Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

Exhibit 10.1    
    

$300,000,000  

 AMENDED AND RESTATED CREDIT AGREEMENT  

Among 

ABRAXAS ENERGY PARTNERS, L.P.
  as Borrower, 

THE LENDERS PARTY HERETO FROM TIME TO TIME
  as Lenders, 

SOCIÉTÉ GÉNÉRALE
  as Administrative Agent and as Issuing Lender, 

THE ROYAL BANK OF CANADA
  as Syndication Agent, 

and

THE ROYAL BANK OF SCOTLAND PLC
  as Documentation Agent 

January 31,
2008 

SG
Americas Securities, LLC as Sole Bookrunner and Arranger 

 

 

 
 

TABLE OF CONTENTS    
    

	 
	 	 
	 	 
	 	Page

	ARTICLE I	 	DEFINITIONS AND ACCOUNTING TERMS	 	1
	  	 	 	 	 	 	 
	 	Section 1.01	 	 	 	Certain Defined Terms	 	1
	 	Section 1.02	 	 	 	Computation of Time Periods	 	20
	 	Section 1.03	 	 	 	Accounting Terms; Changes in GAAP	 	20
	 	Section 1.04	 	 	 	Types of Advances	 	20
	 	Section 1.05	 	 	 	Miscellaneous	 	20
	

ARTICLE II	
 	

CREDIT FACILITIES	
 	

21
	  	 	 	 	 	 	 
	 	Section 2.01	 	 	 	Commitment for Advances	 	21
	 	Section 2.02	 	 	 	Borrowing Base	 	22
	 	Section 2.03	 	 	 	Method of Borrowing	 	25
	 	Section 2.04	 	 	 	Reduction of the Commitments	 	27
	 	Section 2.05	 	 	 	Prepayment of Advances	 	27
	 	Section 2.06	 	 	 	Repayment of Advances	 	30
	 	Section 2.07	 	 	 	Letters of Credit	 	30
	 	Section 2.08	 	 	 	Fees	 	33
	 	Section 2.09	 	 	 	Interest	 	34
	 	Section 2.10	 	 	 	Payments and Computations	 	35
	 	Section 2.11	 	 	 	Sharing of Payments, Etc	 	36
	 	Section 2.12	 	 	 	Breakage Costs	 	36
	 	Section 2.13	 	 	 	Increased Costs	 	36
	 	Section 2.14	 	 	 	Taxes	 	37
	

ARTICLE III	
 	

CONDITIONS OF LENDING	
 	

39
	  	 	 	 	 	 	 
	 	Section 3.01	 	 	 	Conditions Precedent to Effectiveness	 	39
	 	Section 3.02	 	 	 	Conditions Precedent to All Borrowings	 	43
	

ARTICLE IV	
 	

REPRESENTATIONS AND WARRANTIES	
 	

43
	  	 	 	 	 	 	 
	 	Section 4.01	 	 	 	Existence; Subsidiaries	 	43
	 	Section 4.02	 	 	 	Power	 	43
	 	Section 4.03	 	 	 	Authorization and Approvals	 	44
	 	Section 4.04	 	 	 	Enforceable Obligations	 	44
	 	Section 4.05	 	 	 	Financial Statements	 	44
	 	Section 4.06	 	 	 	True and Complete Disclosure	 	45
	 	Section 4.07	 	 	 	Litigation; Compliance with Laws	 	45
	 	Section 4.08	 	 	 	Use of Proceeds	 	45
	 	Section 4.09	 	 	 	Investment Company Act	 	45
	 	Section 4.10	 	 	 	Federal Power Act	 	45
	 	Section 4.11	 	 	 	Taxes	 	45
	 	Section 4.12	 	 	 	Pension Plans	 	46
	 	Section 4.13	 	 	 	Condition of Property; Casualties	 	47
	 	Section 4.14	 	 	 	No Burdensome Restrictions; No Defaults	 	47
	 	Section 4.15	 	 	 	Environmental Condition	 	47
	 	Section 4.16	 	 	 	Permits, Licenses, Etc	 	48
	 	Section 4.17	 	 	 	Gas Contracts	 	48
	 	Section 4.18	 	 	 	Liens; Titles, Leases, Etc	 	48
	 	Section 4.19	 	 	 	Solvency and Insurance	 	48
	 	Section 4.20	 	 	 	Hydrocarbon Hedge Agreements	 	48
	 	Section 4.21	 	 	 	Material Agreements	 	49

i

 

	

ARTICLE V	
 	

AFFIRMATIVE COVENANTS	
 	

49
	  	 	 	 	 	 	 
	 	Section 5.01	 	 	 	Compliance with Laws, Etc	 	49
	 	Section 5.02	 	 	 	Maintenance of Insurance	 	49
	 	Section 5.03	 	 	 	Preservation of Existence, Etc	 	50
	 	Section 5.04	 	 	 	Payment of Taxes, Etc	 	50
	 	Section 5.05	 	 	 	Visitation Rights	 	50
	 	Section 5.06	 	 	 	Reporting Requirements	 	50
	 	Section 5.07	 	 	 	Maintenance of Property	 	54
	 	Section 5.08	 	 	 	Agreement to Pledge	 	54
	 	Section 5.09	 	 	 	Use of Proceeds	 	54
	 	Section 5.10	 	 	 	Title Opinions	 	55
	 	Section 5.11	 	 	 	Further Assurances; Cure of Title Defects	 	55
	 	Section 5.12	 	 	 	Hedging Arrangements	 	55
	 	Section 5.13	 	 	 	Deposit Accounts	 	55
	

ARTICLE VI	
 	

NEGATIVE COVENANTS	
 	

56
	  	 	 	 	 	 	 
	 	Section 6.01	 	 	 	Liens, Etc	 	56
	 	Section 6.02	 	 	 	Debts, Guaranties, and Other Obligations	 	57
	 	Section 6.03	 	 	 	Agreements Restricting Liens and Distributions	 	58
	 	Section 6.04	 	 	 	Merger or Consolidation; Asset Sales	 	58
	 	Section 6.05	 	 	 	Restricted Payments	 	59
	 	Section 6.06	 	 	 	Investments	 	59
	 	Section 6.07	 	 	 	Affiliate Transactions	 	60
	 	Section 6.08	 	 	 	Compliance with ERISA	 	60
	 	Section 6.09	 	 	 	Sale-and-Leaseback	 	61
	 	Section 6.10	 	 	 	Change of Business	 	61
	 	Section 6.11	 	 	 	Organizational Documents, Name Change	 	61
	 	Section 6.12	 	 	 	Use of Proceeds; Letters of Credit	 	61
	 	Section 6.13	 	 	 	Gas Imbalances, Take-or-Pay or Other Prepayments	 	61
	 	Section 6.14	 	 	 	Limitation on Hedging	 	61
	 	Section 6.15	 	 	 	Additional Subsidiaries	 	62
	 	Section 6.16	 	 	 	Account Payables	 	62
	 	Section 6.17	 	 	 	Current Ratio	 	62
	 	Section 6.18	 	 	 	Interest Coverage Ratio	 	63
	 	Section 6.19	 	 	 	Initial Acquisition Instruments/Private Placement Documents	 	63
	 	Section 6.20	 	 	 	Subordinated Debt	 	63
	

ARTICLE VII	
 	

EVENTS OF DEFAULT; REMEDIES	
 	

63
	  	 	 	 	 	 	 
	 	Section 7.01	 	 	 	Events of Default	 	63
	 	Section 7.02	 	 	 	Optional Acceleration of Maturity	 	65
	 	Section 7.03	 	 	 	Automatic Acceleration of Maturity	 	65
	 	Section 7.04	 	 	 	Right of Setoff	 	66
	 	Section 7.05	 	 	 	Non-exclusivity of Remedies	 	66
	 	Section 7.06	 	 	 	Application of Proceeds	 	66
	

ARTICLE VIII	
 	

THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER	
 	

67
	  	 	 	 	 	 	 
	 	Section 8.01	 	 	 	Appointment and Authority	 	67
	 	Section 8.02	 	 	 	Rights as a Lender	 	67
	 	Section 8.03	 	 	 	Exculpatory Provisions	 	67
	 	Section 8.04	 	 	 	Reliance by Administrative Agent	 	68
	 	Section 8.05	 	 	 	Delegation of Duties	 	68

ii

 

	 	Section 8.06	 	 	 	Successor Administrative Agent and Issuing Lender	 	69
	 	Section 8.07	 	 	 	Non-Reliance on Administrative Agent and Other Lenders	 	69
	 	Section 8.08	 	 	 	No Other Duties, etc	 	70
	 	Section 8.09	 	 	 	Collateral Matters	 	70
	

ARTICLE IX	
 	

MISCELLANEOUS	
 	

70
	  	 	 	 	 	 	 
	 	Section 9.01	 	 	 	Amendments, Etc	 	70
	 	Section 9.02	 	 	 	Notices, Etc	 	71
	 	Section 9.03	 	 	 	No Waiver; Cumulative Remedies	 	72
	 	Section 9.04	 	 	 	Costs and Expenses	 	72
	 	Section 9.05	 	 	 	Indemnification	 	73
	 	Section 9.06	 	 	 	Reimbursement by Lenders	 	73
	 	Section 9.07	 	 	 	Waiver of Damages	 	74
	 	Section 9.08	 	 	 	Successors and Assigns	 	74
	 	Section 9.09	 	 	 	Confidentiality	 	76
	 	Section 9.10	 	 	 	Counterparts; Effectiveness	 	77
	 	Section 9.11	 	 	 	Survival of Representations, etc	 	77
	 	Section 9.12	 	 	 	Severability	 	77
	 	Section 9.13	 	 	 	Interest Rate Limitation	 	77
	 	Section 9.14	 	 	 	Governing Law	 	77
	 	Section 9.15	 	 	 	Submission to Jurisdiction; Waiver of Venue; Service of Process	 	78
	 	Section 9.16	 	 	 	Waiver of Jury Trial	 	78
	 	Section 9.17	 	 	 	USA Patriot Act	 	78
	 	Section 9.18	 	 	 	Restatement	 	79
	 	Section 9.19	 	 	 	Intercreditor Agreement	 	79
	 	Section 9.20	 	 	 	Integration	 	79
	
EXHIBITS:	
 	

 	
 	

 	
 	

 
	  	 	 	 	 	 	 
	 	Exhibit A	 	 	 	—        Form of Assignment and Acceptance	 	 
	 	Exhibit B	 	 	 	—        Form of Compliance Certificate	 	 
	 	Exhibit C	 	 	 	—        Form of Guaranty	 	 
	 	Exhibit D	 	 	 	—        Form of Intercreditor Agreement	 	 
	 	Exhibit E	 	 	 	—        Form of Mortgage	 	 
	 	Exhibit F	 	 	 	—        Form of Note	 	 
	 	Exhibit G	 	 	 	—        Form of Notice of Borrowing	 	 
	 	Exhibit H	 	 	 	—        Form of Notice of Conversion or Continuation	 	 
	 	Exhibit I	 	 	 	—        Form of Pledge Agreement	 	 
	 	Exhibit J	 	 	 	—        Form of Security Agreement	 	 
	 	Exhibit K	 	 	 	—        Form of Transfer Letters	 	 
	
SCHEDULES:	
 	

 	
 	

 	
 	

 
	  	 	 	 	 	 	 
	 	Schedule I	 	—	 	Addresses and Commitments	 	 
	 	Schedule 3.01(p)	 	—	 	Hydrocarbon Hedge Agreements	 	 
	 	Schedule 4.01	 	—	 	Subsidiaries	 	 
	 	Schedule 4.05	 	—	 	Existing Debt	 	 
	 	Schedule 4.07	 	—	 	Litigation	 	 
	 	Schedule 4.17	 	—	 	Gas Imbalances	 	 
	 	Schedule 4.21	 	—	 	Material Agreements	 	 
	 	Schedule 6.07	 	—	 	Affiliate Transactions	 	 

iii

 

  AMENDED AND RESTATED CREDIT AGREEMENT  

        This Amended and Restated Credit Agreement dated as of January 31, 2008 is among ABRAXAS ENERGY
PARTNERS, L.P., a Delaware limited partnership ("Borrower"), the lenders party hereto from time to time as Lenders (as defined below), and  SOCIÉTÉ
GÉNÉRALE, as Administrative Agent (as defined below) and as Issuing Lender (as
defined below). 

        A.    The
Borrower, the Administrative Agent, the Issuing Lender, and the Lenders are party to the Credit Agreement dated as of May 25, 2007 (the "Existing Agreement"),
among the Borrower, the Lenders, and Société Générale, as Administrative Agent (as defined therein and in such capacity, the "Existing
Administrative Agent") and as Issuing Lender (as defined therein). 

        B.    In
order to secure the full and punctual payment and performance of the obligations under the Existing Agreement, the Borrower and the Guarantors (as defined in the
Existing Agreement) have executed and delivered mortgages, deeds of trust, collateral assignments, security agreements, pledge agreements and financing statements and other similar agreements and
instruments in favor of the Existing Administrative Agent (or in favor of any predecessors in such capacity) (collectively, the "Existing Security Documents") granting a mortgage lien and continuing
security interest in and to the collateral described in such Existing Security Documents. 

        C.    The
Borrower, the Administrative Agent, the Issuing Lender, and the Lenders party hereto desire to (i) amend and restate (but not extinguish) the Existing
Agreement in its entirety as hereinafter set forth through the execution of this Agreement and (ii) have the obligations of the Borrower hereunder continue to be secured by the liens and
security interests created under the Existing Security Documents. 

        D.    It
is the intention of the parties hereto that this Agreement is an amendment and restatement of the Existing Agreement, and is not a new or substitute credit agreement
or novation of the Existing Agreement. 

        NOW,
THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the Borrower, the Administrative Agent, the Issuing Lender, and the
Lenders (i) do
hereby agree that the Existing Agreement is amended and restated (but not substituted or extinguished) in its entirety as set forth herein, and (ii) do hereby further agree as follows: 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS  

        Section 1.01    Certain Defined Terms.    As used in this Agreement, the term defined above shall have the
meaning set forth therein and the following terms shall have the following meanings: 

        "APC" means Abraxas Petroleum Corporation, a Nevada corporation. 

        "Acceptable Security Interest" in any Property means a Lien which (a) exists in favor of the Administrative Agent for the benefit
of the Secured Parties, (b) is superior to all Liens or rights of any other Person in the Property encumbered thereby other than Permitted Subject Liens, (c) secures the Obligations, and
(d) is perfected and enforceable. 

        "Acquisition" means the purchase by the Borrower or any of its Subsidiaries of any business, including the purchase of associated assets
or operations or of stock (or other ownership interests) of a Person. 

        "Acquisition Assets" means the assets and other Property being sold by the Sellers and being acquired by the Borrower pursuant to the
Purchase and Sale Agreement. 

        "Act" is defined in Section 9.17. 

1

 

        "Adjusted Reference Rate" means, for any day, the fluctuating rate per annum of interest equal to the greater of (a) the Reference
Rate in effect on such day and (b) the Federal Funds Rate in effect on such day plus 1/2 of 1%. 

        "Administrative Agent" means Société Générale, in its capacity as agent
pursuant to Article VIII, and any successor agent pursuant to Section 8.06. 

        "Administrative Questionnaire" means an administrative questionnaire in a form supplied by the Administrative Agent. 

        "Advance" means an advance by a Lender to the Borrower pursuant to Section 2.01(a) as part of a Borrowing and refers to a Reference
Rate Advance or a Eurodollar Rate Advance. 

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

        "Agreement" means this Amended and Restated Credit Agreement, as the same may be amended, supplemented, restated, extended, substituted,
increased, replaced, renewed, refinanced or otherwise modified from time to time. 

        "Applicable Lending Office" means (a) with respect to any Lender, the office, branch, subsidiary, affiliate or correspondent bank
of such Lender specified in its Administrative Questionnaire or such other office, branch, subsidiary, affiliate or correspondent bank as such Lender may from time to time specify to the Borrower and
the Administrative Agent from time to time and (b) with respect to the Administrative Agent, the address specified for such Person on  Schedule I or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by such party in a
notice to the other parties. 

        "Applicable Margin" means, with respect to any Advance, (a) during such times as any Event of Default exists, 3% per annum plus the
rate per annum set forth below for the relevant Type of such Advance based on the present Utilization applicable from time to time, and (b) at all other times, the rate per annum set forth
below for the relevant Type of such Advance based on the relevant Utilization applicable from time to time. The Applicable Margin for any Advance shall change when and as the relevant Utilization
changes and when and as any such Event of Default commences or terminates. 

	Utilization
 
	 	Eurodollar Rate Advances
	 	Base Rate Advances
	 
	Less than or equal to 25%	 	1.25	%	0.25	%
	Greater than 25% but less than 50%	 	1.50	%	0.50	%
	Equal to or greater than 50% but less than 75%	 	1.75	%	0.75	%
	Equal to or greater than 75%	 	2.00	%	1.00	%

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

        "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the
Administrative Agent, in substantially the form of the attached Exhibit A or any other form approved by the Administrative Agent. 

        "Available Cash" means, with respect to any fiscal quarter: 

        (a)   the
sum of (i) all cash and cash equivalents of the Borrower on hand (other than Cash Security) at the end of such fiscal quarter and (ii) all additional
cash and cash equivalents the Borrower has on hand (other than Cash Security) on the date of 

2

 

determination
of Available Cash with respect to such fiscal quarter resulting from working capital borrowings made subsequent to the end of such fiscal quarter, less 

        (b)   the
amount of all cash reserves established by the board of managers of, or the equivalent governing body of, the General Partner in their reasonable discretion to
(i) provide for the proper conduct of the business of the Borrower and its Subsidiaries (including reserves for future maintenance and capital expenditures including drilling and for
anticipated future credit needs of the Borrower and its Subsidiaries, if necessary), (ii) comply with applicable law or any loan agreement, security agreement, mortgage, debt instrument or
other agreement or obligation to which the Borrower or any Subsidiary is a party or bound by which it is bound or its assets are subject, and (iii) provide funds for Restricted Payments with
respect to any one or more of the next four fiscal quarters. 

        "Borrower" shall have the meaning set forth in the preamble hereof. 

        "Borrowing" means, subject to Section 2.03(c)(ii), a borrowing consisting of simultaneous Advances of the same Type made by each
Lender pursuant to Section 2.03(a), continued by each Lender pursuant to Section 2.03(b), or Converted by each Lender to Advances of a different Type pursuant to Section 2.03(b). 

        "Borrowing Base" means at any particular time, the Dollar amount determined in accordance with Section 2.02 (and adjusted from time
to time pursuant to Section 2.02 or Section 6.04(b)) on account of Proven Reserves attributable to Oil and Gas Properties of the Borrower and its Subsidiaries, and to the extent required
herein, subject to an Acceptable Security Interest, and described in the most recent Independent Engineering Report or Internal Engineering Report, as applicable, delivered to the Administrative Agent
and the Lenders pursuant to Section 2.02. 

        "Borrowing Base Deficiency" means the amount by which the aggregate outstanding amount of the Advances  plus the Letter of Credit Exposure exceeds the lesser of
(x) the Borrowing Base and (y) the aggregate Commitments. 

        "Business Day" means a day of the year on which banks are not required or authorized to close in Houston, Texas and New York, New York,
and, if the applicable Business Day relates to any Eurodollar Rate Advances, on which dealings are carried on by banks in the London interbank market. 

        "Capital Leases" means, as applied to any Person, any lease of any Property by such Person as lessee which would, in accordance with GAAP,
be required to be classified and accounted for as a capital lease on the balance sheet of such Person. 

        "Cash Collateral Account" means a special interest bearing cash collateral account pledged by the Borrower to the Issuing Lender
containing cash deposited pursuant to Sections 2.05(b), 7.02(b), or 7.03(b) to be maintained with the Issuing Lender in accordance with Section 2.07(g) and bear interest or be invested
in the Issuing Lender's reasonable discretion. 

        "Cash Security" means (a) all cash and cash equivalents securing obligations of Borrower or any Subsidiary, including obligations
under Hedging Contracts and obligations with respect to letters of credit but excluding Obligations, and (b) all cash and cash equivalents held in the Cash Collateral Account. 

        "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and
all rules and regulations and requirements thereunder in each case as now or hereafter in effect. 

3

 

        "Change in Control" shall mean the occurrence of any of the following events: 

        (a)   the
occurrence of any transaction, the result of which is that (i) the General Partner is no longer the sole general partner of the Borrower, or (ii) the
Borrower ceases to own, either directly or indirectly, 100% of the Equity Interest in any Subsidiary; 

        (b)   any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person or group shall be deemed to have "beneficial ownership" of all securities that such person
or group has the right to acquire (such right, an "option right"), whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 25% or more of the
Equity Interest of the Borrower; provided, that a "group of persons" shall not include the underwriter in any firm underwriting undertaken in connection with any public offering of the Borrower; or 

        (c)   during
any period of 12 consecutive months, a majority of the members of the board of managers or other equivalent governing body of the General Partner cease to be
composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body
or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the
time of such election or nomination at least a majority of that board or equivalent governing body. 

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

        "Closing Date" means the date on which all of the conditions in Section 3.01 have been met or waived in writing as permitted
herein. 

        "Closing Date Acquisition" means the acquisition by the Borrower of the Acquisition Assets pursuant to the Purchase and Sale Agreement. 

        "Closing Date Acquisition Instruments" means, collectively, the Purchase and Sale Agreement and all other documents executed and delivered
by the Sellers and the Borrower in connection with the Closing Date Acquisition. 

        "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute. 

        "Collateral" means (a) all "Collateral", "Pledged Collateral" and "Mortgaged Properties" (as defined in each of the Mortgages, the
Security Agreements, and the Pledge Agreement, as applicable) or similar terms used in the Security Instruments, and (b) all amounts contained in the Borrower's and its Subsidiaries' bank
accounts. 

        "Commitment" means, for any Lender, the amount set opposite such Lender's name on the Schedule I as its Commitment, or if such
Lender has entered into any Assignment and Acceptance, as set forth for such Lender as its Commitment in the Register maintained by the Administrative Agent pursuant to Section 9.08(c), as such
amount may be reduced or terminated pursuant to Section 2.04 or Article VII or otherwise under this Agreement. The initial amount of the aggregate Commitments is $300,000,000. 

        "Commitment Fee Rate" means the per annum commitment fee rate set forth below and applicable from time to time. The Commitment Fee Rate
shall change when and as the relevant Utilization changes. 

4

 

 

	Utilization
 
	 	Rate
	 
	Less than or equal to 25%	 	0.300	%
	Greater than 25% but less than 50%	 	0.375	%
	Equal to or greater than 50% but less than 75%	 	0.375	%
	Equal to or greater than 75%	 	0.500	%

        "Commitment Termination Date" means the earlier of (a) the Maturity Date and (b) the earlier termination in whole of the
Commitments pursuant to Section 2.04 or Article VII. 

        "Company Group" shall mean Borrower, General Partner and each of their respective Subsidiaries. 

        "Compliance Certificate" means a compliance certificate in the form of the attached Exhibit B signed by a Responsible Officer of
the Borrower. 

        "Contribution Agreement" means that certain Contribution, Conveyance and Assumption Agreement, dated as of May 25, 2007, entered
into by and among APC, the General Partner, the Borrower, Abraxas Energy Investments, LLC, a Texas limited liability company, and the Operating Company, as amended in accordance with the terms
hereof. 

        "Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or otherwise. "Controls", "Controlled
by", "Controlling" and "Controlled" have meanings correlative thereto. Without
limiting the generality of the foregoing, a Person shall be deemed to be Controlled by another Person if such other Person possesses, directly or indirectly, the power to vote 10% or more of the
securities having ordinary voting power for the election of directors, managing general partners or the equivalent. 

        "Controlled Group" means all members of a controlled group of corporations and all businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. 

        "Convert," "Conversion," and "Converted"
each refers to a conversion of Advances of one Type into Advances of another Type pursuant to Section 2.03(b). 

        "Credit Extensions" means (a) an Advance made by any Lender, and (b) the issuance, increase or extension of any Letter of
Credit by the Issuing Lender. 

        "Debt," for any Person, means without duplication: (a) indebtedness of such Person for borrowed money; (b) obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments; (c) obligations of such Person to pay the deferred purchase price of Property or services (including obligations
that are non-recourse to the credit of such Person but are secured by the assets of such Person, but excluding trade accounts payable); (d) obligations of such Person as lessee
under Capital Leases; (e) obligations of such Person under letters of credit and agreements relating to the issuance of letters of credit or acceptance financing; (f) obligations of such
Person under any Hedge Contract; (g) obligations of such Person owing in respect of redeemable preferred stock or other preferred equity interest of such Person; (h) any obligations of
such Person owing in connection with any volumetric or production prepayments; (i) obligations of such Person under direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) of such Person to purchase or otherwise acquire, or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in
clauses (a) through (h) above; (j) indebtedness or obligations of others of the kinds referred to in clauses (a) through (i) secured by any Lien on or in respect of
any Property of such Person; and (k) all liabilities of such Person in respect of unfunded vested benefits under any Plan. 

5

 

        "Default" means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would
become an Event of Default. 

        "Disposition" means a sale, lease, transfer, assignment, Farmout, conveyance, release, surrender, or other disposition of Property
(including any working interest, overriding royalty interest, production payment, net profits interest, royalty interest, or mineral fee interest) in any transaction or series of transactions. 

        "Dollars" and "$" means lawful money of the United States of America. 

        "EBITDA" means, for any period, without duplication, (a) consolidated Net Income for such period  plus (b) to the extent deducted in determining consolidated
Net Income, Interest Expense, taxes, depreciation, amortization, depletion, and other
non-cash charges for such period (including any provision for the reduction in the carrying value of assets (including Hedge Contracts) recorded in accordance with GAAP and including
non-cash charges resulting from the requirements of SFAS 133 or 143 and any non-cash expenses incurred pursuant to SFAS 123R) for such period  minus (c) all non-cash items of income which
were included in determining such consolidated Net Income (including
non-cash income resulting from the requirements of SFAS 133 or 143). 

        "Eligible Assignee" means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved Fund, (d) a commercial
bank organized under the laws of the United States, or any state thereof, and having total assets in excess of $250,000,000 and approved by the Administrative Agent and the Issuing Lender in their
sole discretion, which approval shall not be unreasonably withheld, (e) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic
Cooperation and Development or a political subdivision of any such country and which has total assets in excess of $250,000,000, provided that such bank is acting through a branch or agency located in
the United States and such bank is approved by the Administrative Agent and the Issuing Lender in their sole discretion, which approval shall not be unreasonably withheld, (f) a finance
company, insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans or securities in the ordinary course of its
business and having (together with its Affiliates) total assets in excess of $250,000,000 and approved by the Administrative Agent and the Issuing Lender in their sole discretion, which approval shall
not be unreasonably withheld, (g) any other Person (other than a natural person) approved by (i) the Administrative Agent and the Issuing Lender in their sole discretion, which approval
shall not be unreasonably withheld and (ii) unless a Default has occurred and is continuing at the time any assignment is effected pursuant to this Agreement, the Borrower, which approval shall
not be unreasonably withheld; provided that notwithstanding the foregoing, "Eligible Assignee" shall not include the Borrower or any Affiliate or
Subsidiary of a Loan Party. 

        "Engineering Report" means either an Independent Engineering Report or an Internal Engineering Report and includes the Initial Engineering
Reports where applicable. 

        "Environment" or "Environmental" shall have the meanings set forth in 42 U.S.C. 9601(8)
(1988). 

        "Environmental Claim" means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory
action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the Occupational Safety and Health Acts or
similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law. 

6

 

        "Environmental Law" means, as to the Borrower or its Subsidiaries, all Legal Requirements or common law theories applicable to the
Borrower or its Subsidiaries arising from, relating to, or in connection with the Environment, health, or safety, including CERCLA, relating to (a) pollution, contamination, injury,
destruction, loss, protection, cleanup, reclamation or restoration of the air, surface water, groundwater, land surface or subsurface strata, or other natural resources; (b) solid, gaseous or
liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or transportation; (c) exposure to pollutants, contaminants, hazardous, infectious, or toxic
substances, materials or wastes; (d) the safety or health of employees; or (e) the manufacture, processing, handling, transportation, distribution in commerce, use, storage or disposal
of hazardous, infectious, or toxic substances, materials or wastes. 

        "Environmental Liability" shall mean all liabilities, obligations, damages, losses, claims, actions, suits, judgments, orders, fines,
penalties, fees, expenses and costs (including administrative oversight costs, natural resource damages and remediation costs), whether contingent or otherwise, arising out of or relating to
(a) compliance or non-compliance with any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the Release of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant to which liability is
assumed or imposed with respect to any of the foregoing. 

