required to compensate a Lender pursuant to the foregoing provisions of this
Section 3.04 for any increased costs incurred or reductions suffered more than nine months
prior to the date that such Lender notifies the Borrower of the Change in Law giving rise to such
increased costs

43

 

or reductions and of such Lender’s intention to claim compensation therefor (except that, if
the Change in Law giving rise to such increased costs or reductions is retroactive, then the
nine-month period referred to above shall be extended to include the period of retroactive effect
thereof).

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

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

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

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

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

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

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

     3.06 Mitigation Obligations; Replacement of Lenders.

     (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 3.04, or the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 3.01, or if
any

44

 

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

     (b) Replacement of Lenders. If any Lender requests compensation under Section
3.04, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01 or if any
Lender gives a notice pursuant to Section 3.02, the Borrower may replace such Lender in
accordance with Section 10.13.

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

ARTICLE IV.

CONDITIONS PRECEDENT TO LOANS

     4.01 Conditions Precedent to Loans. The obligation of each Lender to make its Loan hereunder
is subject to satisfaction of the following conditions precedent:

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

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

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

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

     (iv) such documents and certifications as the Administrative Agent may reasonably
require to evidence that each Loan Party is duly organized or formed, and that each of the
Borrower and each Guarantor is validly existing, in good standing and qualified to engage in
business in each jurisdiction required by Section 5.01;

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     (v) favorable opinions of Vinson & Elkins L.L.P., counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set forth in
Exhibit G and such other matters concerning the Loan Parties and the Loan Documents
as the Required Lenders may reasonably request;

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

     (vii) the Initial Financial Statements which in each case (A) shall be satisfactory in
form and substance to the Administrative Agent and the Lenders, (B) shall not be materially
inconsistent with the Pre-Commitment Information and (C) with respect to any annual or
quarterly periods, shall meet the requirements of Regulation S-X of the Securities Act and
all other accounting rules and regulations of the SEC promulgated thereunder applicable to a
registration statement under the Securities Act on Form S-1;

     (viii) a certificate signed by a Responsible Officer of the Borrower certifying (A)
that the representations and warranties of the Borrower and each other Loan Party contained
in Article V or any other Loan Document are true and correct in all material
respects on and as of the Closing Date, except to the extent that such representations and
warranties specifically refer to an earlier date, in which case they shall be true and
correct in all material respects as of such earlier date, (B) that no Default exists, or
would result from the Loans or from the application of the proceeds thereof; and (C) that
there has been no event or circumstance since the date of the Audited Financial Statements
that has had or could be reasonably expected to have, either individually or in the
aggregate, a Closing Date Material Adverse Effect;

     (ix) a certificate from a Responsible Officer of the Borrower, in substantially the
form of Exhibit H hereto, attesting to the Solvency of the Borrower and each other
Loan Party after giving effect to the transactions contemplated by this Agreement and the
Refinancing;

     (x) a certificate from the chief financial officer of the Borrower certifying that the
pro forma ratio of Consolidated Funded Indebtedness at the Closing Date to Consolidated
EBITDA for the twelve months ended June 30, 2006 (which pro forma ratio shall be calculated
reflecting the Refinancing on a pro forma basis) was not greater than 3.50 to 1.00;

     (xi) a certificate from a Responsible Officer of the Borrower, certifying that no
default or event of default shall have occurred and be continuing under the indenture
governing the Existing Senior Notes or under the Credit Agreement, and that no such default
or event of default shall arise as a result of the Refinancing;

46

 

     (xii) such other assurances, certificates, documents, consents or opinions as the
Administrative Agent or the Required Lenders reasonably may require.

     (b) Any and all fees required to be paid by the Borrower to the Administrative Agent, the
Arranger and the Lenders on or before the Closing Date shall have been paid, including the fees
required by the Fee Letter. The Borrower shall have complied with all of the terms of the Fee
Letter and the Engagement Letter to be complied with on or before the Closing Date.

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

     (d) The Arranger shall be reasonably satisfied (i) with the arrangements for the payment of
the Refinancing with all of the net proceeds from the Loans, including any amendment to the Credit
Agreement necessary to effect the Refinancing, and (ii) that the Borrower has provided notice to
the administrative agent under the Credit Agreement in accordance with the requirements of Section
2.06 of the Credit Agreement to permanently reduce the revolving commitments under the Credit
Agreement by $100.0 million.

     (e) All of the Pre-Commitment Information shall be complete and correct in all material
respects, and no changes, occurrences or developments shall have occurred, and no new or additional
information shall have been received or discovered by the Arranger or the Lenders, regarding the
Borrower and its Subsidiaries or the Refinancing after the date of the Commitment Letter that (i)
either individually or in the aggregate, is or could reasonably be expected to (A) have a material
adverse effect on the business, operations (including results of operation), assets, liabilities or
financial condition of the Borrower and its Subsidiaries, taken as a whole, (B) materially and
adversely affect the ability of any Loan Party to perform its obligations under the Loan Documents
or (C) materially and adversely affect the rights and remedies of the Lenders under the Loan
Documents or (ii) purports to materially and adversely affect the Loan Facility or any other aspect
of the Refinancing; provided that, the foregoing shall exclude any circumstance, change or
effect resulting or arising from: (I) any change in general economic conditions in the industries
or markets in which the Borrower and its Subsidiaries operate, (II) seasonal reductions in revenues
and/or earnings of the Borrower and its Subsidiaries in the ordinary course of business, (III)
national or international political, diplomatic or military conditions, including any engagement
in, or escalation of, hostilities, whether or not pursuant to a declaration of war, or the
occurrence of any military or terrorist attack and (IV) changes in GAAP or other accounting
principles; provided that none of the changes, events, developments or effects described in
clauses (I), (II) and (IV) specifically relate to or have the effect of specifically relating to or
having a materially disproportionate effect on the Borrower relative to most other industry
participants in the midstream natural gas industry (collectively, a “Closing Date Material
Adverse Effect”). Any determination as to whether any circumstance, change or effect has a
Closing Date Material Adverse Effect shall be made only after taking into account all effective

47

 

insurance coverages, third-party indemnifications and tax benefits with respect to such
circumstance, change or effect.

     (f) The Borrower shall have received all governmental, unitholder and third party consents and
approvals necessary in connection with the Refinancing, each of which shall be in full force and
effect.

     Without limiting the generality of the provisions of Section 9.04, for purposes of
determining compliance with the conditions specified in this Section 4.01, each Lender that
has signed this Agreement shall be deemed to have consented to, approved or accepted or to be
satisfied with, each document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its objection thereto.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES

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

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

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

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

48

 

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

     5.05 Financial Statements; No Material Adverse Effect; No Internal Control Event.

     (a) The Audited Financial Statements (i) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly noted therein; (ii)
fairly present in all material respects the financial condition of the Borrower and its
Subsidiaries as of the date thereof and their results of operations for the period covered thereby
in accordance with GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material indebtedness and other liabilities,
direct or contingent, of the Borrower and its Subsidiaries as of the date thereof, including
liabilities for taxes and Indebtedness.

     (b) The unaudited consolidated balance sheets of the Borrower and its Subsidiaries dated June
30, 2006, and the related consolidated statements of income or operations, members’ capital and
cash flows for the fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present in all material respects the financial condition of the Borrower
and its Subsidiaries as of the date thereof and their results of operations for the period covered
thereby, subject, in the case of clauses (i) and (ii), to the absence of footnotes and to normal
year-end audit adjustments. Schedule 5.05 sets forth all material indebtedness and other
liabilities, direct or contingent, of the Borrower and its consolidated Subsidiaries as of the date
hereof, including liabilities for taxes and Indebtedness, not disclosed in the Initial Financial
Statements.

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

     (d) Since the date of the Audited Financial Statements, no Internal Control Event has
occurred.

     5.06 Litigation. There are no actions, suits, investigations, proceedings, claims or disputes
pending or, to the knowledge of the Borrower after due and diligent investigation, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental Authority, by or against
the Borrower or any of its Restricted Subsidiaries or against any of their properties or revenues
that (a) purport to affect or pertain to this Agreement or any other Loan Document, or the
extensions of credit contemplated hereby or (b) either individually or in the

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aggregate, if determined adversely, could reasonably be expected to have a Material Adverse
Effect.

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

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

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

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

     5.11 Taxes. The Borrower and its Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all Federal, state and other
material taxes, assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets otherwise due and payable, except those which are being
contested in good faith by appropriate proceedings diligently conducted and for which adequate
reserves have been provided in accordance with GAAP. There is no proposed tax assessment against
the Borrower or any Subsidiary that would, if made, have a Material Adverse Effect. Neither any
Loan Party nor any Subsidiary thereof is party to any tax sharing agreement.

     5.12 ERISA Compliance.

     (a) Each Plan is in compliance in all material respects with the applicable provisions of
ERISA, the Code and other Federal or state Laws. Each Plan that is intended to qualify under
Section 401(a) of the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect thereto and, to
the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of,
such qualification. The Borrower and each ERISA Affiliate have made all required

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contributions to each Plan subject to Section 412 of the Code, and no application for a
funding waiver or an extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.

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

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

     5.13 Subsidiaries; Equity Interests. The Borrower has no Subsidiaries other than those
specifically disclosed in Part (a) of Schedule 5.13, and all of the outstanding Equity
Interests in such Subsidiaries have been issued and are owned by a Loan Party in the amounts
specified on Part (a) of Schedule 5.13 free and clear of all Liens other than Liens
permitted under Section 7.06. The Borrower has no equity investments in any other
corporation or entity other than those specifically disclosed in Part (b) of Schedule 5.13.
Schedule 5.13 identifies each Subsidiary as either Restricted or Unrestricted, its state
of organization, and its organizational identification number, and each Restricted Subsidiary on
such schedule is a wholly-owned Subsidiary.

     5.14 Margin Regulations; Investment Company Act.

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

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

     5.15 Disclosure. The Borrower has disclosed to the Administrative Agent and the Lenders all
agreements, instruments and corporate or other restrictions to which it or any of its Restricted
Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. No report, financial
statement, certificate or other written information furnished, including Syndication Information,
by or on behalf of any Loan Party to the Arranger, the Administrative Agent or any

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Lender in connection with the transactions contemplated hereby and the negotiation of this
Agreement or delivered hereunder or under any other Loan Document or the syndication of the Loan
Facility (in each case, as modified or supplemented by other information so furnished) contains any
misstatement of fact or omits to state any fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not materially misleading with respect to
the Borrower and its Restricted Subsidiaries and their operations, business and properties, taken
as a whole; provided that, with respect to projected financial information, the Borrower
represents only that such information was prepared in good faith based upon assumptions believed to
be reasonable at the time.

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

     5.17 Intellectual Property; Licenses, Etc. The Borrower and its Restricted Subsidiaries own,
or possess the right to use, all of the trademarks, service marks, trade names, copyrights,
patents, patent rights, franchises, licenses and other intellectual property rights (collectively,
“IP Rights”) that are reasonably necessary for the operation of their respective
businesses, without conflict with the rights of any other Person. To the best knowledge of the
Borrower, no slogan or other advertising device, product, process, method, substance, part or other
material now employed, or now contemplated to be employed, by the Borrower or any Restricted
Subsidiary infringes upon any rights held by any other Person. No claim or litigation regarding
any of the foregoing is pending or, to the best knowledge of the Borrower, threatened, which,
either individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.

     5.18 Labor Disputes and Acts of God. Neither the business nor the properties of any Loan
Party has been affected by any fire, explosion, accident, strike, lockout or other labor dispute,
drought, storm, hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which could reasonably be expected to have a Material
Adverse Effect.

     5.19 Solvency. Upon giving effect to the execution of this Agreement and the other Loan
Documents by the Borrower and each Guarantor that is a party thereto and the consummation of the
transactions contemplated hereby and thereby, including the Refinancing, the Borrower and each
Guarantor will be Solvent.

ARTICLE VI.

AFFIRMATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied, the Borrower shall, and shall (except in

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the case of the covenants set forth in Sections 6.01, 6.02, and 6.03)
cause each Restricted Subsidiary (as applicable) to:

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

     (a) as soon as available, but in any event within 90 days after the end of each fiscal year of
the Borrower, a consolidated balance sheet of the Borrower and its Subsidiaries (with consolidating
balance sheets breaking out (i) the Borrower and its Subsidiaries, excluding (x) ScissorTail and
its Subsidiaries (if any) and (y) any Unrestricted Subsidiaries described in clause (iii) below,
(ii) ScissorTail and its Subsidiaries (if any), and (iii) to the extent included in such
consolidated balance sheet, Unrestricted Subsidiaries with aggregate assets in excess of
$1,000,000), as at the end of such fiscal year, and the related consolidated and consolidating
statements of income or operations and members’ capital (or other form of owners’ equity) and
consolidated cash flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in accordance with
GAAP, such consolidated statements to be audited and accompanied by (i) a report and opinion of a
Registered Public Accounting Firm of nationally recognized standing reasonably acceptable to the
Required Lenders, which report and opinion shall be prepared in accordance with generally accepted
auditing standards and applicable Securities Laws and shall not be subject to any “going concern”
or like qualification or exception or any qualification or exception as to the scope of such audit
and (ii) an attestation report of such Registered Public Accounting Firm as to the Borrower’s
internal controls pursuant to Section 404 of Sarbanes-Oxley that does not identify any material
weaknesses or scope limitations, other than (1) scope limitations related to acquisitions by the
Borrower or the Restricted Subsidiaries that are effected during the period covered by the
attestation report or (2) material weaknesses or scope limitations to which the Required Lenders do
not object; and such consolidating statements to be certified by a Responsible Officer of the
Borrower to the effect that such statements are fairly stated in all material respects when
considered in relation to the consolidated financial statements of the Borrower and its
Subsidiaries; and

     (b) as soon as available, but in any event within 45 days after the end of each of the first
three fiscal quarters of each fiscal year of the Borrower (commencing with the fiscal quarter ended
September 30, 2006), a consolidated balance sheet of the Borrower and its Subsidiaries (with
consolidating balance sheets breaking out (i) the Borrower and its Subsidiaries, excluding (x)
ScissorTail and its Subsidiaries (if any) and (y) Unrestricted Subsidiaries described in clause
(iii) below, (ii) ScissorTail and its Subsidiaries (if any) and (iii) to the extent included in
such consolidated balance sheet, Unrestricted Subsidiaries with aggregate assets in excess of
$1,000,000), as at the end of such fiscal quarter, and the related consolidated and consolidating
statements of income or operations and members’ capital (or other form of owners’ equity) and
consolidated cash flows for such fiscal quarter and for the portion of the Borrower’s fiscal year
then ended, setting forth in each case in comparative form the figures for the corresponding fiscal
quarter of the previous fiscal year and the corresponding portion of the previous fiscal year, all
in reasonable detail, such consolidated statements to be certified by a Responsible Officer of the
Borrower as fairly presenting in all material respects the financial condition, results of
operations, members’ capital (or other owners’ equity) and cash flows of the Borrower and its
Subsidiaries in accordance with GAAP, subject only to normal year-end audit adjustments and

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the absence of footnotes and such consolidating statements to be certified by a Responsible
Officer of the Borrower to the effect that such statements are fairly stated in all material
respects when considered in relation to the consolidated financial statements of the Borrower and
its Subsidiaries.

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

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

     (a) concurrently with the delivery of the financial statements referred to in Section
6.01(a), the audit report and opinion referred to therein;

     (b) concurrently with the delivery of the financial statements referred to in Sections
6.01(a) and (b), a duly completed Compliance Certificate signed by a Responsible
Officer of the Borrower;

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

     (d) promptly after the same are available, copies of each annual report, proxy or financial
statement or other report or communication sent to the members of the Borrower, and copies of all
annual, regular, periodic and special reports and registration statements which the Borrower has
filed with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be
delivered to the Administrative Agent pursuant hereto;

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

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

     (g) promptly upon the occurrence thereof, notice of any acquisition or divestiture by the
Borrower or any of its Restricted Subsidiaries of any assets or properties in excess of $5,000,000;

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     (h) promptly upon its becoming available, copies of all notices or documents received by the
Borrower or any other Loan Party pursuant to any Material Contract alleging a material default or
nonperformance by such Person thereunder or terminating or suspending any such Material Contract;

     (i) as soon as available, and in any event within 60 days after the end of each fiscal year, a
financial plan for the Borrower (in form reasonably satisfactory to the Administrative Agent),
prepared or caused to be prepared by a Responsible Officer of the Borrower, setting forth for the
then calendar year and financial projections for the Borrower;

     (j) concurrently with the annual renewal of the Loan Parties’ insurance policies, if requested
by the Administrative Agent, a certificate of insurance showing all insurance required to be
maintained pursuant to the Loan Documents has been obtained and is in effect; and

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

     Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(d) may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date (i) on which the Borrower posts such documents, or provides a link
thereto on the Borrower’s website on the Internet at the website address listed on Schedule
10.02, or (ii) on which such documents are posted on the Borrower’s behalf on an Internet or
intranet website, if any, to which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative Agent); or (iii) on
which Borrower provides to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents (delivery of the Compliance Certificates required to
be delivered pursuant to Section 6.02(b) also being deemed delivered on such date if
included within such electronic mail under this clause (iii)); provided, the Borrower shall
upon the request of Administrative Agent provide to the Administrative Agent paper copies of any
such electronically delivered Compliance Certificates); provided further, that the
Borrower shall notify the Administrative Agent (by telecopier or electronic mail) of the posting of
any such documents pursuant to clause (i) or (ii) above and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such documents, and Administrative
hereby agrees that it shall use reasonable commercial efforts to post such documents received
pursuant to this clause (iii) on the Borrower’s behalf to a commercial, third-party or other
website sponsored by the Administrative Agent and notify the Lenders of such posting. Except as
expressly provided in the foregoing clause (iii) the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to above, and in any event
shall have no responsibility to monitor compliance by the Borrower with any such request for
delivery, and each Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

     The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will
make available to the Lenders materials and/or information provided by or on behalf of the Borrower
hereunder (collectively, “Borrower Materials”) by posting the Borrower

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Materials on IntraLinks or another similar electronic system (the “Platform”) and (b)
certain of the Lenders may be “public-side” Lenders (i.e., Lenders that do not wish to
receive material non-public information with respect to the Borrower or its securities) (each, a
“Public Lender”). The Borrower hereby agrees that so long as the Borrower is the issuer of
any outstanding debt or equity securities that are registered or issued pursuant to a private
offering or is actively contemplating issuing any such securities it will use commercially
reasonable efforts to identify that portion of the Borrower Materials that may be distributed to
the Public Lenders and that (w) all such Borrower Materials shall be clearly and conspicuously
marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on
the first page thereof; (x) by marking Borrower Materials “PUBLIC,” the Borrower shall be deemed to
have authorized the Administrative Agent, the Arranger and the Lenders to treat such Borrower
Materials as not containing any material non-public information with respect to the Borrower or its
securities for purposes of United States Federal and state securities laws (provided,
however, that to the extent such Borrower Materials constitute Information, they shall be
treated as set forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC” are
permitted to be made available through a portion of the Platform designated “Public Investor;” and
(z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials
that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not
designated “Public Investor.”

     6.03 Notices. Promptly notify the Administrative Agent and each Lender after any Responsible
Officer has knowledge:

     (a) of the occurrence of any Default;

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

     (c) of the occurrence of any ERISA Event;

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

     (e) of the occurrence of any Internal Control Event the occurrence of which would require
disclosure under the Securities Laws.

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

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     6.04 Payment of Obligations. Pay and discharge as the same shall become due and payable, all
its obligations and liabilities, including (a) all tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being contested in good
faith by appropriate proceedings diligently conducted and adequate reserves in accordance with GAAP
are being maintained by the Borrower or such Restricted Subsidiary; and (b) all lawful claims
which, if unpaid, would by Law become a Lien upon its property, unless the same are being contested
in good faith by appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Restricted Subsidiary.

     6.05 Preservation of Existence, Etc. (a) Preserve, renew and maintain in full force and
effect its legal existence and good standing under the Laws of the jurisdiction of its organization
except in a transaction permitted by Section 7.09; (b) take all reasonable action to
maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the
normal conduct of its business, except to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) preserve or renew all of its registered
patents, trademarks, trade names and service marks, the non-preservation of which could reasonably
be expected to have a Material Adverse Effect.

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

     6.07 Maintenance of Insurance. Maintain with financially sound and reputable insurance
companies not Affiliates of the Borrower, insurance with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons engaged in the same or
similar business, of such types and in such amounts as are customarily carried under similar
circumstances by such other Persons and providing (a) that such policies may not be canceled or
reduced or affected in any material manner for any reason without 30 days prior notice to the
Administrative Agent, and (b) for any other matters which the Administrative Agent may reasonably
require.

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

     6.09 Books and Records. Maintain proper books of record in conformity with GAAP consistently
applied regarding all financial transactions and matters involving the assets and business of the
Borrower or such Restricted Subsidiary, as the case may be.

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

     6.11 Use of Proceeds. Use the proceeds of the Borrowing (a) to effect the Refinancing, and
(b) for the payment of fees and expenses relating to the Refinancing and this Agreement.

     6.12 Additional Guarantors. Notify the Administrative Agent at the time that any Person
becomes a Restricted Subsidiary of the Borrower, and promptly thereafter (and in any event within
15 days), cause such Person to (a) become a Guarantor by executing and delivering to the
Administrative Agent a counterpart of the Guaranty or a joinder thereto in the form attached as
Exhibit F, and (b) deliver to the Administrative Agent documents of the types referred to
in clauses (iii) and (iv) of Section 4.01(a) and, upon request of the Administrative Agent,
favorable opinions of counsel to such Person (which shall cover, among other things, the legality,
validity, binding effect and enforceability of the documentation referred to in clause (a)), all in
form, content and scope reasonably satisfactory to the Administrative Agent.

     6.13 Environmental Matters; Environmental Reviews.

     (a) (i) Comply in all material respects with all Environmental Laws now or hereafter
applicable to such Person as well as all contractual obligations and agreements with respect to
environmental remediation or other environmental matters, (ii) obtain, at or prior to the time
required by applicable Environmental Laws, all permits, licenses and other authorizations under
applicable Environmental Laws necessary for its then current operations and will maintain such
authorizations in full force and effect, (iii) conduct any investigation, study, sampling and
testing, and undertake any cleanup, removal, remedial or other action necessary to remove and clean
up Hazardous Materials at or from any of its properties, as may be required by, and in accordance
with the requirements of, applicable Environmental Laws. Promptly pay and discharge when due all
debts, claims, liabilities and obligations with respect to any clean-up or remediation measures
necessary to comply with Environmental Laws unless, in each case, the same are being contested in
good faith by appropriate proceedings diligently conducted and adequate reserves in accordance with
GAAP are being maintained by the applicable Person.

     (b) Promptly furnish to Administrative Agent all written notices of violation, orders, claims,
citations, complaints, penalty assessments, suits or other proceedings received by such Person, or
of which it has notice, pending or threatened against such Person, the potential liability of which
exceeds $5,000,000 or could reasonably be expected to have a Material Adverse Effect if resolved
adversely against such Person, by any Governmental Authority with respect to any alleged violation
of or non-compliance with any applicable Environmental Laws

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or any permits, licenses or authorizations required under applicable Environmental Laws in
connection with its ownership or use of its properties or the operation of its business.

     (c) Promptly furnish to Administrative Agent all written requests for information, notices of
claim, demand letters, and other written notifications, received by such Person in connection with
its ownership or use of its properties or the conduct of its business, relating to potential
responsibility with respect to any investigation or clean-up of Hazardous Material arising from its
operations at any location, the potential liability of which exceeds $5,000,000 or could reasonably
be expected to have a Material Adverse Effect if resolved adversely against such Person.

     6.14 Compliance with Agreements. Observe, perform or comply with each Material Contract,
unless any such failure to so observe, perform or comply is remedied within the applicable period
of grace (if any) provided in such Material Contract or unless such failure to so observe, perform
or comply would not reasonably be expected to have a Material Adverse Effect.

     6.15 Unrestricted Subsidiaries. Will cause the management, business and affairs of each of
the Borrower and its Restricted Subsidiaries to be conducted in such a manner (including, without
limitation, by keeping separate books of account, furnishing separate financial statements of
Unrestricted Subsidiaries to creditors and potential creditors thereof and by not permitting
properties of the Borrower and its Restricted Subsidiaries to be commingled) so that each
Unrestricted Subsidiary that is a corporation or other legal entity will be treated as an entity
separate and distinct from the Borrower and the Restricted Subsidiaries.

     6.16 Forecasts. Deliver within 30 days following the Closing Date a certificate from the
chief financial officer of the Borrower (a) attaching forecasts, in form reasonably satisfactory to
the Arranger, the Administrative Agent and the Lenders, of balance sheets, income statements and
cash flow statements for each month for the first twelve months following the Closing Date and for
each year commencing with the first fiscal year following the Closing Date for the term of the Loan
Facility (which forecasts shall take into account any anticipated dispositions of assets during the
periods covered thereby) and (b) certifying that such forecasts were prepared in good faith on the
basis of assumptions that were fair in light of then existing conditions (subject to the proviso
that it is understood that such forecasts are necessarily based upon professional opinions,
estimates and projections and that the Borrower does not warrant that such opinions, estimates and
projections will ultimately prove to have been accurate).

