Document:

Exhibit
4.1

 

 

SENIOR CREDIT AND GUARANTY AGREEMENT

 

dated as of May 2, 2006

 

by and among

 

POGO PRODUCING COMPANY,

as Borrower,

 

VARIOUS GUARANTORS,

 

VARIOUS LENDERS,

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Sole Lead Arranger,

 

and

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Administrative Agent

 

 

$500,000,000 Senior Increasing-Rate Loan
Facility

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  Page

  
	
   

  	
   

  
	
  SECTION 1. DEFINITIONS AND INTERPRETATION

  	
  1

  
	
   

  	
   

  
	
   

  	
  1.1. Definitions

  	
  1

  
	
   

  	
  1.2. Accounting
  Terms

  	
  37

  
	
   

  	
  1.3.
  Interpretation, etc

  	
  37

  
	
   

  	
   

  	
   

  
	
  SECTION 2. LOANS

  	
  38

  
	
   

  	
   

  
	
   

  	
  2.1. Loans

  	
  38

  
	
   

  	
  2.2. Option to
  Exchange Loans for Exchange Notes

  	
  38

  
	
   

  	
  2.3. Pro Rata
  Shares

  	
  39

  
	
   

  	
  2.4. Use of
  Proceeds

  	
  39

  
	
   

  	
  2.5. Evidence of
  Debt; Register; Lenders’ Books and Records; Notes

  	
  40

  
	
   

  	
  2.6. Interest on
  Loans

  	
  40

  
	
   

  	
  2.7. Default
  Interest

  	
  41

  
	
   

  	
  2.8. Fees

  	
  41

  
	
   

  	
  2.9. Voluntary
  Prepayments

  	
  41

  
	
   

  	
  2.10. Mandatory
  Prepayments

  	
  41

  
	
   

  	
  2.11. General
  Provisions Regarding Payments

  	
  43

  
	
   

  	
  2.12. Ratable
  Sharing

  	
  43

  
	
   

  	
  2.13. Booking of
  Loans

  	
  44

  
	
   

  	
  2.14. Taxes;
  Withholding, etc

  	
  44

  
	
   

  	
   

  
	
  SECTION 3. CONDITIONS PRECEDENT

  	
  46

  
	
   

  	
   

  
	
   

  	
  3.1. General
  Conditions

  	
  46

  
	
   

  	
  3.2. Concurrent
  Transactions

  	
  48

  
	
   

  	
  3.3. New
  Information

  	
  48

  
	
   

  	
  3.4. Absence of
  Certain Changes

  	
  49

  
	
   

  	
  3.5. Availability
  under Senior Credit Facility and Money Market Lines

  	
  49

  
	
   

  	
  3.6. Performance of
  Obligations

  	
  49

  
	
   

  	
   

  
	
  SECTION 4. REPRESENTATIONS AND WARRANTIES

  	
  49

  
	
   

  	
   

  
	
   

  	
  4.1. Organization,
  etc

  	
  49

  
	
   

  	
  4.2. Due
  Authorization, Non-Contravention, etc

  	
  50

  
	
   

  	
  4.3. Government
  Approval, Regulation, etc

  	
  50

  
	
   

  	
  4.4. Validity, etc

  	
  50

  
	
   

  	
  4.5. Financial
  Information

  	
  50

  
	
   

  	
  4.6. No Material
  Adverse Change

  	
  50

  
	
   

  	
  4.7. Litigation,
  etc

  	
  51

  
	
   

  	
  4.8. Subsidiaries

  	
  51

  
	
   

  	
  4.9. Ownership of
  Properties

  	
  51

  
	
   

  	
  4.10. Taxes

  	
  51

  
	
   

  	
  4.11. ERISA

  	
  51

  
	
   

  	
  4.12. Environmental
  Matters

  	
  52

  

 

 

	
   

  	
  4.13. Absence of
  Defaults

  	
  53

  
	
   

  	
  4.14. Regulation U

  	
  53

  
	
   

  	
  4.15. Disclosure;
  No Material Misstatement

  	
  53

  
	
   

  	
  4.16. Solvency

  	
  54

  
	
   

  	
  4.17. Transaction
  Documents

  	
  54

  
	
   

  	
  4.18. Private
  Offering; Rule 144A Matters

  	
  55

  
	
   

  	
   

  
	
  SECTION 5. AFFIRMATIVE COVENANTS

  	
  55

  
	
   

  	
   

  
	
   

  	
  5.1. Financial
  Statements; Other Information

  	
  56

  
	
   

  	
  5.2. Notices of
  Material Events

  	
  58

  
	
   

  	
  5.3. Refinancing of
  Loans with Permanent Securities; Compliance with Fee Letter and Engagement
  Letter

  	
  59

  
	
   

  	
  5.4. Maintenance of
  Corporate Existence

  	
  59

  
	
   

  	
  5.5. Payment of
  Taxes

  	
  59

  
	
   

  	
  5.6. Performance of
  Obligations under Credit Documents

  	
  60

  
	
   

  	
  5.7. Maintenance of
  Properties

  	
  60

  
	
   

  	
  5.8. Insurance

  	
  60

  
	
   

  	
  5.9. Further
  Assurances

  	
  60

  
	
   

  	
  5.10. Change of
  Control

  	
  60

  
	
   

  	
  5.11. Guarantors

  	
  61

  
	
   

  	
  5.12. Books and
  Records; Inspection Rights

  	
  61

  
	
   

  	
  5.13. Compliance
  with Laws

  	
  61

  
	
   

  	
  5.14. Environmental
  Matters

  	
  61

  
	
   

  	
  5.15. Exchange
  Notes and Registration Rights Agreement

  	
  63

  
	
   

  	
  5.16. Lenders
  Meetings

  	
  63

  
	
   

  	
  5.17. Effectiveness
  of Covenants

  	
  63

  
	
   

  	
   

  
	
  SECTION 6. NEGATIVE COVENANTS

  	
  64

  
	
   

  	
   

  
	
   

  	
  6.1. Limitation on
  Acquisitions

  	
  64

  
	
   

  	
  6.2. Limitation on
  Indebtedness

  	
  64

  
	
   

  	
  6.3. Liens

  	
  67

  
	
   

  	
  6.4. Limitation on
  Restricted Payments

  	
  67

  
	
   

  	
  6.5. Limitation on
  Restrictions on Distributions from Restricted Subsidiaries

  	
  71

  
	
   

  	
  6.6. Amendments or
  Waivers of Certain Related Agreements

  	
  73

  
	
   

  	
  6.7. Limitation on
  Sale of Capital Stock of Restricted Subsidiaries

  	
  73

  
	
   

  	
  6.8. Merger and
  Consolidation

  	
  73

  
	
   

  	
  6.9. Limitations on
  Affiliate Transactions

  	
  74

  
	
   

  	
   

  
	
  SECTION 7. GUARANTY

  	
  76

  
	
   

  	
   

  
	
   

  	
  7.1. Guaranty of
  the Obligations

  	
  76

  
	
   

  	
  7.2. Contribution
  by Guarantors

  	
  76

  
	
   

  	
  7.3. Payment by
  Guarantors

  	
  76

  
	
   

  	
  7.4. Liability of
  Guarantors Absolute

  	
  77

  
	
   

  	
  7.5. Waivers by
  Guarantors

  	
  79

  
	
   

  	
  7.6. Guarantors’
  Rights of Subrogation, Contribution, etc

  	
  79

  
	
   

  	
  7.7. Continuing
  Guaranty

  	
  80

  
	
   

  	
  7.8. Authority of
  Guarantors or the Company

  	
  80

  

 

ii

 

	
   

  	
  7.9. Financial
  Condition of the Company

  	
  80

  
	
   

  	
  7.10. Bankruptcy,
  etc

  	
  80

  
	
   

  	
  7.11. Discharge of
  Guaranty Upon Sale of Guarantor

  	
  81

  
	
   

  	
   

  
	
  SECTION 8. EVENTS OF DEFAULT

  	
  81

  
	
   

  	
   

  
	
   

  	
  8.1. Events of
  Default

  	
  81

  
	
   

  	
   

  
	
  SECTION 9. AGENTS

  	
  85

  
	
   

  	
   

  
	
   

  	
  9.1. Appointment of
  Agents

  	
  85

  
	
   

  	
  9.2. Powers and
  Duties

  	
  85

  
	
   

  	
  9.3. General Immunity

  	
  85

  
	
   

  	
  9.4. Agents
  Entitled to Act as Lender

  	
  86

  
	
   

  	
  9.5. Lenders’
  Representations, Warranties and Acknowledgment

  	
  87

  
	
   

  	
  9.6. Right to
  Indemnity

  	
  87

  
	
   

  	
  9.7. Successor
  Administrative Agent

  	
  87

  
	
   

  	
  9.8. Guaranty

  	
  88

  
	
   

  	
   

  
	
  SECTION 10. MISCELLANEOUS

  	
  88

  
	
   

  	
   

  
	
   

  	
  10.1. Notices

  	
  88

  
	
   

  	
  10.2. Expenses

  	
  88

  
	
   

  	
  10.3. Indemnity

  	
  89

  
	
   

  	
  10.4. Set-Off

  	
  89

  
	
   

  	
  10.5. Amendments
  and Waivers

  	
  90

  
	
   

  	
  10.6. Successors
  and Assigns; Participations

  	
  91

  
	
   

  	
  10.7. Independence
  of Covenants

  	
  94

  
	
   

  	
  10.8. Survival of
  Representations, Warranties and Agreements

  	
  94

  
	
   

  	
  10.9. No Waiver;
  Remedies Cumulative

  	
  94

  
	
   

  	
  10.10. Marshalling;
  Payments Set Aside

  	
  94

  
	
   

  	
  10.11. Severability

  	
  95

  
	
   

  	
  10.12. Obligations
  Several; Independent Nature of Lenders’ Rights

  	
  95

  
	
   

  	
  10.13. Headings

  	
  95

  
	
   

  	
  10.14. APPLICABLE
  LAW

  	
  95

  
	
   

  	
  10.15. CONSENT TO
  JURISDICTION

  	
  95

  
	
   

  	
  10.16. WAIVER OF
  JURY TRIAL

  	
  96

  
	
   

  	
  10.17.
  Confidentiality

  	
  96

  
	
   

  	
  10.18. Usury
  Savings Clause

  	
  97

  
	
   

  	
  10.19. Counterparts

  	
  97

  
	
   

  	
  10.20.
  Effectiveness

  	
  97

  
	
   

  	
  10.21. Lender
  Representations

  	
  97

  

 

iii

 

	
  APPENDICES:

  	
   

  	
  A

  	
   

  	
  Loan Commitments

  
	
   

  	
   

  	
  B

  	
   

  	
  Notice Addresses

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
  1.1

  	
   

  	
  Cash Equivalent
  Investments

  
	
   

  	
   

  	
  3.1

  	
   

  	
  Organizational
  Structure

  
	
   

  	
   

  	
  4.7

  	
   

  	
  Litigation

  
	
   

  	
   

  	
  4.8

  	
   

  	
  Existing Subsidiaries
  and Affiliates

  
	
   

  	
   

  	
  4.12

  	
   

  	
  Environmental Matters

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
  A

  	
   

  	
  Funding Notice

  
	
   

  	
   

  	
  B

  	
   

  	
  Exchange Notice

  
	
   

  	
   

  	
  C

  	
   

  	
  Loan Note

  
	
   

  	
   

  	
  D

  	
   

  	
  Compliance Certificate

  
	
   

  	
   

  	
  E

  	
   

  	
  Opinion of Counsel for Credit Parties

  
	
   

  	
   

  	
  F

  	
   

  	
  Opinion of General Counsel of the Company

  
	
   

  	
   

  	
  G

  	
   

  	
  Assignment Agreement

  
	
   

  	
   

  	
  H

  	
   

  	
  Certificate of Non-Bank Status

  
	
   

  	
   

  	
  I

  	
   

  	
  Closing Date Certificate

  
	
   

  	
   

  	
  J

  	
   

  	
  Solvency Certificate

  
	
   

  	
   

  	
  K

  	
   

  	
  Joinder Agreement

  

 

iv

 

SENIOR CREDIT AND GUARANTY AGREEMENT

 

This SENIOR  CREDIT AND GUARANTY AGREEMENT, dated as of May 2,
2006, is entered into by and among POGO
PRODUCING COMPANY, a Delaware corporation (the “Company”), the Guarantors referred to
herein, the Lenders party hereto from time to time, GOLDMAN SACHS CREDIT PARTNERS L.P. (“GSCP”), as Sole Lead Arranger and Book
Runner (in such capacities, the “Lead
Arranger”), as Syndication Agent (in such capacity, the “Syndication Agent”), and as Administrative
Agent (together with its permitted successors in such capacity, the “Administrative Agent”).

 

RECITALS:

 

WHEREAS,
capitalized terms used in these Recitals shall have the respective meanings set
forth for such terms in Section 1.1 hereof; and

 

WHEREAS, the Lenders
have agreed to make loans to the Company, in an aggregate amount not to exceed
$500.0 million, consisting of up to $500.0 million aggregate
principal amount of senior increasing-rate term loans, the proceeds of which
will be used to fund a portion of the total purchase price of the Acquisition
and pay related fees and expenses.

 

NOW, THEREFORE, in
consideration of the premises and the agreements, provisions and covenants
herein contained, the parties hereto agree as follows:

 

SECTION
1.   DEFINITIONS AND INTERPRETATION

 

1.1.         Definitions.  The following terms used herein, including in
the preamble, recitals, exhibits and schedules hereto, shall have the following
meanings:

 

“2011 Notes” means the 81⁄4%
Senior Subordinated Notes due 2011 of the Company outstanding on the Closing
Date.

 

“2015 Notes” means the
6.625% Senior Subordinated Notes due 2015 of the Company outstanding on the
Closing Date.

 

“2017 Notes” means the 6.875%
Senior Subordinated Notes due 2017 of the Company outstanding on the Closing
Date.

 

“ACNTA”
means (without duplication), as of the date of determination:

 

(1)           the
sum of:

 

(a)       discounted future net revenue from proved crude oil
and natural gas reserves of the Company and its Restricted Subsidiaries
calculated in accordance with SEC guidelines before any state, federal or
foreign income or similar taxes, as estimated in a reserve report prepared as
of the end of the Company’s most recently completed fiscal year, which reserve
report is prepared or reviewed by independent petroleum engineers, as increased
by, as of the date of determination, the discounted future net revenue of:

 

 

(i)            estimated proved crude oil and natural gas reserves of
the Company and its Restricted Subsidiaries attributable to acquisitions
consummated since the date of such year-end reserve report, and

 

(ii)           estimated crude oil and natural gas reserves of the
Company and its Restricted Subsidiaries attributable to extensions, discoveries
and other additions and upward determinations of estimates of proved crude oil
and natural gas reserves (including previously estimated development costs
incurred during the period and the accretion of discount since the prior year
end) due to exploration, development or exploitation, production or other
activities, which reserves were not reflected in such year-end reserve report,

 

in each case calculated in
accordance with SEC guidelines (utilizing the prices utilized in such year-end
reserve report), and decreased by, as of the date of determination, the
discounted future net revenue attributable to

 

(iii)          estimated proved crude oil and natural gas reserves of
the Company and its Restricted Subsidiaries reflected in such year-end reserve
report produced or disposed of since the date of such year-end reserve report
and

 

(iv)          reductions in the estimated oil and gas reserves of the
Company and its Restricted Subsidiaries reflected in such year-end reserve
report since the date of such year-end reserve report attributable to downward
determinations of estimates of proved crude oil and natural gas reserves due to
exploration, development or exploitation, production or other activities
conducted or otherwise occurring since the date of such year-end reserve report,

 

in each case calculated in
accordance with SEC guidelines (utilizing the prices utilized in such year-end
reserve report); provided, however, that, in the case of each of the
determinations made pursuant to clauses (1)(a)(i) through (iv) of this definition,
such increases and decreases shall be as estimated by the Company’s engineers,
except that if as a result of such acquisitions, dispositions, discoveries,
extensions or revisions, there is a Material Change that is an increase, then
such increases and decreases in the discounted future net revenue shall be
confirmed in writing by an independent petroleum engineer;

 

(b)       the capitalized costs that are attributable to crude
oil and natural gas properties of the Company and its Restricted Subsidiaries to
which no proved crude oil and natural gas reserves are attributed, based on the
Company’s books and records as of a date no earlier than the date of the
Company’s latest annual or quarterly financial statements;

 

(c)       the Net Working Capital on a date no earlier than the
date of the Company’s latest annual or quarterly financial statements; and

 

(d)       the greater of (i) the net book value on a date
no earlier than the date of the Company’s latest annual or quarterly financial
statements and (ii) the appraised value, as estimated by independent
appraisers, of other tangible assets of the Company and its Restricted

 

2

 

Subsidiaries as of a date no earlier than the
date of the Company’s latest audited financial statements; minus:

 

(2)           to
the extent not otherwise taken into account in the immediately preceding
clause (1), the sum of:

 

(a)       minority interests;

 

(b)       any net gas balancing liabilities of the Company and
its Restricted Subsidiaries reflected in the Company’s latest audited financial
statements;

 

(c)       the discounted future net revenue, calculated in
accordance with SEC guidelines (utilizing the same prices utilized in the
Company’s year-end reserve report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of
third parties, pursuant to participation, partnership, vendor financing or
other agreements then in effect, or that otherwise are required to be delivered
to third parties;

 

(d)       the discounted future net revenue, calculated in
accordance with SEC guidelines (utilizing the same prices utilized in the
Company’s year-end reserve report), attributable to reserves that are required
to be delivered to third parties to fully satisfy the obligations of the
Company and its Restricted Subsidiaries with respect to volumetric Production
Payments on the schedules specified with respect thereto; and

 

(e)       the discounted future net revenue, calculated in
accordance with SEC guidelines, attributable to reserves subject to
dollar-denominated Production Payments that, based on the estimates of
production and price assumptions included in determining the discounted future
net revenue specified in the immediately preceding clause (1)(a)
(utilizing the same prices utilized in the Company’s year-end reserve report),
would be necessary to satisfy fully the obligations of the Company and its
Restricted Subsidiaries with respect to dollar-denominated Production Payments
on the schedules specified with respect thereto.

 

If the Company changes its
method of accounting from the successful efforts method to the full cost method
or a similar method of accounting, “ACNTA” will continue to be calculated as if
the Company were still using the successful efforts method of accounting.

 

“Acquired Business” means Latigo Petroleum, Inc., a
Delaware corporation, the issued and outstanding shares of capital stock of
which the Company is to acquire by merger pursuant to the Acquisition
Agreement.

 

“Acquired
Indebtedness” means Indebtedness (1) of a Person
or any of its Subsidiaries existing at the time such Person becomes a
Restricted Subsidiary or (2) assumed in connection with the acquisition of
assets from such Person, in each case whether or not Incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary or such acquisition. 
Acquired Indebtedness shall be deemed to have been Incurred, with
respect to clause (1) of the preceding sentence, on the date such Person
becomes a Restricted Subsidiary and, with respect to clause (2) of the
preceding sentence, on the date of consummation of such acquisition of assets.

 

3

 

“Acquisition” means
the acquisition of the Acquired Business by the Company pursuant to the
Acquisition Agreement for an aggregate cash purchase price of approximately $750.0 million
(excluding transaction fees and expenses).

 

“Acquisition Agreement” means
the Agreement and Plan of Merger by and among the Acquired Business, the
Company and Pogo Merger Sub 1, Inc., dated as of April 13, 2006, as
amended from time to time.

 

“Administrative Agent”
is defined in the preamble hereto.

 

“Adverse Proceeding”
means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration (whether or not
purportedly on behalf of the Company or any of its Subsidiaries) at law or in
equity, or before or by any Governmental Authority, domestic or foreign
(including any Environmental Claims), whether pending or, to the knowledge of the
Company or any of its Subsidiaries, threatened against or affecting the Company
or any of its Subsidiaries or any property of the Company or any of its
Subsidiaries.

 

“Affected Lender”
is defined in Section 2.13(a).

 

“Affected Loans” is
defined in Section 2.13(a).

 

“Affiliate” means,
as applied to any specified Person, any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such specified Person.  For the purposes
of this definition, “control” when used with respect to any Person means the
power to direct the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise, and the terms “controlling” and “controlled” have meanings
correlative to the foregoing; provided, however,
that beneficial ownership of 10% or more of the Voting Stock of a Person shall
be deemed to be control.  No Person shall
be deemed an Affiliate of an oil and gas royalty trust solely by virtue of
ownership of units of beneficial interest in such trust.

 

“Agent” means each
of the Lead Arranger, the Syndication Agent and the Administrative Agent.

 

“Aggregate Amounts Due”
is defined in Section 2.12.

 

“Aggregate Payments”
is defined in Section 7.2.

 

“Agreement” means
this Senior Credit and Guaranty Agreement, dated as of May 2, 2006, as it
may be amended, supplemented or otherwise modified from time to time.

 

“Asset Sale” means
any direct or indirect sale, lease (other than an operating lease entered into
in the ordinary course of business), transfer, issuance or other disposition,
or a series of related sales, leases, transfers, issuances or dispositions that
are part of a common plan, of shares of Capital Stock of a Subsidiary (other
than directors’ qualifying shares), property or other assets (each referred to
for the purposes of this definition as a “disposition”) by the

 

4

 

Company or any of its Restricted Subsidiaries,
including any disposition by means of a merger, consolidation or similar
transaction.

 

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

 

(1)           a
disposition by a Restricted Subsidiary to the Company or by the Company or a
Restricted Subsidiary to a Restricted Subsidiary;

 

(2)           the
disposition of cash, Cash Equivalents, Hedging Obligations and other financial
instruments and rights in respect of a Production Payment, in each case in the
ordinary course of business;

 

(3)           a
disposition of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the business of the Company and its Restricted
Subsidiaries and that is disposed of in each case in the ordinary course of
business;

 

(4)           transactions
permitted under Section 6.8;

 

(5)           an
issuance of Capital Stock by a Restricted Subsidiary to the Company or to a
Wholly-Owned Subsidiary;

 

(6)           for
purposes of Section 2.10(a) only, the
making of a Permitted Investment or a disposition of an asset that is permitted
by Section 6.4;

 

(7)           an Asset
Swap effected in compliance with Section 2.10(a);

 

(8)           dispositions
of assets in a single transaction or series of related transactions with an
aggregate Fair Market Value in any calendar year of less than $40.0 million;

 

(9)           dispositions
consisting of the creation of Permitted Liens;

 

(10)         dispositions
of receivables in connection with the compromise, settlement or collection
thereof in the ordinary course of business or in bankruptcy or similar proceedings
and exclusive of factoring or similar arrangements;

 

(11)         the
abandonment, assignment, lease, sublease or farm-out of Oil and Gas Properties,
or the forfeiture or other disposition of such properties pursuant to standard
form operating agreements, in each case in the ordinary course of business in a
manner that is customary in the Oil and Gas Business;

 

(12)         any
disposition of inventory, Hydrocarbons or other mineral products in the
ordinary course of business;

 

(13)         the
licensing or sublicensing of intellectual property or other general intangibles
and licenses, leases or subleases of other property; and

 

(14)         foreclosure
on assets.

 

“Asset Swap” means the substantially
concurrent purchase and sale of Property between the Company or any of its
Restricted Subsidiaries and another Person; provided,
however, that any cash received must be applied in accordance with
Section 2.10(a).

 

5

 

“Assignment Agreement”
means an Assignment and Assumption Agreement substantially in the form of
Exhibit G, with such amendments or modifications as may be approved by the
Administrative Agent.

 

“Attributable
Indebtedness” in respect of a Sale/Leaseback
Transaction means, as 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/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 means 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.

 

“Authorized Officer”
means, as applied to any Person, any individual holding the position of
chairman of the board (if an officer), chief executive officer, president or
one of its vice presidents (or the equivalent thereof), chief financial officer
or treasurer.

 

“Average Life” means, as of the
date of determination, with respect to any Indebtedness or Preferred Stock, the
quotient obtained by dividing (1) the sum of the products of the numbers
of years from the date of determination to the dates of each successive
scheduled principal payment of such Indebtedness or redemption or similar
payment with respect to such Preferred Stock multiplied by the amount of such
payment by (2) the sum of all such payments.

 

“Bank Indebtedness” means any
and all amounts, whether outstanding on the Closing Date or Incurred after the
Closing Date, payable by the Company under or in respect of a Credit Facility,
and any related notes, collateral documents, letters of credit and guarantees
and any Interest Rate Agreement entered into in connection with such credit
agreements, including principal, premium, if any, interest (including interest
accruing on, or after the filing of, any petition in bankruptcy or for
reorganization relating to the Company at the rate specified therein whether or
not a claim for post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees and all other amounts
payable thereunder or in respect thereof.

 

“Bankruptcy Code”
means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.

 

“Beneficiary” means
each Agent and Lender.

 

“Board of Directors” means,
with respect to any Person, the board of directors of such Person or any duly
authorized committee thereof.

 

6

 

“Board of Governors” means
the Board of Governors of the Federal Reserve System of the United States of
America or any successor Governmental Authority.

 

“Business Day”
means any day excluding Saturday, Sunday and any day that is a legal holiday
under the laws of the State of New York or is a day on which banking
institutions located in such state are authorized or required by law or other
governmental action to close.

 

“Cap” means, with
respect to the interest rate in effect on a Loan or Exchange Note, the yield
then in effect for U.S. Treasury Notes with a maturity of 10 years plus
600 basis points.

 

“Capitalized
Lease Obligations” means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP, and the amount of
Indebtedness represented by such obligation will be the capitalized amount of
such obligation at the time any determination thereof is to be made as
determined in accordance with GAAP, and the stated maturity thereof will be the
date of the last payment of rent or any other amount due under such lease prior
to the first date such lease may be terminated without penalty.

 

“Capital Stock” means any and
all shares, interests, participations or other equivalents  (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation), including partnership interests and membership interests, and
any and all warrants, rights or options to purchase or other arrangements or
rights to acquire any of the foregoing.

 

“Cash” means money,
currency or a credit balance in any Deposit Account.

 

“Cash Equivalents”
means:

 

(1)           securities
issued or directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality of the United States (provided that the full faith and credit of
the United States is pledged in support thereof), having maturities of not more
than one year from the date of acquisition;

 

(2)           marketable
general obligations issued by any state of the United States of America or any
political subdivision of any such state or any public instrumentality thereof maturing
within one year from the date of acquisition and, at the time of acquisition,
having a credit rating of “A” or better from either S&P or Moody’s;

 

(3)           certificates
of deposit, time deposits, eurodollar time deposits, overnight bank deposits or
bankers’ acceptances having maturities of not more than one year from the date
of acquisition thereof issued by any commercial bank party to a Credit Facility
or the long-term debt of which is rated at the time of acquisition thereof at
least “A” or the equivalent thereof by S&P, “A” or the equivalent thereof
by Moody’s or “B” or the equivalent thereof by Thompson Bank Watch Rating;

 

7

 

(4)           repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (1), (2) and (3) entered into with any
bank meeting the qualifications specified in clause (3) above;

 

(5)           commercial
paper rated at the time of acquisition thereof at least “A-1” or the
equivalent thereof by S&P or “P-1” or the equivalent thereof by Moody’s
or carrying an equivalent rating by another nationally recognized rating agency
if both of the two named rating agencies cease publishing ratings of
investments, and in any case maturing within one year after the date of
acquisition thereof;

 

(6)           interests
in any money market mutual or similar fund that has assets in excess of $500.0 million;
and

 

(7)           any
Investment, in addition to those described in the preceding clauses (1)
through (6), defined as a Cash Equivalent Investment in the Senior Credit
Facility as in effect on the Closing Date and as itemized in Schedule 1.1
to this Agreement.

 

“Casualty Event” means
any loss, casualty or other insured damage to, or any nationalization, taking
under power of eminent domain or by condemnation or similar proceeding of, any
Property of the Company or any of its Subsidiaries having a Fair Market Value
in excess of $1.5 million.

 

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

 

“CERCLIS” means the Comprehensive Environmental
Response Compensation Liability Information System List.

 

“Certificate of Non-Bank Status”
means a certificate substantially in the form of Exhibit H.

 

“Change of Control” means
(a) any “person” or “group” of related persons (as such terms are used in
Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial
owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that such person or group shall be deemed to have “beneficial
ownership” of all shares that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 50% of the total voting
power of the Voting Stock of the Company (or its successor by merger,
consolidation or purchase of all or substantially all of its properties and
assets) (for the purposes of this clause, such person or group shall be deemed
to beneficially own any Voting Stock of the Company held by a parent entity, if
such person or group “beneficially owns” (as defined above), directly or
indirectly, more than 50% of the voting power of the Voting Stock of such
entity), (b) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board of Directors of the
Company (together with any new directors whose election by such Board of
Directors or whose nomination for election by the shareholders of the Company
was approved by a vote of 662⁄3% of the directors of the Company then still
in office who were either directors at the beginning of such period or whose
election or nomination for election was previously so

 

8

 

approved) cease for any reason to constitute a
majority of the Board of Directors then in office, (c) the sale,
conveyance, lease, assignment, transfer 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 and assets of the Company and its
Subsidiaries, taken as a whole, to any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) or (d) the adoption by
the shareholders of the Company of a plan or proposal for the liquidation or
dissolution of the Company.

 

“Closing Date”
means the date on which the Loans are made.

 

“Closing Date Certificate”
means a Closing Date Certificate substantially in the form of Exhibit I.

 

“Company” is
defined in the preamble hereto.

 

“Commitment Letter” means
the Commitment Letter, dated as of April 18, 2006, between Goldman Sachs
Credit Partners L.P. and the Company.

 

“Commodity Agreement” means,
with respect to any Person, any forward contract, commodity swap agreement,
commodity option agreement or other similar agreement or arrangement designed
to protect such Person against fluctuation in commodity prices.

 

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

 

“Consolidated Affiliates” means
the Affiliates of the Company that in accordance with GAAP are included in the
consolidated financial statements of the Company, other than any Subsidiaries
of the Company.

 

“Consolidated
Coverage Ratio” means, as of any date of
determination, the ratio of (x) the aggregate amount of Consolidated EBITDA for
the period of the Company’s most recent four consecutive fiscal quarters ended
prior to the date of such determination for which financial statements have
been filed with the SEC to (y) its Consolidated Interest Expense for such four
fiscal quarters; provided, however, that:

 

(1)           if
the Company or any Restricted Subsidiary:

 

(a)       has Incurred any Indebtedness since the beginning of
such period that remains outstanding on such date of determination or if the
transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and Consolidated
Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness
had been Incurred on the first day of such period (except that in making such
computation, the amount of Indebtedness under any revolving credit facility
outstanding on the date of such calculation will be deemed to be (i) the
average daily balance of such Indebtedness during such four fiscal quarters or
such shorter period for which such facility was outstanding or (ii) if
such facility was created after the end of such four fiscal quarters, the
average daily balance of such Indebtedness during the period from the date of
creation of such facility to the date of such

 

9

 

calculation)
and the discharge of any other Indebtedness repaid, repurchased, defeased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such period; or

 

(b)       has repaid, repurchased, defeased or otherwise
discharged any Indebtedness since the beginning of the period that is no longer
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio involves a discharge of
Indebtedness (in each case other than Indebtedness Incurred under any revolving
credit facility unless such Indebtedness has been permanently repaid and the
related commitment terminated), Consolidated EBITDA and Consolidated Interest
Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness,
including with the proceeds of such new Indebtedness, as if such discharge had
occurred on the first day of such period;

 

(2)           if since
the beginning of such period the Company or any Restricted Subsidiary has made
any Asset Sale or disposed of any company, division, operating unit, segment,
business, group of related assets or line of business or if the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio is such an
Asset Sale:

 

(a)       the Consolidated EBITDA for such period will be
reduced by an amount equal to the Consolidated EBITDA (if positive) directly
attributable to the assets that are the subject of such Asset Sale for such
period or increased by an amount equal to the Consolidated EBITDA (if negative)
directly attributable thereto for such period; and

 

(b)       Consolidated Interest Expense for such period will be
reduced by an amount equal to the Consolidated Interest Expense directly
attributable to any Indebtedness of the Company or any Restricted Subsidiary
repaid, repurchased, defeased or otherwise discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection with such Asset
Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is
sold, the Consolidated Interest Expense for such period directly attributable
to the Indebtedness of such Restricted Subsidiary to the extent the Company and
its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);

 

(3)           if since
the beginning of such period the Company or any Restricted Subsidiary (by
merger or otherwise) has made an Investment in any Restricted Subsidiary (or
any Person that becomes a Restricted Subsidiary or is merged with or into the
Company) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, that constitutes all or substantially all of a company, division,
operating unit, segment, business, group of related assets or line of business,
Consolidated EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and

 

(4)           if since
the beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) has Incurred any Indebtedness or discharged
any Indebtedness, made any Asset Sale or any Investment or acquisition of
assets that would have

 

10

 

required an adjustment pursuant to clause (2) or
(3) above if made by the Company or a Restricted Subsidiary during such period,
Consolidated EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma
effect thereto as if such Asset Sale or Investment or acquisition of assets
occurred on the first day of such period.

 

For purposes of this definition, whenever pro forma effect is to be given to any calculation under
this definition, the pro forma
calculations will be determined in good faith by a responsible financial or
accounting officer of the Company (including pro forma
expense and cost reductions calculated on a basis consistent with Regulation
S-X under the Securities Act).  If any
Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness
will be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any
Interest Rate Agreement applicable to such Indebtedness if such Interest Rate
Agreement has a remaining term in excess of 12 months).  If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the
Company, the interest rate shall be calculated by applying such optional rate
chosen by the Company.

 

“Consolidated EBITDA” for any period means,
without duplication, the Consolidated Net Income of the Company and its
consolidated Restricted Subsidiaries for such period, plus the following to the
extent deducted in calculating such Consolidated Net Income:

 

(1)           Consolidated
Interest Expense;

 

(2)           Consolidated
Income Taxes;

 

(3)           consolidated
depletion and depreciation expense;

 

(4)           consolidated
exploration expense;

 

(5)           consolidated
amortization expense or impairment charges recorded in connection with the
application of Financial Accounting Standard No. 142, “Goodwill and Other
Intangible Assets”; and

 

(6)           other non-cash
charges reducing Consolidated Net Income (excluding any such non-cash charge to
the extent it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a
prior period not included in the calculation);

 

and
less, to the extent included in calculating such Consolidated Net Income and in
excess of any costs or expenses attributable thereto and deducted in
calculating such Consolidated Net Income, the sum of (x) the amount of
deferred revenues that are amortized during such period and are attributable to
reserves that are subject to volumetric Production Payments and (y) amounts
recorded in accordance with GAAP as repayments of principal and interest
pursuant to dollar-denominated Production Payments.  Notwithstanding the preceding sentence,
clauses (2) through (5) relating to amounts of a Restricted Subsidiary
will be added to Consolidated Net Income to compute Consolidated EBITDA only to
the extent (and in the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the Consolidated Net Income
and, to the extent the amounts set forth in clauses (2) through (5) are in
excess of those

 

11

 

necessary
to offset a net loss of such Restricted Subsidiary or if such Restricted
Subsidiary has net income for such period included in Consolidated Net Income,
only if a corresponding amount would be permitted at the date of determination
to be dividended to the Company by such Restricted Subsidiary without prior
approval (that has not been obtained), pursuant to the terms of its charter and
all agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Restricted Subsidiary or its
stockholders.

 

“Consolidated
Income Taxes” means, for any period, taxes imposed
upon the Company or other payments required to be made by the Company by any
governmental authority, which taxes or other payments are calculated by
reference to the income or profits of the Company or the Company and its
Restricted Subsidiaries (to the extent such income or profits were included in
computing Consolidated Net Income for such period), regardless of whether such
taxes or payments are required to be remitted to any governmental authority.