        "Environmental Permit" means any permit, license, order, approval, registration or other authorization under Environmental Law. 

        "Equity Interest" means, with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of
corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person. 

        "Equity Issuance" means any issuance of equity securities or any other Equity Interests (including any preferred equity securities) by a
Person other than equity securities issued (i) to the Borrower or one of its Subsidiaries, (ii) to APC, and (iii) pursuant to employee or director and officer stock option or
similar plans in the ordinary course of business. 

        "Equity Issuance Proceeds" means, with respect to any Equity Issuance, all cash and cash equivalent investments received by the Borrower
or any of its Subsidiaries from such Equity Issuance after payment of, or provision for, all underwriter fees and expenses, SEC and blue sky fees, printing costs, fees and expenses of accountants,
lawyers and other professional advisors, brokerage commissions and other out-of-pocket fees and expenses actually incurred in connection with such Equity Issuance. 

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 

        "ERISA Affiliate" means each member of a controlled group of corporations and all businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. 

        "Eurocurrency Liabilities" has the meaning assigned to that term in Regulation D of the Federal Reserve Board (or any successor),
as in effect from time to time. 

        "Eurodollar Rate" means, for the Interest Period for each Eurodollar Rate Advance comprising the same Borrowing, the interest rate per
annum (rounded upward to the nearest whole multiple of 1/100 of 1% per annum) set forth on Reuters Reference LIBOR01 as the London Interbank Offered Rate, for deposits in Dollars at 11:00 a.m.
(London, England time) two Business Days before the first day of such Interest Period and for a period equal to such Interest Period; provided, that, if
no such quotation appears on the Reuters Reference LIBOR01, the 

7

 

Eurodollar
Rate shall be an interest rate per annum equal to the rate per annum at which deposits in Dollars are offered by the principal office of Société
Générale in London, England to prime banks in the London interbank market at 11:00 a.m. (London, England time) two Business Days before the first day of such
Interest Period in an amount substantially equal to the Eurodollar Rate Advance to be maintained by the Lender that is the Administrative Agent in respect of such Borrowing and for a period equal to
such Interest Period. 

        "Eurodollar Rate Advance" means an Advance which bears interest as provided in Section 2.09(b). 

        "Eurodollar Rate Reserve Percentage" of any Lender for the Interest Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage shall be so applicable, the daily average of such percentages for those days in such Interest Period during which any such
percentage shall be so applicable) under regulations issued from
time to time by the Federal Reserve Board for determining the maximum reserve requirement (including any emergency, supplemental, or other marginal reserve requirement) for such Lender with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities having a term equal to such Interest Period. 

        "Event of Default" has the meaning specified in Section 7.01. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Lender or any other recipient of any payment to
be made by or on account of any obligation of any Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and franchise or "margin" or similar
taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient is organized or in which its principal office is
located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any
other jurisdiction in which any Borrower is located and (c) in the case of a Foreign Lender (other than an assignee request by the Borrower and any Lender party to this Agreement on the Closing
Date), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office) or is attributable to
such Foreign Lender's failure or inability (other than as a result of a Change in Law) to comply with Section 2.14(e), except to the extent that such Foreign Lender (or its assignor, if any)
was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from any Borrower with respect to such withholding tax pursuant to
Section 2.14(a). Notwithstanding anything to the contrary contained in this definition, "Excluded Taxes" shall not include any withholding tax imposed at any time on payments made by or on
behalf of a Borrower that is not a resident of the United States for tax purposes to any Lender, Administrative Agent or Issuing Lender hereunder or under any other Credit Document, provided that such
Lender, such Administrative Agent and such Issuing Lender shall have complied with Section 2.14(e). 

        "Existing Letters of Credit" means the letters of credit issued and outstanding under the Existing Agreement. 

        "Expiration Date" means, with respect to any Letter of Credit, the date on which such Letter of Credit will expire or terminate in
accordance with its terms. 

8

 

 

        "Farmout" means an arrangement pursuant to agreement whereby the owner(s) of one or more oil, gas and/or mineral lease or other oil and
natural gas working interest with respect to a property from which production of Hydrocarbons is sought agrees to transfer or assign an interest in such property to one or more Persons in exchange for
(a) drilling, or participating in the cost of the drilling of (or agreeing to do so) one or more wells, or undertaking other exploration or development activity or participating in the cost of
such activity, to attempt to obtain production of Hydrocarbons from such property, or (b) obtaining production of Hydrocarbons from such property, or participating in the costs of such
production. 

        "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business
Day, for the immediately preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for
any such day on such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 

        "Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any of its successors. 

        "Fee Letter" means that certain fee letter dated December 20, 2007 among the Borrower, Société
Générale, and SG Americas Securities, LLC, and amended by the Amendment to Fee Letter dated as of January 29, 2008 and as the same may be further amended,
modified or supplemented from time to time. 

        "Financial Statements" means the pro forma unaudited consolidated balance sheet of the Borrower as of the date of this Agreement after
giving effect to the consummation of the Closing Date Acquisition and the Borrowings made hereunder on the Closing Date, and including the certification of a Responsible Officer of the Borrower, all
prepared in accordance with GAAP (except for the absence of footnotes and adjustments typically made at year-end), the copies of which have been delivered to the Administrative Agent and
the Lenders. 

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

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

        "GAAP" means United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.03. 

        "Gas Imbalance" means (a) a sale or utilization by Borrower or other members of the Company Group of volumes of natural gas in
excess of its gross working interest, (b) receipt of volumes of natural gas into a gathering system and redelivery by Borrower or other members of the Company Group of a larger or smaller
volume of natural gas under the terms of the applicable transportation agreement, or (c) delivery to a gathering system of a volume of natural gas produced by Borrower or a member of the
Company Group that is larger or smaller than the volume of natural gas such gathering system redelivers for the account of Borrower or such member of the Company Group, as applicable. 

        "General Partner" means Abraxas General Partner, LLC, a Delaware limited liability company. 

9

 

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

        "Guarantor" means each entity, which may from time to time, execute a Guaranty or a supplement to a Guaranty, including each Subsidiary of
the Borrower and the General Partner. 

        "Guaranty" means a Guaranty in substantially the form of the attached Exhibit C and executed by a Guarantor. 

        "Hazardous Substance" means the substances identified as such pursuant to CERCLA and those regulated under any other Environmental Law,
including pollutants, contaminants, petroleum, petroleum products, radionuclides, radioactive materials, and medical and infectious waste. 

        "Hazardous Waste" means the substances regulated as such pursuant to any Environmental Law. 

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

        "Hydrocarbon Hedge Agreement" means a Hedge Contract between the Borrower or one of its Subsidiaries and any financial institution or
other counterparty which is intended to reduce or eliminate the risk of fluctuations in the price of Hydrocarbons. 

        "Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other
liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and other substances derived therefrom or the processing
thereof, and all other minerals and substances produced in conjunction with such substances, including sulfur, geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores, or
substances of value and the products and proceeds therefrom. 

        "Indemnified Taxes" means Taxes other than Excluded Taxes. 

        "Independent Engineer" means DeGolyer and MacNaughton or any other third party engineering firm acceptable to the Administrative Agent in
its sole discretion. 

        "Independent Engineering Report" means a report, in form and substance satisfactory to the Administrative Agent and each of the Lenders,
prepared by an Independent Engineer, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by the Borrower or any of its Subsidiaries (or to be
acquired by the Borrower or any of its 

10

 

Subsidiaries,
as applicable) which are, or are to be, included in the Borrowing Base, which report shall (a) specify the location, quantity, and type of the estimated Proven Reserves
attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties, (c) contain an estimate of the net operating revenues to
be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product price and cost escalation assumptions specified by the Administrative Agent and the Lenders which are
consistent with the Administrative Agent's and the Lenders' customary internal standards and practices for valuing and redetermining the value of Oil and Gas Properties in connection with reserve
based oil and gas loan transactions, and (d) contain such other information as is customarily obtained from and provided in such reports or is otherwise reasonably requested by the
Administrative Agent or any Lender. 

        "Information "is defined in Section 9.09. 

        "Initial Acquisition" means the acquisition of certain Oil and Gas Properties by the Borrower and its Subsidiaries pursuant to the
Contribution Agreement. 

        "Initial Acquisition Instruments" means, collectively, the Contribution Agreement, the Omnibus Agreement and all other documents,
instruments, and agreements executed and delivered by the sellers and other parties named in the Contribution Agreement or the Borrower or any Guarantor in connection with the Initial Acquisition. 

        "Initial Engineering Reports" means, collectively, an Independent Engineering Report dated as of June 30, 2007 and the
St. Mary's Engineering Report, covering the Proven Reserves of the Loan Parties (after giving pro forma effect to the Closing Date Acquisition) and otherwise in form acceptable to the
Administrative Agent. 

        "Intercompany Debt" means Debt incurred by one or more Loan Parties and owing to any other Loan Party or Loan Parties. 

        "Intercreditor Agreement" means the Intercreditor and Subordination Agreement, dated the date hereof and substantially in the form of
Exhibit D hereto, executed and delivered by the Administrative Agent, the Subordinated Agent and the Loan Parties pursuant to the terms of this Agreement. 

        "Interest Expense" means, for the Borrower and its consolidated Subsidiaries for any period, total interest, letter of credit fees, and
other fees and expenses incurred in connection with any Debt for such period, whether paid or accrued, including, without limitation, all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, imputed interest under Capital Leases, and net costs under Interest Hedge Agreements, all as determined in conformity with GAAP. 

        "Interest Hedge Agreement" means a Hedge Contract between the Borrower or one of its Subsidiaries and one or more financial institutions
providing for the exchange of nominal interest obligations between the Borrower and such financial institution or the cap of the interest rate on any Debt of the Borrower. 

        "Interest Period" means, for each Eurodollar Rate Advance comprising part of the same Borrowing, the period commencing on the date of such
Eurodollar Rate Advance or the date of the Conversion of any Reference Rate Advance into a Eurodollar Rate Advance and ending on the last day of the period selected by the Borrower pursuant to the
provisions below and Section 2.03 and, thereafter, each subsequent period commencing on the last day of the immediately preceding Interest Period and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.03. The duration of each such Interest Period shall be one, two, three, or six months, in each case as the Borrower may,
upon notice 

11

 

received
by the Administrative Agent not later than 11:00 a.m. (New York time) on the third Business Day prior to the first day of such Interest Period, select;  provided, however, that: 

        (a)   the
Borrower may not select any Interest Period which ends after the Commitment Termination Date; 

        (b)   Interest
Periods commencing on the same date for Advances comprising part of the same Borrowing shall be of the same duration; 

        (c)   whenever
the last day of any Interest Period would otherwise occur on a day other than a Business Day, the last day of such Interest Period shall be extended to occur on
the next succeeding Business Day; provided that if such extension would cause the last day of such Interest Period to occur in the next following
calendar month, the last day of such Interest Period shall occur on the immediately preceding Business Day; and 

        (d)   any
Interest Period which begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at
the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it would have ended if there were a numerically corresponding day in such calendar month. 

        "Internal Engineering Report" means a report, in form and substance satisfactory to the Administrative Agent and each Lender, prepared by
the Borrower and certified by a Responsible Officer of the Borrower, addressed to the Administrative Agent and the Lenders with respect to the Oil and Gas Properties owned by the Borrower or any of
its Subsidiaries (or to be acquired by the Borrower or any of its Subsidiaries, as applicable) which are, or are to be, included in the Borrowing Base, which report shall (a) specify the
location, quantity, and type of the estimated Proven Reserves attributable to such Oil and Gas Properties, (b) contain a projection of the rate of production of such Oil and Gas Properties,
(c) contain an estimate of the net operating revenues to be derived from the production and sale of Hydrocarbons from such Proven Reserves based on product price and cost escalation assumptions
specified by the Administrative Agent and the Lenders which are consistent with the Administrative Agent's and the Lenders' customary internal standards and practices for valuing and redetermining the
value of Oil and Gas Properties in connection with reserve based oil and gas loan transactions, and (d) contain such other information as is customarily obtained from and provided in such
reports or is otherwise reasonably requested by the Administrative Agent or any Lender. 

        "Issuing Lender" means Société Générale in its capacity as issuer of Letters
of Credit hereunder, and any successor Issuing Lender pursuant to Section 8.06. 

        "Leases" means all oil and gas leases, oil, gas and mineral leases, oil, gas and casinghead gas leases, wellbore assignments or any other
instruments, agreements, or conveyances under and pursuant to which the owner thereof has or obtains the right to enter upon lands and explore for, drill, and develop such lands for the production of
Hydrocarbons. 

        "Legal Requirement" means, as to any Person, any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or
official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including Regulations D, T, U, and X, which is applicable to
such Person. 

        "Lenders" means the lenders listed on the signature pages of this Agreement and each Eligible Assignee that shall become a party to this
Agreement pursuant to Section 9.08. 

        "Lender Hedging Obligations" means all obligations arising from time to time under Hedge Contracts entered into from time to time between
any Loan Party and a counterparty that is a Lender or an Affiliate of a Lender; provided that if such counterparty ceases to be a Lender 

12

 

hereunder
or an Affiliate of a Lender hereunder, Lender Hedging Obligations shall only include such obligations to the extent arising from transactions entered into at the time such counterparty was a
Lender hereunder or an Affiliate of a Lender hereunder. 

        "Letter of Credit" means, individually, any standby letter of credit issued by the Issuing Lender for the account of the Borrower in
connection with the Commitments and which is subject to this Agreement, and "Letters of Credit" means all such letters of credit collectively. 

        "Letter of Credit Application" means the Issuing Lender's standard form letter of credit application for standby letters of credit that
has been executed by the Borrower and accepted by the Issuing Lender in connection with the issuance of a Letter of Credit. 

        "Letter of Credit Documents" means all Letters of Credit, Letter of Credit Applications, and agreements, documents, and instruments
entered into in connection with or relating thereto. 

        "Letter of Credit Exposure" means, at any time, the sum of (a) the aggregate undrawn maximum face amount of each Letter of Credit
at such time plus (b) the aggregate unpaid amount of all Reimbursement Obligations at such time. 

        "Letter of Credit Obligations" means any obligations of the Borrower under this Agreement in connection with the Letters of Credit,
including the Reimbursement Obligations. 

        "Lien" means any mortgage, lien, pledge, assignment, charge, deed of trust, security interest, hypothecation, preference, deposit
arrangement or encumbrance (or other type of arrangement having the practical effect of the foregoing) to secure or provide for the payment of any obligation of any Person, whether arising by
contract, operation of law, or otherwise (including the interest of a vendor or lessor under any conditional sale agreement, synthetic lease, Capital Lease, or other title retention agreement). 

        "Liquid Investments" means: 

        (a)   direct
obligations of, or obligations the principal of and interest on which are unconditionally guaranteed by, the United States maturing within 270 days from
the date of any acquisition thereof; 

        (b)   (i)
negotiable or nonnegotiable certificates of deposit, time deposits, or other similar banking arrangements maturing within 270 days from the date of
acquisition thereof or which may be liquidated for the full amount thereof without penalty or premium ("bank debt securities"), issued by (A) any Lender (or any Affiliate of any Lender), or
(B) any other bank or trust company so long as either (i) such certificate of deposit is pledged to secure the Borrower's or any Subsidiaries' ordinary course of business bonding
requirements, or (ii) the amount thereof is less than or equal to $100,000, or any other bank or trust company, if at the time of deposit or purchase, such bank debt securities are rated A or
A2 or better by either Standard & Poor's Ratings Group or Moody's Investors Service, Inc., and (ii) commercial paper issued by (A) any Lender (or any Affiliate of any
Lender) or (B) any other Person if at the time of purchase such commercial paper is rated at the highest or the second highest credit rating given by either Standard & Poor's Ratings
Group or Moody's Investors Service, Inc., or upon the discontinuance of both of such services, such other nationally recognized rating service or services, as the case may be, as shall be
selected by the Borrower with the consent of the Required Lenders; 

        (c)   deposits
in money market funds investing exclusively in investments described in clauses (a) and (b) above; 

        (d)   repurchase
agreements relating to investments described in clauses (a) and (b) above with a market value at least equal to the consideration paid in
connection therewith, with any 

13

 

Person
who regularly engages in the business of entering into repurchase agreements and has a combined capital and surplus and undivided profit of not less than $500,000,000.00, if at the time of
entering into such agreement the debt securities of such Person are rated at the highest or the second highest credit rating given by either Standard & Poor's Ratings Group or Moody's Investors
Service, Inc.; and 

        (e)   such
other instruments (within the meaning of Article 9 of the Uniform Commercial Code in effect in New York) or investment property as the Borrower may request
and the Administrative Agent may approve in writing. 

        "Loan Documents" means this Agreement, the Notes, the Letter of Credit Documents, the Guaranties, the Security Instruments, any Hedge
Contract with a Swap Counterparty, the Intercreditor Agreement, the Post-Closing Agreement, and each other agreement, instrument, or document executed by the Borrower, any Guarantor, or
any of the Borrower's or a Guarantor's Subsidiaries or any of their officers at any time in connection with this Agreement or in connection with any of the Obligations. 

        "Loan Party" means the Borrower, the General Partner, or any Guarantor. 

        "Material Adverse Change" means (a) a material adverse change in the business, assets (including the Oil and Gas Properties),
condition (financial or otherwise), results of operations or prospects of the Borrower individually, or the Company Group, taken as a whole, since the Closing Date (but after giving pro forma effect
to the Closing Date Acquisition) or (b) a material adverse effect on the Borrower's, individually, or the Company Group's, taken as a whole, ability to perform its obligations under this
Agreement, any Note, any Guaranty, or any other Loan Document. 

        "Maturity Date" means January 31, 2013. 

        "Maximum Rate" means the maximum nonusurious interest rate under applicable law (determined under such laws after giving effect to any
items which are required by such laws to be construed as interest in making such determination, including if required by such laws, certain fees and other costs). 

        "Mortgage" means the mortgage or deed of trust executed by any one or more of the Loan Parties in favor of the Administrative Agent for
the ratable benefit of the Secured Parties in substantially the form of the attached Exhibit E or such other form as may be requested by the Administrative Agent, together with any assumptions
or assignments of the obligations thereunder by the Borrower, any Guarantor or any of their respective Subsidiaries. 

        "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. 

        "Net Income" means, with respect to the Borrower and its consolidated Subsidiaries, for any period, the net income for such period after
taxes, as determined in accordance with GAAP, excluding, however, (a) extraordinary items, including (i) any net non-cash gain or loss during such period arising from the
sale, exchange, retirement or other disposition of capital assets (such term to include all fixed assets and all securities) other than in the ordinary course of business, and (ii) any
write-up or write-down of assets, including without limitation, Oil and Gas Properties and Hedge Contracts, and (b) the cumulative effect of any change in GAAP. 

        "Note" means a promissory note of the Borrower payable to the order of any Lender in an amount not to exceed the Commitment of such
Lender, in substantially the form of the attached Exhibit F, evidencing indebtedness of the Borrower to such Lender resulting from Advances owing to such Lender. 

14

 

        "Notice of Borrowing" means a notice of borrowing in the form of the attached Exhibit G signed by a Responsible Officer of the
Borrower. 

        "Notice of Conversion or Continuation" means a notice of conversion or continuation in the form of the attached Exhibit H signed by
a Responsible Officer of the Borrower. 

        "Obligations" means (a) all principal, interest, fees, reimbursements, indemnifications, and other amounts payable by the Borrower,
any Guarantor or any of their respective Subsidiaries to the Administrative Agent, the Issuing Lender or the Lenders under the Loan Documents (other than the Hedge Contracts with a Swap Counterparty),
including the Letter of Credit Obligations, and (b) all Lender Hedging Obligations. 

        "Oil and Gas Business" means (a) the acquisition, exploration, exploitation, development, operation and disposition of interests in
Oil and Gas Properties and Hydrocarbons, (b) the gathering, marketing, treating, processing, storage, selling and transporting of any production from such interests or properties, including the
marketing of Hydrocarbons obtained from unrelated Persons, (c) any business relating to or arising from exploration for or development, production, treatment, processing, storage,
transportation or marketing of oil, gas and other minerals and products produced in association therewith, (d) any business relating to oilfield sales and service, and (e) any activity
that is ancillary or necessary or desirable to facilitate the activities described in clauses (a) through (d) of this definition. 

        "Oil and Gas Properties" means fee mineral interests, term mineral interests, Leases, subleases, Farmouts, royalties, overriding
royalties, net profit interests, carried interests, production payments, back-in interests and reversionary interests and similar mineral interests, and all unsevered and unextracted
Hydrocarbons in, under, or attributable to such oil and gas Properties and interests. 

        "Omnibus Agreement" means the Omnibus Agreement dated May 25, 2007, among APC, the General Partner, the Operating Company and the
Borrower, as amended in accordance with the terms hereof. 

        "Operating Company" means Abraxas Operating, LLC, a Delaware limited liability company. 

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

        "Participant" has the meaning assigned to such term in paragraph (d) of Section 9.08. 

        "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. 

        "Permit" means any approval, certificate of occupancy, consent, waiver, exemption, variance, franchise, order, permit, authorization,
right or license of or from any Governmental Authority, including an Environmental Permit. 

        "Permitted Holder" means any holder of Equity Interest in the Borrower on the Closing Date. 

        "Permitted Liens" is defined in Section 6.01. 

        "Permitted Subject Liens" means the Liens permitted under paragraphs (c), (d), (e), (f), (g) and (i) of
Section 6.01. 

        "Person" (whether or not capitalized) means an individual, partnership, corporation (including a business trust), joint stock company,
limited liability company, limited liability partnership, trust, unincorporated association, joint venture or other entity, Governmental Authority or other entity. 

15

 

 

        "Plan" means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Borrower or any member of the
Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code. 

        "Pledge Agreement" means a Pledge Agreement in substantially the form of the attached Exhibit I, executed by the Borrower or any of
its Subsidiaries or any of the Guarantors (other than the General Partner), if applicable, covering the Equity Interests in the Operating Company and each direct or indirect Subsidiary of Borrower or
General Partner. 

        "Post-Closing Agreement" means the post-closing letter agreement dated as of January 31, 2008 between the
Borrower and the Administrative Agent. 

        "Private Placement" means the private placement of the general and limited partnership Equity Interests of the Borrower to APC and such
other third parties pursuant to the terms of the Private Placement Agreement. 

        "Private Placement Agreement" means the Purchase Agreement among the Borrower, the General Partner, APC, the Operating Company and the
purchasers named therein dated as of May 25, 2007 pursuant to which such purchasers have purchased the Common Units (as described therein) of the Borrower for an aggregate purchase price of
$100,000,117.28, as amended in accordance with the terms hereof. 

        "Private Placement Documents" means, collectively, the Private Placement Agreement, the Registration Rights Agreement, and all other
documents, instruments, and agreements executed and delivered by the General Partner, APC or the purchasers named in the Private Placement Agreement in connection with the Private Placement or the
Registration Rights Agreement. 

        "Projections" means, for each of the fiscal years 2008, 2009 and 2010 during the term of this Agreement, Borrower's and the Company
Group's forecasted (a) balance sheets, (b) profit and loss statements, and (c) cash flow statements, based on good faith estimates and assumptions made by the management of the
General Partner on behalf of the Borrower. 

        "Property" of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person. 

        "Proven Reserves" means, at any particular time, the estimated quantities of Hydrocarbons which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years from known reservoirs attributable to Oil and Gas Properties included or to be included in the Borrowing Base under then
existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made). 

        "Pro Rata Share" means, with respect to any Lender, (a) with respect to amounts owing under the Commitments, (i) if such
Commitments have not been canceled, the ratio (expressed as a percentage) of such Lender's uncancelled Commitment at such time to the aggregate uncancelled Commitments at such time, or (ii) if
the aggregate Commitments have been terminated, the ratio as determined pursuant to the preceding clause (i) immediately prior to such termination or (b) with respect to amounts owing
generally under this Agreement and the other Loan Documents, the ratio (expressed as a percentage) of aggregate Commitments of such Lender to the aggregate Commitments of all the Lenders (or if such
Commitments have been terminated, the ratio (expressed as a percentage) of Credit Extensions owing to such Lender to the aggregate Credit Extensions owing to all such Lenders. 

        "Purchase and Sale Agreement" means the Purchase and Sale Agreement dated as of December 11, 2007 between the Sellers and Operating
Company, as it may be amended, supplemented or otherwise modified from time to time. 

16

 

        "PV-10" means estimated future net revenue from Hydrocarbons discounted at a rate of 10% per annum, before income taxes and
with no price or cost escalation or de-escalation in accordance with guidelines promulgated by the SEC. 

        "Reference Rate" means a fluctuating interest rate per annum as shall be in effect from time to time equal to the rate of interest
publicly announced by Société Générale as its reference rate, whether or not the Borrower has notice thereof. 

        "Reference Rate Advance" means an Advance which bears interest as provided in Section 2.09(a). 

        "Register" has the meaning set forth in paragraph (c) of Section 9.08. 

        "Registration Rights Agreement" means the Registration Rights Agreement dated as of May 25, 2007 among the Borrower and the
purchasers named therein, as amended by Amendment No. 1 to Registration Rights Agreement dated as of December 5, 2007 and as the same may be further amended in accordance with the terms
hereof. 

        "Regulations D, T, U, and X" mean Regulations D, T, U, and X of the Federal Reserve Board, as the same is from time to time
in effect, and all official rulings and interpretations thereunder or thereof. 

        "Reimbursement Obligations" means all of the obligations of the Borrower to reimburse the Issuing Lender for amounts paid by the Issuing
Lender under Letters of Credit as established by the Letter of Credit Applications and Section 2.07(d). 

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

        "Release" shall have the meaning set forth in CERCLA or under any other Environmental Law. 

        "Reportable Event" means a "reportable event" described in Section 4043 of ERISA and the regulations issued thereunder. 

        "Required Lenders" means, at any time, Lenders holding at least 662/3% of the Commitments or, if the Commitments have been
terminated or expired, the outstanding principal amount of the Advances and Letter of Credit Exposure with the aggregate amount of each Lender's risk participation and funded participation in Letter
of Credit Obligations being deemed to be "held" by such Lender for purposes of this definition). 

        "Response" shall have the meaning set forth in CERCLA or under any other Environmental Law. 

        "Responsible Officer" means (a) with respect to any Person that is a corporation, such Person's Chief Executive Officer, President,
Chief Financial Officer, or Vice President, (b) with respect to any Person that is a limited liability company, if such Person has officers, then such Person's Chief Executive Officer,
President, Chief Financial Officer, or Vice President, and if such Person is managed by members, then a Responsible Officer of such Person's managing member, and if such Person is managed by managers,
then a manager (if such manager is an individual) or a Responsible Officer of
such manager (if such manager is an entity), and (c) with respect to any Person that is a general partnership or a limited liability partnership, the Responsible Officer of such Person's
general partner or partners. 

        "Restricted Payment" means, with respect to any Person, (a) any direct or indirect dividend or distribution (whether in cash,
securities or other Property) with respect to any Equity Interests, including any payment of any kind or character (whether in cash, securities or other Property) in 

17

 

consideration
for or otherwise in connection with any retirement, purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or
acquire any such Equity Interest of such Person or (b) principal or interest payments (in cash, Property or otherwise) on, or redemptions of, subordinated debt, including, without limitation,
Subordinated Debt, of such Person; provided, that, the term "Restricted Payment" shall not include any dividend or distribution payable solely in Equity
Interests of such Person or warrants, options or other rights to purchase such Equity Interests. 

        "SEC" means the United States Securities and Exchange Commission. 

        "Secured Parties" means the Administrative Agent, the Issuing Lender, the Lenders, and the Persons that are owed Lender Hedging
Obligations. 

        "Security Agreements" means the Security Agreements, each in substantially the form of the attached Exhibit J, executed by the
Borrower, any of its Subsidiaries, or any of the Guarantors. 

        "Security Instruments" means, collectively: (a) the Mortgages, (b) the Transfer Letters, (c) the Pledge Agreement,
(d) the Security Agreements, (e) each other agreement, instrument or document executed at any time in connection with the Pledge Agreement, the Security Agreements, or the Mortgages,
(f) each agreement, instrument or document executed in connection with the Cash Collateral Account, and (g) each other agreement, instrument or document executed at any time in
connection with securing the Obligations. 