ARTICLE VII.

NEGATIVE COVENANTS

     So long as any Lender shall have any Commitment hereunder, or any Loan or other Obligation
hereunder shall remain unpaid or unsatisfied:

     7.01 Limitation on Restricted Payments. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly:

     (a) declare or pay any dividend or make any other payment or distribution on account of the
Borrower’s or any of its Restricted Subsidiaries’ Equity Interests (including, without

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limitation, any payment in connection with any merger or consolidation involving the Borrower
or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Borrower’s or
any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than
dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the
Borrower or payable to the Borrower or a Restricted Subsidiary of the Borrower);

     (b) purchase, redeem or otherwise acquire or retire for value (including, without limitation,
in connection with any merger or consolidation involving the Borrower) any Equity Interests of the
Borrower or any direct or indirect parent of the Borrower;

     (c) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness that is subordinated to the Loans or the Guaranty, except a
payment of interest or principal at the Stated Maturity thereof; or

     (d) make any Restricted Investment (all such payments and other actions set forth in these
clauses (a) through (d) above being collectively referred to as “Restricted Payments”),

unless, at the time of and after giving effect to such Restricted Payment, no Default (except a
Reporting Default) or Event of Default has occurred and is continuing or would occur as a
consequence of such Restricted Payment and either:

     (a) if the Fixed Charge Coverage Ratio for the Borrower’s most recently ended four full fiscal
quarters for which internal financial statements are available at the time of such Restricted
Payment is not less than 1.75 to 1.0, such Restricted Payment, together with the aggregate amount
of all other Restricted Payments made by the Borrower and its Restricted Subsidiaries (excluding
Restricted Payments permitted by clauses (2), (3), (4) and (5) of the next succeeding paragraph)
with respect to the quarter for which such Restricted Payment is made, is less than the sum,
without duplication, of:

     (i) Available Cash from Operating Surplus with respect to the Borrower’s preceding
fiscal quarter, plus

     (ii) 100% of the aggregate net cash proceeds received by the Borrower (including the
fair market value of any Permitted Business or long-term assets that are used or useful in a
Permitted Business to the extent acquired in consideration of Equity Interests of the
Borrower (other than Disqualified Stock)) after the date of this Agreement as a contribution
to its common equity capital or from the issue or sale of Equity Interests of the Borrower
(other than Disqualified Stock) or from the issue or sale of convertible or exchangeable
Disqualified Stock or convertible or exchangeable debt securities of the Borrower that have
been converted into or exchanged for such Equity Interests (other than Equity Interests (or
Disqualified Stock or debt securities) sold to a Restricted Subsidiary of the Borrower),
plus

     (iii) to the extent that any Restricted Investment that was made after the date of this
Agreement is sold for cash or otherwise liquidated or repaid for cash, the cash return of
capital with respect to such Restricted Investment (less the cost of disposition, if any),
plus

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     (iv) the net reduction in Restricted Investments resulting from dividends, repayments
of loans or advances, or other transfers of assets in each case to the Borrower or any of
its Restricted Subsidiaries from any Person (including, without limitation, Unrestricted
Subsidiaries) or from redesignations of Unrestricted Subsidiaries as Restricted
Subsidiaries, to the extent such amounts have not been included in Available Cash from
Operating Surplus for any period commencing on or after the date of the indenture governing
the Existing Senior Notes (items (ii), (iii) and (iv) being referred to as “Incremental
Funds”), minus

     (v) the aggregate amount of Incremental Funds previously expended pursuant to this
clause (a) and clause (b) below; or

     (b) if the Fixed Charge Coverage Ratio for the Borrower’s most recently ended four full fiscal
quarters for which internal financial statements are available at the time of such Restricted
Payment is less than 1.75 to 1.00, such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by the Borrower and its Restricted Subsidiaries (excluding
Restricted Payments permitted by clauses (2), (3), (4) and (5) of the next succeeding paragraph)
with respect to the quarter for which such Restricted Payment is made (such Restricted Payments for
purposes of this clause (b) meaning only distributions on common units of the Borrower), is less
than the sum, without duplication, of:

     (i) $45.0 million less the aggregate amount of all prior Restricted Payments made by
the Borrower and its Restricted Subsidiaries pursuant to this clause (b)(i) since the date
of this Agreement, plus

     (ii) Incremental Funds to the extent not previously expended pursuant to this clause
(b) or clause (a) above.

     So long as no Default (except a Reporting Default) or Event of Default has occurred and is
continuing or would be caused thereby (except with respect to clause (1) below under which the
payment of a distribution or dividend is permitted), the preceding provisions will not prohibit:

     (1) the payment of any dividend or distribution within 60 days after the date of its
declaration, if at the date of declaration the payment would have complied with the provisions of
this Agreement;

     (2) the redemption, repurchase, retirement, defeasance or other acquisition of any
subordinated Indebtedness of the Borrower or any Guarantor or of any Equity Interests of the
Borrower in exchange for, or out of the net cash proceeds of the substantially concurrent (i)
contribution (other than from a Restricted Subsidiary of the Borrower) to the equity capital of the
Borrower or (ii) sale (other than to a Restricted Subsidiary of the Borrower) of, Equity Interests
of the Borrower (other than Disqualified Stock), with a sale being deemed substantially concurrent
if such redemption, repurchase, retirement, defeasance or acquisition occurs not more than 120 days
after such sale; provided, however, that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement, defeasance or other acquisition

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will be excluded or deducted from the calculation of Available Cash from Operating Surplus and
Incremental Funds;

     (3) the defeasance, redemption, repurchase, retirement or other acquisition of subordinated
Indebtedness of the Borrower or any Guarantor with the net cash proceeds from an incurrence of, or
in exchange for, Permitted Refinancing Indebtedness;

     (4) the payment of any dividend or distribution by a Restricted Subsidiary of the Borrower to
the holders of its Equity Interests on a pro rata basis; or

     (5) the repurchase, redemption or other acquisition or retirement for value of any Equity
Interests of the Borrower or any Restricted Subsidiary of the Borrower pursuant to any director or
employee equity subscription agreement or equity option agreement or other employee benefit plan or
to satisfy obligations under any Equity Interests appreciation rights or option plan or similar
arrangement; provided, however, that the aggregate price paid for all such
repurchased, redeemed, acquired or retired Equity Interests may not exceed $2.0 million in any
calendar year, with any portion of such $2.0 million amount that is unused in any calendar year to
be carried forward to successive calendar years and added to such amount.

     The amount of all Restricted Payments (other than cash) will be the fair market value on the
date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued
by the Borrower or such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. The fair market value of any assets or securities that are required to be valued by this
covenant will be determined, in the case of amounts under $10.0 million, by an officer of the
Borrower and, in the case of amounts over $10.0 million, by the Board of Directors of the Borrower,
whose determination shall be evidenced by a resolution of the Board of Directors of the Borrower.
Not later than the date of making any Restricted Payment (excluding any Restricted Payment
described in the preceding clause (2), (3), (4) or (5)) the Borrower will deliver to the
Administrative Agent an Officers’ Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this Section 7.01 were
computed. For purposes of determining compliance with this Section 7.01, in the event that
a Restricted Payment meets the criteria of more than one of the categories of Restricted Payments
described in the preceding clauses (1) – (5), the Borrower will be permitted to classify (or later
classify or reclassify in whole or in part in its sole discretion) such Restricted Payment in any
manner that complies with this Section 7.01.

     7.02 Limitation on Dividend and Other Payment Restrictions Affecting Subsidiaries. The
Borrower will not, and will not permit any of its Restricted Subsidiaries to, directly or
indirectly, create or permit to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to:

     (a) pay dividends or make any other distributions on its Capital Stock to the Borrower or any
of its Restricted Subsidiaries, or pay any Indebtedness or other obligations owed to the Borrower
or any of its Restricted Subsidiaries;

     (b) make loans or advances to the Borrower or any of its Restricted Subsidiaries; or

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     (c) transfer any of its properties or assets to the Borrower or any of its Restricted
Subsidiaries.

     However, the preceding restrictions of this Section 7.02 will not apply to
encumbrances or restrictions existing under or by reason of:

     (1) agreements as in effect on the date of this Agreement and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, replacements or refinancings of those
agreements or the Indebtedness to which they relate, provided that the amendments,
modifications, restatements, renewals, increases, supplements, refundings, replacement or
refinancings are no more restrictive, taken as a whole, with respect to such dividend, distribution
and other payment restrictions than those contained in those agreements on the date of this
Agreement;

     (2) this Agreement, the Loans and the Guaranty;

     (3) applicable Laws;

     (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the
Borrower or any of its Restricted Subsidiaries as in effect at the time of such acquisition, which
encumbrance or restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person, so acquired,
provided that, in the case of Indebtedness, such Indebtedness was otherwise permitted by
the terms of this Agreement to be incurred;

     (5) customary non-assignment provisions in Hydrocarbon purchase and sale or exchange
agreements or similar operational agreements or in licenses or leases, in each case entered into in
the ordinary course of business and consistent with past practices;

     (6) Capital Lease Obligations, mortgage financings or purchase money obligations, in each case
for property acquired in the ordinary course of business that impose restrictions on that property
of the nature described in clause (c) of the preceding paragraph;

     (7) any agreement for the sale or other disposition of a Restricted Subsidiary of the Borrower
that restricts distributions by that Restricted Subsidiary pending its sale or other disposition;

     (8) Permitted Refinancing Indebtedness, provided that the restrictions contained in
the agreements governing such Permitted Refinancing Indebtedness are not materially more
restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness
being refinanced;

     (9) Liens securing Indebtedness otherwise permitted to be incurred under the provisions of
Section 7.06 that limit the right of the debtor to dispose of the assets subject to such
Liens;

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     (10) provisions with respect to the disposition or distribution of assets or property in joint
venture agreements, asset sale agreements, stock sale agreements and other similar agreements
entered into in the ordinary course of business;

     (11) any agreement or instrument relating to any property or assets acquired after the date of
this Agreement, so long as such encumbrance or restriction relates only to the property or assets
so acquired and is not and was not created in anticipation of such acquisitions;

     (12) restrictions on cash or other deposits or net worth imposed by customers under contracts
entered into in the ordinary course of business; and

     (13) any instrument governing Indebtedness of an FERC Subsidiary, provided that such
Indebtedness was otherwise permitted by the terms of this Agreement to be incurred.

     7.03 Limitation on Incurrence of Indebtedness and Issuance of Preferred Stock. The Borrower
will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, “incur”) any Indebtedness (including
Acquired Debt), the Borrower will not issue any Disqualified Stock, and the Borrower will not
permit any of its or its Restricted Subsidiaries to issue any preferred securities;
provided, however, that the Borrower and any of its Restricted Subsidiaries may
incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, if the Fixed Charge
Coverage Ratio for the Borrower’s most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at least 2.0 to 1.0,
determined on a pro forma basis (including a pro forma application of the net proceeds therefrom),
as if the additional Indebtedness had been incurred or Disqualified Stock had been issued, as the
case may be, at the beginning of such four-quarter period.

     The first paragraph of this Section 7.03 will not prohibit the incurrence of any of
the following items of Indebtedness (collectively, “Permitted Debt”) or the issuance of any
preferred securities described in clause (k) below:

     (a) the incurrence by the Borrower or any of its Restricted Subsidiaries of additional
Indebtedness (including letters of credit) under one or more Credit Facilities, provided
that, after giving effect to any such incurrence, the aggregate principal amount of all
Indebtedness incurred under this clause (a) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Borrower and its Subsidiaries
thereunder) and then outstanding does not exceed the greater of (i) $400.0 million or (ii) $300.0
million plus 15% of the Borrower’s Consolidated Net Tangible Assets;

     (b) the incurrence by the Borrower or any of its Restricted Subsidiaries of the Existing
Indebtedness;

     (c) the incurrence by the Borrower and the Guarantors of Indebtedness represented by the Loans
and the related Guaranty;

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     (d) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness
represented by Capital Lease Obligations, mortgage financings or purchase money obligations, in
each case, incurred for the purpose of financing all or any part of the purchase price or cost of
construction or improvement of property, plant or equipment used in the business of the Borrower or
such Restricted Subsidiary, including all Permitted Refinancing Indebtedness incurred to extend,
refinance, renew, replace, defease or refund any Indebtedness incurred pursuant to this clause (d),
provided that after giving effect to any such incurrence, the principal amount of all
Indebtedness incurred pursuant to this clause (d) and then outstanding does not exceed the greater
of (i) $15.0 million or (ii) 2.5% of the Borrower’s Consolidated Net Tangible Assets at such time;

     (e) the incurrence by the Borrower or any of its Restricted Subsidiaries of Permitted
Refinancing Indebtedness in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund Indebtedness that was permitted by this Agreement to
be incurred under the first paragraph of this Section 7.03 or clause (b) or (c) of this
paragraph or this clause (e);

     (f) the incurrence by the Borrower or any of its Restricted Subsidiaries of intercompany
Indebtedness between or among the Borrower and any of its Restricted Subsidiaries;
provided, however, that:

     (i) if the Borrower is the obligor on such Indebtedness and a Guarantor is not the
obligee, such Indebtedness must be expressly subordinated to the prior payment in full in
cash of all Obligations with respect to the Loans, or if a Guarantor is the obligor on such
Indebtedness and neither the Borrower nor another Guarantor is the obligee, such
Indebtedness must be expressly subordinated to the prior payment in full in cash of all
Obligations with respect to the Guaranty of such Guarantor; and

     (ii) (A) any subsequent issuance or transfer of Equity Interests that results in any
such Indebtedness being held by a Person other than the Borrower or a Restricted Subsidiary
of the Borrower and (B) any sale or other transfer of any such Indebtedness to a Person that
is neither the Borrower nor a Restricted Subsidiary of the Borrower will be deemed, in each
case, to constitute an incurrence of such Indebtedness by the Borrower or such Restricted
Subsidiary, as the case may be, that was not permitted by this clause (f);

     (g) the incurrence by the Borrower or any of its Restricted Subsidiaries of Hedging Contracts;

     (h) the guarantee by the Borrower or any of its Restricted Subsidiaries of Indebtedness of the
Borrower or any of its Restricted Subsidiaries that was permitted to be incurred by another
provision of this Section 7.03;

     (i) the incurrence by the Borrower or any of its Restricted Subsidiaries of obligations
relating to net gas balancing positions arising in the ordinary course of business and consistent
with past practice;

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     (j) the incurrence by the Borrower or any of its Restricted Subsidiaries of Indebtedness in
respect of bid, performance, surety and similar bonds issued for the account of the Borrower and
any of its Restricted Subsidiaries in the ordinary course of business, including guarantees and
obligations of the Borrower or any of its Restricted Subsidiaries with respect to letters of credit
supporting such obligations (in each case other than an obligation for money borrowed);

     (k) the issuance by any of the Borrower’s Restricted Subsidiaries to the Borrower or to any of
its Restricted Subsidiaries of any preferred securities; provided, however, that:

     (i) any subsequent issuance or transfer of Equity Interests that results in any such
preferred securities being held by a Person other than the Borrower or a Restricted
Subsidiary of the Borrower; and

     (ii) any sale or other transfer of any such preferred securities to a Person that is
not either the Borrower or a Restricted Subsidiary of the Borrower

shall be deemed, in each case, to constitute an issuance of such preferred securities by such
Restricted Subsidiary that was not permitted by this clause (k); and

     (l) the incurrence by the Borrower or any of its Restricted Subsidiaries of liability in
respect of the Indebtedness of any Unrestricted Subsidiary of the Borrower or any Joint Venture but
only to the extent that such liability is the result of the Borrower’s or any such Restricted
Subsidiary’s being a general partner of such Unrestricted Subsidiary or Joint Venture and not as
guarantor of such Indebtedness, provided that, after giving effect to any such incurrence,
the aggregate principal amount of all Indebtedness incurred under this clause (l) and then
outstanding does not exceed $25.0 million;

     (m) the incurrence by the Borrower or any of its Restricted Subsidiaries of Acquired Debt in
connection with a merger or consolidation meeting either one of the financial tests set forth in
clause (d) of Section 7.09; and

     (n) the incurrence by the Borrower or any of its Restricted Subsidiaries of additional
Indebtedness, provided that, after giving effect to any such incurrence, the aggregate
principal amount of all Indebtedness incurred under this clause (n) and then outstanding does not
exceed the greater of (i) $25.0 million or (ii) 4.0% of the Borrower’s Consolidated Net Tangible
Assets.

     For purposes of determining compliance with this Section 7.03, in the event that an
item of Indebtedness (including Acquired Debt) meets the criteria of more than one of the
categories of Permitted Debt described in clauses (a) through (n) above, or is entitled to be
incurred pursuant to the first paragraph of this Section 7.03, the Borrower will be
permitted to classify (or later classify or reclassify in whole or in part in its sole discretion)
such item of Indebtedness in any manner that complies with this covenant. Any Indebtedness under
Credit Facilities on the date of this Agreement shall be considered incurred under the first
paragraph of this Section 7.03.

     The accrual of interest, the accretion or amortization of original issue discount, the payment
of interest on any Indebtedness in the form of additional Indebtedness with the same

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terms, and the payment of dividends on Disqualified Stock in the form of additional shares of
the same class of Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an
issuance of Disqualified Stock for purposes of this Section 7.03, provided, in each
such case, that the amount thereof is included in Fixed Charges of the Borrower as accrued.

     7.04 Limitation on Asset Sales. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:

     (a) the Borrower (or the Restricted Subsidiary, as the case may be) receives consideration at
the time of the Asset Sale at least equal to the fair market value of the assets or Equity
Interests issued or sold or otherwise disposed of;

     (b) the fair market value is determined by (a) an executive officer of the Borrower if the
value is less than $10.0 million and evidenced by an Officers’ Certificate delivered to the
Administrative Agent, or (b) the Borrower’s Board of Directors if the value is $10.0 million or
more and evidenced by a resolution of the Board of Directors of the Borrower set forth in an
Officers’ Certificate delivered to the Administrative Agent; and

     (c) at least 75% of the aggregate consideration received by the Borrower and its Restricted
Subsidiaries in the Asset Sale and all other Asset Sales since the date of this Agreement is in the
form of cash. For purposes of this provision, each of the following will be deemed to be cash:

     (i) any liabilities, as shown on the Borrower’s or such Restricted Subsidiary’s most
recent balance sheet, of the Borrower or any Subsidiary (other than contingent liabilities
and liabilities that are by their terms subordinated to the Loans or the Guaranty) that are
assumed by the transferee of any such assets pursuant to a customary novation agreement that
releases the Borrower or such Subsidiary from further liability; and

     (ii) any securities, notes or other obligations received by the Borrower or any such
Restricted Subsidiary from such transferee that are, within 90 days after the Asset Sale,
converted by the Borrower or such Subsidiary into cash, to the extent of the cash received
in that conversion.

     Within 360 days after the receipt of any Net Proceeds from an Asset Sale, the Borrower or any
such Restricted Subsidiary shall apply those Net Proceeds at its option to any combination of the
following:

     (I) to repay Senior Debt;

     (II) to acquire all or substantially all of the properties or assets of a Person primarily
engaged in a Permitted Business;

     (III) to acquire a majority of the Voting Stock of a Person primarily engaged a Permitted
Business;

     (IV) to make capital expenditures; or

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     (V) to acquire other long-term assets that are used or useful in a Permitted Business.]

     Pending the final application of any Net Proceeds, the Borrower or any such Restricted
Subsidiary may invest the Net Proceeds in any manner that is not prohibited by this Agreement.

     7.05 Limitation on Transactions With Affiliates. The Borrower will not, and will not permit
any of its Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or assets from, or enter
into or make or amend any transaction, contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each, an “Affiliate Transaction”),
unless:

     (a) the Affiliate Transaction is on terms that are no less favorable to the Borrower or the
relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction
by the Borrower or such Restricted Subsidiary with an unrelated Person; and

     (b) the Borrower delivers to the Administrative Agent:

     (i) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $10.0 million, a resolution of
the Board of Directors of the Borrower set forth in an Officers’ Certificate certifying that
such Affiliate Transaction complies with this Section 7.05 and that such Affiliate
Transaction has been approved by a majority of the disinterested members of the Board of
Directors of the Borrower; and

     (ii) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $25.0 million, a written opinion
as to the fairness to the Lenders of such Affiliate Transaction from a financial point of
view issued by an accounting, appraisal or investment banking firm of national standing.

     The following items will not be deemed to be Affiliate Transactions and, therefore, will not
be subject to the provisions of the prior paragraph of this Section 7.05:

     (1) any employment equity award, equity option or equity appreciation agreement or plan
entered into by the Borrower or any of its Restricted Subsidiaries in the ordinary course of
business;

     (2) transactions between or among any of the Borrower and its Restricted Subsidiaries;

     (3) transactions with a Person that is an Affiliate of the Borrower solely because the
Borrower owns an Equity Interest in such Person;

     (4) customary compensation, indemnification and other benefits made available to officers,
directors or employees of the Borrower or a Restricted Subsidiary or Affiliate of the Borrower,
including reimbursement or advancement of out-of-pocket expenses and provisions of officers’ and
directors’ liability insurance;

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     (5) sales of Equity Interests (other than Disqualified Stock) to Affiliates of the Borrower;

     (6) Restricted Payments that are permitted by Section 7.01;

     (7) transactions effected in accordance with the terms of the Administrative and Operating
Services Agreement, as such agreement is in effect on the date of this Agreement, and any amendment
or extension of such agreement so long as such amendment or extension agreement is no less
advantageous to the Borrower in any material respect than the agreement so amended or extended;

     (8) the purchase by the Borrower or any of its Restricted Subsidiaries of natural gas from
John R. Eckel, Jr., or any of his Affiliates and any related transactions, or the gathering or
compressing of any natural gas by the Borrower or any of its Restricted Subsidiaries for the
account of John R. Eckel, Jr. or any of his Affiliates and any related transactions, in each case
in the ordinary course of business;

     (9) the guarantee by ScissorTail of the performance by Southern Dome of its obligations under
the New Dominion Gas Purchase Agreement, as such agreement is in effect on the date of this
Agreement, and any amendment or extension of such agreement so long as such amendment or extension
agreement is no less advantageous to the Borrower in any material respect than the agreement so
amended or extended;

     (10) transactions effected in accordance with the terms of the Management Agreement dated as
of August 1, 2005 between Southern Dome and ScissorTail, as such agreement is in effect on the date
of this Agreement, and any amendment or extension of such agreement so long as such amendment or
extension agreement is no less advantageous to the Borrower in any material respect than the
agreement so amended or extended; and

     (11) the transportation of natural gas across the gathering systems of Webb/Duval Gatherers
and its Subsidiaries in the ordinary course of business and consistent with past practices.

     7.06 Limitation on Liens. The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or become effective
any Lien of any kind (other than Permitted Liens) securing Indebtedness or Attributable Debt upon
any of their property or assets, now owned or hereafter acquired, unless the Loans or any Guaranty
of such Restricted Subsidiary, as applicable, is secured on an equal and ratable basis (or on a
senior basis to, in the case of obligations subordinated in right of payment to the Loans or such
Guaranty, as the case may be) with the obligations so secured until such time as such obligations
are no longer secured by a Lien.

     7.07 Permitted Business Activities. The Borrower will not, and will not permit any Restricted
Subsidiary to, engage in any business other than a Permitted Business, except to such extent as
would not be material to the Borrower and its Restricted Subsidiaries taken as a whole.

     7.08 Sale and Leaseback Transactions. The Borrower will not, and will not permit any of its
Restricted Subsidiaries to, enter into any Sale and Leaseback Transaction; provided,

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however, that the Borrower or any of its Restricted Subsidiaries may enter into a Sale
and Leaseback Transaction if:

     (a) the Borrower or that Restricted Subsidiary, as applicable, could have (i) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback
transaction under the Fixed Charge Coverage Ratio test in the first paragraph of Section
7.03 and (ii) incurred a Lien to secure such Indebtedness pursuant to Section 7.06;

     (b) the gross cash proceeds of that Sale and Leaseback Transaction are at least equal to the
fair market value, as determined in good faith by the Board of Directors of the Borrower and set
forth in an Officers’ Certificate delivered to the Administrative Agent, of the property that is
the subject of that Sale and Leaseback Transaction; and

     (c) the transfer of assets in that Sale and Leaseback Transaction is permitted by, and the
Borrower applies the proceeds of such transaction in compliance with, Section 7.04.