 

“Consolidated Interest Expense” means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, whether paid or accrued, plus, to the extent not included in such
interest expense:

 

(1)           interest
expense attributable to Capitalized Lease Obligations;

 

(2)           amortization of
debt discount (provided that any amortization of bond premium will be credited
to reduce Consolidated Interest Expense unless, pursuant to GAAP, such
amortization of bond premium has otherwise reduced Consolidated Interest
Expense);

 

(3)           commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers’ acceptance financing;

 

(4)           interest
actually paid by the Company or any such Restricted Subsidiary under any
Guarantee of Indebtedness or other obligation of any Person other than the
Company or any Restricted Subsidiary;

 

(5)           costs
associated with Hedging Obligations (including amortization of fees but
excluding obligations pursuant to Commodity Agreements); provided,
however, that if Hedging
Obligations result in net benefits rather than costs, such benefits shall be
credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such
net benefits are otherwise reflected in Consolidated Net Income;

 

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

 

(7)           all dividends
paid or payable to a Person other than the Company or a Wholly-Owned
Subsidiary, in cash, Cash Equivalents or Indebtedness or accrued during such
period on any series of Disqualified Stock of the Company or on Preferred Stock
of its Restricted Subsidiaries;

 

provided, however, that there will be excluded
therefrom any such interest expense attributable to dollar-denominated
Production Payments.

 

12

 

For purposes of the
preceding definition, total interest expense will be determined (a) after
giving effect to any net payments made or received by the Company and its
Restricted Subsidiaries with respect to Interest Rate Agreements and (b) exclusive
of amounts classified as other comprehensive income in the balance sheet of the
Company.

 

“Consolidated Net Income” means, for any period, the
net income (loss) of the Company and its consolidated Restricted Subsidiaries
for such period determined in accordance with GAAP; provided, however,
that there will not be included in such Consolidated Net Income:

 

(1)           any net income
(loss) of any Person if such Person is not a Restricted Subsidiary, except
that:

 

(a)           subject to the limitations contained in
clauses (3), (4) and (5) below, the Company’s equity in the net income of
any such Person for such period will be included in such Consolidated Net
Income up to the aggregate amount of cash actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other distribution to
a Restricted Subsidiary, to the limitations contained in clause (2)
below); and

 

(b)           the Company’s equity in a net loss of any
such Person (other than an Unrestricted Subsidiary) for such period will be
included in determining such Consolidated Net Income to the extent such loss
has been funded with cash from the Company or a Restricted Subsidiary;

 

(2)           any net income
(but not loss) of any Restricted Subsidiary if such Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that:

 

(a)           subject to the limitations contained in
clauses (3), (4) and (5) below, the Company’s equity in the net income of
any such Restricted Subsidiary for such period will be included in such
Consolidated Net Income up to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period to the Company or
another Restricted Subsidiary as a dividend (subject, in the case of a dividend
to another Restricted Subsidiary, to the limitation contained in this clause);
and

 

(b)           the Company’s equity in a net loss of any
such Restricted Subsidiary for such period will be included in determining such
Consolidated Net Income;

 

(3)           any gain (loss)
realized upon the sale or other disposition of any property, plant or equipment
of the Company or its consolidated Restricted Subsidiaries (including pursuant
to any Sale/Leaseback Transaction) that is not sold or otherwise disposed of in
the ordinary course of business and any gain (loss) realized upon the sale or
other disposition of any Capital Stock of any Person;

 

(4)           any
extraordinary gain or loss;

 

(5)           the cumulative
effect of a change since December 31, 2005, in accounting principles;

 

13

 

(6)           any non-cash
mark-to-market adjustments to assets or liabilities resulting in unrealized
gains or losses in respect of Hedging Obligations; and

 

(7)           any impairments
or write-downs of long-lived assets; provided,
however, that any ceiling
limitation write-downs in accordance with GAAP shall be treated as capitalized
costs, as if such write-downs had not occurred.

 

In addition, notwithstanding
the preceding, for the purposes of Section 6.4 only, there shall be
excluded from Consolidated Net Income 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.  Further, notwithstanding the
preceding, the effects of SFAS 133 and SFAS 143 and any non-cash
writedowns will be disregarded for purposes of calculating Consolidated Net
Income.

 

“Consolidated Subsidiaries” means
each Subsidiary of the Company (whether now existing or hereafter created or
acquired) the financial statements of which shall be (or should have been)
consolidated with the financial statements of the Company in accordance with
GAAP.

 

“Contributing Guarantors”
is defined in Section 7.2.

 

“Controlled Group” means all members of a
controlled group of corporations and all members of a controlled group of
trades or businesses (whether or not incorporated) under common control, that,
together with the Company, are treated as a single employer under Section 414(b)
or 414(c) of the Code or Section 4001 of ERISA.

 

“Credit Date” means
the date of a Credit Extension.

 

“Credit Document”
means this Agreement, the Loan Notes, if any, and all other documents,
instruments or agreements executed and delivered by a Credit Party for the
benefit of any Agent or any Lender in connection herewith.

 

“Credit Extension”
means the making of a Loan.

 

“Credit Facility” means, with
respect to the Company and any of its Restricted Subsidiaries, one or more debt
facilities (including the Senior Credit Facility) or commercial paper
facilities with banks or other institutional lenders providing for revolving credit
loans, term loans, money market lines, 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), accounts payable
overdraft financing or letters of credit, in each case, as amended, restated,
modified, renewed, refunded, replaced or refinanced in whole or in part from
time to time (and whether or not with the original administrative agent and
lenders or another administrative agent or agents or other lenders and whether or
not provided under the Senior Credit Facility or any other credit or other
agreement or indenture).

 

“Credit Party”
means each Person (other than any Agent or any Lender or any other
representative thereof) from time to time party to a Credit Document.

 

14

 

“Currency Agreement” means in
respect of a Person any foreign exchange contract, currency swap agreement,
futures contract, option contract or other similar agreement as to which such
Person is a party or a beneficiary.

 

“Default” means a
condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.

 

“Deposit Account”
means a demand, time, savings, passbook or like account with a bank, savings
and loan association, credit union or like organization, other than an account
evidenced by a negotiable certificate of deposit.

 

“Disqualified
Stock” means, with respect to any Person, any Capital
Stock of such Person that by its terms (or by the terms of any security into
which it is convertible or for which it is exchangeable) or upon the happening
of any event:

 

(1)           matures
or is mandatorily redeemable pursuant to a sinking fund obligation or
otherwise;

 

(2)           is
convertible or exchangeable for Indebtedness or Disqualified Stock (excluding
Capital Stock that is convertible or exchangeable solely at the option of the
Company or a Restricted Subsidiary); or

 

(3)           is
redeemable at the option of the holder of the Capital Stock in whole or in
part, in each case on or prior to the date that is 91 days after the
earlier of the date (a) of the stated maturity of the 2017 Notes or
(b) on which there are no Loans outstanding; provided, however, that only the portion of Capital Stock that
so matures or is mandatorily redeemable, is so convertible or exchangeable or
is so redeemable at the option of the holder thereof prior to such date will be
deemed to be Disqualified Stock; and provided
further that any Capital Stock
that would constitute Disqualified Stock solely because the holders thereof
have the right to require the Company to repurchase such Capital Stock upon the
occurrence of a change of control or asset sale (each defined in a
substantially similar manner to the corresponding definitions in this
Agreement) shall not constitute Disqualified Stock if the terms of such Capital
Stock (and all such securities into which it is convertible or for which it is
exchangeable) provide that the Company may not repurchase or redeem any such
Capital Stock (and all such securities into which it is convertible or for
which it is exchangeable) pursuant to such provision prior to compliance by the
Company with Section 2.10(a) and Section 5.10 and such repurchase or
redemption complies with Section 6.4.

 

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

 

“Eligible Assignee”
means (1) any Lender, any Affiliate of any Lender and any Related Fund
(any two or more Related Funds being treated as a single Eligible Assignee for
all purposes hereof) and (2) any commercial bank, insurance company,
investment or mutual fund or other entity that is an “accredited investor” (as
defined in Regulation D under the Securities Act) and that extends credit
or buys loans as one of its businesses; provided that
any Eligible Assignee represents and agrees that any election by such Eligible
Assignee to exchange all or a

 

15

 

portion of its Loan for one or more Exchange Notes
would be for its own account and not with a view to distribution in violation
of any securities laws.

 

“Engagement Letter” means
the Engagement Letter, dated as of April 18, 2006, between Goldman Sachs
Credit Partners L.P. and the Company.

 

“Environment” means
ambient air, indoor air, surface water and groundwater (including potable water
and navigable water), the land surface or subsurface strata, the workplace,
natural resources (including wetlands, flora and fauna) or as otherwise defined
in any Environmental Law.

 

“Environmental Claim”
means any investigation, notice, notice of violation, claim, action, suit, complaint,
proceeding, demand, abatement order or other order or directive (conditional or
otherwise), by any Governmental Authority or any other Person, arising (1) pursuant
to or in connection with any actual or alleged violation of any Environmental
Law, (2) in connection with any Hazardous Material or any actual or
alleged Hazardous Materials Activity, (3) in connection with any actual or
alleged damage, injury, threat or harm to health, safety, natural resources or
the Environment or (4) any contract, agreement or other consensual
arrangement pursuant to which liability is assumed or imposed with respect to
any of the foregoing.

 

“Environmental Laws” means all applicable laws, statutes,
ordinances, rules, regulations, judgments, writs, injunctions, decrees, orders
and awards promulgated or issued by any Governmental Authority concerning the preservation
or protection of the Environment or human health or safety, or regulating Hazardous
Materials Activity or any discharge of substances into, the environment.

 

“Equity Interests” means
shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such Equity Interest.

 

“ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statutes, and all regulations and guidances promulgated thereunder.

 

“Event of Default”
means each of the conditions or events set forth in Section 8.1.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.

 

“Exchange Note Indenture” means
the indenture relating to the Exchange Notes, among the Company, as issuer, the
Guarantors, as guarantors, and the Exchange Note Trustee.

 

“Exchange Note Trustee” means
The Bank of New York Trust Company, N.A., in its capacity as trustee under the
Exchange Note Indenture, and each of its successors in such capacity.

 

16

 

“Exchange Notes” means
the senior unsecured Exchange Notes of the Company, to be guaranteed by the
Guarantors, if any, to be authenticated by the Exchange Note Trustee and
delivered in exchange for Loans on or after the first anniversary of the
Closing Date in an equal principal amount from time to time pursuant to
Section 2.2, in the form attached as an exhibit to the Exchange Note
Indenture.

 

“Exchange Notice” is
defined in Section 2.2(a).

 

“Excluded Subsidiary” means each
Subsidiary of the Company; provided that
any such Subsidiary shall cease to be an Excluded Subsidiary at such time as
such Subsidiary Guarantees any other indebtedness of the Company (other than
indebtedness under the Senior Credit Facility).

 

“Fair Market Value” means, with
respect to any asset or Investment, the fair market value of such asset or
Investment at the time of the event requiring such determination, (1) as
determined in good faith by senior management of the Company, if the fair
market value of such asset or Investment is less than 3% of ACNTA at the time
of the event requiring such determination, or (2) as determined in good
faith by the Board of Directors of the Company, if the fair market value of
such asset or Investment is equal to or greater than 3% of ACNTA at the time of
the event requiring such determination. 
Unless specifically required by the terms of this Agreement, no
valuation or assessment from any investment banker, appraiser or other third
party shall be required to be obtained in connection with either determination
contemplated by the first sentence of this definition of Fair Market Value.

 

“Fair Share Contribution Amount”
is defined in Section 7.2.

 

“Fair Share” is
defined in Section 7.2.

 

“Fee Letter” means the
Fee Letter, dated April 18, 2006, among GSCP, Goldman, Sachs & Co. and
the Company.

 

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

 

“Fiscal Year” means
the fiscal year of the Company and its Subsidiaries ending on December 31 of
each calendar year.

 

“Foreign Subsidiary”
means any Restricted Subsidiary that is not organized under the laws of the
United States of America or any state thereof or the District of Columbia and
has substantially all of its operations outside the United States.

 

“Funding Guarantors”
is defined in Section 7.2.

 

“Funding Notice”
means a notice substantially in the form of Exhibit A.

 

“GAAP” means,
subject to the limitations on the application thereof set forth in
Section 1.2, U.S. generally accepted accounting principles in effect as of
the date of determination thereof.

 

17

 

“Governmental Approval” means (1) any authorization, consent,
approval, license, ruling, permit, tariff, certification, waiver, exemption,
filing, variance, claim, order, judgment or decree of, or with, (2) any
required notice to, (3) any declaration of or with, or (4) any
registration by or with, any Governmental Authority.

 

“Governmental Authority”means any U.S. federal, state or local
or any foreign government, governmental regulatory or administrative authority,
agency or commission or any court, tribunal or judicial or arbitral body.

 

“GSCP” is defined
in the preamble hereto.

 

“Guarantee”
means any obligation, contingent or otherwise, of any Person
directly or indirectly guaranteeing any Indebtedness of any other Person and
any obligation, direct or indirect, contingent or otherwise, of such Person:

 

(1)           to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or services, to
take-or-pay, or to maintain financial statement conditions or otherwise); or

 

(2)           entered into for
purposes of assuring in any other manner the obligee of such Indebtedness of
the payment thereof or to protect such obligee against loss in respect thereof
(in whole or in part);

 

provided, however, that the term “Guarantee” will
not include (a) endorsements for collection or deposit in the ordinary
course of business or (b) a contractual commitment by one Person to invest
in another Person for so long as such Investment is reasonably expected to
constitute a Permitted Investment.  The
term “Guarantee” used as a verb has a corresponding meaning.

 

“Guaranteed Obligations” is
defined in Section 7.1.

 

“Guarantor” means
any Restricted Subsidiary that has provided a Guaranty in accordance with
Section 5.11 and its successors and assigns.

 

“Guaranty” means
the guarantee of each Guarantor set forth in Section 7.

 

“Hazardous Materials”
means:

 

(1)           any “hazardous substance,”
as defined by CERCLA;

 

(2)           any “hazardous waste,”
as defined by the Resource Conservation and Recovery Act, as amended;

 

(3)           any
petroleum, crude oil or any fraction thereof, petroleum products or by-products;

 

18

 

(4)           any
hazardous, dangerous or toxic chemical, material waste or substance, pollutant
or contaminant, defined, listed or regulated as such by, or requiring removal,
remediation or reporting pursuant to, any Environmental Law;

 

(5)           any
radioactive material, including any naturally occurring radioactive material,
and any source, special or by-product material as defined in 42 U.S.C. §2011 et
seq., and any amendments or reauthorizations thereof;

 

(6)           asbestos-containing
materials in any form or condition; or

 

(7)           polychlorinated
biphenyls in any form or condition.

 

“Hazardous Materials Activity”
means any past, current, proposed or threatened activity, event or occurrence
involving any Hazardous Materials, including the use, manufacture, possession,
storage, holding, presence, existence, location, Release, threatened Release,
discharge, placement, generation, transportation, processing, construction,
treatment, abatement, removal, remediation, disposal, disposition or handling
of any Hazardous Materials, and any corrective action or response action (and
related investigations) with respect to any of the foregoing.

 

“Hedging Obligations”
of any Person means the obligations of such Person pursuant to any Interest
Rate Agreement, Currency Agreement or Commodity Agreement.

 

“Highest Lawful Rate”
means the maximum lawful interest rate, if any, that at any time or from time
to time may be contracted for, charged, or received under the laws applicable
to any Lender that are presently in effect or, to the extent allowed by law,
under such applicable laws that may hereafter be in effect and that allow a
higher maximum nonusurious interest rate than applicable laws now allow.

 

“Historical Financial Statements”
means (1) the audited financial statements of the Company and its
Subsidiaries and Consolidated Affiliates for the three Fiscal Years immediately
preceding the Closing Date, consisting of balance sheets and the related
consolidated statements of income, stockholders’ equity and cash flows for such
Fiscal Years and (2) if available, the unaudited financial statements of
the Company and its Subsidiaries and Consolidated Affiliates as at March 31, 2006, and for the three months then
ended, consisting of a balance sheet and the related consolidated statements of
income, stockholders’ equity and cash flows, all certified by the chief
financial officer of the Company that they fairly present, in all material
respects, the financial condition of the Company and its Subsidiaries and
Consolidated Affiliates as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject (in the case
of the March 31, 2006, financial statements) to changes resulting from
normal year-end adjustments.

 

“Hydrocarbon Interests” means
all rights, titles and interests in and to oil and gas leases, oil, gas and
mineral leases, other Hydrocarbon leases, mineral interests, mineral
servitudes, overriding royalty interests, royalty interests, net profits
interests, Production Payments and other similar interests.

 

19

 

“Hydrocarbons” means,
collectively, crude oil, natural gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate and all other liquid or gaseous hydrocarbons
and related minerals and all products therefrom, in each case whether in a
natural or a processed state.

 

“Incur” means issue, create,
assume, Guarantee, incur or otherwise become liable for; provided,
however, that any Indebtedness or Capital Stock of a Person existing
at the time such Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition or otherwise) will be deemed to be Incurred by such
Restricted Subsidiary at the time it becomes a Restricted Subsidiary; and the
terms “Incurred” and “Incurrence”
have meanings correlative to the foregoing.

 

“Indebtedness”
means, with respect to any Person on any date of determination (without
duplication):

 

(1)           the
principal of and premium (if any) in respect of indebtedness of such Person for
borrowed money;

 

(2)           the
principal of and premium (if any) in respect of obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;

 

(3)           the
principal component of all obligations of such Person in respect of letters of
credit, bankers’ acceptances or other similar instruments (including
reimbursement obligations with respect thereto except to the extent such
reimbursement obligation relates to a trade payable and such obligation is
satisfied within 30 days of Incurrence);

 

(4)           the
principal component of all obligations of such Person to pay the deferred and
unpaid purchase price of property (except trade payables), which purchase price
is due more than six months after the date of placing such property in service
or taking delivery and title thereto;

 

(5)           Capitalized
Lease Obligations and all Attributable Indebtedness of such Person;

 

(6)           the
principal component or liquidation preference of all obligations of such Person
with respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary, any Preferred Stock (but
excluding, in each case, any accrued dividends);

 

(7)           the
principal component of all Indebtedness of other Persons secured by a Lien on
any asset of such Person, whether or not such Indebtedness is assumed by such
Person; provided, however, that the amount of
such Indebtedness will be the lesser of (a) the Fair Market Value of such
asset at such date of determination and (b) the amount of such Indebtedness
of such other Persons;

 

(8)           the
principal component of Indebtedness of other Persons to the extent Guaranteed
by such Person (including any Guarantees of production or payment by such
Person with respect to a Production Payment but excluding other contractual
obligations of such Person with respect to such Production Payment); and

 

20

 

(9)           to
the extent not otherwise included in this definition, net obligations of such
Person under Hedging Obligations (the amount of any such obligations to be
equal at any time to the termination value of the agreement or arrangement
giving rise to such obligation that would be payable by such Person at such
time).

 

The amount of
Indebtedness of any Person at any date will be the outstanding balance at such
date of all unconditional obligations as described above and the maximum
liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.

 

Notwithstanding the preceding,
the following shall not constitute “Indebtedness”:

 

(a)           any
obligation in respect of any Production Payment (except as set forth in
clause (8) of the first paragraph of this definition of “Indebtedness”),
royalty, overriding royalty, net profits interest, master limited partnership
interest or other interest in oil and natural gas properties, reserves or the
right to receive all or a portion of the production or the proceeds from the
sale of production attributable to such properties;

 

(b)           any
obligation in respect of a farm-in agreement;

 

(c)           any
Indebtedness that has been defeased in accordance with GAAP or defeased
pursuant to the deposit of cash or U.S. Government Obligations (in an amount
sufficient to satisfy all such Indebtedness at Stated Maturity or redemption,
as applicable, and all payments of interest and premium, if any) in a trust or
account created or pledged for the sole benefit of the holders of such
Indebtedness, and subject to no other Liens, and the other applicable terms of
the instrument governing such Indebtedness;

 

(d)           oil
or gas balancing liabilities incurred in the ordinary course of business and
consistent with past practice;

 

(e)           any
obligations in respect of (i) completion bonds, performance bonds, bid
bonds, surety bonds and other similar bonds and (ii) bankers acceptances
and letters of credit, in each case Incurred by the Company or any Restricted
Subsidiary in the ordinary course of business, and any Guarantees or letters of
credit functioning as or supporting any of the foregoing obligations; and

 

(f)            any
obligation arising from the honoring by a bank or other financial institution
of a check, draft or similar instrument (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is
extinguished within five Business Days of Incurrence.

 

“Indemnified Liabilities”
means, collectively, any and all liabilities, obligations, losses, damages
(including natural resource damages), penalties, claims (including
Environmental Claims), costs (including the costs of any investigation, study,
sampling, testing, abatement, cleanup, removal, remediation or other response
action necessary to remove, remediate, clean up or abate any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding

 

21

 

commenced or threatened by any Person, whether or not
any such Indemnitee shall be designated as a party or a potential party
thereto, and any fees or expenses incurred by Indemnitees in enforcing this
indemnity), whether direct, indirect or consequential and whether based on any
federal, state or foreign laws, statutes, rules or regulations (including
securities and commercial laws, statutes, rules or regulations and
Environmental Laws), on common law or equitable cause or on contract or
otherwise, that may be imposed on, incurred by, or asserted against any such
Indemnitee, in any manner relating to or arising out of (1) this Agreement
or the other Credit Documents or the transactions contemplated hereby or
thereby (including the Lenders’ agreement to make Credit Extensions or the use
or intended use of the proceeds thereof, or any enforcement of any of the
Credit Documents (including the enforcement of the Guaranty)), or (2) any
Environmental Claim or any Hazardous Materials Activity relating to or arising
from, directly or indirectly, any past or present activity, operation, land
ownership, or practice of the Company or any of its Subsidiaries.

 

“Indemnitee” is
defined in Section 10.3.

 

“Interest Payment Date”
means each August 2, November 2, February 2 and May 2 of
each year.

 

“Interest Rate Agreement”
means, with respect to any Person, any interest rate protection agreement,
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement or arrangement as to
which such Person is party or a beneficiary.

 

“Internal Revenue Code”
means the Internal Revenue Code of 1986, as amended to the date hereof and from
time to time hereafter, and any successor statute.

 

“Investment” means,
with respect to any Person, all investments by such Person in other Persons
(including Affiliates) in the form of any direct or indirect advance, loan
(other than advances or extensions of credit to customers in the ordinary
course of business) or other extensions of credit (including by way of
Guarantee, but excluding any debt or extension of credit represented by a bank
deposit other than a time deposit) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments by such Person, and
all other items that are or would be classified as investments on a balance
sheet prepared in accordance with GAAP; provided, however, that endorsements of negotiable instruments and
documents in the ordinary course of business will not be deemed to be an
Investment.

 

For purposes of Section 6.4:

 

(1) “Investment” will include the portion
(proportionate to the Company’s equity interest in a Restricted Subsidiary to
be designated as an Unrestricted Subsidiary) of the Fair Market Value of the
net assets of such Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that, upon a redesignation of such Subsidiary as a
Restricted Subsidiary, the Company will be deemed to continue to have a

 

22

 

permanent “Investment” in an Unrestricted
Subsidiary in an amount (if positive) equal to (a) the Company’s “Investment”
in such Subsidiary at the time of such redesignation less (b) the portion
(proportionate to the Company’s equity interest in such Subsidiary) of the Fair
Market Value of the net assets (as determined in accordance with the definition
of such term in this Section 1.1, the results of which determination shall
be set forth in an Officers’ Certificate delivered to the Administrative Agent)
of such Subsidiary at the time that such Subsidiary is so re-designated a
Restricted Subsidiary;

 

(2) any property transferred to or from an
Unrestricted Subsidiary will be valued at its Fair Market Value at the time of
such transfer, in each case as determined in accordance with the definition of
such term in this Section 1.1, the results of which determination shall be
set forth in an Officers’ Certificate delivered to the Administrative Agent;
and

 

(3) if the Company or any Restricted
Subsidiary sells or otherwise disposes of any Voting Stock of any Restricted
Subsidiary such that, after giving effect to any such sale or disposition, such
entity is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to
the Fair Market Value (as determined in accordance with the definition of such
term in this Section 1.1, the results of which determination shall be set
forth in an Officers’ Certificate delivered to the Administrative Agent) of the
Capital Stock of such Subsidiary not sold or disposed of.

 

“Investment Bank” means Goldman,
Sachs & Co.

 

“Investment
Grade Rating” means a rating equal to or higher than
Baa3 (or the equivalent) by Moody’s or BBB- (or the equivalent) by S&P.

 

“Joinder Agreement”
means a Joinder Agreement substantially in the form of Exhibit K delivered
by a Credit Party pursuant to Section 5.11.

 

“Joint Venture”
means a joint venture, partnership or other similar arrangement, whether in
corporate, partnership or other legal form; provided
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.

 

“Lead Arranger” is
defined in the preamble hereto.

 

“Lender” means each
financial institution listed on the signature pages hereto as a Lender and any
other Person that becomes a party hereto pursuant to an Assignment Agreement.

 

“Lien” means any
interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute or contract, and whether such obligation or claim is fixed
or contingent, and including (a) the lien or security interest arising
from a mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes or
(b) production payments and the like payable out of Oil and Gas
Properties.  The term “Lien” shall include
easements, restrictions, servitudes, permits, conditions, covenants, exceptions
or reservations.  The term “Lien” shall
not include rights created in a third Person in

 

23

 

connection with the creation by the Company or a
Restricted Subsidiary of a Production Payment. 
For the purposes of this Agreement, the Company and its Subsidiaries
shall be deemed to be the owner of any Property that it has acquired or holds
subject to a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been retained by
or vested in some other Person in a transaction intended to create a financing.

 

“Litigation” is defined in Section 4.7.

 

“Loan” means a Loan
made by a Lender to the Company pursuant to Section 2.1(a).

 

“Loan Commitment”
means the commitment of a Lender to make or otherwise fund a Loan and “Loan Commitments” means such commitments
of all Lenders in the aggregate.  The
amount of each Lender’s Loan Commitment, if any, is set forth on
Appendix A or in the applicable Assignment Agreement, subject to any
adjustment or reduction pursuant to the terms and conditions hereof.  The aggregate amount of the Loan Commitments
as of the Closing Date is $500.0 million.

 

“Loan Exposure”
means, with respect to any Lender, as of any date of determination, the
outstanding principal amount of the Loans of such Lender; provided that at any time prior to the
making of the Loans, the Loan Exposure of any Lender shall be equal to such
Lender’s Loan Commitment.

 

“Loan Note” means a
promissory note evidencing a Loan substantially in the form of Exhibit C.

 

“Margin Stock” has
the meaning specified in Regulation U of the Board of Governors as in
effect from time to time.

 

“Material Adverse Effect” means any change in or effect on the Companyor any of its Subsidiaries (including
the Acquired Business) that,
individually or in the aggregate with any other changes in or effects on the
Company or any of its Subsidiaries (including the Acquired Business), (1) is materially adverse to the
business, properties, financial condition or results of operations of the
Company and its Subsidiaries (including the Acquired Business), taken as a whole, or (2) would
reasonably be expected to have a material adverse effect on the Company’s
ability to perform its respective obligations under the Transaction Documents; provided,
however, that “Material Adverse Effect” shall not be deemed to
include any changes or effects arising out of any effects of FAS 133 or
FAS 143 or other changes in GAAP or in the generally applicable
interpretation thereof.

 

“Material
Change” means an increase or decrease (excluding
changes that result solely from changes in prices and changes resulting from
the incurrence of previously estimated future development costs) of more than
50% during a fiscal quarter in the discounted future net revenue from proved
crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries, calculated in accordance with clause (1)(a) of the
definition of ACNTA; provided, however, that the following will be
excluded from the calculation of Material Change:

 

24

 

(1)           any acquisitions during
the fiscal quarter of oil and gas reserves that have been estimated by
independent petroleum engineers and with respect to which a report or reports
of such engineers exist; and

 

(2)           any disposition of
properties existing at the beginning of such fiscal quarter that have been
disposed of in compliance with Section 4.8 of the indenture governing the
2017 Notes.

 

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

 

“Moody’s” means
Moody’s Investor Services, Inc.

 

“NAIC” means The
National Association of Insurance Commissioners and any successor thereto.

 

“Net Cash
Proceeds,” with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees,
listing fees, discounts or commissions and brokerage, consultant and other fees
and charges actually Incurred in connection with such issuance or sale and net
of taxes paid or payable as a result of such issuance or sale (after taking
into account any available tax credit or deductions and any tax-sharing
arrangements).

 

“Net
Proceeds” means cash
payments received by the Company or any of its Restricted Subsidiaries
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise and net proceeds from
the sale or other disposition of any securities received as consideration and
including casualty insurance settlements and condemnation awards, but only as
and when received, but excluding, in the case of an Asset Sale, any other
consideration received in the form of assumption by the acquiring Person of
Indebtedness or other obligations relating to the properties or assets that are
the subject of such Asset Sale or received in any other non-cash form) from any
Asset Sale or loss, damage, destruction or condemnation of any asset or assets
of the Company or any of its Restricted Subsidiaries, in each case net of:

 

(1)           all legal, accounting, investment banking,
title and recording tax expenses, commissions and other fees and expenses
Incurred, and all federal, state, provincial, foreign and local taxes required
to be paid or accrued as a liability under GAAP (after taking into account any
available tax credits or deductions and any tax-sharing agreements), incurred
in connection therewith;

 

(2)           in the case of an Asset Sale, all permanent
repayments made on any Indebtedness that is secured by any assets subject to
such Asset Sale, in accordance with the terms of any Lien upon such assets, or
that must by its terms, or in order to obtain a necessary consent to such Asset
Sale, or by applicable law be repaid out of the proceeds from such Asset Sale;

 

(3)           all distributions and other payments required
to be made to minority interest holders in Subsidiaries or joint ventures as a
result of such Asset Sale or receipt of such casualty insurance settlements or
condemnation awards, as the case may be; and

 

25

 

(4)           in the case of an Asset Sale, the deduction
of appropriate amounts to be provided by the seller as a reserve, in accordance
with GAAP, against any liabilities associated with the assets disposed of in
such Asset Sale and retained by the Company or any Restricted Subsidiary after
such Asset Sale.

 

“Net
Working Capital” means:

 

(1)           all
current assets of the Company and its Restricted Subsidiaries; minus

 

(2)           all
current liabilities of the Company and its Restricted Subsidiaries, except
current liabilities included in Indebtedness;

 

determined in accordance
with GAAP.

 

“Non-Recourse
Debt” means Indebtedness of a Person:

 

(1)           as
to which neither the Company nor any Restricted Subsidiary (a) provides
any Guarantee or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute Indebtedness)
or (b) is directly or indirectly liable (as a guarantor or otherwise); and

 

(2)           no
default with respect to which (including any rights that the holders thereof
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 of the Company or any Restricted Subsidiary to declare a default
under such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.

 

“Non-U.S. Lender”
is defined in Section 2.14(c).

 

“Notice” means a
Funding Notice or an Exchange Notice.

 

“Obligations” means
the Loans and all other obligations of every nature of each Credit Party from
time to time owed to any Agent or Lender (or former Agent or Lender) or any
Indemnitee under any Credit Document, whether for principal, interest
(including interest that, but for the filing of a petition in bankruptcy with
respect to such Credit Party, would have accrued on any Obligation, whether or not
a claim is allowed against such Credit Party for such interest in the related
bankruptcy proceeding), fees, expenses, indemnification or otherwise.

 

“Officers’ Certificate” means a
certificate signed by two Authorized Officers (for which in the case of the
annual Officers’ Certificate delivered pursuant to Section 5.1(e) at least
one of such Authorized Officer shall be the principal executive officer,
principal financial officer or principal accounting officer of the Company),
that is delivered to the Administrative Agent and includes (1) a statement
that the individual making such certificate has read the applicable covenant or
condition of this Agreement, (2) a brief statement as to the nature and
scope of the examination or investigation upon which the statements or opinions
contained in such certificate are based, (3) a statement that, in the
opinion of such individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not the
applicable covenant or condition has been complied with and (4) a

 

26

 

statement as to whether or not, in the opinion of such
individual, the applicable covenant or condition has been complied with.

 

“Oil and Gas Business” means:

 

(1)           the
acquisition, exploration, exploitation, development, operation or disposition
of interests in crude oil, natural gas or other Hydrocarbon properties;

 

(2)           the
gathering, marketing, treating, processing, storage, selling, transporting or
refining of any production from such interests or properties;

 

(3)           any
business relating to or arising from exploration for or development,
production, gathering, marketing, treatment, processing, storage, sale,
transportation or refining of crude oil, natural gas and other Hydrocarbons and
products produced in association therewith; or

 

(4)           any
activity that is ancillary or necessary or desirable to facilitate the
activities described in clauses (1) through (3) of this definition,
including raising capital to finance operations.

 

“Oil and
Gas Properties” means Hydrocarbon Interests;
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby (including all units created under orders,
regulations and rules of any Governmental Authority having jurisdiction) that
may affect all or any portion of Hydrocarbon Interests; all operating
agreements, joint venture agreements, contracts and other agreements that
relate to any Hydrocarbon Interests or the production, sale, purchase, exchange
or processing of Hydrocarbons from or attributable to Hydrocarbon Interests;
all Hydrocarbons in and under and that may be produced and saved or
attributable to Hydrocarbon Interests, the lands covered thereby and all oil in
tanks and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to Hydrocarbon Interests; all tenements, profits á
prendre, hereditaments, appurtenances and Properties in anywise appertaining,
belonging, affixed or incidental to Hydrocarbon Interests, Properties, rights,
titles, interests and estates described or referred to above, including any and
all Property, real or personal, now owned or hereafter acquired and situated
upon, used, held for use or useful in connection with the operating, working or
development of any Hydrocarbon Interests or Property (excluding drilling rigs,
automotive equipment or other personal Property that may be on such premises
for the purpose of drilling a well or for other similar temporary uses) and
including any and all oil wells, gas wells, water wells, injection wells or
other wells, buildings, structures, fuel separators, liquid extraction plants,
plant compressors, pumps, pumping units, field gathering systems, tanks and
tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way,
easements and servitudes together with all additions, substitutions,
replacements, accessions and attachments to any and all of the foregoing.

 

“Organic Document” means,
relative to any Person and as applicable, its certificate or articles of
organization, formation or incorporation (or comparable document), its

 

27

 

bylaws or operating agreement, and all partnership
agreements or limited liability company agreement, regulations or other general
rules of governance or association and similar arrangements applicable to
ownership.  In the event any term or
condition of this Agreement or any other Credit Document requires any Organic
Document to be certified by a secretary of state or similar governmental
official, the reference to any such “Organic Document” shall only be to a
document of a type customarily certified by such governmental official.

 

“PBGC” means the
Pension Benefit Guaranty Corporation or any successor thereto.

 

“Pension Plan” means a “pension plan,” as such term is
defined in Section 3(2) of ERISA, that is subject to Title IV of
ERISA (other than a multi-employer plan as defined in Section 4001(a)(3)
of ERISA) and to which the Company or any corporation, trade or business that
is, along with the Company, a member of a Controlled Group may have liability,
including any liability by reason of having been a substantial employer, within
the meaning of Section 4063 of ERISA, at any time during the preceding
five years or by reason of being deemed a contributing sponsor under
Section 4069 of ERISA.

 

“Permanent Securities” means
debt or equity securities (other than common stock or securities convertible
into common stock) issued by the Company and, in the case of debt securities,
fully and unconditionally guaranteed by the Guarantors, which debt or equity
securities have either been registered with the SEC and sold pursuant to a
registration statement in a public offering or privately placed or otherwise
sold in an offering exempt from registration with the SEC, to refinance the
Loans.

 

“Permitted Business Investment”
means any Investment made in the ordinary course of, and of a nature that is or
shall have become customary in, the Oil and Gas Business as a means of exploiting,
exploring for, acquiring, developing, processing, gathering, marketing or
transporting crude oil, natural gas and other Hydrocarbons through any
agreement, transaction, interest or arrangement that permits one to share risks
or costs, comply with regulatory requirements regarding local ownership or
satisfy other objectives customarily achieved through the conduct of the Oil
and Gas Business jointly with third parties, including:

 

(1)           direct
or indirect ownership of crude oil, natural gas and other Hydrocarbon
properties or gathering, transportation, processing, storage or related
systems; and

 

(2)           the
entry into any one or more operating agreements, joint venture agreements,
partnership agreements, processing agreements, farm-in agreements, farm-out
agreements, contracts for the sale, transportation or exchange of crude oil,
natural gas and other Hydrocarbons, unitization agreements, pooling
arrangements, joint bidding agreements, service contracts, subscription
agreements, stock purchase agreements, area of mutual interest agreements,
production sharing agreements or other similar or customary agreements with any
one or more third parties, excluding, however, Investments in corporations and
publicly-traded limited partnerships.