        "Sellers" means St. Mary Land & Exploration Company, a Delaware corporation, Ralph H. Smith Restated Revocable Trust dated
August 14, 1997, Ralph H. Smith, Trustee, and the Kent J. Harrell Revocable Trust dated January 19, 1995, Kent J. Harrell, Trustee. 

        "Solvent" means, with respect to any Person as of the date of any determination, that on such date (a) the fair value of the
Property of such Person (both at fair valuation and at present fair saleable
value) is greater than the total liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that
will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to realize upon its assets and pay its debts and other
liabilities, contingent obligations, and other commitments as they mature in the normal course of business, (d) such Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (e) such Person is not engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably small capital after giving due consideration to current and anticipated future capital requirements and current and
anticipated future business conduct and the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, such liabilities shall
be computed at the amount which, in light of the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. 

        "St. Mary's Engineering Report" means the Internal Engineering Report that evaluates as of December 1, 2007 the Oil and Gas
Properties to be acquired by the Borrower and any of its Subsidiaries pursuant to the Closing Date Acquisition. 

        "Subordinated Agent" means Société Générale or such other Subordinated Lender
serving in the capacity as the "administrative agent" under the Subordinated Credit Agreement to the extent permitted under the Subordinated Credit Agreement and the Intercreditor Agreement. 

        "Subordinated Collateral" means the "Collateral" as defined in the Subordinated Credit Agreement. 

18

 

        "Subordinated Credit Agreement" means the Subordinated Credit Agreement dated as of the date hereof between the Borrower, the Subordinated
Agent and the Subordinated Lenders, as amended, supplemented, restated, extended, substituted, increased, replaced, renewed, refinanced or otherwise modified but only to the extent permitted under the
terms of the Intercreditor Agreement. 

        "Subordinated Debt" means the "Obligations" as defined in the Subordinated Credit Agreement. 

        "Subordinated Lender Hedging Obligations" means the "Lender Hedging Obligations" as defined in the Subordinated Credit Agreement. 

        "Subordinated Lenders" means the lenders party to the Subordinated Credit Agreement from time to time. 

        "Subordinated Loan Documents" means the Subordinated Credit Agreement, the promissory notes executed and delivered pursuant to the
Subordinated Credit Agreement, the Intercreditor Agreement and each other agreement, instrument, or document executed by the Borrower or any of its Subsidiaries or any of their Responsible Officers in
connection with the Subordinated Credit Agreement. 

        "Subordinated Security Instruments" means the "Security Instruments" as defined in the Subordinated Credit Agreement. 

        "Subsidiary" means, with respect to any Person (the "parent") at any date, any other
Person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of
such date, as well as any Person, a majority of whose outstanding Voting Securities (other than directors' qualifying shares) shall at any time be owned by such parent or one or more Subsidiaries of
such parent. Unless otherwise specified, all references herein to a "Subsidiary" or to "Subsidiaries" shall refer to a Subsidiary or Subsidiaries of the Borrower. 

        "Swap Counterparty" means any Lender (or Affiliate of a Lender) that is party to any Hedge Contract with the Borrower or any other Loan
Party. 

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

        "Termination Event" means (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder
(other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower or any of its Affiliates from a
Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under Section 4041 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, or (e) any other event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. 

        "Transfer Letters" means, collectively, the letters in lieu of transfer orders in substantially the form of the attached Exhibit K
and executed by the Borrower, any Guarantor or any of their respective Subsidiaries executing a Mortgage. 

        "Type" has the meaning set forth in Section 1.04. 

19

 

 

        "Unused Commitment Amount" means, with respect to a Lender at any time, the lesser of (a) such Lender's Commitment at such time and
(b) such Lender's Pro Rata Share of the Borrowing Base then in effect at such time minus, in each case the sum of (i) the aggregate
outstanding principal amount of all Advances owed to such Lender at such time plus (ii) such Lender's Pro Rata Share of the aggregate Letter of
Credit Exposure at such time. 

        "Utilization" means the percentage obtained by dividing (a) the outstanding principal amount of the Advances and the Letter of
Credit Exposure at such time by (b) the lesser of (i) the Commitments and (ii) the Borrowing Base in effect at such time. 

        "Voting Securities" means (a) with respect to any corporation (including any unlimited liability company), capital stock of such
corporation having general voting power under ordinary circumstances to elect directors of such corporation (irrespective of whether at the time stock of any other class or classes shall have or might
have special voting power or rights by reason of the happening of any contingency), (b) with respect to any partnership, any partnership interest or other ownership interest having general
voting power to elect the general partner or other management of the partnership or other Person, and (c) with respect to any limited liability company, membership certificates or interests
having general voting power under ordinary circumstances to elect managers of such limited liability company. 

        Section 1.02    Computation of Time Periods.    In this Agreement, with respect to the computation of periods
of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". 

        Section 1.03    Accounting Terms; Changes in GAAP.    Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless
otherwise disclosed to the Lenders in writing at the time of delivery thereof) be prepared, in accordance with GAAP applied on a basis consistent with those used in the preparation of the latest
financial statements furnished to the Lenders hereunder (which prior to the delivery of the first financial statements under Section 5.06, shall mean the Financial Statements). All calculations
made for the purposes of determining compliance with this Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with that used in
the preparation of the annual or quarterly financial statements furnished to the Lenders pursuant to Section 5.06 most recently delivered prior to or concurrently with such calculations (or,
prior to the delivery of the first financial statements under Section 5.06, used in the preparation of the Financial Statements). In addition, all calculations and defined accounting terms used
herein shall, unless
expressly provided otherwise, when referring to any Person, where applicable, refer to such Person on a consolidated basis and mean such Person and its consolidated Subsidiaries. 

        Section 1.04    Types of Advances.    Advances are distinguished by "Type." The "Type" of an Advance refers to
the determination whether such Advance is a Eurodollar Rate Advance or Reference Rate Advance. 

        Section 1.05    Miscellaneous.    The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." The word "will" shall be construed to have the same meaning and effect as the word "shall." Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person's successors and assigns, (c) the words "herein," "hereof" and 

20

 

"hereunder,"
and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles,
Sections, paragraphs, Exhibits and Schedules shall be construed to refer to Articles, Sections and paragraphs, of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words "asset" and "property" shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. 

ARTICLE II

CREDIT FACILITIES  

        Section 2.01    Commitment for Advances.    

        (a)    Advances.    Each Lender severally agrees, on the terms and conditions set forth in this Agreement (including
without limitation, the terms set forth in Section 3.01), to make Advances to the Borrower from time to time on any Business Day during the period from the date of this Agreement until the
Commitment Termination Date in an amount for each Lender not to exceed such Lender's Unused Commitment Amount. Each Borrowing shall, in the case of Borrowings consisting of Reference Rate Advances, be
in an aggregate amount not less than $250,000 and in integral multiples of $100,000 in excess thereof, and in the case of Borrowings consisting of Eurodollar Rate Advances, be in an
aggregate amount not less than $500,000 and in integral multiples of $100,000 in excess thereof, and in each case shall consist of Advances of the same Type made on the same day by the Lenders ratably
according to their respective Commitments. Within the limits of each Lender's Commitment, and subject to the terms of this Agreement, the Borrower may from time to time borrow, prepay, and reborrow
Advances. 

        (b)    Outstanding Loans under Existing Agreement.    The parties hereto acknowledge and agree that, effective as of
the Closing Date, all outstanding Advances (as defined in the Existing Agreement) shall be automatically deemed to be Advances outstanding under this Agreement. 

        (c)    Evidence of Debt.    

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

         (ii)  In
addition to the accounts and records referred to in subsection (i), each Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by the
Administrative Agent 

21

 

and
the accounts and records of any Lender in respect of such matters, the accounts and records of the Administrative Agent shall control in the absence of manifest error. 

        Section 2.02    Borrowing Base.    

        (a)    Borrowing Base.    The initial Borrowing Base in effect as of the date of this Agreement has been set by the
Administrative Agent and the Lenders and acknowledged by the Borrower as $140,000,000. Such initial Borrowing Base shall remain in effect until the next redetermination made pursuant to this
Section 2.02 or Section 6.04(b). The Borrowing Base shall be determined in accordance with the standards set forth in Section 2.02(d) and is subject to periodic redetermination
pursuant to Sections 2.02(b), 2.02(c) and 6.04(b). 

        (b)    Calculation of Borrowing Base.    

          (i)  The
Borrower shall deliver to the Administrative Agent and each of the Lenders on or before each February 28th (or February 29th, as
applicable) of each year, an Independent Engineering Report dated effective as of the immediately preceding December 31, and such other information as may be reasonably requested by any Lender
with respect to the Oil and Gas Properties included or to be included in the Borrowing Base; provided that with respect to the February 29, 2008
redetermination, the Independent Engineering Report delivered pursuant to this Section shall be comprised of (A) an Independent Engineering Report dated effective as of December 31, 2007
and delivered on or before February 29, 2008, covering all of the Oil and Gas Properties owned by the Borrower or any of its Subsidiaries (other than those Oil and Gas Properties acquired
pursuant to the Closing Date Acquisition), and (B) an Independent Engineering Report dated effective as of a date on or before March 31, 2008 and delivered on or before April 30,
2008, covering all of the Oil and Gas Properties acquired by the Borrower or any of its Subsidiaries pursuant to the Closing Date Acquisition, in each case, together with such other information as may
be reasonably requested by any Lender with respect to the Oil and Gas Properties included or to be included in the Borrowing Base. Within thirty (30) days after receipt of all such Engineering
Reports and information, the Administrative Agent shall make an initial determination of the new Borrowing Base and upon such initial determination shall promptly notify the Lenders in writing of its
initial determination of the proposed Borrowing Base. Subject to the last sentence of this Section 2.02(b)(i), the Required Lenders shall approve or reject the Administrative Agent's initial
determinations of the proposed Borrowing Base by written notice to the Administrative Agent within fifteen (15) days of the Administrative Agent's notification of its initial determinations;
provided, however that, the failure by any Lender to confirm in writing the Administrative Agent's determination of the proposed Borrowing Base within such fifteen (15) day period shall be
deemed an approval of such proposed Borrowing Base by such Lender. If the Required Lenders fail to approve any such proposed Borrowing Base determined by the Administrative Agent hereunder in such
fifteen (15) day period, then the Administrative Agent shall poll the Lenders to ascertain the highest proposed Borrowing Base then acceptable to the Required Lenders for purposes of this
Section 2.02(b)(i) and, subject to the last sentence of this Section 2.02(b)(i), such amounts shall become the new Borrowing Base, effective on the date specified in this
Section 2.02(b)(i). Until such approval or deemed approval, the Borrowing Base in effect before the proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent
and the Required Lenders of the new Borrowing Base, the Administrative Agent shall, by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such
designation shall be effective as of the Business Day specified in such written notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such
written notice) and such new Borrowing Base shall remain in effect until the next determination or redetermination of the Borrowing Base in accordance with this Agreement. Notwithstanding anything
contained herein to the contrary, (A) any determination or redetermination of the Borrowing Base resulting in any increase of the Borrowing Base in effect 

22

 

immediately
prior to such determination or redetermination shall require the written approval (and not deemed approval) of all the Lenders in their sole discretion but subject to paragraph (d)
of this Section 2.02, and (B) in no event shall the determined or redetermined Borrowing Base exceed the aggregate Commitments of the Lenders. 

         (ii)  The
Borrower shall deliver to the Administrative Agent and each Lender on or before each August 31, beginning August 31, 2008, an Internal Engineering
Report dated effective as of the immediately preceding June 30, and such other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and
Gas Properties included or to be included in the Borrowing Base. Within thirty (30) days after receipt of all such Engineering Report and information, the Administrative Agent shall make an
initial determination of the new Borrowing Base
and upon such initial determination shall promptly notify the Lenders in writing of its initial determination of the proposed Borrowing Base. Subject to the last sentence of this
Section 2.02(b)(ii), the Required Lenders shall approve or reject the Administrative Agent's initial determinations of the proposed Borrowing Base by written notice to the Administrative Agent
within fifteen (15) days of the Administrative Agent's notification of its initial determinations; provided, however that, the failure by any Lender to confirm in writing the Administrative
Agent's determination of the proposed Borrowing Base within such fifteen (15) day period shall be deemed an approval of the such proposed Borrowing Base by such Lender. If the Required Lenders
fail to approve any such proposed Borrowing Base determined by the Administrative Agent hereunder in such fifteen (15) day period, then the Administrative Agent shall poll the Lenders to
ascertain the highest proposed Borrowing Base then acceptable to the Required Lenders for purposes of this Section 2.02(b)(ii) and, subject to the last sentence of this
Section 2.02(b)(ii), such amounts shall become the new Borrowing Base, effective on the date specified in this Section 2.02(b)(ii). Until such approval or deemed approval, the Borrowing
Base in effect before the proposed Borrowing Base shall remain in effect. Upon agreement by the Administrative Agent and the Required Lenders of the new Borrowing Base, the Administrative Agent shall,
by written notice to the Borrower and the Lenders, designate the new Borrowing Base available to the Borrower. Such designation shall be effective as of the Business Day specified in such written
notice (or, if no effective date is specified in such written notice, the next Business Day following delivery of such written notice) and such new Borrowing Base shall remain in effect until the next
determination or redetermination of the Borrowing Base in accordance with this Agreement. Notwithstanding anything contained herein to the contrary, (A) any determination or redetermination of
the Borrowing Base resulting in any increase of the Borrowing Base in effect immediately prior to such determination or redetermination shall require the written approval (and not deemed approval) of
all the Lenders in their sole discretion but subject to paragraph (d) of this Section 2.02, and (B) in no event shall the determined or redetermined Borrowing Base exceed the
aggregate Commitments of the Lenders. 

        (iii)  In
the event that the Borrower does not furnish to the Administrative Agent and the Lenders the Independent Engineering Report, Internal Engineering Report or other
information specified in clauses (i) and (ii) above by the date specified therein, the Administrative Agent and the Lenders may nonetheless redetermine the Borrowing Base and redesignate
the Borrowing Base from time-to-time thereafter in their sole discretion until the Administrative Agent and the Lenders receive the relevant Independent Engineering Report,
Internal Engineering Report, or other information, as applicable, whereupon the Administrative Agent and the Lenders shall redetermine the Borrowing Base as otherwise specified in this
Section 2.02. 

        (iv)  Each
delivery of an Engineering Report by the Borrower to the Administrative Agent and the Lenders shall constitute a representation and warranty by the Borrower to the
Administrative Agent and the Lenders that (A) the Borrower and its Subsidiaries, as applicable, own the Oil and Gas Properties specified therein subject to an Acceptable Security Interest and
free and clear of 

23

 

any
Liens (except Permitted Liens), and (B) on and as of the date of such Engineering Report each Oil and Gas Property described as "proved developed" therein was developed for oil and/or gas,
and the wells pertaining to such Oil and Gas Properties that are described therein as producing wells ("Wells"), were each producing oil and/or gas in paying quantities, except for Wells that were
utilized as water or gas injection wells or as water disposal wells. Additionally, the Borrower shall deliver with each such Engineering Report a list of any Proven Reserves that have been sold or
acquired by the Borrower and its Subsidiaries since the date of the last Engineering Report delivered to the Administrative Agent; provided that such
requirement shall not constitute nor be construed as a consent to any sale or proposed sale that would not be permitted under the terms of this Agreement. 

        (c)    Interim Redetermination.    In addition to the Borrowing Base redeterminations provided for in
Section 2.02(b), the Administrative Agent and the Lenders may (i) in their sole discretion make one additional redetermination of the Borrowing Base during any six-month
period between scheduled redeterminations and (ii) at the request of the Borrower make one additional redetermination of the Borrowing Base during any six-month period between
scheduled redeterminations, and in any case, based on such information as the Administrative Agent and the Lenders deem relevant (but in accordance with Section 2.02(d)). Additionally, the
Administrative Agent and the Lenders may request (A) an additional redetermination in connection with any sale or proposed sale of Oil and Gas Properties of the Borrower or any of its
Subsidiaries having a market value that would, when aggregated with all other such sales that have been consummated since the date of the last redetermination, equal or exceed an amount equal to 5% of
the Borrowing Base then in effect; provided that such request shall not constitute nor be construed as a consent to any sale or proposed sale that would
not be permitted under the terms of this Agreement, and (B) an additional redetermination if the net aggregate amount of Gas Imbalances with respect to the Oil and Gas Properties of the
Borrower and its Subsidiaries exceeds at any time an amount equal to 1% of the Proven Reserves that are categorized as "proved, developed and producing" on the most recently delivered Engineering
Report; provided that such request shall not constitute nor be construed as a consent to or a waiver of any Default or Event of Default occurring as a
result of any such Gas Imbalance. The party requesting the redetermination shall give the other parties at least 10 days' prior written notice that a redetermination of the Borrowing Base
pursuant to this paragraph (c) is to be performed. In connection with any redetermination of the Borrowing Base under this Section 2.02(c), the Borrower shall provide the Administrative
Agent and the Lenders with such information regarding the Borrower and its Subsidiaries' business (including its Oil and Gas Properties, the Proven Reserves, and production relating thereto) as the
Administrative Agent or any Lender may request, including, without limitation, an updated Independent Engineering Report. The Administrative Agent shall promptly notify the Borrower in writing of each
redetermination of the Borrowing Base pursuant to this Section 2.02(c) and the amount of the Borrowing Base as so redetermined. 

        (d)    Standards for Redetermination.    Each redetermination of the Borrowing Base by the Administrative Agent and
the Lenders pursuant to this Section 2.02 shall be made (i) in the sole discretion of the Administrative Agent and the Lenders (but in accordance with the other provisions of this
Section 2.02(d)), (ii) in accordance with the Administrative Agent's and the Lenders' customary internal standards and practices for valuing and redetermining the value of Oil and Gas
Properties in connection with reserve based oil and gas loan transactions, (iii) in conjunction with the most recent Independent Engineering Report or Internal Engineering Report, as
applicable, or other information received by the Administrative Agent and the Lenders relating to the Proven Reserves of the Borrower and its Subsidiaries, and (iv) based upon the estimated
value of the Proven Reserves owned by the Borrower and its Subsidiaries as determined by the Administrative Agent and the Lenders. In valuing and redetermining the Borrowing Base, the Administrative
Agent and the Lenders may also consider the business, financial condition, and Debt obligations of the Borrower and its Subsidiaries and such other factors as the Administrative Agent and the Lenders
customarily deem appropriate. In that 

24

 

regard,
the Borrower acknowledges that the determination of the Borrowing Base reflects a loan amount to market value percentage differential which is essential for the adequate protection of the
Administrative Agent and the Lenders. No Proven Reserves shall be included or considered for inclusion in the Borrowing Base unless the Administrative Agent and the Lenders shall have received, at the
Borrower's expense, evidence of title satisfactory in form and substance to the Administrative Agent that the Administrative Agent has, to the extent required hereunder, an Acceptable Security
Interest in the Oil and Gas Properties relating thereto pursuant to the Security Instruments. At all times after the Administrative Agent has given the Borrower notification of a redetermination of
the Borrowing Base under this Section 2.02, the Borrowing Base shall be equal to the redetermined amount or such lesser amount designated by the Borrower and disclosed in writing to the
Administrative Agent and the Lenders until the Borrowing Base is subsequently redetermined in accordance with this Section 2.02. 

        Section 2.03    Method of Borrowing.    

        (a)    Notice.    Each Borrowing shall be made pursuant to a Notice of Borrowing (or by telephone notice promptly
confirmed in writing by a Notice of Borrowing), given not later than 11:00 a.m. (New York time) (i) on the third Business Day before the date of the proposed Borrowing, in the case of a
Borrowing comprised of Eurodollar Rate Advances or (ii) on the Business Day of the proposed Borrowing, in the case of a Borrowing comprised of Reference Rate Advances, by the Borrower to the
Administrative Agent, which shall in turn give to each Lender prompt notice of such proposed Borrowing by facsimile. Each Notice of Borrowing shall be in writing (by facsimile or otherwise) specifying
the information required therein. In the case of a proposed Borrowing comprised of Eurodollar Rate Advances, the Administrative Agent shall promptly notify each Lender of the applicable interest rate
under Section 2.09(b). Each Lender shall, before 12:00 noon (New York time) on the date of such Borrowing, make available for the account of its Applicable Lending Office to the Administrative
Agent at its address referred to in Section 9.02, or such other location as the Administrative Agent may specify by notice to the Lenders, in same day funds, in the case of a Borrowing, such
Lender's Pro Rata Share of such Borrowing. After the Administrative Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the Administrative
Agent shall make such funds available to the Borrower at its account with the Administrative Agent. 

        (b)    Conversions and Continuations.    The Borrower may elect to Convert or continue any Borrowing under this
Section 2.03 by delivering an irrevocable Notice of Conversion or Continuation to the Administrative Agent at the Administrative Agent's office no later than 11:00 a.m. (New York time)
(i) on the date which is at least three Business Days in advance of the proposed Conversion or continuation date in the case of a Conversion to or a continuation of a Borrowing comprised of
Eurodollar Rate Advances and (ii) on the Business Day of the proposed Conversion, in the case of a Conversion to a Borrowing comprised of Reference Rate Advances. Each such Notice of Conversion
or Continuation shall be in writing (by facsimile or otherwise) specifying the information required therein. Promptly after receipt of a Notice of Conversion or Continuation under this Section, the
Administrative Agent shall provide each Lender with a copy thereof and, in the case of a Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate Advances, notify each Lender of the
applicable interest rate under Section 2.09(b). 

        (c)    Certain Limitations.    Notwithstanding anything to the contrary contained in paragraphs (a) and
(b) above: 

          (i)  at
no time shall there be more than six Interest Periods applicable to outstanding Eurodollar Rate Advances and the Borrower may not select Eurodollar Rate Advances for
any Borrowing at any time that a Default has occurred and is continuing; 

25

 

         (ii)  if
any Lender shall, at least one Business Day before the date of any requested Borrowing, Conversion, or continuation, notify the Administrative Agent that any Change
in Law makes it unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful, for such Lender or its Applicable Lending Office to perform its obligations under this
Agreement to make Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances, the right of the Borrower to select Eurodollar Rate Advances from such Lender shall be suspended until such
Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist, and the Advance made by such Lender in respect of such Borrowing, Conversion, or
continuation shall be a Reference Rate Advance; 

        (iii)  if
the Administrative Agent is unable to determine the Eurodollar Rate for Eurodollar Rate Advances comprising any requested Borrowing, the right of the Borrower to
select Eurodollar Rate Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that the circumstances
causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Reference Rate Advance; 

        (iv)  if
the Required Lenders shall, at least one Business Day before the date of any requested Borrowing, notify the Administrative Agent that the Eurodollar Rate for
Eurodollar Rate Advances comprising such Borrowing will not adequately reflect the cost to such Lenders of making or funding their respective Eurodollar Rate Advances, as the case may be, for such
Borrowing, the right of the Borrower to select Eurodollar Rate Advances for such Borrowing or for any subsequent Borrowing shall be suspended until the Administrative Agent shall notify the Borrower
and the Lenders that the circumstances causing such suspension no longer exist, and each Advance comprising such Borrowing shall be a Reference Rate Advance; and 

         (v)  if
the Borrower shall fail to select the duration or continuation of any Interest Period for any Eurodollar Rate Advances in accordance with the provisions contained in
the definition of "Interest Period" in Section 1.01 and paragraph (b) of this Section 2.03, the Administrative Agent shall forthwith so notify the Borrower and the Lenders and
such Advances shall be made available to the Borrower on the date of such Borrowing as Reference Rate Advances or, if an existing Advance, Convert into Reference Rate Advances. 

        (d)    Notices Irrevocable.    Each Notice of Borrowing and Notice of Conversion or Continuation shall be irrevocable
and binding on the Borrower. In the case of any Borrowing for which the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate Advances, the Borrower shall indemnify each Lender
against any loss, out-of-pocket cost, or expense incurred by such Lender as a result of any failure by the Borrower to fulfill on or before the date specified in such Notice of
Borrowing for such Borrowing the applicable conditions set forth in Article III including any loss (including any loss of anticipated profits), cost, or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender to fund the Advance to be made by such Lender as part of such Borrowing when such Advance, as a result of such failure,
is not made on such date. 

        (e)    Funding by Lenders; Presumption by Administrative Agent.    Unless the Administrative Agent shall have received
notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender's share of such Borrowing, the Administrative Agent
may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section 2.03 and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the
Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is 

26

 

made
available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Rate
and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, the interest
rate applicable to Base Rate Advances. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall
promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount
so paid shall constitute such Lender's Advance included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have
failed to make such payment to the Administrative Agent. 

        (f)    Lender Obligations Several.    The failure of any Lender to make the Advance to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any, to make its Advance on the date of such Borrowing. No Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing. 

        Section 2.04    Reduction of the Commitments.    

        (a)   The
Borrower shall have the right, upon at least three Business Days' irrevocable notice to the Administrative Agent, to terminate in whole or reduce ratably in part the
unused portion of the Commitments; provided, that, each partial reduction shall be in the aggregate amount of $5,000,000 or in integral multiples of
$1,000,000 in excess thereof. 

        (b)   Any
reduction and termination of the Commitments pursuant to this Section 2.04 shall be applied ratably to each Lender's Commitment and shall be permanent, with
no obligation of the Lenders to reinstate such Commitments. 

        Section 2.05    Prepayment of Advances.    

        (a)    Optional.    The Borrower may prepay the Advances, after giving by 11:00 a.m. (New York time):
(i) in the case of Eurodollar Rate Advances, at least three Business Days' or (ii) in the case of Reference Rate Advances, same Business Day's, irrevocable prior written notice to the
Administrative Agent stating the proposed date and aggregate principal amount of such prepayment. If any such notice is given, the Borrower shall prepay the Advances in whole or ratably in part in an
aggregate principal amount equal to the amount specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid and amounts, if any, required to
be paid pursuant to Section 2.12 as a result of such prepayment being made on such date; provided, however, that each partial prepayment with
respect to: (A) any amounts prepaid in respect of Eurodollar Rate Advances shall be applied to Eurodollar Rate Advances comprising part of the same Borrowing; (B) any prepayments made in
respect of Reference Rate Advances shall be made in minimum amounts of $250,000 and in integral multiples of $100,000 in excess thereof, and (C) any prepayments made in respect of any Borrowing
comprised of Eurodollar Rate Advances shall be made in an aggregate principal amount of at least $500,000 and in integral multiples of $100,000 in excess thereof and in an aggregate principal amount
such that after giving effect thereto such Borrowing shall have a remaining principal amount outstanding with respect to such Borrowing of at least $100,000. Full prepayments of any Borrowing are
permitted without restriction of amounts. 

27

 

  
        (b)    Mandatory.    

        (i)    Borrowing Base Deficiency.    Subject to Section 2.05(b)(ii), if a Borrowing Base Deficiency exists,
then after receipt of written notice from the Administrative Agent regarding such deficiency, the Borrower shall, 

        (A)  (1)
within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating its intent
to prepay Advances or, if the Advances have been repaid in full, make deposits into the Cash Collateral Account to provide cash collateral for the Letter of Credit Exposure, such that the Borrowing
Base Deficiency is cured, and (2) make such payments and deposits within 10 days after the date such deficiency notice is received by the Borrower; 

        (B)  (1)
within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating its intent
to pledge as Collateral for the Obligations additional Oil and Gas Properties acceptable to the Required Lenders in their sole discretion such that the Borrowing Base Deficiency is cured, and
(2) deliver such additional Collateral within 30 days after the date such deficiency notice is received by the Borrower; 

        (C)  (1)
within 3 Business Days after the date such deficiency notice is received by the Borrower, deliver a written notice to the Administrative Agent indicating the
Borrower's election to repay the Advances and make deposits into the Cash Collateral Account to provide cash collateral for the Letters of Credit, each in six equal consecutive monthly installments
equal to one-sixth of such Borrowing Base Deficiency with the first such installment due 30 days after the date such deficiency notice is received by the Borrower from the
Administrative Agent and each following installment due 30 days after the preceding installment due date, and (2) make such payments and deposits within such time periods; or 

        (D)  (1)
within 3 Business Days after the date such deficiency notice is received by the Borrower to the Administrative Agent, deliver a written notice to the Administrative
Agent indicating the Borrower's election to combine the options provided in clause (B) and clause (C) above, and also indicating the amount to be prepaid in installments and the amount
to be provided as additional Collateral, and (2) make such six equal consecutive monthly installments and deliver such additional Collateral within the time required under clause (B) and
clause (C) above. 

        The
failure of the Borrower to deliver any such election notice or to perform the actions chosen to remedy a Borrowing Base Deficiency under this Section 2.05(b)(i) shall
constitute an Event of Default. 