     7.09 Merger, Consolidation and Sale of Assets. The Borrower may not, directly or indirectly,
consolidate or merge with or into another Person (whether or not the Borrower is the survivor), or
sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to another Person, unless:

     (a) either (i) the Borrower is the survivor or (ii) the Person formed by or surviving any such
consolidation or merger (if other than the Borrower) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a Person organized or existing under
the laws of the United States, any state of the United States or the District of Columbia;

     (b) the Person formed by or surviving any such consolidation or merger (if other than the
Borrower) or the Person to which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes all the obligations of the Borrower under the Loans and
this Agreement;

     (c) immediately after such transaction no Default or Event of Default exists;

     (d) either (i) the Borrower or the Person formed by or surviving any such consolidation or
merger (if other than the Borrower), or to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made will, at the time of such transaction and after giving
pro forma effect thereto and any related financing transaction as if the same had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in the first paragraph of
Section 7.03 hereof or (ii) immediately after giving effect to such transaction on a pro
forma basis and any related financing transactions as if the same had occurred at the beginning of
the Borrower’s most recently ended four full quarters for which internal financial statements are
available immediately preceding the date of the transactions, the Fixed Charge Coverage Ratio of
the Borrower or the Person formed by or surviving any such consolidation or merger (if other than
the Borrower), or to which such sale, assignment, transfer, lease, conveyance or other disposition
has been made will be equal to or greater than the Fixed Charge Coverage Ratio of the Borrower
immediately before such transactions; and

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     (e) the Borrower has delivered to the Administrative Agent an Officers’ Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or disposition comply with this
Agreement; and

     (f) (i) no Change of Control results from such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition or (ii) if a Change of Control does result from
such consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the
Borrower or the Person formed by or surviving any such consolidation or merger (if other than the
Borrower), or to which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made has complied in all respects with Section 2.02(c).

     Notwithstanding the preceding paragraph of this Section 7.09, the Borrower may
reorganize as any other form of entity in accordance with the following procedures provided
that:

     (1) the reorganization involves the conversion (by merger, sale, contribution or exchange of
assets or otherwise) of the Borrower into a form of entity other than a limited liability company
formed under Delaware law;

     (2) the entity so formed by or resulting from such reorganization is an entity organized or
existing under the laws of the United States, any state thereof or the District of Columbia;

     (3) the entity so formed by or resulting from such reorganization assumes all the obligations
of the Borrower under the Loans and this Agreement pursuant to agreements reasonably satisfactory
to the Administrative Agent;

     (4) immediately after such reorganization no Default or Event of Default exists; and

     (5) such reorganization is not materially adverse to the Lenders (for purposes of this clause
a reorganization will not be considered materially adverse to the Lenders solely because the
successor or survivor of such reorganization (i) is subject to federal or state income taxation as
an entity or (ii) is considered to be an “includable corporation” of an affiliated group of
corporations with the meaning of Section 1504(b)(i) of the Code or any similar state or local law).

     Upon any consolidation or merger, or any sale, assignment, transfer, lease, conveyance or
other disposition of all or substantially all of the properties or assets of the Borrower in
accordance with this Section 7.09, the successor formed by such consolidation or into or
with which the Borrower is merged or to which such sale, assignment, transfer, lease, conveyance or
other disposition is made shall succeed to, and may exercise every right and power of, such
Borrower under this Agreement with the same effect as if such successor had been named as the
Borrower herein and shall be substituted for the Borrower (so that from and after the date of such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other disposition, the
provisions of this Agreement referring to the “Borrower” shall refer instead to the successor and
not to the Borrower as the case may be); and thereafter, if the Borrower is dissolved following a
transfer of all or substantially all of its properties or assets in accordance with this Agreement,
it shall be discharged and released from all obligations and covenants under this Agreement and

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the Loans. The Administrative Agent shall enter into an agreement to evidence the succession
and substitution of such successor and such discharge and release of the Borrower.

     7.10 Designation of Restricted and Unrestricted Subsidiaries. (a) The Board of Directors of
the Borrower may designate any Restricted Subsidiary of the Borrower to be an Unrestricted
Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary of the
Borrower is designated as an Unrestricted Subsidiary, the aggregate fair market value of all
outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the Subsidiary
properly designated will be deemed to be an Investment made as of the time of the designation and
will reduce the amount available for Restricted Payments under the first paragraph of Section
7.01 or represent Permitted Investments, as determined by the Borrower. That designation shall
only be permitted if the Investment would be permitted at that time and if the Subsidiary so
designated otherwise meets the definition of an Unrestricted Subsidiary and such Subsidiary: (i)
except to the extent permitted by subclause (b)(ii) of the definition of “Permitted Business
Investments,” has no Indebtedness other than Non-Recourse Debt owing to any Person other than the
Borrower or any of its Restricted Subsidiaries; (ii) is not party to any agreement, contract,
arrangement or understanding with the Borrower or any Restricted Subsidiary of the Borrower unless
the terms of any such agreement, contract, arrangement or understanding are no less favorable to
the Borrower or such Restricted Subsidiary than those that might be obtained at the time from
Persons who are not Affiliates of the Borrower; (iii) is a Person with respect to which neither the
Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (1) to
subscribe for additional Equity Interests or (2) to maintain or preserve such Person’s financial
condition or to cause such Person to achieve any specified levels of operating results; and (iv)
has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness
of the Borrower or any of its Restricted Subsidiaries. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will
thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any
Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the
Borrower as of such date and, if such Indebtedness is not permitted to be incurred as of such date
under Section 7.03, the Borrower will be in default of such covenant..

     (b) The Board of Directors of the Borrower may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary of the Borrower; provided that such designation
will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of
any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be
permitted if (i) such Indebtedness is permitted under Section 7.03, calculated on a pro
forma basis as if such designation had occurred at the beginning of the four-quarter reference
period, and (ii) no Default or Event of Default would be in existence following such designation.

     7.11 Financial Covenant. The Borrower will not permit the Consolidated Total Leverage Ratio
as of the last day of any fiscal quarter, beginning with the fiscal quarter ending September 30,
2006, to be greater than 4.75 to 1.00. For purposes of calculating the Consolidated Total Leverage
Ratio in this Section 7.11, Consolidated EBITDA shall be determined on a pro forma basis,
with such pro forma adjustments being for highly certain, clearly definable and defensible items
acceptable to the Administrative Agent.

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     7.12 Use of Proceeds. The Borrower will not use the proceeds of the Loans, whether directly
or indirectly, and whether immediately, incidentally or ultimately, to purchase or carry margin
stock (within the meaning of Regulation U of the FRB) or to extend credit to others for the purpose
of purchasing or carrying margin stock or to refund indebtedness originally incurred for such
purpose.

ARTICLE VIII.

EVENTS OF DEFAULT AND REMEDIES

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

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

     (b) Specific Covenants. The Borrower fails to perform or observe any term, covenant
or agreement contained in any of Sections 6.03, 6.05(a), 6.10, 6.11 or 6.12 or Article
VII; or

     (c) Other Defaults. Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in subsection (a) or (b) above) contained in any Loan Document on its part
to be performed or observed and such failure continues for 30 days after the earlier of (i) the
date on which the Administrative Agent notifies Borrower of such failure or (ii) the date on which
a Responsible Officer of any Loan Party first becomes aware of such failure; or

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

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

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defined in such Hedging Contract) resulting from (A) any event of default under such Hedging
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such
Hedging Contract) or (B) any Termination Event (as so defined) under such Hedging Contract as to
which the Borrower or any Restricted Subsidiary is an Affected Party (as so defined) and, in either
event, the Hedging Termination Value owed by the Borrower or such Restricted Subsidiary as a result
thereof is greater than the Threshold Amount; or

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

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

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

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

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

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or further liability or obligation under any Loan Document, or purports to revoke, terminate
or rescind any provision of any Loan Document.

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

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

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

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

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

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

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

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

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

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

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

ARTICLE IX.

ADMINISTRATIVE AGENT

     9.01 Appointment and Authority. Each of the Lenders hereby irrevocably appoints Banc of
America Bridge to act on its behalf as the Administrative Agent hereunder and under the other Loan
Documents and authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof,
together with such actions and powers as are reasonably incidental thereto. The provisions of this
Article are solely for the benefit of the Administrative Agent and the Lenders, and neither the
Borrower nor any other Loan Party shall have rights as a third party beneficiary of any of such
provisions.

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

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

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

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

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

     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage

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of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good
faith shall be necessary, under the circumstances as provided in Sections 10.01 and
8.02) or (ii) in the absence of its own gross negligence or willful misconduct. The
Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower or a Lender.

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

     9.04 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely
upon, and shall not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing (including any electronic message,
Internet or intranet website posting or other distribution) believed by it to be genuine and to
have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed by it to have been
made by the proper Person, and shall not incur any liability for relying thereon. In determining
compliance with any condition hereunder to the making of a Loan, that by its terms must be
fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition
is satisfactory to such Lender unless the Administrative Agent shall have received notice to the
contrary from such Lender prior to the making of such Loan. The Administrative Agent may consult
with legal counsel (who may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.

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

     9.06 Resignation of Administrative Agent. The Administrative Agent may at any time give
notice of its resignation to the Lenders and the Borrower. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with the Borrower, to
appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of
any such bank with an office in the United States. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment within 30

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

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

     9.08 No Other Duties, Etc. Anything herein to the contrary notwithstanding, none of the
bookrunners, syndication agents or documentation agents listed on the cover page hereof shall have
any powers, duties or responsibilities under this Agreement or any of the other Loan Documents,
except in its capacity, as applicable, as the Administrative Agent or a Lender hereunder.

     9.09 Administrative Agent May File Proofs of Claim. In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any Loan Party, the
Administrative Agent (irrespective of whether the principal of any Loan shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of

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whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled
and empowered, by intervention in such proceeding or otherwise

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

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

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

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

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

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

ARTICLE X.

MISCELLANEOUS

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

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

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

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

     (d) reduce the principal of, or the rate of interest specified herein on, any Loan, or
(subject to clause (iv) of the second proviso to this Section 10.01) any fees or other
amounts payable hereunder or under any other Loan Document, without the written consent of each
Lender directly affected thereby; provided, however, that only the consent of the
Required Lenders shall be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest at the Default Rate or (ii) to amend any financial
covenant hereunder (or any defined term used therein) even if the effect of such amendment would be
to reduce the rate of interest on any Loan or to reduce any fee payable hereunder;

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

     (f) change any provision of this Section 10.01 or the definition of “Required Lenders”
or any other provision hereof specifying the number or percentage of Lenders required to amend,
waive or otherwise modify any rights hereunder or make any determination or grant any consent
hereunder, without the written consent of each Lender; or

     (g) release all or substantially all of the value of the Guaranty without the written consent
of each Lender, except as provided in Section 9.10;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;
(ii) Section 10.06(h) may not be amended, waived or otherwise modified without the consent
of each Granting Lender all or any part of whose Loans are being funded by an SPC at the time of
such amendment, waiver or other modification; and (iii) the Fee Letter may be amended, or rights or
privileges thereunder waived, in a writing executed only by the parties thereto. Notwithstanding
anything to the contrary contained in this Section 10.01 or in any other Loan Document, if
the Administrative Agent does not hold more than 50% of the sum of the Outstanding Amounts, the
Administrative Agent shall be deemed to hold more than 50% of the Outstanding Amounts such that the
Administrative Agent can at all times approve any amendment, waiver or consent of this Agreement
and the other Loan Documents on behalf of the Required Lenders, unless such amendment, waiver or
consent requires the consent of all Lenders holding Loans.

     10.02 Notices; Effectiveness; Electronic Communication.

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

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

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

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

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

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

     (c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR
THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE
BORROWER MATERIALS. NO WARRANTY

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OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER
CODE DEFECTS, IS MADE BY ANY AGENT PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.
In no event shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Lender or any other Person for
losses, claims, damages, liabilities or expenses of any kind (whether in tort, contract or
otherwise) arising out of the Borrower’s or the Administrative Agent’s transmission of Borrower
Materials through the Internet, except to the extent that such losses, claims, damages, liabilities
or expenses are determined by a court of competent jurisdiction by a final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of such Agent Party;
provided, however, that in no event shall any Agent Party have any liability to the
Borrower, any Lender or any other Person for indirect, special, incidental, consequential or
punitive damages (as opposed to direct or actual damages).

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

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

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

     10.04 Expenses; Indemnity; Damage Waiver.

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     (a) Costs and Expenses. The Borrower shall pay (i) all reasonable out of pocket
expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees,
charges and disbursements of counsel for the Administrative Agent), in connection with the
syndication of the credit facilities provided for herein, the preparation, negotiation, execution,
delivery and administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated) and (ii) all out of pocket expenses incurred
by the Administrative Agent or any Lender (including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender), in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section 10.04, or (B) in connection with the Loans made
hereunder, including all such out of pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

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

     (c) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under subsection (a) or (b) of this Section 10.04 to
be paid by it to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of
the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-

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agent) or such Related Party, as the case may be, such Lender’s Applicable Percentage
(determined as of the time that the applicable unreimbursed expense or indemnity payment is sought)
of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) in its capacity as such, or against any Related Party
of any of the foregoing acting for the Administrative Agent (or any such sub-agent) in connection
with such capacity. The obligations of the Lenders under this subsection (c) are subject to the
provisions of Section 2.09(d).

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

     (e) Payments. All amounts due under this Section 10.04 shall be payable not
later than ten Business Days after demand therefor; provided such demand shall be
accompanied by a reasonably detailed invoice outlining the costs and expenses to be reimbursed.

     (f) Survival. The agreements in this Section 10.04 shall survive the
resignation of the Administrative Agent, the replacement of any Lender, the termination of the
Aggregate Commitments and the repayment, satisfaction or discharge of all the other Obligations.

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

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     10.06 Successors and Assigns.

     (a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that neither the Borrower nor any other Loan Party may assign or
otherwise transfer any of its rights or obligations hereunder without the prior written consent of
the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an assignee in accordance with the provisions of
Section 10.06(b), (ii) by way of participation in accordance with the provisions of
Section 10.06(d), (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 10.06(f), or (iv) to an SPC in accordance with the provisions
of Section 10.06(h) (and any other attempted assignment or transfer by any party hereto
shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective successors and assigns
permitted hereby, Participants to the extent provided in subsection (d) of this Section
10.06 and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

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

     (i) Minimum Amounts.

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

     (B) in any case not described in subsection (b)(i)(A) of this Section
10.06, the aggregate amount of the Commitment (which for this purpose includes
Loans outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to each
such assignment, determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent or, if “Trade
Date” is specified in the Assignment and Assumption, as of the Trade Date, shall not
be less than $5,000,000, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed); provided,
however, that concurrent assignments to members of an Assignee Group and
concurrent assignments from members of an Assignee Group to a single Eligible
Assignee (or to an Eligible Assignee and members of its Assignee Group) will be
treated as a single assignment for purposes of determining whether such minimum
amount has been met;

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

     (iii) Required Consents. No consent shall be required for any assignment
except to the extent required by subsection (b)(i)(B) of this Section 10.06 and, in
addition:

     (A) the consent of the Borrower (such consent not to be unreasonably withheld
or delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a Lender, an
Affiliate of a Lender or an Approved Fund;

     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for all assignments in respect
of any Commitment or any Loan; and

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

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

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

Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection (c)
of this Section 10.06, from and after the effective date specified in each Assignment and
Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the
interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations under this Agreement
(and, in the case of an Assignment and Assumption covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05 and
10.04 with respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and deliver a Note to the
assignee Lender. Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with
Section 10.06(d).

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

     (d) Participations. Any Lender may at any time, without the consent of, or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Commitment and/or the Loans owing to it);
provided that (i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent and the Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s rights and obligations
under this Agreement.

     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such
agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this Section
10.06, the Borrower agrees that each Participant shall be entitled to the benefits of
Sections 3.01, 3.04 and 3.05 to the same extent as if it were a Lender and
had acquired its interest by assignment pursuant to subsection (b) of this Section 10.06.
To the extent permitted by law, each Participant also shall be entitled to the benefits of
Section 10.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.10 as though it were a Lender.

     (e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable Lender
would have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrower’s prior written
consent. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to
the benefits of Section 3.01 unless the Borrower is notified of the participation sold to
such Participant and such Participant agrees, for the benefit of the Borrower, to comply with
Section 3.01(e) as though it were a Lender.

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

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its obligations hereunder or substitute any such pledgee or assignee for such Lender as a
party hereto.

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

     (h) Special Purpose Funding Vehicles. Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle identified as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Borrower (an “SPC”) the option to provide all or any part of
any Loan that such Granting Lender would otherwise be obligated to make pursuant to this Agreement;
provided that (i) nothing herein shall constitute a commitment by any SPC to fund any Loan,
and (ii) if an SPC elects not to exercise such option or otherwise fails to make all or any part of
such Loan, the Granting Lender shall be obligated to make such Loan pursuant to the terms hereof
or, if it fails to do so, to make such payment to the Administrative Agent as is required under
Section 2.09(b)(ii). Each party hereto hereby agrees that (i) neither the grant to any SPC
nor the exercise by any SPC of such option shall increase the costs or expenses or otherwise
increase or change the obligations of the Borrower under this Agreement (including its obligations
under Section 3.04), (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or other modification of
any provision of any Loan Document, remain the lender of record hereunder. The making of a Loan by
an SPC hereunder shall utilize the Commitment of the Granting Lender to the same extent, and as if,
such Loan were made by such Granting Lender. In furtherance of the foregoing, each party hereto
hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the
date that is one year and one day after the payment in full of all outstanding commercial paper or
other senior debt of any SPC, it will not institute against, or join any other Person in
instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency, or
liquidation proceeding under the laws of the United States or any State thereof. Notwithstanding
anything to the contrary contained herein, any SPC may (i) with notice to, but without prior
consent of the Borrower and the Administrative Agent and with the payment of a processing fee in
the amount of $2,500, assign all or any portion of its right to receive payment with respect to any
Loan to the Granting Lender and (ii) disclose on a confidential basis any non-public information
relating to its funding of Loans to any rating agency, commercial paper dealer or provider of any
surety or guarantee or credit or liquidity enhancement to such SPC.

     10.07 Treatment of Certain Information; Confidentiality. Each of the Administrative Agent and
the Lenders agrees to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its Affiliates and to its and its Affiliates’ respective
partners, directors, officers, employees, agents, advisors and

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

     For purposes of this Section 10.07, “Information” means all information
received from any Loan Party or any Subsidiary thereof relating to any Loan Party or any Subsidiary
thereof or any of their respective businesses, other than any such information that is available to
the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by any Loan
Party or any Subsidiary thereof, provided that, in the case of information received from a
Loan Party or any Subsidiary thereof after the date hereof, such information is clearly identified
at the time of delivery as confidential. Any Person required to maintain the confidentiality of
Information as provided in this Section 10.07 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential
information.

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

     10.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each
Lender and each of their respective Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) at any time held
and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate
to or for the credit or the account of the Borrower or any other Loan Party against any and all of
the obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement
or any other Loan Document to such Lender, irrespective of whether or not such Lender shall have
made any demand under this Agreement or any other Loan Document and although such obligations of
the Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of
such Lender different from the branch or office holding such deposit or obligated on such
indebtedness. The rights of each Lender and their respective

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Affiliates under this Section 10.08 are in addition to other rights and remedies
(including other rights of setoff) that such Lender or their respective Affiliates may have. Each
Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff
and application, provided that the failure to give such notice shall not affect the
validity of such setoff and application.

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

     10.10 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto in different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single contract.
This Agreement and the other Loan Documents constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except as provided in
Section 4.01, this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received counterparts hereof
that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.

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

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

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invalidity of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     10.13 Replacement of Lenders. If (a) any Lender requests compensation under Section
3.04, (b) the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 3.01, or if any
Lender is a Defaulting Lender, (c) any Lender fails to consent to an election, consent, amendment,
waiver or other modification to this Agreement or any other Loan Document that requires the consent
of a greater percentage of the Lenders than the Required Lenders and such election, consent,
amendment, waiver or other modification is otherwise consented to by the Required Lenders, or (d)
if any other circumstance exists hereunder that gives the Borrower the right to replace a Lender as
a party hereto, then the Borrower may, at its sole expense and effort, upon notice to such Lender
and the Administrative Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in, and consents required by, Section
10.06), all of its interests, rights and obligations under this Agreement and the related Loan
Documents to an assignee that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment), provided that:

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

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

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

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

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

     10.14 Governing Law; Jurisdiction; Etc.

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

     (b) SUBMISSION TO JURISDICTION. THE ADMINISTRATIVE AGENT, EACH LENDER, THE BORROWER
AND EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO
THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND
OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT
FROM

91

 

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

     (c) WAIVER OF VENUE. THE ADMINISTRATIVE AGENT, EACH LENDER, THE BORROWER AND EACH
OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION 10.14. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN
INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

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

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

92

 

     10.16 No Advisory or Fiduciary Responsibility. In connection with all aspects of each
transaction contemplated hereby, the Borrower acknowledges and agrees, and acknowledges its
Affiliates’ understanding, that: (i) the credit facility provided for hereunder and any related
arranging or other services in connection therewith (including in connection with any amendment,
waiver or other modification hereof or of any other Loan Document) are an arm’s-length commercial
transaction between the Borrower and its Affiliates, on the one hand, and the Administrative Agent
and the Arranger, on the other hand, and the Borrower is capable of evaluating and understanding
and understands and accepts the terms, risks and conditions of the transactions contemplated hereby
and by the other Loan Documents (including any amendment, waiver or other modification hereof or
thereof); (ii) in connection with the process leading to such transaction, the Administrative Agent
and the Arranger each is and has been acting solely as a principal and is not the financial
advisor, agent or fiduciary, for the Borrower or any of its Affiliates, stockholders, creditors or
employees or any other Person; (iii) neither the Administrative Agent nor the Arranger has assumed
or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower with
respect to any of the transactions contemplated hereby or the process leading thereto, including
with respect to any amendment, waiver or other modification hereof or of any other Loan Document
(irrespective of whether the Administrative Agent or the Arranger has advised or is currently
advising the Borrower or any of its Affiliates on other matters) and neither the Administrative
Agent nor the Arranger has any obligation to the Borrower or any of its Affiliates with respect to
the transactions contemplated hereby except those obligations expressly set forth herein and in the
other Loan Documents; (iv) the Administrative Agent and the Arranger and their respective
Affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Borrower and its Affiliates, and neither the Administrative Agent nor the Arranger has
any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Administrative Agent and the Arranger have not provided and will not
provide any legal, accounting, regulatory or tax advice with respect to any of the transactions
contemplated hereby (including any amendment, waiver or other modification hereof or of any other
Loan Document) and the Borrower has consulted its own legal, accounting, regulatory and tax
advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the
fullest extent permitted by law, any claims that it may have against the Administrative Agent and
the Arranger with respect to any breach or alleged breach of agency or fiduciary duty.

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

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

93

 

[Remainder Of Page Intentionally Left Blank. Signature Pages Follow.]

94

 

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

	 	 	 	 	 	 	 
	 	 	COPANO ENERGY, L.L.C.,	 	 
	 	 	as Borrower	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John R. Eckel, Jr.	 	 
	 

	 	Name:
	 	 

John R. Eckel, Jr.
	 	 
	 

	 	Title:
	 	Chairman of the Board and	 	 
	 

	 	 	 	Chief Executive Officer	 	 

95

 

	 	 	 	 	 	 	 
	 	 	BANC OF AMERICA BRIDGE LLC, as	 	 
	 	 	Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lex Maultsby	 	 
	 

	 	Name:
	 	
Lex
Maultsby 

	 	 
	 

	 	Title:	 	Managing Director	 	 

96

 

	 	 	 	 	 	 	 
	 	 	BANC OF AMERICA BRIDGE LLC, as a	 	 
	 	 	Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Lex Maultsby	 	 
	 

	 	Name:
	 	
Lex
Maultsby

	 	 
	 

	 	Title:	 	Managing Director	 	 

97

 

SCHEDULE 2.01

COMMITMENTS

AND APPLICABLE PERCENTAGES

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Applicable	 
	Lender
	 	Commitment	 	 	Percentage	 
	 
	 	 	 	 	 	 	 	 
	Banc of America Bridge LLC
	 	$	100,000,000.00	 	 	 	100.000000000	%
	 
	 	 	 	 	 	 	 	 
	Total
	 	$	100,000,000.00	 	 	 	100.000000000	%<PAGE>
                                                                   EXHIBIT 10.15

                           PURCHASE AND SALE AGREEMENT

                                     BETWEEN

                       KINDER MORGAN PRODUCTION COMPANY LP

                                    AS SELLER

                                       AND

                          LEGACY RESERVES OPERATING LP

                                    AS BUYER

                               DATED JUNE 28, 2006

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.