 

“Permitted Investment” means
an Investment by the Company or any Restricted Subsidiary in:

 

28

 

(1)           a
Restricted Subsidiary or a Person that will, upon the making of such
Investment, become a Restricted Subsidiary;

 

(2)           another
Person if as a result of such Investment such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all its
properties and assets to, the Company or a Restricted Subsidiary;

 

(3)           Permitted
Business Investments;

 

(4)           cash
and Cash Equivalents;

 

(5)           Capital
Stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Company or any Restricted
Subsidiary or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of a
debtor or in settlement of any litigation or dispute;

 

(6)           Investments
made as a result of the receipt of non-cash consideration from an Asset Sale
that was made pursuant to and in compliance with Section 2.10(a);

 

(7)           Investments
for consideration consisting of Capital Stock (other than Disqualified Stock)
of the Company;

 

(8)           Hedging
Obligations Incurred in compliance with Section 6.2; and

 

(9)           Investments
by the Company or any of its Restricted Subsidiaries, together with all other
Investments pursuant to this clause (9), in an aggregate outstanding
amount not to exceed 2% of ACNTA at any one time (with the Fair Market Value of
such Investment being measured at the time made and without giving effect to
subsequent changes in value).

 

“Permitted Liens”
means, with respect to any Person:

 

(1) Liens securing Indebtedness of such
Person under a Credit Facility or any other Senior Indebtedness of such Person;

 

(2) Liens securing Hedging Obligations so
long as the related Indebtedness is permitted under this Agreement;

 

(3) Liens for the purpose of securing the
payment of all or a part of the purchase price of, or purchase money
obligations or other payments Incurred to finance the acquisition, improvement
or construction of, assets or property acquired or constructed in the ordinary
course of business, provided that
(a) the aggregate principal amount of Indebtedness secured by such Liens
is otherwise permitted to be Incurred under this Agreement and does not exceed
the cost of the assets or property so acquired or constructed and (b) such
Liens are created within 180 days of construction or acquisition of such
assets or property and do not encumber any other assets or property of the
Company or any Restricted Subsidiary other than such assets or property and
assets affixed or appurtenant thereto;

 

(4) Liens existing on the Closing Date;

 

29

 

(5) Liens in favor of the Company or any
Guarantor;

 

(6) Liens on property or Capital Stock of a
Person at the time such Person becomes a Restricted Subsidiary (plus
improvements, accessions, proceeds or dividends or distributions in respect of
any such property); provided, however,
that such Liens are not Incurred in connection with, or in contemplation of,
such other Person becoming a Restricted Subsidiary; and provided
further, however, that any such Lien may not extend to any other
property owned by the Company or any Restricted Subsidiary;

 

(7) Liens on property at the time the Company
or a Restricted Subsidiary acquired the property (plus improvements,
accessions, proceeds or dividends or distributions in respect of any such
property), including any acquisition by means of a merger or consolidation with
or into the Company or any Restricted Subsidiary; provided,
however, that such Liens are not Incurred in connection with, or in
contemplation of, such acquisition; and provided further, however,
that such Liens may not extend to any other property owned by the Company or
any Restricted Subsidiary;

 

(8) Liens securing the Loans or the Guaranty;

 

(9) Liens securing Refinancing Indebtedness
Incurred to refinance Indebtedness that was previously so secured, provided that any such Lien is limited to all or part of the
same property (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured the Indebtedness being
refinanced; or

 

(10) Liens incurred in the ordinary course of
business of the Company and its Restricted Subsidiaries with respect to
Indebtedness that does not exceed $10.0 million.

 

“Person” means and
includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint
stock companies, Joint Ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and Governmental Authorities.

 

“Preferred Stock” means, as
applied to the Capital Stock of any Person, Capital Stock of any class or
classes (however designated) that is preferred as to the payment of dividends,
or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of Capital Stock of any
other class of such Person.

 

“Principal Office”
means the Administrative Agent’s “Principal Office” as set forth on
Appendix B or such other office as the Administrative Agent may from time
to time designate in writing to the Company and each Lender.

 

“Production
Payment” means a production payment obligation
(whether volumetric or U.S. dollar-denominated) of the Company or any of its
Subsidiaries that is payable from a specified share of proceeds received from
production from specified Oil and Gas Properties, together with all
undertakings and obligations in connection therewith.

 

30

 

“Property” means
any interest in any kind of property or asset, whether real, personal or mixed,
or tangible or intangible, including cash, securities, accounts and contract
rights.

 

“Pro Rata Share”
means, with respect to any Lender, the percentage obtained by dividing
(a) the Loan Exposure of that Lender by (b) the aggregate Loan
Exposure of all Lenders.

 

“Redemption” means
with respect to any Indebtedness, the repurchase, redemption, prepayment,
repayment or defeasance (or the segregation of funds with respect to any of the
foregoing) of such Indebtedness.  “Redeem” has the correlative meaning
thereto.

 

“Refinancing Indebtedness” means
Indebtedness that is Incurred to refund, refinance, replace, exchange, renew,
repay or extend (including pursuant to any defeasance or discharge mechanism)
(collectively, “refinance,” and the terms “refinances” and “refinanced” shall
have correlative meanings) any Indebtedness existing on the Closing Date or
Incurred in compliance with this Agreement, including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that:

 

(1) (a) if the stated maturity of the
Indebtedness being refinanced is earlier than the stated maturity of the
2017 Notes, the Refinancing Indebtedness has a stated maturity no earlier
than the stated maturity of the Indebtedness being refinanced and (b) if
the stated maturity of the Indebtedness being refinanced is later than the
stated maturity of the 2017 Notes, the Refinancing Indebtedness has a
stated maturity at least 91 days later than the stated maturity of the
2017 Notes;

 

(2) the Refinancing Indebtedness has an
Average Life at the time such Refinancing Indebtedness is Incurred that is
equal to or greater than the Average Life of the Indebtedness being refinanced;

 

(3) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the sum of the aggregate
principal amount (or if issued with original issue discount, the aggregate
accreted value) then outstanding of the Indebtedness being refinanced (plus,
without duplication, any additional Indebtedness Incurred to pay interest or
premiums required by the instruments governing such existing Indebtedness and
fees and other transactional expenses Incurred in connection therewith);

 

(4) if the Indebtedness being refinanced is subordinated
in right of payment to the Loans or the Guaranty, such 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 refinanced; and

 

(5) such Indebtedness is not incurred by a
Restricted Subsidiary (other than a Guarantor) if the Company or a Guarantor is
the obligor on the Indebtedness being refinanced; and provided,
however, that a Restricted Subsidiary
that is also a Guarantor may Guarantee Refinancing Indebtedness Incurred by the
Company, whether or not such Restricted Subsidiary was an

 

31

 

obligor or guarantor of the Indebtedness
being refinanced; and provided further, however,
that if such Refinancing Indebtedness is subordinated to the Loans, such
Guarantee shall be subordinated to such Restricted Subsidiary’s Guaranty to at
least the same extent.

 

“Register” is
defined in Section 2.5(b).

 

“Registration Rights Agreement”
means the registration rights agreement by and among the Company, the
Guarantors and the Administrative Agent on behalf of the Lenders and holders of
Exchange Notes, pursuant to which the Exchange Notes are required to be
registered for public sale.

 

“Regulation D”
means Regulation D of the Board of Governors, as in effect from time to
time.

 

“Regulation U” means any of
Regulations T, U or X of the Board of Governors from time to time in
effect and shall include any successor or other regulations or official
interpretations of the Board of Governors or any successor Person that relate
to the extension of credit for the purpose of purchasing or carrying Margin
Stock and that are applicable to member banks of the Federal Reserve System or
any successor Person.

 

“Related Agreements”
means, collectively, the Acquisition Agreement, the Exchange Note Indenture,
the Exchange Notes, the Registration Rights Agreement, the Engagement Letter
and the Fee Letter.

 

“Related Fund”
means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

 

“Release” means any spilling,
leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, disposing, depositing, dispersing or migrating in,
into, onto or through the Environment.

 

“Remedial Work” is defined in Section 5.13(a)(iv).

 

“Requisite Lenders”
means one or more Lenders having or holding Loan Exposure and representing more
than 50% of the aggregate Loan Exposure of all Lenders.

 

“Restricted Payment” is
defined in Section 6.4.

 

“Restricted Subsidiary” means
any Subsidiary of the Company other than an Unrestricted Subsidiary.

 

“S&P” means
Standard & Poor’s Ratings Group, a division of The McGraw Hill Corporation.

 

“Sale/Leaseback
Transaction” means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Restricted Subsidiary
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.

 

32

 

“SEC” means the
U.S. Securities and Exchange Commission or any successor Governmental
Authority.

 

“Securities Act”
means the Securities Act of 1933, as amended from time to time, and any
successor statute.

 

“Senior Credit Facility”
means the Credit Agreement dated as of December 16, 2004, as amended on
August 31, 2005 (effective as of September 27, 2005), among the
Company, as the Borrower, certain commercial lending institutions, as the
Lenders, Bank of Montreal, acting through its Chicago, Illinois branch, as the
Administrative Agent for the Lenders, Bank of America, N.A., Toronto Dominion
(Texas) LLC and BNP Paribas, as Co-Syndication Agents, Wachovia Bank, National
Association, as Documentation Agent, and Citibank, N.A. and The Bank of Nova
Scotia, as Managing Agents.

 

“Senior Indebtedness” means,
with respect to either the Company or a Guarantor, and whether such Senior
Indebtedness is outstanding on the Closing Date or thereafter Incurred, its
Bank Indebtedness and all amounts payable by it under or in respect of all of
its other Indebtedness (including, without limitation, the Loans), including
premiums and accrued and unpaid interest (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to such Person, at the rate specified in the documentation with respect thereto,
whether or not a claim for post filing interest is allowed in such proceeding)
and fees relating thereto; provided, however,
that Senior Indebtedness will not include any of the following if it
constitutes Indebtedness):

 

(a)       any Indebtedness Incurred in violation of this
Agreement;

 

(b)       any obligation of such Person to any Subsidiary;

 

(c)       any liability for federal, state, foreign, local or
other taxes owed or owing by such Person;

 

(d)       any accounts payable or other liability to trade
creditors of such Person arising in the ordinary course of business (including
Guarantees thereof or instruments evidencing such liabilities);

 

(e)       any Indebtedness, Guarantee or obligation of such
Person that is expressly subordinate or junior in right of payment to any other
Indebtedness, Guarantee or obligation of such Person, including any Senior
Subordinated Indebtedness and any Subordinated Obligations of such Person; or

 

(f)        any Capital Stock of such Person.

 

“Senior Subordinated Indebtedness”
means, with respect to the Company, the 2011 Notes, the 2015 Notes
and the 2017 Notes and, with respect to a Guarantor, its Guarantee, if
any, with respect to the 2011 Notes, the 2015 Notes and the
2017 Notes, and any other Indebtedness of such Person that specifically
provides that such Indebtedness is to rank equally with the 2017 Notes in
right of payment and is not subordinated by its terms in right of payment

 

33

 

to any Indebtedness or other obligation of such Person
which is not Senior Indebtedness of such Person.

 

“Significant Subsidiary” means
any Restricted Subsidiary that would be a “Significant Subsidiary” of the
Company within the meaning of Rule 1-02 under Regulation S-X
promulgated by the SEC.

 

“Solvency Certificate” means
a Solvency Certificate of the chief financial officer of the Company
substantially in the form of Exhibit J.

 

“Solvent” means,
with respect to any Credit Party, that, as of the date of determination, both
(1)(a) the sum of such Credit Party’s Indebtedness (including contingent
liabilities) does not exceed the present fair saleable value of such Credit
Party’s present assets, (b) such Credit Party’s capital is not
unreasonably small in relation to its business as contemplated on the Closing
Date or with respect to any transaction contemplated or undertaken after the
Closing Date and (c) such Person has not incurred and does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due (whether at maturity or
otherwise) and (2) such Person is “solvent” within the meaning given that
term and similar terms under applicable laws relating to fraudulent transfers
and conveyances.  For purposes of this
definition, the amount of any contingent liability at any time shall be
computed as the amount that, in light of all of 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).

 

“Special Interest” means
any and all special interest accruing and becoming due and payable pursuant to
the Registration Rights Agreement.

 

“Subordinated Obligation” means,
with respect to either the Company or a Guarantor, any Indebtedness of such
Person (whether outstanding on the Closing Date or thereafter Incurred) that is
subordinate or junior in right of payment to the Loans or the Guaranty of such
Person, as the case may be, pursuant to a written agreement.

 

“Subsidiary” means, with respect to
any Person, any corporation, partnership, limited liability company,
association, joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled
(without regard to the occurrence of any contingency) to vote in the election
of the Person or Persons (whether directors, managers, trustees or other Persons
performing similar functions) having the power to direct or cause the direction
of the management and policies thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof; provided
that, in determining the percentage of ownership interests of any Person
controlled by another Person, no ownership interest in the nature of a “qualifying
share” of the former Person shall be deemed to be outstanding.  Unless otherwise specified, all references
herein to a Subsidiary mean a Subsidiary of the Company.

 

34

 

“Stated
Maturity” means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision, but shall not include any contingent
obligations to repay, redeem or repurchase any such principal prior to the date
originally scheduled for the payment thereof.

 

“Swap Agreement” means
any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement, whether exchange traded, “over-the-counter”
or otherwise, involving, or settled by reference to, one or more rates,
currencies, commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or
former directors, officers, employees or consultants of the Company or the
Subsidiaries shall be a Swap Agreement.

 

“Syndication Agent”
is defined in the preamble hereto.

 

“Tax” means any
present or future tax, levy, impost, duty, assessment, charge, fee, deduction
or withholding of any nature and whatever called, by whomsoever, on whomsoever
and wherever imposed, levied, collected, withheld or assessed; provided that “Tax on the overall net
income” of a Person shall be construed as a reference to a tax imposed by the
jurisdiction in which that Person is organized or in which that Person’s
applicable principal office (and/or, in the case of a Lender, its lending
office) is located or in which that Person (and/or, in the case of a Lender,
its lending office) is deemed to be doing business on all or part of the net
income, profits or gains (whether worldwide, or only insofar as such income,
profits or gains are considered to arise in or to relate to a particular
jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender,
its applicable lending office).

 

“Transaction Costs”
means the fees, costs and expenses payable by the Company or any of its
Subsidiaries on or before the Closing Date in connection with the transactions
contemplated by the Transaction Documents.

 

“Transaction Documents” means
the Credit Documents and the Related Agreements.

 

“Transactions” means,
collectively, the Acquisition, the related financing transactions and each of
the other transactions contemplated by the Transaction Documents.

 

“Unrestricted Subsidiary” means:

 

(1) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Company in the manner provided below; and

 

(2) any Subsidiary of an Unrestricted
Subsidiary.

 

The Company may designate any Subsidiary of the
Company (including any newly acquired or newly formed Subsidiary or a Person
becoming a Subsidiary through merger or consolidation or Investment therein) to
be an Unrestricted Subsidiary only if:

 

35

 

(a) such Subsidiary
or any of its Subsidiaries does not, at the time of designation or at any time
thereafter, own any Capital Stock or Indebtedness of or have any Investment in,
or own or hold any Lien on any property of, any other Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary;

 

(b) all the
Indebtedness of such Subsidiary and its Subsidiaries (excluding any
Indebtedness owing to the Company or any Restricted Subsidiary) shall, at the
date of designation, and will at all times thereafter, consist of Non-Recourse
Debt;

 

(c) such designation
and the Investment of the Company in such Subsidiary comply with
Section 6.4;

 

(d) such Subsidiary,
either alone or in the aggregate with all other Unrestricted Subsidiaries, does
not operate, directly or indirectly, all or substantially all of the business
of the Company and its Subsidiaries;

 

(e) such Subsidiary
is a Person with respect to which neither the Company nor any of its Restricted
Subsidiaries has any director indirect obligation (i) to subscribe for additional
Capital Stock of such Person or (ii) to maintain or preserve such Person’s
financial condition or to cause such Person to achieve any specified levels of
operating results; and

 

(f) on the date such
Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary with terms substantially less favorable to the
Company or such Restricted Subsidiary, as applicable, than those that might
have been obtained from Persons who are not Affiliates of the Company.

 

Any such designation by the
Company shall be evidenced to the Administrative Agent by filing with the
Administrative Agent an Officers’ Certificate reflecting such designation and
certifying that such designation complies with the preceding conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the foregoing
requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an
Unrestricted Subsidiary for purposes of this Agreement.

 

The Company may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, provided that,
immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof and the Company could Incur at least $1.00 of additional Indebtedness
under Section 6.2(a) on a pro forma basis
taking into account such designation.

 

“U.S.
Dollar-Equivalent” means, with respect to any monetary
amount in a currency other than the U.S. dollar, at or as of any time for the
determination thereof, the amount of U.S. 
dollars obtained by converting such foreign currency involved in such
computation into U.S.  dollars at the
spot rate for the purchase of U.S. dollars with the applicable foreign currency
as quoted by Reuters (or, if Reuters ceases to provide such spot quotations, by
any other reputable service as is providing such spot quotations, as selected
by the Company) at approximately 11:00 a.m. (New York City time) on the date
not more than two Business Days

 

36

 

prior to such determination.  Whenever the definitions in this
Section 1.1 or the provisions of Section 5 or 6 refer to an amount in
U.S. dollars, that amount shall be deemed to refer to the U.S.  Dollar Equivalent of the amount denominated
in any other currency or currency unit, including composite currencies.

 

“U.S.
Government Obligations” means securities that are
(1) direct obligations of the United States of America for the timely
payment of which its full faith and credit is pledged or (2) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely payment of which is
unconditionally guaranteed as a full faith and credit obligation of the United
States of America, that, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as
custodian with respect to any such U.S. Government Obligations or a specific
payment of principal of or interest on any such U.S. Government Obligations
held by such custodian for the account of the holder of such depositary
receipt, provided that (except as
required by law) such custodian is not authorized to make any deduction from
the amount payable to the holder of such depositary receipt from any amount
received by the custodian in respect of the U.S. Government Obligations or the
specific payment of principal of or interest on the U.S. Government Obligations
evidenced by such depositary receipt.

 

“Voting Stock” of a corporation
means all classes of Capital Stock of such corporation then outstanding and
normally entitled to vote in the election of directors.

 

“Welfare Plan” means a “welfare plan,” as such term is
defined under Section 3(1) of ERISA.

 

“Wholly-Owned Subsidiary” means
a Restricted Subsidiary, all of the Capital Stock of which (other than
directors’ qualifying shares) is owned by the Company or another Wholly-Owned
Subsidiary.

 

1.2. Accounting Terms.  Except as otherwise expressly provided
herein, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.  Financial statements and other information
required to be delivered by the Company to the Lenders pursuant to the
provisions of this Agreement shall be prepared in accordance with GAAP as in effect
at the time of such preparation (and delivered together with the reconciliation
statements provided for in Section 5.1(d), if applicable).  Subject to the foregoing, calculations in
connection with the definitions, covenants and other provisions hereof shall
utilize accounting principles and policies in conformity with those used to
prepare the Historical Financial Statements.

 

1.3. Interpretation, etc.  Any of the terms defined herein may, unless
the context otherwise requires, be used in the singular or the plural,
depending on the reference.  References
herein to any Section, Appendix, Schedule or Exhibit shall be to a Section, an
Appendix, a Schedule or an Exhibit, as the case may be, hereof unless otherwise
specifically provided.  The use herein of
the word “include” or “including,” when following any general statement, term
or matter, shall not be construed to limit such statement, term or matter to
the specific items or matters set forth immediately following such word or to
similar items or matters, whether or not

 

37

 

no limiting
language (such as “without limitation” or “but not limited to” or words of
similar import) is used with reference thereto, but rather shall be deemed to
refer to all other items or matters that fall within the broadest possible
scope of such general statement, term or matter.

 

SECTION 2.         LOANS

 

2.1.   Loans.

 

(a)       Loan Commitments.  Subject to
the terms and conditions hereof, each Lender severally agrees to make, on the
Closing Date, a Loan to the Company in an amount equal to such Lender’s Loan
Commitment.  The Company may make only
one borrowing under the Loan Commitments, which borrowing shall be on the date
on which the Acquisition is consummated in accordance with the terms and
conditions of the Acquisition Agreement, but in no event later than
June 30, 2006.  Any amount borrowed
under this Section 2.1(a) and subsequently repaid or prepaid may not be
reborrowed.  Subject to Sections 2.9
and 2.10, all outstanding Loans shall be paid in full no later than the Maturity
Date.  Each Lender’s Loan Commitment
shall terminate immediately and without further action on the Closing Date
after giving effect to the funding of such Lender’s Loan Commitment on such
date.

 

(b)       Borrowing Mechanics.

 

(i)            The Company shall deliver to the Administrative Agent
a fully executed Funding Notice no later than one Business Day prior to the
Closing Date.  Promptly upon receipt by
the Administrative Agent of such Certificate, the Administrative Agent shall
notify each Lender of the proposed borrowing.

 

(ii)           Each Lender shall make its Loan available to the
Administrative Agent not later than 11:00 a.m. (New York City time) on the
Closing Date, by wire transfer of same day funds in Dollars, at the
Administrative Agent’s Principal Office. 
Upon satisfaction or waiver of the conditions precedent specified
herein, the Administrative Agent shall make the proceeds of the Loans available
to the Company on the Closing Date by causing an amount of same day funds in
Dollars equal to the proceeds of all such Loans received by the Administrative
Agent from the Lenders to be credited to the account of the Company at the
Administrative Agent’s Principal Office or to such other account as may be
designated in writing to the Administrative Agent by the Company.

 

2.2.   Option
to Exchange Loans for Exchange Notes.

 

(a)       On any Business Day on or after the first anniversary
of the Closing Date, any Lender may elect to exchange all or any portion of its
Loan for one or more Exchange Notes by giving not less than five Business Days’
prior notice of such election, in the form of Exhibit B hereto, to the
Company, the Administrative Agent and the Exchange Note Trustee specifying the
principal amount of its Loan to be exchanged (which amount shall be at least
$1.0 million and integral multiples of $1,000 in excess thereof) and
subject to the terms of the Exchange Note Indenture, the name of the proposed
registered holder and the amount of each Exchange Note requested (each such
notice, an “Exchange Notice”); provided
that in no event

 

38

 

shall the aggregate principal
amount of the Loans initially exchanged pursuant to this Section 2.2(a) be
less than $50.0 million; and provided further
that any such election by such Lender would be for its own account and not with
a view to distribution in violation of any securities laws. Any such exchanging
Lender shall deliver its Loan Notes to the Administrative Agent within three
Business Days following delivery of an Exchange Notice. Loans exchanged for
Exchange Notes pursuant to this Section 2.2 shall be deemed repaid and
canceled and the Exchange Notes so issued shall be governed by and construed in
accordance with the provisions of the Exchange Note Indenture.

 

(b)           Not later than the third Business Day
after delivery of an Exchange Notice:

 

(i)            the Administrative Agent shall deliver to the Exchange
Note Trustee the original Loan Notes delivered to it by the exchanging Lender
pursuant to Section 2.2(a);

 

(ii)           the Administrative Agent shall cancel each Loan Note so
delivered to it and, if applicable, the Company shall issue a replacement Loan
Note to such Lender in an amount equal to the principal amount of such Lender’s
Loan that is not being exchanged, or the Administrative Agent shall make a
notation on the surrendered Loan Note to the effect that a portion of the Loan
represented thereby has been repaid; and

 

(iii)          the Exchange Note Trustee shall deliver the applicable
Exchange Note(s) to the holder or holders thereof specified in the Exchange
Notice, dated the date of issuance.

 

(c)       Each Exchange Note issued to a Lender pursuant to this
Section 2.2 shall bear interest at a fixed rate equal to the rate per
annum borne by the Loans on the first date that Exchange Notes are issued in
exchange for Loans.

 

(d)       The Exchange Notes to be issued to any Lender shall be issued
in an aggregate principal amount equal to the principal amount specified by
such Lender in the Exchange Notice, payable to such Lender or its nominee in
such amounts as may be specified therein. On the day such Exchange Notes are
issued, the Company shall pay to the Administrative Agent, for account of such
Lender, all unpaid interest accrued to such day on the Loans that are the
subject of the exchange.

 

2.3. Pro Rata Shares.   All Loans shall be made by Lenders simultaneously and
proportionately to their respective Pro Rata Shares, it being understood that
no Lender shall be responsible for any default by any other Lender in such
other Lender’s obligation to make a Loan requested hereunder nor shall any Loan
Commitment of any Lender be increased or decreased as a result of a default by
any other Lender in such other Lender’s obligation to make a Loan requested
hereunder.

 

2.4. Use of Proceeds.   The proceeds of the Loans
made on the Closing Date shall be applied by the Company to fund part of the
purchase price of the Acquisition. No portion of the proceeds of any Credit
Extension shall be used in any manner that causes or might cause such Credit
Extension or the application of such proceeds to violate Regulation T, U
or X of the Board

 

39

 

of Governors or any other
regulation thereof or to violate the Exchange Act. If requested by the
Administrative Agent, the Company will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form U-1 or such other form referred to in
Regulation U, T or X of the Board of Governors, as the case may be.

 

2.5. Evidence of Debt; Register;
Lenders’ Books and Records; Notes

 

(a)       Lenders’ Evidence of Debt. Each Lender shall maintain
on its internal records an account or accounts evidencing the Obligations of the
Company to such Lender, including the amounts of the Loans made by it and each
repayment and prepayment in respect thereof. Any such recordation shall be
conclusive and binding on the Company, absent manifest error; provided that the failure to make any such
recordation, or any error in such recordation, shall not affect the Company’s
Obligations in respect of any applicable Loans.

 

(b)       Register. The Administrative Agent shall maintain at
its Principal Office a register for the recordation of the names and addresses
of the Lenders and Loans of each Lender from time to time (the “Register”). The
Register shall be available for inspection by the Company or any Lender at any
reasonable time and from time to time upon reasonable prior notice. The Administrative
Agent shall record in the Register the Loans, and each repayment or prepayment
in respect of the principal amount of the Loans, and any such recordation shall
be conclusive and binding on the Company and each Lender, absent manifest
error; provided that the failure
to make any such recordation, or any error in such recordation, shall not
affect the Company’s Obligations in respect of any Loan. The Company hereby
designates GSCP to serve as the Company’s agent solely for purposes of
maintaining the Register as provided in this Section 2.5, and the Company
hereby agrees that, to the extent GSCP serves in such capacity, GSCP and its
officers, directors, employees, agents and affiliates shall constitute “Indemnitees.”

 

(c)       Notes. If requested by any Lender upon written notice
to the Company (with a copy to the Administrative Agent) at any time, the
Company shall execute and deliver to such Lender (and/or, if applicable, to any
Person who is an assignee of such Lender pursuant to Section 10.6 and so
specified in such notice) on the Closing Date (or, if such notice is delivered
after the Closing Date, promptly after the Company’s receipt of such notice)
one or more Loan Notes to evidence such Lender’s Loan.

 

2.6. Interest on Loans.

 

(a)       Interest on Loans. From and including the Closing Date
to and excluding the first Interest Payment Date occurring after the Closing
Date, each Loan shall bear interest on the unpaid principal amount thereof for
each day on which such Loan is outstanding at a rate per annum
equal to 6.875%. The interest rate on each Loan will increase by 50 basis
points on each Interest Payment Date occurring after the Closing Date,
including the first Interest Payment Date. Notwithstanding the foregoing, at no
time will the interest rate in effect on a Loan be less than the rate in effect
on the Senior Credit Facility or exceed the Cap.

 

(b)       Interest payable pursuant to this Section 2.6 shall be
computed on the basis of a 360-day year, in each case for the actual number of
days elapsed in the period during

 

40

 

which it accrues. In computing
interest on any Loan, the date of the making of such Loan and the immediately preceding
Interest Payment Date occurring after the Closing Date, as the case may be, shall
be included, and the date of payment of such Loan or the current Interest Payment
Date shall be excluded; provided that,
if a Loan is repaid on the same day on which it is made, one day’s interest
shall be paid on that Loan.

 

(c)       Except as otherwise set forth herein, interest on each Loan
shall be payable in arrears on and to (i) each Interest Payment Date, (ii) upon
any prepayment of that Loan, whether voluntary or mandatory, to the extent
accrued on the amount being prepaid, and (iii) at maturity, including
final maturity.

 

(d)       If Special Interest accrues and becomes payable on or before any
Interest Payment Date occurring more than 395 days after the Closing Date, the
Company and the Guarantors shall pay such Special Interest when and as other
interest becomes payable.

 

2.7. Default Interest.   Upon the occurrence and during the continuance of an
Event of Default, the principal amount of all Loans outstanding and, to the
extent permitted by applicable law, any interest payments on the Loans or any
fees or other amounts owed hereunder shall thereafter bear interest (including
post-petition interest in any proceeding under the Bankruptcy Code or other
applicable bankruptcy laws), payable on demand, at a rate that is 2% per annum
in excess of the interest rate otherwise payable hereunder with respect to the
applicable Loans (or, in the case of any such fees and other amounts, at a rate
that is 2% per annum in excess of the interest rate otherwise payable hereunder
for Loans). Payment or acceptance of the increased rates of interest provided
for in this Section 2.7 is not a permitted alternative to timely payment
and shall not constitute a waiver of any Event of Default or otherwise
prejudice or limit any rights or remedies of the Administrative Agent or any
Lender.

 

2.8. Fees.  
The Company
agrees to pay to the Administrative Agent, for its own account, fees payable
pursuant to the Fee Letter and any other fees agreed upon between the Company
and the Administrative Agent, if any.

 

2.9. Voluntary Prepayments.   At any time and from time to time, the Company may
prepay any Loans on any Business Day in whole or in part in an aggregate minimum
amount of $1.0 million and integral multiples of $1.0 million in
excess of that amount. All such prepayments shall be made upon not less than three
Business Day’s prior written notice given to the Administrative Agent, by
12:00 p.m. (New York City time) on the date required. Upon the giving of
any such notice, the principal amount of the Loans specified in such notice shall
become due and payable on the prepayment date specified therein.

 

2.10. Mandatory Prepayments.

 

(a)       Asset Sales and Receipt of Insurance Proceeds. On or
before the fifth Business Day following any day on which the Company or any Restricted
Subsidiary of the Company (including the Acquired Business) receives any Net
Proceeds, the Company shall apply such Net Proceeds towards the prepayment of
the Loans in an aggregate amount equal to 100% of such Net Proceeds (together
with any other Indebtedness that is pari
passu with the Loans containing provisions similar to those set
forth in this Agreement with respect to

 

41

 

prepayments or offers to purchase
or redeem with the proceeds of sales of assets). If the aggregate principal
amount of Loans and other pari passu
Indebtedness required to be prepaid, purchased or redeemed with Net Proceeds
exceeds the amount of Net Proceeds, the prepayment, purchase or redemption
shall be made on a pro rata basis.

 

(b)       Issuance of Equity Securities. On or before the fifth
Business Day following the date of receipt by the Company or any Restricted Subsidiary
of the Company (including the Acquired Business) of any Cash proceeds from any
direct or indirect offering or private placement of any equity securities
(including a capital contribution to, or the issuance of any Capital Stock of, the
Company or any such Restricted Subsidiary, but excluding any such offering or
private placement (i) by the Company to a Restricted Subsidiary or by a Restricted
Subsidiary to the Company or another Restricted Subsidiary or (ii) by the
Company or a Restricted Subsidiary pursuant to restricted
stock plans, long-term incentive plans, stock appreciation rights plans, employee
participation plans or similar employee benefits plans), the
Company shall prepay the Loans in an aggregate amount equal to 100% of such
proceeds, net of underwriting discounts and commissions and other reasonable
costs and expenses associated therewith, including reasonable legal fees and
expenses.

 

(c)       Issuance of Indebtedness. On or before the fifth
Business Day following the date of receipt by the Company or any Restricted Subsidiary
of the Company (including the Acquired Business) of any Cash proceeds from the
incurrence of any Indebtedness (other than with respect to any Indebtedness
incurred under the Senior Credit Facility (including the increase of commitments
permitted thereunder) as in effect on the Closing Date and borrowings of up to
$100.0 million under money market lines) by the Company or any such
Restricted Subsidiary, the Company shall prepay the Loans in an aggregate
amount equal to 100% of such Cash proceeds, net of underwriting discounts and
commissions and other reasonable costs and expenses associated therewith,
including reasonable legal fees and expenses (“Net
Issuance Proceeds”); provided that
no prepayment shall be required under this Section 2.10(c) prior to July 14,
2006, if (i) all Net Issuance Proceeds received prior to such date by the
Company or any of its Restricted Subsidiaries are used to repay amounts
outstanding under the Senior Credit Facility or to prepay the Loans and (ii) the
amounts undrawn and available to the Company for immediate drawing under the Senior
Credit Facility are, at all times after the Company or any of its Restricted
Subsidiaries receives any such Net Issuance Proceeds and prior to July 14,
2006, greater than or equal to the amount of Net Issuance Proceeds used to repay
amounts outstanding under the Senior Credit Facility.

 

(d)       Priority of Senior Credit Facility. Notwithstanding the
provisions of Sections 2.10(a) and (c), if the Senior Credit Facility (as
in effect on the date hereof) requires the Company or any Restricted Subsidiary
to apply any Net Proceeds or proceeds from the issuance of Indebtedness to
repay any amounts then outstanding under the Senior Credit Facility, then
mandatory prepayment of the Loans shall be required pursuant to such Sections
only (i) following the satisfaction in full or waiver of the required
payment under the Senior Credit Facility and (ii) to the extent of any Net
Proceeds or proceeds from the issuance of Indebtedness that remains after
application of such amounts to required payments under the Senior Credit
Facility.

 

42

 

(e)       Prepayment Certificate. Concurrently with any
prepayment of the Loans pursuant to Sections 2.10(a) through (c), the
Company shall deliver to the Administrative Agent a certificate of an
Authorized Officer demonstrating the calculation of the amount of the
applicable net proceeds. In the event that the Company shall subsequently
determine that the actual amount received exceeded the amount set forth in such
certificate, the Company shall promptly make an additional prepayment of the
Loans in an amount equal to such excess, and the Company shall concurrently
therewith deliver to the Administrative Agent a certificate of an Authorized
Officer demonstrating the derivation of such excess.

 

2.11. General Provisions Regarding Payments.

 

(a)       All payments by the Company of principal, interest, fees and
other Obligations shall be made in Dollars in same day funds, without defense,
set-off or counterclaim, free of any restriction or condition, and delivered to
the Administrative Agent not later than 12:00 p.m. (New York City time) on
the date due at the Administrative Agent’s Principal Office for the account of the
Lenders. Funds received by the Administrative Agent after that time on such due
date shall be deemed to have been paid by the Company on the next succeeding
Business Day.

 

(b)       All payments in respect of the principal amount of any Loan
shall be accompanied by payment of accrued interest on the principal amount
being repaid or prepaid.

 

(c)       The Administrative Agent shall promptly distribute to each
Lender, at such address as such Lender shall indicate in writing, such Lender’s
applicable Pro Rata Share of all payments and prepayments of principal and
interest due hereunder, together with all other amounts due thereto, including
all fees payable with respect thereto, to the extent received by the
Administrative Agent.

 

(d)       Whenever any payment to be made hereunder shall be stated to
be due on a day that is not a Business Day, such payment shall be made on the
next succeeding Business Day and such extension of time shall be included in
the computation of the payment of interest hereunder.

 

2.12. Ratable Sharing.   The Lenders hereby agree among themselves
that, if any of them shall, whether by voluntary payment (other than a
voluntary prepayment of Loans made and applied in accordance with the terms
hereof), through the exercise of any right of set-off or banker’s lien, by counterclaim
or cross action or by the enforcement of any right under the Credit Documents
or otherwise, or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of the
aggregate amount of principal, interest, fees and other amounts then due and
owing to such Lender hereunder or under the other Credit Documents
(collectively, the “Aggregate Amounts Due”
to such Lender) that is greater than the proportion received by any other Lender
in respect of the Aggregate Amounts Due to such other Lender, then the Lender
receiving such proportionately greater payment shall (a) notify the
Administrative Agent and each other Lender of the receipt of such payment and
(b) apply a portion of such payment to purchase participations (which it
shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all such

 

43

 

recoveries of Aggregate
Amounts Due shall be shared by all Lenders in proportion to the Aggregate
Amounts Due to them; provided that,
if all or part of such proportionately greater payment received by such
purchasing Lender is thereafter recovered from such Lender upon the bankruptcy
or reorganization of the Company or otherwise, those purchases shall be
rescinded and the purchase prices paid for such participations shall be
returned to such purchasing Lender ratably to the extent of such recovery, but
without interest. The Company expressly consents to the foregoing arrangement
and agrees that any holder of a participation so purchased may exercise any and
all rights of banker’s lien, set-off or counterclaim with respect to any and
all monies owing by the Company to that holder with respect thereto as fully as
if that holder were owed the amount of the participation held by that holder.