        (ii)    Asset Disposition.    Upon any adjustments to the Borrowing Base pursuant to Section 6.04(b) in
connection with a Disposition, if a Borrowing Base Deficiency exists, then the Borrower shall prepay Advances or, if the Advances have been repaid in full, make deposits into the Cash Collateral
Account to provide cash collateral for the Letter of Credit Exposure, such that the Borrowing Base Deficiency is cured. The Borrower shall be obligated to make such prepayment and/or deposit of cash
collateral on the date it or any Subsidiary receives cash proceeds as a result of such Disposition; provided that all payments required to be made pursuant to this Section 2.05(b)(ii) must be
made on or prior to the Commitment Termination Date. 

        (iii)    Equity Issuance.    If the Borrower or any Subsidiary receives Equity Issuance Proceeds, then immediately
upon the receipt thereof by the Borrower such Equity Issuance Proceeds shall be applied in the following order: 

        (A)  First,
if a Borrowing Base Deficiency exists, to the prepayment of Advances or, if the Advances have been repaid in full, to make deposits into the Cash Collateral
Account to 

28

 

provide
cash collateral for the Letter of Credit Exposure, such that the Borrowing Base Deficiency is cured; and 

        (B)  Second,
ratably, according to the then unpaid amounts thereof, without preference or priority of any kind among them, to the payment of the Obligations then due and
payable, including Obligations with respect to Letters of Credit, including any Lender Hedging Obligations of any Loan Party; provided that so long as
no Event of Default exists, any such excess amounts remaining after application under clause (A) above shall instead be applied ratably, according to the then unpaid amounts thereof, without
preference or priority of any kind among them, to the payment of the Subordinated Debt then due and payable prior to the payment of the Obligations;  provided further that in no event shall the Borrower
be required to make prepayments pursuant to this paragraph (B) with respect to Equity
Issuance Proceeds in excess of $100,000,000. 

        (iv)    Reduction of Commitments.    On the date of each reduction of the aggregate Commitments pursuant to
Section 2.04, the Borrower agrees to make a prepayment in respect of the outstanding amount of the Advances to the extent, if any, that the aggregate unpaid principal amount of all Advances  plus
the Letter of Credit Exposure exceeds the lesser of (A) the aggregate Commitments, as so reduced, and (B) the Borrowing Base. Each
prepayment pursuant to this Section 2.05(c) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to
Section 2.12 as a result of such prepayment being made on such date. Each
prepayment in respect of Advances under this Section 2.05(c) shall be applied to the Advances as determined by the Administrative Agent and agreed to by the Lenders in their sole discretion. 

        (v)    Illegality.    If any Lender shall notify the Administrative Agent and the Borrower that Change in Law makes it
unlawful, or that any central bank or other Governmental Authority asserts that it is unlawful for such Lender or its Applicable Lending Office to perform its obligations under this Agreement to
maintain any Eurodollar Rate Advances of such Lender then outstanding hereunder, (i) the Borrower shall, no later than 11:00 a.m. (New York time) (A) if not prohibited by law, on
the last day of the Interest Period for each outstanding Eurodollar Rate Advance made by such Lender or (B) if required by such notice, on the second Business Day following its receipt of such
notice, prepay all of the Eurodollar Rate Advances made by such Lender then outstanding, together with accrued interest on the principal amount prepaid to the date of such prepayment and amounts, if
any, required to be paid pursuant to Section 2.12 as a result of such prepayment being made on such date, (ii) such Lender shall simultaneously make a Reference Rate Advance to the
Borrower on such date in an amount equal to the aggregate principal amount of the Eurodollar Rate Advances prepaid to such Lender, and (iii) the right of the Borrower to select Eurodollar Rate
Advances from such Lender for any subsequent Borrowing shall be suspended until such Lender shall notify the Administrative Agent that the circumstances causing such suspension no longer exist. 

        (c)    Interests, Costs and Application of Payments.    Each prepayment pursuant to any provision of this
Section 2.05 shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment and amounts, if any, required to be paid pursuant to Section 2.12 as a result
of such prepayment being made on such date. Each prepayment under this Section 2.05(b) (other than paragraph (iv) above) shall be applied to the Advances as determined by the
Administrative Agent and agreed to by the Lenders in their sole discretion. 

        (d)    No Additional Right; Ratable Prepayment.    The Borrower shall have no right to prepay any principal amount of
any Advance except as provided in this Section 2.05, and all notices given pursuant to this Section 2.05 shall be irrevocable and binding upon the Borrower. Each payment of 

29

 

any
Advance pursuant to this Section 2.05 shall be made in a manner such that all Advances comprising part of the same Borrowing are paid in whole or ratably in part. 

        Section 2.06    Repayment of Advances.    The Borrower shall repay to the Administrative Agent for the ratable
benefit of the Lenders the outstanding principal amount of each Advance, together with any accrued interest thereon, on the Maturity Date or such earlier date pursuant to Section 7.02 or
Section 7.03. 

        Section 2.07    Letters of Credit.    

        (a)    Commitment.    From time to time from the date of this Agreement until 30 days prior to the Maturity
Date, at the request of the Borrower, the Issuing Lender shall, on the terms and conditions set forth in this Agreement (including without limitation, the terms of Section 3.01), issue,
increase, or extend the Expiration Date of, Letters of Credit for the account of the Borrower on any Business Day. No Letter of Credit will be issued, increased, or extended: 

          (i)  if
such issuance, increase, or extension would cause the Letter of Credit Exposure to exceed lesser of (A) $5,000,000 and (B) the lesser of (1) the
aggregate Commitments at such time and (2) the Borrowing Base in effect at such time minus, in each case, under this clause (b) the sum of
the aggregate outstanding principal amount of all Advances at such time; 

         (ii)  if
such Letter of Credit has an Expiration Date later than the earlier of (A) one year after the date of issuance thereof and (B) 30 days prior to
the Maturity Date; 

        (iii)  unless
such Letter of Credit Documents are in form and substance acceptable to the Issuing Lender in its sole discretion; 

        (iv)  unless
such Letter of Credit is a standby letter of credit not supporting the repayment of indebtedness for borrowed money of any Person; 

         (v)  unless
the Borrower has delivered to the Issuing Lender a completed and executed Letter of Credit Application; and 

        (vi)  unless
such Letter of Credit is governed by (1) the Uniform Customs and Practice for Documentary Credits (2006 Revision), International Chamber of Commerce
Publication No. 500, or (2) the International Standby Practices (ISP98), International Chamber of Commerce Publication No. 600, in either case, including any subsequent revisions
thereof approved by a Congress of the International Chamber of Commerce and adhered to by the Issuing Lender. 

        If
the terms of any Letter of Credit Application referred to in the foregoing clause (v) conflicts with the terms of this Agreement, the terms of this Agreement shall control. 

        (b)    Participations.    Upon the date of the issuance or increase of a Letter of Credit, the Issuing Lender shall be
deemed to have sold to each other Lender having a Commitment and each other Lender having a Commitment shall have been deemed to have purchased from the Issuing Lender a participation in the related
Letter of Credit Obligations equal to such Lender's Pro Rata Share at such date and such sale and purchase shall otherwise be in accordance with the terms of this Agreement.
The Issuing Lender shall promptly notify each such participant Lender having a Commitment by telephone, or telecopy of each Letter of Credit issued, increased, or extended or converted and the actual
dollar amount of such Lender's participation in such Letter of Credit. 

        (c)    Issuing.    Each Letter of Credit shall be issued, increased, or extended pursuant to a Letter of Credit
Application (or by telephone notice promptly confirmed in writing by a Letter of Credit Application), given not later than 11:00 a.m. (New York time) on the third Business Day before the date
of the proposed issuance, increase, or extension of the Letter of Credit, and the Issuing Lender shall give to each other Lender prompt notice thereof by telephone, or telecopy. Each Letter of Credit
Application shall be delivered by facsimile or by mail specifying the information required therein; 

30

 

 provided that if such Letter of Credit Application is delivered by facsimile, the Borrower shall follow such facsimile with an original by mail. After the Issuing Lender's
receipt of such Letter of Credit Application (by facsimile or by mail) and upon fulfillment of the applicable conditions set forth in Article III, the Issuing Lender shall issue, increase, or
extend such Letter of Credit for the account of the Borrower. Each Letter of Credit Application shall be irrevocable and binding on the Borrower. 

        (d)    Reimbursement.    

        (i)    Obligation.    The Borrower hereby agrees to pay on demand to the Issuing Lender an amount equal to any amount
paid by the Issuing Lender under any Letter of Credit. In the event the Issuing Lender makes a payment pursuant to a request for draw presented under a Letter of Credit and such payment is not
promptly reimbursed by the Borrower upon demand, the Issuing Lender shall give the Administrative Agent notice of the Borrower's failure to make such reimbursement and the Administrative Agent shall
promptly notify each Lender having a Commitment of the amount necessary to reimburse the Issuing Lender. Upon such notice from the Administrative Agent, each Lender shall promptly reimburse the
Issuing Lender for such Lender's Pro Rata Share of such amount, and such reimbursement shall be deemed for all purposes of this Agreement to be an Advance to the Borrower transferred at the Borrower's
request to the Issuing Lender. If such reimbursement is not made by any Lender to the Issuing Lender on the same day on which the Administrative Agent notifies such Lender to make reimbursement to the
Issuing Lender hereunder, such Lender shall pay interest on its Pro Rata Share thereof to the Issuing Lender at a rate per annum equal to the Federal Funds Rate. The Borrower hereby unconditionally
and irrevocably authorizes, empowers, and directs the Administrative Agent and the Lenders to record and otherwise treat such reimbursements to the Issuing Lender as Reference Rate Advances under a
Borrowing requested by the Borrower to reimburse the Issuing Lender which have been transferred to the Issuing Lender at the Borrower's request. 

        (ii)    Lenders' Obligations.    Each Lender's obligation to make Advances or to purchase and fund risk participations
in Letters of Credit pursuant to this Section 2.07(d) shall be absolute and unconditional and shall not be affected by any circumstance, including (a) any setoff, counterclaim,
recoupment, defense or other right which such Lender may have against the Issuing Lender, any Loan Party, or any other Person for any reason whatsoever, (b) the occurrence or continuance of a
Default or Event of Default, or (c) any other occurrence, event or condition, whether or not similar to any of the foregoing.
No such funding of risk participations shall relieve or otherwise impair the obligation of the Borrower to pay the Reimbursement Obligations together with interest as provided herein. Nothing herein
is intended to release the Borrower's obligations under any Letter of Credit Application, but only to provide an additional method of payment therefor. The making of any Borrowing under
Section 2.07(d)(i) shall not constitute a cure or waiver of any Default or Event of Default, other than the payment Default or Event of Default which is satisfied by the application of the
amounts deemed advanced hereunder, caused by a Borrower's failure to comply with the provisions of this Agreement or the Letter of Credit Application. 

        (e)    Obligations Unconditional.    The obligations of the Borrower under this Agreement in respect of each Letter of
Credit shall be unconditional and irrevocable, and shall be paid strictly in accordance with the terms of this Agreement under all circumstances, including the following circumstances: 

          (i)  any
lack of validity or enforceability of any Letter of Credit Documents; 

         (ii)  any
amendment or waiver of, or any consent to or departure from, any Letter of Credit Documents; 

        (iii)  the
existence of any claim, set-off, defense, or other right which the Borrower may have at any time against any beneficiary or transferee of such Letter
of Credit (or any Persons for whom any such beneficiary or any such transferee may be acting), the Issuing Lender, or any other 

31

 

Person,
whether in connection with this Agreement, the transactions contemplated in this Agreement or in any Letter of Credit Documents, or any unrelated transaction; 

        (iv)  any
statement or any other document presented under such Letter of Credit proving to be forged, fraudulent, invalid, or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect; 

         (v)  payment
by the Issuing Lender under such Letter of Credit against presentation of a draft or certificate which does not comply with the terms of such Letter of Credit;
or 

        (vi)  any
other circumstance or happening whatsoever, whether or not similar to any of the foregoing; 

provided, however, that nothing contained in this paragraph (e) shall be deemed to constitute a
waiver of any remedies of the Borrower in connection with the Letters of Credit or the Borrower's rights under Section 2.07(f). 

        (f)    Liability of Issuing Lender.    The Borrower assumes all risks of the acts or omissions of any beneficiary or
transferee of any Letter of Credit with respect to its use of such Letter of Credit. Neither the Issuing Lender nor any of its officers or directors shall be liable or responsible for: 

          (i)  the
use which may be made of any Letter of Credit or any acts or omissions of any beneficiary or transferee in connection therewith; 

         (ii)  the
validity, sufficiency, or genuineness of documents, or of any endorsement thereon, even if such documents should prove to be in any or all respects invalid,
insufficient, fraudulent, or forged; 

        (iii)  payment
by the Issuing Lender against presentation of documents which do not comply with the terms of a Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the relevant Letter of Credit; or 

        (iv)  any
other circumstances whatsoever in making or failing to make payment under any Letter of Credit (INCLUDING THE ISSUING LENDER'S OWN
NEGLIGENCE), 

except that, notwithstanding the provisions in paragraphs (e) or (f) of this Section 2.07, the Borrower shall have a claim against
the Issuing Lender, and the Issuing Lender shall be liable to the Borrower, to the extent of any direct, as opposed to consequential, damages suffered by the Borrower which the Borrower proves were
caused by the Issuing Lender's willful misconduct or gross negligence. In furtherance and not in limitation of the foregoing, the Issuing Lender may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any notice or information to the contrary. 

32

 

  
        (g)    Cash Collateral Account.    

          (i)  If
the Borrower is required to deposit funds in the Cash Collateral Account pursuant to Section 2.05(b), 7.02(b), or 7.03(b), then the Borrower and the Issuing
Lender shall establish the Cash Collateral Account and the Borrower shall execute any documents and agreements, including the Administrative Agent's standard form assignment of deposit accounts, that
the Administrative Agent requests in connection therewith to establish the Cash Collateral Account and grant the Administrative Agent a first priority security interest in such account and the funds
therein. The Borrower hereby pledges to the Administrative Agent and grants the Administrative Agent a security interest in the Cash Collateral Account, whenever established, all funds held in the
Cash Collateral Account from time to time, and all proceeds thereof as security for the payment of the Obligations. 

         (ii)  So
long as no Default or Event of Default exists, (A) the Administrative Agent may apply the funds held in the Cash Collateral Account only to the reimbursement
of any Letter of Credit Obligations, and (B) the Administrative Agent shall release to the Borrower at the Borrower's written request any funds held in the Cash Collateral Account in an amount
up to but not exceeding the excess, if any (immediately prior to the release of any such funds), of the total amount of funds held in the Cash Collateral Account over the Letter of Credit Exposure.
During the existence of any Event of Default, the Administrative Agent may apply any funds held in the Cash Collateral Account to the Obligations in any order determined by the Administrative Agent,
regardless of any Letter of Credit Exposure that may remain outstanding. The Administrative Agent may in its sole discretion at any time release to the Borrower any funds held in the Cash Collateral
Account. 

        (iii)  The
Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Cash Collateral Account and shall be deemed to have
exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own Property, it being understood that the Administrative Agent
shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such funds. 

        (h)    Letters of Credit Issued for Subsidiaries.    Notwithstanding that a Letter of Credit issued or outstanding
hereunder is in support of any obligations of, or is for the account of, a Subsidiary of a Loan Party, the Borrower shall be obligated to reimburse the Issuing Lender hereunder for any and all
drawings under such Letter of Credit issued hereunder by the Issuing Lender. Borrower hereby acknowledges that the issuance of Letters of Credit for the account of any of Subsidiary of a Loan Party
inures to the benefit of the Borrower, and that the Borrower's business derives substantial benefits from the businesses of such Subsidiaries. 

        (i)    Existing Letters of Credit.    The Issuing Lender, the Lenders and the Borrower agree that effective as of the
Closing Date, the Existing Letters of Credit shall be deemed to have been issued and maintained under, and to be governed by the terms and conditions of, this Agreement. 

        Section 2.08    Fees.    

        (a)    Commitment Fee.    The Borrower agrees to pay to the Administrative Agent for the account of each Lender having
a Commitment a commitment fee at a per annum rate equal to the Commitment Fee Rate on the average daily Unused Commitment Amount of such Lender, from the date of this Agreement until the Commitment
Termination Date. The commitment fees shall be due and payable quarterly in arrears on the last day of each March, June, September, and December commencing on March 31, 2008, and continuing
thereafter through and including the Commitment Termination Date. 

33

 

        (b)    Letter of Credit Fees.    

          (i)  The
Borrower agrees to pay (A) to the Administrative Agent for the pro rata benefit of the Lenders having a Commitment a per annum letter of credit fee for each
Letter of Credit issued hereunder in an amount equal to the greater of (y) a per annum rate equal to the Applicable Margin then in effect for Eurodollar Rate Advances on the face amount of such
Letter of Credit for the period such Letter of Credit is to be outstanding and (z) $500.00, and (B) to the Issuing Lender, a fronting fee for each Letter of Credit equal to .125% per
annum on the face amount of such Letter of Credit. Each such fee shall be payable annually in advance on the date of the issuance of the Letter of Credit, and, in the case of an increase or extension
only, on the date of such increase or such extension. 

         (ii)  The
Borrower also agrees to pay to the Issuing Lender such other usual and customary fees associated with any transfers, amendments, drawings, negotiations or
reissuances of any Letters of Credit. 

        (c)    Upfront Fee.    The Borrower agrees to pay to the Administrative Agent the fees described in the Fee Letter. 

        (d)    Borrowing Base Increase Fees.    The Borrower agrees to pay to the Administrative Agent for the account of the
Lenders having a Commitment in connection with any increase of the Borrowing Base, a
borrowing base increase fee on the amount of such increase. The borrowing base increase fee shall be in an amount equal to .20% multiplied by the amount of the increase and shall be due and payable on
the date that the increase to the Borrowing Base becomes effective. 

        Section 2.09    Interest.    The Borrower shall pay interest on the unpaid principal amount of each Advance
made by each Lender from the date of such Advance until such principal amount shall be paid in full, at the following rates per annum: 

        (a)    Reference Rate Advances.    If such Advance is a Reference Rate Advance, a rate per annum equal at all times to
the Adjusted Reference Rate in effect from time to time plus the Applicable Margin in effect from time to time, payable quarterly in arrears on the last
day of each March, June, September, and December and on the date such Reference Rate Advance shall be paid in full. 

        (b)    Eurodollar Rate Advances.    If such Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
during the Interest Period for such Advance to the Eurodollar Rate for such Interest Period plus the Applicable Margin in effect from time to time,
payable on the last day of such Interest Period and, in the case of any Interest Period longer than three months in duration, on the third monthly anniversary of the beginning of such Interest Period
as well as the last day of such Interest Period. 

        (c)    Additional Interest on Eurodollar Rate Advances.    The Borrower shall pay to each Lender, so long as any such
Lender shall be required under regulations of the Federal Reserve Board to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency Liabilities, additional
interest on the unpaid principal amount of each Eurodollar Rate Advance of such Lender, from the effective date of such Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the Eurodollar Rate for the Interest Period for such Advance from (ii) the rate obtained by dividing such Eurodollar
Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period, payable on each date on which interest is payable on such Advance. Such
additional interest payable to any Lender shall be determined by such Lender and notified to the Borrower through the Administrative Agent (such notice to include the calculation of such additional
interest, which calculation shall be conclusive in the absence of manifest error). 

34

 

        (d)    Usury Recapture.    

          (i)  If,
with respect to any Lender or the Issuing Lender, the effective rate of interest contracted for under the Loan Documents, including the stated rates of interest and
fees contracted for hereunder
and any other amounts contracted for under the Loan Documents which are deemed to be interest, at any time exceeds the Maximum Rate, then the outstanding principal amount of the loans made by such
Lender or Issuing Lender, as applicable, hereunder shall bear interest at a rate which would make the effective rate of interest for such Lender or Issuing Lender, as applicable, under the Loan
Documents equal the Maximum Rate until the difference between the amounts which would have been due at the stated rates and the amounts which were due at the Maximum Rate (the "Lost Interest") has
been recaptured by such Lender or Issuing Lender, as applicable. 

         (ii)  If,
when the loans and reimbursement obligations made hereunder are repaid in full, the Lost Interest has not been fully recaptured by such Lender or Issuing Lender, as
applicable, pursuant to the preceding paragraph, then, to the extent permitted by law, for the loans and other credit extensions made hereunder by such Lender or Issuing Lender, as applicable, the
interest rates charged under Section 2.09 hereunder shall be retroactively increased such that the effective rate of interest under the Loan Documents was at the Maximum Rate since the
effectiveness of this Agreement to the extent necessary to recapture the Lost Interest not recaptured pursuant to the preceding sentence and, to the extent allowed by law, the Borrower shall pay to
such Lender or Issuing Lender, as applicable, the amount of the Lost Interest remaining to be recaptured by such Lender or Issuing Lender, as applicable. 

        Section 2.10    Payments and Computations.    

        (a)    Payment Procedures.    The Borrower shall make each payment under this Agreement not later than
11:00 a.m. (New York time) on the day when due in Dollars to the Administrative Agent at 1221 Avenue of the Americas, New York, New York 10020 (or such other location as the Administrative
Agent shall designate in writing to the Borrower) in same day funds without deduction, setoff, or counterclaim of any kind. The Administrative Agent shall promptly thereafter cause to be distributed
like funds relating to the payment of principal, interest or fees ratably (other than amounts payable solely to the Administrative Agent, the Issuing Lender, or a specific Lender pursuant to
Section 2.08(c), 2.09(c), 2.12, 2.13, 2.14, 9.04, 9.05, or 9.06, but after taking into account payments effected pursuant to Section 7.04) in accordance with each Lender's Pro Rata Share
to the Lenders for the account of their respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender or the Issuing Lender to such Lender for
the account of its Applicable Lending Office, in each case to be applied in accordance with the terms of this Agreement. 

        (b)    Computations.    All computations of interest based on the Reference Rate and of fees (other than Letter of
Credit fees) shall be made by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Eurodollar Rate and the
Federal Funds Rate and Letter of Credit fees shall be made by the Administrative Agent, on the basis of a year of 360 days, in each case for the actual number of days (including the first day,
but excluding the last day) occurring in the period for which such interest or fees are payable. Each determination by the Administrative Agent of an interest rate or fee shall be conclusive and
binding for all purposes, absent manifest error. 

        (c)    Non-Business Day Payments.    Whenever any payment shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees, as the case
may be; provided, however, that if such extension would cause payment of interest on or principal of Eurodollar Rate Advances to be made in the next
following calendar month, such payment shall be made on the immediately preceding Business Day. 

35

 

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

        Section 2.11    Sharing of Payments, Etc.    If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Advances or other obligations hereunder resulting in such Lender's receiving payment of a proportion
of the aggregate amount of its Advances and accrued interest thereon or other such obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater
proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Advances and such other obligations of the other
Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of
and accrued interest on their respective Advances and other amounts owing them, provided that: (i) if any such participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and (ii) the provisions of this Section shall not
be construed to apply to (x) any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its Advances or participations in the Letter of Credit Obligations to any assignee or participant, other than to the Borrower
or any Subsidiary thereof (as to which the provisions of this Section shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable Legal
Requirement, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. 

        Section 2.12    Breakage Costs.    If (a) any payment of principal of any Eurodollar Rate Advance is
made other than on the last day of the Interest Period for such Advance, whether as a result of any payment pursuant to Section 2.05, the acceleration of the maturity of the Obligations
pursuant to Article VII, or otherwise, or (b) the Borrower fails to make a principal or interest payment with respect to any Eurodollar Rate Advance on the date such payment is due and
payable, the Borrower shall, within 10 days of any written demand sent by any Lender to the Borrower through the Administrative Agent, pay to the Administrative Agent for the account of such
Lender any amounts required to compensate such Lender for any additional losses, out-of-pocket costs or expenses which it may reasonably incur as a result of such payment or
nonpayment, including any loss (including loss of anticipated profits), cost or expense incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund
or maintain such Advance. 

        Section 2.13    Increased Costs.    

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

          (i)  impose,
modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the
account of, or 

36

 

credit
extended or participated in by, any Lender (except any reserve requirement reflected in the Eurodollar Rate Reserve Percentage) or the Issuing Lender; 

         (ii)  subject
any Lender or the Issuing Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit
or any Eurodollar Rate Advance made by it, or change the basis of taxation of payments to such Lender or the Issuing Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by
Section 2.14 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Lender); or 

        (iii)  impose
on any Lender or the Issuing Lender or the London interbank market any other condition, cost or expense affecting this Agreement or Eurodollar Rate Advances
made by such Lender or any Letter of Credit or participation therein; 

and
the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Rate Advance (or of maintaining its obligation to make any such Advance), or
to increase the cost to such Lender or the Issuing Lender of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such Lender or the Issuing Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Lender
or
the Issuing Lender, the Borrower will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender, as the case
may be, for such additional costs incurred or reduction suffered. 

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

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

        (d)    Delay in Requests.    Failure or delay on the part of any Lender or the Issuing Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Lender's right to demand such compensation. 

        Section 2.14    Taxes.    

        (a)    Payments Free of Taxes.    Any and all payments by or on account of any obligation of the Borrower hereunder or
under any other Loan Document shall be made free and clear of and without reduction or withholding for any Indemnified Taxes or Other Taxes, provided
that if the Borrower shall be required by applicable Legal Requirement to deduct any Indemnified Taxes (including any Other 

37

 

Taxes)
from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable
under this Section) the Administrative Agent, Lender or Issuing Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in accordance with applicable Legal Requirement. 

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

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

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

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

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

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

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

        (iii)  in
the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is 

38

 

not
(A) a "bank" within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of the Borrower within the meaning of section 881(c)(3)(B) of
the Code, or (C) a "controlled foreign corporation" described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service
Form W-8BEN, or 

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

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

ARTICLE III

CONDITIONS OF LENDING  

        Section 3.01    Conditions Precedent to Effectiveness.    The effectiveness of this Agreement and the amendment
and restatement of the Existing Credit Agreement is subject to the conditions precedent that: 

        (a)    Documentation.    The Administrative Agent shall have received the following duly executed by all the parties
thereto, in form and substance satisfactory to the Administrative Agent, the Issuing Lender and the Lenders, and, where applicable, in sufficient copies for each Lender: 

          (i)  this
Agreement, a Note payable to the order of each requesting Lender in the amount of its Commitment, the Security Agreements, the Guaranties, the Pledge Agreements,
and Mortgages encumbering substantially all of the Borrower's and its Subsidiaries' personal property and encumbering at least 90% of the PV-10 of the Loan Parties' Proven Reserves (as set
forth in the Initial Engineering Reports) and Oil and Gas Properties in connection therewith (including the Oil and Gas Properties to be acquired under the Closing Date Acquisition), and each of the
other Loan Documents, including the Intercreditor Agreement, and all attached exhibits and schedules; 

         (ii)  a
favorable opinion of (A) the Borrower's and the Guarantors' primary counsel dated as of the date of this Agreement in form and covering such matters as the
Administrative Agent may reasonably request and (B) the Borrower's and the Guarantors' local counsel dated as of the date of this Agreement in form and covering such matters as the
Administrative Agent may reasonably request; 

        (iii)  copies,
certified as of the date of this Agreement by a Responsible Officer of the General Partner of (A) the resolutions of the board of managers of the
General Partner approving the 

39

 

Loan
Documents to which the Borrower or the General Partner is a party, (B) the articles or certificate of formation of the General Partner and the company agreement of the General Partner,
(C) the certificate of limited partnership of the Borrower, (D) the partnership agreement of the Borrower, and (E) all other documents evidencing other necessary corporate action
and governmental approvals, if any, with respect to this Agreement, the Notes, and the other Loan Documents; 

        (iv)  certificates
of the secretary or assistant secretary of the General Partner certifying the names and true signatures of the officers of the General Partner authorized
to sign this Agreement, the Notes, Notices of Borrowing, Notices of Conversion or Continuation, and the other Loan Documents to which the Borrower or the General Partner is a party; 

         (v)  other
than as otherwise required under clause (iii) above, copies, certified as of the date of this Agreement by a Responsible Officer or the secretary or an
assistant secretary of each Guarantor of (A) the resolutions of the Board of Directors (or other applicable governing body) of such Guarantor approving the Loan Documents to which it is a
party, (B) the articles or certificate (as applicable) of incorporation (or organization) and bylaws of such Guarantor, and (C) all other documents evidencing other necessary corporate
action and governmental approvals, if any, with respect to the Guaranty, the Security Instruments, and the other Loan Documents to which such Guarantor is a party; 

        (vi)  a
certificate of the secretary or an assistant secretary of each Guarantor certifying the names and true signatures of officers of such Guarantor authorized to sign the
Guaranty, Security Instruments and the other Loan Documents to which such Guarantor is a party; 

       (vii)  a
certificate dated as of the Closing Date from a Responsible Officer of the Borrower stating that (A) all representations and warranties of the Borrower set
forth in this Agreement are true and correct in all material respects; (B) no Default has occurred and is continuing; and (C) the conditions in this Section 3.01 have been met; 

      (viii)  appropriate
UCC-1 and UCC-3, as applicable, Financing Statements covering the Collateral for filing with the appropriate authorities and any
other documents, agreements or instruments necessary to create an Acceptable Security Interest in such Collateral; 

        (ix)  property
insurance certificates naming the Administrative Agent loss payee and liability insurance certificates naming the Administrative Agent as additional insured,
as applicable, and evidencing insurance which meets the requirements of this Agreement and the Security Instruments (including business interruption insurance), and which is otherwise satisfactory to
the Administrative Agent; 

         (x)  the
Initial Engineering Reports; 

        (xi)  to
the extent required in connection with the Pledge Agreements, (A) stock or, to the extent applicable under the Person's organizational documents, membership
or partnership interest certificates, and stock powers executed in blank for each such stock certificate endorsed in blank to the Administrative Agent and (B) to the extent such Person is a
limited liability company or a limited partnership, copies of its limited liability company agreement, partnership agreement or other similar document the terms of which expressly provide that
membership interests or partnership interests, as applicable, in such Person are securities governed by Chapter 8 of the Uniform Commercial Code as in effect in the State of New York; 

40

 

 

       (xii)  copies,
certified by a Responsible Officer of the Borrower, of all of the Closing Date Acquisition Instruments and all exhibits and schedules thereto, together with
all amendments, modifications or waivers thereto in effect as of the date of this Agreement; 

      (xiii)  a
Compliance Certificate completed and executed by a Responsible Officer of the General Partner showing the calculation of, and Borrower's pro forma compliance with
Section 6.17 as of the Closing Date after giving effect to the Closing Date Acquisition and the Borrowings requested and made on the Closing Date; 

      (xiv)  certificates
of good standing and existence for each Loan Party in (a) the state, province or territory in which each such Person is organized and
(b) each state, province or territory in which such good standing is necessary, which certificates shall be dated a date not earlier than 30 days prior to the date hereof; and 

       (xv)  such
other documents, governmental certificates, agreements and lien searches as the Administrative Agent or any Lender may reasonably request. 