<S>                                                                                                             <C>
Article I         Assets.........................................................................................1

         Section 1.01          Agreement to Sell and Purchase....................................................1

         Section 1.02          Assets............................................................................1

         Section 1.03          Excluded Assets...................................................................3

Article II        Purchase Price.................................................................................4

         Section 2.01          Purchase Price....................................................................4

         Section 2.02          Deposit...........................................................................5

         Section 2.03          Allocated Values..................................................................5

         Section 2.04          Effective Time....................................................................5

Article III       Title Matters..................................................................................5

         Section 3.01          Examination Period................................................................5

         Section 3.02          Defensible Title and Permitted Encumbrances.......................................6

         Section 3.03          Title Defects.....................................................................8

         Section 3.04          Notice of Title Defects...........................................................9

         Section 3.05          Remedies for Title Defects.......................................................10

         Section 3.06          Special Warranty of Title........................................................11

         Section 3.07          Preferential Rights To Purchase..................................................11

         Section 3.08          Consents to Assignment...........................................................12

         Section 3.09          Remedies for Title Benefits......................................................12

Article IV        Environmental Matters.........................................................................13

         Section 4.01          Environmental Review.............................................................13

         Section 4.02          Environmental Definitions........................................................14

         Section 4.03          Notice of Environmental Defects..................................................15

         Section 4.04          Remedies for Environmental Defects...............................................16

Article V         Representations and Warranties of Seller......................................................16

         Section 5.01          Seller's Existence...............................................................17

         Section 5.02          Legal Power......................................................................17

         Section 5.03          Execution........................................................................17

         Section 5.04          Brokers..........................................................................17

         Section 5.05          Bankruptcy.......................................................................17

         Section 5.06          Suits............................................................................17

         Section 5.07          Royalties........................................................................17

         Section 5.08          Taxes............................................................................18
</TABLE>

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.

<S>                                                                                                             <C>
         Section 5.09          Contracts........................................................................18

         Section 5.10          Liens............................................................................18

Article VI        Representations and Warranties of Buyer.......................................................18

         Section 6.01          Buyer's Existence................................................................18

         Section 6.02          Legal Power......................................................................18

         Section 6.03          Execution........................................................................18

         Section 6.04          Brokers..........................................................................18

         Section 6.05          Bankruptcy.......................................................................19

         Section 6.06          Suits............................................................................19

         Section 6.07          Qualifications...................................................................19

         Section 6.08          Investment.......................................................................19

         Section 6.09          Funds............................................................................19

Article VII       Seller's Conditions to Close..................................................................19

         Section 7.01          Representations..................................................................19

         Section 7.02          Performance......................................................................19

         Section 7.03          Pending Matters..................................................................19

         Section 7.04          Purchase Price...................................................................20

         Section 7.05          Execution and Delivery of the Closing Documents..................................20

Article VIII      Buyer's Conditions to Close...................................................................20

         Section 8.01          Representations..................................................................20

         Section 8.02          Performance......................................................................20

         Section 8.03          Pending Matters..................................................................20

         Section 8.04          Execution and Delivery of the Closing Documents..................................20

Article IX        Tax Matters...................................................................................20

         Section 9.01          Transfer Taxes...................................................................20

         Section 9.02          Ad Valorem and Similar Taxes.....................................................20

         Section 9.03          Tax Deferred Exchange............................................................20

Article X         The Closing...................................................................................22

         Section 10.01         Time and Place of the Closing....................................................22

         Section 10.02         Adjustments to Purchase Price at the Closing.....................................22

         Section 10.03         Closing Statement................................................................23

         Section 10.04         Actions of Seller at the Closing.................................................23

         Section 10.05         Actions of Buyer at the Closing..................................................23
</TABLE>

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.

<S>                                                                                                       <C>
Article XI        Termination...................................................................................24

         Section 11.01         Right of Termination.............................................................24

         Section 11.02         Effect of Termination............................................................25

         Section 11.03         Termination Damages..............................................................25

         Section 11.04         Attorneys' Fees, Etc.............................................................25

Article XII       Post Closing Obligations......................................................................26

         Section 12.01         Allocation of Expense and Revenues...............................................26

         Section 12.02         Gas Imbalances...................................................................27

         Section 12.03         Final Accounting Statement.......................................................27

         Section 12.04         Further Cooperation..............................................................28

Article XIII      Operation of the Assets.......................................................................28

         Section 13.01         Operations after Effective Time..................................................28

         Section 13.02         Limitations on the Operational Obligations and Liabilities of Seller.............29

         Section 13.03         Operation of the Assets After the Closing........................................30

         Section 13.04         Casualty Loss....................................................................30

         Section 13.05         Operatorship.....................................................................31

Article XIV       Obligations and Indemnification...............................................................31

         Section 14.01         Retained Obligations.............................................................31

         Section 14.02         Assumed Obligations..............................................................31

         Section 14.03         Buyer's Indemnification..........................................................32

         Section 14.04         Seller's Indemnification.........................................................32

         Section 14.05         Notices and Defense of Indemnified Matters.......................................33

         Section 14.06         Sole Remedy......................................................................33

         Section 14.07         Insurance and Tax Benefits.......................................................33

         Section 14.08         Express Negligence...............................................................33

Article XV        Limitations on Representations and Warranties.................................................34

         Section 15.01         Disclaimers of Representations and Warranties....................................34

         Section 15.02         Independent Investigation........................................................35

         Section 15.03         Survival.........................................................................35

         Section 15.04         Mitigation.......................................................................35

         Section 15.05         Effect of Waiver.................................................................35

         Section 15.06         Waiver of Consumer Rights........................................................35
</TABLE>

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                           Page No.

<S>                                                                                                       <C>

Article XVI       Dispute Resolution............................................................................36

         Section 16.01         General..........................................................................36

         Section 16.02         Senior Management................................................................36

         Section 16.03         Dispute by Independent Expert....................................................36

         Section 16.04         Limitation on Arbitration........................................................37

Article XVII      Miscellaneous.................................................................................37

         Section 17.01         Names............................................................................37

         Section 17.02         Expenses.........................................................................37

         Section 17.03         Document Retention...............................................................37

         Section 17.04         Entire Agreement.................................................................38

         Section 17.05         Waiver...........................................................................38

         Section 17.06         Publicity........................................................................38

         Section 17.07         Construction.....................................................................38

         Section 17.08         No Third Party Beneficiaries.....................................................38

         Section 17.09         Assignment.......................................................................38

         Section 17.10         Buyer's Obligation Independent of Financing......................................38

         Section 17.11         Governing Law....................................................................38

         Section 17.12         Notices..........................................................................39

         Section 17.13         Severability.....................................................................39

         Section 17.14         Time of the Essence..............................................................39

         Section 17.15         Counterpart Execution............................................................39
</TABLE>

EXHIBITS AND SCHEDULES

Exhibit A - Subject Interests (Listing of Leases)
Exhibit B - Wells, Leases, Units and Interests
Exhibit C - Allocated Values
Exhibit D - Assignment and Bill of Sale

Schedule 3.07 - Values allocated to Assets subject to Preferential Rights to
Purchase Schedule 3.08 - Consents to Assign
Schedule 12.02 - Gas Imbalances

<PAGE>

                           PURCHASE AND SALE AGREEMENT

         This Purchase and Sale Agreement (this "Agreement") is made and entered
into this 29th day of June, 2006, by and between Kinder Morgan Production
Company LP, a Delaware Limited Partnership (the "Seller"), and Legacy Reserves
Operating LP, a Delaware limited partnership (the "Buyer"). Buyer and Seller are
collectively referred to herein as the "Parties", and are sometimes referred to
individually as a "Party."

                              W I T N E S S E T H:

         WHEREAS, Seller is willing to sell to Buyer, and Buyer is willing to
purchase from Seller, the Assets (as defined in Section 1.02 hereof), all upon
the terms and conditions hereinafter set forth;

         NOW, THEREFORE, in consideration of the mutual benefits derived and to
be derived from this Agreement by each Party, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller and Buyer hereby agree as follows:

                                    ARTICLE I
                                     ASSETS

         Section 1.01 Agreement to Sell and Purchase. Subject to and in
accordance with the terms and conditions of this Agreement and as of the
Effective Time (as defined in Section 2.04), Buyer agrees to purchase the Assets
from Seller, and Seller agrees to sell the Assets to Buyer.

         Section 1.02 Assets. Subject to Section 1.03, the term "Assets" shall
mean all of Seller's right, title and interest in and to:

                  (a)      the leasehold estates in and to the oil, gas and
                           mineral leases described or referred to in Exhibit A
                           attached hereto (the "Leases"), whether or not all
                           lands covered by the Leases are described in Exhibit
                           A, and any overriding royalty interests, fee mineral
                           interests, royalty interests or other interests in
                           and to the lands covered by the Leases, assignments
                           and other documents of title described or referred to
                           in Exhibit A, all as more specifically described in
                           Exhibit A (collectively, the "Subject Interests," or
                           singularly, a "Subject Interest");

                  (b)      all rights incident to the Subject Interests,
                           including, without limitation, (i) all rights with
                           respect to the use and occupation of the surface of
                           and the subsurface depths under the Subject
                           Interests; (ii) all rights with respect to any
                           pooled, communitized or unitized acreage by virtue of
                           any Subject Interest being a part thereof, including
                           all Hydrocarbon (as defined in Subsection (d) of this
                           Section 1.02) production after the Effective Time (as
                           defined in Section 2.04) attributable to the Subject
                           Interests or any such pool or unit allocated to any
                           such Subject Interest;

                  (c)      to the extent assignable or transferable, all
                           easements, rights-of-way, surface leases, surface
                           estates, servitudes, and other estates or similar

<PAGE>

                           rights and privileges directly related to or used
                           solely in connection with the Subject Interests (the
                           "Easements"), including, without limitation, the
                           Easements described or referred to in Exhibit A;

                  (d)      to the extent assignable or transferable, all
                           personal property, equipment, fixtures, inventory and
                           improvements located on or used in connection with
                           the Subject Interests and the Easements or with the
                           production, treatment, sale, or disposal of oil, gas
                           or other hydrocarbons (collectively, "Hydrocarbons"),
                           byproducts or waste produced therefrom or
                           attributable thereto, including, without limitation,
                           all wells located on the lands covered by the Subject
                           Interests or on lands with which the Subject
                           Interests may have been pooled, communitized or
                           unitized (whether producing, shut in or abandoned,
                           and whether for production, injection or disposal),
                           including, without limitation, all wells described on
                           Exhibit B attached hereto, and all wellhead
                           equipment, pumps, pumping units, flowlines, gathering
                           systems, piping, tanks, buildings, treatment
                           facilities, injection facilities, disposal
                           facilities, compression facilities, and other
                           materials, supplies, equipment, facilities and
                           machinery (collectively, "Personal Property");

                  (e)      to the extent assignable or transferable, all
                           contracts, agreements and other arrangements that
                           directly relate to the Subject Interests, the Leases
                           or the Easements, including, without limitation,
                           production sales contracts, farmout agreements,
                           operating agreements, service agreements and similar
                           arrangements (collectively, the "Contracts");

                  (f)      to the extent assignable or transferable, all books,
                           records, files, muniments of title, reports and
                           similar documents and materials, including, without
                           limitation, lease records, well records, and division
                           order records, well files, title records (including
                           abstracts of title, title opinions and memoranda, and
                           title curative documents related to the Assets),
                           contracts and contract files, correspondence, that
                           relate to the foregoing interests in the possession
                           of, and maintained by, Seller (collectively, the
                           "Records") subject to Seller's right to retain copies
                           of the same; and

                  (g)      all geological and geophysical data relating to the
                           Subject Interests, other than such data that is
                           interpretive in nature or which cannot be transferred
                           without the consent of, or payment to, any Third
                           Party. For purposes of this Agreement, "Third Party"
                           means any person or entity, governmental or
                           otherwise, other than Seller or Buyer, and their
                           respective affiliates; the term includes, but is not
                           limited to, working interest owners, royalty owners,
                           lease operators, landowners, service contractors and
                           governmental agencies.

                  (h)      all franchises, licenses, permits, approvals,
                           consents, certificates, and other authorizations and
                           rights granted by governmental authorities and all

                                      -2-
<PAGE>

                           certificates of convenience or necessity, immunities,
                           privileges, grants and other rights that relate to
                           the Assets or the ownership or operation of any
                           thereof.

         Section 1.03 Excluded Assets. Notwithstanding the foregoing, the Assets
shall not include, and there is excepted, reserved and excluded from the sale
contemplated hereby (collectively, the "Excluded Assets"):

                  (a)      all credits and refunds and all accounts,
                           instruments, trade credits, and general intangibles
                           (as such terms are defined in the Texas Uniform
                           Commercial Code) attributable to the Assets accruing
                           prior to the Effective Time;

                  (b)      all claims of Seller for refunds of or loss carry
                           forwards with respect to (i) ad valorem, severance,
                           production or any other taxes attributable to any
                           period prior to the Effective Time, (ii) income or
                           franchise taxes, or (iii) any taxes attributable to
                           the other Excluded Assets, and such other refunds,
                           and rights thereto, for amounts paid in connection
                           with the Assets and attributable to the period prior
                           to the Effective Time, including refunds of amounts
                           paid under any gas gathering or transportation
                           agreement;

                  (c)      all proceeds, income, revenues or hydrocarbon
                           production (and any security or other deposits made)
                           attributable to (i) the Assets for any period prior
                           to the Effective Time, or (ii) any other Excluded
                           Assets;

                  (d)      all personal computers and associated peripherals and
                           all radio and telephone equipment and all of Seller's
                           proprietary computer software, technology, patents,
                           trade secrets, copyrights, names, trademarks, logos
                           and other intellectual property;

                  (e)      all of Seller's rights and interests in geological
                           and geophysical data that is interpretive in nature
                           or which cannot be transferred without the consent
                           of, or payment to, any Third Party;

                  (f)      all documents and instruments of Seller that may be
                           protected by an attorney-client privilege;

                  (g)      data and other information that cannot be disclosed
                           or assigned to Buyer as a result of confidentiality
                           or similar arrangements under agreements with persons
                           unaffiliated with Seller;

                  (h)      all audit rights arising under any of the Contracts
                           or otherwise with respect to any period prior to the
                           Effective Time or to any of the other Excluded
                           Assets;

                  (i)      all corporate, partnership, income tax records, and
                           documents subject to legal privilege (other than
                           title);

                                      -3-
<PAGE>

                  (j)      all claims and causes of action of Seller (i) arising
                           from acts, omissions, or events, or damage to or
                           destruction of property, occurring prior to the
                           Effective Time, (ii) arising under or with respect to
                           any of the Contracts that are attributable to periods
                           of time prior to the Effective time (including claims
                           for adjustments or refunds), or (iii) with respect to
                           any of the Excluded Assets;

                  (k)      all rights and interests of Seller (i) under any
                           policy or agreement of insurance or indemnity, (ii)
                           under any bond, or (iii) to any insurance or
                           condemnation proceeds or awards arising, in each
                           case, from acts, omissions, or events, or damage to
                           or destruction of property, occurring prior to the
                           Effective Time;

                  (l)      any amounts due or payable to Seller as adjustments
                           to insurance premiums related to the Assets with
                           respect to any period prior to the Effective Time;

                  (m)      all (i) agreements and correspondence between Seller
                           and Tristone Capital, LP (the "Advisor") relating to
                           the transactions contemplated in this Agreement, (ii)
                           lists of prospective purchasers for such transactions
                           compiled by either Seller or the Advisor, (iii) bids
                           submitted by other prospective purchasers of the
                           Assets, (iv) analyses by Seller or the Advisor of any
                           bids submitted by any prospective purchaser, (v)
                           correspondence between or among Seller or Advisor, or
                           either of their respective representatives, and any
                           prospective purchaser other than Buyer, (vi)
                           correspondence between Seller or Advisor or any of
                           their respective representatives with respect to any
                           of the bids, the prospective purchasers, the
                           engagement or activities of the Advisor, or the
                           transactions contemplated in this Agreement and (vii)
                           the Kinder Morgan 2006 Permian Basin Divestiture --
                           Transaction Process Memorandum dated May 2006,
                           prepared by the Advisor and circulated to prospective
                           purchasers; and

                  (n)      all cash, checks, funds, accounts receivable,
                           accounts payable, promissory notes or general
                           intangibles (as such terms are defined by the Uniform
                           Commercial Code) attributable to Sellers' interests
                           in the Assets with respect to any period prior to the
                           Effective Date.

                                   ARTICLE II
                                 PURCHASE PRICE

         Section 2.01 Purchase Price. The purchase price for the purchase, sale
and conveyance of the Assets to Buyer is Buyer's payment to Seller of the sum of
$20,000,000.00 (the "Purchase Price"), as adjusted in accordance with the
provisions of this Agreement. The Purchase Price, as adjusted in accordance with
the terms of this Agreement, including, without limitation, Section 10.02, shall
be paid to Seller (or its designee) at Closing (as defined in Section 10.01) by
means of a completed federal funds transfer to an account designated in writing
by Seller.

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<PAGE>

         Section 2.02 Deposit. Concurrently with the execution of this Agreement
by Buyer and Seller, Buyer shall deliver to Seller a performance guarantee
deposit in the amount of ten percent (10%) of the Purchase Price (the
"Deposit"). The Deposit shall be paid by Buyer to Seller by means of a completed
federal funds transfer to the account of Kinder Morgan CO2 Company, L.P. on
behalf of Seller, Account No. 4121049415, at Wells Fargo, ABA Routing Number
121000248. The refund of the Deposit as provided for in Section 11.03 and shall
be subject to the terms of this Agreement. Without duplication, if the
transactions contemplated by this Agreement are consummated, the Deposit shall
be retained by Seller and shall be considered as prepayment of a portion of the
Purchase Price, and the amount payable by Buyer at the Closing shall be reduced
by the amount of the Deposit.

         Section 2.03 Allocated Values.

                  (a)      Buyer and Seller agree to allocate the Purchase Price
                           (as adjusted pursuant to this Agreement) among the
                           Assets as set forth in Exhibit C attached hereto (the
                           "Allocated Values"). Seller and Buyer agree that the
                           Allocated Values shall be used to compute any
                           adjustments to the Purchase Price pursuant to the
                           provisions of Article III and Article IV.

                  (b)      The Allocated Values shall be completed in the manner
                           required by Section 1060 of the Internal Revenue Code
                           of 1986, as amended (the "Code"). Buyer and Seller
                           further agree to comply with all filing, notice and
                           reporting requirements described in Section 1060 of
                           the Code and the Treasury Regulations promulgated
                           thereunder, including the timely preparation and
                           filing of Form 8594 based on the Allocated Values.
                           The Buyer and the Sellers hereby agree that they will
                           report the federal, state, foreign and other tax
                           consequences of the transactions contemplated by this
                           Agreement in a manner consistent with the Allocated
                           Values.

         Section 2.04 Effective Time. If the transactions contemplated hereby
are consummated in accordance with the terms and provisions hereof, the
ownership of the Assets shall be transferred from Seller to Buyer on the Closing
Date, and effective as of 7:00 a.m. local time where the Assets are located on
July 1, 2006 (the "Effective Time").

                                   ARTICLE III
                                  TITLE MATTERS

         Section 3.01 Examination Period. Following the execution date of this
Agreement until 9:00 a.m., local time in Houston, Texas on July 28, 2006 (the
"Examination Period"), Seller shall permit Buyer and/or its representatives to
examine, at all reasonable times, in Seller's offices, all abstracts of title,
title opinions, title files, ownership maps, lease files, contract files,
assignments, division orders, operating and accounting records and agreements
pertaining to the Assets insofar as same may now be in existence and in the
possession of Seller, subject to such restrictions on disclosure as may exist
under confidentiality agreements or other agreements binding on Seller or such
data. "Business Days" means all calendar days excluding Saturdays, Sundays and
U.S. legal holidays.

                                      -5-
<PAGE>

         Section 3.02 Defensible Title and Permitted Encumbrances. For purposes
of this Agreement, the term "Defensible Title" means, with respect to a given
Asset, such ownership by Seller in such Asset that, subject to and except for
the Permitted Encumbrances (as defined in Subsection (d) of this Section 3.02):

                  (a)      entitles Seller to receive not less than the
                           percentage set forth in Exhibit B as Seller's "Net
                           Revenue Interest" of all Hydrocarbons produced, saved
                           and marketed from each well, lease or unit as set
                           forth in Exhibit B, all without reduction, suspension
                           or termination of such interest throughout the
                           productive life of such well, except as specifically
                           set forth in Exhibit B;

                  (b)      obligates Seller to bear not greater than the
                           percentage set forth in Exhibit B as Seller's
                           "Working Interest" of the costs and expenses relating
                           to the maintenance, development and operation of each
                           well, lease or unit as set forth in Exhibit B, all
                           without increase throughout the productive life of
                           such well, except as specifically set forth in
                           Exhibit B; and

                  (c)      is free and clear of all liens, encumbrances and
                           defects in title.

                  (d)      The term "Permitted Encumbrances" shall mean any of
                           the following matters to the extent the same are
                           valid and subsisting and affect the Assets:

                           (i)      the Leases and Contracts to the extent the
                                    same do not operate to reduce the Net
                                    Revenue Interests of Seller below those set
                                    forth in Exhibit B or increase the Working
                                    Interests of Seller above those set forth in
                                    Exhibit B without a corresponding increase
                                    in the Net Revenue Interests or otherwise
                                    interfere materially with the operation,
                                    value or use of the Assets;

                           (ii)     any (A) undetermined or inchoate liens or
                                    charges constituting or securing the payment
                                    of expenses that were incurred incidental to
                                    the maintenance, development, production or
                                    operation of the Assets or for the purpose
                                    of developing, producing or processing
                                    Hydrocarbons therefrom or therein, and (B)
                                    materialman's, mechanics', repairman's,
                                    employees', contractors', operators' liens
                                    or other similar liens or charges for
                                    expenses incurred which are not yet
                                    delinquent;

                           (iii)    any liens for taxes and assessments not yet
                                    delinquent or, if delinquent, that are being
                                    contested in good faith in the ordinary
                                    course of business and for which any Seller
                                    has agreed to pay pursuant to the terms
                                    hereof or which have been prorated pursuant
                                    to the terms hereof;

                           (iv)     the terms, conditions, restrictions,
                                    exceptions, reservations, limitations and
                                    other matters contained in (including any
                                    liens or

                                      -6-
<PAGE>

                                    security interests created by law or
                                    reserved in oil and gas leases for royalty,
                                    bonus or rental, or created to secure
                                    compliance with the terms of) the
                                    agreements, instruments and documents that
                                    create or reserve to Seller its interest in
                                    the Assets to the extent the same do not
                                    operate to reduce the Net Revenue Interests
                                    of Seller below those set forth in Exhibit B
                                    or increase the Working Interests of Seller
                                    above those set forth in Exhibit B without a
                                    corresponding increase in the Net Revenue
                                    Interests or otherwise interfere materially
                                    with the operation, value or use of the
                                    Assets;

                           (v)      any obligations or duties affecting the
                                    Assets to any municipality or public
                                    authority with respect to any franchise,
                                    grant, license or permit and all applicable
                                    laws, rules, regulations and orders of any
                                    Governmental Authority (as defined in
                                    Section 4.02(b));

                           (vi)     any (A) easements, rights-of-way,
                                    servitudes, permits, surface leases and
                                    other rights in respect of surface
                                    operations, pipelines, grazing, hunting,
                                    lodging, canals, ditches, reservoirs or the
                                    like, and (B) easements for streets, alleys,
                                    highways, pipelines, telephone lines, power
                                    lines, railways and other similar
                                    rights-of-way on, over or in respect of
                                    property owned or leased by Seller or over
                                    which Seller owns rights-of-way, easements,
                                    permits or licenses, to the extent that same
                                    do not materially interfere with the oil and
                                    gas operations to be conducted on the
                                    Assets;

                           (vii)    all lessors' royalties, overriding
                                    royalties, net profits interests, carried
                                    interests, production payments, reversionary
                                    interests and other burdens on or deductions
                                    from the proceeds of production created or
                                    in existence as of the Effective Time,
                                    whether recorded or unrecorded, provided
                                    that such matters do not operate to reduce
                                    the Net Revenue Interests of Seller below
                                    those set forth in Exhibit B or increase the
                                    Working Interests of Seller above those set
                                    forth in Exhibit B without a corresponding
                                    increase in the Net Revenue Interests;

                           (viii)   preferential rights to purchase or similar
                                    agreements subject to the Provisions of
                                    Section 3.07;

                           (ix)     required Third Party consents to assignments
                                    or similar agreements subject to the
                                    provisions of Section 3.08;

                           (x)      all rights to consent by, required notices
                                    to, filings with, or other actions by
                                    Governmental Authorities in connection with
                                    the sale or conveyance of oil and gas leases
                                    or interests therein that are customarily
                                    obtained subsequent to such sale or
                                    conveyance;

                                      -7-
<PAGE>

                           (xi)     production sales contracts; division orders;
                                    contracts for sale, purchase, exchange,
                                    refining or processing of Hydrocarbons;
                                    unitization and pooling designations,
                                    declarations, orders and agreements;
                                    operating agreements; agreements of
                                    development; area of mutual interest
                                    agreements; gas balancing or deferred
                                    production agreements; processing
                                    agreements; plant agreements; pipeline,
                                    gathering and transportation agreements;
                                    injection, repressuring and recycling
                                    agreements; carbon dioxide purchase or sale
                                    agreements; salt water or other disposal
                                    agreements; seismic or geophysical permits
                                    or agreements; and any and all other
                                    agreements that have terms that are ordinary
                                    and customary to the oil, gas, sulphur and
                                    other mineral exploration, development,
                                    processing or extraction business or in the
                                    business of processing of gas and gas
                                    condensate production for the extraction of
                                    products therefrom, to the extent the same
                                    do not reduce the Net Revenue Interests of
                                    Seller below those set forth in Exhibit B or
                                    increase the Working Interests of Seller
                                    above those set forth in Exhibit B without a
                                    corresponding increase in the Net Revenue
                                    Interest;

                           (xii)    rights reserved to or vested in any
                                    Governmental Authority to control or
                                    regulate any of the Assets and the
                                    applicable laws, rules, and regulations of
                                    such Governmental Authorities; and

                           (xiii)   all defects and irregularities affecting the
                                    Assets which individually or in the
                                    aggregate (A) do not operate to (1) reduce
                                    the Net Revenue Interest of Seller, (2)
                                    increase the proportionate share of costs
                                    and expenses of leasehold operations
                                    attributable to or to be borne by the
                                    Working Interests of Seller, or (3)
                                    otherwise interfere materially with the
                                    operation, value or use of the Assets, or
                                    (4) that would not be considered material
                                    when applying general industry standards; or
                                    (B) operate to increase the proportionate
                                    share of costs and expenses of leasehold
                                    operations attributable to or to be borne by
                                    the Working Interest of Seller, so long as
                                    there is a proportionate increase in
                                    Seller's Net Revenue Interest.