 

2.13. Booking of Loans.   Any Lender may make, carry or transfer Loans
at, to, or for the account of any of its branch offices or the office of an
Affiliate of such Lender.

 

2.14. Taxes; Withholding, etc.

 

(a)       Payments to Be Free and Clear. All sums payable by any
Credit Party hereunder and under the other Credit Documents shall (except to
the extent required by law) be paid free and clear of, and without any
deduction or withholding on account of, any Tax (other than a Tax on the
overall net income of any Lender) imposed, levied, collected, withheld or
assessed by or within the United States of America or any political subdivision
in or of the United States of America or any other jurisdiction from or to
which a payment is made by or on behalf of any Credit Party or by any
federation or organization of which the United States of America or any such
jurisdiction is a member at the time of payment.

 

(b)       Withholding of Taxes. If any Credit Party or any other
Person is required by law to make any deduction or withholding on account of
any such Tax from any sum paid or payable by any Credit Party to the
Administrative Agent or any Lender under any of the Credit Documents, (i) the
Company shall notify the Administrative Agent of any such requirement or any
change in any such requirement as soon as the Company becomes aware of it,
(ii) the Company shall pay any such Tax before the date on which penalties
attach thereto, such payment to be made (if the liability to pay is imposed on
any Credit Party) for its own account or (if that liability is imposed on the
Administrative Agent or such Lender, as the case may be) on behalf of and in
the name of the Administrative Agent or such Lender, (iii) the sum payable
by such Credit Party in respect of which the relevant deduction, withholding or
payment is required shall be increased to the extent necessary to ensure that,
after the making of that deduction, withholding or payment, the Administrative
Agent or such Lender, as the case may be, receives on the due date a net sum
equal to what it would have received had no such deduction, withholding or
payment been required or made and (iv) within 30 days after paying
any sum from which it is required by law to make any deduction or withholding,
and within 30 days after the due date of payment of any Tax that it is
required by clause (ii) above to pay, the Company shall deliver to the
Administrative Agent evidence satisfactory to the other affected parties of
such deduction, withholding or payment and of the remittance thereof to the
relevant taxing or other authority; provided
that no such additional amount shall be required to be paid to any Lender under
clause (iii) above with
respect to any U.S. federal
withholding Taxes that are in effect as of the date hereof that would apply to
amounts payable under any Credit Documents.

 

44

 

(c)       Evidence of Exemption From U.S. Withholding Tax. Each
Lender that is not a United States Person (as such term is defined in
Section 7701(a)(30) of the Internal Revenue Code) for U.S. federal income
tax purposes (a “Non-U.S. Lender”) shall
deliver to the Administrative Agent for transmission to the Company, on or
prior to the Closing Date (in the case of each Lender listed on the signature
pages hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other
Lender), and at such other times as may be necessary in the determination of the
Company or the Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of Internal Revenue Service
Form W-8BEN (establishing a reduction in or exemption from withholding of
U.S. federal income tax under an applicable treaty) or W-8ECI (or any successor
forms), properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and reasonably requested
by the Company to establish that such Lender is entitled to a reduction in or
is exempt from U.S. federal income tax with respect to any payments to such
Lender of principal, interest, fees or other amounts payable under any of the
Credit Documents, or (ii) if such Lender is not a “bank” or other Person
described in Section 881(c)(3) of the Internal Revenue Code, a Certificate
of Non-Bank Status together with two original copies of Internal Revenue
Service Form W-8BEN (or any successor forms), properly completed and duly
executed by such Lender, and such other documentation required under the
Internal Revenue Code and reasonably requested by the Company to establish that
such Lender is exempt from withholding of U.S. federal income tax with respect
to any payments to such Lender of interest payable under any of the Credit
Documents. Each Lender required to deliver any forms, certificates or other
evidence with respect to U.S. federal income tax withholding matters pursuant
to this Section 2.14(c) hereby agrees, from time to time after the initial
delivery by such Lender of such forms, certificates or other evidence, whenever
a lapse in time or change in circumstances renders such forms, certificates or
other evidence obsolete or inaccurate in any material respect, that such Lender
shall promptly deliver to the Administrative Agent for transmission to the
Company two new original copies of Internal Revenue Service Form W-8BEN or
W-8ECI, or a Certificate of Non-Bank Status and two original copies of Internal
Revenue Service Form W-8BEN (or any successor forms), as the case may be,
properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and reasonably requested
by the Company to confirm or establish that such Lender is entitled to a
reduction in or is exempt from withholding of U.S. federal income tax with
respect to payments to such Lender under the Credit Documents, or notify the
Administrative Agent and the Company of its inability to deliver any such
forms, certificates or other evidence. The Company shall not be required to pay
any additional amount to any Non-U.S. Lender under Section 2.14(b)(iii) if
such Lender shall have failed to deliver the forms, certificates or other
evidence referred to in this Section 2.14(c); provided that nothing in this last sentence of Section 2.14(c)
shall relieve the Company of its obligation to pay any additional amounts pursuant
to this Section 2.14 in the event that, as a result of any change after
the date hereof in any applicable law, treaty or governmental rule, regulation
or order, or any change in the interpretation, administration or application
thereof, such Lender is no longer properly entitled to deliver forms,
certificates or other evidence.

 

45

 

SECTION 3. CONDITIONS
PRECEDENT

 

3.1. General Conditions.   The obligation of any Lender to make a
Loan on the Closing Date is subject to the satisfaction, or waiver in
accordance with Section 10.5, of the following conditions on or before the
Closing Date:

 

(a)       Credit Documents. The Administrative Agent shall have
received sufficient copies of each Credit Document originally executed and
delivered by each applicable Credit Party for each Lender.

 

(b)       Organic Documents; Incumbency. The Administrative Agent
shall have received (i) sufficient copies of each Organic Document
executed and delivered by each Credit Party, as applicable, and, to the extent
applicable, certified as of a recent date by the appropriate governmental
official, for each Lender, each dated the Closing Date or a recent date prior
thereto, (ii) signature and incumbency certificates of the officers of
such Person executing the Credit Documents to which it is a party, (iii) resolutions
of the Board of Directors or similar governing body of each Credit Party
approving and authorizing the execution, delivery and performance of this
Agreement and the other Credit Documents and the Related Agreements to which it
is a party or by which it or its assets may be bound as of the Closing Date,
certified as of the Closing Date by its secretary or an assistant secretary as
being in full force and effect without modification or amendment, (iv) a
good-standing certificate from the applicable Governmental Authority of each
Credit Party’s jurisdiction of incorporation, organization or formation, each
dated a recent date prior to the Closing Date, and (v) such other
documents as the Administrative Agent may reasonably request, in each case,
satisfactory to the Administrative Agent.

 

(c)       Organizational Structure. The organizational structure
of the Company and its Subsidiaries, both before and after giving effect to the
Acquisition, shall be as set forth on Schedule 3.1.

 

(d)       Acquisition Agreement. The Syndication Agent and the
Administrative Agent shall each have received a fully executed or conformed
copy of the Acquisition Agreement and any documents executed in connection
therewith.

 

(e)       Transaction Costs. On or prior to the Closing Date, the
Company shall have delivered to the Administrative Agent the Company’s
reasonable best estimate of the Transaction Costs (other than fees payable to
any Agent).

 

(f)        Governmental Approvals and Consents. All necessary
Governmental Approvals, shareholder and third-party approvals and consents
necessary or desirable in connection with the Acquisition and the financing
thereof and the transactions contemplated thereby and contemplated by the Transaction
Documents shall have been received and shall be in full force and effect, and
all applicable waiting periods shall have expired without any action being
taken by any applicable authority. The Administrative Agent, in its sole
discretion, shall be satisfied that the borrowings under the Loans and the
performance by the Company of the transactions contemplated by the this
Agreement, the Fee Letter and the Engagement Letter, including the issuance of
the Permanent Securities and the repayment of the Loans at maturity

 

46

 

or upon a mandatory repayment
event, will not conflict with, result in a breach or violation of any of the
terms or provisions of, require a waiver or amendment to, or constitute a
default under the Senior Credit Facility, the indentures governing the 2011 Notes,
the 2015 Notes or the 2017 Notes or any other agreement governing
material indebtedness of the Company or its subsidiaries.

 

(g)       Financial Statements. The Lenders shall have received
from the Company the Historical Financial Statements.

 

(h)       Opinions of Counsel to Credit Parties. The Lenders and
their respective counsel shall have received originally executed copies of the
favorable written opinions of (i) Baker Botts L.L.P., counsel for the
Credit Parties, in the form of Exhibit E and (ii) and Michael J.
Killelea, general counsel of the Company, in the form of Exhibit F, and in
each case as to such other matters as the Administrative Agent may reasonably
request, dated as of the Closing Date and otherwise in form and substance
reasonably satisfactory to the Administrative Agent (and each Credit Party
hereby instructs such counsel to deliver such opinions to the Agents and the
Lenders).

 

(i)        Solvency Certificate. On the Closing Date, the
Administrative Agent shall have received a Solvency Certificate from the chief
financial officer of the Company, dated the Closing Date and addressed to the Syndication
Agent, the Administrative Agent and the Lenders, and in form, scope and
substance satisfactory to the Syndication Agent and the Administrative Agent,
stating that, to the best of his or her knowledge, information and belief,
after giving effect to the consummation of the Acquisition, the Company and its
Subsidiaries are and will be Solvent.

 

(j)        Closing Date Certificate. The Company shall have
delivered to the Administrative Agent an originally executed Closing Date
Certificate, together with all attachments thereto.

 

(k)       No Litigation. There shall not exist any action, suit,
investigation, litigation or proceeding or other legal or regulatory
developments, pending or threatened in any court or before any arbitrator or
Governmental Authority that, in the opinion of the Administrative Agent and the
Syndication Agent, materially affects any of the Transactions or to constitute
or result in a Material Adverse Effect or a material adverse effect on the
Acquired Business, the Acquisition, the financing thereof or any of the
transactions contemplated thereby.

 

(l)        No Breach Under Engagement Letter or Fee Letter. Neither
the Company nor any Guarantor shall be in breach or violation of any of its
obligations under the Engagement Letter or the Fee Letter and each of the
Engagement Letter and the Fee Letter shall be in full force and effect.

 

(m)      Funding Notice. The Administrative Agent shall have
received a fully executed and delivered Funding Notice at least one Business
Day prior to the Closing Date.

 

47

 

(n)       Representations and Warranties. The representations and
warranties contained herein and in the other Transaction Documents shall be
true and correct in all material respects on and as of that Credit Date to the
same extent as though made on and as of that date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties shall have been true and correct in
all material respects on and as of such earlier date.

 

(o)       No Default or Event of Default. No event shall have occurred
and be continuing or would result from the consummation of the applicable
Credit Extension that would constitute an Event of Default or a Default.

 

(p)       Patriot Act Information. The Administrative Agent shall
have received all documentation and other information on its behalf and on
behalf of the Lenders in order to comply with their obligations under
applicable “know your customer” and anti-money laundering rules and
regulations, including the USA Patriot Act.

 

Each Lender, by
delivering its signature page to this Agreement and funding a Loan on the
Closing Date, shall be deemed to have acknowledged receipt of, and consented to
and approved, each Credit Document and each other document required to be
approved by any Agent, Requisite Lenders or Lenders, as applicable on the
Closing Date.

 

Any Agent or Requisite
Lenders shall be entitled, but not obligated to, request and receive, prior to
the making of any Loan, additional information reasonably satisfactory to the
requesting party confirming the satisfaction of any of the foregoing if, in the
good faith judgment of such Agent or the Requisite Lender such request is
warranted under the circumstances.

 

3.2. Concurrent Transactions.   The Acquisition shall have been
consummated pursuant to the Acquisition Agreement, without any adjustment in
the purchase price (except as contemplated by the Acquisition Agreement) and
all conditions precedent to the consummation of the Acquisition shall have been
satisfied or, with the prior approval of the Administrative Agent, waived. On a
pro forma basis, neither the Company nor
any of its Subsidiaries shall have any debt for borrowed money or equity
outstanding, except (a) debt and equity outstanding as of the date of the
Commitment Letter, (b) up to $500.0 million
of borrowings under this Agreement, (c) no more than $975.0 million of
borrowings and letters of credit outstanding under the Senior Credit Facility and
the Company’s money market lines and (d) common stock issued upon exercise
of employee or director stock options or otherwise pursuant to employee benefit
plans. There shall not exist (pro forma for
the Acquisition and the financing thereof) any default or event of default
under the Senior Credit Facility, the Loans, this Agreement, any other Credit
Documents or any other material Indebtedness of the Company or its Subsidiaries.

 

3.3. New Information.   The Administrative Agent shall not have
become aware of any information relating to conditions or events not previously
described to the Administrative Agent or constituting new information or
additional developments concerning conditions or events previously disclosed to
the Administrative Agent that the Administrative Agent, in its judgment,
believes may have a material adverse effect on the condition (financial or
otherwise), assets, liabilities (contingent or otherwise), properties,
solvency, business, management or prospects of

 

48

 

the Company, the Acquired
Business, the Acquisition or the transactions contemplated by this Agreement.

 

3.4. Absence of Certain Changes.   No change in the capital stock or
long-term debt arrangements of the Company or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position, stockholders’
equity, results of operations or prospects of the Company or the Company and
their respective subsidiaries shall have occurred since December 31, 2005
(the date of the most recent audited financial statements that have been
delivered to the Lenders as of the date hereof), and no material inaccuracy in
such financial statements shall exist. The Company shall have no material
liabilities except those set forth on the audited balance sheets dated December 31,
2005, and those incurred in the ordinary course of business since such dates in
amounts that are consistent with past practice.

 

3.5. Availability under Senior Credit
Facility and Money Market Lines. 
 After giving effect to the consummation of the
Acquisition and the payment of all Transaction Costs and other amounts payable
in connection therewith, the Company shall have at least $75.0 million
undrawn and available to it for immediate drawing under the Senior Credit
Facility and money market lines.

 

3.6. Performance of Obligations.   All costs, fees and expenses (including
legal fees and expenses) due to the Lenders, GSCP, Goldman Sachs or the
Administrative Agent on or before the Closing Date (including the fees payable
pursuant to Section 2.8) in connection with this Agreement, the Loans, the
Commitment Letter, the Fee Letter, the Engagement Letter or otherwise shall
have been paid in full. The Company shall have complied with all of its other
obligations under the Commitment Letter, the Fee Letter and the Engagement
Letter.

 

SECTION 4. REPRESENTATIONS
AND WARRANTIES

 

In order to induce the
Lenders to enter into this Agreement and to make the Loans, each Credit Party
represents and warrants to each Lender, on the Closing Date, that the following
statements are true and correct (it being understood and agreed that the
representations and warranties made on the Closing Date are deemed to be made
concurrently with, and after giving effect to, the consummation of the
Acquisition):

 

4.1. Organization, etc.   The Company and each of its Restricted Subsidiaries that
is a corporation is validly organized and existing and in good standing under
the laws of the State, or country, of its incorporation, and is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification,
except where failure to qualify could not reasonably be expected to have a
Material Adverse Effect. Each of the Company’s Restricted Subsidiaries that is
a partnership or a limited liability company is validly formed or organized and
existing and in good standing under the laws of the state of its formation or
organization, and is duly qualified to do business and is in good standing as a
foreign partnership or limited liability company where the nature of its
business requires such qualification, except where failure to qualify could not
reasonably be expected to have a Material Adverse Effect. The Company has full
corporate power and

 

49

 

authority and holds all
requisite Governmental Approvals to enter into and perform its obligations in
respect of the Transactions and to own and hold under lease its property and to
conduct its business substantially as currently conducted by it, except where
the failure to have such Governmental Approvals could not reasonably be
expected to have a Material Adverse Effect.

 

4.2. Due Authorization, Non-Contravention,
etc.   The execution, delivery and performance by the Company
of this Agreement and each other Transaction Document executed, or to be
executed, by it are within the Company’s corporate powers, have been duly
authorized by all necessary corporate action, as the case may be, and do not (a) contravene
the Company’s Organic Documents, (b) contravene any contractual
restriction, law or governmental regulation or court decree or order binding on
or affecting the Company, (c) result in, or require the creation or
imposition of, any Lien on any properties of the Company or (d) violate,
or result in a default under, any indenture, agreement or other instrument
binding upon the Company or any of its Subsidiaries or its Properties, or give
rise to a right thereunder to require any payment to be made by the Company or
such Subsidiary.

 

4.3. Government Approval, Regulation, etc.   No Governmental Approval or other action by any
Governmental Authority is required for the due execution, delivery or
performance by the Company of this Agreement or any other Transaction Document
executed or to be executed by it, except for the filing of this Agreement with
the SEC as a material document under Item 601(b) of Regulation S-K. Neither
the Company nor any of its Subsidiaries is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,”
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.

 

4.4. Validity, etc.   This Agreement constitutes, and each other Transaction
Document executed by the Company will, on the due execution and delivery
thereof, constitute, the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms
except as such enforceability is subject to the effect of (a) any
applicable bankruptcy, insolvency, reorganization or other similar law relating
to or affecting creditors’ rights generally and (b) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law), including concepts of materiality, reasonableness, good
faith and fair dealing.

 

4.5. Financial Information.   The Historical Financial Statements, copies of
which have been furnished to the Administrative Agent and each Lender, have
been prepared in accordance with GAAP consistently applied, and present fairly
in all material respects the consolidated financial condition of the Company
and its Consolidated Subsidiaries and Consolidated Affiliates as at the dates
thereof and the results of their operations for the periods then ended subject,
in the case of any available consolidated balance sheet of March 31, 2006,
and related consolidated statements of income and cash flow as of such date, to
the making of normal year-end audit adjustments and the year-end addition of
notes required pursuant to GAAP.

 

4.6. No Material Adverse Change.   Except as disclosed to the Administrative
Agent in writing, since December 31, 2005, there has been no material
adverse change, or any

 

50

 

development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity or results of operations
of the Company and its subsidiaries, taken as a whole, or the Acquired Business
and its subsidiaries, taken as a whole.

 

4.7. Litigation, etc.   There is no pending or, to the knowledge of the
Company, threatened labor controversy, litigation, action, or proceeding
against the Company or any of its Consolidated Subsidiaries or Consolidated
Affiliates, or any of their respective properties or revenues, that has a
significant probability of consequences that could reasonably be expected to
have a Material Adverse Effect, except as disclosed in Schedule 4.7
(“Litigation”), or that purports
to affect the legality, validity or enforceability of this Agreement or any
other Transaction Document; provided that the
Company’s representation with respect to the absence of pending litigation
against its Consolidated Affiliates is limited to the Company’s knowledge. Neither
the Company nor any of its Subsidiaries is in default with respect to any
judgment, order, writ, injunction, decree, rule or regulation of any
Governmental Authority applicable to or binding on it, which default could
reasonably be expected to have a Material Adverse Effect.

 

4.8. Subsidiaries.   As of the Closing Date, the Company has
no Subsidiaries or Consolidated Affiliates, except those that are identified on
Schedule 4.8. As of the Closing Date, each Subsidiary of the
Company is either a Restricted Subsidiary or an Unrestricted Subsidiary as
identified on Schedule 4.8 (“Existing
Subsidiaries and Affiliates”). As of the Closing Date, the Company
is the record or beneficial owner of the ownership interest of each such
Subsidiary that is identified on Schedule 4.8. Such ownership
interests are free and clear of any Liens, including claims arising out of any
preemptive rights granted in connection with the issuance of any such ownership
interests, except for inchoate Liens existing at law. All ownership interests
are duly issued, fully paid and nonassessable and there are no outstanding
options, warrants or other rights entitling the holder thereof to purchase any
of the ownership interests of any such Subsidiary except as disclosed on Schedule 4.8.

 

4.9. Ownership of Properties.   The Company
and each of its Restricted Subsidiaries has marketable title to all of its real
properties and good title to, or has the right to use, all of its personal
property, tangible and intangible, of any nature whatsoever (including
concession agreements, patents, trademarks, trade names, service marks and
copyrights), and all properties and assets and all revenues (present and
future) of the Company and its Restricted Subsidiaries are free and clear of
all Liens or other charges or claims (including infringement claims with
respect to patents, trademarks, copyrights and the like), except (a) as to
any such charges or claims are disclosed in the Company’s most recent
Form 10-K filed with the SEC and (b) other Liens permitted under
Section 6.3.

 

4.10. Taxes.   The Company
and each of its Subsidiaries has filed all tax returns and reports required by
law to have been filed by it and has paid all taxes and governmental charges
thereby shown to be owing, except any such taxes or charges that are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP have been set aside on its books.

 

4.11. ERISA.   During the 12-consecutive-month period
prior to the date of this Agreement, no steps have been taken to terminate any
Pension Plan, and no contribution failure

 

51

 

has occurred with respect
to any Pension Plan sufficient to give rise to a Lien under Section 302(f)
of ERISA. No condition exists or event or transaction has occurred with respect
to any Pension Plan that could reasonably be expected to result in the
incurrence by the Company or any member of the Controlled Group of any material
liability, fine or penalty.

 

4.12. Environmental Matters.   Except as set forth in Schedule 4.12:

 

(a)       all facilities and property (including underlying groundwater)
owned, leased or operated by the Company or any of its Subsidiaries have been
and are owned, leased or operated by the Company and its Subsidiaries in
compliance with all Environmental Laws, except where the failure to so comply
could not be reasonably expected to have a Material Adverse Effect;

 

(b)       there are no pending or, to the best actual knowledge of the
Company, threatened (i)  Environmental Claims; (ii) notices or inquiries
to, or requests for information received by, the Company or any of its
Subsidiaries regarding any Environmental Claim, in either case that, singly or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect;

 

(c)       there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned, leased or operated by the Company
or any of its Subsidiaries that, singly or in the aggregate, could reasonably
be expected to have a Material Adverse Effect;

 

(d)       the Company and its Subsidiaries have been issued and are in
compliance with all Governmental Approvals relating to environmental matters
that are necessary for their businesses, except where the failure to have or to
comply with such Governmental Approvals could not be reasonably expected to
have a Material Adverse Effect;

 

(e)       neither the Company nor any Subsidiary has actual knowledge
that any property now or previously owned, leased or operated by the Company or
any of its Subsidiaries is listed or proposed for listing (with respect to
owned property only) on the National Priorities List pursuant to CERCLA, on the
CERCLIS or on any similar state list of sites requiring investigation or clean-up,
or is subject to any corrective action or closure obligations, where the
anticipated costs to the Company and its Subsidiaries to comply with CERCLA or
the applicable Environmental Law could reasonably be expected to have a
Material Adverse Effect;

 

(f)        there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously
owned, leased or operated by the Company or any of its Subsidiaries where the
anticipated costs to the Company and its Subsidiaries to bring such property
into compliance could reasonably be expected to have a Material Adverse Effect;

 

(g)       neither the Company nor any of its Subsidiaries has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location that, to the best actual knowledge of the Company, is listed
or proposed for listing on the National

 

52

 

Priorities List pursuant to CERCLA,
on the CERCLIS or on any similar state list or a site that currently is the
subject of enforcement actions or other investigations by a Governmental
Authority that could reasonably be expected to lead to claims against the
Company or such Subsidiary under any Environmental Law that could reasonably be
expected to have a Material Adverse Effect;

 

(h)       there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned, leased or operated by the
Company or any Subsidiary of the Company that, singly or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; and

 

(i)        to the best actual knowledge of the Company, no circumstances
or conditions exist at, on or under any property now or previously owned,
leased or operated by the Company that, with the passage of time, or the giving
of notice or both, would give rise to any Environmental Claims or liability or
compliance obligations under any Environmental Law that could reasonably be
expected to have a Material Adverse Effect.

 

4.13. Absence of Defaults.   No Default exists. As of the Closing
Date, neither the Company nor any of its Restricted Subsidiaries is in default
under any material agreement or instrument governing Indebtedness to which any
of them is a party.

 

4.14. Regulation U.   The Company is not engaged in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock, and no proceeds of any Loans will be used for a purpose that violates,
or would be inconsistent with, Regulation U. Terms for which meanings are
provided in Regulation U or any regulations substituted therefor, as from time
to time in effect, are used in this Section with such meanings.

 

4.15. Disclosure; No Material Misstatement.   The Company has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and corporate
or other restrictions to which it or any of its Subsidiaries is subject, and
all other matters known to it (other than matters generally applicable to Persons
engaged principally in the Oil and Gas Business), that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
The reports, financial statements and certificates filed by the Company or any of
its Subsidiaries with the SEC or furnished by or on behalf of the Company or
any of its Subsidiaries to the Administrative Agent or any Lender or any of
their Affiliates in connection with the negotiation of this Agreement or any
other Transaction Document or delivered hereunder or under any other
Transaction Document (as modified or supplemented by other information so
furnished), taken as a whole, do not, as of the date hereof, contain any
material misstatement of fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided
that, with respect to projected financial and other forward-looking information,
the Company represents only that such information was prepared in good faith
based upon assumptions believed by management of the Company to be reasonable
at the time, it being understood that such
projected financial and other forward-looking information is not to be viewed
as facts, that actual results during the period or periods covered thereby may
differ from such projected financial and other forward-looking information and
that such differences may be material. There is no fact peculiar to the
Company or any Subsidiary (and not generally applicable to

 

53

 

Persons engaged
principally in the Oil and Gas Business) that could reasonably be expected to
have a Material Adverse Effect and that has not been set forth in this
Agreement or the Transaction Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf
of the Company or any Subsidiary prior to, or on, the date hereof in connection
with the transactions contemplated hereby. There are no statements or
conclusions in any reserve report (i) delivered to the Company and
prepared as of the end of the Company’s most recently completed fiscal year or
(ii) delivered on behalf of the Acquired Business to the Company in
connection with the Acquisition, that, to the knowledge of the Company in the
case of the foregoing clause (ii), are based upon or include materially misleading
information or fail to take into account material information regarding the
matters reported therein, it being understood that projections concerning
volumes attributable to the Oil and Gas Properties and production and cost
estimates contained in each such reserve report are necessarily based upon
professional opinions, estimates and projections and that the Company and the
Subsidiaries do not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.

 

4.16. Solvency.   After giving effect to the transactions
contemplated hereby, including the Acquisition and the financing thereof, (a) the
aggregate assets (after giving effect to amounts that could reasonably be
received by reason of indemnity, offset, insurance or any similar arrangement),
at a fair valuation, of the Company and its Subsidiaries, taken as a whole, will
exceed the aggregate Indebtedness of the Company and its Subsidiaries, taken as
a whole, on a consolidated basis, as the Indebtedness becomes absolute and
matures, (b) each of the Company and each of its Subsidiaries will not
have incurred or intended to incur, and will not believe that it will incur,
Indebtedness beyond its ability to pay such Indebtedness (after taking into
account the timing and amounts of cash to be received by the Company and the
amounts to be payable on or in respect of its liabilities, and giving effect to
amounts that could reasonably be received by reason of indemnity, offset,
insurance or any similar arrangement) as such Indebtedness becomes absolute and
matures and (c) each of the Company and each of its Subsidiaries will not
have (and will have no reason to believe that it will have thereafter)
unreasonably small capital for the conduct of its business.

 

4.17. Transaction Documents.

 

(a)       Delivery. The Company has delivered to the Syndication
Agent and the Administrative Agent complete and correct copies of (i) each
Transaction Document and of all exhibits and schedules thereto as of the date
hereof and (ii) copies of any material amendment, restatement, supplement
or other modification to or waiver of each Transaction Document entered into
after the date hereof.

 

(b)       Governmental Approvals. All material Governmental Approvals
and all other material authorizations, approvals and consents of any other
Person required by the Transaction Documents or to consummate the Acquisition
have been obtained and are in full force and effect.

 

(c)       Conditions Precedent. On the Closing Date, (i) all
of the conditions to effecting or consummating the Acquisition set forth in the
Transaction Documents have been

 

54

 

duly satisfied or, with the
consent of the Administrative Agent, waived and (ii) the Acquisition has
been consummated in accordance with the Acquisition Agreements and all
applicable laws.

 

4.18. Private Offering; Rule 144A Matters

 

(a)       Neither the Company nor any Subsidiary of the Company has
issued or sold Loans, the instruments evidencing such Loans, or Exchange Notes
to anyone other than the Lenders. No securities of the same class as the Loans,
the instruments evidencing such Loans, or the Exchange Notes have been issued
or sold by the Company or any Subsidiary of the Company within the six-month
period immediately prior to the date hereof. The Company agrees that none of
it, any Subsidiary of the Company or anyone acting on their behalf, will
(i) offer the Loans, the instruments evidencing such Loans or the Exchange
Notes so as to subject the making, issuance and/or sale of the Loans, the instruments
evidencing such Loans or the Exchange Notes, to the registration or prospectus
delivery requirements of the Securities Act or (ii) offer any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect to the same with,
anyone if the issuance or sale of the Loans, the instruments evidencing such
Loans, the Exchange Notes and any such securities would be integrated as a
single offering for the purposes of the Securities Act, including Regulation D
thereunder, in such a manner as would require registration under the Securities
Act thereof. Each Loan Note and (subject to the terms of the Exchange Note
Indenture) each of the Exchange Notes shall have a legend setting forth the
restrictions on the transferability thereof imposed by the Securities Act for
so long as such restrictions apply.

 

(b)       In the case of each offer, sale or issuance of the Loans or
the Exchange Notes, no form of general solicitation or general advertising was
or will be used by the Company or any Subsidiary of the Company or their
representatives, including advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.

 

(c)       The Exchange Notes will be eligible for resale pursuant to
Rule 144A under the Securities Act. When the Exchange Notes are issued, authenticated
and delivered pursuant to the Exchange Note Indenture, they will not be of the
same class (within the meaning of Rule 144A(d)(3) under the Securities Act) as
any other security of the Company or any Subsidiary of the Company that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a U.S. automated interdealer quotation system.
Neither the issuance of the Exchange Notes nor the execution, delivery and
performance of the Transaction Documents (other than the Registration Rights
Agreement) will require the qualification of an indenture under the Trust
Indenture Act.

 

SECTION 5. AFFIRMATIVE
COVENANTS

 

Each Credit Party
covenants and agrees that, so long as any Commitment is in effect and until
payment in full of the principal of and interest on all Loans, each Credit
Party shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 5.

 

55

 

5.1. Financial Statements; Other Information.   The Company will furnish to the
Administrative Agent and each Lender:

 

(a)       Annual Financial Statements. As soon as available, but
in any event in accordance with then applicable law and not later than 90 days
after the end of each fiscal year of the Company, its audited consolidated
balance sheet and related statements of operations, stockholders’ equity and
cash flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by PricewaterhouseCoopers
LLC or other independent public accountants of recognized national standing
(without a “going concern” or like qualification or exception and without any
qualification or exception as to the scope of such audit) to the effect that
such consolidated financial statements present fairly in all material respects
the financial condition and results of operations of the Company and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

 

(b)       Quarterly Financial Statements. As soon as available,
but in any event in accordance with then applicable law and not later than 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
the Company, its consolidated balance sheet and related statements of
operations, stockholders’ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by its chief financial officer as
presenting fairly in all material respects the financial condition and results
of operations of the Company and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments.

 

(c)       SEC and Other Filings; Reports to Shareholders. Promptly
after the same become publicly available, copies of all periodic and other
reports, proxy statements and other materials filed by the Company or any
Subsidiary with the SEC, or with any national securities exchange, or
distributed by the Company to its shareholders generally, as the case may be.

 

(d)       Statements of Reconciliation after Change in Accounting
Principles. If, as a result of any change in accounting principles and
policies from those used in the preparation of the Historical Financial
Statements, the consolidated financial statements of the Company and its
Subsidiaries delivered pursuant to Section 5.1(a) or (b) will differ in
any material respect from the consolidated financial statements that would have
been delivered pursuant to such subdivisions had no such change in accounting
principles and policies been made, then, together with the first delivery of
such financial statements after such change, one or more statements of
reconciliation for all such prior financial statements in form and substance
satisfactory to the Administrative Agent;

 

(e)       Compliance Certificate. Within 90 days after the
end of each fiscal year of the Company, a Compliance Certificate signed by the
principal financial officer of the Company stating that a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
has been made under the supervision of the signing Authorized Officers with a
view to determining whether the Company has performed its obligations under
this Agreement, and further stating whether or not the signers know of any
Default or Event of Default that occurred during such period and, if a Default
or Event of

 

56

 

Default has occurred, the
certificate shall describe such Default or Event of Default, its status and
what action the Company is taking or proposes to take with respect thereto.

 

(f)        Notice of Default. Promptly upon any Authorized
Officer of the Company becoming aware of any Default or Event of Default, an
Officers’ Certificate describing such Default or Event of Default, its status
and what action the Company is taking or proposes to take with respect thereto.

 

(g)       Other Accounting Reports. Promptly upon receipt
thereof, a copy of each other report or letter (except standard and customary
correspondence) submitted to the Company or any of its Subsidiaries by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Company or any such Subsidiary, and a copy of
any response by the Company or any such Subsidiary, or the board of directors
of the Company or any such Subsidiary, to such letter or report.

 

(h)       Notices Under Material Instruments. Promptly after the
furnishing thereof, copies of any financial statement, report or notice of
breach or default furnished to or by any Person pursuant to the terms of any
preferred stock designation (other than capital call notices and communications
related thereto), indenture, loan or credit or other similar agreement, other
than this Agreement, and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 5.1.

 

(i)        Notice of Litigation. Promptly upon any Authorized
Officer of the Company obtaining knowledge of (i) the institution of, or
non-frivolous threat of, any Adverse Proceeding not previously disclosed in
writing by the Company to the Lenders or (ii) any material development in
any Adverse Proceeding that, in the case of either clause (i) or (ii) if
adversely determined, could be reasonably expected to have a Material Adverse
Effect, or seeks to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated hereby, written notice thereof together with such other information
as may be reasonably available to the Company to enable the Lenders and their
counsel to evaluate such matters.

 

(j)        Notice of Casualty Events. Prompt written notice, and
in any event within three Business Days, of the occurrence of any Casualty Event
or the commencement of any action or proceeding that could reasonably be
expected to result in a Casualty Event.

 

(k)       Notices of Certain Changes. Promptly, but in any event
within five Business Days after the execution thereof, copies of any amendment,
modification or supplement to the certificate or articles of incorporation,
bylaws, any preferred stock designation or any other Organic Document of the
Company or any material Subsidiary.

 

(l)        Notice of Sales of Oil and Gas Properties. In the
event that the Company or any Subsidiary intends to sell, transfer, assign or
otherwise dispose of any material Oil or Gas Properties or any Equity Interests
in any material Subsidiary in accordance with Section 6.8, prior written
notice of such disposition, the price thereof and the anticipated date of
closing.

 

57

 

(m)      Notice of Labor Disputes. Prompt written notice, and in
any event within five Business Days, after the commencement of any labor
controversy, litigation, action or proceeding that has a significant
probability of consequences that could reasonably be expected to have a
Material Adverse Effect.

 

(n)       ERISA Events. Prompt written notice after becoming
aware of the institution of any steps by the Company or any other Person to
terminate any Pension Plan, or the failure to make a required contribution to
any Pension Plan if such failure is sufficient to give rise to a Lien under Section 302(f)
of ERISA, or the taking of any action with respect to a Pension Plan that could
result in the requirement that the Company furnish a bond or other security to
the PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan that could result in the incurrence by the Company of any
material liability, fine or penalty, or any material increase in the contingent
liability of the Company with respect to any postretirement Welfare Plan
benefit.

 

(o)       Other Requested Information. Promptly following any
request therefor, such other information regarding the operations, business
affairs and financial condition of the Company or any Subsidiary, or compliance
with the terms of this Agreement or any other Credit Document, as the
Administrative Agent or any Lender may reasonably request, including all
documentation and other information that the Administrative Agent reasonably
requests on its behalf or on behalf of any Lender in order to comply with its
ongoing obligations under applicable “know your customer” and anti-money
laundering rules and regulations, including the USA Patriot Act.