        (b)    Payment of Fees.    On the date of this Agreement, the Borrower shall have paid the fees required by
Section 2.08(c) and all costs and expenses that have been invoiced and are payable pursuant to Section 9.04. 

        (c)    Delivery of Financial Information.    The Administrative Agent and the Lenders shall have received true and
correct copies of (i) the Financial Statements, (ii) the Projections, and (iii) such other financial information as the Lenders may reasonably request. 

        (d)    Security Instruments.    The Administrative Agent shall have received all appropriate evidence required by the
Administrative Agent and the Lenders in their sole discretion necessary to determine that the Administrative Agent (for its benefit and the benefit of the Lenders) shall have an Acceptable Security
Interest in the Collateral (which shall include, at least 90% of the PV-10 of the Loan Parties' Proven Reserves (as set forth in the Initial Engineering Reports) and Oil and Gas Properties
in connection therewith, including the Oil and Gas Properties to be acquired under the Closing Date
Acquisition) and that all actions or filings necessary to protect, preserve and validly perfect such Liens have been made, taken or obtained, as the case may be, and are in full force and effect. 

        (e)    Title.    The Administrative Agent shall be satisfied in its sole discretion with the title to the Oil and Gas
Properties included in the Borrowing Base and that such Oil and Gas Properties, after giving effect to the Closing Date Acquisition, constitute at least 71% of the PV-10 Value of the Loan
Parties' Proven Reserves (as set forth on the Initial Engineering Reports), including mortgagee's title opinions or other title evidence in form and substance satisfactory to the Administrative Agent
and, in the case of title opinions, issued by title counsel satisfactory to the Administrative Agent. 

        (f)    Environmental.    The Administrative Agent shall have received reports as it may reasonably require and shall
be satisfied with the condition of the Oil and Gas Properties with respect to the Borrower's compliance with Environmental Laws. 

        (g)    No Default.    No Default shall have occurred and be continuing. 

        (h)    Representations and Warranties.    The representations and warranties contained in Article IV and in
each other Loan Document shall be true and correct in all material respects. 

        (i)    Material Adverse Change.    No event or circumstance that could cause a Material Adverse Change shall have
occurred. 

        (j)    No Proceeding or Litigation; No Injunctive Relief.    No action, suit, investigation or other proceeding
(including the enactment or promulgation of a statute or rule) by or before any arbitrator or any Governmental Authority shall be threatened or pending and no preliminary or permanent injunction or
order by a state or federal court shall have been entered (i) in connection with this 

41

 

Agreement
or any transaction contemplated hereby or (ii) which, in any case, in the judgment of the Administrative Agent, could reasonably be expected to result in a Material Adverse Change. 

        (k)    Consents, Licenses, Approvals, etc.    The Administrative Agent shall have received true copies (certified to
be such by the Borrower or other appropriate party) of all consents, licenses and approvals required in accordance with applicable Legal Requirements, or in accordance with any document, agreement,
instrument or arrangement to which the Borrower, any Guarantor or any of their respective Subsidiaries is a party, in connection with the execution, delivery, performance, validity and enforceability
of this Agreement, the other Loan Documents, and the Closing Date Acquisition Instruments. In addition, the Borrower, the Guarantors and their respective Subsidiaries shall have all
such material consents, licenses and approvals required in connection with the continued operation of the Borrower, such Guarantors and such Subsidiaries and such approvals shall be in full force and
effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would restrain, prevent or otherwise impose adverse
conditions on this Agreement and the actions contemplated hereby. The Administrative Agent shall be satisfied that the consummation of the Closing Date Acquisition does not contravene any law or any
contractual restriction binding on or affecting the Borrower or any Subsidiary, the Sellers or any other party to the Closing Date Acquisition Instruments. 

        (l)    Material Contracts.    The Borrower shall have delivered to the Administrative Agent copies of all material
contracts, agreements or instruments listed on the attached Schedule 4.21. 

        (m)    Notice of Borrowing.    The Administrative Agent shall have received a Notice of Borrowing from the Borrower in
the form of Exhibit G, with appropriate insertions and executed by a duly authorized Responsible Officer of the Borrower. 

        (n)    Closing Date Acquisition.    All conditions to the consummation and effectiveness of the Closing Date
Acquisition (other than the payment of the purchase price) shall have been met. Furthermore, the Administrative Agent shall have received (i) payoff letters, if any, in form and substance
reasonably satisfactory to the Administrative Agent covering all Debt secured by liens that encumber any of the Properties being purchased by the Borrower under the Closing Date Acquisition and
(ii) UCC financing statement terminations, deed of trust and mortgage lien releases and other evidence reasonably required by the Administrative Agent indicating that all liens encumbering the
Acquisition Assets to be acquired by the Borrower and its Subsidiaries have been terminated or released. 

        (o)    USA Patriot Act.    The Borrower has delivered to each Lender that is subject to the Act such information
requested by such Lender in order to comply with the Act. 

        (p)    Hydrocarbon Hedge Agreements.    The Borrower shall have entered into Hydrocarbon Hedge Agreements covering
notional volumes at least equal to the minimum volumes set forth on Schedule 3.01(p) and establishing pricing at least equal to the minimum prices set forth on such Schedule 3.01(p). 

        (q)    Minimum Liquidity.    The sum of the Borrower's unrestricted cash and Unused Commitment Amount as of the
Closing Date after giving effect to the Closing Date Acquisition and the Borrowings requested and made on the Closing Date shall be at least $15,000,000. 

        (r)    Subordinated Debt.    (i) The Borrower shall have entered into the Subordinated Credit Agreement,
(ii) the terms and conditions thereof shall be reasonably satisfactory to the Administrative Agent and the Lenders, and (iii) the conditions precedent set forth in Section 3.01 of
the Subordinated Credit Agreement shall contemporaneously herewith have been satisfied or waived in writing as of the date hereof. The Borrower shall have delivered copies of the Subordinated Credit
Agreement and each other agreement, instrument, or document executed by the Borrower or any of its Subsidiaries or any 

42

 

of
their Responsible Officers at any time in connection with the Subordinated Credit Agreement on or before the date hereof. 

        Section 3.02    Conditions Precedent to All Borrowings.    The obligation of each Lender to make an Advance on
the occasion of each Borrowing and of the Issuing Lender to issue, increase, or extend any Letter of Credit shall be subject to the further conditions precedent that on the date of such Borrowing or
the date of the issuance, increase, or extension of such Letter of Credit: 

        (a)   the
following statements shall be true (and each of the giving of the applicable Notice of Borrowing, Notice of Conversion or Continuation, or Letter of Credit
Application and the acceptance by the Borrower of the proceeds of such Borrowing or the issuance, increase, or extension of such Letter of Credit shall constitute a representation and warranty by the
Borrower that on the date of such Borrowing or on the date of such issuance, increase, or extension of such Letter of Credit, as applicable, such statements are true): 

          (i)  the
representations and warranties contained in Article IV of this Agreement and the representations and warranties contained in the Security Instruments, the
Guaranties, and each of the other Loan Documents are true and correct in all material respects on and as of the date of such Borrowing or the date of the issuance, increase, or extension of such
Letter of Credit, before and after giving effect to such Borrowing or to the issuance, increase, or extension of such Letter of Credit and to the application of the proceeds from such Borrowing, as
though made on and as of such date; and 

         (ii)  no
Default has occurred and is continuing or would result from such Borrowing or from the application of the proceeds therefrom, or would result from the issuance,
increase, or extension of such Letter of Credit; and 

        (b)   the
Administrative Agent shall have received such other approvals, opinions, or documents reasonably deemed necessary or desirable by the Administrative Agent as a
result of circumstances occurring after the date of this Agreement. 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES  

        The Borrower represents and warrants as follows: 

        Section 4.01    Existence; Subsidiaries.    The Borrower is a limited partnership duly organized, validly
existing and in good standing under the laws of Delaware and in good standing and qualified to do business in each other jurisdiction where its ownership or lease of Property or conduct of its
business requires such qualification. Each Subsidiary of the Borrower is duly organized, validly existing, and in good standing under the laws of its jurisdiction of formation and in good standing and
qualified to do business in each jurisdiction where its ownership or lease of Property or conduct of its business requires such qualification. The General Partner is a limited liability company duly
organized, validly existing and in good standing under the laws of Delaware and in good standing and qualified to do business in each jurisdiction where its ownership or lease of Property or conduct
of its business requires such qualification. As of the date of this Agreement, Schedule 4.01 sets forth the capital structure of the Borrower and the Subsidiaries of the Borrower. 

        Section 4.02    Power.    The execution, delivery, and performance by the Borrower of this Agreement, the
Notes, and the other Loan Documents to which it is a party and by the Guarantors of the Guaranties and the other Loan Documents to which they are a party and the consummation of the transactions
contemplated hereby and thereby (a) are within the Borrower's and such Guarantors' governing powers, (b) have been duly authorized by all necessary governing action, (c) do not
contravene (i) the Borrower's or any Guarantor's certificate or articles of incorporation, bylaws, limited liability company agreement, or other similar governance documents or (ii) any
law or any contractual 

43

 

restriction
binding on or affecting the Borrower or any Guarantor, and (d) will not result in or require the creation or imposition of any Lien prohibited by this Agreement. At the time of each
Advance and the issuance, extension or increase of a Letter of Credit, such Advance and such Letter of Credit, and the use of the proceeds of such Advance and such Letter of Credit, will be within the
Borrower's governing powers, will have been duly authorized by all necessary governing action, will not contravene (i) the Borrower's articles or certificate of incorporation or other
organizational documents or (ii) any law or any contractual restriction binding on or affecting the Borrower and will not result in or require the creation or imposition of any Lien prohibited
by this Agreement. 

        Section 4.03    Authorization and Approvals.    No consent, order, authorization, or approval or other action
by, and no notice to or filing with, any Governmental Authority or any other Person is required for the due execution, delivery, and performance by the Borrower of this Agreement, the Notes, or the
other Loan Documents to which the Borrower is a party or by each Guarantor of its Guaranty or the other Loan Documents to which it is a party or the consummation of the transactions contemplated
thereby. No consents, licenses and approvals are required in accordance with applicable Legal Requirements, or in accordance with any document, agreement, instrument or arrangement to which the
Borrower, the Guarantors, and their respective Subsidiaries is a party, in connection with the execution, delivery, performance, validity and enforceability of the Closing Date Acquisition
Instruments. At the time of
each Borrowing and each issuance, increase or extension of a Letter of Credit, no authorization or approval or other action by, and no notice to or filing with, any Governmental Authority will be
required for such Borrowing or such issuance, increase or extension of such Letter of Credit or the use of the proceeds of such Borrowing or such Letter of Credit. 

        Section 4.04    Enforceable Obligations.    This Agreement, the Notes, and the other Loan Documents to which
the Borrower is a party have been duly executed and delivered by the Borrower and the Guaranties and the other Loan Documents to which each Guarantor is a party have been duly executed and delivered
by such Guarantors. Each Loan Document is the legal, valid, and binding obligation of the Borrower and any Guarantor which is a party to it enforceable against the Borrower and each such Guarantor in
accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law affecting creditors' rights generally and
by general principles of equity. 

        Section 4.05    Financial Statements.    

        (a)   The
Borrower has delivered to the Administrative Agent and the Lenders copies of the Financial Statements, and the Financial Statements present fairly the financial
condition of Borrower and its Subsidiaries as of their respective dates and for their respective periods in accordance with GAAP. As of the date of the Financial Statements, there were no material
contingent obligations, liabilities for taxes, unusual forward or long-term commitments, or unrealized or anticipated losses of the Borrower, except as disclosed therein in accordance with
GAAP and adequate reserves for such items have been made in accordance with GAAP. 

        (b)   All
projections, estimates, and pro forma financial information furnished by the Borrower were prepared on the basis of assumptions, data, information, tests, or
conditions believed to be reasonable at the time such projections, estimates, and pro forma financial information were furnished. 

        (c)   Since
the date of the Financial Statements, no event or circumstance that could reasonably be expected to cause a Material Adverse Change has occurred. 

        (d)   As
of the date of this Agreement and after giving effect to the Closing Date Acquisition but before giving effect to the making of the initial Advances or the issuance
of the initial Letters of Credit, neither the Borrower nor any of its Subsidiaries has any Debt other than the Debt listed on Schedule 4.05. 

44

 

        Section 4.06    True and Complete Disclosure.    All factual information (excluding estimates and projections
such as the Projections and the estimates and projections contained in the Engineering Reports) heretofore or contemporaneously furnished by or on behalf of the Borrower or any of the Guarantors in
writing to any Lender or the Administrative Agent for purposes of or in connection with this Agreement, any other Loan Document or any transaction contemplated hereby or thereby is, and all other such
factual information hereafter furnished by or on behalf of the Borrower and the Guarantors in writing to the Administrative Agent or any of the Lenders shall be, true and accurate in all material
respects on the date as of which such information is dated or certified and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements
contained therein not misleading at such time. All projections and estimates furnished by the Borrower (including, without limitation, the Projections and all estimates and projections contained in
the Engineering Reports) were prepared on the basis of assumptions, data, information, tests, or conditions believed to be reasonable at the time such projections, estimates, and pro forma financial
information were furnished. This Section 4.06 shall not be applicable to the Financial Statements as to which the representations and warranties set forth in Section 4.05 shall be
applicable. 

        Section 4.07    Litigation; Compliance with Laws.    

        (a)   Other
than as set forth in Schedule 4.07, there is no pending or, to the best knowledge of the Borrower, threatened action or proceeding affecting the Borrower or
any of the Guarantors before any court, Governmental Authority or arbitrator which could reasonably be expected to cause a Material Adverse Change or which purports to affect the legality, validity,
binding effect or enforceability of this Agreement, any Note, or any other Loan Document. Additionally, there is no pending or, to the best knowledge of the Borrower, threatened action or proceeding
instituted against the Borrower or any of the Guarantors which seeks to adjudicate the Borrower or any of the Guarantors as bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property, to the extent required herein. 

        (b)   The
Borrower and its Subsidiaries have complied in all material respects with all material statutes, rules, regulations, orders and restrictions of any Governmental
Authority having jurisdiction over the conduct of their respective businesses or the ownership of their respective Property. 

        Section 4.08    Use of Proceeds.    The proceeds of the Advances will be used by the Borrower for the purposes
described in Section 5.09. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U). No
proceeds of any Advance will be used to purchase or carry any margin stock in violation of Regulation T, U or X. 

        Section 4.09    Investment Company Act.    Neither the Borrower nor any of the Guarantors is an "investment
company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 

        Section 4.10    Federal Power Act.    No Credit Party and no Subsidiary of a Credit Party is subject to
regulation under the Federal Power Act, as amended or any other Legal Requirement which regulates the incurring by such Person of Debt, including Legal Requirements relating to common contract
carriers or the sale of electricity, gas, steam, water or other public utility services. 

        Section 4.11    Taxes.    

        (a)    Reports and Payments.    All Returns (as defined below in clause (c) of this Section 4.11)
required to be filed by or on behalf of the Borrower, the Guarantors, or any member of the Controlled Group (hereafter collectively called the "Tax Group") have been duly filed on a timely basis or 

45

 

appropriate
extensions have been obtained and such Returns are and will be true, complete and correct, except where the failure to so file would not be reasonably expected to cause a Material Adverse
Change; and all Taxes shown to be payable on the Returns or on subsequent assessments with respect thereto will have been paid in full on a timely basis, and no other Taxes will be payable by the Tax
Group with respect to items or periods covered by such Returns, except in each case to the extent of (i) reserves reflected in the Financial Statements or subsequent financial statements
delivered under Section 5.06 or (ii) taxes that are being contested in good faith. The reserves for accrued Taxes reflected in the financial statements delivered to the Lenders under
this Agreement are adequate in the aggregate for the payment of all unpaid Taxes, whether or not disputed, for the period ended as of the date thereof and for any period prior thereto, and for which
the Tax Group may be liable in its own right, as withholding agent or as a transferee of the assets of, or successor to, any Person, except for such Taxes or reserves therefor, the failure to pay or
provide for which does not and would not reasonably be expected to cause a Material Adverse Change. 

        (b)    Taxes Definition.    "Taxes" in this Section 4.11 shall mean all taxes, charges, fees, levies, or other
assessments imposed by any federal, state, local, or foreign taxing authority, including income, gross receipts, excise, real or personal property, sales, occupation, use, service, leasing,
environmental, value added, transfer, payroll, and franchise taxes (and including any interest, penalties, or additions to tax attributable to or imposed on or with respect to any such assessment). 

        (c)    Returns Definition.    "Returns" in this Section 4.11 shall mean any federal, state, local, or foreign
report, estimate, declaration of estimated Tax, information statement or return relating to, or required to be filed in connection with, any Taxes, including any information return or report with
respect to backup withholding or other payments of third parties. 

        Section 4.12    Pension Plans.    All Plans are in compliance in all material respects with all applicable
provisions of ERISA. No Termination Event has occurred with respect to any Plan, and each Plan has complied with and been administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in Section 302 of ERISA) has occurred, and for plan years after December 31, 2007, no unpaid minimum required
contribution exists, and there has been no excise tax imposed under Section 4971 of the Code. No Reportable Event has occurred with respect to any Multiemployer Plan, and each Multiemployer
Plan has complied with and been administered in all material respects in accordance with applicable provisions of ERISA and the Code. The present value of all benefits vested under each Plan (based on
the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such Plan allocable to such vested benefits by more than
$1,000,000. Neither the Borrower nor any member of the Controlled Group has had a complete or partial withdrawal from any Multiemployer Plan for which there is any withdrawal liability in excess of
$1,000,000. As of the most recent valuation date applicable thereto, neither the Borrower nor any member of the Controlled Group would become subject to any liability under ERISA in excess of
$1,000,000 if the Borrower or any member of the Controlled Group has received notice that any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing as of the date of this
Agreement and current factual circumstances, the Borrower has no reason to believe that the annual cost during the term of this Agreement to the Borrower or any member of the Controlled Group for
post-retirement benefits to be provided to the current and former employees of the Borrower or any member of the Controlled Group under Plans that are welfare benefit plans (as defined in
Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause a Material Adverse Change. 

46

 

  
        Section 4.13    Condition of Property; Casualties.    Each of the Borrower and the Guarantors has good and
defensible title to all of its Properties free and clear of all Liens except for Permitted Liens. The material Properties used or to be used in the continuing operations of the Borrower and each of
the Guarantors are in good repair, working order and condition, ordinary wear and tear excepted. Since the date of the Financial Statements, neither the business nor the material Properties of the
Borrower and each of the Guarantors, taken as a whole, has been materially and adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other
labor disturbance, embargo, requisition or taking of Property or cancellation of contracts, Permits, or concessions by a Governmental Authority, riot, activities of armed forces, or acts of God or of
any public enemy. 

        Section 4.14    No Burdensome Restrictions; No Defaults.    

        (a)   Neither
the Borrower nor any Guarantor is a party to any indenture, loan, or credit agreement or any lease or other agreement or instrument or subject to any charter or
corporate restriction or provision of applicable Legal Requirement that could reasonably be expected to cause a Material Adverse Change. Neither the Borrower nor any of its Subsidiaries is in default
under or with respect to any contract, agreement, lease, or other instrument to which the Borrower or any Subsidiary is a party and which could reasonably be expected to cause a Material Adverse
Change or under any agreement in connection with any Debt. Neither the Borrower nor any of its Subsidiaries has received any notice of default under any material contract, agreement, lease, or other
instrument to which the Borrower or such Subsidiary is a party. 

        (b)   No
Default has occurred and is continuing. 

        Section 4.15    Environmental Condition.    

        (a)    Permits, Etc.    The Borrower and the Guarantors, or to the extent that the right of operation is vested in
others, such operators on behalf of the Borrower and the Guarantors, (i) have obtained all Environmental Permits necessary for the ownership and operation of their respective Properties and the
conduct of their respective businesses except where the failure to obtain such Environmental Permit could not reasonably be expected to cause a Material Adverse Change; (ii) have at all times
been and are in compliance with all terms and conditions of such Permits and with all other requirements of applicable Environmental Laws except where the failure to be in compliance could not
reasonably be expected to cause a Material Adverse Change; (iii) have not received notice of any material violation or
alleged violation of any Environmental Law or Permit; and (iv) are not subject to any actual or contingent Environmental Claim, which could reasonably be expected to cause a Material Adverse
Change. 

        (b)    Certain Liabilities.    To the Borrower's actual knowledge, none of the present or previously owned or operated
Property of the Borrower or any Guarantor or of any of their former Subsidiaries, wherever located: (i) has been placed on or proposed to be placed on the National Priorities List, the
Comprehensive Environmental Response Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified as a
potential site for removal, remediation, cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws; (ii) is subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any Property owned or operated by the Borrower or any of the Guarantors, wherever located, which could reasonably be
expected to cause a Material Adverse Change; or (iii) has been the site of any Release of Hazardous Substances or Hazardous Wastes from present or past operations which has caused at the site
or at any third-party site any condition that has resulted in or could reasonably be expected to result in the need for Response that would cause a Material Adverse Change. 

47

 

        (c)    Certain Actions.    Without limiting the foregoing: (i) all necessary notices have been properly filed,
and no further action is required under current Environmental Law as to each Response or other restoration or remedial project undertaken by the Borrower or the Guarantors (or to the extent that the
right of operation is vested in others, undertaken by such operators on behalf of the Borrower or the Guarantors), or any of their former Subsidiaries on any of their presently or formerly owned or
operated Property and (ii) the present and, to the Borrower's knowledge, future liability, if any, of the Borrower and the Guarantors which could reasonably be expected to arise in connection
with requirements under Environmental Laws will not result in a Material Adverse Change. 

        Section 4.16    Permits, Licenses, Etc.    The Borrower and the Guarantors, or to the extent that the right of
operation is vested in others, such operators on behalf of the Borrower and the Guarantors, possess all authorizations, Permits, licenses, patents, patent rights or licenses, trademarks, trademark
rights, trade name rights and copyrights which are material to the conduct of their business. The Borrower and the Guarantors, or to the extent that the right of operation is vested in others, such
operators on behalf of the Borrower and the Guarantors, manage and operate their business in all material respects in accordance with all applicable Legal Requirements and good industry practices. 

        Section 4.17    Gas Contracts.    Other than as set forth in Schedule 4.17, neither the Borrower nor any
of the Guarantors, as of the date hereof and as of the Closing Date: (a) is obligated in any material respect by virtue of any prepayment made under any contract containing a
"take-or-pay" or "prepayment" provision or under any similar agreement to deliver hydrocarbons produced from or allocated to any of the Borrower's and its Subsidiaries' Oil
and Gas Properties at some future date without receiving full payment therefor at the time of delivery, or (b) has produced gas, in any material amount, subject to, and none of the Borrower's
and the Guarantors' Oil and Gas Properties is subject to, balancing rights of third parties or subject to balancing duties under governmental requirements, in each case other than in the ordinary
course of business and which prepayments and balancing rights, in the aggregate, do not result in the Borrower or any Guarantor having net aggregate liability at any time in excess of an amount equal
to 1% of the Proven Reserves categorized as "proved, developed and producing" on the most recently delivered Engineering Report. 

        Section 4.18    Liens; Titles, Leases, Etc.    None of the Property of the Borrower or any of the Guarantors is
subject to any Lien other than Permitted Liens or Liens to be released on the Closing Date. On the Closing Date, all governmental actions and all other filings, recordings, registrations, third party
consents and other actions which are necessary to create and perfect the Liens provided for in the Security Instruments will have been made, obtained and taken in all relevant jurisdictions. All
Leases and agreements for the conduct of business of the Borrower and the Guarantors are valid and subsisting, in full force and effect and there exists no default or event of default or circumstance
which with the giving of notice or lapse of time or both would give rise to a default under any such Leases or agreements which could reasonably be expected to cause a Material Adverse Change. Neither
the Borrower nor any of the Guarantors is a party to any agreement or arrangement (other than this Agreement and the Security Instruments), or subject to any order, judgment, writ or decree, which
either restricts or purports to restrict its ability to grant Liens to secure the Obligations against their respective assets or Properties. 

        Section 4.19    Solvency and Insurance.    Before and after giving effect to the making of the initial Advances
and after giving effect to the Closing Date Acquisition, each of the Borrower and its Subsidiaries is Solvent. Additionally, each of the Borrower and its Subsidiaries carry insurance required under
Section 5.02. 

        Section 4.20    Hydrocarbon Hedge Agreements.    The Hydrocarbon Hedge Agreements in effect on the Closing Date
meet the minimum volume and minimum pricing requirements set forth in Section 3.01(p). 

48

 

        Section 4.21    Material Agreements.    Schedule 4.21 sets forth a complete and correct list of all
material agreements, leases, indentures, purchase agreements, obligations in respect of letters of credit, guarantees, joint venture agreements, and other instruments in effect or to be in effect as
of the date hereof and as of the Closing Date (other than (a) the Hydrocarbon Hedge Agreements and (b) the Closing Date Acquisition Instruments and any material agreements or instruments
disclosed therein) providing for, evidencing, securing or otherwise relating to any Debt of the Borrower or any of the Guarantors, and all obligations of the Borrower or any of the Guarantors to
issuers of surety or appeal bonds issued for account of the Borrower or any such Guarantor, and such list correctly sets forth the
names of the debtor or lessee and creditor or lessor with respect to the Debt or lease obligations outstanding or to be outstanding and the Property subject to any Lien securing such Debt or lease
obligation. Also set forth on Schedule 4.21 is a complete and correct list of all material agreements and other instruments of the Borrower and the Guarantors relating to the purchase,
transportation by pipeline, gas processing, marketing, sale and supply of natural gas and other Hydrocarbons. Except as detailed otherwise in Schedule 4.21, the Borrower has heretofore
delivered to the Administrative Agent and the Lenders a complete and correct copy of all such material credit agreements, indentures, purchase agreements, contracts, letters of credit, guarantees,
joint venture agreements, or other instruments, including any modifications or supplements thereto, as in effect on the date hereof and as of the Closing Date. 