         Section 3.03 Title Defects.

                  (a)      The term "Title Defect," as used in this Agreement,
                           shall mean: (a) any encumbrance, encroachment,
                           irregularity, defect in or objection to Seller's
                           ownership of any Asset (expressly excluding Permitted
                           Encumbrances) that causes Seller not to have
                           Defensible Title to such Asset or (b) any default by
                           Seller under a lease, farmout agreement or other
                           contract or agreement that would (i) have a material
                           adverse affect on the operation, value or use of such
                           Asset, (ii) prevent Seller from receiving the
                           proceeds of production attributable to Seller's
                           interest therein or (iii) result in cancellation of
                           Seller's interest therein.

                                      -8-
<PAGE>

                  (b)      The value attributable to each Title Defect (the
                           "Title Defect Value") that is asserted by Buyer in
                           the Title Defect notices shall be determined based
                           upon the criteria set forth below:

                           (i)      If the Title Defect is a lien upon any
                                    Asset, the Title Defect Value is the amount
                                    necessary to be paid to remove the lien from
                                    the affected Asset.

                           (ii)     If the Title Defect asserted is that the Net
                                    Revenue Interest attributable to any well,
                                    lease or unit is less than that stated in
                                    Exhibit B or the Working Interest
                                    attributable to any well, lease or unit is
                                    greater than that stated in Exhibit B, then
                                    the Title Defect Value shall take into
                                    account the relative change in the interest
                                    from Exhibit B and the appropriate Allocated
                                    Value attributed to such Asset.

                           (iii)    If the Title Defect represents an
                                    obligation, encumbrance, burden or charge
                                    upon the affected Asset (including any
                                    increase in Working Interest for which there
                                    is not a proportionate increase in Net
                                    Revenue Interest) for which the economic
                                    detriment to Buyer is unliquidated, the
                                    amount of the Title Defect Value shall be
                                    determined by taking into account the
                                    Allocated Value of the affected Asset, the
                                    portion of the Asset affected by the Title
                                    Defect, the legal effect of the Title
                                    Defect, the potential discounted economic
                                    effect of the Title Defect over the life of
                                    the affected Asset, and the Title Defect
                                    Values placed upon the Title Defect by Buyer
                                    and Seller.

                           (iv)     If a Title Defect is not in effect or does
                                    not adversely affect an Asset throughout the
                                    entire productive life of such Asset, such
                                    fact shall be taken into account in
                                    determining the Title Defect Value.

                           (v)      The Title Defect Value of a Title Defect
                                    shall be determined without duplication of
                                    any costs or losses included in another
                                    Title Defect Value hereunder.

                           (vi)     Notwithstanding anything herein to the
                                    contrary, in no event shall a Title Defect
                                    Value exceed the Allocated Value of the
                                    wells, units or other Assets affected
                                    thereby.

                           (vii)    Such other factors as are reasonably
                                    necessary to make a proper evaluation.

         Section 3.04 Notice of Title Defects.

                  (a)      If Buyer discovers any Title Defect affecting any
                           Asset, Buyer shall notify Seller as promptly as
                           possible but no later than the expiration of the
                           Examination Period of such alleged Title Defect. To
                           be effective, such

                                      -9-
<PAGE>

                           notice must (i) be in writing, (ii) be received by
                           Seller prior to the expiration of the Examination
                           Period, (iii) describe the Title Defect in
                           sufficient, specific detail (including any alleged
                           variance in the Net Revenue Interest), (iv) identify
                           the specific Asset or Assets affected by such Title
                           Defect, and (v) include the value of such Title
                           Defect as determined by Buyer. Subject to the special
                           warranty contained in the Assignment, any matters
                           that may otherwise constitute Title Defects, but of
                           which Seller has not been specifically notified by
                           Buyer in accordance with the foregoing, shall be
                           deemed to have been waived by Buyer for all purposes
                           and shall constitute Permitted Encumbrances.

                  (b)      An individual matter that would otherwise be
                           considered a Title Defect under Section 3.03(a) shall
                           not be considered to be a Title Defect unless the
                           Title Defect Value of such matter is greater than
                           $25,000, as determined by Section 3.03(b) ("Title
                           Defect Threshold"). Buyer shall not be entitled to
                           allege Title Defects until the aggregate of all Title
                           Defects which exceed the Title Defect Threshold
                           exceeds three per cent (3%) of the Purchase Price
                           prior to any adjustments thereto (the "Defect
                           Deductible").

         Section 3.05 Remedies for Title Defects.

                  (a)      Upon the receipt of effective notice of a Title
                           Defect from Buyer (as provided by Section 3.04),
                           Seller may:

                           (i)      attempt to cure such Title Defect at any
                                    time prior to Closing;

                           (ii)     exclude the affected Asset from the sale and
                                    reduce the Purchase Price by the Allocated
                                    Value of such affected Asset; or

                           (iii)    not take any action with respect to the
                                    alleged Title Defect and reduce the Purchase
                                    Price as agreed pursuant to Sections 3.05(b)
                                    and (c) in accordance with Section 10.02(b)
                                    (which shall cause such alleged Title Defect
                                    to become an Assumed Obligation, as that
                                    term is defined in Section 14.02 hereof).

                  (b)      Except as otherwise provided in this Section 3.05,
                           with respect to each Title Defect that is not cured
                           on or before the Closing and for which the Seller has
                           not agreed to exclude the affected Asset from the
                           Closing under Section 3.05(a)(ii), the Purchase Price
                           shall be reduced by an amount equal to the Title
                           Defect Value agreed upon in writing by Buyer and
                           Seller, but only to the extent such amount exceeds
                           the Defect Deductible. In the event that there is
                           more than one affected Asset with a Title Defect, and
                           the aggregate of all Title Defects is greater than
                           the Defect Deductible, the amount by which the
                           aggregate of all Title Defects exceeds the Defect
                           Deductible shall be applied pro-rata to the Allocated

                                      -10-
<PAGE>

                           Value of each affected Asset in determining the
                           amount to adjust the Purchase Price.

                  (c)      If prior to Closing, the Parties have not agreed upon
                           the validity of any asserted Title Defect or have not
                           agreed on the Title Defect Value attributable
                           thereto, either Party shall have the right to elect
                           to have the validity of such Title Defect and/or such
                           Title Defect Value determined by an Independent
                           Expert pursuant to Section 16.03. If the validity of
                           any asserted Title Defect, or the Title Defect Value
                           attributable thereto, is not determined before
                           Closing, the Purchase Price paid at Closing shall not
                           be reduced by virtue of such disputed Title Defect or
                           Title Defect Value, and, upon the final resolution of
                           such dispute, the Title Defect Value, if any, found
                           to be attributable to such Title Defect, which
                           exceeds the Defect Deductible, shall, subject to this
                           Section, be promptly refunded by Seller to Buyer.

         Section 3.06 Special Warranty of Title. Seller hereby agrees to warrant
and defend title to the Assets unto Buyer and its successors and assigns against
every person whomsoever lawfully claiming or to claim the same or any part
thereof, by, through or under Seller, but not otherwise; subject, however, to
the Permitted Encumbrances and the other matters set forth herein.

         Section 3.07 Preferential Rights To Purchase. Buyer's good faith
allocation of values as set forth in Exhibit C shall be used to prepare an
allocation of the Purchase Price to Assets that are, subject to Seller's
Knowledge (as such term is defined below), subject to preferential rights to
purchase and will be set forth in Schedule 3.07. Seller will use reasonable
efforts to send out the applicable preferential right to purchase notices within
five (5) Business Days after the date this Agreement is executed. Seller shall
provide to Buyer for Buyer's reasonable approval the form of all preferential
right notices. As used herein, the terms "Seller's Knowledge" and "to the
knowledge of Seller" shall construed to mean the actual knowledge of a matter
(without investigation) of an executive officer of Seller or its general
partner, or William G. Foster, Land Manager.

Seller shall use its reasonable efforts to comply with all preferential right to
purchase provisions relative to any Asset prior to the Closing. If, prior to
Closing, a holder of a preferential purchase right notifies Seller that it
intends to exercise it rights with respect to an Asset to which its preferential
purchase right applies (as determined in accordance with the agreement in which
the preferential purchase right arises), the Asset covered by said preferential
purchase right shall be excluded from the Assets to be conveyed to Buyer, and
the Purchase Price shall be reduced by the Allocated Value of said Asset. Buyer
acknowledges and agrees that Seller shall attempt to determine (in its good
faith judgment) the extent of the preferential purchase rights encumbering the
Assets, and said determination shall be used by Seller to provide the
preferential purchase right notifications. If the holder of the preferential
purchase right fails to consummate the purchase of the Asset subject to the
preferential purchase right or fails to respond to the notice by Closing, Seller
and Buyer shall proceed with Closing and the sale of the Asset to Buyer, it
being expressly understood and agreed hereby that in such case, Buyer shall
purchase such Asset(s) subject to the effects of such preferential purchase
right, and such preferential purchase right and

                                      -11-
<PAGE>

any and all liability arising therefrom shall be deemed to be an Assumed
Obligation (as such term is defined in Section 14.02 hereof).

         Section 3.08 Consents to Assignment. Seller shall use reasonable
efforts to obtain all necessary consents from Third Parties to assign the Assets
prior to Closing (other than governmental approvals that are customarily
obtained after Closing), subject to Seller's Knowledge of the existence of such
consents to assign. Buyer shall assist Seller with such efforts. To the extent
such consents are not obtained prior to Closing and would render the assignment
of some or all of the Assets void or voidable, would give rise to a claim for
damages or could cause a termination of the Lease or other Asset to be assigned,
Buyer may either waive the defect and proceed with Closing or exclude the Asset
as to that portion of the Assets affected thereby. If Buyer excludes an affected
Asset the Purchase Price shall be reduced by the Allocated Value of the affected
Asset. In all other cases, such unobtained consents shall not constitute Title
Defects. If Buyer elects to waive the defect and proceed with Closing under the
provisions of this Section 3.08, Buyer shall purchase such Asset(s) subject to
the effects of such consent to assign, and such consent to assign and any and
all liability arising therefrom shall be deemed to be an Assumed Obligation.

         Section 3.09 Remedies for Title Benefits.

                  (a)      If either Party discovers any Title Benefit during
                           the Examination Period affecting the Assets, it shall
                           promptly notify the other Party in writing thereof on
                           or before the expiration of the Examination Period.
                           Subject to Section 3.05, Seller shall be entitled to
                           an upward adjustment to the Purchase Price pursuant
                           to Section 10.02(a)(i) with respect to all Title
                           Benefits, in an amount mutually agreed upon by the
                           Parties. For purposes of this Agreement, the term
                           "Title Benefit" shall mean Seller's interest in any
                           Subject Interest that is greater than or in addition
                           to that set forth in Exhibit B (including, without
                           limitation, a Net Revenue Interest that is greater
                           than that set forth in Exhibit B) or Seller's Working
                           Interest in any Subject Interest that is less than
                           the Working Interest set forth in Exhibit B (without
                           a corresponding decrease in the Net Revenue
                           Interest). Any matters that may otherwise constitute
                           Title Benefits, but of which Buyer has not been
                           specifically notified by Seller in accordance with
                           the foregoing, shall be deemed to have been waived by
                           Seller for all purposes.

                  (b)      If, with respect to a Title Benefit, the Parties are
                           not deemed to have agreed on the amount of the upward
                           Purchase Price adjustment or have not otherwise
                           agreed on such amount on or before the Closing Date,
                           Seller or Buyer shall have the right to elect to have
                           such Purchase Price adjustment determined by an
                           Independent Expert pursuant to Section 16.03. If the
                           amount of such adjustment is not determined pursuant
                           to this Agreement by the Closing, the undisputed
                           portion of the Purchase Price with respect to the
                           Asset affected by such Title Benefit shall be paid by
                           Buyer at the Closing and, upon determination of the
                           amount of such adjustment, any unpaid portion thereof
                           shall be paid by Buyer to Seller.

                                      -12-
<PAGE>

                                   ARTICLE IV
                              ENVIRONMENTAL MATTERS

         Section 4.01 Environmental Review.

                  (a)      Buyer shall have the right to conduct or cause a
                           consultant ("Buyer's Environmental Consultant") to
                           conduct an environmental review of the Assets prior
                           to the expiration of the Examination Period ("Buyer's
                           Environmental Review"). The cost and expense of
                           Buyer's Environmental Review, if any, shall be borne
                           solely by Buyer. The scope of work comprising Buyer's
                           Environmental Review shall be limited to that
                           mutually agreed by Buyer and Seller prior to
                           commencement thereof and shall not include any
                           intrusive test, Phase II type examination or other
                           similar procedure without the prior consent of
                           Seller. Buyer shall (and shall cause Buyer's
                           Environmental Consultant to): (i) consult with Seller
                           before conducting any work comprising Buyer's
                           Environmental Review, (ii) perform all such work in a
                           safe and workmanlike manner and so as to not
                           unreasonably interfere with Seller's operations, and
                           (iii) comply with all applicable laws, rules, and
                           regulations. Buyer shall be solely responsible for
                           obtaining any Third Party consents that are required
                           in order to perform any work comprising Buyer's
                           Environmental Review, and Buyer shall consult with
                           Seller prior to requesting each such Third Party
                           consent. Seller shall have the right to have a
                           representative or representatives accompany Buyer and
                           Buyer's Environmental Consultant at all times during
                           Buyer's Environmental Review. With respect to any
                           samples taken in connection with Buyer's
                           Environmental Review, Buyer shall take split samples,
                           providing one of each such sample, properly labeled
                           and identified, to Seller. Buyer hereby agrees to
                           release, defend, indemnify and hold harmless Seller
                           from and against all claims, losses, damages, costs,
                           expenses, causes of action and judgments of any kind
                           or character (INCLUDING THOSE RESULTING FROM SELLER'S
                           SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR
                           STRICT LIABILITY, BUT EXCLUDING THOSE CAUSED BY
                           SELLER'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT)
                           arising out of or relating to Buyer's Environmental
                           Review.

                  (b)      Unless otherwise required by applicable law, Buyer
                           shall (and shall cause Buyer's Environmental
                           Consultant to) treat confidentially any matters
                           revealed by Buyer's Environmental Review and any
                           reports or data generated from such review (the
                           "Environmental Information"), and Buyer shall not
                           (and shall cause Buyer's Environmental Consultant to
                           not) disclose any Environmental Information to any
                           Governmental Authority or other Third Party without
                           the prior written consent of Seller. Unless otherwise
                           required by law, Buyer may use the Environmental
                           Information only in connection with the transactions
                           contemplated by this Agreement. If Buyer, Buyer's
                           Environmental Consultant, or any Third Party to whom

                                      -13-
<PAGE>

                           Buyer has provided any Environmental Information
                           become legally compelled to disclose any of the
                           Environmental Information, Buyer shall provide Seller
                           with prompt notice sufficiently prior to any such
                           disclosure so as to allow Seller to file any
                           protective order, or seek any other remedy, as it
                           deems appropriate under the circumstances. If this
                           Agreement is terminated prior to the Closing, Buyer
                           shall deliver the Environmental Information to
                           Seller, which Environmental Information shall become
                           the sole property of Seller. Buyer shall provide
                           copies of the Environmental Information to Seller
                           without charge.

         Section 4.02 Environmental Definitions.

                  (a)      Environmental Defects. For purposes of this
                           Agreement, the term "Environmental Defect" shall
                           mean, with respect to any given Asset, an individual
                           environmental condition that constitutes a material
                           violation of Environmental Laws in effect as of the
                           date of this Agreement in the jurisdiction in which
                           such Asset is located.

                  (b)      Governmental Authority. For purposes of this
                           Agreement, the term "Governmental Authority" shall
                           mean, as to any given Asset, the United States and
                           the state, county, parish, city and political
                           subdivisions in which such Asset is located and that
                           exercises jurisdiction over such Asset, and any
                           agency, department, board or other instrumentality
                           thereof that exercises jurisdiction over such Asset.

                  (c)      Environmental Laws. For purposes of this Agreement,
                           the term "Environmental Laws" shall mean all laws,
                           statutes, ordinances, court decisions, rules and
                           regulations of any Governmental Authority pertaining
                           to health or the environment as may be interpreted by
                           applicable court decisions or administrative orders,
                           including, without limitation, the Clean Air Act, as
                           amended, the Comprehensive Environmental Response,
                           Compensation and Liability Act, as amended
                           ("CERCLA"), the Federal Water Pollution Control Act,
                           as amended, the Occupational Safety and Health Act,
                           as amended, the Resources Conservation and Recovery
                           Act, as amended, the Safe Drinking Water Act, as
                           amended, the Toxic Substances Control Act, as
                           amended, the Superfund Amendment and Reauthorization
                           Act of 1986, as amended, the Hazardous Materials
                           Transportation Act, as amended, and comparable state
                           and local laws.

                  (d)      Environmental Defect Value. For purposes of this
                           Agreement, the term "Environmental Defect Value"
                           shall mean, with respect to any Environmental Defect,
                           the value, as of the Closing Date, of the estimated
                           costs and expenses to correct such Environmental
                           Defect in the most cost-effective manner reasonably
                           available, consistent with Environmental Laws, taking
                           into account that non-permanent remedies (such as
                           mechanisms to contain or stabilize hazardous
                           materials, including monitoring site conditions,
                           natural attenuation, risk-based corrective

                                      -14-
<PAGE>

                           action, institutional controls or other appropriate
                           restrictions on the use of property, caps, dikes,
                           encapsulation, leachate collection systems, etc.) may
                           be the most cost-effective manner reasonably
                           available.

         Section 4.03 Notice of Environmental Defects.

                  (a)      If Buyer discovers any Environmental Defect affecting
                           the Assets, Buyer shall notify Seller prior to the
                           expiration of the Examination Period of such alleged
                           Environmental Defect. To be effective, such notice
                           must: (i) be in writing; (ii) be received by Seller
                           prior to the expiration of the Examination Period;
                           (iii) describe the Environmental Defect in
                           sufficient, specific detail, including, without
                           limitation, (A) the written conclusion of Buyer's
                           Environmental Consultants that an Environmental
                           Defect exists, which conclusion shall be reasonably
                           substantiated by the factual data gathered in Buyer's
                           Environmental Review, and (B) a citation of the
                           provisions of Environmental Laws alleged to be
                           violated and the related facts that substantiate such
                           violation; (iv) identify the specific Assets affected
                           by such Environmental Defect, including, without
                           limitation, a site plan showing the location of all
                           sampling events, boring logs and other field notes
                           describing the sampling methods utilized and the
                           field conditions observed, chain-of-custody
                           documentation and laboratory reports; (v) identify
                           the procedures recommended to correct the
                           Environmental Defect, together with any related
                           recommendations from Buyer's Environmental
                           Consultant; and (vi) state Buyer's estimate of the
                           Environmental Defect Value, including the basis for
                           such estimate, for which Buyer would agree to adjust
                           the Purchase Price in order to accept such
                           Environmental Defect if Seller elected Section
                           4.04(a)(iv) as the remedy therefor.

                  (b)      An individual matter that would otherwise be
                           considered an Environmental Defect under Section
                           4.02(a) shall not be considered to be an
                           Environmental Defect unless the value of such matter
                           is greater than $25,000, as determined by Section
                           4.02(d) (the "Environmental Defect Threshold"). Buyer
                           shall not be entitled to allege Environmental Defects
                           until the aggregate of all Environmental Defects
                           which exceed the Environmental Defect Threshold
                           exceeds three per cent (3%) of the Purchase Price
                           prior to any adjustments thereto (the "Environmental
                           Defect Deductible").

                  (c)      Any matters that may otherwise constitute
                           Environmental Defects, but of which Seller has not
                           been specifically notified by Buyer in accordance
                           with the foregoing, together with any environmental
                           matter that does not constitute an Environmental
                           Defect, shall be deemed to have been waived by Buyer
                           for all purposes and constitute an Assumed Obligation
                           (as defined in Section 14.02).

         Section 4.04 Remedies for Environmental Defects.

                                      -15-
<PAGE>

                  (a)      Upon the receipt of effective notice of an
                           Environmental Defect from Buyer (as provided by
                           Section 4.03), Seller may:

                           (i)      attempt to cure such Environmental Defect at
                                    any time prior to Closing;

                           (ii)     exclude the affected Asset from the sale and
                                    reduce the Purchase Price by the Allocated
                                    Value of such affected Asset;

                           (iii)    subject to the approval of Buyer (such
                                    approval not to be unreasonably withheld),
                                    not take any action with respect to the
                                    alleged Environmental Defect and indemnify
                                    Buyer pursuant to Section 14.05 against all
                                    losses and costs which Buyer may incur in
                                    connection with the same (which shall cause
                                    such alleged Environmental Defect to become
                                    a Retained Obligation, as that term is
                                    defined in Section 14.01 hereof); or

                           (iv)     not take any action with respect to the
                                    alleged Environmental Defect and reduce the
                                    Purchase Price in accordance with Section
                                    10.02(b) (which shall cause such alleged
                                    Environmental Defect to become an Assumed
                                    Obligation as that term is defined in
                                    Section 14.02 hereof).

                  (b)      If Buyer and Seller have not agreed as to the
                           validity of any asserted Environmental Defect, or if
                           the Parties have not agreed on the Environmental
                           Defect Value therefor, then on or before three (3)
                           Business Days prior to the Closing Date either Party
                           shall have the right to elect to have validity of the
                           asserted Environmental Defect, and/or the
                           Environmental Defect Value for such Environmental
                           Defect, determined by an Independent Expert pursuant
                           to Section 16.03. If the validity of any such
                           asserted Environmental Defect or the amount of the
                           Environmental Defect Value attributable thereto is
                           not determined by the Closing, the Purchase Price
                           paid at Closing shall not be reduced by virtue of
                           such disputed Environmental Defect or the
                           Environmental Defect Value, and, upon the final
                           resolution of such dispute, the Environmental Defect
                           Value, if any, found to be attributable to such
                           Environmental Defect, which exceeds the Environmental
                           Defect Deductible shall, subject to this Section, be
                           promptly refunded by Seller to Buyer. Notwithstanding
                           the foregoing, the Seller shall have unilateral right
                           to exclude an Asset from the sale if the
                           Environmental Defect Value exceeds the Allocated
                           Value of the Asset(s) affected thereby.

                                    ARTICLE V
                    REPRESENTATIONS AND WARRANTIES OF SELLER

         Seller represents and warrants to Buyer that:

                                      -16-
<PAGE>

         Section 5.01 Seller's Existence. Seller is a limited partnership, duly
organized and validly existing under the laws of the State of Delaware and is
qualified to conduct business in the States of Texas and New Mexico. Seller has
full legal power, right and authority to carry on its business as such is now
being conducted and as contemplated to be conducted.

         Section 5.02 Legal Power. Seller has the legal power and right to enter
into and perform this Agreement and the transactions contemplated hereby. The
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with:

                  (a)      any provision of Seller's governing documents;

                  (b)      except for any preferential purchase rights and
                           consents to assignment, any material agreement or
                           instrument to which Seller is a party or by which
                           Seller is bound; or

                  (c)      any judgment, order, ruling or decree applicable to
                           Seller as a party in interest or any law, rule or
                           regulation applicable to Seller.

         Section 5.03 Execution. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite partnership action on the part of Seller. This
Agreement constitutes the legal, valid and binding obligation of Seller
enforceable in accordance with its terms except as (x) the enforceability hereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and (y) the
availability of equitable remedies may be limited by equitable principles of
general applicability.

         Section 5.04 Brokers. Tristone Capital LP has acted for or on behalf of
Seller or any affiliate of Seller in connection with this Agreement and the
transactions contemplated by this Agreement. No broker or finder is entitled to
any brokerage or finder's fee, or to any commission, based in any way on
agreements, arrangements or understandings made by or on behalf of Seller or any
affiliate of Seller for which Buyer has or will have any liabilities or
obligations (contingent or otherwise).

         Section 5.05 Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or to the knowledge of
Seller threatened against Seller.