 

5.2. Notices of Material Events.   The Company will furnish to the
Administrative Agent prompt written notice of the following:

 

(a)       the occurrence of any Default or Event of Default;

 

(b)       the filing or commencement of, or the threat in writing of,
any action, suit, proceeding, investigation or arbitration by or before any
arbitrator or Governmental Authority against the Company or any Affiliate
thereof not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, if adversely determined,
could reasonably be expected to result in liability in excess of $3.0 million;

 

(c)       any Release of Hazardous Materials, the commencement of any
Remedial Work, or the discovery of any event, condition or compliance
obligation that, in either case, could reasonably be expected to give rise to
Environmental Claims or result in the Company or its Subsidiaries incurring liability
under Environmental Laws in excess of $2.0 million.

 

(d)       the institution of any steps by the Company or any other
Person to terminate any Pension Plan, or the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give rise to
a Lien under Section 302(f) of ERISA, or the taking of any action with
respect to a Pension Plan that could result in the requirement that the Company
furnish a bond or other security to the PBGC or such Pension Plan, or the
occurrence of any event with respect to any Pension Plan that could result in
the incurrence by the

 

58

 

Company of any material liability,
fine or penalty, or any material increase in the contingent liability of the
Company with respect to any postretirement Welfare Plan benefit; and

 

(e)       any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.

 

Each notice
delivered under this Section 5.2 shall be accompanied by a statement of an
Authorized Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.

 

5.3. Refinancing of Loans with Permanent
Securities; Compliance with Fee Letter and Engagement Letter.   The Company will use all commercially
reasonable efforts to effect a refinancing of the Loans with Permanent
Securities as promptly as practicable. In that regard, the Company will comply
with all of its obligations under the Fee Letter and the Engagement Letter.

 

5.4. Maintenance of Corporate Existence.   The Company will at all times do or cause
to be done all things necessary to preserve and keep in full force and effect
its corporate existence and, subject to Section 7, the corporate,
partnership or other existence of each Guarantor, if any; provided
that nothing herein shall require the Company to continue the existence of any
Guarantor if in the judgment of the Company it shall be necessary, advisable or
in the interest of the Company to discontinue the same.

 

5.5. Payment of Taxes.   The Company will pay, and will cause each
of its Significant Subsidiaries to pay, prior to delinquency, all material
taxes, assessments, and governmental levies except such as are contested in
good faith and by appropriate proceedings and for which adequate reserves have
been established in accordance with GAAP.

 

59

 

5.6. Performance of Obligations under Credit
Documents.   The Company will pay the Loans and Loan
Notes when payment or prepayment is due, and the Company will, and will cause
each Subsidiary to, do and perform every act and discharge all of the obligations
to be performed and discharged by them under the Credit Documents, including
this Agreement, at the time or times and in the manner specified.

 

5.7. Maintenance of Properties.   The Company shall cause all material Properties owned
by the Company or any Restricted Subsidiary and used or held for use in the
conduct of its business or the business of any Restricted Subsidiary to be
maintained and kept in good condition, repair and working order (ordinary wear
and tear excepted); provided, however,
that nothing in this Section 5.7 shall prevent the Company from
discontinuing the maintenance of any of such Properties if such discontinuance
is, in the judgment of the Company, desirable in the conduct of its business or
the business of any Restricted Subsidiary and not disadvantageous in any
material respect to the Lenders. Notwithstanding the foregoing, nothing
contained in this Section 5.7 shall limit or impair in any way the right
of the Company and its Restricted Subsidiaries to sell, divest and otherwise to
engage in transactions that are otherwise permitted by this Agreement.

 

5.8. Insurance.   The Company shall at all times keep all of its and its
Restricted Subsidiaries’ Properties that are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or
damage to the extent that Property of similar character is usually so insured
by corporations similarly situated and owning like Properties; provided, however, that the Company may adopt such other
plan or method of protection, in lieu of or supplemental to insurance with
insurers, whether by the establishment of an insurance fund or reserve to be
held and applied to make good losses from casualties, or otherwise, conforming
to the systems of self-insurance maintained by corporations similarly situated
and owning like Properties, as may be determined by the Company.

 

5.9. Further Assurances.   The Company at its expense will, and will cause each
Subsidiary to, promptly execute and deliver to the Administrative Agent all
such other documents, agreements and instruments reasonably requested by the
Administrative Agent to comply with, cure any defects or accomplish the
conditions precedent, covenants and agreements of the Company or any
Subsidiary, as the case may be, in the Credit Documents, including the Loan
Notes.

 

5.10. Change of Control

 

If a
Change of Control occurs, then such Change of Control shall constitute a “triggering
event” that shall result in the obligation of the Company to offer to repay
each Lender all or any part of such Lender’s Loans, in an amount in cash equal
to 100% of the principal amount of such Lender’s Loans plus accrued and unpaid
interest, if any, to the date of repayment.

 

Within
30 days following any Change of Control, the Company will mail a notice
(the “Change of Control Offer”) to
each Lender, with a copy to the Administrative Agent, stating (1) that a
Change of Control has occurred and that such Lender has the right to require the
Company to repay such Lender’s Loans, in an amount in cash equal to 100% of the
principal amount of such Lender’s Loans plus accrued and unpaid interest, if
any, to the date of purchase

 

60

 

(the “Change of Control Payment”) and (2) the
repayment date (which shall be no earlier than 30 days, nor later than
60 days, from the date such notice is mailed) (the “Change of Control Payment Date”) and (3) the
procedures determined by the Company, consistent with this Agreement and
reasonably acceptable to the Administrative Agent, that a Lender must follow in
order to have its Loans repaid.

 

On or
before the Change of Control Payment Date, the Company will, to the extent
lawful, (1) accept for payment all Loans to be repaid pursuant to the
Change of Control Offer and (2) deposit with the Administrative Agent an
amount equal to the Change of Control Payment in respect of all Loans (or
portions thereof) to be so repaid.

 

The Company
will not be required to make a Change of Control Offer upon a Change of Control
if a third party makes the Change of Control Offer in the manner, at the times
and otherwise in compliance with the requirements set forth in this Section 5.10
applicable to a Change of Control Offer made by the Company and repays all
Loans to be so repaid under such Change of Control Offer.

 

5.11. Guarantors.   In the event that any Person becomes a Subsidiary of
the Company (other than an Excluded Subsidiary) or any Subsidiary of the
Company ceases to be an Excluded Subsidiary, then in each case the Company
shall, within 20 days of such event, cause such Subsidiary to execute and
deliver a Joinder Agreement and become a Guarantor hereunder and, to the extent
that the Registration Rights Agreement and the Exchange Note Indenture has been
executed, thereunder and to execute and deliver such other additional closing
documents, certificates and legal opinions as shall reasonably be requested by
the Administrative Agent.

 

5.12. Books and Records; Inspection Rights.   The Company will, and will cause each Subsidiary to,
keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and
activities. The Company will, and will cause each Subsidiary to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its Properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times during normal business hours and as often as reasonably
requested on an individual and aggregate basis.

 

5.13. Compliance with Laws.  
The Company
will, and will cause each Subsidiary to, comply with all laws, rules, regulations
and orders of any Governmental Authority applicable to it or its Property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

5.14. Environmental
Matters.

 

(a)           The
Company shall, at its sole expense:

 

(i)            comply,
and shall cause its Properties and operations and each Subsidiary and each
Subsidiary’s Properties and operations to comply, with all applicable

 

61

 

Environmental Laws, the breach of which could be reasonably
expected to have a Material Adverse Effect;

 

(ii)           not dispose of or otherwise Release, and shall cause each
Subsidiary not to dispose of or otherwise Release, any oil, oil and gas waste, Hazardous
Material, or solid waste on, under, about or from any of the Company’s or its
Subsidiaries’ Properties or any other Property except in compliance with
applicable Environmental Laws and in a manner that could not reasonably be
expected to have a Material Adverse Effect;

 

(iii)          timely obtain or file, and shall cause each Subsidiary to
timely obtain or file, all notices, permits, licenses, exemptions, approvals,
registrations or other authorizations, if any, required under applicable
Environmental Laws to be obtained or filed in connection with the operation or
use of the Company’s or its Subsidiaries’ Properties, which failure to obtain
or file could reasonably be expected to have a Material Adverse Effect;

 

(iv)          promptly commence and diligently prosecute to completion,
and shall cause each Subsidiary to promptly commence and diligently prosecute
to completion, any assessment, evaluation, investigation, monitoring,
containment, cleanup, removal, repair, restoration, remediation or other
remedial obligations (collectively, the “Remedial
Work”) in the event any Remedial Work is required or reasonably
necessary under applicable Environmental Laws because of or in connection with
the actual or suspected past, present or future disposal or other Release of
any oil, oil and gas waste, Hazardous Material or solid waste on, under, about
or from any of the Company’s or its Subsidiaries’ Properties, which failure to
commence and diligently prosecute to completion could reasonably be expected to
have a Material Adverse Effect; and

 

(v)           establish
and implement, and shall cause each Subsidiary to establish and implement, such
procedures as may be reasonably necessary and prudent to continuously determine
and assure that the Company’s and its Subsidiaries’ obligations under this
Section 5.14 are timely and fully satisfied.

 

(b)       The
Company will, and will cause each Subsidiary to, undertake reasonable
environmental audits and tests in accordance with reasonable industry standards
upon the request of the Administrative Agent which request may be made no more
than once per year at each property unless an Event of Default has occurred or
such audits or tests are otherwise required to be obtained by the
Administrative Agent or the Lenders by any Governmental Authority; provided,
however, that, if the Company or its
Subsidiaries fail to undertake such audits or tests in a diligent and prompt
manner after receipt of the Administrative Agent’s request, the Administrative
Agent may, in its sole discretion and after notice to the Company, engage a
qualified environmental consultant to complete such audit or test at the
Company’s expense. The Company and its Subsidiaries shall cooperate with the
Administrative Agent in the completion of such audits or tests, including by
providing reasonable access to their properties, personnel and records.

 

62

 

5.15. Exchange Notes and Registration Rights Agreement.

 

(a)       In
the event that any Loans remain outstanding on the 180th day after
the Closing Date, the Company will provide to the Administrative Agent the form
of the Exchange Note Indenture and the form of the Registration Rights
Agreement (in each case, including all exhibits and appendices thereto), which
forms shall each be in form and substance reasonably satisfactory to the
Administrative Agent; it being understood that (i) the covenants contained
in the Exchange Note Indenture shall be, to the extent analogous, substantially
identical to the indenture governing the 2017 Notes and (ii) the
provisions in the Registration Rights Agreement governing filing deadlines and
Special Interest shall conform with the description thereof in the Commitment
Letter, and the Registration Rights Agreement shall otherwise be substantially
similar to the corresponding agreement executed in connection with the 2017 Notes.
In the event that any Loans remain outstanding on the 330th day
following the Closing Date, the Company shall execute and deliver the Exchange
Note Indenture and the Registration Rights Agreement to the Indenture Trustee
and the Administrative Agent, respectively. On such date, the Company shall
execute and deliver certificates evidencing the full amount of the Exchange
Notes that may be issued pursuant to the terms hereof, to be held by the
Trustee, undated and unauthenticated, pending issuance pursuant to the terms
hereof.

 

(b)       In
the event that any Loans remain outstanding on the tenth Business Day prior to
the first anniversary of the Closing Date, the Company shall (i) cause the
Exchange Notes to become eligible to deposit at The Depository Trust Company,
(ii) obtain “CUSIP” and “ISIN” numbers for the Exchange Notes and
(iii) cause the Exchange Notes to be eligible for trading in the Private
Offerings, Resales and Trading through Automatic Linkages market.

 

(c)       If
Exchange Notes are issued pursuant to the terms hereof, then the Company shall
register the Exchange Notes under the Securities Act in accordance with the
terms of the Registration Rights Agreement.

 

5.16. Lenders Meetings. 
 The Company will, upon the request of the
Administrative Agent or the Requisite Lenders, participate in a meeting of the
Administrative Agent and the Lenders once during each Fiscal Year to be held at
the Company’s corporate offices (or at such other location as may be agreed to
by the Company and the Administrative Agent) at such time as may be agreed to
by the Company and the Administrative Agent.

 

5.17. Effectiveness of Covenants.   The covenants described under
Section 5.11, 6.2, 6.4, 6.5, 6.7, 6.8(c) and 6.9 will no longer be in
effect from and after the time that the Company delivers to the Administrative
Agent an Officer’s Certificate certifying that the Loans have an Investment
Grade Rating from either S&P or Moody’s; provided
that no Default or Event of Default (other than with respect to any
such Section or clause) has occurred and is continuing under this Agreement at
the time of such notification.

 

63

 

SECTION 6. NEGATIVE
COVENANTS

 

Each Credit Party
covenants and agrees that, so long as any Commitment is in effect and until
payment in full of the principal of and interest on all Loans, such Credit
Party shall perform, and shall cause each of its Subsidiaries to perform, all
covenants in this Section 6.

 

6.1. Limitation on Acquisitions.   The Company shall not, and shall not
permit any of its Restricted Subsidiaries to, enter into or consummate any
transaction in which it acquires by purchase or otherwise any assets or
businesses of any kind (other than the Acquisition) for a purchase price that,
from the date of this Agreement, exceeds $100.0 million individually or in
the aggregate (excluding like-kind exchanges or Asset Swaps).

 

6.2. Limitation on Indebtedness.

 

(a)       The Company
will not, and will not permit any of its Restricted Subsidiaries to, Incur any
Indebtedness (including Acquired Indebtedness); provided, however,
that the Company and any Subsidiary Guarantor may Incur Indebtedness if on the
date of such Incurrence:

 

(i)            the Consolidated Coverage Ratio for the Company and its Restricted
Subsidiaries is at least 2.25 to 1.00; and

 

(ii)           no Default or Event of
Default will have occurred or be continuing or would occur as a consequence of
Incurring the Indebtedness or transactions relating to such Incurrence.

 

(b)       Notwithstanding Section 6.2(a), any of the following may be
Incurred, to the extent constituting Indebtedness:

 

(i)            additional Indebtedness of the Company and its Restricted Subsidiaries
Incurred pursuant to any Credit Facility, so long as the aggregate amount of
all Indebtedness Incurred under this clause (i) that is at any time
outstanding (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Company and its Restricted
Subsidiaries thereunder) does not exceed the greater of (x) $1.25 billion
and (y) $600.0 million plus 12.5% of ACNTA, in each case, as of the
date of such Incurrence;

 

(ii)           Indebtedness of the
Company owing to and held by any Restricted Subsidiary or Indebtedness of a
Restricted Subsidiary owing to and held by the Company or any Restricted
Subsidiary; provided, however, that:

 

(A) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all obligations with
respect to the Loans; and

 

(B)(1) any
subsequent issuance or transfer of Capital Stock or any other event that
results in any such Indebtedness being beneficially held by a Person other than
the Company or a Restricted Subsidiary and (2) any sale or other transfer
of any

 

64

 

such Indebtedness to a Person other than the Company or a
Restricted Subsidiary shall be deemed, in each case, to constitute an
Incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be;

 

(iii)          Indebtedness represented by (A) the Loans issued on
the Closing Date (and any Exchange Notes exchanged therefor) and the Guaranty,
(B) any other Indebtedness (other than the Indebtedness described in
Sections 6.2(b)(i) and (ii)) outstanding on the Closing Date, and any
guarantees in respect thereof, and (C) any Refinancing Indebtedness
Incurred in respect of any Indebtedness described in this
Section 6.2(b)(iii) or Section 6.2(b)(iv) or Incurred pursuant to Section 6.2(a);

 

(iv)          Indebtedness of a
Restricted Subsidiary Incurred and outstanding on the date on which such
Restricted Subsidiary was acquired by the Company (other than Indebtedness
Incurred (A) to provide all or any portion of the funds utilized to consummate
the transaction or series of related transactions pursuant to which such
Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired
by the Company or (B) otherwise in connection with, or in contemplation
of, such acquisition); provided, however, that, at the time such Restricted
Subsidiary is acquired by the Company, the Company would have been able to
Incur $1.00 of additional Indebtedness pursuant to Section 6.2(a) after
giving effect to the Incurrence of such Indebtedness pursuant to this
clause (iv);

 

(v)           any Hedging Obligations; provided that
such Hedging Obligations are related to business transactions of the Company or
its Restricted Subsidiaries entered into in the ordinary course of business and
are Incurred for bona fide hedging purposes (and not for speculative purposes)
of the Company or its Restricted Subsidiaries (as determined in good faith by
the Board of Directors or senior management of the Company);

 

(vi)          any Indebtedness arising
from any agreement of the Company or a Restricted Subsidiary providing for
indemnities, Guarantees, purchase price adjustments, holdbacks, contingent
payment obligations based on the performance of acquired or disposed assets or
similar obligations (but excluding Guarantees of Indebtedness) Incurred by the
Company or any Restricted Subsidiary in connection with the acquisition or
disposition of any business, assets or Capital Stock of a Restricted
Subsidiary;

 

(vii)         the Guarantee by the Company of Indebtedness of any of its
Restricted Subsidiaries or by any Restricted Subsidiary of Indebtedness of the
Company or another Restricted Subsidiary, in each case, that was permitted to
be Incurred by another provision of this covenant; and

 

(viii)        Permanent Securities issued as contemplated in the Engagement
Letter.

 

(ix)           in addition to the items
referred to in clauses (i) through (viii) above, Indebtedness of the
Company and its Restricted Subsidiaries (including Indebtedness of a Restricted
Subsidiary Incurred and outstanding on the date such Restricted Subsidiary

 

65

 

was acquired by the Company) in
an aggregate outstanding principal amount that, when taken together with the
principal amount of all other Indebtedness Incurred pursuant to this clause (ix)
and then outstanding, will not exceed $50.0 million at any time
outstanding.

 

(c)       For
purposes of determining compliance with, and the outstanding principal amount
of any particular Indebtedness Incurred pursuant to and in compliance with,
this Section 6.2:

 

(i)            in the event that Indebtedness meets the criteria of more than one of
the types of Indebtedness described in Sections 6.2(a) and (b), the
Company, in its sole discretion, will classify such item of Indebtedness on the
date of Incurrence, and thereafter may reclassify such item of Indebtedness,
and only be required to include the amount and type of such Indebtedness in one
of such clauses;

 

(ii)           all Indebtedness
outstanding on the date of this Agreement under a Credit Facility shall be
deemed to have been Incurred on the Closing Date under Section 6.2(b)(i)
and not Section 6.2(a) or any other clause of this Section 6.2;

 

(iii)          Guarantees of, or
obligations in respect of letters of credit relating to, Indebtedness that is
otherwise included in the determination of a particular amount of Indebtedness
shall not be included;

 

(iv)          if obligations in respect
of letters of credit are Incurred pursuant to a Credit Facility and are being
treated as Incurred pursuant to Section 6.2(b)(i) and the letters of credit
relate to other Indebtedness, then such other Indebtedness shall not be
included;

 

(v)           the principal amount of any Disqualified Stock of the Company or
Preferred Stock of a Restricted Subsidiary will be equal to the greater of the
maximum mandatory redemption or repurchase price (not including, in either
case, any redemption or repurchase premium) or the liquidation preference
thereof;

 

(vi)          Indebtedness permitted by
this Section 6.2 need not be permitted solely by reference to one
provision permitting such Indebtedness but may be permitted in part by one such
provision and in part by one or more other provisions of this covenant
permitting such Indebtedness; and

 

(vii)         the amount of Indebtedness
issued at a price that is less than the principal amount thereof will be equal
to the amount of the liability in respect thereof determined in accordance with
GAAP.

 

(d)       Accrual of interest, accrual of dividends, the accretion of accreted
value, the payment of interest in the form of additional Indebtedness and the
payment of dividends in the form of additional shares of Preferred Stock or
Disqualified Stock will not be deemed to be an Incurrence of Indebtedness for
purposes of this Section 6.2. The amount of any Indebtedness outstanding
as of any date shall be (i) the accreted value thereof in the case of any
Indebtedness issued with original issue discount and (ii) the principal
amount thereof, together

 

66

 

with any interest thereon that is
more than 30 days past due, in the case of any other Indebtedness.

 

(e)       If
at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any
Indebtedness of such Subsidiary shall be deemed to be Incurred by a Restricted
Subsidiary as of such date (and, if such Indebtedness is not permitted to be
Incurred as of such date under this Section 6.2, the Company shall be in
Default of this covenant).

 

(f)        For
purposes of determining compliance with any U.S. dollar-denominated restriction
on the Incurrence of Indebtedness, the U.S. Dollar-Equivalent principal amount
of Indebtedness denominated in a foreign currency shall be calculated based on
the relevant currency exchange rate in effect on the date such Indebtedness was
Incurred, in the case of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided, however,
that, if such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would cause the
applicable U.S. dollar-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of such refinancing,
such U.S. dollar-denominated restriction shall be deemed not to have been
exceeded so long as the principal amount of such refinancing Indebtedness
(including any additional Indebtedness Incurred to pay interest or premiums
required by the instruments governing such Indebtedness being refinanced and
fees and other transactional expenses Incurred in connection therewith) does
not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding
any other provision of this Section 6.2, the maximum amount of
Indebtedness that the Company may Incur pursuant to this Section 6.2 shall
not be deemed to be exceeded solely as a result of fluctuations in the exchange
rate of currencies. The principal amount of any Indebtedness Incurred to
refinance other Indebtedness, if Incurred in a different currency from the
Indebtedness being refinanced, shall be calculated based on the currency exchange
rate applicable to the currencies in which such refinancing Indebtedness is
denominated that is in effect on the date of such refinancing.

 

6.3. Liens. 
 The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, Incur or suffer to
exist any Lien (other than Permitted Liens) securing Indebtedness upon any of
its property or assets (including Capital Stock of its Restricted
Subsidiaries), whether owned on the Closing Date or acquired after that date,
unless contemporaneously with the Incurrence of such Liens effective provision
is made to secure the Loans or the Guaranty of such Restricted Subsidiary, as
applicable, equally and ratably with (or prior to in the case of Liens with
respect to its Subordinated Obligations) the Indebtedness secured by such Lien
for so long as such Indebtedness is so secured.

 

6.4. Limitation on Restricted
Payments

 

(a)           The Company will not, and will not permit any of its Restricted
Subsidiaries, directly or indirectly, to:

 

(i)            declare or pay any dividend or make any distribution on or in respect
of its Capital Stock (including any payment in connection with any merger or
consolidation involving the Company or any of its Restricted Subsidiaries)
except:

 

67

 

(A)
dividends or distributions payable in Capital Stock of the Company (other than
Disqualified Stock), including options, warrants or other rights to purchase
such Capital Stock of the Company; and

 

(B)
dividends or distributions payable to the Company or a Restricted Subsidiary
(and if such Restricted Subsidiary is not a Wholly-Owned Subsidiary, to its
other holders of Capital Stock on a pro rata
basis);

 

(ii)           purchase, redeem, retire
or otherwise acquire for value any Capital Stock of the Company or any direct
or indirect parent of the Company held by Persons other than the Company or a
Restricted Subsidiary of the Company;

 

(iii)          purchase, repurchase,
redeem, defease or otherwise acquire or retire for value, prior to scheduled
maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations of the Company or a Guarantor (other than the
purchase, repurchase, redemption, defeasance or other acquisition or retirement
of any such Subordinated Obligations purchased in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in each case
due within one year of the date of purchase, repurchase, redemption, defeasance
or other acquisition or retirement); or

 

(iv)          make any Restricted
Investment in any Person

 

(any
such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or Restricted Investment referred to in clauses (i)
through (iv) of this Section 6.4(a) is referred to herein as a “Restricted Payment”) if, at the time the Company or such
Restricted Subsidiary makes such Restricted Payment:

 

(A)
a Default has occurred and is continuing (or would result therefrom); or

 

(B)
the Company is not able to Incur an additional $1.00 of Indebtedness pursuant
to Section 6.2(a) after giving effect, on a pro forma
basis, to such Restricted Payment; or

 

(C)
the aggregate amount of such Restricted Payment and all other Restricted
Payments declared or made subsequent to September 23, 2005 (other than as
set forth in clauses (i), (ii), (iii), (vii), (viii) and (ix) of
Section 6.4(b)), would exceed the sum of:

 

(1)           50% of Consolidated Net Income for
the period (treated as one accounting period) from April 1, 2001, to the end of the most recent fiscal quarter
ending prior to the date of such Restricted Payment for which internal
financial statements are in existence (or, in case such Consolidated Net Income
is a deficit, minus 100% of such deficit); plus

 

(2)           100% of the aggregate Net Cash Proceeds
or the Fair Market Value of property other than cash (including Capital Stock
of Persons

 

68

 

engaged
in the Oil and Gas Business or property used in the Oil and Gas Business),
received by the Company from the issue or sale of its Capital Stock (other than
Disqualified Stock) subsequent to September 23,
2005 (other than any Net Cash Proceeds or property received from an
issuance or sale of such Capital Stock to (x) a Subsidiary of the Company,
(y) an employee stock ownership plan or (z) a trust established by the
Company or any of its Subsidiaries for the benefit of employees), and 100% of
any cash contribution to its common equity capital subsequent to September 23, 2005; plus

 

(3)           the amount by which Indebtedness of the
Company or its Restricted Subsidiaries is reduced on the Company’s balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to September 23, 2005, of any Indebtedness of the
Company or its Restricted Subsidiaries convertible or exchangeable for Capital
Stock (other than Disqualified Stock) of the Company (less the amount of any
cash, or the Fair Market Value of any other property, distributed by the
Company upon such conversion or exchange); plus

 

(4)           to the extent that any Restricted
Investment (other than an Investment made pursuant to Section 6.4(b)(ix))
that was made after September 23, 2005, is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (x) the cash return of capital
with respect to such Restricted Investment (less the cost of disposition, if
any) and (y) the initial amount of such Restricted Investment; plus

 

(5)           to the extent that any Unrestricted
Subsidiary of the Company designated as such after the Closing Date is
redesignated as a Restricted Subsidiary after the Closing Date, the lesser of
(x) the Fair Market Value of the Company’s Investment in such Subsidiary
as of the date of such redesignation or (y) such Fair Market Value, as of
the date on which such Subsidiary was originally designated as an Unrestricted
Subsidiary after the Closing Date;

 

provided, however, that no amount will be included under
clauses (4) or (5) to the extent it is already included in Consolidated
Net Income.

 

(b)           The foregoing provisions
of Section 6.4(a) will not prohibit:

 

(i)            any purchase, repurchase, redemption, defeasance or other acquisition
or retirement of Capital Stock of the Company or its direct or indirect parent
or Subordinated Obligations of the Company or a Guarantor made by exchange for,
or out of the Net Cash Proceeds of the substantially concurrent sale of,
Capital Stock of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to (x) a Subsidiary of the Company, (y) an
employee stock ownership plan or (z) a trust established by the Company or
any of its Subsidiaries for the benefit of employees); provided, however, that the amount of any
such Net Cash Proceeds that are utilized for

 

69

 

any such acquisition or retirement
will be excluded from clause (C)(2) of the preceding paragraph;

 

(ii)           any purchase, repurchase,
redemption, defeasance or other acquisition or retirement of Subordinated
Obligations of the Company or a Guarantor made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated Obligations of the
Company or a Guarantor that, in each case, are permitted to be Incurred
pursuant to Section 6.2 and that in each case constitutes Refinancing
Indebtedness;

 

(iii)          any purchase, repurchase,
redemption, defeasance or other acquisition or retirement of Disqualified Stock
of the Company or a Restricted Subsidiary made by exchange for or out of the
proceeds of the substantially concurrent sale of Disqualified Stock of the
Company or such Restricted Subsidiary, as the case may be, that, in each case,
is permitted to be Incurred pursuant to Section 6.2 and that in each case
constitutes Refinancing Indebtedness;

 

(iv)          dividends paid within
60 days after the date of declaration if at such date of declaration such
dividend would have complied with this provision; provided, however,
that such dividends will be included in subsequent calculations of the amount
of Restricted Payments;

 

(v)           so long as no Default or Event of Default has occurred and is
continuing, the repurchase, redemption or other acquisition, cancellation or
retirement for value of Capital Stock of the Company or any of its Restricted
Subsidiaries, held by any current or former officer, director or employee of the
Company or any Restricted Subsidiary pursuant to any equity subscription
agreement, stock option agreement, shareholders’ agreement or similar
agreement; provided, however, that
the aggregate price paid for all such repurchased, redeemed, acquired or
retired Capital Stock may not exceed $5.0 million in the aggregate in any
calendar year (with 50% of the unused amounts in any calendar year being
carried over to succeeding calendar years);

 

(vi)          so long as no Default or
Event of Default has occurred and is continuing, the declaration and payment of
dividends to holders of any class or series of Disqualified Stock of the
Company issued in accordance with the terms of this Agreement to the extent
such dividends are included in the definition of “Consolidated Interest Expense”;

 

(vii)         repurchases of Capital
Stock deemed to occur upon the exercise of stock options, warrants or other
convertible securities if such Capital Stock represents a portion of the
exercise price thereof;

 

(viii)        the purchase by the Company
of fractional shares arising out of stock dividends, splits or combinations or
business combinations; and

 

(ix)           Restricted Payments in an
aggregate amount not to exceed $50.0 million since September 23, 2005
(after giving effect to any subsequent reduction

 

70

 

in the amount of any Investment
made pursuant to this clause (ix) as a result of the repayment or other
disposition thereof for cash, the amount of such reduction not to exceed the
initial amount of such Investment).

 

(c)       The amount of all Restricted Payments (other than cash) shall be the Fair
Market Value on the date of such Restricted Payment of the securities or other assets proposed to be paid, transferred or issued by the
Company or such Restricted Subsidiary, as the case may be, pursuant to such
Restricted Payment. The Fair Market Value of any non-cash Restricted Payment
shall be determined in the manner contemplated by the definition of the term “Fair
Market Value” in Section 1.1, and the results of such determination will
be evidenced by an Officers’ Certificate delivered to the Administrative Agent.

 

6.5. Limitation on Restrictions on Distributions from
Restricted Subsidiaries.

 

(a)       The Company
will not, and will not permit any Restricted Subsidiary to, create or otherwise
cause or permit to exist or become effective any consensual encumbrance or
consensual restriction on the ability of any Restricted Subsidiary to:

 

(i)            pay dividends or make any other distributions on its Capital Stock to,
or pay any Indebtedness or other obligations owed to, the Company or any
Restricted Subsidiary (it being understood that the priority of any Preferred
Stock in receiving dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not be deemed a
restriction on the ability to make distributions on Capital Stock);

 

(ii)           make any loans or advances
to the Company or any Restricted Subsidiary (it being understood that the
subordination of loans or advances made to the Company or any Restricted
Subsidiary to other Indebtedness Incurred by the Company or any Restricted
Subsidiary shall not be deemed a restriction on the ability to make loans or
advances); or

 

(iii)          transfer any of its
property or assets to the Company or any Restricted Subsidiary.

 

(b)           The provisions
of Section 6.5(a) will not prohibit:

 

(i)            any encumbrance or restriction pursuant to an agreement in effect at or
entered into on the Closing Date, including this Agreement and a Credit
Facility in effect on such date;

 

(ii)           any encumbrance or
restriction with respect to a Restricted Subsidiary pursuant to an agreement
relating to any Capital Stock or Indebtedness Incurred by a Restricted
Subsidiary on or before the date on which such Restricted Subsidiary became a
Restricted Subsidiary (other than Capital Stock or Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds utilized to
consummate, the transaction or series of related transactions pursuant to which
such Restricted Subsidiary became a Restricted Subsidiary or was acquired by the
Company or in contemplation of the transaction) and outstanding on such date;

 

71

 

(iii)          any encumbrance or
restriction pursuant to an agreement effecting a refunding, replacement or
refinancing of Indebtedness Incurred pursuant to an agreement referred to in
Section 6.5(b)(i), (ii) or (iv) or this Section 6.5(b)(iii) or
contained in any amendment to an agreement referred to in any such Section; provided, however,
that the encumbrances and restrictions contained in any such agreement are no
less favorable, in the aggregate, in any material respect to the Lenders than
the encumbrances and restrictions contained in such agreements referred to in
Section 6.5(b)(i), (ii) or (iv) on the Closing Date or the date the
applicable Restricted Subsidiary became a Restricted Subsidiary, whichever is
applicable;

 

(iv)          in the case of
Section 6.5(a)(iii), any encumbrance or restriction:

 

(A)
that restricts in a customary manner the subletting, assignment or transfer of
any property or asset that is subject to a lease, farm-in agreement or farm-out
agreement, license or similar contract, or the assignment or transfer of any
such lease, license or other contract;

 

(B)
contained in mortgages, pledges or other security agreements permitted under
this Agreement securing Indebtedness or other obligations of the Company or a
Restricted Subsidiary to the extent such encumbrances or restrictions restrict
the transfer of the property subject to such mortgages, pledges or other
security agreements;

 

(C)
pursuant to customary provisions restricting dispositions of real property
interests set forth in any reciprocal easement agreements of the Company or any
Restricted Subsidiary;

 

(D)
with respect to the disposition or distribution of property or assets in
operating agreements, joint venture agreements, development agreements, area of
mutual interest agreements and other agreements that are customary in the Oil
and Gas Business and entered into in the ordinary course of business;

 

(E)
pursuant to any merger agreements, stock purchase agreements, asset sale
agreements and similar agreements limiting the transfer of any property assets
pending consummation of the subject transaction; or

 

(F)
pursuant to typical cash management plans that provide for an orderly
repatriation of funds designed to optimize after-tax cash flow and agreed to by
all shareholders of a Foreign Subsidiary;

 

(v)           (A) purchase money obligations for property acquired in the
ordinary course of business and (B) Capitalized Lease Obligations
permitted under this Agreement, in each case that impose encumbrances or
restrictions of the nature described in Section 6.5(a)(iii) on the
property or assets so acquired;

 

(vi)          any restriction with
respect to a Restricted Subsidiary (or any of its property or assets) imposed
pursuant to an agreement entered into for the direct or

 

72

 

indirect sale or disposition of
all or substantially all of the Capital Stock or properties and assets of such
Restricted Subsidiary (or the property or assets that are subject to such
restriction) pending the closing of such sale or disposition; and

 

(vii)         any restriction on cash or
other deposits or net worth imposed by customers under agreements entered into
by the Company or any Restricted Subsidiary in the ordinary course of business.

 

6.6. Amendments or Waivers of Certain
Related Agreements.   No Credit Party shall, nor shall it permit any of its
Subsidiaries to, agree to any material amendment, restatement, supplement or
other modification to, or waiver of, any of its material rights or obligations
under any Related Agreement after the Closing Date without in each case
obtaining the prior written consent of the Requisite Lenders to such amendment,
restatement, supplement or other modification or waiver.

 

6.7. Limitation on Sale of Capital Stock of Restricted
Subsidiaries.

 

(a)       The
Company will not, and will not permit any Restricted Subsidiary to, transfer,
convey, sell, lease or otherwise dispose of any Voting Stock of any Restricted
Subsidiary or issue any of the Voting Stock of a Restricted Subsidiary (other
than, if necessary, shares of its Voting Stock constituting directors’
qualifying shares) to any Person except:

 

(i)            to the Company or a Wholly-Owned Subsidiary; or

 

(ii)           in compliance with
Section 2.10(a) and immediately after giving effect to such issuance or
sale, such Restricted Subsidiary would continue to be a Restricted Subsidiary.

 

(b)       Notwithstanding the preceding paragraph, the Company may sell all the Voting Stock of
a Restricted Subsidiary so long as the Company complies with Section 2.10(a).

 

6.8. Merger and Consolidation.   The Company will not consolidate with or
merge with or into, or sell, convey, assign, transfer or otherwise dispose of
all or substantially all its properties and assets to, any Person, unless:

 

(a)       the
resulting, surviving or transferee Person (the “Successor Company”) will be a corporation, partnership, trust
or limited liability company organized and existing under the laws of the
United States of America, any State of the United States or the District of
Columbia and the Successor Company (if not the Company) will expressly assume
all the obligations of the Company under the Loans and this Agreement and will
expressly assume all of the obligations of the Company under any Registration
Rights Agreement then in effect;

 

(b)       immediately
after giving effect to such transaction (and treating any Indebtedness that
becomes an obligation of the Successor Company or any Subsidiary of the
Successor Company as a result of such transaction as having been Incurred by
the Successor Company or such Subsidiary at the time of such transaction), no
Default or Event of Default shall have occurred and be continuing;

 

73

 

(c)       immediately
after giving effect to such transaction, on a pro forma
basis (on the assumption that the transaction occurred on the first day of the
period of four full fiscal quarters ending immediately prior to the
consummation of such transaction, with the appropriate adjustments with respect
to such transaction being included in such pro forma
calculation) the Successor Company would be able to Incur at least an
additional $1.00 of Indebtedness pursuant to Section 6.2(a);

 

(d)       the
Company shall have delivered to the Administrative Agent an Officers’
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or disposition and such assumption comply with this Agreement; and

 

(e)       to
the extent that the Company or any of its Subsidiaries sell any Properties or
assets in a transaction that constitutes an Asset Sale, the Net Proceeds from
such Asset Sale shall be applied in accordance with Section 2.10(a).