ARTICLE V

AFFIRMATIVE COVENANTS  

        So long as any Obligation or any Letter of Credit shall remain outstanding, any Letter of Credit Exposure shall exist, or any Lender shall have any Commitment
hereunder, the Borrower agrees, unless the Required Lenders shall otherwise consent in writing, to comply with the following covenants: 

        Section 5.01    Compliance with Laws, Etc.    The Borrower shall comply, and cause each of its Subsidiaries to
comply, in all material respects with all Legal Requirements. Without limiting the generality and coverage of the foregoing, the Borrower shall comply, and shall cause each of its Subsidiaries to
comply, in all material respects, with all Environmental Laws and all laws, regulations, or directives with respect to equal employment opportunity and employee safety in all jurisdictions in which
the Borrower, or any of its Subsidiaries do business; provided, however, that this Section 5.01 shall not prevent the Borrower or any of its
Subsidiaries from, in good faith and with reasonable diligence, contesting the validity or application of any such laws or regulations by appropriate legal proceedings. Without limitation of the
foregoing, the Borrower shall, and shall cause each of its Subsidiaries to, (a) maintain and possess all authorizations, Permits, licenses, trademarks, trade names, rights and copyrights which
are material to the conduct of its business and (b) obtain, as soon as practicable, all consents or approvals required from the United States or any states of the United States (or other
Governmental Authorities) necessary to grant the Administrative Agent an Acceptable Security Interest in the Borrower's and its Subsidiaries' Oil and Gas Properties. 

        Section 5.02    Maintenance of Insurance.    

        (a)   The
Borrower shall, and shall cause each of its Subsidiaries to, procure and maintain or shall cause to be procured and maintained continuously in effect policies of
insurance in form and amounts and issued by companies, associations or organizations reasonably satisfactory to the Administrative Agent covering such casualties, risks, perils, liabilities and other
hazards reasonably required by the Administrative Agent, including business interruption insurance. In addition, the Borrower shall, and shall cause each of its Subsidiaries to, comply with all
requirements regarding insurance contained in the Security Instruments. 

        (b)   All
certified copies of policies or certificates thereof, and endorsements and renewals thereof shall be delivered to and retained by the Administrative Agent. All
policies of insurance shall either 

49

 

have
attached thereto a lender's loss payable endorsement for the benefit of the Administrative Agent, as loss payee in form reasonably satisfactory to the Administrative Agent or shall name the
Administrative Agent as an additional insured, as applicable. The Borrower shall furnish the Administrative Agent with a certificate of insurance or a certified copy of all policies of insurance
required. All policies or certificates of insurance shall set forth the coverage, the limits of liability, the name of the carrier, the policy number, and the period of coverage. In addition, all
policies of insurance required under the terms hereof shall contain an endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms of such policy
notwithstanding any act of negligence of the Borrower, or a Subsidiary or any party holding under the Borrower or a Subsidiary which might otherwise result in a forfeiture of the insurance and the
further agreement of the insurer waiving all rights of setoff, counterclaim or deductions against the Borrower and its Subsidiaries. Without limiting the generality of the foregoing provisions,
Administrative Agent will be named as an additional insured and will be provided a waiver of subrogation on the Borrower's general liability and umbrella policies. All such policies shall contain a
provision that notwithstanding any contrary agreements between the Borrower, its Subsidiaries, and the applicable insurance company, such policies will not be canceled, allowed to lapse without
renewal, surrendered or amended (which provision shall include any reduction in the scope or limits of coverage) without at least 30 days' prior written notice to the Administrative Agent
unless such is cancelled for non-payment of premium and then the Administrative Agent will be given 10 days notice of cancellation. In the event that, notwithstanding the "lender's
loss payable endorsement" requirement of this Section 5.02, the proceeds of any insurance policy described above are paid to the Borrower or a Subsidiary and any Obligations are outstanding,
the Borrower shall deliver such proceeds to the Administrative Agent immediately upon receipt. 

        Section 5.03    Preservation of Existence, Etc.    The Borrower shall preserve and maintain, and cause each of
its Subsidiaries to preserve and maintain, its partnership, corporate or limited liability company, as applicable, existence, rights, franchises, and privileges in the jurisdiction of its formation,
and qualify and remain qualified, and cause each such Subsidiary to qualify and remain qualified, as a foreign entity in each jurisdiction in which qualification is necessary or desirable in view of
its business and operations or the ownership of its Properties, and, in each case, where failure to qualify or preserve and maintain its rights and franchises could reasonably be expected to cause a
Material Adverse Change. 

        Section 5.04    Payment of Taxes, Etc.    The Borrower shall pay and discharge, and cause each of its
Subsidiaries to pay and discharge, before the same shall become delinquent, (a) all taxes, assessments, and governmental charges or levies imposed upon it or upon its income or profits or
Property that are material in amount, prior to the date on which penalties attach thereto and (b) all lawful claims that are material in amount which, if unpaid, might by law become a Lien upon
its Property; provided, however, that neither the Borrower nor any such Subsidiary shall be required to pay or discharge any such tax, assessment,
charge, levy, or claim which is being contested in good faith and by appropriate proceedings, and with respect to which reserves in conformity with GAAP have been provided. 

        Section 5.05    Visitation Rights.    At any reasonable time and from time to time, upon reasonable notice, the
Borrower shall, and shall cause its Subsidiaries to, permit the Administrative Agent and any Lender or any of their respective agents or representatives thereof, to (a) examine and make copies
of and abstracts from the records and books of account of, and visit and inspect at their reasonable discretion the Properties of, the Borrower and any such Subsidiary, and (b) discuss the
affairs, finances and accounts of the Borrower and any such Subsidiary with any of their respective officers or directors. 

        Section 5.06    Reporting Requirements.    The Borrower shall furnish to the Administrative Agent and each
Lender (unless otherwise provided below): 

        (a)    Annual Financials.    As soon as available and in any event not later than 120 days after the end of
each fiscal year (commencing with fiscal year ending December 31, 2007) of the Borrower and 

50

 

its
consolidated Subsidiaries (or such later date authorized by the SEC, if applicable; provided that, the Borrower shall have delivered proper and timely notices of late filings filed with the SEC
and also delivered such to the Administrative Agent and such later date may not be a date later than 120 days after the end of such fiscal year): (i) the Form 10-K
filed with the SEC for such fiscal year end, if any (ii) to the extent not otherwise provided in such Form 10-K, a copy of the annual audit report for such year for the
Borrower and such consolidated Subsidiaries, including therein the Borrower's and such consolidated Subsidiaries' balance sheets as of the end of such fiscal year and the Borrower's and such
consolidated Subsidiaries' statements of income, cash flows, and retained earnings, in each case certified by independent certified public accountants of national standing reasonably acceptable to the
Administrative Agent and including any management letters delivered by such accountants to the Borrower or any Subsidiary in connection with such audit; provided that, with respect to the fiscal year
ending December 31, 2007 only, the requirements of this clause (ii) with respect to such fiscal year shall be satisfied by delivering (A) the annual audit report of APC and the
related financial information described in this clause (ii) with respect to APC instead of the Borrower, and (B) unaudited financial statements of the type described in this
clause (ii) with respect to the Borrower for such period, (iii) a certificate of such accounting firm to the Administrative Agent and the Lenders stating that, in the course of the
regular audit of the business of the Borrower and its consolidated Subsidiaries (or APC, if applicable), if any, which audit was conducted by such accounting firm in accordance with generally accepted
auditing standards, such accounting firm has obtained no knowledge that a Default has occurred and is continuing, or if, in the opinion of such accounting firm, a Default has occurred and is
continuing, a statement as to the nature thereof, and (iv) a Compliance Certificate executed by a Responsible Officer of the Borrower; 

        (b)    Quarterly Financials.    As soon as available and in any event not later than 60 days after the end of
each of the first three fiscal quarters of each fiscal year (commencing with fiscal quarter ending March 31, 2008) of the Borrower and its consolidated Subsidiaries (or such later date
authorized by the SEC, if applicable; provided that the Borrower shall have delivered proper and timely notices of late filings filed with the SEC and
also delivered such to the Administrative Agent and such later date may not be a date later than 90 days after the end of such fiscal quarter): (i) the Form 10-Q filed
with the SEC for such fiscal quarter end, if any, (ii) to the extent not otherwise provided in such Form 10-Q, unaudited balance sheet and the unaudited statements of income,
cash flows, and retained earnings of each such Person for the period commencing at the end of the previous year
and ending with the end of such fiscal quarter, all in reasonable detail and duly certified with respect to such consolidated statements (subject to the absence of footnotes and to
year-end audit adjustments) by a Responsible Officer of the Borrower as having been prepared in accordance with GAAP; and (iii) a Compliance Certificate executed by a Responsible
Officer of the Borrower; 

        (c)    Oil and Gas Reserve Reports.    

          (i)  As
soon as available but in any event on or before February 28th (or 29th, as applicable) of each year, an Independent
Engineering Report dated effective as of the immediately preceding December 31; provided that the Independent Engineering Report due on
February 29, 2008 shall be delivered in accordance with Section 2.02(b)(i) hereof; 

         (ii)  As
soon as available but in any event on or before August 31st of each year, an Internal Engineering Report dated effective as of the
immediately preceding June 30; 

        (iii)  Such
other information as may be reasonably requested by the Administrative Agent or any Lender with respect to the Oil and Gas Properties included or to be included
in the Borrowing Base; 

        (iv)  With
the delivery of each Engineering Report, a certificate from a Responsible Officer of the Borrower certifying that, to the best of his knowledge and in all material
respects: (a) (i) the factual information contained in the Engineering Report and any other information delivered in 

51

 

connection
therewith is true and correct in all material respects, and (ii) all estimates and projections contained in the Engineering Report and any other information delivered in connection
therewith was prepared on the basis of assumptions, data, information, tests, or conditions believed to be reasonable at the time such Engineering Report or other information was delivered,
(b) the Borrower or its Subsidiary, as applicable, owns good and defensible title to the Oil and Gas Properties evaluated in such Engineering Report, and such Properties are subject to an
Acceptable Security Interest to the extent required herein and are free of all Liens except for Permitted Liens, (c) except as set forth on an exhibit to the certificate, on a net basis there
are no Gas Imbalances, take or pay or other prepayments with respect to its Oil and Gas Properties evaluated in such Engineering Report which would require the Borrower or any of its Subsidiaries to
deliver Hydrocarbons produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (d) none of its Oil and Gas Properties have been
sold since the date of the last Borrowing Base determination except as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties sold and in such
detail as reasonably required by the Required Lenders, (e) attached to the certificate is a list of its Oil and Gas Properties added to and deleted from the immediately prior Engineering Report
and a list showing any change in working interest or net revenue interest in its Oil and Gas Properties occurring and the reason for such change, (f) attached to the certificate is a list of
all Persons disbursing proceeds to the Borrower or to its Subsidiary, as applicable, from its Oil and Gas Properties, (g) except as set forth on a schedule attached to the certificate, 90% of
the PV-10 of the Proven Reserves evaluated by such Engineering Report are pledged as Collateral for the Obligations and attached to the certificate is a schedule detailing compliance with
Section 5.08, and (h) attached to the certificate is a monthly cash flow budget for the 12 months following the delivery of such certificate setting forth the Borrower's
projections for production volumes, revenues, expenses, taxes and budgeted capital expenditures during such period; 

        (d)    Production Reports.    As soon as available and in any event within 60 days after the end of each fiscal
quarter, commencing with the fiscal quarter ending December 31, 2007, a report certified by a Responsible Officer of the Borrower in form and substance satisfactory to the Administrative Agent
prepared by the Borrower covering each of the Oil and Gas Properties of the Borrower and its Subsidiaries and detailing quarterly on a field by field basis (i) the production, revenue, and
price information and associated operating expenses for each such quarter, (ii) any changes to any producing reservoir, production equipment, or producing well during each such quarter, which
changes could cause a Material Adverse Change, and (iii) any sales of the Borrower's or any Subsidiaries' Oil and Gas Properties during each such quarter; 

        (e)    Defaults.    As soon as practicable and in any event within five days after (i) the occurrence of any
Default or (ii) the occurrence of any default under any instrument or document evidencing Debt of the Borrower or any Subsidiary, in each case known to any officer of the Borrower or any of its
Subsidiaries which is continuing on the date of such statement, a statement of a Responsible Officer of the Borrower setting forth the details of such Default or default, as applicable, and the
actions which the Borrower or such Subsidiary has taken and proposes to take with respect thereto; 

        (f)    Quarterly Hedging Reports.    Within 60 days after the end of each calendar quarter end, a statement
prepared by Borrower and certified as being true and correct in all material respects by a Responsible Officer of the Borrower, (i) setting forth in reasonable detail all Hydrocarbon Hedge
Agreements to which any production of oil, gas or other Hydrocarbons from the Oil and Gas Properties of the Borrower and its Subsidiaries is then subject, together with a statement of Borrower's
position with respect to each such Hydrocarbon Hedge Agreement, provided, however, if the price of any of the oil, gas or other Hydrocarbons produced
from such Oil and Gas Properties is subject to a Hydrocarbon Hedge Agreement, then Borrower shall promptly notify the Administrative Agent and the Lenders if such Hydrocarbon Hedge Agreement is
terminated, modified, amended or altered prior to 

52

 

the
end of its contractual term, or if there is an amendment, adjustment or modification of the price of any of the oil, gas or other Hydrocarbons produced from such Oil and Gas Properties that is
subject to or established by a Hydrocarbon Hedge Agreement, and (ii) demonstrating the Borrower's compliance with Section 5.12 hereof. 

        (g)    Termination Events.    As soon as practicable and in any event (i) within 30 days after
(A) the Borrower knows or has reason to know that any Termination Event described in clause (a) of the definition of Termination Event with respect to any Plan has occurred, or
(B) the Borrower acquires knowledge that any member of the Controlled Group knows that any Termination Event described in clause (a) of the definition of Termination Event with respect
to any Plan has occurred, and (ii) within 10 days after (A) the Borrower knows or has reason to know that any other Termination Event with respect to any Plan has occurred, or
(B) the Borrower acquires knowledge that any of its Affiliates knows that any other Termination Event with respect to any Plan has occurred, a statement of a Responsible Officer of the Borrower
describing such Termination Event and the action, if any, which the Borrower or such Affiliate proposes to take with respect thereto; 

        (h)    Termination of Plans.    Promptly and in any event within two Business Days after (i) receipt thereof by
the Borrower from the PBGC, or (ii) the Borrower acquires knowledge of any Controlled Group member's receipt thereof from the PBGC, copies of each notice received by the Borrower or any such
member of the Controlled Group of the PBGC's intention to terminate any Plan or to have a trustee appointed to administer any Plan; 

        (i)    Other ERISA Notices.    Promptly and in any event within five Business Days after (i) receipt thereof by
the Borrower from a Multiemployer Plan sponsor, or (ii) the Borrower acquires knowledge of any Controlled Group member's receipt thereof from a Multiemployer Plan sponsor, a copy of each notice
received by the Borrower or any member of the Controlled Group concerning the imposition or amount of withdrawal liability pursuant to Section 4202 of ERISA; 

        (j)    Environmental Notices.    Promptly upon the receipt thereof by the Borrower or any of its Subsidiaries, a copy
of any form of request, notice, summons or citation received from the Environmental Protection Agency, or any other Governmental Authority, concerning (i) violations or alleged violations of
Environmental Laws, which seeks to impose liability therefor and could cause a Material Adverse
Change, (ii) any action or omission on the part of the Borrower or any Subsidiary or any of their former Subsidiaries in connection with Hazardous Waste or Hazardous Substances which could
reasonably result in the imposition of liability therefor that could cause a Material Adverse Change, including any information request related to, or notice of, potential responsibility under CERCLA,
or (iii) concerning the filing of a Lien upon, against or in connection with the Borrower or any Subsidiary or their former Subsidiaries, or any of their leased or owned Property, wherever
located; 

        (k)    Other Governmental Notices.    Promptly and in any event within five Business Days after receipt thereof by the
Borrower or any Subsidiary, a copy of any notice, summons, citation, or proceeding seeking to modify in any material respect, revoke, or suspend any material contract, license, permit or agreement
with any Governmental Authority; 

        (l)    Material Changes.    Prompt written notice of any condition or event of which the Borrower has knowledge, which
condition or event has resulted or may reasonably be expected to result in (i) a Material Adverse Change (other than global changes in the Oil and Gas Business or the world economy generally)
or (ii) a breach of or noncompliance with any material term, condition, or covenant of any material contract to which the Borrower or any of its Subsidiaries is a party or by which they or
their Properties may be bound; 

        (m)    Disputes, Etc.    Prompt written notice of (i) any claims, legal or arbitration proceedings, proceedings
before any Governmental Authority, or disputes, or to the knowledge of the Borrower threatened, or affecting the Borrower, or any of its Subsidiaries which, if adversely determined, could 

53

 

reasonably
be expected to cause a Material Adverse Change, or any material labor controversy of which the Borrower or any of its Subsidiaries has knowledge resulting in or reasonably considered to be
likely to result in a strike against the Borrower or any of its Subsidiaries and (ii) any claim, judgment, Lien or other encumbrance (other than a Permitted Lien) affecting any Property of the
Borrower or any Subsidiary if the value of the claim, judgment, Lien, or other encumbrance affecting such Property shall exceed $1,000,000; 

        (n)    Other Accounting Reports.    Promptly upon receipt thereof, a copy of each other report or letter submitted to
the Borrower or any Subsidiary by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower and its Subsidiaries, and a copy of any
response by the Borrower or any Subsidiary of the Borrower, or the Board of Managers (or other applicable governing body) of the Borrower or any Subsidiary of the Borrower, to such letter or report; 

        (o)    Notices Under Other Loan Agreements.    Promptly after the furnishing thereof, copies of any statement, report
or notice furnished to any Person pursuant to the terms of any 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 5.06; 

        (p)    SEC Filings.    Promptly after the sending or filing thereof, copies of all proxy material, reports and other
information which the Borrower or any of its Subsidiaries sends to or files with the SEC or sends to the limited partners of the Borrower or the holders of Equity Interests in any of its Subsidiaries;
and 

        (q)    Other Information.    Such other information respecting the business or Properties, or the condition or
operations, financial or otherwise, of the Borrower or any of its Subsidiaries, as any Lender through the Administrative Agent may from time to time reasonably request. 

        The
Administrative Agent agrees to provide the Lenders with copies of any material notices and information delivered solely to the Administrative Agent pursuant to the terms of this
Agreement. 

        Section 5.07    Maintenance of Property.    Subject to Section 6.04, the Borrower shall, and shall cause
each of its Subsidiaries to, maintain their owned, leased, or operated Property in good condition and repair, ordinary wear and tear excepted; and shall abstain, and cause each of its Subsidiaries to
abstain from, knowingly or willfully permitting the commission of waste or other injury, destruction, or loss of natural resources, or the occurrence of pollution, contamination, or any other
condition in, on or about the owned or operated Property involving the Environment that could reasonably be expected to result in Response activities and that could reasonably be expected to cause a
Material Adverse Change. 

        Section 5.08    Agreement to Pledge.    The Borrower shall, and shall cause each Subsidiary to, grant to the
Administrative Agent an Acceptable Security Interest in all personal Property of the Borrower or any Subsidiary now owned or hereafter acquired, and shall, and shall cause each Subsidiary to, grant to
the Administrative Agent an Acceptable Security Interest in at least 90% of the PV-10 of the Proven Reserves of the Borrower and its Subsidiaries based on its most recently delivered
Engineering Report. 

        Section 5.09    Use of Proceeds.    The Borrower shall use the proceeds of the Advances to (a) fund the
acquisition of the Acquisition Assets from the Sellers pursuant to the Closing Date Acquisition Instruments, (b) to finance the acquisition, exploration, development, maintenance and production
of Oil and Gas Properties, (c) fund Restricted Payments which are permitted hereunder and (d) other working capital and general partnership purposes, including the cost of entering into
any Hydrocarbon Hedge Agreements permitted hereby. The Letters of Credit shall be used solely for the support of: (i) hedging obligations incurred by Borrower and its Subsidiaries in the
ordinary course of business, and (ii) other obligations incurred by Borrower and its Subsidiaries in the ordinary course of business. 

54

 

        Section 5.10    Title Opinions.    The Borrower shall from time to time after March 31, 2008, upon the
reasonable request of the Administrative Agent, take such actions and execute and deliver such documents and instruments as the Administrative Agent shall require to ensure that the Administrative
Agent shall, at all times, have received satisfactory title evidence (including, if requested, supplemental or new title opinions addressed to it) covering at least 80% of the PV-10 of the
Proven Reserves of the Borrower and its Subsidiaries as reasonably determined by the Administrative Agent and at least 80% of the PV-10 of the Proven Reserves which are categorized as
"proved, developed and producing", which title opinions shall be in form and substance acceptable to the Administrative Agent in its sole discretion and shall include opinions regarding the before
payout and after payout ownership interests held by the Borrower and the Borrower's Subsidiaries, for all wells located on the Oil and Gas Properties covered thereby as to the ownership of Oil and Gas
Properties of the Borrower and its Subsidiaries, and reflecting that the Administrative Agent has an Acceptable Security Interest in such Oil and Gas Properties of the Borrower and its Subsidiaries. 

        Section 5.11    Further Assurances; Cure of Title Defects.    The Borrower shall, and shall cause each
Subsidiary to, cure promptly any defects in the creation and issuance of the Notes and the execution and delivery of the Security Instruments and this Agreement. The Borrower hereby authorizes the
Lenders or the Administrative Agent to file any financing statements without the signature of the Borrower to the extent permitted by applicable Legal Requirements in order to perfect or maintain the
perfection of any security interest granted under any of the Loan Documents. The Borrower at its expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative
Agent upon request all such other documents, agreements and instruments to comply with or accomplish the covenants and agreements of the Borrower or any Subsidiary, as the case may be, in the Security
Instruments and this Agreement, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in the Security Instruments, or to
state more fully the security obligations set out herein or in any of the Security Instruments, or to perfect, protect or preserve any Liens created pursuant to any of the Security Instruments, or to
make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith or to enable the Administrative Agent to exercise and enforce its rights
and remedies with respect to any Collateral. Within 30 days after (a) a request by the Administrative Agent or the Lenders to cure any title defects or exceptions which are not Permitted
Liens raised by such information or (b) a notice by the Administrative Agent that the Borrower has failed to comply with Section 5.10, the Borrower shall (i) cure such title
defects or exceptions which are not Permitted Liens or substitute acceptable Oil and Gas Properties with no title defects or exceptions except for Permitted Liens covering Collateral of an equivalent
value and (ii) deliver to the Administrative Agent satisfactory title evidence (including supplemental or new title opinions meeting the foregoing requirements) in form and substance acceptable
to the Administrative Agent in its reasonable business judgment as to the Borrower's and its Subsidiaries' ownership of such Oil and Gas Properties and the Administrative Agent's Liens and security
interests therein as are required to maintain compliance with Section 5.10. 

        Section 5.12    Hedging Arrangements.    The Borrower shall maintain in effect all of the Hydrocarbon Hedge
Agreements required to be established on the Closing Date pursuant to Section 3.01(p). 

        Section 5.13    Deposit Accounts.    The Borrower shall, and shall cause each of its Subsidiaries to, maintain
their principal operating accounts and other deposit accounts with the Administrative Agent or any Lender or any other bank that has executed an account control agreement reasonably acceptable in form
and substance to the Administrative Agent. 

        Section 5.14    Post-Closing Requirements.    On or prior to March 31, 2008, the Borrower
shall satisfy each of the requirements set forth in that certain Post-Closing Agreement, in each case to the satisfaction of the Administrative Agent as set forth therein. 

55

 

  ARTICLE VI

NEGATIVE COVENANTS  

        So long as any Obligation or any Letter of Credit shall remain outstanding, any Letter of Credit Exposure shall exist, or any Lender shall have any Commitment
hereunder, the Borrower agrees, unless the Required Lenders shall otherwise consent in writing, to comply with the following covenants: 

        Section 6.01    Liens, Etc.    The Borrower shall not create, assume, incur, or suffer to exist, or permit any
of its Subsidiaries to create, assume, incur, or suffer to exist, any Lien on or in respect of any of its Property whether now owned or hereafter acquired, or assign any right to receive income,
except that the Borrower and its Subsidiaries may create, incur, assume, or suffer to exist (all of which shall be referred to as "Permitted Liens"): 

        (a)   Liens
securing the Obligations; 

        (b)   Liens
securing the Subordinated Debt to the extent permitted under the Intercreditor Agreement; 

        (c)   purchase
money Liens or purchase money security interests upon or in any equipment acquired or held by the Borrower or any of its Subsidiaries in the ordinary course of
business prior to or at the time of the Borrower's or such Subsidiary's acquisition of such equipment; provided that the Debt secured by such Liens
(i) was incurred solely for the purpose of financing the acquisition of such equipment, and does not exceed the aggregate purchase price of such equipment, (ii) is secured only by such
equipment and not by any other assets of the Borrower and its Subsidiaries, and (iii) is not increased in amount; 

        (d)   Liens
for taxes, assessments, or other governmental charges or levies not yet due or that (provided foreclosure, sale, or other similar proceedings shall not have been
initiated) are being contested in good faith by appropriate proceedings, and such reserve as may be required by GAAP shall have been made therefor; 

        (e)   Liens
in favor of vendors, carriers, warehousemen, repairmen, mechanics, workmen, materialmen, suppliers, laborers, construction, or similar Liens arising by operation
of law in the ordinary course of business in respect of obligations that are not yet due or that are being contested in good faith by appropriate proceedings,  provided that such reserve as may be
required by GAAP shall have been made therefor; 

        (f)    Liens
to operators and non-operators under joint operating agreements arising in the ordinary course of the business of the Borrower or the relevant
Subsidiary to secure amounts owing, which amounts are not yet due or are being contested in good faith by appropriate proceedings, if such reserve as may be required by GAAP shall have been made
therefor; 

        (g)   royalties,
overriding royalties, net profits interests, production payments, reversionary interests, calls on production, preferential purchase rights and other burdens
on or deductions from the proceeds of production, that do not secure Debt for borrowed money and that are taken into account in computing the net revenue interests and working interests of the
Borrower or any of its Subsidiaries warranted in the Security Instruments; 

        (h)   Liens
arising in the ordinary course of business out of pledges or deposits under workers' compensation laws, unemployment insurance, old age pensions or other social
security or retirement benefits, or similar legislation or to secure public or statutory obligations of the Borrower; 

        (i)    Liens
arising under operating agreements, unitization and pooling agreements and orders, Farmout agreements, gas balancing agreements and other similar agreements, in
each case that are customary in the Oil and Gas Business and that are entered into in the ordinary course of business that are taken into account in computing the net revenue interests and working
interests of the Borrower or 

56

 

any
of its Subsidiaries warranted in the Security Instruments, to the extent that any such Lien referred to in this clause does not materially impair the use of the Property covered by such Lien for
the purposes for which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; 

        (j)    easements,
rights-of-way, and other similar encumbrances, and minor defects in the chain of title that are customarily accepted in the oil and
gas financing industry, none of which interfere with the ordinary conduct of the business of Borrower or any Subsidiary or materially detract from the value or use of the Property to which they apply; 

        (k)   Liens
in favor of landlords or lessors under operating leases or Capital Leases of a Loan Party; provided that (i) any such Lien shall secure only the obligations
of such Loan Party arising under the applicable operating lease or Capital Lease, and (ii) the Debt under such Capital Leases is permitted under Section 6.02 below; 

        (l)    Liens
on cash or securities pledged to secure performance of bids, tenders, performance bonds, surety and appeals bonds, or regulatory compliance or other obligations of
a like nature incurred in the ordinary course of business and not in connection with the borrowing of money; 

        (m)  Liens
in favor of collecting or payor banks having a right of setoff, revocation, refund or chargeback with respect to money or instruments of any of the Company Group
on deposit with or in possession of such bank; 

        (n)   Liens
on cash and Liquid Investments securing the performance obligations of Borrower under any Hedge Contract (subject to the limitations set forth in
Section 6.14); 

        (o)   Liens
in favor of Persons financing unpaid insurance premiums so long as (i) such Liens are limited to insurance policies with respect to which such premiums are
financed, and (ii) the obligations secured by such Liens do not exceed $500,000 in the aggregate; 

        (p)   Subject
to paragraphs (d) and (e) of this Section 6.01, non-consensual statutory Liens on pipeline or pipeline facilities, Hydrocarbons
or Properties of the Company Group which arise out of operation of law and are not in connection with the borrowing of money; 

        (q)   Liens
described in Schedule 4.05; and 

        (r)   Liens
resulting from any judgment or award that is not a Default or Event of Default. 