         Section 5.06 Suits. Seller has not received notice of any suit, action,
claim, investigation or inquiry by any person or entity or by any administrative
agency or Governmental Authority and no legal, administrative or arbitration
proceeding is pending or, to Seller's Knowledge, threatened against Seller or
the Assets that has materially affected or will materially affect Seller's
ability to consummate the transactions contemplated herein or materially affect
the title to or value of the Assets.

         Section 5.07 Royalties. During the period of time from March 1, 2006 at
7 o'clock a.m. local time at the locations of the Assets until the Effective
Time (the "Seller Ownership Period"), all rentals, royalties and other payments
due under the Subject Interests described in Exhibit A have been paid in all
material respects, except those amounts properly held in suspense.

                                      -17-
<PAGE>

         Section 5.08 Taxes. During the Seller Ownership Period, all ad valorem,
property, production, severance, excise and similar taxes and assessments based
on or measured by the ownership of the Assets or the production of Hydrocarbons
or the receipt of proceeds therefrom that have become due and payable have been
paid in all material respects.

         Section 5.09 Contracts. All material Contracts are in full force and
effect, and Seller is not in default with respect to any of its material
obligations thereunder.

         Section 5.10 Liens. Except for Permitted Encumbrances, the Assets will
be conveyed free and clear of all liens, mortgages and encumbrances.

         Section 5.11 No Violation of Laws. To Seller's Knowledge, and during
the Seller Ownership Period, neither Seller nor Journey Operating (defined
below) has violated in any material respect any applicable law, rule,
regulation, ordinance, writ, decree or judgment of any Government Authority
(excluding Environmental Laws which are handled exclusively under Article IV of
this Agreement) with respect to the ownership or operation of the Assets which
could materially affect Seller's ability to consummate the transactions
contemplated herein or materially affect the ownership, value or operation of
any of the Assets.

         Section 5.12 No Prepayments. To Seller's Knowledge, there have been no
advanced, take or pay or other prepayments with respect to the Assets that would
obligate Seller or Buyer to deliver Hydrocarbon production from the Assets after
the Effective Time without receiving full payment therefor.

         Section 5.13 Production Sale Contracts. To Seller's Knowledge, there
are no production sales contracts pertaining to the Assets that cannot be
cancelled at any time upon 90 days (or less) prior notice.

         Section 5.14 Calls on Production. To Seller's Knowledge, none of the
Assets are subject to any calls on production.

                                   ARTICLE VI
                     REPRESENTATIONS AND WARRANTIES OF BUYER

         Buyer represents and warrants to Seller that:

         Section 6.01 Buyer's Existence. Buyer is a limited partnership, duly
organized and validly existing under the laws of the State of Delaware and is
qualified to conduct business in the State of Texas. Buyer has full legal power,
right and authority to carry on its business as such is now being conducted and
as contemplated to be conducted. Buyer's headquarters and principal offices are
all located in the State of Texas.

         Section 6.02 Legal Power. Buyer has the legal power and right to enter
into and perform this Agreement and the transactions contemplated hereby. The
consummation of the transactions contemplated by this Agreement will not
violate, nor be in conflict with:

                  (a)      any provision of Buyer's agreement of limited
                           partnership or other governing documents;

                                      -18-
<PAGE>

                  (b)      any material agreement or instrument to which Buyer
                           is a party or by which Buyer is bound; or

                  (c)      any judgment, order, ruling or decree applicable to
                           Buyer as a party in interest or any law, rule or
                           regulation applicable to Buyer.

         Section 6.03 Execution. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby are duly and validly
authorized by all requisite partnership action on the part of Buyer. This
Agreement constitutes the legal, valid and binding obligation of Buyer
enforceable in accordance with its terms except as (x) the enforceability hereof
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally, and (y) the
availability of equitable remedies may be limited by equitable principles of
general applicability.

         Section 6.04 Brokers. No broker or finder has acted for or on behalf of
Buyer or any affiliate of Buyer in connection with this Agreement or the
transactions contemplated by this Agreement. No broker or finder is entitled to
any brokerage or finder's fee, or to any commission, based in any way on
agreements, arrangements or understandings made by or on behalf of Buyer or any
affiliate of Buyer for which Seller has or will have any liabilities or
obligations (contingent or otherwise).

         Section 6.05 Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending, being contemplated by or to the knowledge of
Buyer threatened against Buyer or any affiliate of Buyer.

         Section 6.06 Suits. There is no suit, action, claim, investigation or
inquiry by any person or entity or by any administrative agency or Governmental
Authority and no legal, administrative or arbitration proceeding pending or, to
Buyer's knowledge, threatened against Buyer or any affiliate of Buyer that has
materially affected or will materially affect Buyer's ability to consummate the
transactions contemplated herein.

         Section 6.07 Qualifications. Buyer is now, and after the Closing shall
continue to be, qualified with all applicable Governmental Authorities to own
and operate the Assets and has, and shall maintain, all necessary bonds to own
and operate the Assets.

         Section 6.08 Investment. Prior to entering into this Agreement, Buyer
was advised by and has relied solely on its own legal, tax and other
professional counsel concerning this Agreement, the Assets and the value
thereof. Buyer is acquiring the Assets for its own account and not for
distribution or resale in any manner that would violate any state or federal
securities law, rule, regulation or order. Buyer understands and acknowledges
that if any of the Assets were held to be securities, they would be restricted
securities and could not be transferred without registration under applicable
state and federal securities laws or the availability of an exemption from such
registration.

         Section 6.09 Funds. Buyer has arranged to have available by the Closing
Date sufficient funds to enable Buyer to pay in full the Purchase Price as
herein provided and otherwise to perform its obligations under this Agreement.

                                      -19-
<PAGE>

                                   ARTICLE VII
                          SELLER'S CONDITIONS TO CLOSE

         The obligations of Seller to consummate the transaction provided for
herein are subject, at the option of Seller, to the fulfillment on or prior to
the Closing Date of each of the following conditions:

         Section 7.01 Representations. The representations and warranties of
Buyer herein contained shall be true and correct in all material respects on the
Closing Date as though made on and as of such date (except to the extent such
representations are qualified by materiality in which case such representations
shall be true and correct in all respects).

         Section 7.02 Performance. Buyer shall have performed all material
obligations, covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the Closing.

         Section 7.03 Pending Matters. No suit, action or other proceeding shall
be pending or threatened that seeks to restrain, enjoin or otherwise prohibit
the consummation of the transactions contemplated by this Agreement.

         Section 7.04 Purchase Price. Buyer shall have delivered to Seller the
Purchase Price, as the same may be adjusted hereunder, in accordance with the
provisions of Article II.

         Section 7.05 Execution and Delivery of the Closing Documents. Buyer
shall have executed, acknowledged and delivered, as appropriate, to Seller all
closing documents described in Section 10.05.

                                  ARTICLE VIII
                           BUYER'S CONDITIONS TO CLOSE

         The obligations of Buyer to consummate the transaction provided for
herein are subject, at the option of Buyer, to the fulfillment on or prior to
the Closing Date of each of the following conditions:

         Section 8.01 Representations. The representations and warranties of
Seller herein contained shall be true and correct in all material respects on
the Closing Date as though made on and as of such date (except to the extent
such representations are qualified by materiality in which case such
representations shall be true and correct in all respects).

         Section 8.02 Performance. Seller shall have performed all material
obligations, covenants and agreements contained in this Agreement to be
performed or complied with by it at or prior to the Closing.

         Section 8.03 Pending Matters. No suit, action or other proceeding shall
be pending or threatened that seeks to restrain, enjoin, or otherwise prohibit
the consummation of the transactions contemplated by this Agreement.

                                      -20-
<PAGE>

         Section 8.04 Execution and Delivery of the Closing Documents. Seller
shall have executed, acknowledged and delivered, as appropriate, to Buyer all
closing documents described in Section 10.04.

                                   ARTICLE IX
                                   TAX MATTERS

         Section 9.01 Transfer Taxes. All sales, use or other taxes (other than
taxes on gross income, net income or gross receipts) and duties, levies,
recording fees or other governmental charges incurred by or imposed with respect
to the property transfers undertaken pursuant to this Agreement shall be the
responsibility of, and shall be paid by, Buyer.

         Section 9.02 Ad Valorem and Similar Taxes. Ad valorem, property,
severance and similar taxes and assessments based upon or measured by the value
of the Assets shall be divided or prorated between Seller and Buyer as of the
Effective Time. Seller shall retain responsibility for such taxes attributable
to the period of time prior to the Effective Time and Buyer shall assume
responsibility for the period of time from and after the Effective Time.

         Section 9.03 Tax Deferred Exchange. Either or both Buyer and/or Seller
may, at or before the Closing, elect to affect a tax-deferred exchange of the
Assets for other qualifying properties (hereinafter collectively called the
"Exchange Property") in accordance with the following:

                  (a)      In the event Seller makes such an election prior to
                           the Closing, Seller may elect, by notice to Buyer
                           delivered on or before the Closing Date, to have the
                           Purchase Price paid to a qualified intermediary until
                           Seller has designated the Exchange Property. The
                           Exchange Property shall be designated by Seller and
                           acquired by the qualified intermediary within the
                           time periods prescribed in Section 1031(a)(3) of the
                           Internal Revenue Code, and shall thereupon be
                           conveyed to Seller. In the event Seller fails to
                           designate and the qualified intermediary fails to
                           acquire the Exchange Property within such time
                           periods, the agency or trust shall terminate and the
                           proceeds then held by the qualified intermediary
                           shall be paid immediately to Seller.

                  (b)      In the event Buyer makes such an election prior to
                           the Closing, Buyer may elect, by notice to Seller
                           delivered on or before the Closing Date, to have the
                           Assets conveyed to a qualified intermediary or an
                           exchange accommodation titleholder (as that term is
                           defined in Rev. Proc. 2000-37 issued effective
                           September 15, 2000).

                  (c)      The rights and responsibilities of Seller, Buyer and
                           the qualified intermediary or exchange accommodation
                           titleholder shall be documented with such agreements
                           containing such terms and provisions as shall be
                           determined by Seller and Buyer, each in their sole
                           discretion, to be necessary to accomplish a tax
                           deferred exchange under Section 1031 of the Internal
                           Revenue Code, subject, however, to the limitations on
                           costs

                                      -21-
<PAGE>

                           and liabilities of Buyer and Seller set forth below.
                           If Seller makes a tax deferred exchange election,
                           Buyer shall not be obligated to pay any additional
                           costs or incur any additional obligations in the
                           acquisition of the Assets. If Buyer makes a tax
                           deferred exchange election, Seller shall not be
                           obligated to pay any additional costs or incur any
                           additional obligations in the consummation of the
                           transactions contemplated in this Agreement and Buyer
                           shall not be relieved of any obligation hereunder.
                           Any such tax deferred exchange election by either
                           Party shall not affect the duties, rights or
                           obligations of the Parties except as expressly set
                           forth in this Section 9.03.

         Should either Seller or Buyer make such an election and should the tax
         deferred exchange fail or be disallowed by the Internal Revenue Service
         for any reason, the non-electing party's sole responsibility and
         liability to the electing party shall be to take such actions as are
         required by subsections (a), (b) or (c) above and such non-electing
         party shall have no other responsibility or liability whatsoever to the
         electing party; and the electing party shall release, indemnify, defend
         and hold harmless the non-electing party from any responsibility or
         liability related to such election except for such actions as may be
         required by subsections (a), (b) or (c) above.

                                    ARTICLE X
                                   THE CLOSING

         Section 10.01 Time and Place of the Closing. If the conditions referred
to in Articles VII and VIII of this Agreement have been satisfied or waived in
writing, the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Bracewell & Giuliani LLP whose address is Pennzoil
Place, 711 Louisiana Street, Suite 2300, Houston, Texas 77002 on July 31, 2006,
(the "Closing Date").

         Section 10.02 Adjustments to Purchase Price at the Closing.

                  (a)      At the Closing, the Purchase Price shall be increased
                           by the following amounts:

                           (i)      all upward Purchase Price adjustments for
                                    Title Benefits determined in accordance with
                                    Article III;

                           (ii)     any other amount provided for in this
                                    Agreement or agreed upon by Buyer and
                                    Seller;

                           (iii)    an estimate of any and all transfer, sales,
                                    gross receipts, compensating use or similar
                                    taxes, or assessments resulting from the
                                    transaction;

                           (iv)     an amount equal to the costs and expenses
                                    that are (i) attributable to the Assets for
                                    the period of time from the Effective Time
                                    to the Closing Date (the "Closing Period"),
                                    whether paid before or after the Effective
                                    Time, and (ii) paid by the Seller,
                                    including, without

                                      -22-
<PAGE>

                    limitation, bond and insurance premiums paid by or on behalf
                    of Seller attributable to coverage during the Closing
                    Period;

               (v)  an amount equal to the interest of Seller in the quantity of
                    merchantable Hydrocarbon substances produced from the Assets
                    in storage above the outlet connection and/or upstream of
                    the applicable sales meter at the Effective Time multiplied
                    by the contract price therefor at the Effective Time; and

               (vi) an amount equal to $500 per operated producing well per
                    month (prorated for any partial month or months) from the
                    Effective Time to the Closing Date in lieu of any indirect
                    overhead charges.

          (b)  At the Closing, the Purchase Price shall be decreased by the
               following amounts:

               (i)  the Allocated Value of any Subject Interest sold prior to
                    the Closing to the holder of a preferential right pursuant
                    to Section 3.07;

               (ii) any revenue attributable to post-Effective Time production
                    and received by Seller;

               (iii) all downward Purchase Price Adjustment for Title Defects
                    and Environmental Defects determined in accordance with
                    Article III and Article IV hereof; and

               (iv) any other amount provided for in this Agreement or agreed
                    upon by Buyer and Seller.

          (c)  The adjustments described in Sections 10.02(a) and (b) are
               hereinafter referred to as the "Purchase Price Adjustments."

     Section 10.03 Closing Statement. Not later than three (3) Business Days
prior to the Closing Date, Seller shall prepare and deliver to Buyer a statement
of the estimated Purchase Price Adjustments taking into account the foregoing
principles (the "Statement"). At the Closing, Buyer shall pay the Purchase
Price, as adjusted by the estimated Purchase Price Adjustments reflected on the
Statement.

     Section 10.04 Actions of Seller at the Closing.

     At the Closing, Seller shall:

          (a)  execute, acknowledge and deliver to Buyer the Assignment in the
               form of Exhibit D attached hereto in a sufficient number of
               counterparts for filing in each county where the Assets are
               located (the "Assignment");

                                      -23-
<PAGE>

          (b)  execute, acknowledge and deliver to Buyer letters in lieu of
               transfer or division orders directing all purchasers of
               production from the Subject Interests to make payment of proceeds
               attributable to such production to Buyer from and after the
               Effective Time as reasonably requested by Buyer prior to the
               Closing Date;

          (c)  deliver to Buyer possession of the Assets;

          (d)  execute and deliver to Buyer an affidavit attesting to its
               non-foreign status;

          (e)  deliver to Buyer appropriate change of operator forms on those
               Assets operated by Seller;

          (f)  execute and deliver to Buyer assignments of all state and federal
               Leases on the prescribed forms; and

          (g)  execute, acknowledge and deliver any other agreements provided
               for herein or necessary or desirable to effectuate the
               transactions contemplated hereby.

     Section 10.05 Actions of Buyer at the Closing.

     At the Closing, Buyer shall:

          (a)  deliver to Seller the Purchase Price (as adjusted pursuant to the
               provisions hereof and net of the Deposit) by wire transfer to an
               account designated in writing by Seller;

          (b)  take possession of the Assets; and

          (c)  execute, acknowledge and deliver the Assignment and any other
               agreements provided for herein or necessary or desirable to
               effectuate the transactions contemplated hereby.

                                   ARTICLE XI
                                   TERMINATION

     Section 11.01 Right of Termination. This Agreement may be terminated at any
time at or prior to the Closing:

          (a)  by mutual written consent of the Parties;

          (b)  by Seller on the Closing Date if the conditions set forth in
               Article VII have not been satisfied in all material respects by
               Buyer or waived by Seller in writing by the Closing Date;

                                      -24-
<PAGE>

          (c)  by Buyer on the Closing Date if the conditions set forth in
               Article VIII have not been satisfied in all material respects by
               Seller or waived by Buyer in writing by the Closing Date;

          (d)  by Seller if the Closing shall not have occurred on or before
               August 31, 2006;

          (e)  by either Party if any Governmental Authority shall have issued
               an order, judgment or decree or taken any other action
               challenging, delaying, restraining, enjoining, prohibiting or
               invalidating the consummation of any of the transactions
               contemplated herein;

          (f)  by either Party if (i) the aggregate amount of the Purchase Price
               Adjustments agreed by the Parties or otherwise finally determined
               pursuant to this Agreement with respect to all uncured Title
               Defects (net of the aggregate amount of the Purchase Price
               Adjustments for all Title Benefits agreed by the Parties) plus
               (ii) the aggregate amount of the Environmental Defect Values
               agreed by the Parties or otherwise finally determined pursuant to
               this Agreement with respect to all Environmental Defects, exceeds
               ten percent (10%) percent of the Purchase Price;

          (g)  by Buyer in accordance with Section 13.04(c); or

          (h)  as otherwise provided herein;

provided, however, that no Party shall have the right to terminate this
Agreement pursuant to clause (b), (c), or (d) above if such Party is at such
time in material breach of any provision of this Agreement.

     Section 11.02 Effect of Termination. In the event that the Closing does not
occur as a result of any Party exercising its right to terminate pursuant to
Section 11.01, then except as set forth in Section 11.03, this Agreement shall
be null and void and no Party shall have any further rights or obligations under
this Agreement, except that nothing herein shall relieve any Party from any
liability for any breach hereof or any liability that has accrued prior to the
date of such termination.

     Section 11.03 Termination Damages.

          (a)  If all conditions precedent to the obligations of Buyer set forth
               in Article VIII have been met and the transactions contemplated
               by this Agreement are not consummated on or before the Closing
               Date because of the failure of Buyer to perform any of its
               material obligations hereunder or the breach of any material
               representation herein by Buyer, then in such event and as
               Seller's sole remedy, Seller shall have the right to terminate
               this Agreement, in which case Seller shall retain the Deposit as
               liquidated damages on account of Buyer's failure to perform its
               obligations under this Agreement or Buyer's breach of any
               material representation under this Agreement, which remedy shall
               be the sole and exclusive remedy

                                      -25-
<PAGE>

               available to Seller for Buyer's failure to perform or breach.
               Buyer and Seller acknowledge and agree that (i) Seller's actual
               damages upon the event of such a termination are difficult to
               ascertain with any certainty, (ii) that the Deposit is a
               reasonable estimate of such actual damages and (iii) such
               liquidated damages do not constitute a penalty.

          (b)  If this Agreement is terminated by the mutual written agreement
               of Buyer and Seller, or if the Closing does not occur on or
               before the Closing Date for any reason other than as set forth in
               Section 11.01(b), then Seller shall return the Deposit to Buyer
               in immediately available funds within three (3) Business Days
               after the event giving rise to such payment to Buyer. Buyer and
               Seller shall thereupon have the rights and obligations set forth
               elsewhere herein.

          (c)  If all conditions to the obligations of Seller set forth in
               Article VII have been met and the transactions contemplated by
               this Agreement are not consummated on or before the Closing Date
               because of the failure of Seller to perform any of its material
               obligations hereunder or the breach of any material
               representation herein by Seller and Seller fails to cure same
               within ten (10) Business Days after receipt of written notice of
               such breach from Buyer, then Buyer shall have the right to pursue
               specific performance.

     Section 11.04 Attorneys' Fees, Etc. If either Party to this Agreement
resorts to legal proceedings to enforce this Agreement, the prevailing Party in
such proceedings shall be entitled to recover all costs incurred by such Party,
including reasonable attorneys' fees, in addition to any other relief to which
such Party may be entitled. Notwithstanding anything to the contrary in this
Agreement, in no event shall either Party be entitled to receive any punitive,
indirect or consequential damages unless same are a part of a Third Party claim
for which a Party is seeking indemnification hereunder, REGARDLESS OF WHETHER
CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT
NEGLIGENCE OR STRICT LIABILITY OF THE OTHER PARTY.

                                   ARTICLE XII
                            POST CLOSING OBLIGATIONS

     Section 12.01 Allocation of Expense and Revenues.

          (a)  Provided that the Closing occurs, appropriate adjustments shall
               be made between Buyer and Seller so that (i) Buyer will receive
               all proceeds from sales of Hydrocarbons that are produced and
               saved from and after the Effective Time and any other revenues
               arising out of the ownership or operation of the Assets from and
               after the Effective Time, net of all applicable production,
               severance, and similar taxes, and net of all costs and expenses
               that are incurred in the ownership or operation of the Assets
               from and after the Effective Time, including, without limitation,
               all drilling costs, all capital expenditures, all overhead
               charges under

                                      -26-
<PAGE>

               applicable operating or other agreements (regardless of whether
               Seller or an affiliate of Seller serves as operator prior to the
               Closing), and (ii) Seller will receive all proceeds from sales of
               Hydrocarbons that are produced and saved prior to the Effective
               Time and any other revenues arising out of the ownership or
               operation of the Assets prior to the Effective Time, net of all
               applicable production, severance, and similar taxes, and net of
               all costs and expenses that are incurred in the ownership or
               operation of the Assets prior to the Effective Time.

          (b)  In addition to the foregoing, and without duplication of any
               Purchase Price Adjustments, the Seller will be paid (i) the
               amount as of the Effective Time of all prepaid ad valorem,
               property or similar taxes and assessments based upon or measured
               by ownership of the Assets and any prepaid costs, including
               rentals and insurance premiums, insofar as such prepaid costs
               relate to periods of time after the Effective Time, and (ii) the
               value of all merchantable Hydrocarbons produced prior to the
               Effective Time but in storage above the inlet connection or
               upstream of the applicable sales meter on the Closing Date.

          (c)  In addition to the foregoing, and without duplication of any
               Purchase Price Adjustments, the Buyer will be paid (i) an amount
               equal to all unpaid ad valorem, property, production, severance
               and similar taxes and assessments based upon or measured by the
               ownership of the Assets that are attributable to periods of time
               prior to the Effective Time, which amounts shall, to the extent
               not actually assessed, be computed based on the 2006 tax
               statements received by Seller, or to the extent not received,
               then based on such taxes and assessments for the preceding tax
               year (such amount to be prorated for the period of Seller's and
               Buyer's ownership before and after the Effective Time), and (ii)
               an amount equal to all cash in, or attributable to, suspense
               accounts relative to the Assets for which Buyer has assumed
               responsibility under Section 14.02.

          (d)  To the extent that the same are not known as of the Closing Date
               or settled as Purchase Price Adjustments pursuant to Section
               10.02, all amounts due under this Section 12.01 will be settled
               in accordance with the Final Statement under Section 12.03.

     Section 12.02 Gas Imbalances. Buyer and Seller agree that the net gas
imbalance attributable to the Assets as of the Effective Time is believed to be
that which is set forth on Schedule 12.02 (the "Agreed Imbalance"),
notwithstanding that the actual imbalance may be less or greater. Buyer and
Seller shall verify the actual net gas imbalance in the post-closing accounting
and any imbalance shall be accounted for between the parties at the price of
$6.00 per Mcf but only as to those volumes which exceed or are less than the
Agreed Imbalance. Such settlement shall be final and neither party thereafter
shall make claim upon the other concerning the gas imbalances of the Assets.
BUYER ASSUMES ALL RIGHTS AND LIABILITIES RELATING TO GAS IMBALANCES DISCOVERED
AFTER THE POST-CLOSING SETTLEMENT INCLUDING ANY REVENUE ADJUSTMENT CAUSED BY
SUCH

                                      -27-
<PAGE>

SUBSEQUENTLY DISCOVERED IMBALANCE AND AGREES TO DEFEND AND INDEMNIFY SELLER FROM
AND AGAINST ANY CLAIM, BY ANYONE, ARISING OUT OF SUCH GAS IMBALANCES REGARDLESS
OF SELLER'S NEGLIGENCE OR FAULT (INCLUDING STRICT LIABILITY).

     Section 12.03 Final Accounting Statement.

          (a)  On or before ninety (90) days after the Closing Date, Seller
               shall prepare and deliver to Buyer a post-closing statement
               setting forth a detailed calculation of all post-Closing
               adjustments applicable to the period for time between the
               Effective Time and Closing ("Accounting Statement"). The
               Accounting Statement shall include any adjustment or payment
               which was not finally determined as of the Closing Date and the
               allocation of revenues and expenses as determined in accordance
               with Section 12.01. To the extent reasonably required by Seller,
               Buyer shall assist in the preparation of the Accounting
               Statement. Seller shall provide Buyer such data and information
               as Buyer may reasonably request supporting the amounts reflected
               on the Accounting Statement in order to permit Buyer to perform
               or cause to be performed an audit. The Accounting Statement shall
               become final and binding upon the parties on the thirtieth (30th)
               day following receipt thereof by Buyer (the "Final Settlement
               Date") unless Buyer gives written notice of its disagreement (a
               "Notice of Disagreement") to Seller prior to such date. Any
               Notice of Disagreement shall specify in detail the dollar amount,
               nature and basis of any disagreement so asserted. If a Notice of
               Disagreement is received by Seller in a timely manner, then the
               Parties shall resolve the Dispute (as defined in Section 16.01)
               evidenced by the Notice of Disagreement in accordance with
               Article XVI.