 

For purposes of this
Section 6.8, the sale, conveyance, assignment, transfer, or other
disposition of all or substantially all of the properties and assets of one or
more Subsidiaries of the Company, which properties and assets, if held by the
Company instead of such Subsidiaries, would constitute all or substantially all
of the properties and assets of the Company on a consolidated basis, shall be
deemed to be the transfer of all or substantially all of the properties and assets
of the Company. In addition, the Company shall not, directly or indirectly,
lease all or substantially all of the properties and assets of it and its
Restricted Subsidiaries, taken as a whole, in one or more related transactions,
to any other Person.

 

Notwithstanding the
preceding clause (c) of this Section 6.8, any Restricted Subsidiary,
or any Person with no Indebtedness outstanding, may consolidate with or merge
with or into the Company.

 

6.9. Limitations on Affiliate Transactions.

 

(a)       The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or
the rendering of any service) with any Affiliate of the Company (an “Affiliate Transaction”)
unless:

 

(i)            the terms of such Affiliate Transaction are no less favorable to the
Company or such Restricted Subsidiary, as the case may be, than those that
could be obtained in a comparable transaction at the time of such transaction
in arm’s-length dealings with a Person who is not such an Affiliate or, if no
comparable transaction with a Person that is not an Affiliate is available, on
terms that are fair from a financial point of view to the Company or such
Restricted Subsidiary;

 

(ii)           in the event such
Affiliate Transaction involves an aggregate consideration in excess of $25.0 million,
an Officers’ Certificate shall have been delivered to the Administrative Agent
certifying that such Affiliate Transaction satisfies the criteria in
clause (i) of this Section 6.9 and that the terms of such transaction
have

 

74

 

been approved by a majority of
the members of the Board of Directors of the Company; and

 

(iii)          in the event such
Affiliate Transaction involves an aggregate consideration in excess of $50.0 million,
the Officers’ Certificate referred to in clause (ii) of this Section 6.9
shall also include a certification that the terms of such transaction shall
have been approved by a majority of the members of the Board of Directors of the
Company having no personal stake in such transaction (other than through
ownership of Capital Stock of the Company), if any, or if there are no such
members, then the Company shall have received a written opinion from an
independent investment banking, accounting or appraisal firm of nationally
recognized standing that the terms of such Affiliate Transaction are not
materially less favorable to the Company or the applicable Restricted
Subsidiary than those that might reasonably have been obtained in a comparable
transaction at such time on an arm’s-length basis from a Person that is not an
Affiliate or that such terms are fair from a financial point of view to the
Company or the applicable Restricted Subsidiary.

 

(b)           Section 6.9(a) will not apply to:

 

(i)            any
Restricted Payment or any Permitted Investment permitted to be made pursuant to
Section 6.4;

 

(ii)           any issuance of
securities, or other payments, awards or grants in cash, securities or otherwise
pursuant to, or the funding of, employment agreements and other compensation
arrangements, options to purchase Capital Stock of the Company, restricted
stock plans, long-term incentive plans, stock appreciation rights plans,
participation plans or similar employee benefits plans and/or indemnity
provided on behalf of directors, officers and employees either in the ordinary
course of business or as approved by the Board of Directors of the Company;

 

(iii)          loans or advances to
employees, officers or directors in the ordinary course of business of the
Company or any of its Restricted Subsidiaries, in each case only as permitted
by Section 402 of the Sarbanes Oxley Act of 2002, but in any event not to
exceed $5.0 million in the aggregate outstanding at any one time with
respect to all loans or advances made since the Closing Date;

 

(iv)          any transaction between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries;

 

(v)           any transaction effected pursuant to the terms of an agreement that was
entered into, alone or as part of a series of agreements, pursuant to or in
accordance with this Section 6.9; and

 

(vi)          the payment of reasonable
and customary fees and compensation to, and indemnity provided on behalf of,
officers and directors of the Company or any Restricted Subsidiary.

 

75

 

SECTION 7. GUARANTY

 

7.1. Guaranty of the Obligations.   Subject to the provisions of
Section 7.2, the Guarantors from time to time becoming parties hereto
pursuant to Section 5.11 jointly and severally hereby irrevocably and
unconditionally guarantee to the Administrative Agent for the ratable benefit
of the Beneficiaries the due and punctual payment in full of all Obligations
when the same shall become due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including amounts
that would become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a))
(collectively, the “Guaranteed Obligations”).

 

7.2. Contribution by Guarantors.   All Guarantors desire to allocate among
themselves (collectively, the “Contributing
Guarantors”), in a fair and equitable manner, their obligations
arising under this Guaranty. Accordingly, in the event any payment or
distribution is made on any date by a Guarantor (a “Funding Guarantor”) under this Guaranty such that its
Aggregate Payments exceeds its Fair Share as of such date, such Funding
Guarantor shall be entitled to a contribution from each of the other
Contributing Guarantors in an amount sufficient to cause each Contributing
Guarantor’s Aggregate Payments to equal its Fair Share as of such date. “Fair Share” means, with respect to a
Contributing Guarantor as of any date of determination, an amount equal to
(a) the ratio of (i) the Fair Share Contribution Amount with respect
to such Contributing Guarantor to (ii) the aggregate of the Fair Share
Contribution Amounts with respect to all Contributing Guarantors multiplied by
(b) the aggregate amount paid or distributed on or before such date by all
Funding Guarantors under this Guaranty in respect of the obligations Guaranteed.
“Fair Share Contribution Amount”
means, with respect to a Contributing Guarantor as of any date of
determination, the maximum aggregate amount of the obligations of such
Contributing Guarantor under this Guaranty that would not render its
obligations hereunder or thereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of Title 11 of the United States Code
or any comparable applicable provisions of state law; provided that, solely for purposes of
calculating the Fair Share Contribution Amount with respect to any Contributing
Guarantor for purposes of this Section 7.2, any assets or liabilities of
such Contributing Guarantor arising by virtue of any rights to subrogation,
reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Contributing Guarantor. “Aggregate Payments”
means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (1) the aggregate amount of all payments
and distributions made on or before such date by such Contributing Guarantor in
respect of this Guaranty (including in respect of this Section 7.2) minus
(2) the aggregate amount of all payments received on or before such date
by such Contributing Guarantor from the other Contributing Guarantors as contributions
under this Section 7.2. The amounts payable as contributions hereunder
shall be determined as of the date on which the related payment or distribution
is made by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this Section 7.2 shall not
be construed in any way to limit the liability of any Contributing Guarantor
hereunder. Each Guarantor is a third party beneficiary to the contribution
agreement set forth in this Section 7.2.

 

7.3. Payment by Guarantors.   Subject to Section 7.2, the
Guarantors hereby jointly and severally agree, in furtherance of the foregoing
and not in limitation of any other right that

 

76

 

any Beneficiary may have
at law or in equity against any Guarantor by virtue hereof, that upon the
failure of the Company to pay any of the Guaranteed Obligations when and as the
same shall become due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including amounts that would
become due but for the operation of the automatic stay under
Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), the
Guarantors will upon demand pay, or cause to be paid, in Cash, to the
Administrative Agent for the ratable benefit of the Beneficiaries, an amount
equal to the sum of the unpaid principal amount of all Guaranteed Obligations
then due as aforesaid, accrued and unpaid interest on such Guaranteed
Obligations (including interest that, but for the Company’s becoming the
subject of a case under the Bankruptcy Code, would have accrued on such
Guaranteed Obligations, whether or not a claim is allowed against the Company
for such interest in the related bankruptcy case) and all other Guaranteed
Obligations then owed to the Beneficiaries as aforesaid.

 

7.4. Liability of Guarantors Absolute.   Each Guarantor agrees that its
obligations hereunder are irrevocable, absolute, independent and unconditional
and shall not be affected by any circumstance that constitutes a legal or
equitable discharge of a guarantor or surety other than payment in full of the
Guaranteed Obligations. In furtherance of the foregoing and without limiting
the generality thereof, each Guarantor agrees as follows:

 

(a)       this
Guaranty is a guarantee of payment when due and not of collectability and is a
primary obligation of each Guarantor and not merely a contract of surety;

 

(b)       the
Administrative Agent may enforce this Guaranty upon the occurrence of an Event
of Default notwithstanding the existence of any dispute between the Company and
any Beneficiary with respect to the existence of such Event of Default;

 

(c)       the
obligations of each Guarantor hereunder are independent of the obligations of the
Company and the obligations of any other guarantor (including any other Guarantor)
of the obligations of the Company, and a separate action or actions may be
brought and prosecuted against such Guarantor whether or not any action is
brought against the Company or any of such other guarantors and whether or not the
Company is joined in any such action or actions;

 

(d)       payment
by any Guarantor of a portion, but not all, of the Guaranteed Obligations shall
in no way limit, affect, modify or abridge any Guarantor’s liability for any
portion of the Guaranteed Obligations that has not been paid. Without limiting
the generality of the foregoing, if the Administrative Agent is awarded a
judgment in any suit brought to enforce any Guarantor’s covenant to pay a
portion of the Guaranteed Obligations, such judgment shall not be deemed to
release such Guarantor from its covenant to pay the portion of the Guaranteed
Obligations that is not the subject of such suit, and such judgment shall not,
except to the extent satisfied by such Guarantor, limit, affect, modify or
abridge any other Guarantor’s liability hereunder in respect of the Guaranteed
Obligations;

 

(e)       any
Beneficiary, upon such terms as it deems appropriate, without notice or demand
and without affecting the validity or enforceability hereof or giving rise to
any reduction, limitation, impairment, discharge or termination of any
Guarantor’s liability hereunder, from time to time may (i) renew, extend,
accelerate, increase the rate of interest on,

 

77

 

or otherwise change the time, place, manner or terms of
payment of the Guaranteed Obligations, (ii) settle, compromise, release or
discharge, or accept or refuse any offer of performance with respect to, or
substitutions for, the Guaranteed Obligations or any agreement relating thereto
and/or subordinate the payment of the same to the payment of any other
obligations, (iii) request and accept other guarantees of the Guaranteed
Obligations and take and hold security for the payment hereof or the Guaranteed
Obligations, (iv) release, surrender, exchange, substitute, compromise,
settle, rescind, waive, alter, subordinate or modify, with or without
consideration, any security for payment of the Guaranteed Obligations, any
other guarantees of the Guaranteed Obligations, or any other obligation of any Person
(including any other Guarantor) with respect to the Guaranteed Obligations,
(v) enforce and apply any security now or hereafter held by or for the
benefit of such Beneficiary in respect hereof or the Guaranteed Obligations and
direct the order or manner of sale thereof, or exercise any other right or
remedy that such Beneficiary may have against any such security, in each case
as such Beneficiary in its discretion may determine consistent herewith or the
applicable Swap Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or
nonjudicial sales, whether or not every aspect of any such sale is commercially
reasonable, and even though such action operates to impair or extinguish any right
of reimbursement or subrogation or other right or remedy of any Guarantor
against the Company or any security for the Guaranteed Obligations and (vi) exercise
any other rights available to it under the Credit Documents; and

 

(f)        this
Guaranty and the obligations of the Guarantors hereunder shall be valid and
enforceable and shall not be subject to any reduction, limitation, impairment,
discharge or termination for any reason (other than payment in full of the
Guaranteed Obligations), including the occurrence of any of the following,
whether or not any Guarantor shall have had notice or knowledge of any of them:  (i) any failure or omission to assert or
enforce or agreement or election not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy (whether
arising under the Credit Documents, at law, in equity or otherwise) with
respect to the Guaranteed Obligations or any agreement relating thereto, or
with respect to any other guarantee of or security for the payment of the
Guaranteed Obligations, (ii) any rescission, waiver, amendment or
modification of, or any consent to departure from, any of the terms or
provisions (including provisions relating to events of default) hereof, any of
the other Credit Documents or any agreement or instrument executed pursuant
thereto, or of any other guarantee or security for the Guaranteed Obligations,
in each case whether or not in accordance with the terms hereof or such Credit
Document, such Swap Agreement or any agreement relating to such other guarantee
or security, (iii) the Guaranteed Obligations, or any agreement relating
thereto, at any time being found to be illegal, invalid or unenforceable in any
respect, (iv) the application of payments received from any source (other
than payments received pursuant to the other Credit Documents or from the
proceeds of any security for the Guaranteed Obligations, except to the extent
such security also serves as collateral for indebtedness other than the
Guaranteed Obligations) to the payment of indebtedness other than the
Guaranteed Obligations, even though any Beneficiary might have elected to apply
such payment to any part or all of the Guaranteed Obligations, (v) any
Beneficiary’s consent to the change, reorganization or termination of the
corporate structure or existence of the Company or any of its Subsidiaries and
to any corresponding restructuring of the Guaranteed Obligations, (vi) any
failure to perfect or continue perfection of a security

 

78

 

interest in any collateral that secures any of the Guaranteed
Obligations, (vii) any defenses, set-offs or counterclaims that the
Company may allege or assert against any Beneficiary in respect of the
Guaranteed Obligations, including failure of consideration, breach of warranty,
payment, statute of frauds, statute of limitations, accord and satisfaction and
usury and (viii) any other act or thing or omission, or delay to do any
other act or thing, that may or might in any manner or to any extent vary the
risk of any Guarantor as an obligor in respect of the Guaranteed Obligations.

 

7.5. Waivers by Guarantors.   Each Guarantor hereby waives, for the
benefit of the Beneficiaries, (a) any right to require any Beneficiary, as
a condition of payment or performance by such Guarantor, to (i) proceed
against the Company, any other guarantor (including any other Guarantor) of the
Guaranteed Obligations or any other Person, (ii) proceed against or
exhaust any security held from the Company, any such other guarantor or any
other Person, (iii) proceed against or have resort to any balance of any
Deposit Account or credit on the books of any Beneficiary in favor of the Company
or any other Person or (iv) pursue any other remedy in the power of any
Beneficiary whatsoever; (b) any defense arising by reason of the
incapacity, lack of authority or any disability or other defense of the Company
or any other Guarantor including any defense based on or arising out of the
lack of validity or the unenforceability of the Guaranteed Obligations or any
agreement or instrument relating thereto or by reason of the cessation of the
liability of the Company or any other Guarantor from any cause other than
payment in full of the Guaranteed Obligations; (c) any defense based upon
any statute or rule of law that provides that the obligation of a surety must
be neither larger in amount nor in other respects more burdensome than that of
the principal; (d) any defense based upon any Beneficiary’s errors or
omissions in the administration of the Guaranteed Obligations, except behavior that
amounts to bad faith; (e)(i) any principles or provisions of law,
statutory or otherwise, that are or might be in conflict with the terms hereof
and any legal or equitable discharge of such Guarantor’s obligations hereunder,
(ii) the benefit of any statute of limitations affecting such Guarantor’s
liability hereunder or the enforcement hereof, (iii) any rights to set-offs,
recoupments and counterclaims and (iv) promptness, diligence and any
requirement that any Beneficiary protect, secure, perfect or insure any
security interest or lien or any property subject thereto; (f) notices,
demands, presentments, protests, notices of protest, notices of dishonor and
notices of any action or inaction, including acceptance hereof, notices of
default hereunder or any agreement or instrument related thereto, notices of
any renewal, extension or modification of the Guaranteed Obligations or any
agreement related thereto, notices of any extension of credit to the Company
and notices of any of the matters referred to in Section 7.4 and any right
to consent to any thereof; and (g) any defenses or benefits that may be
derived from or afforded by law that limit the liability of or exonerate
guarantors or sureties, or that may conflict with the terms hereof.

 

7.6. Guarantors’ Rights of Subrogation,
Contribution, etc.   Until the Guaranteed Obligations shall
have been paid in full, each Guarantor hereby waives any claim, right or
remedy, direct or indirect, that such Guarantor now has or may hereafter have
against the Company or any other Guarantor or any of its assets in connection
with this Guaranty or the performance by such Guarantor of its obligations
hereunder, in each case whether such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise and including (a) any
right of subrogation, reimbursement or indemnification that such Guarantor now
has or may hereafter have against the Company with respect to the Guaranteed
Obligations, (b) any right to enforce, or to participate in, any claim,
right or remedy that any Beneficiary now

 

79

 

has or may hereafter have
against the Company and (c) any benefit of, and any right to participate
in, any collateral or security now or hereafter held by any Beneficiary. In
addition, until the Guaranteed Obligations shall have been paid in full, each
Guarantor shall withhold exercise of any right of contribution such Guarantor
may have against any other guarantor (including any other Guarantor) of the
Guaranteed Obligations, including any such right of contribution as
contemplated by Section 7.2. Each Guarantor further agrees that, to the
extent the waiver or agreement to withhold the exercise of its rights of
subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation, reimbursement or indemnification such
Guarantor may have against the Company or against any collateral or security,
and any rights of contribution such Guarantor may have against any such other
guarantor, shall be junior and subordinate to any rights any Beneficiary may
have against the Company, to all right, title and interest any Beneficiary may
have in any such collateral or security, and to any right any Beneficiary may
have against such other guarantor. If any amount shall be paid to any Guarantor
on account of any such subrogation, reimbursement, indemnification or
contribution rights at any time when all Guaranteed Obligations shall not have
been finally and indefeasibly paid in full, such amount shall be held in trust
for the Administrative Agent on behalf of the Beneficiaries and shall forthwith
be paid over to the Administrative Agent for the benefit of the Beneficiaries
to be credited and applied against the Guaranteed Obligations, whether matured
or unmatured, in accordance with the terms hereof.

 

7.7. Continuing Guaranty.   This Guaranty is a continuing guarantee
and shall remain in effect until all of the Guaranteed Obligations shall have
been paid in full. Each Guarantor hereby irrevocably waives any right to revoke
this Guaranty as to future transactions giving rise to any Guaranteed
Obligations.

 

7.8. Authority of Guarantors or the Company.   It is not necessary for any Beneficiary
to inquire into the capacity or powers of any Guarantor or the Company or the
officers, directors or any agents acting or purporting to act on behalf of any
of them.

 

7.9. Financial Condition of the Company.   Any Credit Extension may be made to the
Company or continued from time to time may be entered into from time to time
without notice to or authorization from any Guarantor regardless of the
financial or other condition of the Company at the time of any such grant or
continuation or at the time such Swap Agreement is entered into, as the case
may be. No Beneficiary shall have any obligation to disclose or discuss with
any Guarantor its assessment, or any Guarantor’s assessment, of the financial
condition of the Company. Each Guarantor has adequate means to obtain
information from the Company on a continuing basis concerning the financial
condition of the Company and its ability to perform its obligations under the
Credit Documents, and each Guarantor assumes the responsibility for being and
keeping informed of the financial condition of the Company and of all
circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations.
Each Guarantor hereby waives and relinquishes any duty on the part of any
Beneficiary to disclose any matter, fact or thing relating to the business,
operations or conditions of the Company now known or hereafter known by any
Beneficiary.

 

7.10. Bankruptcy, etc.   (a)  So long as
any Guaranteed Obligations remain outstanding, no Guarantor shall, without the
prior written consent of the Administrative Agent acting pursuant

 

80

 

to the instructions of the Requisite Lenders, commence or join with any
other Person in commencing any bankruptcy, reorganization or insolvency case or
proceeding of or against the Company or any other Guarantor. The obligations of
the Guarantors hereunder shall not be reduced, limited, impaired, discharged,
deferred, suspended or terminated by any case or proceeding, voluntary or
involuntary, involving the bankruptcy, insolvency, receivership,
reorganization, liquidation or arrangement of the Company or any other
Guarantor or by any defense that the Company or any other Guarantor may have by
reason of the order, decree or decision of any court or administrative body
resulting from any such proceeding.

 

(b)       Each Guarantor acknowledges and agrees that any interest on
any portion of the Guaranteed Obligations that accrues after the commencement
of any case or proceeding referred to in clause (a) above (or, if interest
on any portion of the Guaranteed Obligations ceases to accrue by operation of
law by reason of the commencement of such case or proceeding, such interest as
would have accrued on such portion of the Guaranteed Obligations if such case
or proceeding had not been commenced) shall be included in the Guaranteed
Obligations because it is the intention of the Guarantors and Beneficiaries
that the Guaranteed Obligations that are guaranteed by the Guarantors pursuant
hereto should be determined without regard to any rule of law or order that may
relieve the Company of any portion of such Guaranteed Obligations. The Guarantors
will permit any trustee in bankruptcy, receiver, debtor in possession, assignee
for the benefit of creditors or similar person to pay the Administrative Agent,
or allow the claim of the Administrative Agent in respect of, any such interest
accruing after the date on which such case or proceeding is commenced.

 

(c)       In the event that all or any portion of the Guaranteed
Obligations are paid by the Company, the obligations of the Guarantors
hereunder shall continue and remain in full force and effect or be reinstated,
as the case may be, in the event that all or any part of such payment(s) are
rescinded or recovered directly or indirectly from any Beneficiary as a
preference, fraudulent transfer or otherwise, and any such payments that are so
rescinded or recovered shall constitute Guaranteed Obligations for all purposes
hereunder.

 

7.11. Discharge of Guaranty Upon Sale of
Guarantor.   If all of the Capital Stock of any Guarantor or any of
its successors in interest hereunder shall be sold or otherwise disposed of
(including by merger or consolidation) in accordance with the terms and
conditions hereof, the Guaranty of such Guarantor or such successor in
interest, as the case may be, hereunder shall automatically be discharged and
released without any further action by any Beneficiary or any other Person
effective as of the time of such Asset Sale.

 

SECTION 8. EVENTS OF DEFAULT

 

8.1. Events of Default.   If any one or more of the following conditions
or events shall occur:

 

(a)       Failure to Make Payments When Due. Failure by the
Company to pay (i) when due any principal of any Loan, whether at stated
maturity, by acceleration, by notice of voluntary prepayment, by mandatory
prepayment or otherwise, or (ii) any interest on any Loan or any fee or any
other amount when due hereunder and continued for 30 days; or

 

81

 

(b)       Default in Other Agreements. Default under any mortgage, indenture or instrument under which there
may be issued or by which there may be secured or evidenced any Indebtedness
for money borrowed by the Company or any of its Restricted Subsidiaries (or the
payment of which is Guaranteed by the Company or any of its Restricted
Subsidiaries), other than the Loans or any Indebtedness owed to the Company or
a Restricted Subsidiary, whether such Indebtedness or Guarantee now exists, or
is created after the Closing Date, which default (i) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness (“Borrowed
Money Payment Default”) or (ii) results in the
acceleration of such Indebtedness prior to its maturity; and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Borrowed Money Payment Default or the maturity of which has been so
accelerated, aggregates $25.0 million or more; provided, however, that, if any such Borrowed Money Payment
Default is cured or waived or any such acceleration rescinded, or such
Indebtedness is repaid, within a period of 10 days from the continuation
of such Borrowed Money Payment Default beyond the applicable grace period or
the occurrence of such acceleration, as the case may be, such Event of Default
and any consequential acceleration of the unpaid principal of and accrued
interest on the Loans shall be automatically rescinded, so long as such
rescission does not conflict with any judgment or decree of a competent court;
or

 

(c)       Breach of Certain Covenants. Failure of any Credit
Party to perform or comply with any term or condition contained in (i) Section 6.8
or (ii) Section 5 or 6 (other than Section 6.8) and, in the case
of this clause (ii), such default shall not have been remedied or waived
within 30 days after receipt by the Company of notice from the Administrative
Agent or any Lender of such Default, which notice shall specify such Default,
demand that it be remedied and state that such notice is a “Notice of Default”;
or

 

(d)       Breach of Representations, etc. Any representation,
warranty, certification or other statement made or deemed made by any Credit
Party in any Credit Document or in any statement or certificate at any time
given by any Credit Party or any of its Subsidiaries in writing pursuant hereto
or thereto or in connection herewith or therewith shall be false in any
material respect as of the date made or deemed made; or

 

(e)       Other Defaults Under Credit Documents. Any Credit Party
shall default in the performance of or compliance with any term contained
herein or any of the other Credit Documents, other than any such term referred
to in any other Section of this Section 8.1, and such default shall not
have been remedied or waived within 60 days after receipt by the Company
of notice from the Administrative Agent or any Lender of such default, which
notice shall specify such default, demand that it be remedied and state that
such notice is a “Notice of Default”; or

 

(f)        Involuntary Bankruptcy; Appointment of Receiver, etc. A court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (i) is for relief against the Company or any
Significant Subsidiary or a group of Restricted Subsidiaries that, taken
together (as of the latest audited consolidated financial statements for the
Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary in an involuntary case, (ii) appoints a Custodian of the
Company or any Significant Subsidiary or a group of Restricted

 

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Subsidiaries
that, taken together (as of the latest audited consolidated financial
statements for the Company and its Restricted Subsidiaries), would constitute a
Significant Subsidiary or for any substantial part of its property or (iii) orders
the winding up or liquidation of the Company or any Significant Subsidiary or a
group of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary; or any
similar relief is granted under any foreign laws and the order, decree or relief remains unstayed and in effect for 60 days; or

 

(g)       Voluntary Bankruptcy; Appointment of Receiver, etc. The
Company or a Significant Subsidiary or a group of Restricted Subsidiaries that,
taken together (as of the latest audited consolidated financial statements for the
Company and its Restricted Subsidiaries), would constitute a Significant
Subsidiary, pursuant to or within the meaning of any Bankruptcy Law (i) commences a voluntary case or proceeding, (ii) consents to the
entry of a judgment, decree or order for relief against it in an involuntary
case or proceeding, (iii) consents to the appointment of a Custodian of it
or for any substantial part of its property, (iv) makes a general
assignment for the benefit of its creditors or (v) makes a general
assignment for the benefit of its creditors; or

 

(h)       Judgments and Attachments. Failure by the Company or any Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for the Company and its Restricted
Subsidiaries), would constitute a Significant Subsidiary to pay final judgments
aggregating in excess of $25.0 million (net of any amounts that a
reputable and creditworthy insurance company has acknowledged liability for in
writing), which judgments are not paid, discharged or stayed for a period of
60 days; or

 

(i)        Guaranties and other Credit Documents. At any time
after the execution and delivery hereof or thereof, as applicable, (i) any
Guaranty, for any reason other than the satisfaction in full of all Obligations
or its release pursuant to the terms hereof, shall cease to be in full force
and effect (other than in accordance with its terms) or shall be declared to be
null and void or any Guarantor shall repudiate its obligations thereunder,
(ii) this Agreement ceases to be in full force and effect (other than by
reason of the satisfaction in full of the Obligations in accordance with the
terms hereof) or shall be declared null and void or (iii) any Credit Party
shall contest the validity or enforceability of any Credit Document in writing
or deny in writing that it has any further liability, including with respect to
future advances by the Lenders, under any Credit Document to which it is a
party; or

 

(j)        Permanent Securities. The Company shall (i) fail
to issue and sell Permanent Securities when and as required by paragraph 3
of the Fee Letter or (ii) terminate the Engagement Letter or cause or
permit any material breach of its obligations thereunder, except in
circumstances where the relevant document by its terms provides for liquidated
damages and specifies such liquidated damages are the exclusive remedy for the
relevant breach;

 

THEN, (1) upon the occurrence of any
Event of Default described in Section 8.1(f) or (g), automatically, and (2) upon
the occurrence of any other Event of Default, at the request of (or with the
consent of) the Requisite Lenders, upon notice to the Company by the
Administrative

 

83

 

Agent, the unpaid
principal of and accrued interest on the Loans shall immediately become due and
payable, in each case without presentment, demand, protest or other
requirements of any kind, all of which are hereby expressly waived by each
Credit Party.

 

84

 

SECTION 9. AGENTS

 

9.1. Appointment of Agents.   GSCP is hereby appointed the Administrative Agent
hereunder and under the other Credit Documents and each Lender hereby
authorizes the Administrative Agent to act as its agent in accordance with the
terms hereof and the other Credit Documents. GSCP is hereby appointed
Syndication Agent hereunder, and each Lender hereby authorizes the Syndication
Agent to act as its agent in accordance with the terms hereof and the other
Credit Documents. Each Agent hereby agrees to act upon the express conditions
contained herein and the other Credit Documents, as applicable. The provisions
of this Section 9 are solely for the benefit of the Agents and the Lenders
and no Credit Party shall have any rights as a third party beneficiary of any
of the provisions thereof. In performing its functions and any duties
hereunder, each Agent shall act solely as an agent of the Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or
relationship of agency or trust with or for the Company or any of its Subsidiaries.
Each Agent, without consent of or notice to any party hereto, may assign any
and all of its rights or obligations hereunder to any of its Affiliates. As of
the Closing Date, neither GSCP, in its capacity as Syndication Agent, nor GSCP,
in its capacity as Lead Arranger, shall have any obligations under this
Agreement or any other Credit Document, but each of them shall be entitled to
all benefits of this Section 9. To the extent required
by any applicable law, the Administrative Agent may withhold from any payment
to any Lender an amount equivalent to any applicable withholding Tax. If the
Internal Revenue Service or any other Governmental Authority asserts a claim
that the Administrative Agent did not properly withhold Tax from amounts paid
to or for the account of any Lender because the appropriate form was not
delivered or was not properly executed or because such Lender failed to notify
the Administrative Agent of a change in circumstance that rendered the
exemption from, or reduction of, withholding Tax ineffective or for any other
reason, such Lender shall indemnify the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Administrative Agent as Tax or
otherwise, including any penalties or interest, together with all expenses
(including legal expenses, allocated internal costs and out-of-pocket expenses)
incurred.

 

9.2. Powers and Duties.   Each Lender irrevocably authorizes each
Agent to take such action on such Lender’s behalf and to exercise such powers,
rights and remedies hereunder and under the other Credit Documents as are
specifically delegated or granted to such Agent by the terms hereof and
thereof, together with such powers, rights and remedies as are reasonably
incidental thereto. Each Agent shall have only those duties and
responsibilities that are expressly specified herein and the other Credit
Documents. Each Agent may exercise such powers, rights and remedies and perform
such duties by or through its agents or employees. No Agent shall have, by
reason hereof or any of the other Credit Documents, a fiduciary relationship in
respect of any Lender; and nothing herein or any of the other Credit Documents,
expressed or implied, is intended to or shall be so construed as to impose upon
any Agent any obligations in respect hereof or any of the other Credit
Documents except as expressly set forth herein or therein.

 

9.3. General Immunity.

 

(a)       No Responsibility for Certain Matters. No Agent shall
be responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency hereof or any other
Credit Document or for any representations, warranties,

 

85

 

recitals or statements made herein
or therein or made in any written or oral statements or in any financial or
other statements, instruments, reports or certificates or any other documents
furnished or made by any Agent to the Lenders or by or on behalf of any Credit
Party to any Agent or any Lender in connection with the Credit Documents and
the transactions contemplated thereby or for the financial condition or
business affairs of any Credit Party or any other Person liable for the payment
of any Obligations, nor shall any Agent be required to ascertain or inquire as to
the performance or observance of any of the terms, conditions, provisions,
covenants or agreements contained in any of the Credit Documents or as to the
use of the proceeds of the Loans or as to the existence or possible existence
of any Event of Default or Default or to make any disclosures with respect to
the foregoing. Anything contained herein to the contrary notwithstanding, the
Administrative Agent shall not have any liability arising from confirmations of
the amount of outstanding Loans or the component amounts thereof.

 

(b)       Exculpatory Provisions. No Agent or any of its
officers, partners, directors, employees or agents shall be liable to the
Lenders for any action taken or omitted by any Agent under or in connection
with any of the Credit Documents except to the extent caused by such Agent’s
gross negligence or willful misconduct. Each Agent shall be entitled to refrain
from any act or the taking of any action (including the failure to take an
action) in connection herewith or any of the other Credit Documents or from the
exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in
respect thereof from the Requisite Lenders (or such other Lenders as may be
required to give such instructions under Section 10.5) and, upon receipt
of such instructions from the Requisite Lenders (or such other Lenders, as the
case may be), such Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. Without prejudice to the generality of the
foregoing, (i) each Agent shall be entitled to rely, and shall be fully
protected in relying, upon any communication, instrument or document believed
by it to be genuine and correct and to have been signed or sent by the proper
Person or Persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for the
Company and its Subsidiaries), accountants, experts and other professional
advisors selected by it and (ii) no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or (where so
instructed) refraining from acting hereunder or any of the other Credit
Documents in accordance with the instructions of the Requisite Lenders (or such
other Lenders as may be required to give such instructions under Section 10.5).

 

9.4. Agents Entitled to Act as Lender.   The agency hereby created shall in no way
impair or affect any of the rights and powers of, or impose any duties or
obligations upon, any Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans, each Agent shall have the same
rights and powers hereunder as any other Lender and may exercise the same as if
it were not performing the duties and functions delegated to it hereunder, and
the term “Lender” shall, unless the context clearly otherwise indicates,
include each Agent in its individual capacity. Any Agent and its Affiliates may
accept deposits from, lend money to, own securities of, and generally engage in
any kind of banking, trust, financial advisory or other business with the
Company or any of its Affiliates as if it were not performing the duties

 

86

 

specified herein, and may
accept fees and other consideration from the Company for services in connection
herewith and otherwise without having to account for the same to the Lenders.

 

9.5. Lenders’ Representations, Warranties and Acknowledgment.

 

(a)       Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of the Company
and its Subsidiaries in connection with Credit Extensions hereunder and that it
has made and shall continue to make its own appraisal of the creditworthiness
of the Company and its Subsidiaries. No Agent shall have any duty or
responsibility, either initially or on a continuing basis, to make any such investigation
or any such appraisal on behalf of the Lenders or to provide any Lender with
any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter,
and no Agent shall have any responsibility with respect to the accuracy of or
the completeness of any information provided to the Lenders.

 

(b)       Each Lender, by delivering its signature page to this
Agreement and funding its Loan on the Closing Date, shall be deemed to have
acknowledged receipt of, and consented to and approved, each Credit Document
and each other document required to be approved by any Agent, Requisite Lenders
or Lenders, as applicable on the Closing Date.

 

9.6. Right to Indemnity.   Each Lender, in proportion to its Pro
Rata Share, severally agrees to indemnify each Agent, to the extent that such
Agent shall not have been reimbursed by any Credit Party, for and against any
and all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever that may be imposed on, incurred
by or asserted against such Agent in exercising its powers, rights and remedies
or performing its duties hereunder or under the other Credit Documents or
otherwise in its capacity as such Agent in any way relating to or arising out
of this Agreement or the other Credit Documents; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from such Agent’s gross
negligence or willful misconduct. If any indemnity furnished to any Agent for
any purpose shall, in the opinion of such Agent, be insufficient or become
impaired, such Agent may call for additional indemnity and cease, or not
commence, to do the acts indemnified against until such additional indemnity is
furnished; provided that in no
event shall this sentence require any Lender to indemnify any Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement in excess of such Lender’s Pro Rata Share thereof; and provided further that this sentence shall
not be deemed to require any Lender to indemnify any Agent against any
liability, obligation, loss, damage, penalty, action, judgment, suit, cost,
expense or disbursement described in the proviso in the immediately preceding
sentence.

 

9.7. Successor Administrative Agent.   The Administrative Agent may resign at
any time by giving 30 days’ prior written notice thereof to the Lenders
and the Company. Upon any such notice of resignation, the Requisite Lenders
shall have the right, upon five Business Days’ notice to the Company, to
appoint a successor Administrative Agent. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, that successor Administrative Agent shall thereupon succeed to and
become vested with all the rights,

 

87

 

powers, privileges and
duties of the retiring or removed Administrative Agent and the retiring or
removed Administrative Agent shall promptly transfer to such successor
Administrative Agent all sums, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor Administrative Agent under the Credit Documents, whereupon such
retiring or removed Administrative Agent shall be discharged from its duties
and obligations hereunder. After any retiring or removed Administrative Agent’s
resignation or removal hereunder as Administrative Agent, the provisions of
this Section 9 shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Administrative Agent hereunder.