        Section 6.02    Debts, Guaranties, and Other Obligations.    The Borrower shall not, and shall not permit any
of its Subsidiaries to, create, assume, suffer to exist, or in any manner become or be liable in respect of, any Debt except: 

        (a)   Debt
of the Borrower and its Subsidiaries under the Loan Documents; 

        (b)   Debt
of the Borrower and its Subsidiaries under the Subordinated Loan Documents; 

        (c)   Debt
not otherwise permitted by this Section 6.02 and listed on Schedule 4.05; provided that the amount of
such Debt may not be increased; 

        (d)   Debt
in the form of obligations for the deferred purchase price of Property or services incurred in the ordinary course of business which are not yet due and payable or
are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been established; 

        (e)   Debt
secured by the Liens permitted under paragraph (c) of Section 6.01; provided that, the sum of such Debt and other unsecured Debt permitted under
paragraph 6.02(k) does not exceed $250,000 at any time; 

57

 

        (f)    Debt
under Hydrocarbon Hedge Agreements or Interest Hedge Agreements which are not prohibited by the terms of Section 6.14; 

        (g)   Debt
consisting of sureties or bonds provided to any Governmental Authority or other Person and assuring payment of contingent liabilities of the Borrower in connection
with the operation of the Oil and Gas Properties, including with respect to plugging, facility removal and abandonment of its Oil and Gas Properties; 

        (h)   Intercompany
Debt; 

        (i)    Debt
constituting letters of credit for the account of any member of the Company Group provided as security (i) for any matter which is a Lien permitted under
paragraphs (e), (l), (n) or (o) or Section 6.01; provided that the amount of such Debt shall not exceed the obligations secured by such Lien, and (ii) to secure
payment obligations in connection with self-insurance or similar requirements in the ordinary course of business; 

        (j)    Debt
arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course
of business if extinguished within two (2) Business Days of incurrence and does not exceed $50,000; and 

        (k)   Debt
not otherwise permitted under this Section 6.02, provided that (i) such Debt is not secured by any
Lien, and (ii) the aggregate of amount of such Debt plus the aggregate amount of Debt permitted under Section 6.02(e) shall not to exceed $250,000 at any time. 

        Section 6.03    Agreements Restricting Liens and Distributions.    The Borrower shall not, nor shall it permit
any of its Subsidiaries to, create, incur, assume or permit to exist any contract, agreement or understanding (other than this Agreement, the Security Instruments and the Subordinated Loan Documents)
which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property, whether now owned or hereafter acquired, to secure the Obligations or
restricts any Subsidiary from paying dividends to the Borrower, or which requires the consent of or notice to other Persons in connection therewith. 

        Section 6.04    Merger or Consolidation; Asset Sales.    

        (a)   The
Borrower shall not, nor shall it permit any of its Subsidiaries to merge or consolidate with or into any other Person other than the merger or consolidation of a
Loan Party with and into the Borrower or another Loan Party. 

        (b)   The
Borrower shall not, nor shall it permit any of its Subsidiaries to enter into or effect a Disposition of any of its Properties other than: (i) the sale of
Hydrocarbons in the ordinary course of business, (ii) the Disposition of equipment that is (A) obsolete, worn out, depleted or uneconomic and disposed of in the ordinary course of
business, (B) no longer necessary for the business of such Person or (C) contemporaneously replaced by equipment of at least comparable use, (iii) Farmouts of undeveloped acreage
and assignments in connection with such Farmouts, (iv) Dispositions of Oil and Gas Properties or any interest therein or Subsidiaries owning Oil and Gas Properties  provided that (A) 100% of
the consideration received in respect of such Disposition shall be cash, (B) the consideration received in
respect of such Disposition shall be equal to or greater than the fair market value of the Oil and Gas Property, interest therein or Subsidiary subject of such Disposition (as reasonably determined by
the board of managers or the equivalent governing body of the General Partner and, if requested by the Administrative Agent, the Borrower shall deliver a certificate of a Responsible Officer of the
Borrower certifying to that effect), (C) if such Disposition of Oil and Gas Property or Subsidiary owning Oil and Gas Properties included in the most recently delivered Engineering Report
during any period between two successive scheduled redeterminations of the Borrowing Base has a fair market value (as determined by the Administrative Agent), individually or in the aggregate, in
excess of 5% of the Borrowing Base in effect at the time such Disposition is effected, 

58

 

the
Borrowing Base shall be reduced, effective immediately upon such Disposition, by an amount equal to the value, if any, assigned such Property as determined by the Required Lenders in the most
recently delivered Engineering Report, and (D) if any such Disposition is of a Subsidiary owning Oil and Gas Properties, such Disposition shall include all the Equity Interests of such
Subsidiary; (v) the sale, release, surrender (in accordance with the terms of the applicable lease) or other disposition of leasehold interests in any Oil and Gas Property to which no Proven
Reserves are attributed, (vi) Dispositions of Properties between and among Loan Parties, and (vii) any Disposition of Properties not otherwise regulated by Section 6.04(b) and
having a fair market value not to exceed $250,000 during any 12-month period. 

        Section 6.05    Restricted Payments.    The Borrower shall not, nor shall it permit any of its Subsidiaries to,
make any Restricted Payments, including, without limitation, cash liquidated damages payments made pursuant to of the Registration Rights Agreement, except that 

        (a)   any
Subsidiary may declare and make Restricted Payments to the Borrower or any other Loan Party; 

        (b)   the
Borrower may declare and pay quarterly cash distributions to its equity interest holders of Available Cash so long as before and after giving effect to such
distribution and any redetermination of the Borrowing Base as a result of such distribution (i) no Default exists and (ii) no Borrowing Base Deficiency exists;  provided that no such
distribution shall be made using the proceeds of any Advance unless the Unused Commitment Amount, as it may have been calculated
as a result of such distribution, is greater than or equal to 10% of the lesser of (A) the then effective Borrowing Base or (B) the aggregate Commitments; and 

        (c)   to
the extent permitted under the Intercreditor Agreement, the Borrower may pay principal and interest due under the Subordinated Credit Agreement so long as before and
after giving effect to such payment (i) no Default or Event of Default exists and (ii) no Borrowing Base Deficiency exists. 

        Section 6.06    Investments.    The Borrower shall not, nor shall it permit any of its Subsidiaries to, make or
permit to exist any loans, advances, or capital contributions to, or make any investment in (including the making of any Acquisition), or purchase or commit to purchase any stock or other securities
or evidences of indebtedness of or interests in any Person, except: 

        (a)   Liquid
Investments; 

        (b)   trade
and customer accounts receivable which are for goods furnished or services rendered in the ordinary course of business and are payable in accordance with customary
trade terms; 

        (c)   creation
of any additional Subsidiaries in compliance with Section 6.15; 

        (d)   investments
in negotiable instruments for collection in the ordinary course of business; 

        (e)   investments
made in the ordinary course of business and of a nature that is customary in the Oil and Gas Business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, marketing or transporting oil and gas through agreements, transactions, interests or arrangements which provide for the sharing of risks or costs or
satisfy other objectives of the Oil and Gas Business, jointly with third parties, including entering into operating agreements, working interests, royalty interests, mineral leases, processing
agreements, Farmouts, farm-in agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements
and area of mutual interest agreements, production sharing agreements or other similar or customary agreement, transactions, properties, interest and investments and expenditures in connection
therewith; provided that (i) no such investments includes an investment in any Equity Interest in a Person, (ii) any Debt incurred or Lien granted or permitted to exist pursuant to such
Investments is otherwise permitted under Section 6.01 and Section 6.02, respectively, and 

59

 

(iii) such
investments are taken into account in computing the net revenue interests and working interests of the Borrower or any of its Subsidiaries warranted in the Security Instruments; 

        (f)    Hedge
Contracts to the extent permitted by Sections 6.02 and 6.14; 

        (g)   Investments
in Intercompany Debt; and 

        (h)   Investments
not otherwise permitted under this Section 6.06 in an aggregate amount not to exceed $500,000. 

        Section 6.07    Affiliate Transactions.    Other than as set forth on Schedule 6.07, the Borrower shall
not, nor shall it permit any of its Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of transactions (including the purchase, sale, lease or exchange of
Property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of their Affiliates unless such transaction or series of
transactions is on terms no less favorable to the Borrower or the Subsidiary, as applicable, than those that could be obtained in a comparable arm's length transaction with a Person that is not such
an Affiliate. 

        Section 6.08    Compliance with ERISA.    The Borrower shall not, nor shall it permit any of its Subsidiaries
to, directly or indirectly, (a) engage in, or permit any Subsidiary or ERISA Affiliate to engage in, any transaction in connection with which the Borrower, any Subsidiary or any ERISA Affiliate
could be subjected to either a civil penalty assessed pursuant to section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code, in either
case, in excess of $1,000,000; (b) terminate, or permit any Subsidiary or ERISA Affiliate to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could
result in any liability to the Borrower, any Subsidiary or any ERISA Affiliate to the PBGC in excess of $1,000,000; (c) fail to make, or permit any Subsidiary or ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the provisions of any Plan, agreement relating thereto or applicable Legal Requirement, the Borrower, a Subsidiary or any ERISA Affiliate is
required to pay as contributions thereto; (d) permit to exist, or allow any Subsidiary or ERISA Affiliate to permit to exist, any accumulated funding deficiency (or unpaid minimum required
contribution for plan years after December 31, 2007) within the meaning of Section 302 of ERISA or section 412 of the Code, whether or not waived, with respect to any Plan;
(e) permit, or allow any Subsidiary or ERISA Affiliate to permit, the actuarial present value of the benefit liabilities (as "actuarial present value of the benefit liabilities" shall have the
meaning specified in section 4041 of ERISA) under any Plan maintained by the Borrower, any Subsidiary or any ERISA Affiliate which is regulated under Title IV of ERISA to exceed the current
value of the assets (computed on a plan termination basis in accordance with Title IV of ERISA) of such Plan allocable to such benefit liabilities by more than $1,000,000; (f) contribute to or
assume an obligation to contribute to, or permit any Subsidiary or ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan in excess of $1,000,000;
(g) acquire, or permit any Subsidiary or ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Borrower, any Subsidiary
or any ERISA Affiliate if such Person sponsors, maintains or contributes to, or at any time in the six-year period preceding such acquisition has sponsored, maintained, or contributed to,
(1) any Multiemployer Plan under which any Subsidiary or ERISA Affiliate would have an obligation to contribute more than $1,000,000, or (2) any other Plan that is subject to Title IV of
ERISA under which the actuarial present value of the benefit liabilities under such Plan exceeds the current value of the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities by more than $1,000,000; (h) incur, or permit any Subsidiary or ERISA Affiliate to incur, a liability to or on account of a Plan under
section 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; (i) contribute to or assume an obligation to contribute to, or permit any Subsidiary or ERISA Affiliate to contribute to or assume
an obligation to contribute to, any employee welfare benefit plan, as defined in section 3(1) of ERISA, including any such plan maintained to provide benefits to former employees of such
entities, that may 

60

 

not
be terminated by such entities in their sole discretion at any time without any material liability; (j) amend or permit any Subsidiary or ERISA Affiliate to amend, a Plan resulting in an
increase in current liability such that the Borrower, any Subsidiary or any ERISA Affiliate is required to provide security to such Plan under section 401(a)(29) of the Code; or
(k) permit to exist any occurrence of any Reportable Event (as defined in Title IV of ERISA), or any other event or condition, which presents a material (in the opinion of the Required Lenders)
risk of such a termination by the PBGC of any Plan. 

        Section 6.09    Sale-and-Leaseback.    The Borrower shall not, nor shall it permit any
of its Subsidiaries to, sell or transfer to a Person any Property (other than with respect to Property that is permitted to be sold or transferred pursuant to Section 6.04), whether now owned
or hereafter acquired, if at the time or thereafter the Borrower or a Subsidiary shall lease as lessee such
Property or any part thereof or other Property which the Borrower or a Subsidiary intends to use for substantially the same purpose as the Property sold or transferred. 

        Section 6.10    Change of Business.    The Borrower shall not, nor shall it permit any of its Subsidiaries to,
make any material change in the character of its business as an independent oil and gas exploration and production company, nor will the Borrower or any Subsidiary operate or carry on business in any
jurisdiction other than the United States or Canada. 

        Section 6.11    Organizational Documents, Name Change.    The Borrower shall not, nor shall it permit any of
its Subsidiaries to, amend, supplement, modify or restate their articles or certificate of incorporation, bylaws, limited liability company agreements, or other equivalent organizational documents or
amend its name or change its jurisdiction of incorporation, organization or formation, in any case, without prior written notice to, and prior consent of, the Administrative Agent. 

        Section 6.12    Use of Proceeds; Letters of Credit.    The Borrower will not permit the proceeds of any Advance
or Letters of Credit to be used for any purpose other than those permitted by Section 5.09. The Borrower will not engage in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U). Neither the Borrower nor any Person acting on behalf of the Borrower has taken or shall take, nor permit any of the Borrower's
Subsidiaries to take any action which might cause any of the Loan Documents to violate Regulation T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to
violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect, including the use of
the proceeds of any Advance or Letters of Credit to purchase or carry any margin stock in violation of Regulation T, U or X. 

        Section 6.13    Gas Imbalances, Take-or-Pay or Other Prepayments.    The Borrower shall
not, nor shall it permit any of its Subsidiaries to, allow Gas Imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any
Subsidiary which would require the Borrower or any Subsidiary to deliver their respective Hydrocarbons produced on a monthly basis from such Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor other than Gas Imbalances, take-or-pay or other prepayments incurred in the ordinary course of business and which Gas Imbalances,
take-or-pay, or other prepayments and balancing rights, in the aggregate, do not result in the Borrower or any Guarantor having net aggregate liability at any time in excess of
an amount equal to 1% of the Proven Reserves that are categorized as "proved, developed and producing" on the most recently delivered Engineering Report. 

        Section 6.14    Limitation on Hedging.    The Borrower shall not, nor shall it permit any of its Subsidiaries
to: 

        (a)   purchase,
assume, or hold a speculative position in any commodities market or futures market or enter into any Hedge Contract for speculative purposes; 

61

 

  
        (b)   be party to or otherwise enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or any other Hedge Contract which (i) is entered into for reasons
other than as a part of its normal business operations as a risk management strategy and/or hedge against changes resulting from market conditions related to the Borrower's operations,
(ii) fixes a price for a term of more than 5 years, (iii) that covers notional volumes in excess of the greater of (A) 90% of the anticipated production volumes of crude
oil and natural gas, calculated separately, attributable to Proven Reserves categorized as "proved, developing and producing" of such Loan Party during the period such hedge arrangement is in effect
as shown on the most recently delivered Independent Engineering Report (or such separate or supplemental reserve data or other information acceptable to the Administrative Agent in its sole
discretion) and (B) 85% of the anticipated production volumes of crude oil and natural gas, calculated separately, attributable to the total Proven Reserves of such Loan Party during the period
such hedge arrangement is in effect as shown on the most recently delivered Independent Engineering Report (or such separate or supplemental reserve data or other information acceptable to the
Administrative Agent in its sole discretion), (iv) except for (A) the Collateral under the Security Instruments with respect to Lender Hedging Obligations, (B) the Subordinated
Collateral under the Subordinated Security Instruments with respect to Subordinated Lender Hedging Obligations, and (C) letters of credit up to $500,000 in the aggregate with respect to Hedge
Contracts entered into from time to time with a counterparty that is not a Lender or a Subordinated Lender or an Affiliate of a Lender or a Subordinated Lender, requires such Loan Party to put up
money, assets, or other security against the event of its nonperformance prior to actual default by such Loan Party in performing its obligations thereunder, or (iv) is with a counterparty or
has a guarantor of the obligation of the counterparty who (unless such counterparty is a Lender or one of its Affiliates) at the time the contract is made has long-term obligations rated
less than A- or A3, respectively, by Standard & Poor's Ratings Group or Moody's Investors Service, Inc; or 

        (c)   allow
the aggregate monthly production of crude oil and natural gas, calculated separately (determined, in the case of contracts that are not settled on a monthly basis,
by a monthly proration reasonably acceptable to Administrative Agent), for any single month during the period such hedge arrangements are in effect to be less than the aggregate notional volumes
covered by any Hydrocarbon Hedge Agreements, Interest Hedge Agreements or similar hedge arrangements; provided that if such production deficiency is the
result of a force majeure event, such production deficiency shall not constitute a breach hereunder unless such production deficiency shall be continuing for a period of more than three months. 

        Section 6.15    Additional Subsidiaries.    The Borrower shall not, nor shall it permit any of its Subsidiaries
to, create or acquire any additional Subsidiaries without (a) prior written notice to the Administrative Agent and the Required Lenders, (b) such new Subsidiary executing and delivering
to the Administrative Agent, at its request, a Guaranty, a Pledge Agreement (if applicable), a Security Agreement and a Mortgage (if applicable), and such other Security Instruments as the
Administrative Agent or the Required Lenders may reasonably request, (c) the equity holder of such Subsidiary
executing and delivering to the Administrative Agent a Pledge Agreement pledging 100% of the Equity Interest owned by such equity holder of such Subsidiary along with the certificates pledged thereby,
if any, and appropriately executed stock powers in blank, if applicable, and (d) the delivery by the Borrower and such Subsidiary of any certificates, opinions of counsel, title opinions or
other documents as the Administrative Agent may reasonably request relating to such Subsidiary. 

        Section 6.16    Account Payables.    The Borrower shall not, nor shall it permit any of its Subsidiaries to,
allow any of its trade payables or other accounts payable to be outstanding for more than 90 days beyond the date when due (except in cases where any such trade payable is being disputed in
good faith and adequate reserves under GAAP have been established). 

        Section 6.17    Current Ratio.    The Borrower shall not permit, as of the end of any fiscal quarter, the ratio
of (a) its consolidated current assets to (b) its consolidated current liabilities, to be less than 

62

 

1.00
to 1.00. For purposes of this calculation, (i) "current assets" shall include, as of the date of calculation, the aggregate Unused Commitment Amounts but shall exclude, as of the date of
calculation (A) any cash deposited with or at the request of a counterparty to any Hedge Contract and (B) any assets representing a valuation account arising from the application of
SFAS 133 and 143, and (ii) "current liabilities" shall exclude, as of the date of calculation, (A) the current portion of long-term Debt and (B) any liabilities
representing a valuation account arising from the application of SFAS 133 and 143. 

        Section 6.18    Interest Coverage Ratio.    The Borrower (a) shall not permit, as of the fiscal quarter
ending December 31, 2007, the ratio of (i) the consolidated EBITDA of the Borrower calculated for the three fiscal quarters then ended, to (ii) the consolidated Interest Expense
of the Borrower for the three fiscal quarters then ended, to be less than 2.50 to 1.00; and (b) shall not permit, as of the end of each fiscal quarter ending on or after March 31, 2008,
the ratio of (i) the consolidated EBITDA of the Borrower calculated for the four fiscal quarters then ended, to (ii) the consolidated Interest Expense of the Borrower for the four fiscal
quarters then ended, to be less than 2.50 to 1.00. 

        Section 6.19    Initial Acquisition Instruments/Private Placement Documents.    The Borrower shall not, nor
shall it permit any of its Subsidiaries to, modify, amend, supplement or replace, any of the Initial Acquisition Instruments or the Private Placement Documents, in any respect that would adversely
affect the Lenders or the Borrower's ability to perform the Obligations, without the prior written consent of the Administrative Agent and the Required Lenders. 

        Section 6.20    Subordinated Debt.    Except as otherwise permitted by the terms of this Agreement and the
Intercreditor Agreement, neither the Borrower nor any of its Subsidiaries shall (b) make any optional, mandatory or scheduled payments on account of principal (whether by redemption, purchase,
retirement, defeasance, set-off or otherwise), interest, premiums and fees in respect of
the Subordinated Debt, or (b) amend, supplement or otherwise modify the terms of the Subordinated Debt. 

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES  

        Section 7.01    Events of Default.    The occurrence of any of the following events shall constitute an "Event
of Default" under any Loan Document: 

        (a)    Payment.    Any Loan Party (i) fails to pay any principal when due under this Agreement or
(ii) fails to pay, within three (3) Business Days of the date when due, any other amount due under this Agreement or any other Loan Document, including payments of interest, fees,
reimbursements, and indemnifications. 

        (b)    Representation and Warranties.    Any representation or warranty made or deemed to be made (i) by the
Borrower, any Guarantor or any of their respective Subsidiaries (or any of their respective officers) in this Agreement or in any other Loan Document, or (ii) by the Borrower, any Guarantor or
any of their respective Subsidiaries (or any of their respective officers) in connection with this Agreement or any other Loan Document, shall prove to have been incorrect in any material respect when
made or deemed to be made; 

        (c)    Covenant Breaches.    The Borrower, any Guarantor or any of their respective Subsidiaries shall fail to
(i) perform or observe any covenant contained in Section 5.02(a), Section 5.06(e), Section 5.12, Section 5.13 or Article VI or (ii) fail to perform or
observe any other term or covenant set forth in this Agreement or in any other Loan Document which is not covered by clause (i) above or any other provision of this Section 7.01, if such
failure shall remain unremedied for 30 days after the occurrence of such breach or failure; 

63

 

        (d)    Cross-Defaults.    (i) The Borrower, any Guarantor or any of their respective Subsidiaries shall fail to pay
any principal of or premium or interest on its Debt which is outstanding in a principal amount of at least $1,000,000 individually or when aggregated with all such Debt of the Borrower, any Guarantor
or any of their respective Subsidiaries so in default (but excluding the Obligations) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace or cure period, if any, specified in the agreement or instrument relating to such Debt (including, without limitation, the
Subordinated Credit Agreement); (ii) any other event shall occur or condition shall exist under any agreement or instrument relating to Debt which is outstanding in a principal amount of at
least $1,000,000 individually or when aggregated with all such Debt of the Borrower, such Subsidiary, or such Guarantor so in default, and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit the acceleration of, the maturity of such Debt; or (iii) any such Debt which
is outstanding in a principal amount of at least $1,000,000 individually or when aggregated all such Debt of the Borrower, such Subsidiary, or such Guarantor so in default, shall be declared to be due
and payable, or required to be prepaid (other than by a regularly scheduled required prepayment), prior to the stated maturity thereof; provided that,
for purposes of this paragraph (d), the "principal amount" of the obligations in respect of Hedging Contracts at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that would be required to be paid if such Hedging Contracts were terminated at such time; 

        (e)    Insolvency.    The Borrower, any Guarantor or any of their respective Subsidiaries shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be
instituted by or against the Borrower, any of its Subsidiaries, or any Guarantor seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief
or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property and, in the case of any such proceeding instituted against the Borrower, any such
Subsidiary or any such Guarantor either such proceeding shall remain undismissed for a period of 60 days or any of the actions sought in such proceeding shall occur; or the Borrower, any of its
Subsidiaries, or any Guarantor shall take any company action to authorize any of the actions set forth above in this paragraph (e); 

        (f)    Judgments.    Any judgment or order for the payment of money in excess of $1,000,000 shall be rendered against
the Borrower, any Guarantor or any of their respective Subsidiaries and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or
(ii) there shall be any period of 45 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; 

        (g)    Termination Events.    Any Termination Event with respect to a Plan shall have occurred, and, 30 days
after notice thereof shall have been given to the Borrower by the Administrative Agent, (i) such Termination Event shall not have been corrected and (ii) the then present value of such
Plan's vested benefits exceeds the then current value of assets accumulated in such Plan by more than the amount of $1,000,000 (or in the case of a Termination Event involving the withdrawal of a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), the withdrawing employer's proportionate share of such excess shall exceed such amount); 

        (h)    Plan Withdrawals.    The Borrower or any member of the Controlled Group as employer under a Multiemployer Plan
shall have made a complete or partial withdrawal from such Multiemployer Plan
and the plan sponsor of such Multiemployer Plan shall have notified such withdrawing employer that such employer has incurred a withdrawal liability in an annual amount exceeding $1,000,000; 

64

 

        (i)    Change in Control.    A Change in Control shall have occurred; 

        (j)    Borrowing Base.    Any failure to cure any Borrowing Base deficiency in accordance with Section 2.05; 

        (k)    Loan Documents.    Any material provision of any Loan Document shall for any reason cease to be valid and
binding on the Borrower or a Guarantor or any of their respective Subsidiaries or any such Person shall so state in writing; 

        (l)    Security Instruments.    (i) The Administrative Agent shall fail to have an Acceptable Security Interest in any
portion of the Collateral or (ii) any Security Instrument shall at any time and for any reason cease to create the Lien on the Property purported to be subject to such agreement in accordance
with the terms of such agreement, or cease to be in full force and effect, or shall be contested by the Borrower, any Guarantor or any of their respective Subsidiaries; 

        (m)    Material Adverse Change.    An event resulting in a Material Adverse Change shall have occurred; 

        (n)    Casualty.    Loss, theft, substantial damage or destruction of a material portion of the Collateral the subject
of any Security Instrument not fully covered by insurance (except for deductibles and allowing for the depreciated value of such Collateral) shall have occurred; 

        (o)    Subordinated Credit Agreement.    An "Event of Default" under the Subordinated Credit Agreement shall have
occurred; or 

        (p)    Intercreditor Agreement.    The subordination provisions of the Intercreditor Agreement shall be invalidated or
otherwise cease to be in full force and effect. 

        Section 7.02    Optional Acceleration of Maturity.    If any Event of Default (other than an Event of Default
pursuant to paragraph (e) of Section 7.01) shall have occurred and be continuing, then, and in any such event, 

        (a)   the
Administrative Agent (i) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare the obligation of each
Lender and the Issuing Lender to make extensions of credit hereunder, including making Advances and issuing, increasing or extending Letters of Credit, to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required Lenders, by notice to the Borrower, declare all principal, interest, fees, reimbursements,
indemnifications, and all other amounts payable under this Agreement, the Notes, and the other Loan Documents to be forthwith due and payable, whereupon all such amounts shall become and be forthwith
due and payable in full, without notice of intent to demand, demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to
accelerate, notice of acceleration, and all other notices, all of which are hereby expressly waived by the Borrower; 

        (b)   the
Borrower shall, on demand of the Administrative Agent at the request or with the consent of the Required Lenders, deposit with the Administrative Agent into the Cash
Collateral Account an amount of cash equal to the Letter of Credit Exposure as security for the Obligations; and 

        (c)   the
Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security
Instruments, the Guaranties, and any other Loan Document for the ratable benefit of Secured Parties by appropriate proceedings. 

        Section 7.03    Automatic Acceleration of Maturity.    If any Event of Default pursuant to paragraph (e)
of Section 7.01 shall occur, 

        (a)   (i)
the obligation of each Lender and the Issuing Lender to make extensions of credit hereunder, including making Advances and issuing, increasing or extending Letters
of Credit, shall 

65

 

terminate,
and (ii) all principal, interest, fees, reimbursements, indemnifications, and all other amounts payable under this Agreement, the Notes, and the other Loan Documents shall become and
be forthwith due and payable in full, without notice of intent to demand, demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent
to accelerate, notice of acceleration, and all other notices, all of which are hereby expressly waived by the Borrower; 

        (b)   the
Borrower shall deposit with the Administrative Agent into the Cash Collateral Account an amount of cash equal to the outstanding Letter of Credit Exposure as
security for the Obligations; and 

        (c)   the
Administrative Agent shall at the request of, or may with the consent of, the Required Lenders proceed to enforce its rights and remedies under the Security
Instruments, the Guaranties, and any other Loan Document for the ratable benefit of Secured Parties by appropriate proceedings. 

        Section 7.04    Right of Setoff.    If an Event of Default shall have occurred and be continuing, the
Administrative Agent, each Lender, the Issuing Lender, and each of their respective Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any
time owing by the Administrative Agent, such Lender, the Issuing Lender or any such Affiliate to or for the credit or the account of the Borrower or any other Loan Party against any and all of the
obligations of the Borrower or such Loan Party now or hereafter existing under this Agreement or any other Loan Document to the Administrative Agent, such Lender or the Issuing Lender, irrespective of
whether or not the Administrative Agent, such Lender or the Issuing Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrower or
such Loan Party may be contingent or unmatured or are owed to a branch or office of the Administrative Agent, such Lender or the Issuing Lender different from the branch or office holding such deposit
or obligated on such indebtedness. The rights of the Administrative Agent, each Lender, the Issuing Lender and their respective Affiliates under this Section are in addition to other rights and
remedies (including other rights of setoff) that the Administrative Agent, such Lender, the Issuing Lender or their respective Affiliates may have. The Administrative Agent, each Lender and the
Issuing Lender agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of
such setoff and application. 