          (b)  Within five (5) Business Days after the Final Settlement Date,
               Seller shall pay to Buyer or Buyer shall pay to Seller, as
               applicable, in immediately available funds the net amount due.
               For purposes of this Agreement, the term "Final Statement" shall
               mean (i) the revised Statement becoming final pursuant to this
               Section, or (ii) upon resolution of any Dispute regarding a
               Notice of Disagreement, the revised Statement reflecting such
               resolutions, which the Parties shall issue, or cause the
               Independent Expert or arbitrators to issue, as applicable,
               following such resolution.

     Section 12.04 Further Cooperation. Seller shall make the Records available
to be picked up by Buyer at the offices of Seller during normal business hours
within five (5) Business Days after the Closing to the extent the Records are in
the possession of Seller and are not subject to contractual restrictions on
transferability. Seller shall have the right to retain copies of any of the
Records and the rights granted under Section 17.03.

After the Closing Date, each Party, at the request of the other and without
additional consideration, shall execute and deliver, or shall cause to be
executed and delivered, from time to time such further instruments of conveyance
and transfer and shall take such other action as the

                                      -28-
<PAGE>

other Party may reasonably request to convey and deliver the Assets to Buyer and
to accomplish the orderly transfer of the Assets to Buyer in the manner
contemplated by this Agreement. After the Closing, the Parties will cooperate to
have all proceeds received attributable to the Assets be paid to the proper
Party hereunder and to have all expenditures to be made with respect to the
Assets be made by the proper Party hereunder.

                                  ARTICLE XIII
                             OPERATION OF THE ASSETS

     Section 13.01 Operations after Effective Time. Pursuant to that certain
Transition Services Agreement dated April 1, 2006 by and between Seller and
Journey Operating L.L.C. ("Journey Operating") (the "Journey Transition Services
Agreement"), Journey Operating is operating certain of the Assets on which
Seller is the operator of record and shall continue to do so until such time as
the Journey Transition Services Agreement terminates pursuant to the terms
thereof.

Seller agrees, from and after the date hereof until Closing, except as expressly
contemplated by this Agreement or the Journey Transition Services Agreement, or
as expressly consented to in writing by Buyer, or in situations wherein
emergency action is taken in the face of risk to life, property or the
environment, to use commercially reasonable efforts to, or cause Journey
Operating to:

          (a)  Operate, or cause to be operated, the Assets in a good and
               workmanlike manner and in the usual, regular and ordinary manner
               consistent with past practice;

          (b)  maintain the books of account and records relating to the Assets
               in the usual, regular and ordinary manner, in accordance with the
               usual accounting practices of each such person;

          (c)  not enter into a material contract, or materially amend or change
               the terms of any such contract that would involve individual
               commitments of more than $50,000;

          (d)  not plug or abandon any well located on the Assets without
               Buyer's prior written consent;

          (e)  not transfer, sell, mortgage, pledge or dispose of any material
               portion of the Assets other than the sale and/or disposal of
               hydrocarbons in the ordinary course of business and sales of
               equipment that is no longer necessary in the operation of the
               Assets or for which replacement equipment has been obtained;

          (f)  preserve in full force and effect all oil and gas leases,
               operating agreements, easements, rights-of-way, permits,
               licenses, insurance (to the extent maintained by Seller) and
               agreements that relate to the Assets;

                                      -29-
<PAGE>

          (g)  submit to Buyer for prior written approval, all requests for
               operating or capital expenditures relating to the Assets that
               involve individual commitments of more than $50,000; and

          (h)  obtain Buyer's written approval prior to voting under any
               operating, joint venture, partnership or similar agreement or
               electing to non-consent any operation under an operating
               agreement.

In order to reimburse the Seller for administrative overhead expenses incurred
in order to operate the properties in accordance with this Section from the
Effective Time to the Closing Date, Buyer shall pay the Seller a fee as provided
in Section 10.02(a)(vi).

     Section 13.02 Limitations on the Operational Obligations and Liabilities of
Seller

          (a)  From and after the date of execution of this Agreement and until
               the Closing, and subject to the provisions of applicable
               operating and other agreements, Seller shall use commercially
               reasonable efforts to cause Journey Operating to operate the
               Assets and use commercially reasonable efforts to cause any other
               operators to operate and administer the Assets in a manner
               consistent with its past practices, and shall carry on its
               business with respect to the Assets in substantially the same
               manner as before execution of this Agreement.

               Buyer acknowledges that Seller owns undivided interests in some
               or all of the Assets, and Buyer agrees that the acts or omissions
               of the other working interest owners shall not constitute a
               violation of the provisions of this Article XIII, nor shall any
               action required by a vote of working interest owners constitute
               such a violation so long as Seller has voted its interests in a
               manner that complies with the provisions of this Article XIII. To
               the extent that Seller is not the operator of any of the Assets,
               the obligations of Seller in this Article XIII shall be construed
               to require that Seller use reasonable efforts (without being
               obligated to incur any expense or institute any cause of action)
               to cause the operator of such Assets to take such actions or
               render such performance within the constraints of the applicable
               operating agreements and other applicable agreements.

          (b)  Notwithstanding anything to the contrary in this Article XIII,
               and pursuant to Section 14.03 hereof, Seller shall have no
               liability to Buyer for, and Buyer hereby agrees to release,
               defend, indemnify and hold harmless Seller from, the incorrect
               payment of delay rentals, royalties, shut-in royalties or similar
               payments or for any failure to pay any such payments through
               mistake or oversight (INCLUDING THOSE RESULTING FROM SELLER'S
               SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT
               LIABILITY, BUT EXCLUDING THOSE RESULTING FROM SELLER'S GROSS
               NEGLIGENCE OR WILLFUL MISCONDUCT) provided that such payments
               relate to production months after the Effective Time. In no

                                      -30-
<PAGE>

               event shall Buyer's remedy for any breach by Seller of its
               obligations under this Article XIII exceed the Allocated Value of
               the Subject Interest affected by such breach.

     Section 13.03 Operation of the Assets After the Closing. Following the
Closing, Seller shall not be obligated to continue operating any of the Assets,
and Buyer hereby agrees to assume full responsibility for operating (or causing
the operation of) all Assets. Seller shall make its personnel available to Buyer
prior to the Closing as may be reasonably necessary to assist in the transition
if Buyer becomes the operator. Without implying any obligation on Seller's part
to continue operating any Assets after the Closing, if Seller elects to operate
any Assets following the Closing at the request of Buyer or any Third Party
working interest owner, due to constraints of applicable joint operating
agreement(s), or failure of a successor operator to take over operations or
other reasonable cause, such continued operation by Seller shall be for the
account of Buyer, at the sole risk, cost and expense of Buyer. Seller, as a part
of the Assumed Obligations, is hereby released and indemnified by Buyer from all
claims, losses, damages, costs, expenses, causes of action and judgments of any
kind or character (INCLUDING THOSE RESULTING FROM SELLER'S SOLE, JOINT,
COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY) with respect to (a)
such continued operations by Seller, (b) Buyer's assumption of operations, and
(c) compliance with the terms of any applicable joint operating agreement
related to the election of a successor operator. Buyer shall conduct or cause to
be conducted all operations on the Assets after Closing in a good and
workmanlike manner and in compliance with all applicable laws, rules,
regulations and agreements. Notwithstanding anything to the contrary contained
herein, at Closing, Seller will resign as operator of any wells within the
Assets that Seller currently operates.

     Section 13.04 Casualty Loss.

          (a)  Buyer shall assume all risk of loss with respect to, and any
               change in the condition of, the Assets from Effective Time until
               the Closing, including with respect to the depletion of
               Hydrocarbons, the watering-out of any well, the collapse of
               casing, sand infiltration of wells, and the depreciation of
               personal property.

          (b)  If after the date of this Agreement and prior to the Closing any
               part of the Assets shall be damaged or destroyed by fire or other
               casualty or if any part of the Assets shall be taken in
               condemnation or under the right of eminent domain or if
               proceedings for such purposes shall be pending or threatened,
               this Agreement shall remain in full force and effect
               notwithstanding any such destruction, taking or proceeding, or
               the threat thereof and the Parties shall proceed with the
               transactions contemplated by this Agreement notwithstanding such
               destruction or taking without reduction of the Purchase Price,
               but subject to Section 13.04(c).

          (c)  Notwithstanding Section 13.04(a), in the event of any loss
               described in Section 13.04(b), at the Closing, Seller shall pay
               to Buyer all sums paid to Seller by Third Parties by reason of
               the destruction or taking of such Assets (up to the Allocated
               Value thereof), including any sums paid

                                      -31-
<PAGE>

               pursuant to any policy or agreement of insurance or indemnity,
               and shall assign, transfer and set over unto Buyer all of the
               rights, title and interest of Seller in and to any claims, causes
               of action, unpaid proceeds or other payments from Third Parties,
               including any policy or agreement of insurance or indemnity,
               arising out of such destruction or taking (up to the Allocated
               Value thereof). Notwithstanding anything to the contrary in this
               Section 13.04, except as provided in Section 13.01 Seller shall
               not be obligated to carry or maintain, and shall have no
               obligation or liability to Buyer for its failure to carry or
               maintain, any insurance coverage with respect to any of the
               Assets. Notwithstanding anything to the contrary contained in
               this Section 13.04, should the uncompensated loss exceed fifteen
               (15%) percent of the Purchase Price, Buyer shall have the option
               to terminate this Agreement in which event Seller shall return
               the Deposit and to Buyer within three (3) Business Days after
               such termination.

     Section 13.05 Operatorship. At or before Closing, Seller will send out
notifications of its resignation as operator for all wells Seller currently
operates and is selling to Buyer pursuant to this Agreement. Seller makes no
representation and/or warranty to Seller as to the transferability or
assignability of operatorship of such wells. Buyer acknowledges that the rights
and obligations associated with such wells are governed by applicable agreements
and that operatorship will be determined by the terms of those agreements.

                                   ARTICLE XIV
                         OBLIGATIONS AND INDEMNIFICATION

     Section 14.01 Retained Obligations. Provided that the Closing occurs,
Seller shall retain the following, to the extent that Buyer has provided Seller
with written notice claiming indemnification within six (6) months of the
Closing pursuant to the provisions of Section 14.04, and not thereafter,: (a)
all obligations and liabilities for the payment of royalties and rentals under
the Leases relating to the Subject Interests accruing during the Seller
Ownership Period; (b) all obligations of Seller under the Contracts for payment
of trade payables that accrue during the Seller Ownership Period; (c) any
obligation for which Seller expressly elects to indemnify Buyer pursuant to
Section 4.04(a)(iii); (d) all obligations and liabilities for payment of ad
valorem, property, and severance taxes attributable to the Assets arising during
the Seller Ownership Period; (e) all obligations and liabilities of Seller to
Third Parties for personal injury or death to the extent occurring prior to the
Effective Time as a result of the operation of the Assets by Seller, Journey
Operating or their respective affiliates; and (f) all obligations and
liabilities relating to any contamination or condition that is the result of any
offsite disposal by Seller, Journey Operating or their respective affiliates of
any wastes, pollutants, contaminants, hazardous material or other material or
substances on, in or below any properties not included in the Assets prior to
the Effective Time ("Offsite Disposal Claims") (collectively, the "Retained
Obligations").

     Section 14.02 Assumed Obligations. Provided that the Closing occurs, Buyer
hereby assumes all duties, obligations and liabilities of every kind and
character with respect to the Assets and the ownership or operation thereof
(other than the Retained Obligations), whether attributable to periods before or
after the Effective Time, including, without limitation, those

                                      -32-
<PAGE>

arising out of (a) the terms of the Easements, Contracts, Leases, Personal
Property or Subject Interests comprising part of the Assets, (b) Gas Imbalances,
(c) suspense accounts, (d) ad valorem, property, severance and other similar
taxes or assessments based upon or measured by the ownership of the Assets or
the production therefrom, (e) the condition of the Subject Interests, regardless
of whether such condition arose before or after the Effective Time, (f)
obligations to properly plug and abandon or re-plug or re-abandon or remove
wells, flowlines, gathering lines or other facilities, equipment or other
personal property or fixtures comprising part of the Assets, (g) obligations to
restore the surface of the Subject Interests and obligations to remediate or
bring the Subject Interests into compliance with applicable Environmental Laws
(including conducting any remediation activities that may be required on or
otherwise in connection with activities on the Subject Interests), regardless of
whether such obligations or conditions or events giving rise to such
obligations, arose, occurred or accrued before or after the Effective Time, and
(h) any other duty, obligation, event, condition or liability assumed by Buyer
under the terms of this Agreement (collectively, the "Assumed Obligations").

     Section 14.03 Buyer's Indemnification.

          (a)  Provided that the Closing occurs, Buyer shall release, defend,
               indemnify and hold harmless Seller, its partners, and their
               respective officers, directors, employees, agents, partners,
               representatives, members, shareholders, affiliates, subsidiaries,
               successors and assigns (collectively, the "Seller Indemnitees")
               from and against any and all claims, damages, liabilities,
               losses, causes of action, costs and expenses (including, without
               limitation, those involving theories of negligence or strict
               liability and including court costs and attorneys' fees)
               (collectively, the "Losses") as a result of, arising out of, or
               related to the Assumed Obligations, REGARDLESS OF WHETHER CAUSED
               OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT
               NEGLIGENCE OR STRICT LIABILITY OF ANY OF THE SELLER INDEMNITEES.

          (b)  Without limiting the foregoing, provided that the Closing occurs,
               Buyer shall release, defend, indemnify and hold harmless Seller
               Indemnitees from and against any and all Losses which Seller
               Indemnitees may sustain or incur by reason of or in connection
               with environmental claims (excluding Offsite Disposal Claims
               which constitute Retained Obligations, subject to other
               limitations set forth in this Article XIV) relating to or arising
               from the Assets REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY
               THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT
               LIABILITY OF ANY OF THE SELLER INDEMNITEES. BUYER HEREBY
               EXPRESSLY WAIVES BUYER'S RIGHT TO CONTRIBUTION UNDER CERCLA.

     Section 14.04 Seller's Indemnification. Provided that the Closing occurs,
subject to the limitations set forth in this paragraph and Section 15.03 Seller
shall release, defend, indemnify and hold harmless Buyer, its partners, and
their respective officers, directors, employees, agents, representatives,
members, shareholders, affiliates and subsidiaries (collectively, the "Buyer

                                      -33-
<PAGE>

Indemnitees") from and against any and all Losses resulting from Seller's breach
of its representations and warranties and the Retained Obligations REGARDLESS OF
WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT
NEGLIGENCE OR STRICT LIABILITY OF ANY OF THE BUYER INDEMNITEES. Notwithstanding
anything to the contrary contained herein, Seller's indemnification obligation
under this Section 14.04 shall only apply if (a) Buyer has provided Seller with
written notice claiming indemnification within six (6) months of the Closing,
and (b) Buyer shall bear sole responsibility for the aggregate costs associated
with all Losses relating to Buyer Indemnitees up to a deductible percentage of
three percent (3%) of the Purchase Price. By the prior sentence, it is the
intent that the Seller only be obligated to the extent of the excess of the
claims for Losses exceeds the deductible percentage of three percent (3%). In no
event shall Seller be required to indemnify the Buyer Indemnitees (or any single
Buyer Indemnitee) or pay any other amount in connection with or with respect to
the transactions contemplated in this Agreement any amount exceeding in the
aggregate twenty percent (20%) of the Purchase Price (as increased or decreased
under the terms of this Agreement).

     Section 14.05 Notices and Defense of Indemnified Matters. Each Party shall
promptly notify the other Party of any matter of which it becomes aware and for
which it is entitled to indemnification from the other Party under this
Agreement. The indemnifying Party shall be obligated to defend, at the
indemnifying Party's sole expense, any litigation or other administrative or
adversarial proceeding against the indemnified Party relating to any matter for
which the indemnifying Party has agreed to indemnify and hold the indemnified
Party harmless under this Agreement. However, the indemnified Party shall have
the right to participate with the indemnifying Party in the defense of any such
matter at its own expense.

     Section 14.06 Sole Remedy. If the Closing occurs, the sole and exclusive
remedy of each of the Buyer Indemnitees and the Seller Indemnitees with respect
to the Assets, including this purchase and sale, shall be pursuant to the
express provisions of this Agreement. With respect to the Buyer Indemnitees, any
and all (i) claims relating to the representations, warranties, covenants, and
agreements contained in this Agreement, (ii) other claims pursuant to, or in
connection with, this Agreement, or (iii) other claims relating to the Assets
and the purchase and sale thereof shall be subject to the provisions set forth
in Section 14.04. With respect to the Seller Indemnitees, any and all (i) claims
relating to the representations, warranties, covenants, and agreements contained
in this Agreement, (ii) other claims pursuant to, or in connection with, this
Agreement, or (iii) other claims relating to the Assets and the purchase and
sale thereof shall be subject to the provisions set forth in this Article XIV.
If the Closing occurs, Buyer on behalf of each of the Buyer Indemnitees and
Seller on behalf of each of the Seller Indemnitees shall be deemed to have
waived, to the fullest extent permitted under applicable law, any right to
contribution against Seller or any of its affiliates and any and all other
rights, claims, and causes of action it may have against Seller or any of its
affiliates, or Buyer or any of its affiliates, respectively, arising under or on
any federal, state, or local statute, law ordinance, rule or regulation, common
law or otherwise.

     Section 14.07 Insurance and Tax Benefits. The amount for which any of the
Buyer Indemnitees or the Seller Indemnitees are entitled to indemnification or
other compensation under this Agreement or in connection with or with respect to
the transactions contemplated in this Agreement shall be reduced by any
corresponding (i) tax benefit created or generated or (ii)

                                      -34-
<PAGE>

insurance proceeds realized or that could reasonably be expected to be realized
by such party if a claim were properly pursued under the relevant insurance
arrangements.

     Section 14.08 Express Negligence. EXCEPT AS SPECIFICALLY PROVIDED OTHERWISE
IN THIS AGREEMENT, THE INDEMNIFICATION, RELEASE AND ASSUMPTION PROVISIONS
PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES,
COSTS, EXPENSES, AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM (i) THE
EXPRESS, GROSS, ACTIVE, PASSIVE, OR CONCURRENT NEGLIGENCE, OR OTHER FAULT OF ANY
BUYER INDEMNITEE OR SELLER INDEMNITEE OR (II) ANY ACTION THAT SUBJECTS THE BUYER
INDEMNITEE OR SELLER INDEMNITEE TO CLAIMS PREMISED IN WHOLE OR IN PART ON STRICT
LIABILITY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

                                   ARTICLE XV
                  LIMITATIONS ON REPRESENTATIONS AND WARRANTIES

     Section 15.01 Disclaimers of Representations and Warranties. The express
representations and warranties of Seller contained in this Agreement and in the
Assignment are exclusive and are in lieu of all other representations and
warranties, express, implied or statutory. EXCEPT FOR THE EXPRESS
REPRESENTATIONS OF SELLER IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLER HAS
NOT MADE, AND SELLER HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY
EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON
LAW, BY STATUTE OR OTHERWISE RELATING TO (a) PRODUCTION RATES, RECOMPLETION
OPPORTUNITIES, DECLINE RATES, GAS BALANCING INFORMATION OR THE QUALITY, QUANTITY
OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS,
(b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO BUYER BY
OR ON BEHALF OF SELLER, AND (c) THE ENVIRONMENTAL CONDITION OF THE ASSETS.
EXCEPT FOR THE EXPRESS REPRESENTATIONS OF SELLER IN THIS AGREEMENT, SELLER
EXPRESSLY DISCLAIMS AND NEGATES, AND BUYER HEREBY WAIVES, AS TO PERSONAL
PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES CONSTITUTING A PART OF
THE ASSETS (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (II) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (III) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(IV) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM DEFECTS, WHETHER KNOWN OR UNKNOWN, (VI) ANY AND ALL
IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW, AND (VII) ANY IMPLIED OR
EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT, OR PROTECTION OF THE

                                      -35-
<PAGE>

ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS INTENTION OF BUYER AND SELLER THAT
THE PERSONAL PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES INCLUDED IN
THE ASSETS SHALL BE CONVEYED TO BUYER, AND BUYER SHALL ACCEPT SAME, AS IS, WHERE
IS, WITH ALL FAULTS AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND BUYER
REPRESENTS TO SELLER THAT BUYER WILL MAKE OR CAUSE TO BE MADE SUCH INSPECTIONS
WITH RESPECT TO SUCH PERSONAL PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND
FIXTURES AS BUYER DEEMS APPROPRIATE. SELLER AND BUYER AGREE THAT, TO THE EXTENT
REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN
WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE
PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.

     Section 15.02 Independent Investigation. Buyer represents and acknowledges
that it is knowledgeable of the oil and gas business and of the usual and
customary practices of producers such as Seller and that it has had (or will
have prior to the Closing if Seller complies with its obligations under this
Agreement) access to the Assets, the officers and employees of Seller, and the
books, records and files of Seller relating to the Assets, and in making the
decision to enter into this Agreement and consummate the transactions
contemplated hereby, Buyer has relied solely on the basis of its own independent
due diligence investigation of the Assets and upon the representations and
warranties made in Article V, and not on any other representations or warranties
of Seller or any other person or entity.

     Section 15.03 Survival. The representations and warranties set forth in
Sections 5.07 through 5.14 and the covenants and agreements of Seller and Buyer
to be performed prior to or at the Closing shall terminate upon the Closing and
be of no further force and effect. All other representations, warranties,
covenants and obligations of Buyer under this Agreement shall indefinitely
survive the Closing. The representations, warranties, covenants and obligations
of Seller under Sections 5.01, 5.02, 5.03, 5.04, 5.05, and 5.06 of this
Agreement shall survive the Closing for a period of six months from the Closing.
The provisions of Section 11.04, 13.03, and 13.04(a) and Articles XII, XV, XVI
and XVII shall survive indefinitely. Article 14 shall survive the Closing
indefinitely, provided, however, nothing herein shall extend the six (6) month
period after Closing in which Buyer may send written notice claiming the right
to indemnification either under Sections 14.01 or 14.04 and Buyer expressly
waives all other rights to make any claim against Seller Indemnitees in
accordance with Sections 14.06 and 15.05.

     Section 15.04 Mitigation. Each person and entity entitled to
indemnification hereunder or otherwise to damages in connection with the
transactions contemplated in this Agreement shall take all reasonable steps to
mitigate all losses, costs, expenses and damages after becoming aware of any
event which could reasonably be expected to give rise to any losses, costs,
expenses and damages that are indemnifiable or recoverable hereunder or in
connection herewith.

     Section 15.05 Effect of Waiver. Neither Seller not Buyer shall have any
obligation or liability under this Agreement or in connection with or with
respect to the transactions contemplated in this Agreement for any breach,
misrepresentation, or noncompliance with

                                      -36-
<PAGE>

respect to any representation, warranty, covenant, or obligation if such breach,
misrepresentation or noncompliance shall have been waived by the other party.

     Section 15.06 Waiver of Consumer Rights. BUYER HEREBY WAIVES THE PROVISIONS
OF THE TEXAS DECEPTIVE TRADE PRACTICES ACT (THE "DTPA"), CHAPTER 17, SUBCHAPTER
E, SECTIONS 17.41 THROUGH 17.63, INCLUSIVE (OTHER THAN SECTION 17.555, WHICH IS
NOT WAIVED) OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES CONSUMERS
SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF ITS OWN
SELECTION, BUYER VOLUNTARILY CONSENTS TO THIS WAIVER. TO EVIDENCE ITS ABILITY TO
GRANT SUCH WAIVER, BUYER REPRESENTS TO SELLER THAT IT (i) IS IN THIS BUSINESS OF
SEEKING OR ACQUIRING, BY PURCHASE OR LEASE, GOODS OR SERVICES FOR COMMERCIAL OR
BUSINESS USE, (II) HAS ASSETS OF $5 MILLION OR MORE ACCORDING TO ITS MOST RECENT
FINANCIAL STATEMENT PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, (III) HAS KNOWLEDGE AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS
THAT ENABLE IT TO EVALUATE THE MERITS AND RISKS OF THE TRANSACTION CONTEMPLATED
HEREBY, AND (IV) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING POSITION.

                                   ARTICLE XVI
                               DISPUTE RESOLUTION

     Section 16.01 General. Any and all claims, disputes, controversies or other
matters in question arising out of or relating to title issues pursuant to
Section 3.05(c), environmental issues pursuant to Section 4.04(b), or
calculation of the Accounting Statement or revisions thereto pursuant to Section
12.03(a) (all of which are referred to herein as "Disputes" which term shall not
include any other disputes claims, disputes, controversies or other matters in
question arising under this Agreement) shall be resolved in the manner
prescribed by this Article XVI.