 

9.8. Guaranty

 

(a)       Agents under Guaranty. Each Lender hereby further
authorizes the Administrative Agent, on behalf of and for the benefit of the Lenders,
to be the agent for and representative of the Lenders with respect to the Guaranty.
Subject to Section 10.5, without further written consent or authorization
from the Lenders, the Administrative Agent may execute any documents or
instruments necessary to release any Guarantor from the Guaranty pursuant to
Section 7.11 or with respect to which the Requisite Lenders (or such other
Lenders as may be required to give such consent under Section 10.5) have
otherwise consented.

 

(b)       Right to Enforce Guaranty. Anything contained in any of
the Credit Documents to the contrary notwithstanding, the Company, the Administrative
Agent and each Lender hereby agree that no Lender shall have any right
individually to enforce the Guaranty, it being understood and agreed that all
powers, rights and remedies hereunder may be exercised solely by the Administrative
Agent, on behalf of the Lenders in accordance with the terms hereof.

 

SECTION 10. MISCELLANEOUS

 

10.1. Notices.   Unless otherwise specifically provided
herein, any notice or other communication herein required or permitted to be
given to a Credit Party, the Syndication Agent or the Administrative Agent
shall be sent to such Person’s address as set forth on Appendix B or in
the other relevant Credit Document, and in the case of any Lender, the address
as indicated on Appendix B or otherwise indicated to the Administrative
Agent in writing. Each notice hereunder shall be in writing and may be
personally served, telexed or sent by telefacsimile or U.S. mail or courier
service and shall be deemed to have been given when delivered in person or by
courier service and signed for against receipt thereof, upon receipt of
telefacsimile or telex, or three Business Days after depositing it in the U.S.
mail with postage prepaid and properly addressed; provided that no notice to any Agent shall be effective
until received by such Agent.

 

10.2. Expenses.   Whether or not the transactions
contemplated hereby shall be consummated, the Company agrees to pay promptly
(a) all the actual and reasonable costs and expenses of preparation of the
Credit Documents and any consents, amendments, waivers or other modifications
thereto, (b) all the costs of furnishing all opinions by counsel for the
Company and the other Credit Parties, (c) the reasonable fees, expenses
and disbursements of counsel to the Agents (in each case including allocated
costs of internal counsel) in connection with the

 

88

 

negotiation, preparation,
execution and administration of the Credit Documents and any consents, amendments,
waivers or other modifications thereto and any other documents or matters
requested by the Company, (d) all the actual costs and reasonable fees,
expenses and disbursements of any auditors, accountants, consultants or
appraisers, (e) all other actual and reasonable costs and expenses
incurred by each Agent in connection with the syndication of the Loans and
Commitments and the negotiation, preparation and execution of the Credit
Documents and any consents, amendments, waivers or other modifications thereto
and the transactions contemplated thereby and (f) after the occurrence of
a Default or an Event of Default, all costs and expenses, including reasonable
attorneys’ fees (including allocated costs of internal counsel) and costs of
settlement, incurred by any Agent and Lenders in enforcing any Obligations of
or in collecting any payments due from any Credit Party hereunder or under the
other Credit Documents by reason of such Default or Event of Default (including
in connection with the enforcement of the Guaranty) or in connection with any
refinancing or restructuring of the credit arrangements provided hereunder in
the nature of a “work-out” or pursuant to any insolvency or bankruptcy cases or
proceedings.

 

10.3. Indemnity.

 

(a)       In addition to the payment of expenses pursuant to
Section 10.2, whether or not the transactions contemplated hereby shall be
consummated, each Credit Party agrees to defend (subject to Indemnitees’
selection of counsel), indemnify, pay and hold harmless each Agent and Lender
and the officers, partners, directors, trustees, employees, agents and
Affiliates of each Agent and each Lender (each, an “Indemnitee”), from
and against any and all Indemnified Liabilities; provided that no Credit Party shall have any obligation to
any Indemnitee hereunder with respect to any Indemnified Liabilities to the
extent such Indemnified Liabilities arise from the gross negligence, willful
misconduct or bad faith of that Indemnitee. To the extent that the undertakings
to defend, indemnify, pay and hold harmless set forth in this Section 10.3
may be unenforceable in whole or in part because they are violative of any law
or public policy, the applicable Credit Party shall contribute the maximum
portion that it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees
or any of them.

 

(b)       To the extent permitted by applicable law, no Credit Party
shall assert, and each Credit Party hereby waives, any claim against the Lenders,
the Agents and their respective Affiliates, directors, employees, attorneys or
agents, on any theory of liability, for special, indirect, consequential or
punitive damages  (as opposed to direct
or actual damages) (whether or not the claim therefor is based on contract,
tort or duty imposed by any applicable legal requirement) arising out of, in
connection with, arising out of, as a result of, or in any way related to, this
Agreement or any Credit Document or any agreement or instrument contemplated
hereby or thereby or referred to herein or therein, the transactions
contemplated hereby or thereby, any Loan or the use of the proceeds thereof or
any act or omission or event occurring in connection therewith, and the Company
hereby waives, releases and agrees not to sue upon any such claim or any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.

 

10.4. Set-Off.   In addition to any rights now or
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence of any Event of Default

 

89

 

each Lender is hereby
authorized by each Credit Party at any time or from time to time subject to the
consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed), without notice to any Credit Party or to any other Person
(other than the Administrative Agent), any such notice being hereby expressly
waived, to set off and to appropriate and to apply any and all deposits
(general or special, including Indebtedness evidenced by certificates of
deposit, whether matured or unmatured, but not including trust accounts) and
any other Indebtedness at any time held or owing by such Lender to or for the
credit or the account of any Credit Party against and on account of the
obligations and liabilities of any Credit Party to such Lender hereunder and
participations therein and under the other Credit Documents, including all
claims of any nature or description arising out of or connected hereto, and
participations therein or with any other Credit Document, irrespective of
whether or not (a) such Lender shall have made any demand hereunder or
(b) the principal of or the interest on the Loans or any other amounts due
hereunder shall have become due and payable pursuant to Section 2 and
although such obligations and liabilities, or any of them, may be contingent or
unmatured.

 

10.5. Amendments and Waivers.

 

(a)       Requisite Lenders’ Consent. Subject to Sections 10.5(b)
and (c), no amendment, modification, termination or waiver of any provision of
the Credit Documents, or consent to any departure by any Credit Party
therefrom, shall in any event be effective without the written concurrence of
the Requisite Lenders.

 

(b)       Affected Lenders’ Consent. Without the written consent
of each Lender  that would be directly
affected thereby, no amendment, modification, termination, or consent shall be
effective if the effect thereof would:

 

(i)            extend the scheduled final maturity of any Loan or Loan
Note;

 

(ii)           waive any mandatory prepayment required by Section 2.10(b)
or (c);

 

(iii)          reduce the rate of interest on any Loan (other than any
waiver of any increase in the interest rate applicable to any Loan pursuant to
Section 2.7) or any fee payable hereunder;

 

(iv)          extend the time for payment of any such interest or fees;

 

(v)           reduce the principal amount of any Loan;

 

(vi)          amend, modify, terminate or waive any provision of this
Section 10.5(b);

 

(vii)         amend the definition of “Requisite Lenders” or “Pro
Rata Share”;

 

(viii)        release all or substantially all of the
Guarantors from the Guaranty except as expressly provided in the Credit
Documents; or

 

90

 

(ix)           consent to the assignment or transfer by any Credit Party
of any of its rights and obligations under any Credit Document.

 

(c)       Other Consents. No amendment, modification, termination
or waiver of any provision of the Credit Documents, or consent to any departure
by any Credit Party therefrom, shall amend, modify, terminate or waive any
provision of Section 10 as the same applies to any Agent, or any other
provision hereof as the same applies to the rights or obligations of any Agent,
in each case without the consent of such Agent.

 

(d)       Execution of Amendments, etc. The Administrative Agent
may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of such Lender.
Any waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 10.5
shall be binding upon each Lender at the time outstanding, each future Lender
and, if signed by a Credit Party, on such Credit Party.

 

10.6. Successors and Assigns;
Participations.

 

(a)       Generally. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns and shall inure to
the benefit of the parties hereto and the successors and assigns of the Lenders.
No Credit Party’s rights or obligations hereunder nor any interest therein may
be assigned or delegated by any Credit Party without the prior written consent
of all Lenders (and any purported assignment or delegation without such consent
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 and, to the extent expressly
contemplated hereby, Indemnitees and Affiliates of each of the Agents and the
Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

 

(b)       Register. The Company, the Administrative Agent and the
Lenders shall deem and treat the Persons listed as Lenders in the Register as
the holders and owners of the corresponding Commitments and Loans listed
therein for all purposes hereof, and no assignment or transfer of any such
Commitment or Loan shall be effective, in each case, unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall have
been delivered to and accepted by the Administrative Agent and recorded in the
Register as provided in Section 10.6(e). Prior to such recordation, all
amounts owed with respect to the applicable Commitment or Loan shall be owed to
the Lender listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is listed in the Register as a Lender shall
be conclusive and binding on any subsequent holder, assignee or transferee of
the corresponding Commitments or Loans.

 

(c)       Right to Assign. Each Lender shall have the right at
any time to sell, assign or transfer all or a portion of its rights and
obligations under this Agreement, including all or a

 

91

 

portion of its Commitment or Loans
owing to it or other Obligation (provided,
however, that each such assignment shall be of a uniform, and not
varying, percentage of all rights and obligations under and in respect of any
Loan and any related Commitments):

 

(i)            to any Person meeting the criteria of clause (1) of
the definition of the term of “Eligible Assignee” upon the giving of notice to
Company and Administrative Agent; and

 

(ii)           to any Person meeting the criteria of clause (2) of
the definition of the term of “Eligible Assignee”; provided that each such assignment pursuant to this
Section 10.6(c)(ii) shall be in an aggregate amount of not less than
$1 million (or such lesser amount as may be agreed to by Administrative
Agent or as shall constitute the aggregate amount of the Loan of the assigning
Lender) with respect to the assignment of Loans.

 

(d)       Mechanics. The assigning Lender and the assignee
thereof shall execute and deliver to the Administrative Agent an Assignment
Agreement, together with such forms, certificates or other evidence, if any,
with respect to U.S. federal income tax withholding matters as the assignee
under such Assignment Agreement may be required to deliver to the Administrative
Agent pursuant to Section 2.14(c).

 

(e)       Notice of Assignment. Upon its receipt of a duly
executed and completed Assignment Agreement, together with the processing and
recordation fee referred to in Section 10.6(d) (and any forms,
certificates or other evidence required by this Agreement in connection
therewith), the Administrative Agent shall record the information contained in
such Assignment Agreement in the Register, shall give prompt notice thereof to the
Company and shall maintain a copy of such Assignment Agreement.

 

(f)        Representations and Warranties of Assignee. Each
Lender, upon execution and delivery hereof or upon executing and delivering an
Assignment Agreement, as the case may be, represents and warrants as of the
Closing Date or as of the applicable Effective Date (as defined in the
applicable Assignment Agreement) that it (i) is an Eligible Assignee, (ii) has
experience and expertise in the making of or investing in commitments or loans
such as the applicable Commitments or Loans, as the case may be, and (iii) will
make or invest in, as the case may be, its Commitments or Loans for its own
account in the ordinary course of its business and without a view to
distribution of such Commitments or Loans within the meaning of the Securities
Act or the Exchange Act or other federal securities laws (it being understood
that, subject to the provisions of this Section 10.6, the disposition of
such Loans or any interests therein shall at all times remain within its
exclusive control).

 

(g)       Effect of Assignment. Subject to the terms and
conditions of this Section 10.6, as of the “Effective Date” specified in
the applicable Assignment Agreement, (i) the assignee thereunder shall
have the rights and obligations of a “Lender” hereunder to the extent such
rights and obligations hereunder have been assigned to it pursuant to such
Assignment Agreement and shall thereafter be a party hereto and a “Lender” for
all purposes hereof, (ii) the assigning Lender thereunder shall, to the
extent that rights and obligations hereunder have been assigned thereby
pursuant to such Assignment Agreement, relinquish its

 

92

 

rights (other than any rights that
survive the termination hereof under Section 10.8) and be released from
its obligations hereunder (and, in the case of an Assignment Agreement covering
all or the remaining portion of an assigning Lender’s rights and obligations
hereunder, such Lender shall cease to be a party hereto; provided that, anything contained in any
of the Credit Documents to the contrary notwithstanding, such assigning Lender
shall continue to be entitled to the benefit of all indemnities hereunder as
specified herein with respect to matters arising out of the prior involvement
of such assigning Lender as a Lender hereunder), (iii) the Commitments
shall be modified to reflect the Commitment of such assignee and (iv) if
any such assignment occurs after the issuance of any Note hereunder, the
assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to the
Administrative Agent for cancellation, and thereupon the Company shall issue
and deliver new Notes, if so requested by the assignee and/or assigning Lender,
to such assignee and/or to such assigning Lender, with appropriate insertions,
to reflect the new outstanding Loans of the assignee and/or the assigning
Lender.

 

(h)       Participations. Each Lender shall have the right at any
time to sell one or more participations to any Person (other than the Company,
any of its Subsidiaries or any of its Affiliates) in all or any part of its
Commitments, Loans or in any other Obligation. The holder of any such
participation, other than an Affiliate of the Lender granting such participation,
shall not be entitled to require such Lender to take or omit to take any action
hereunder except with respect to any amendment, modification or waiver that
would (i) extend the final scheduled maturity of any Loan or Note in which
such participant is participating, or reduce the rate or extend the time of
payment of interest or fees thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant’s
participation over the amount thereof then in effect (it being understood that
a waiver of any Default or Event of Default or of a mandatory reduction in the
Commitment shall not constitute a change in the terms of such participation,
and that an increase in any Commitment or Loan shall be permitted without the
consent of any participant if the participant’s participation is not increased
as a result thereof) or (ii) consent to the assignment or transfer by any
Credit Party of any of its rights and obligations under this Agreement. The Company
agrees that each participant shall be entitled to the benefits of Section 2.14
to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to paragraph (c) of this Section; provided that (i) a participant shall not be entitled
to receive any greater payment under Section 2.14 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 Company’s prior written consent, and (ii) a participant
that would be a Non-U.S. Lender if it were a Lender shall not be entitled to
the benefits of Section 2.14 unless the Company is notified of the
participation sold to such participant and such participant agrees, for the
benefit of the Company, to comply with Section 2.14 as though it were a
Lender. To the extent permitted by law, each participant also shall be entitled
to the benefits of Section 10.4 as though it were a Lender, provided that such Participant agrees to
be subject to Section 2.12 as though it were a Lender.

 

(i)        Certain Other Assignments. In addition to any other
assignment permitted pursuant to this Section 10.6, any Lender may assign
and/or pledge all or any portion of its Loans, the other Obligations owed by or
to such Lender, and its Notes, if any, to secure

 

93

 

obligations of such Lender
including to any Federal Reserve Bank as collateral security pursuant to
Regulation A of the Board of Governors and any operating circular issued
by such Federal Reserve Bank; provided
that no Lender, as between the Company and such Lender, shall be relieved of
any of its obligations hereunder as a result of any such assignment and pledge;
and provided further that in no event shall
the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender”
or be entitled to require the assigning Lender to take or omit to take any action
hereunder.

 

10.7. Independence of Covenants.   All covenants hereunder shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or would otherwise be within the limitations of, another covenant shall not
avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.

 

10.8. Survival of Representations,
Warranties and Agreements. 
 All representations, warranties and agreements made
herein shall survive the execution and delivery hereof and the making of any
Credit Extension. Notwithstanding anything herein or implied by law to the
contrary, the agreements of each Credit Party set forth in Sections 2.14, 10.2,
10.3 and 10.4 and the agreements of the Lenders set forth in Sections 2.12
shall survive the payment of the Loans.

 

10.9. No Waiver; Remedies Cumulative.   No failure or delay on the part of any
Agent or any Lender in the exercise of any power, right or privilege hereunder
or under any other Credit Document shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other power, right or
privilege. The rights, powers and remedies given to each Agent and each Lender
hereby are cumulative and shall be in addition to and independent of all
rights, powers and remedies existing by virtue of any statute or rule of law or
in any of the other Credit Documents. Any forbearance or failure to exercise,
and any delay in exercising, any right, power or remedy hereunder shall not
impair any such right, power or remedy or be construed to be a waiver thereof,
nor shall it preclude the further exercise of any such right, power or remedy.

 

10.10. Marshalling; Payments Set Aside.   Neither any Agent nor any Lender shall be
under any obligation to marshal any assets in favor of any Credit Party or any
other Person or against or in payment of any or all the Obligations. To the
extent that any Credit Party makes a payment or payments to the Administrative
Agent or the Lenders (or to the Administrative Agent, on behalf of the Lenders),
or the Administrative Agent or the Lenders enforce any security interests or
exercise their rights of set-off, and such payment or payments or the proceeds
of such enforcement or set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, any other state or federal law, common law or any equitable
cause, then, to the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, rights and remedies
therefor or related thereto, shall be revived and continued in full force and
effect as if such payment or payments had not been made or such enforcement or
set-off had not occurred.

 

94

 

10.11. Severability.   In case any provision in or obligation
hereunder or any Note shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

10.12. Obligations Several; Independent
Nature of Lenders’ Rights. 
 The obligations of the Lenders hereunder are several
and no Lender shall be responsible for the obligations or Commitment of any
other Lender hereunder. Nothing contained herein or in any other Credit
Document, and no action taken by the Lenders pursuant hereto or thereto, shall
be deemed to constitute the Lenders as a partnership, an association, a joint
venture or any other kind of entity. The amounts payable at any time hereunder
to each Lender shall be a separate and independent debt, and each Lender shall
be entitled to protect and enforce its rights arising out hereof and it shall
not be necessary for any other Lender to be joined as an additional party in
any proceeding for such purpose.

 

10.13. Headings.   Section headings herein are included
herein for convenience of reference only and shall not constitute a part hereof
for any other purpose or be given any substantive effect.

 

10.14. APPLICABLE LAW.   THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF.

 

10.15. CONSENT TO JURISDICTION.   ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY CREDIT PARTY ARISING OUT OF OR
RELATING HERETO OR ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH
CREDIT PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(a) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION
AND VENUE OF SUCH COURTS, (b) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS,
(c) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
SECTION 10.1, (d) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE CREDIT
PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT AND (e) AGREES AGENTS AND
LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW
OR TO BRING PROCEEDINGS AGAINST ANY CREDIT PARTY IN THE COURTS OF ANY OTHER
JURISDICTION.

 

95

 

10.16. WAIVER OF JURY TRIAL.   EACH OF THE PARTIES HERETO HEREBY
AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE OTHER CREDIT
DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT IS BEING ESTABLISHED. THE
SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS
TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND
ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY HERETO ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP,
THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT AND
THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. EACH
PARTY HERETO FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER
WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 10.16 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

 

10.17. Confidentiality.   Each Lender shall hold all confidential
information regarding the Company and its Subsidiaries and their businesses
identified as such by the Company and obtained by such Lender pursuant to the
requirements hereof in accordance with such Lender’s customary procedures for
handling confidential information of 
such nature, it being understood and agreed by the Company that, in any
event, a Lender may make (i) disclosures of such information to Affiliates
of such Lender and to their agents and advisors (and to other persons
authorized by a Lender or Agent to organize, present or disseminate such
information in connection with disclosures otherwise made in accordance with
this Section 10.17), (ii) disclosures of such information reasonably
required by any bona fide or potential assignee, transferee or participant in
connection with the contemplated assignment, transfer or participation by such
Lender of any Loans, provided that,
prior to any disclosure, such assignee, transferee or participant shall agree
in a writing provided to the Company to be bound by the provisions of this
Section 10.17 as if it were a Lender hereunder, (iii) disclosure to
any rating agency when required by it, provided
that, prior to any disclosure, such rating agency shall undertake in writing to
preserve the confidentiality of any confidential information relating to the
Credit Parties received by it from any of the Agents or any Lender and (iv) disclosures
required or requested by any governmental agency or representative thereof or
by the NAIC or pursuant to legal or judicial process; provided that, unless specifically
prohibited by applicable law or

 

96

 

court order, each Lender
shall make reasonable efforts to notify the Company of any request by any
governmental agency or representative thereof (other than any such request in
connection with any examination of the financial condition or other routine
examination of such Lender by such governmental agency) for disclosure of any
such non-public information prior to disclosure of such information.

 

10.18. Usury Savings Clause.   Notwithstanding any other provision
herein, the aggregate interest rate charged with respect to any of the Obligations,
including all charges or fees in connection therewith deemed in the nature of
interest under applicable law shall not exceed the Highest Lawful Rate. If the
rate of interest (determined without regard to the preceding sentence) under
this Agreement at any time exceeds the Highest Lawful Rate, the outstanding
amount of the Loans made hereunder shall bear interest at the Highest Lawful
Rate until the total amount of interest due hereunder equals the amount of
interest that would have been due hereunder if the stated rates of interest set
forth in this Agreement had at all times been in effect. In addition, if when
the Loans made hereunder are repaid in full the total interest due hereunder
(taking into account the increase provided for above) is less than the total
amount of interest that would have been due hereunder if the stated rates of
interest set forth in this Agreement had at all times been in effect, then to
the extent permitted by law, the Company shall pay to the Administrative Agent
an amount equal to the difference between the amount of interest paid and the
amount of interest that would have been paid if the Highest Lawful Rate had at
all times been in effect. Notwithstanding the foregoing, it is the intention of
the Lenders and the Company to conform strictly to any applicable usury laws. Accordingly,
if any Lender contracts for, charges, or receives any consideration that
constitutes interest in excess of the Highest Lawful Rate, then any such excess
shall be cancelled automatically and, if previously paid, shall at such Lender’s
option be applied to the outstanding amount of the Loans made hereunder or be
refunded to the Company.

 

10.19. Counterparts.   This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.

 

10.20. Effectiveness.   This Agreement shall become effective
upon the execution of a counterpart hereof by each of the parties hereto and
receipt by the Company and the Administrative Agent of written or telephonic
notification of such execution and authorization of delivery thereof.

 

10.21. Lender Representations.   Each Lender represents and warrants to
the Credit Parties as follows:

 

(a)       such Lender is an “accredited investor,” as that term is
defined in Rule 501 of the Securities Act, and is purchasing its Loan and
the Exchange Notes for the purpose of investment and not with a view towards
the sale or distribution thereof within the meaning of the Securities Act;

 

(b)       it understands that the Exchange Notes will not be registered
under the Securities Act or any state or other securities law, by reason of
their issuance by the Company in a transaction exempt from the registration
requirements of the Securities Act, and that it

 

97

 

must hold the Exchange Notes
indefinitely unless a subsequent disposition thereof is registered under the
Securities Act and applicable state and other securities laws or is exempt from
registration; and

 

(c)       it understands that the exemption from registration afforded
by Rule 144 promulgated under the Securities Act depends on the
satisfaction of various conditions.

 

[Remainder of page intentionally
left blank]

 

98

 

IN
WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

 

 

	
   

  	
  POGO PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James P. Ulm, II

  
	
   

  	
   

  	
  Name:

  	
  James P. Ulm, II

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice
  President and

  
	
   

  	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  GOLDMAN SACHS
  CREDIT PARTNERS L.P.,

  
	
   

  	
  as Lead Arranger, Syndication Agent,

  Administrative Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W W Archer

  
	
   

  	
   

  	
  Authorized Signatory

  

 

 

APPENDIX A

TO CREDIT AGREEMENT

 

Loan Commitments

 

	
  Lender

  	
   

  	
  Loan

  Commitment

  	
   

  	
  Pro

  Rata Share

  	
   

  
	
  Goldman Sachs
  Credit Partners L.P.

  	
   

  	
  $

  	
  500,000,000

  	
   

  	
  100.000

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  500,000,000

  	
   

  	
  100.000

  	
  %

  

 

A-1

 

APPENDIX B

TO CREDIT AGREEMENT

 

Notice Addresses

 

POGO PRODUCING COMPANY

5 Greenway Plaza

P.O. Box 2504

Houston, Texas  77252

Attention:  James P. Ulm, II

Telecopier:  (713) 297-5150

 

with a copy to:

 

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas  75201

Attention:  Roderick Goyne, Esq.

Telecopier:  (214) 661-4527

 

B-1

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Lead Arranger, Administrative Agent,

Syndication Agent and a Lender

 

Goldman Sachs Credit Partners L.P.

85 Broad Street

New York, New York  10004

Attention:  Pedro Ramirez

Telecopier:  (212) 357-4597

 

with a copy to:

 

Goldman Sachs Credit Partners L.P.

85 Broad Street

New York, New York  10004

Attention:  Michelle Latzoni

Telecopier:  (212) 357-4597

 

B-2

 

SCHEDULE 1.1

 

CASH
EQUIVALENT INVESTMENTS

 

Unless otherwise noted, all capitalized terms used in
this Schedule 1.1 have the respective meanings assigned to them in the Senior
Credit Facility, effective on the date hereof.

 

“Cash Equivalent
Investment” means, at any time:

 

(a)           securities maturing not
more than one year after such time, issued or guaranteed by the United States
Government or its agencies or instrumentalities and GSE’s (Government Sponsored
Enterprises);

 

(b)           commercial paper,
maturing not more than nine months from the date of issue, which is issued by
(i) a corporation (other than an Affiliate or a Subsidiary of the Borrower)
organized under the laws of any state of the United States or of the District
of Columbia and rated to be of investment grade by S&P or Moody’s, or (ii)
any Lender (or its holding company);

 

(c)           any certificate of
deposit, banker’s acceptance or other bank obligations, maturing not more than
one year after such time, which is issued by either (i) a commercial banking
institution that is a member of the Federal Reserve System and has a combined
capital and surplus and undivided profits of not less than $100,000,000, or
(ii) any Lender;

 

(d)           any repurchase
agreement entered into with any Lender (or other commercial banking institution
of the stature referred to in clause (c)(i))
which (i) is secured by a fully perfected security interest in any obligation
of the type described in any of clauses (a)
through (c), and (ii) has a market
value at the time such repurchase agreement is entered into of not less than
100% of the repurchase obligation of such Lender (or other commercial banking
institution) thereunder;

 

(e)           any loan participation
in a loan which is to a borrower with a long-term debt rating of investment
grade or higher from any nationally recognized rating agency and is made by (i)
a commercial banking institution that is a member of the Federal Reserve System
and has a combined capital and surplus and undivided profits of not less than
$100,000,000, or (ii) any Lender;

 

(f)            any evidence of
Indebtedness, maturing not more than one year after such time, issued or
guaranteed by any agency of the United States Government, which has a rating of
“A-” or better from S&P or a rating of “A3” or better from Moody’s;

 

(g)           any interest bearing
account at, or certificate of deposit maturing not more than one year after
such time issued by, a U.S. savings and loan association which has a rating of “A-”
or better from S&P or a rating of “A3” or better from Moody’s on its long
term unsecured debt and which has combined capital and surplus and undivided
profits of not less than $100,000,000;

 

 

(h)           any interest bearing
account at, or certificate of deposit maturing not more than one year after
such time, payable in U.S. Dollars and issued by, (i) a foreign banking
institution or foreign branch of a U.S. banking institution, which banking
institution has a rating of “A-” or better from S&P or a rating of “A3” or
better from Moody’s on its long-term unsecured debt and combined capital and surplus
and undivided profits of not less than $100,000,000, or (ii) any foreign
subsidiary of a U.S. banking institution, which U.S. banking institution has a
rating of “A-” or better from S&P or a rating of “A3” or better from Moody’s
and which subsidiary has combined capital and surplus and undivided profits of
not less than $100,000,000 or (iii) by any Lender;

 

(i)            any evidence of
Indebtedness (including variable rate demand notes), maturing not more than one
year after such time, issued by any State of the United States, by any county
or municipality organized or incorporated under the laws of any State of the
United States or by any agency or subdivision of any of the foregoing, in each
case rated “A-” or better by S&P or rated “A3” or better by Moody’s;

 

(j)            any auction rate or
preferred securities issued by domestic or foreign corporations,
municipalities, or closed-end management investment companies and are designed
as short term money market instruments rated “A-” or better by S&P or rated
“A3” or better by Moody’s, provided that such Investment will not result in any
violation of F.R.S. Board Regulation U and further provided that the Borrower’s
ownership interest will not exceed (and will not be convertible into shares
which exceed) 5% of the issuer’s outstanding shares entitled to vote unless
such ownership interest is acquired pursuant to a merger agreement between the
Borrower and such issuer); and

 

(k)           any mutual funds or
similar investment vehicles investing primarily in Investments of the types set
forth in the foregoing clauses (a) through (j), provided
that ratings requirements shall be applicable to the mutual fund rather than
the underlying Investments, as follows: 
such mutual funds shall, in each case, have a rating of “A-” or better
from S&P or a rating of “A3” from Moody’s or a rating satisfactory to the
Administrative Agent from another recognized rating agency satisfactory to the
Administrative Agent, provided, however, that it is agreed that
(i) any Investment which when made complies with the requirements of any of the
foregoing clauses (f), (g) or (h) may continue to be held
notwithstanding that such Investment if made thereafter would not comply with
such requirements; and (ii) no Investment otherwise permitted by clauses (i)
or (j) shall be permitted to be made directly or indirectly through a
mutual fund if, immediately before or after giving effect thereto, any Default
shall have occurred and be continuing; or

 

(m)          any Investments outside
of the United States by the Borrower or any of its Subsidiaries which are the
functional foreign equivalents in all material respects to the investments
described in the foregoing clauses (a) through (g), (i), and (k)
of this definition; provided, however, that at no time may the
aggregate amount of any individual Investment permitted under this Subsection
(m) constitute more than ten percent (10%) of the total principal amount of
any applicable mutual fund or other similar investment vehicle in which the
Borrower’s Investment has been made.

 

 

SCHEDULE 3.1

 

ORGANIZATION
AND CAPITAL STRUCTURE

 

See attached
chart, dated April 11, 2006. The Borrower owns a 100% interest in each entity
contained therein, with the exception of Bennett Energy (Utah) P/S in which the
Borrower owns an 85.34% interest.

 

 

 

 

SCHEDULE 4.7

 

LITIGATION

 

None.

 

 

SCHEDULE 4.8

 

EXISTING
SUBSIDIARIES AND AFFILIATES

 

	
  Name and Type of Entity

  	
   

  	
  Ownership

  Percentage

  (Direct and

  Indirect)

  	
   

  	
  Jurisdiction of

  Organization

  	
   

  	
  Restricted/

  Unrestricted Subsidiary

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bennett Energy (Utah) P/S (partnership)

  	
   

  	
  85.34

  	
  %

  	
  Utah

  	
   

  	
  Restricted
  Subsidiary

  
	
  Latigo Petroleum, Inc. (corporation)(1)

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
  Restricted
  Subsidiary

  
	
  Northrock Energy, Inc. (corporation)

  	
   

  	
  100

  	
  %

  	
  Canada

  	
   

  	
  Restricted
  Subsidiary

  
	
  Northrock Resources, Ltd. (corporation)

  	
   

  	
  100

  	
  %

  	
  Canada

  	
   

  	
  Restricted
  Subsidiary

  
	
  Northrock Resources P/S (partnership)

  	
   

  	
  100

  	
  %

  	
  Canada

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Alberta, ULC (corporation)

  	
   

  	
  100

  	
  %

  	
  Canada

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Denmark ApS (limited liability company)

  	
   

  	
  100

  	
  %

  	
  Denmark

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Energy, Inc. (corporation)

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Finance, ULC (corporation)

  	
   

  	
  100

  	
  %

  	
  Canada

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Merger Sub 1, Inc. (corporation)(1)

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo New Zealand (unlimited company)

  	
   

  	
  100

  	
  %

  	
  New
  Zealand

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo North Sea Limited (corporation)

  	
   

  	
  100

  	
  %

  	
  United
  Kingdom

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Offshore Pipeline Co. (corporation)

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Overseas Production B.V. (private company with
  limited liability)

  	
   

  	
  100

  	
  %

  	
  Netherlands

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Panhandle 2004, LP (partnership)

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Partners, Inc. (corporation)

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Producing (San Juan) Company (corporation)

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Producing (Texas Panhandle Company)
  (corporation)

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
  Restricted
  Subsidiary

  
	
  Pogo Services and Technology Corporation
  (corporation)

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
  Restricted
  Subsidiary

  
	
  Ponzea B.V. (private company)

  	
   

  	
  100

  	
  %

  	
  Netherlands

  	
   

  	
  Restricted
  Subsidiary

  

 

(1) Subject to the terms and
conditions of the Acquisition Agreement, upon consummation of the merger of
Pogo Merger Sub 1, Inc. with and into Latigo Petroleum, Inc. (“Latigo”) as
provided therein, Latigo shall be deemed a Restricted Subsidiary.

 

 

SCHEDULE 4.12

 

ENVIRONMENTAL
MATTERS

 

None.

 

 

EXHIBIT A

 

FORM OF FUNDING NOTICE

 

Reference is made to the
Senior Credit and Guaranty Agreement, dated as of May 2, 2006 (as it may
be amended, supplemented or otherwise modified, the “Credit Agreement”), by and among Pogo Producing Company, the
Guarantors referred to therein, the Lenders party thereto from time to time and
Goldman Sachs Credit Partners L.P., as Sole Lead Arranger and Book Runner,
Syndication Agent and Administrative Agent. Capitalized terms used herein and
not otherwise defined herein have the meanings assigned to them in the Credit
Agreement.

 

Pursuant to Section 2.1
of the Credit Agreement, the Company desires that Lenders make the following
Loans to the Company in accordance with the applicable terms and conditions of
the Credit Agreement on May 2, 2006 (the “Credit
Date”):

 

Loans:                                    $450,000,000.00

 

The Company
hereby certifies that:

 

(i)            as
of the Credit Date, the representations and warranties contained in each of the
Credit Documents are true, correct and complete in all material respects on and
as of such Credit Date to the same extent as though made on and as of such
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
are true, correct and complete in all material respects on and as of such
earlier date;

 

(ii)           as
of the Credit Date, no event has occurred and is continuing or would result
from the consummation of the borrowing contemplated hereby that would
constitute an Event of Default or a Default.

 

	
  Date: May 1, 2006

  	
  POGO PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT B

 

FORM OF EXCHANGE NOTICE

 

Date: 
[               ],
20[     ]

 

Goldman
Sachs Credit Partners L.P.,

in its capacity as Administrative Agent

85 Broad Street

New York, New York  10004

Attention:  Pedro Ramirez

 

Re:          Pogo Producing Company Credit Agreement

 

Ladies and Gentlemen:

 

Reference is
hereby made to the Senior Credit and Guaranty Agreement dated as of May 2, 2006
(the “Credit Agreement”),
by and among Pogo Producing Company (the “Company”), the
Guarantors referred to therein, the Lenders party thereto from time to time and
Goldman Sachs Credit Partners L.P., as Sole Lead Arranger and Book Runner
(in such capacities, the “Arranger”), Syndication Agent and
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Credit Agreement.

 

1.             Surrender of Loan Note(s). Enclosed herewith [is
an/are] original Loan Note[s] under the Credit Agreement issued to the order of
the Lender specified in Section 4 below in the aggregate principal amount
of $[               ]
(the “Surrendered
Note(s)”).

 

2.             Accrued and Unpaid Interest. The [aggregate] amount
of accrued and unpaid interest on the Surrendered Note(s) as of the date hereof
(the “Exchange
Date”) is
$[               ],
all of which is required by Sections 2.6 and 2.7 of the Credit Agreement
to be paid in cash.

 

3.             Interest Rate. The undersigned hereby
certifies that the interest rate on the Surrendered Note(s) on the Exchange
Date equals [          ]% per
annum. Pursuant to Section 2.2 of the Credit Agreement, the Exchange Notes
to be issued pursuant to this Exchange Notice will bear interest at the rate of
[          ]% per annum [insert the
interest rate then in effect on the Surrendered Note(s) as of the Exchange Date].

 

4.             Request for Exchange. [Name of Lender] wishes to exchange
[all/$[               ]]
of the Surrendered Note(s) to be exchanged for [number] Exchange Note(s) each dated the Exchange Date,
bearing interest at the rate specified in Section 3 above and made payable
to the following payees ($1 million or any integral multiple of $1,000 in
excess thereof):

 

 

	
  Amount(s)

  	
   

  	
  Name(s) of Payee(s)

  	
   

  	
  Address(es) of Payee(s)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
						

 

5.             Issuance of Exchange Notes; Cancellation of Surrendered Note(s). Not
later than three Business Days after receipt of this Exchange Notice, please
(a) issue the Exchange Note(s) and dated the Exchange Date, bearing
interest at the rate specified in Section 3 above from and including the
Exchange Date, in the amount(s) and to the payee(s) set forth in Section 4
above, (b) deliver such Exchange Note(s) by hand or by overnight courier
to the Exchange Note Indenture Trustee for authentication and instruct the
Exchange Note Indenture Trustee to deliver such duly authenticated Exchange
Note(s) by hand or by overnight courier to the [respective] payee(s) identified
in Section 4 above at the address(es) specified therein and
(c) deliver the Surrendered Note(s) to the Company for cancellation upon
receipt of evidence that all cash interest has been paid in accordance with
Section 7 below and the terms of the Credit Agreement.

 

6.             Issuance of Replacement Loan Note. Not later than three
Business Days from the date hereof, the Company shall (a) issue
replacement Loan Note(s) dated the Exchange Date, bearing interest at the rate
then in effect on the Surrendered Note(s), in the aggregate amount of
$[               ],
representing
$[               ]
of principal on the Surrendered Note(s) not so exchanged, in the respective
amount(s) and to the payee(s) set forth below and (b) deliver such
replacement Loan Note(s) by hand or by overnight courier to the [respective]
payee(s) identified in this Section 6 at the address(es) specified below
(amounts to payees other than the Lender presenting Surrendered Notes must be
in denominations of $1 million or any integral multiple of $1,000 in
excess thereof):

 

	
  Amount(s)

  	
   

  	
  Name(s) of Payee(s)

  	
   

  	
  Address(es) of Payee(s)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  $

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
							

 

B-2

 

7.             Payment of Accrued and Unpaid Interest. Not later than three
Business Days after receipt of this Exchange Notice, and in any event prior to
the cancellation of the Surrendered Notes contemplated by Section 5 above,
the Company shall make payment of all accrued and unpaid interest specified in
Section 2 above in accordance with Sections 2.6 and 2.7 of the Credit
Agreement.

 

Thank you in
advance for your prompt attention to this Exchange Notice.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name of Lender]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  cc:

  	
  The
  Bank of New York Trust Company, N.A.,

  in its capacity as Exchange Note Trustee

  
	
   

  	
   

  
	
   

  	
  Pogo Producing
  Company

  

 

B-3

 

EXHIBIT C

 

FORM OF LOAN NOTE

 

$[               ]

	
  [               ],
  20[          ]

  	
   

  	
  New York, New York

  

 

FOR VALUE RECEIVED, POGO
PRODUCING COMPANY, a Delaware corporation (the “Company”), promises to pay [Name of
Lender] (“Payee”) or
its registered assigns the principal amount of [               ]
DOLLARS ($[               ]) on the Maturity Date (as defined in the
Credit Agreement referred to below).

 

The
Company also promises to pay interest on the unpaid principal amount hereof,
from the date hereof until paid in full, at the rates and at the times that
shall be determined in accordance with the provisions of that certain Senior Credit
and Guaranty Agreement, dated as of May 1, 2006 (as it may be amended,
supplemented or otherwise modified, the “Credit
Agreement”), by and among the Company, the Guarantors referred to
therein, the Lenders party thereto from time to time and Goldman Sachs Credit
Partners L.P., as Sole Lead Arranger and Book Runner, Syndication Agent
and Administrative Agent. Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to them in the Credit Agreement.

 

This
Loan Note is one of the “Loan Notes” in the aggregate principal amount of $[               ] and is issued pursuant to and entitled to
the benefits of the Credit Agreement, to which reference is hereby made for a
more complete statement of the terms and conditions under which the Loan
evidenced hereby was made and is to be repaid.

 

All
payments of principal and interest in respect of this Loan Note shall be made
in lawful money of the United States of America in same-day funds at the
Principal Office of Administrative Agent or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Unless and until an Assignment Agreement effecting the
assignment or transfer of the obligations evidenced hereby shall have been
accepted by Administrative Agent and recorded in the Register, the Company,
each Agent and the Lenders shall be entitled to deem and treat Payee as the
owner and holder of this Loan Note and the obligations evidenced hereby. Payee
hereby agrees, by its acceptance hereof, that, before disposing of this Loan
Note or any part hereof, it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has
been paid; provided that the
failure to make a notation of any payment made on this Loan Note shall not
limit or otherwise affect the obligations of the Company hereunder with respect
to payments of principal of or interest on this Loan Note.

 

This
Loan Note is subject to mandatory prepayment and to prepayment at the option of
the Company, each as provided in the Credit Agreement.

 

This Loan Note and the
rights and obligations of the Company and Payee hereunder shall be governed by,
and shall be construed and enforced in accordance with, the internal laws of
the State of New York, without regard to conflict of laws principles thereof.

 

 

Upon
the occurrence of an Event of Default, the unpaid balance of the principal
amount of this Loan Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.

 

The
terms of this Loan Note are subject to amendment only in the manner provided in
the Credit Agreement.

 

No
reference herein to the Credit Agreement and no provision of this Loan Note or
the Credit Agreement shall alter or impair the obligations of the Company,
which are absolute and unconditional, to pay the principal of and interest on
this Loan Note at the place, at the respective times, and in the currency
herein prescribed.

 

The
Company promises to pay all costs and expenses, including reasonable attorneys’
fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Loan Note. The Company and any endorsers of this Loan Note
hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest,
demand notice of every kind and, to the full extent permitted by law, the right
to plead any statute of limitations as a defense to any demand hereunder.

 

This
Loan Note has not been registered under the United States Securities Act of
1933 (the “Securities Act”) and may not be offered, sold, pledged or otherwise
transferred except (a)(1) to a person who the seller reasonably believes
is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act purchasing for its own account or for the account of a
qualified institutional buyer in a transaction meeting the requirements of
Rule 144A, (2) in an offshore transaction complying with
Rule 903 or Rule 904 of Regulation S under the Securities Act,
(3) pursuant to an exemption from registration under the Securities Act
provided by Rule 144 thereunder (if available), (4) to an
institutional accredited investor in a transaction exempt from the registration
requirements of the Securities Act or (5) pursuant to an effective
registration statement under the Securities Act and (b) in accordance with
all applicable securities laws of the states of the United States and other
jurisdictions.

 

C-2

 

IN WITNESS WHEREOF, the Company has caused this Loan Note to be duly
executed and delivered by its officer thereunto duly authorized as of the date
and at the place first written above.

 

	
   

  	
  POGO PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

C-3

 

TRANSACTIONS ON THIS LOAN NOTE

 

	
  Date

  	
   

  	
  Amount of Loan

  Made This Date

  	
   

  	
  Amount of Loan

  Repaid This Date

  	
   

  	
  Outstanding Principal

  Balance This Date

  	
   

  	
  Notation

  Made By

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

C-4

 

EXHIBIT D

 

FORM OF COMPLIANCE CERTIFICATE

 

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

 

1.     I
am the principal financial officer of Pogo Producing Company (the “Company”).

 

2.     I
have reviewed the terms of that certain Senior Credit and Guaranty Agreement,
dated as of May 2, 2006 (as it may be amended, supplemented or otherwise
modified, the “Credit Agreement”),
by and among the Company, the Guarantors referred to therein, the Lenders party
thereto from time to time and Goldman Sachs Credit Partners L.P., as Sole
Lead Arranger and Book Runner, Syndication Agent and Administrative Agent; and
I have made, or have caused to be made under my supervision, a review of the
activities of the Company and its Subsidiaries during the preceding fiscal year
of the Company with a view to determining whether the Company has performed its
obligations under the Credit Agreement. Capitalized terms used herein and not
otherwise defined herein have the meanings assigned to them in the Credit
Agreement.

 

3.     The
examination described in paragraph 2 above did not disclose, and I have no
knowledge of, any Event of Default or Default that occurred at any time since
the beginning of the preceding fiscal year of the Company, except as set forth
in a separate attachment, if any, to this Certificate, describing in detail the
nature of the Event of Default or Default, the period during which it has
existed, its status and the action that the Company has taken, is taking, or
proposes to take with respect to each such Event of Default or Default.

 

The
foregoing certifications, together with any other attachments hereto pursuant
to paragraph 3 above, are made and delivered on
[               ],
20[          ], pursuant to
Section 5.1(e) of the Credit Agreement.

 

	
   

  	
  POGO PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:  [Chief Financial Officer]

  

 

 

EXHIBIT E

 

FORM OF OPINION OF COUNSEL FOR CREDIT PARTIES

 

	
   

  	
   

  	
  2001 ROSS
  AVENUE

  	
   

  	
  AUSTIN

  
	
   

  	
   

  	
  DALLAS,
  TEXAS

  	
   

  	
  DALLAS

  
	
  

  	
   

  	
  75201-2980

  	
   

  	
  DUBAI

  
	
   

  	
   

  	
   

  	
  HONG KONG

  
	
   

  	
  TEL    +1

  	
   

  	
  HOUSTON

  
	
   

  	
   

  	
  214.953.6500

  	
   

  	
  LONDON

  
	
   

  	
   

  	
  FAX  +1

  	
   

  	
  MOSCOW

  
	
   

  	
   

  	
  214.953.6503

  	
   

  	
  NEW YORK

  
	
   

  	
   

  	
  www.bakerbotts.com

  	
   

  	
  RIYADH

  
	
   

  	
   

  	
   

  	
   

  	
  WASHINGTON

  

 

May 2, 2006

 

Goldman Sachs
Credit Partners L.P.,

as
Administrative Agent and a Lender

85 Broad
Street

New York, New
York  10004

 

Re:          Senior
Credit and Guaranty Agreement of even date herewith (the “Credit
Agreement”) among Pogo Producing Company, a Delaware corporation
(the “Borrower”), as Borrower, the commercial
lending institutions party thereto, as Lenders (the “Lenders”),
and Goldman Sachs Credit Partners L.P. (“Goldman”), as
Sole Lead Arranger and as Administrative Agent for the Lenders

 

Ladies and
Gentlemen:

 

We have acted as special counsel to the Borrower in connection with the
Credit Agreement. In that connection, we have examined the Credit Agreement,
the Loan Note in the original principal amount of $450,000,000 dated as of the date hereof executed and delivered by the
Borrower and payable to the order of Goldman, as a Lender (the “Note”), the Fee Letter, the Engagement Letter, the
certificate of incorporation and by-laws of the Borrower, corporate records of
the Borrower, certificates of public officials and of officers of the Borrower,
statutes and other documents as a basis for the opinions hereinafter expressed.
We have assumed that all signatures on documents examined by us are genuine,
that all documents submitted to us as originals are authentic and all documents
submitted to us as certified or photostatic copies conform to the original
copies of those documents. This opinion is furnished to you pursuant to Section
3.1(h) of the Credit Agreement. Capitalized terms used herein and not otherwise
defined herein have the meanings assigned to such terms in the Credit
Agreement.

 

On the basis of the foregoing, and subject to the assumptions,
qualifications and limitations set forth below, we are of the opinion that:

 

1.             The Borrower is a
corporation, validly existing and in good standing in each case under the laws
of the State of Delaware.

 

2.             The Borrower has all
requisite corporate power and authority to own its properties and to conduct
its business as described in the Borrower’s Annual Report on Form 10-K for
fiscal year 2005, to execute and deliver the Credit Agreement and the Note and
to perform its obligations thereunder. The execution, delivery and performance
of the Credit Agreement, the Note, the Fee Letter and the Engagement Letter by
the Borrower and the consummation by the Borrower of the transactions
contemplated thereby have been duly authorized by all necessary corporate
action on the part of the Borrower. The Credit Agreement, the Note, the Fee
Letter and the Engagement Letter have been duly executed and delivered by the
Borrower.

 

 

3.             Each of the Credit
Agreement, the Note, the Fee Letter and the Engagement Letter constitutes the
legal, valid and binding obligation of the Borrower, enforceable against the
Borrower in accordance with its terms.

 

4.             The execution,
delivery and performance by the Borrower of the Credit Agreement, the Note, the
Fee Letter and the Engagement Letter do not (a) violate any federal or New York
statute, rule or regulation, or (b) require consent or approval of,
registration or filing with, or any other action by, any federal or New York
state governmental authority.

 

5.             The Loan to be made
on the date hereof and the application of the proceeds thereof as provided for
in the Credit Agreement do not violate Regulation U or X of the Board of
Governors of the Federal Reserve System.

 

6.             The Borrower is not,
and will not be upon the issuance and sale of the Note and the use of the
proceeds thereof, an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

7.             Assuming the accuracy
of the representations and warranties of the Borrower and the Lenders as to
matters of fact contained in the Credit Agreement, the performance by them of
the agreements contained therein, and the compliance by the holder of the Note
with the restrictions on transfer set forth in the Note, it is not necessary in
connection with the offer and sale by the Borrower of the Note in the manner contemplated
by the Credit Agreement to register the Note under the Securities Act or to
qualify an indenture in respect of the Note under the Trust Indenture Act of
1939, as amended.

 

The foregoing opinions are subject to the following assumptions,
qualifications and limitations:

 

A.            We
have, without independent verification, relied on the representations and
warranties of the Borrower contained in the Credit Agreement with respect to
the accuracy of the factual matters contained therein and assumed with your
approval (i) that each party to the Credit Agreement (other than the Borrower)
has the power and authority to enter into the Credit Agreement and to perform
its obligations thereunder, (ii) the due authorization, execution and delivery
of the Credit Agreement by each party thereto (other than the Borrower), (iii)
that the Credit Agreement constitutes the legal, valid, binding and enforceable
obligations of each party thereto (other than the Borrower) and (iv) the
genuineness of all signatures, the conformity to authentic, original documents
of all documents submitted to us as certified or photostatic copies and the
authenticity of all documents submitted to us as originals.

 

B.            Our
opinions set forth in paragraph 3 are subject to the effect of
(i) applicable bankruptcy, insolvency, reorganization, fraudulent transfer
or conveyance, moratorium, conservatorship and similar laws affecting
creditor’s rights and remedies generally, (ii) general principles of
equity (whether considered in a proceeding in equity or at law) and
(iii) principles of materiality and reasonableness and implied covenants
of

 

 

E-2

 

good faith and
fair dealing. We express no opinion as to whether a court would grant specific
performance or any other equitable remedy or any particular remedy or the
enforceability of any self-help remedy.

 

C.            With
respect to our opinions in paragraphs 2 and 4, we assume that the Borrower owns
no assets and conducts no business other than as described in the Borrower’s
Annual Report on Form 10-K for fiscal year 2005.

 

D.            No
opinion is expressed above as to the enforceability of any provision of the
Credit Agreement or the Note that purports to (i) waive rights of any party
that cannot be waived as a matter of applicable law, (ii) entitle a party to
indemnification or absolution from liability in respect of any matters contrary
to public policy or arising under any securities laws or in whole or in part by
reason of any illegal, wrongful or negligent act or omission of that party,
(iii) prohibit any unwritten waivers of or amendments to any provisions of the
Credit Agreement or the Note or (iv) establish any evidentiary standard.

 

E.             No
opinion is expressed above (i) except as provided in our opinions set forth in paragraphs
5, 6 and 7, as to the effect of any state or federal securities laws or
regulations insofar as they are applicable to or otherwise affect any party to
the Credit Agreement or the Note, the transactions contemplated by the Credit
Agreement and the Note or the exercise of any rights or remedies of any party
to the Credit Agreement or the Note or (ii) as to various state and
federal laws and regulations applicable to the business or lending transactions
of the Agents, the Lenders or any assignee or participant of any such Person
which may relate to the Credit Agreement or the Note or the transactions
contemplated thereby.

 

This opinion
is limited to the applicable laws of the State of New York, the Delaware
General Corporation Law and applicable federal law, each as in effect on the
date hereof, and no opinion is expressed herein as to the laws of any other
jurisdiction. We undertake no, and hereby disclaim any, obligation or
responsibility to update or supplement this opinion in response to subsequent
changes in law or future events affecting any transaction contemplated by the
Credit Agreement or the Note. This opinion is rendered solely for your benefit
in connection with the transactions contemplated by the Credit Agreement and
the Note to be consummated on this date. This opinion may not be used for any
other purpose or disclosed to or relied on by any other Person without, in each
instance, our prior written consent.

 

Very truly yours,

 

 

E-3

 

EXHIBIT F

 

FORM OF OPINION OF GENERAL COUNSEL OF THE COMPANY

 

May 2, 2006

 

To:          Goldman
Sachs Credit Partners L.P.,

as
Administrative Agent and a Lender

115 South
LaSalle Street

Chicago, Illinois 60603

 

Re:          Senior Credit and
Guaranty Agreement of even date herewith (the “Credit
Agreement”) among Pogo Producing Company, a Delaware corporation
(the “Borrower”), as Borrower, the commercial
lending institutions party thereto, as Lenders (the “Lenders”),
and Goldman Sachs Credit Partners L.P. (“Goldman”), as
Sole Lead Arranger and as Administrative Agent for the Lenders

 

Ladies and
Gentlemen:

 

This opinion
is furnished to you pursuant to Section 3.1(h) of the Credit Agreement. Except
as otherwise specified, capitalized terms used in this opinion which are
defined in the Credit Agreement are used herein with the same meaning.

 

I have acted
as counsel to the Borrower in connection with the Credit Agreement. In that
capacity, I have examined the originals, or copies certified or otherwise
identified to my satisfaction, of the Credit Agreement, the Loan Note in the
original principal amount of $450,000,000 dated as of
the date hereof executed and delivered by the Borrower and payable to the order
of Goldman, as a Lender (the “Note”), the Fee
Letter, the Engagement Letter, the certificates of incorporation and by-laws of
the Borrower, corporate records of the Borrower, certificates of public
officials and of officers of the Borrower, statutes and other documents as a
basis for the opinions hereinafter expressed. I have assumed that all documents
submitted to me as originals are authentic and all documents submitted to me as
certified or photostatic copies conform to the original copies of those
documents.

 

Based on the
foregoing, and subject to the qualifications stated herein, I am of the opinion
that:

 

1.           The
Borrower is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the nature of its business requires such
qualification, except where the failure to qualify could not reasonably be
expected to have a Material Adverse Effect.

 

2.           The
execution and delivery of the Credit Agreement and the Note, the consummation
of the transactions contemplated thereby and compliance by the Borrower with
the provisions thereof will not conflict with, constitute a default under or
violate (i) any of the provisions of the certificate of incorporation or
by-laws of the Borrower, (ii) any of the terms, conditions or provisions
of any material agreement, instrument or other document to which the Borrower
is a party or by which it is bound of which I am aware, the default under or
violation of which would have a Material Adverse Effect or (iii) to my
knowledge, any court order applicable to the Borrower.

 

 

3.           To
my knowledge, there is no action, suit or proceeding pending or threatened
against the Borrower or any of its Subsidiaries or any of their respective
properties (other than those that are common to the oil and gas industry
generally) in any court or before any arbitrator of any kind or before or by
any Governmental Authority that, if adversely determined, would, individually
or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.

 

This opinion
is limited to the laws of the State of Texas and the federal laws of the United
States as in effect on the date hereof and is rendered solely for your benefit
in connection with the transactions contemplated by the Credit Agreement and
the Note to be consummated on this date. I undertake no, and hereby disclaim
any, obligation or responsibility to update or supplement this opinion in
response to subsequent changes in law or future events affecting any
transaction contemplated by the Credit Agreement or the Note. This opinion may
not be used or relied on by any other Person and may not be disclosed, quoted,
filed with a governmental agency or otherwise referred to without my prior
written consent.

 

	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Senior Vice
  President and General Counsel

  

 

 

F-2

 

EXHIBIT G

 

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and
Assumption Agreement (the “Assignment”)
is dated as of the Effective Date set forth below and is entered into by and
between [Insert name of Assignor]
(the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but not
defined herein shall have the meanings given to them in the Credit Agreement
identified below (as it may be amended, supplemented or otherwise modified from
time to time, the “Credit Agreement”),
receipt of a copy of which is hereby acknowledged by the Assignee. The Standard
Terms and Conditions set forth in Annex 1 attached hereto are hereby
agreed to and incorporated herein by reference and made a part of this
Assignment as if set forth herein in full.

 

For an agreed consideration,
the Assignor hereby irrevocably sells and assigns to the Assignee, and the
Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit
Agreement, as of the Effective Date inserted by the Administrative Agent as
contemplated below, the interest in and to all of the Assignor’s rights and
obligations under the Credit Agreement and any other documents or instruments
delivered pursuant thereto that represents the amount and percentage interest
identified below of all of the Assignor’s outstanding rights and obligations
under the respective facilities identified below (the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and the Credit Agreement, without representation or
warranty by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
                                       

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
                                       

  	
   [an
  Eligible Assignee]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Company:

  	
   

  	
  Pogo Producing Company

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative Agent:

  	
   

  	
  Goldman Sachs Credit Partners L.P., as the administrative agent
  under the Credit Agreement

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Credit Agreement:

  	
   

  	
  The Credit Agreement dated as of May 2, 2006, among Pogo Producing
  Company, the Lenders parties thereto, Goldman Sachs Credit
  Partners L.P., as Administrative Agent, and the other agents parties
  thereto

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Assigned Interest:

  	
   

  	
   

  

 

 

	
  Loans Assigned

  	
   

  	
  Aggregate Amount

  of

  Commitment/Loans

  for all Lenders

  	
   

  	
  Amount of

  Commitment/Loans

  Assigned

  	
   

  	
  Percentage

  Assigned of

  Commitment/

  Loans

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  

 

Effective Date: 
[               ],
20[     ] [To be inserted by the
Administrative Agent and which shall be the effective date of recordation of
transfer in the Register therefor.]

 

7.             Notice
and Wire Instructions:

 

	
   

  	
  [Name of Assignor] 

  	
  [Name of Assignee] 

  
	
   

  	
   

  	
   

  
	
   

  	
  Notices:

  	
  Notices:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Telecopier:

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
  with a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:

  	
   

  	
  Attention:

  
	
   

  	
   

  	
  Telecopier:

  	
   

  	
  Telecopier:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Wire Instructions:

  	
  Wire Instructions:

  
								

 

G-2

 

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

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [Name of Assignor]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [Name of Assignee]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

	
  Consented to and Accepted:

  
	
   

  
	
  GOLDMAN SACHS CREDIT PARTNERS L.P., as

  
	
  Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

G-3

 

ANNEX 1 to EXHIBIT G

 

STANDARD
TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

1.             Representations
and Warranties.

 

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

 

1.2       Assignee. The Assignee (a) represents and warrants that
(i) it has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all requirements of an Eligible Assignee under the Credit Agreement,
(iii) from and after the Effective Date, it shall be bound by the
provisions of the Credit Agreement and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iv) it has received a
copy of the Credit Agreement and such other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter into
this Assignment and to purchase the Assigned Interest on the basis of which it
has made such analysis and decision, (v) if it elects to exchange all or a
portion of its Loan for one or more Exchange Notes, such exchange of Notes
would be for its own account and not with a view to distribution in violation
of any securities laws and (vi) if it is a Non-U.S. Lender, attached to
the Assignment is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by the Assignee;
and (b) agrees that (i) it will, independently and without reliance
on the Administrative Agent, the Assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at that time,
continue to make its own credit decisions in taking or not taking action under
the Credit Documents and (ii) it will perform in accordance

 

G-4

 

with
their terms all of the obligations that, by the terms of the Credit Documents,
are required to be performed by it as a Lender.

 

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

 

3.             General Provisions.
This Assignment shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment may be
executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this
Assignment by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment. This Assignment shall be governed by, and
construed in accordance with, the internal laws of the State of New York
without regard to conflict of laws principles thereof.

 

G-5

 

EXHIBIT H

 

FORM OF CERTIFICATE OF NON-BANK STATUS

 

Reference is
made to the Senior Credit and Guaranty Agreement, dated as of May 2, 2006 (as
it may be amended, supplemented or otherwise modified, the “Credit Agreement”), by and among Pogo
Producing Company, the Guarantors referred to therein, the Lenders party
thereto from time to time and Goldman Sachs Credit Partners L.P., as Sole
Lead Arranger and Book Runner, Syndication Agent and Administrative Agent. Pursuant
to Section 2.14(c) of the Credit Agreement, the undersigned hereby
certifies that it is not a “bank” or other Person described in
Section 881(c)(3) of the Internal Revenue Code of 1986, as amended.

 

 

	
   

  	
  [Name of Lender]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

 

EXHIBIT I

 

FORM OF CLOSING DATE CERTIFICATE

 

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

 

1.   I am the chief financial officer of Pogo
Producing Company (“Company”).

 

2.   Reference is made to Section 3.1 of the
Senior Credit and Guaranty Agreement, dated as of May 2, 2006 (as it may
be amended, supplemented or otherwise modified, the “Credit Agreement”), by and among the Company, the Guarantors
referred to therein, the Lenders party thereto from time to time and Goldman
Sachs Credit Partners L.P., as Sole Lead Arranger and Book Runner,
Syndication Agent and Administrative Agent. Capitalized terms used herein and
not otherwise defined herein have the meanings assigned to them in the Credit
Agreement.

 

3.   I have reviewed the terms of Sections 3
and 4 of the Credit Agreement and the definitions and provisions contained in
such Credit Agreement relating thereto, and in my opinion I have made, or have
caused to be made under my supervision, such examination or investigation as is
necessary to enable me to express an informed opinion as to the matters
referred to herein.

 

4.   Based upon my review and examination
described in paragraph 3 above, I certify, on behalf of the Company and
not in my individual capacity, that as of the date hereof:

 

(i)            as
of the Closing Date, the representations and warranties contained in each of
the Credit Documents are true, correct and complete in all material respects on
and as of the Closing Date to the same extent as though made on and as of such
date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
are true, correct and complete in all material respects on and as of such earlier
date;

 

(ii)           as
of the Closing Date, no injunction or other restraining order has been issued
and no hearing to cause an injunction or other restraining order to be issued
is pending or noticed with respect to any action, suit or proceeding seeking to
enjoin or otherwise prevent the consummation of, or to recover any damages or
obtain relief as a result of, the borrowing contemplated by the Credit
Agreement;

 

(iii)          as
of the Closing Date, no event has occurred and is continuing or would result
from the consummation of the borrowing contemplated by the Credit Agreement
that would constitute an Event of Default or a Default;

 

(iv)          as
of the Closing Date, the Company has signed the Commitment Letter, Fee Letter
and Engagement Letter and neither the Company nor any Guarantor is in breach or
violation of any of its obligations under the Commitment Letter or Fee Letter;
and

 

(v)           the
Acquisition is being consummated simultaneously with this transaction and all
conditions thereto have been satisfied or waived (with the Administrative Agent’s
consent).

 

 

5.   Attached as Annex A hereto are true and
complete (and, where applicable, executed and conformed) copies of the
Acquisition Agreement and all material documents executed in connection
therewith.

 

6.   Each Credit Party has requested Baker
Botts L.L.P., counsel for Credit Parties, and Michael J. Killelea, general
counsel of the Company, to deliver to Agents and Lenders on the Closing Date
favorable written opinions setting forth substantially the matters in the opinions
designated in Exhibits E and F annexed to the Credit Agreement, and as to
such other matters as Syndication Agent and Administrative Agent may reasonably
request.

 

7.   Attached hereto as Annex B are true,
complete and correct copies of the Historical Financial Statements.

 

8.   After giving effect to the consummation of the Acquisition and the
payment of all Transaction Costs and other amounts payable in connection
therewith, the Company has at least $75.0 million undrawn and available to
it for immediate drawing under the Senior Credit Facility and its money market
lines, as illustrated below:

 

	
  Availability: (i) - (ii) + (iii) =

  	
   

  	
  Actual:

  	
   

  	
  $

  	
  [     ,     ,      ]

  	
   

  
	
   

  	
   

  	
  Required:

  	
   

  	
  $

  	
  75,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (i)

  	
   

  	
  pro forma aggregate borrowing base
  available under

  Senior Credit Facility as of the Closing Date

  	
   

  	
  $

  	
  [     ,     ,     ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (ii)

  	
   

  	
  (a)

  	
  pro forma borrowings under Senior Credit
  Facility

  as of the Closing Date

  	
   

  	
  $

  	
  [     ,     ,     ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (b)

  	
  pro forma letters of credit outstanding
  under

  Senior Credit Facility as of the Closing Date

  	
   

  	
  $

  	
  [     ,     ,     ]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  (iii)

  	
   

  	
  funds that can be drawn under money market
  lines

  as of the Closing Date

  	
   

  	
  $

  	
  [     ,     ,     ]

  	
   

  
											

 

[Remainder of page
intentionally left blank.]

 

I-2

 

The
foregoing certifications are made and delivered as of May 2, 2006.

 

 

	
   

  	
  POGO
  PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Chief
  Financial Officer

  

 

I-3

 

EXHIBIT J

 

SOLVENCY CERTIFICATE

 

THE
UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

 

1.     I am the chief financial officer of Pogo
Producing Company, a Delaware corporation (“Company”).

 

2.     Reference is made to that certain Senior
Credit and Guaranty Agreement, dated as of May 2, 2006 (as it may be
amended, supplemented or otherwise modified, the “Credit Agreement”), by and among the Company, the Guarantors
referred to therein, the Lenders party thereto from time to time and Goldman
Sachs Credit Partners L.P., as Sole Lead Arranger and Book Runner,
Syndication Agent and Administrative Agent. Capitalized terms used herein and
not otherwise defined herein have the meanings assigned to them in the Credit
Agreement.

 

3.     I have reviewed the terms of Sections 3
and 4 of the Credit Agreement and the definitions and provisions contained
in the Credit Agreement relating thereto and, in my opinion, have made, or have
caused to be made under my supervision, such examination or investigation as is
necessary to enable me to express an informed opinion as to the matters
referred to herein.

 

4.     Based upon my review and examination
described in paragraph 3 above, I certify that, to the best of my
knowledge, information and belief as of the date hereof, after giving effect to
the consummation of the Acquisition and other transactions contemplated by the
Related Agreements, the related financings and the other transactions
contemplated by the Credit Documents and the Related Agreements, the Company
and its Subsidiaries are and will be Solvent.

 

The
foregoing certifications are made and delivered as of May 2, 2006.

 

	
   

  	
  POGO
  PRODUCING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title: Chief Financial Officer

  

 

 

EXHIBIT K

 

JOINDER AGREEMENT

 

This
JOINDER AGREEMENT, dated
[               ],
20[     ] (this “Joinder
Agreement”), is delivered pursuant to the Senior Credit and Guaranty
Agreement, dated as of May 2, 2006 (as it may be amended, supplemented or
otherwise modified, the “Credit Agreement”),
by and among Pogo Producing Company, the Guarantors referred to therein, the
Lenders party thereto from time to time and Goldman Sachs Credit Partners L.P.,
as Sole Lead Arranger and Book Runner, Syndication Agent and Administrative
Agent. Capitalized terms
used herein and not otherwise defined herein have the meanings assigned to them
in the Credit Agreement.

 

Section 1.
Pursuant to Section 5.11 of the Credit Agreement, the undersigned hereby:

 

(a)           agrees
that this Joinder Agreement may be attached to the Credit Agreement and that,
by the execution and delivery hereof, the undersigned becomes a Guarantor under
the Credit Agreement and agrees to be bound by all of the terms thereof;

 

(b)           represents
and warrants that each of the representations and warranties set forth in the
Credit Agreement and each other Credit Document and applicable to the
undersigned is true and correct both before and after giving effect to this
Joinder Agreement, except to the extent that any such representation and
warranty relates solely to any earlier date, in which case such representation
and warranty is true and correct as of such earlier date;

 

(c)           no
event has occurred or is continuing as of the date hereof, or will result from
the transactions contemplated hereby on the date hereof, that would constitute
an Event of Default or a Default; and

 

(d)           agrees
to irrevocably and unconditionally guarantee the due and punctual payment in
full of all Obligations when the same shall become due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including amounts that would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code,
11 U.S.C. § 362(a)) and in accordance with Section 7 of the
Credit Agreement;

 

Section 2.
The undersigned agrees from time to time, upon request of Administrative Agent,
to take such additional actions and to execute and deliver such additional
documents (including a legal opinion substantially in the form of
Exhibit E to the Credit Agreement, mutatis mutandi)
and instruments as Administrative Agent may request to effect the transactions
contemplated by, and to carry out the intent of, this Joinder Agreement. Neither
this Joinder Agreement nor any term hereof may be changed, waived, discharged
or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Joinder Agreement) against whom enforcement of such change,

 

 

waiver, discharge or termination is sought. Any notice or other
communication herein required or permitted to be given shall be given in
accordance with the corresponding provisions of the Credit Agreement, and, for all purposes thereof, the notice
address of the undersigned shall be the address as set forth on the signature
page hereof. In case any provision in or obligation under this Joinder
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.

 

This
Joinder Agreement shall be governed by, and shall be construed and enforced in
accordance with, the internal laws of the State of New York, without regard to
conflict of laws principles thereof.

 

K-2

 

IN
WITNESS WHEREOF, the undersigned has caused this Joinder Agreement to be duly
executed and delivered by its duly authorized officer as of the date above
first written.

 

 

	
   

  	
  POGO PRODUCING
  COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

Address for Notices:

 

POGO PRODUCING COMPANY

5 Greenway Plaza

P.O. Box 2504

Houston, Texas  77252

Attention:  James P. Ulm, II

Telecopier:  (713) 297-5150

 

with a copy to:

 

Baker Botts L.L.P.

2001 Ross Avenue

Dallas, Texas  75201

Attention:  Roderick Goyne, Esq.

Telecopier:  (214) 661-4527

 

ACKNOWLEDGED AND ACCEPTED,

as of the date above first written:

 

GOLDMAN SACHS CREDIT PARTNERS L.P.,

as Administrative Agent

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

K-3Exhibit 10.1

 

LETTER AMENDMENT No. 4

 

Dated as of May 1, 2006

 

M&I Marshall & Ilsley Bank

651 Nicollet Mall

Minneapolis, Minnesota 
55402-1611

 

Ladies/Gentlemen:

 

We refer to the Revolving Credit and Term Loan Agreement dated as of
October 17, 2003, as amended (the “Credit Agreement”) between you and us (under
our former name of MedAmicus, Inc.). Unless otherwise defined in this letter
amendment, terms defined in the Credit Agreement are used in this letter
amendment as defined in the Credit Agreement.

 

It is hereby agreed by you and us as follows:

 

The Credit Agreement is, effective the date first above written, hereby
amended as follows:

 

(a)           Section 2.1 is
amended by changing the Termination Date to be April 30, 2007.

 

(b)           Section 2.8
[Mandatory Prepayment – Term Note] is amended to read as follows:  “Intentionally
Omitted”.

 

(c)           Section 5.1(h) is
amended to read in full as follows:

 

(h)  Fixed Charge Coverage
Ratio. Maintain as of the end of each fiscal quarter a Fixed Charge
Coverage Ratio for the 12-month period ending at the end of that quarter of not
less than 1.10 to 1 at March 31, 2006 and of not less than 1.20 to 1 at all
times thereafter.

 

We have
requested that you waive our failure to comply with Section 5.1(f) [Tangible
Net Worth] and Section 5.1(h) [Fixed Charge Coverage Ratio] of the Credit
Agreement as of

 

 

December 31, 2005. You have
agreed to this request. We acknowledge that this waiver is subject to the
provisions of Sections 7.1 and 7.2 of the Credit Agreement.

 

On and after the effective date of this letter amendment, each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”,
or words of like import referring to the Credit Agreement, and each reference
in the Notes and the Security Agreements to “the Credit Agreement”, “thereunder”,
“thereof”, or words of like import referring to the Credit Agreement, shall
mean and be a reference to the Credit Agreement as amended by this letter
amendment. The Credit Agreement, as amended by this letter amendment, is and
shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.

 

This letter amendment may be executed in any number of counterparts and
by any combination of the parties hereto in separate counterparts, each of
which counterparts shall be an original and all of which taken together shall
constitute one and the same letter amendment.

 

If you agree to the terms and provisions hereof, please evidence your
agreement by executing and returning one counterpart of this letter amendment
to us. This letter amendment shall become effective as of the date first above
written when and if counterparts of this letter amendment shall have been
executed by you and us.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Enpath Medical, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By 

  	
   

  	
   

  
	
   

  	
  Its 

  	
   

  	
   

  
					

 

2

 

	
  Agreed as of the date

  	
   

  
	
  first above written:

  	
   

  
	
   

  	
   

  
	
  M&I Marshall & Ilsley Bank

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  
	
  Its

  	
   

  	
   

  	
   

  
					

 

3

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