     Section 16.02 Senior Management. If a Dispute occurs that the senior
representatives of the Parties responsible for the transaction contemplated by
this Agreement have been unable to settle or agree upon within a period of
fifteen (15) days after such Dispute arose, Seller shall nominate and commit one
of the senior officers of its general partner, and Buyer shall nominate and
commit one of its senior officers, to meet at a mutually agreed time and place
not later than thirty (30) days after the Dispute has arisen to attempt to
resolve same. If such senior management have been unable to resolve such Dispute
within a period of fifteen (15) days after such meeting, or if such meeting has
not occurred within forty-five (45) days following such Dispute arising, then
either Party shall have the right, by written notice to the other, to resolve
the Dispute through the relevant Independent Expert pursuant to Section 16.03.

     Section 16.03 Dispute by Independent Expert.

          (a)  Each Party shall have the right to submit Disputes regarding
               title issues, environmental issues, or calculation of the
               Statement or revisions thereto, to an independent expert
               appointed in accordance with this Section 16.03

                                      -37-
<PAGE>

               (each, an "Independent Expert"), who shall serve as sole
               arbitrator. The Independent Expert shall be appointed by mutual
               agreement of the Parties from among candidates with experience
               and expertise in the area that is the subject of such Dispute,
               and failing such agreement, such Independent Expert for such
               Dispute shall be selected in accordance with the Rules (as
               defined in Subsection (b) of this Section 16.03).

          (b)  Disputes to be resolved by an Independent Expert shall be
               resolved in accordance with mutually agreed procedures and rules
               and failing such agreement, in accordance with the rules and
               procedures of the Texas Arbitration Act and the Rules of the
               American Arbitration Association to the extent such Rules do not
               conflict with such Texas Arbitration Act or the provisions of
               this Agreement The Independent Expert shall be instructed by the
               Parties to resolve such Dispute as soon as reasonably practicable
               in light of the circumstances. The decision and award of the
               Independent Expert shall be binding upon the Parties as an award
               under the Texas Arbitration Act and final and nonappealable to
               the maximum extent permitted by law, and judgment thereon may be
               entered in a court of competent jurisdiction and enforced by any
               Party as a final judgment of such court.

          (c)  The charges and expenses of the arbitrator shall be shared
               equally by Seller and Buyer.

          (d)  Any arbitration hearing held pursuant to Section 16.03 shall be
               held in Houston, Texas

     Section 16.04 Limitation on Arbitration. ALL OTHER DISAGREEMENTS,
DIFFERENCES, OR DISPUTES ARISING BETWEEN SELLER AND BUYER UNDER THE TERMS OF
THIS AGREEMENT (AND NOT COVERED BY SECTION 16.03) SHALL NOT BE SUBJECT TO
ARBITRATION AND SHALL BE DETERMINED BY A COURT OF COMPETENT JURISDICTION, UNLESS
THE PARTIES OTHERWISE MUTUALLY AGREE.

                                  ARTICLE XVII
                                  MISCELLANEOUS

     Section 17.01 Names. As soon as reasonably possible after the Closing, but
in no event later than 45 days after the Closing, Buyer shall remove the names
of Seller and its affiliates, and all variations thereof, from all of the Assets
and make the requisite filings with, and provide the requisite notices to, the
appropriate federal, state or local agencies to place the title or other indicia
of ownership, including operation of the Assets, in a name other than the name
of the Seller or any of its affiliates, or any variations thereof.

     Section 17.02 Expenses. Each Party shall be solely responsible for all
expenses, including due diligence expenses, incurred by it in connection with
this transaction, and neither Party shall be entitled to any reimbursement for
such expenses from the other Party.

                                      -38-
<PAGE>

     Section 17.03 Document Retention. As used in this Section 17.03, the term
"Documents" shall mean all files, documents, books, records and other data
delivered to Buyer by Seller pursuant to the provisions of this Agreement (other
than those that Seller has retained either the original or a copy of),
including, but not limited to: financial and tax accounting records; land, title
and division of interest files; contracts; engineering and well files; and books
and records related to the operation of the Assets prior to the Closing Date.
Buyer shall retain and preserve the Documents for a period of no less than four
(4) years following the Closing Date (or for such longer period as may be
required by law or governmental regulation), and shall allow Seller or its
representatives to inspect the Documents at reasonable times and upon reasonable
notice during regular business hours during such time period. Seller shall have
the right during such period to make copies of the Documents at its expense.

     Section 17.04 Entire Agreement. This Agreement, the documents to be
executed hereunder, and the exhibits attached hereto constitute the entire
agreement between the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties pertaining to the subject matter hereof.
No supplement, amendment, alteration, modification or waiver of this Agreement
shall be binding unless executed in writing by the Parties and specifically
referencing this Agreement.

     Section 17.05 Waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.

     Section 17.06 Publicity. Neither Seller nor Buyer will issue any public
announcement or press release concerning this transaction without prior
consultation of the other Party (except as required by law or the applicable
rules or regulations of any Governmental Authority or stock exchange, and in
such case with prior written agreement between the Parties on the wording of the
announcement or press release).

     Section 17.07 Construction. The captions in this Agreement are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Agreement. The Parties
acknowledge that they have participated jointly in the negotiation and drafting
of this Agreement and as such the Parties agree that if an ambiguity or question
of intent or interpretation arises hereunder, this Agreement shall not be
construed more strictly against one Party than another on the grounds of
authorship.

     Section 17.08 No Third Party Beneficiaries. Except as may be specifically
provided for in the terms of this Agreement, nothing in this Agreement shall
provide any benefit to any Third Party or entitle any Third Party to any claim,
cause of action, remedy or right of any kind, it being the intent of the Parties
that this Agreement shall otherwise not be construed as a Third Party
beneficiary contract.

     Section 17.09 Assignment. Neither Party may assign or delegate any of its
rights or duties hereunder without the prior written consent of the other Party,
and any assignment made without such consent shall be void. Notwithstanding the
foregoing, Seller may assign its rights and delegate its duties hereunder
without the consent of Buyer to any entity (i) that is controlled

                                      -39-
<PAGE>

by Seller; (ii) that controls Seller, or (iii) that is under common control with
Seller; provided however, that no such assignment of rights or delegation of
duties shall relieve Seller of any of its obligations under this Agreement.
Except as otherwise provided herein, this Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective permitted
successors, assigns and legal representatives.

     Section 17.10 Buyer's Obligation Independent of Financing. Notwithstanding
anything to the contrary in this Agreement, the rights and obligations of Buyer
under this Agreement (including, without limitation, Buyer's due diligence
rights under Articles III and IV hereof) are independent of Buyer's ability to
obtain financing.

     Section 17.11 Governing Law. This Agreement, other documents delivered
pursuant hereto and the legal relations between the Parties shall be governed
and construed in accordance with the laws of the State of Texas, without giving
effect to principles of conflicts of laws that would result in the application
of the laws of another jurisdiction. The Parties agree to venue in Harris
County, Texas.

     Section 17.12 Notices. Any notice, communication, request, instruction or
other document required or permitted hereunder shall be given in writing and
delivered in person or sent by U.S. Mail postage prepaid, return receipt
requested, overnight courier or facsimile to the addresses of Seller and Buyer
set forth below. Any such notice shall be effective only upon receipt.

           Seller:                 Kinder Morgan Production Company LP
                                   500 Dallas, Suite 1000
                                   Houston, Texas 77002
                                   Attn: President
                                   Facsimile No.: 713-369-9195

           Buyer:                  Legacy Reserves Operating LP
                                   303 West Wall, Suite 1600
                                   Midland, Texas 79701
                                   Attn:  Kyle A. McGraw
                                   Facsimile No.: 432-686-8316

Either Party may, by written notice so delivered to the other Party, change its
address for notice purposes hereunder.

     Section 17.13 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect and the Parties shall negotiate in
good faith to modify this Agreement so as to effect their original intent as
closely as possible in an acceptable manner to the end that the transactions
contemplated hereby are fulfilled to the extent possible.

                                      -40-
<PAGE>

     Section 17.14 Time of the Essence. Time shall be of the essence with
respect to all time periods and notice periods set forth in this Agreement.

     Section 17.15 Counterpart Execution. This Agreement may be executed in any
number of counterparts, and each counterpart hereof shall be effective as to
each party that executes the same whether or not all of such parties execute the
same counterpart. If counterparts of this Agreement are executed, the signature
pages from various counterparts may be combined into one composite instrument
for all purposes. All counterparts together shall constitute only one Agreement,
but each counterpart shall be considered an original.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -41-
<PAGE>

     IN WITNESS WHEREOF, Seller and Buyer have executed and delivered this
Agreement as of the date first set forth above.

         SELLER:

                                 KINDER MORGAN PRODUCTION COMPANY LP
                                 By:      KM Production Company GP LLC,
                                          Its General Partner

                                 By:         /s/ R. D. Bradley
                                    --------------------------------------------
                                          Name:  R. D. Bradley
                                          Title: President

         BUYER:

                                 LEGACY RESERVES OPERATING LP
                                 By:      Legacy Reserves Operating GP LLC,
                                          Its General Partner

                                 By:         /s/ Steven H. Pruett
                                    --------------------------------------------
                                          Name:  Steven H. Pruett
                                          Title: President & Chief Financial
                                                 Officer

                                      -42-
<PAGE>

                                    EXHIBIT D

                           ASSIGNMENT AND BILL OF SALE

     THIS ASSIGNMENT AND BILL OF SALE (this "Assignment"), effective as of 7:00
a.m. on July 1, 2006 (the "Effective Time"), is made by Kinder Morgan Production
Company LP, a Delaware Limited Partnership (the "Assignor"), whose address is
500 Dallas, Suite 1000, Houston, Texas 77002, to Legacy Reserves Operating LP, a
Delaware Limited Partnership (the "Assignee"), whose address is 303 West Wall,
Suite 1600, Midland, Texas 79701.

                                    ARTICLE I
                              GRANTING AND HABENDUM

     For Ten Dollars ($10.00) and other good and valuable consideration, the
receipt, and sufficiency of which are hereby acknowledged, Assignor does hereby
grant, bargain, sell, transfer, convey, set over, assign and deliver unto
Assignee, its successors and assigns, effective for all purposes as of the
Effective Time and subject to the matters set forth herein, the Assets. The term
"Assets" shall mean all of Assignor's right, title and interest in and to the
following:

          (a)  the leasehold estates in and to the oil, gas and mineral leases
               described or referred to in Exhibit A attached hereto (the
               "Leases"), whether or not all lands covered by the Leases are
               described in Exhibit A, and any overriding royalty interests, fee
               mineral interests, royalty interests or other interests in and to
               the lands covered by the Leases, assignments and other documents
               of title described or referred to in Exhibit A, all as more
               specifically described in Exhibit A (collectively, the "Subject
               Interests," or singularly, a "Subject Interest");

          (b)  all rights incident to the Subject Interests, including, without
               limitation, (i) all rights with respect to the use and occupation
               of the surface of and the subsurface depths under the Subject
               Interests; (ii) all rights with respect to any pooled,
               communitized or unitized acreage by virtue of any Subject
               Interest being a part thereof, including all Hydrocarbon (as
               defined in Subsection (d) of this Article I) production after the
               Effective Time attributable to the Subject Interests or any such
               pool or unit allocated to any such Subject Interest;

          (c)  to the extent assignable or transferable, all easements,
               rights-of-way, surface leases, surface estates, servitudes, and
               other estates or similar rights and privileges directly related
               to or used solely in connection with the Subject Interests (the
               "Easements"), including, without limitation, the Easements
               described or referred to in Exhibit A;

          (d)  to the extent assignable or transferable, all personal property,
               equipment, fixtures, inventory and improvements located on or
               used in connection with the Subject Interests and the Easements
               or with the production,

                                      -1-
<PAGE>

               treatment, sale, or disposal of oil, gas or other hydrocarbons
               (collectively, "Hydrocarbons"), byproducts or waste produced
               therefrom or attributable thereto, including, without limitation,
               all wells located on the lands covered by the Subject Interests
               or on lands with which the Subject Interests may have been
               pooled, communitized or unitized (whether producing, shut in or
               abandoned, and whether for production, injection or disposal),
               including, without limitation, all wells described on Exhibit B
               attached hereto, and all wellhead equipment, pumps, pumping
               units, flowlines, gathering systems, piping, tanks, buildings,
               treatment facilities, injection facilities, disposal facilities,
               compression facilities, and other materials, supplies, equipment,
               facilities and machinery (collectively, "Personal Property");

          (e)  to the extent assignable or transferable, all contracts,
               agreements and other arrangements that directly relate to the
               Subject Interests, the Leases or the Easements, including,
               without limitation, production sales contracts, farmout
               agreements, operating agreements, service agreements and similar
               arrangements (collectively, the "Contracts");

          (f)  to the extent assignable or transferable, all books, records,
               files, muniments of title, reports and similar documents and
               materials, including, without limitation, lease records, well
               records, and division order records, well files, title records
               (including abstracts of title, title opinions and memoranda, and
               title curative documents related to the Assets), contracts and
               contract files, correspondence, that relate to the foregoing
               interests in the possession of, and maintained by, Assignor
               (collectively, the "Records") subject to Assignor's right to
               retain copies of the same; and

          (g)  all geological and geophysical data relating to the Subject
               Interests, other than such data that is interpretive in nature or
               which cannot be transferred without the consent of, or payment
               to, any Third Party. For purposes of this Agreement, "Third
               Party" means any person or entity, governmental or otherwise,
               other than Assignor or Assignee, and their respective affiliates;
               the term includes, but is not limited to, working interest
               owners, royalty owners, lease operators, landowners, service
               contractors and governmental agencies.

          (h)  all franchises, licenses, permits, approvals, consents,
               certificates, and other authorizations and rights granted by
               governmental authorities and all certificates of convenience or
               necessity, immunities, privileges, grants and other rights that
               related to the Assets or the ownership or operation of any
               thereof.

     NOTWITHSTANDING THE FOREGOING, the Assets shall not include, and there is
excepted, reserved and excluded from the assignment contemplated hereby
(collectively, the "Excluded Assets"):

                                      -2-
<PAGE>

          (a)  all credits and refunds and all accounts, instruments, trade
               credits, and general intangibles (as such terms are defined in
               the Texas Uniform Commercial Code) attributable to the Assets
               accruing prior to the Effective Time;

          (b)  all claims of Assignor for refunds of or loss carry forwards with
               respect to (i) ad valorem, severance, production or any other
               taxes attributable to any period prior to the Effective Time,
               (ii) income or franchise taxes, or (iii) any taxes attributable
               to the other Excluded Assets, and such other refunds, and rights
               thereto, for amounts paid in connection with the Assets and
               attributable to the period prior to the Effective Time, including
               refunds of amounts paid under any gas gathering or transportation
               agreement;

          (c)  all proceeds, income, revenues or hydrocarbon production (and any
               security or other deposits made) attributable to (i) the Assets
               for any period prior to the Effective Time, or (ii) any other
               Excluded Assets;

          (d)  all personal computers and associated peripherals and all radio
               and telephone equipment and all of Assignor's proprietary
               computer software, technology, patents, trade secrets,
               copyrights, names, trademarks, logos and other intellectual
               property;

          (e)  all of Assignor's rights and interests in geological and
               geophysical data that is interpretive in nature or which cannot
               be transferred without the consent of, or payment to, any Third
               Party;

          (f)  all documents and instruments of Assignor that may be protected
               by an attorney-client privilege;

          (g)  data and other information that cannot be disclosed or assigned
               to Assignee as a result of confidentiality or similar
               arrangements under agreements with persons unaffiliated with
               Assignor;

          (h)  all audit rights arising under any of the Contracts or otherwise
               with respect to any period prior to the Effective Time or to any
               of the other Excluded Assets;

          (i)  all corporate, partnership, income tax records, and documents
               subject to legal privilege (other than title);

          (j)  all claims and causes of action of Assignor (i) arising from
               acts, omissions, or events, or damage to or destruction of
               property, occurring prior to the Effective Time, (ii) arising
               under or with respect to any of the Contracts that are
               attributable to periods of time prior to the Effective time
               (including claims for adjustments or refunds), or (iii) with
               respect to any of the Excluded Assets;

                                      -3-
<PAGE>

          (k)  all rights and interests of Assignor (i) under any policy or
               agreement of insurance or indemnity, (ii) under any bond, or
               (iii) to any insurance or condemnation proceeds or awards
               arising, in each case, from acts, omissions, or events, or damage
               to or destruction of property, occurring prior to the Effective
               Time;

          (l)  any amounts due or payable to Assignor as adjustments to
               insurance premiums related to the Assets with respect to any
               period prior to the Effective Time; and

          (m)  all cash, checks, funds, accounts receivable, accounts payable,
               promissory notes or general intangibles (as such terms are
               defined by the Uniform Commercial Code) attributable to
               Assignor's interests in the Assets with respect to any period
               prior to the Effective Time.

     TO HAVE AND TO HOLD the Assets, together with all and singular the rights,
privileges, contracts and appurtenances, in any way appertaining or belonging
thereto, unto Assignee, its successors and assigns, forever, subject to the
matters set forth herein.

                                   ARTICLE II
                    SPECIAL WARRANTY OF TITLE AND DISCLAIMERS

     Section 2.01 Special Warranty of Title. Assignor hereby agrees to warrant
and defend title to the Assets unto Assignee, its successors and assigns,
against every person whomsoever lawfully claiming or to claim the same or any
part thereof, by, through, or under Assignor, but not otherwise; subject,
however, to the Permitted Encumbrances (as such term is defined in the Purchase
Agreement described below) and the other matters set forth herein. The interests
set forth on Exhibit B are included for warranty purposes only and shall not
limit the interests herein conveyed, it being the intent of Assignor to convey
to Assignee all of its undivided interest in the Assets. Assignor also grants
and transfers to Assignee and its successors and assigns, to the extent so
transferable, the benefit of and the right to enforce all title and other
covenants and warranties, if any, which Assignor may enforce with respect to the
Assets against Assignor's predecessors-in-title to the Assets.

     Section 2.02 Disclaimer. ASSIGNEE ACKNOWLEDGES THAT ASSIGNOR HAS NOT MADE,
AND ASSIGNOR HEREBY EXPRESSLY DISCLAIMS AND NEGATES, AND ASSIGNEE HEREBY
EXPRESSLY WAIVES, ANY REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, AT COMMON
LAW, BY STATUTE OR OTHERWISE RELATING TO (a) PRODUCTION RATES, RECOMPLETION
OPPORTUNITIES, DECLINE RATES, GAS BALANCING INFORMATION OR THE QUALITY, QUANTITY
OR VOLUME OF THE RESERVES OF HYDROCARBONS, IF ANY, ATTRIBUTABLE TO THE ASSETS;
(b) THE ACCURACY, COMPLETENESS OR MATERIALITY OF ANY INFORMATION, DATA OR OTHER
MATERIALS (WRITTEN OR ORAL) NOW, HERETOFORE OR HEREAFTER FURNISHED TO ASSIGNEE
BY OR ON BEHALF OF ASSIGNOR; AND (c) THE ENVIRONMENTAL CONDITION OF THE ASSETS.
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS ASSIGNMENT, ASSIGNOR EXPRESSLY
DISCLAIMS AND NEGATES, AND ASSIGNEE HEREBY WAIVES, AS TO PERSONAL

                                      -4-
<PAGE>

PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES CONSTITUTING A PART OF
THE ASSETS (i) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (ii) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (iii) ANY
IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS,
(iv) ANY RIGHTS OF PURCHASERS UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF
CONSIDERATION OR RETURN OF THE PURCHASE PRICE, (v) ANY IMPLIED OR EXPRESS
WARRANTY OF FREEDOM FROM DEFECTS, WHETHER KNOWN OR UNKNOWN, (vi) ANY AND ALL
IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW, AND (vii) ANY IMPLIED OR
EXPRESS WARRANTY REGARDING ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE
ENVIRONMENT, OR PROTECTION OF THE ENVIRONMENT OR HEALTH, IT BEING THE EXPRESS
INTENTION OF ASSIGNEE AND ASSIGNOR THAT THE PERSONAL PROPERTY, EQUIPMENT,
INVENTORY, MACHINERY AND FIXTURES INCLUDED IN THE ASSETS SHALL BE CONVEYED TO
ASSIGNEE, AND ASSIGNEE SHALL ACCEPT SAME, AS IS, WHERE IS, WITH ALL FAULTS AND
IN THEIR PRESENT CONDITION AND STATE OF REPAIR AND ASSIGNEE REPRESENTS TO
ASSIGNOR THAT ASSIGNEE HAS MADE OR CAUSED TO BE MADE SUCH INSPECTIONS WITH
RESPECT TO SUCH PERSONAL PROPERTY, EQUIPMENT, INVENTORY, MACHINERY AND FIXTURES
AS ASSIGNEE DEEMS APPROPRIATE. ASSIGNOR AND ASSIGNEE AGREE THAT, TO THE EXTENT
REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN
WARRANTIES CONTAINED IN THIS SECTION ARE "CONSPICUOUS" DISCLAIMERS FOR THE
PURPOSES OF ANY APPLICABLE LAW, RULE OR ORDER.

                                   ARTICLE III
                                  MISCELLANEOUS

     Section 3.01 Construction. The captions in this Assignment are for
convenience only and shall not be considered a part of or affect the
construction or interpretation of any provision of this Assignment. Assignor and
Assignee acknowledge that they have participated jointly in the negotiation and
drafting of this Assignment and as such they agree that if an ambiguity or
question of intent or interpretation arises hereunder, this Assignment shall not
be construed more strictly against one party than another on the grounds of
authorship.

     Section 3.02 No Third Party Beneficiaries. Nothing in this Assignment shall
provide any benefit to any Third Party or entitle any Third Party to any claim,
cause of action, remedy or right of any kind, it being the intent of the parties
hereto that this Assignment shall otherwise not be construed as a Third Party
beneficiary contract.

     Section 3.03 Assignment. This Assignment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.

     Section 3.04 Governing Law. This Assignment, other documents delivered
pursuant hereto and the legal relations between the parties hereto shall be
governed and construed in accordance with the laws of the State of Texas,
without giving effect to principles of conflicts of laws that would result in
the application of the laws of another jurisdiction.

                                      -5-
<PAGE>

     Section 3.05 Counterpart Execution. This Assignment may be executed in any
number of counterparts, and each counterpart hereof shall be effective as to
each party that executes the same whether or not all of such parties execute the
same counterpart. If counterparts of this Assignment are executed, the signature
pages from various counterparts may be combined into one composite instrument
for all purposes. All counterparts together shall constitute only one
Assignment, but each counterpart shall be considered an original.

     Section 3.06 Recording. To facilitate the recording or filing of this
Assignment, the counterpart to be recorded in a given county may contain only
that portion of the exhibits that describes Assets located in that county. In
addition to filing this Assignment, the parties hereto shall execute and file
with the appropriate authorities, whether federal, state or local, all forms or
instruments required by applicable law to effectuate the conveyance contemplated
hereby. Said instruments shall be deemed to contain all of the exceptions,
reservations, rights, titles and privileges set forth herein as fully as though
the same were set forth in each such instrument. The interests conveyed by such
separate assignments are the same, and not in addition to the Assets conveyed
herein.

     Section 3.07 Purchase and Sale Agreement. This Assignment is subject to all
of the terms and conditions of the Purchase and Sale Agreement dated June 28,
2006 by and between Assignor and Assignee (the "Agreement").

                            [SIGNATURE PAGES FOLLOW]

                                      -6-

<PAGE>

     IN WITNESS WHEREOF, this Assignment is executed by the parties on the date
of their respective acknowledgments below, but shall be effective for all
purposes as of the Effective Time.

         ASSIGNOR:

                               KINDER MORGAN PRODUCTION COMPANY LP
                               By:      KM Production Company GP LLC,
                                        Its General Partner

                               By:
                                  ----------------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

         ASSIGNEE:

                               LEGACY RESERVES OPERATING LP
                               By:      Legacy Reserves Operating GP LLC,
                                        Its General Partner

                               By:
                                  ----------------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------

STATE OF TEXAS             SS
                           SS
COUNTY OF ______________   SS

This instrument was acknowledged before me on _________, ____, 2006 by
______________, the _____________ of KM Production Company GP LLC, as general
partner of Kinder Morgan Production Company LP, a Delaware limited partnership
on behalf of such limited partnership.

                                      ------------------------------------------
                                      Notary Public in and for
                                      The State of Texas
                                      Name:
                                           -------------------------------------
                                      My Commission Expires:
                                                            -------------

<PAGE>

STATE OF TEXAS             SS
                           SS
COUNTY OF ______________   SS

This instrument was acknowledged before me on _________, ____, 2006 by
______________, the _____________ of Legacy Reserves Operating GP LLC, as
general partner of Legacy Reserves Operating LP, a Delaware limited partnership
on behalf of such limited partnership.

                                      ------------------------------------------
                                      Notary Public in and for
                                      The State of Texas
                                      Name:
                                           -------------------------------------
                                      My Commission Expires:
                                                            --------------------

<PAGE>

                                 SCHEDULE 12.02

                                 GAS IMBALANCES

                                     [NONE]

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