        Section 7.05    Non-exclusivity of Remedies.    No remedy conferred upon the Administrative Agent,
the Issuing Lender or the Lenders is intended to be exclusive of any other remedy, and each remedy shall be cumulative of all other remedies existing by contract, at law, in equity, by statute or
otherwise. 

        Section 7.06    Application of Proceeds.    From and during the continuance of any Event of Default, any monies
or Property actually received by the Administrative Agent pursuant to this Agreement or any other Loan Document, the exercise of any rights or remedies under any Security Instrument or any other
agreement with the Borrower, any Guarantor or any of their respective Subsidiaries which secures any of the Obligations, shall be applied in the following order: 

        (a)   First,
to the payment of all amounts, including costs and expenses incurred in connection with the collection of such proceeds and the payment of any part of the
Obligations, due to the Administrative Agent under any of the expense reimbursement or indemnity provisions of this Agreement or any other Loan Document, any Security Instrument or other collateral
documents, and any applicable Legal Requirement; 

        (b)   Second,
ratably, according to the then unpaid amounts thereof, without preference or priority of any kind among them, to the payment of the Obligations then due and
payable, including 

66

 

Obligations
with respect to Letters of Credit, including any Lender Hedging Obligations of any Loan Party; and 

        (c)   Third,
the remainder, if any, to the Subordinated Agent as required under the Intercreditor Agreement. 

        Administrative
Agent shall have no responsibility to determine the existence or amount of Lender Hedging Obligations and may reserve from the application of amounts under this Section
amounts distributable in respect of Lender Hedging Obligations until it has received evidence satisfactory to it of the existence and amount of such Lender Hedging Obligations. Subject to
paragraph (a) of the first sentence of this Section, Administrative Agent and Lenders hereby acknowledge and confirm that the Liens in the Collateral secure the Obligations and the Lender
Hedging Obligations on a ratable basis. 

ARTICLE VIII

THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER  

        Section 8.01    Appointment and Authority.    Each of the Lenders and the Issuing Lender hereby irrevocably
appoints Société Générale to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers
as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and neither the Borrower nor any other
Loan Party shall have rights as a third party beneficiary of any of such provisions. 

        Section 8.02    Rights as a Lender.    The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may
accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders. 

        Section 8.03    Exculpatory Provisions.    The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent: 

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

67

 

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

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

        The
Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or
percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 9.01 and 7.02,
and 7.03 or (ii) in the absence of its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a Lender or the Issuing Lender. The Administrative Agent shall not be responsible for or have any duty to ascertain or
inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth
herein or therein or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument
or document or (v) the satisfaction of any condition set forth in Article III or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the
Administrative Agent. 

        Section 8.04    Reliance by Administrative Agent.    The Administrative Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet
website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any
statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any
condition hereunder to the making of an Advance, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative
Agent may presume that such
condition is satisfactory to such Lender or the Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of
such Advance or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected
by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 

        Section 8.05    Delegation of Duties.    The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any
such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall 

68

 

apply
to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. 

        Section 8.06    Successor Administrative Agent and Issuing Lender.    The Administrative Agent and the Issuing
Lender may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrower, to appoint a successor, which shall be a bank with an office in New York City or Houston, Texas or an Affiliate of any such bank with an office in New York City or
Houston, Texas. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 60 days after the retiring Administrative Agent or
Issuing Lender gives notice of its resignation, then the retiring Administrative Agent or Issuing Lender, as applicable, may on behalf of the Lenders, appoint a successor Administrative Agent or
Issuing Lender, as applicable, meeting the qualifications set forth above provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted
such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (1) the retiring Administrative Agent or Issuing Lender, as applicable, shall be
discharged from its duties and obligations hereunder and under the other Loan Documents (except that (A) in the case of any Collateral held by the Administrative Agent on behalf of the Lenders
or the Issuing Lender under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such Collateral until such time as a successor Administrative Agent is appointed, and
(B) the retiring Issuing Lender shall remain the Issuing Lender with respect to any Letters of Credit outstanding on the effective date of its resignation and the provisions affecting the
Issuing Lender with respect to such Letters of Credit shall inure to the benefit of the retiring Issuing Lender until the termination of all such Letters of Credit) and (2) all payments,
communications and determinations provided to be made by, to or through the Administrative Agent or Issuing Lender, as applicable, shall instead be made by or to each Lender directly, until such time
as the Required Lenders appoint a successor Administrative Agent or Issuing Lender, as provided for above in this Section. Upon the acceptance of a successor's appointment as Administrative Agent or
Issuing Lender hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent or Issuing Lender,
and the retiring Administrative Agent or Issuing Lender shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as
provided above in this Section and except that the retiring Issuing Lender shall remain
the Issuing Lender with respect to any Letters of Credit outstanding on the effective date of its resignation and the provisions affecting the Issuing Lender with respect to such Letters of Credit
shall inure to the benefit of the retiring Issuing Lender until the termination of all such Letters of Credit). The fees payable by the Borrower to a successor Administrative Agent or Issuing Lender
shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Administrative Agent's or Issuing Lender's resignation
hereunder and under the other Loan Documents, the provisions of this Article and Sections 9.04 and 9.05 shall continue in effect for the benefit of such retiring Administrative Agent or Issuing
Lender, as applicable, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent or
Issuing Lender, as applicable was acting as Administrative Agent or Issuing Lender, as applicable. 

        Section 8.07    Non-Reliance on Administrative Agent and Other Lenders.    Each Lender and the
Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and
information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue 

69

 

to
make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. 

        Section 8.08    No Other Duties, etc.    Anything herein to the contrary notwithstanding, none of the Persons
identified as a Syndication Agent, Documentation Agent, Bookrunner or Arranger on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan
Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Lender hereunder. 

        Section 8.09    Collateral Matters.    

        (a)   The
Administrative Agent is authorized on behalf of the Secured Parties, without the necessity of any notice to or further consent from such Secured Parties, from time
to time, to take any actions with respect to any Collateral or Security Instruments which may be necessary to perfect and maintain the Liens upon the Collateral granted pursuant to the Security
Instruments. The Administrative Agent is further authorized (but not obligated) on behalf of the Secured Parties, without the necessity of any notice to or further consent from the Secured Parties,
from time to time, to take any action in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Secured Parties under the Loan Documents or applicable Legal
Requirements. Persons that are owed any Lender Hedging Obligations by accepting the benefit of the Liens granted pursuant to the Security Instruments hereby agrees to the terms of this
paragraph (a). 

        (b)   The
Lenders hereby, and Persons that are owed any Lender Hedging Obligations by accepting the benefit of the Liens granted pursuant to the Security Instruments,
irrevocably authorize the Administrative Agent to (i) release any Lien granted to or held by the Administrative Agent upon any Collateral (a) upon termination of this Agreement,
termination of all Hedge Contracts with such Persons, termination of all Letters of Credit, and the payment in full of all outstanding Advances, Letter of Credit Obligations and all other Obligations
payable under this Agreement and under any other Loan Document; (b) constituting property sold or to be sold or disposed of as part of or in connection with any disposition permitted under this
Agreement or any other Loan Document; (c) constituting property in which the Borrower or any Subsidiary owned no interest at the time the Lien was granted or at any time thereafter; or
(d) constituting property leased to the Borrower or any Subsidiary under a lease which has expired or has been terminated in a transaction permitted under this Agreement or is about to expire
and which has not been, and is not intended by the Borrower or such Subsidiary to be, renewed or extended; and (ii) release a Guarantor from its obligations under a Guaranty and any other
applicable Loan Document if such Person ceases to be a Subsidiary as a result of a transaction permitted under this Agreement. Upon the request of the Administrative Agent at any time, the Secured
Parties will confirm in writing the Administrative Agent's authority to release particular types or items of Collateral pursuant to this Section 8.09. 

ARTICLE IX

MISCELLANEOUS  

        Section 9.01    Amendments, Etc.    No amendment or waiver of any provision of this Agreement, the Notes, or
any other Loan Document, nor consent to any departure by the Borrower or any Subsidiary therefrom, shall in any event be effective unless the same shall be in writing and signed by the Required
Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given;  provided, however, that no amendment, waiver, or
consent shall: 

        (a)   without
the consent of each Lender: (i) waive any of the conditions specified in Article III; (ii) increase the Borrowing Base; (iii) change
any provision of this Section or the definition of "Required Lenders" or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any
rights hereunder or make any determination or 

70

 

grant
any consent hereunder; (iv) amend Section 2.11 or any other provision of this Agreement in a manner that would alter the pro rata sharing of payments or the pro rata allocation of
disbursements required thereby; (v) release any Guarantor from its obligations under any Guaranty unless such Guarantor ceases to be a Subsidiary of the Borrower under a transaction permitted
by the terms hereof; (vi) permit the Borrower or any Subsidiary to enter into any merger or consolidation with or into any other Person or amend Section 6.04(a); (vii) release any
Collateral securing the Obligations, except as provided in Section 8.09 above; (viii) change Section 7.06 or any other provision of this Agreement in a manner that would alter the
order of application of proceeds set forth in Section 7.06; (ix) increase the aggregate Commitments; (x) amend or waive any provision of, nor consent to any departure by any party
thereto from, the Intercreditor Agreement; 

        (b)   without
the written consent of each Lender directly affected thereby, (i) extend or increase the Commitment of any Lender (or reinstate any Commitment terminated
pursuant to Section 7.02), (ii) reduce the principal of, or interest on, the Obligations or any fees or other amounts payable hereunder or under any other Loan Document, or
(iii) postpone any date fixed for any payment of principal of, or interest on, the Obligations or any fees or other amounts payable hereunder or extend the Maturity Date or the Commitment
Termination Date; 

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

        Section 9.02    Notices, Etc.    

        (a)    General.    Except in the case of notices and other communications expressly permitted to be given by telephone
(and except as provided in paragraph (c) below), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed
by certified or registered mail, sent by facsimile or (subject to subsection (c) below) electronic mail address as follows: 

          (i)  if
to any Borrower or any other Loan Party, the Administrative Agent, or the Issuing Lender, to the address, facsimile number, electronic mail address or telephone
number specified for such Person on Schedule I or to such other address, facsimile number, electronic mail address or telephone number as shall
be designated by such party in a notice to the other parties; and 

         (ii)  if
to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other
address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Administrative Agent. 

        (b)   Notices
sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile
shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next
Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (c) below, shall be effective as provided in said paragraph (c).
In no event shall a voicemail message be effective as a notice, communication or confirmation hereunder. 

        (c)    Effectiveness of Facsimile Documents and Signatures.    Loan Documents may be transmitted and/or signed by
facsimile. The effectiveness of any such documents and signatures shall, subject to 

71

 

applicable
Legal Requirements, have the same force and effect as manually-signed originals and shall be binding on all Loan Parties, the Administrative Agent and the Lenders. The Administrative Agent
may also require that any such documents and signatures be confirmed by a manually-signed original thereof; provided, however, that the failure to
request or deliver the same shall not limit the effectiveness of any facsimile document or signature. 

        (d)    Limited Use of Electronic Mail.    Unless expressly provided otherwise herein, notices and other communications
to the Lenders and the Issuing Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures
approved by the Administrative Agent, provided that the foregoing shall not apply to notices to any Lender or the Issuing Lender pursuant to
Article II, except that, until the Administrative Agent gives notice to the Borrower to the contrary, Notices of Borrowing and Notices of Conversion or Continuation may be delivered to the
Administrative Agent by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it, provided that approval of such procedures may be limited to particular notices or communications.
Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an
acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement),  provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or communication shall be
deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its
e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. 

        (e)    Reliance by Administrative Agent and Lenders.    The Administrative Agent and the Lenders shall be entitled to
rely and act upon any notices (including telephonic Notices of Borrowing) purportedly given by or on behalf of the Borrower even if (i) such notices were not made in a manner specified herein,
were incomplete or were not preceded or followed by any other form of notice specified herein, or (ii) the terms thereof, as understood by the recipient, varied from any confirmation thereof.  The BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ISSUING LENDER, EACH LENDER AND THEIR RELATED PARTIES FROM ALL LOSSES, COSTS, EXPENSES AND
LIABILITIES RESULTING FROM THE RELIANCE BY SUCH PERSON ON EACH NOTICE PURPORTEDLY GIVEN BY OR ON BEHALF OF THE BORROWER. All telephonic notices to and other communications with
the Administrative Agent may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such recording. 

        Section 9.03    No Waiver; Cumulative Remedies.    No failure on the part of any Lender or the Administrative
Agent to exercise, and no delay by any such Person in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any
such right preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 

        Section 9.04    Costs and Expenses.    The Borrower shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan
Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for 

72

 

payment
thereunder and (iii) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges and
disbursements of any counsel for the Administrative Agent, any Lender or the Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this
Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Advances made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Advances or Letters of Credit. The foregoing costs and expenses shall
include all search, filing, recording, appraisal charges and fees and taxes related thereto, and other out-of-pocket expenses incurred by the Administrative Agent or any Lender
and the cost of independent public accountants and other outside experts retained by the Administrative Agent or any Lender. All amounts due under this Section 9.04 shall be payable within
thirty days after demand. The agreements in this Section shall survive the termination of the Commitments and repayment of all other Obligations. 

        Section 9.05    Indemnification.    The Borrower shall
indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an
"Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the
fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all fees and time charges and disbursements for attorneys who may be
employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their
respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Advance or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its
Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,
damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of
such Indemnitee. All amounts due under this Section 9.05
shall be payable within ten Business Days after demand therefor. The agreements in this Section shall survive the resignation of the Administrative Agent, the Resignation of the Issuing Lender, the
replacement of any Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all the other Obligations.

        Section 9.06    Reimbursement by Lenders.    To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under Section 9.04 or Section 9.05 to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender or any
Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or such Related Party, as the case may
be, such Lender's Pro Rata Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing
Lender in its capacity as such, or against any Related Party of any of 

73

 

the
foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Lender in connection with such capacity. The failure of any Lender to pay its Pro Rata Share of such
unpaid amounts shall not relieve any other Lender of its obligation, if any, to pay its respective share of such unpaid amounts. No Lender shall be responsible for the failure of any other Lender to
comply with this Section. All amounts due under this Section 9.06 shall be payable within ten Business Days after demand therefor. THE AGREEMENTS IN THIS SECTION SHALL
SURVIVE THE RESIGNATION OF THE ADMINISTRATIVE AGENT, THE RESIGNATION OF THE ISSUING LENDER, THE REPLACEMENT OF ANY LENDER, THE TERMINATION OF THE COMMITMENTS AND THE REPAYMENT, SATISFACTION OR
DISCHARGE OF ALL THE OTHER OBLIGATIONS

        Section 9.07    Waiver of Damages.    To the fullest extent
permitted by applicable Legal Requirement, each Loan Party shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated
hereby, the transactions contemplated hereby or thereby, any Advance or Letter of Credit or the use of the proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by
unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby.

        Section 9.08    Successors and Assigns.    

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

        (b)    Assignments by Lenders.    Any Lender may assign to one or more Eligible Assignees all or any portion of its
rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it, participations in Letter of Credit Obligations) at the time
owing to it); provided, however, that 

          (i)  except
in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Advances being assigned at the time owing to it or in
the case of an assignment to a Lender or an Affiliate of a Lender or an Approved Fund with respect to a Lender, the aggregate amount of the Commitments and Advances of such Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment and Acceptance with respect to such assignment) shall not be less than $5,000,000.00; 

         (ii)  each
partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to
the Advances or the Commitment assigned; 

74

 

 

        (iii)  the
parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and
Acceptance; and 

        (iv)  each
Eligible Assignee (other than an Eligible Assignee that is a Lender or an Affiliate of a Lender) shall pay to the Administrative Agent a $3,500 processing and
recording fee and shall, if it is not a Lender, deliver to the Administrative Agent an Administrative Questionnaire. 

        Upon
such execution, delivery, acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified
in each Assignment and Acceptance, (A) the Eligible Assignee thereunder shall be a party hereto for all purposes and, to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) such assigning Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 9.04 and 9.05 with respect to facts and circumstances occurring prior to the effective date of such assignment. Any assignment or transfer by a Lender of rights
or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations
in accordance with paragraph (d) of this Section. 

        (c)    Register.    The Administrative Agent shall maintain at its Applicable Lending Office a copy of each Assignment
and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Advances owing to, each
Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and each
of the Loan Parties, the Administrative Agent, the Issuing Lender, and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 

        (d)    Participations.    Any Lender may at any time, without the consent of, or notice to, the Borrower or the
Administrative Agent, sell participations to any Person (other than a natural person or the Borrower or any of any Borrower's Affiliates or Subsidiaries) (each, a
"Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or
the Advances (including such Lender's participations in Letter of Credit Obligations) owing to it); provided that (i) such Lender's obligations
under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower,
the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement
or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or
waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, waiver or other modification described in the first proviso to Section 9.01 that directly affects such Participant. Subject to the last two sentences of
this paragraph (d), Borrower agrees that each Participant shall be entitled to the benefits of, and be bound by the terms of, Sections 2.12, 2.13, 2.14, 9.04, 9.05 and 9.06 to the same
extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to
the benefits of Section 7.04 as though it were a Lender, provided such Participant agrees to be subject to Section 2.11 as though it were a 

75

 

Lender.
A Participant shall not be entitled to receive any greater payment under Section 2.13 or 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 Borrower's prior written consent. A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits of Section 2.14 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of
the Borrower, to comply with Section 2.14 as though it were a Lender. 

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

        (f)    Approved Funds.    Notwithstanding anything to the contrary contained herein, any Lender that is a Approved
Fund may create a security interest in all or any portion of the Advances owing to it and the Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by such
Fund as security for such obligations or securities, provided that unless and until such trustee actually becomes a Lender in compliance with the other
provisions of this Section 9.08, (i) no such pledge shall release the pledging Lender from any of its obligations under the Loan Documents and (ii) such trustee shall not be
entitled to exercise any of the rights of a Lender under the Loan Documents even though such trustee may have acquired ownership rights with respect to the pledged interest through foreclosure or
otherwise. 

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

        Section 9.09    Confidentiality.    Each of the Administrative Agent and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Affiliates' directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent required by applicable Legal Requirements or by any subpoena or similar legal process, (d) to any other party hereto,
(e) in connection with the exercise of any remedies hereunder or under any other Loan Document or any action or proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section, to (i) any assignee of or Participant
in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to the Borrower and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (x) becomes publicly available
other than as a result of a breach of this Section or (y) becomes available to the Administrative Agent or any Lender or any of their respective Affiliates on a nonconfidential basis from a
source other than the Borrower. For purposes of this Section, "Information" means all information received from any Loan Party relating to any Loan Party or any of their respective businesses, other
than any such information that is available 

76

 

to
the Administrative Agent or any Lender or any of its Affiliates on a nonconfidential basis prior to disclosure by any Loan Party, provided that, in
the case of information received from a Loan Party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own confidential information in accordance with safe and sound banking practices. 

        Section 9.10    Counterparts; Effectiveness.    This Agreement may be executed in counterparts (and by
different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in
Section 3.01, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that,
when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement. 

        Section 9.11    Survival of Representations, etc.    All representations and warranties made hereunder and in
any other Loan Document or other document delivered pursuant hereto or thereto or in connection herewith or therewith shall survive the execution and delivery hereof and thereof. Such representations
and warranties have been or will be relied upon by the Administrative Agent and each Lender, regardless of any investigation made by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice or knowledge of any Default at the time of any Advance, and shall continue in full force and effect as long as any
Advance or any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding. 

        Section 9.12    Severability.    If any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. 

        Section 9.13    Interest Rate Limitation.    Notwithstanding anything to the contrary contained in any Loan
Document, the interest paid or agreed to be paid under the Loan Documents shall not exceed the Maximum Rate. If the Administrative Agent or any Lender shall receive interest in an amount that exceeds
the Maximum Rate, the excess interest shall be applied to the principal of the Advances or, if it exceeds such unpaid principal, refunded to the Borrower. In determining whether the interest
contracted for, charged, or received by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by applicable Legal Requirement, (a) characterize
any payment that is not principal as an expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the contemplated term of the Obligations hereunder. 

        Section 9.14    Governing Law.    This Agreement and each of the other Loan Documents shall be governed by and
construed in accordance with the laws of the State of New York and the applicable laws of the United States of America. 

77

 

        Section 9.15    Submission to Jurisdiction; Waiver of Venue; Service of Process.    

        (a)    Submission to Jurisdiction.    The Borrower, the Lenders, and the other parties hereto irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the courts of the
State of New York sitting in New York City and of the United States District Court for the Southern District of the State of New York and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or any other Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto irrevocably and unconditionally
agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by applicable law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent, any Lender or the Issuing Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Loan Party or its properties in the courts of any jurisdiction. 

        (b)    Waiver of Venue.    Each of the Borrower, the Lenders and the
other parties hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, any objection that it may now or hereafter have to the laying of venue of any action or
proceeding arising out of or relating to this Agreement or any other Loan Document in any court referred to in paragraph (a) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

        (c)    Service of Process.    Each party hereto irrevocably consents to service of process in the manner provided for
notices in Section 9.02 other than by electronic mail. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law. 

        Section 9.16    Waiver of Jury Trial.    EACH PARTY TO THIS
AGREEMENT HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. EACH PARTY HEREBY AGREES AND CONSENTS THAT THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

        Section 9.17    USA Patriot Act.    Each Lender that is subject to the Act (as hereinafter defined) and the
Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the "Act"), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower
and other information 

78

 

that
will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower in accordance with the Act. 

        Section 9.18    Restatement.    This Agreement amends and restates the Existing Agreement in its entirety.
Borrower hereby agrees that (a) the Debt outstanding under the Existing Agreement and the Loan Documents (as defined in the Existing Agreement; together with the Existing Agreement, the
"Existing Credit Documents") and all accrued and unpaid interest thereon and (b) all accrued and unpaid fees under the Existing Credit Documents, shall be deemed to be outstanding under and
governed by this Agreement. Borrower hereby acknowledges, warrants, represents and agrees that this Agreement is not intended to be, and shall not be deemed or construed to be, a novation or release
of the Existing Credit Documents. Each Lender (which is a Lender under the Existing Credit Documents) hereby waives any requirements for notice of prepayment, minimum amounts of prepayments of the
loans thereunder, ratable reductions of the commitments of Lenders under the Existing Credit Documents and ratable payments on account of the principal or interest of any loan under the Existing
Credit Documents to the extent that any such prepayment, reductions or payments are required to ensure that, upon the effectiveness of this Agreement, the loans of the Lenders shall be outstanding on
a ratable basis in accordance with their respective Pro Rata Share. Each Lender hereby authorizes Administrative Agent and Borrower to request Borrowings from Lenders, to make prepayment of the loans
under the Existing Credit Documents and to reduce the commitments under the Existing Credit Documents among Lenders in order to ensure that, upon the effectiveness of this Agreement, the loans of
Lenders shall be outstanding on a ratable basis in accordance with their respective Pro Rata Share. 

        Section 9.19    Intercreditor Agreement.    The Administrative Agent is hereby authorized on behalf of the
Lenders for the Lenders and its Affiliates that are Swap Counterparties to enter into the Intercreditor Agreement. A copy of such Intercreditor Agreement will be made available to each Secured Party
on the Closing Date and thereafter upon request. Each Lender and each Swap Counterparty (by receiving the benefits thereunder and of the Collateral) acknowledges and agrees to the terms of such
Intercreditor Agreement and agrees that the terms thereof shall be binding on such Secured Party and its successors and assigns, as if it were a party thereto. 

        Section 9.20    Integration.    This Agreement and the other Loan Documents represent the final agreement among
the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten oral agreements among the parties. 

[Remainder of this page intentionally left blank. Signature page follows.]

79

  
        EXECUTED as of the date first above written. 

	BORROWER:	 	ABRAXAS ENERGY PARTNERS, L.P.
	

 	
 	

By:	
 	

Abraxas General Partner, LLC,

its general partner
	

 	
 	

 	
 	

By:	
 	
/s/ Barbara M. Stuckey
 Barbara M. Stuckey

President and Chief Operating Officer

Signature
page to Amended and Restated Credit Agreement 

	ADMINISTRATIVE AGENT/ISSUING LENDER:	 	SOCIÉTÉ GÉNÉRALE
	

 	
 	

By:	
 	
/s/ Elena Robciuc
 Elena Robciuc

Director

	LENDERS:	 	SOCIÉTÉ GÉNÉRALE
	

 	
 	

By:	
 	
/s/ Elena Robciuc
 Elena Robciuc

Director

	 	 	COMERICA BANK
	

 	
 	

By:	
 	
/s/ Josh Strong
 Name: Josh Strong

Title: Assistant Vice President

	 	 	THE ROYAL BANK OF CANADA
	

 	
 	

By:	
 	
/s/ Don J. McKinnerney
 Name: Don J. McKinnerney

Title: Authorized Signatory

	 	 	THE ROYAL BANK OF SCOTLAND PLC
	

 	
 	

By:	
 	
/s/ Robert E. Poirrier, Jr.
 Name: Robert E. Poirrier, Jr.

Title: Senior Vice President

QuickLinks

Exhibit 10.1

TABLE OF CONTENTSQuickLinks
 -- Click here to rapidly navigate through this document

 

 
 

Exhibit 10.5    
    

ABRAXAS ENERGY PARTNERS, L.P.  

 AMENDED AND RESTATED

LONG-TERM INCENTIVE PLAN  

 DATED JANUARY 22, 2008  

SECTION 1.    Purpose of the Plan    

        The
Abraxas Energy Partners, L.P. Long-Term Incentive Plan (the "Plan") has been adopted by Abraxas General
Partner, LLC, a Delaware limited liability company (the "Company"), which is the general partner of Abraxas Energy Partners, L.P., a
Delaware limited partnership (the "Partnership"), and is intended to promote the interests of the Partnership and the Company by providing to Employees,
Consultants and Directors incentive compensation awards, based on Units, for superior performance. The Plan is also contemplated to enhance the ability of the Company, the Partnership and their
Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Partnership and to encourage them to devote their best efforts to advancing the
business of the Partnership. 

SECTION 2.    Definitions    

        As
used in the Plan, the following terms shall have the meanings set forth below: 

        "409A Regulations" means the Treasury regulations promulgated under Code Section 409A. 

        "Affiliate" means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with, the Person in question. As used herein, the term "control" means the possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise. 

        "Award" means an Option, Unit Appreciation Right, Restricted Unit, Phantom Unit, Substitute Award, DER or Other Unit-Based
Award granted under the Plan. 

        "Award Agreement" means the written or electronic agreement by which an Award shall be evidenced. 

        "Board" means the Board of Directors of the Company. 

        "Change of Control" means, and shall be deemed to have occurred upon one or more of the following events: 

        1.     a "person" within the meaning of the term as used in Sections 13(d) and 14(d)(2) of the Exchange Act, other than an
Affiliate of the Company, becoming the beneficial owner, by way of merger, consolidation, recapitalization, reorganization or otherwise, of more than 50% of the combined voting power of the equity
interests in the Company or the Partnership; 

        2.     the partners of the Partnership approve, in one or a series of transactions, a plan of complete liquidation of the
Partnership; 

        3.     the sale or other disposition by either the Company or the Partnership of all or substantially all of its assets in one or
more transactions to any Person other than the Company or an Affiliate of the Company; or 

        4.     a transaction resulting in a Person other than the Company or an Affiliate of the Company being the general partner of the
Partnership. 

        "Code" means the Internal Revenue Code of 1986, as amended. 

        "Committee" means the Board, the Compensation Committee of the Board or such other committee as may be appointed by the Board to
administer the Plan. 

 

        "Company" has the meaning set forth in Section 1. 

        "Consultant" means an individual, other than an Employee or a Director, who provides services to the Company, the Partnership, or an
Affiliate. 

        "DER" means a contingent right, granted in tandem with a specific Phantom Unit or Other Unit-Based Award, to receive with
respect to each Phantom Unit or Other Unit-Based Award subject to an Award, an amount in cash, Units, Phantom Units and/or Other Unit-Based Award equal in value to the
distributions made by the Partnership with respect to a Unit during the period such Award is outstanding. The payment of any amounts under a DER shall occur in connection with the vesting and payment
of the corresponding Phantom Unit or Other Unit-Based Award, unless otherwise provided in an Award Agreement. 

        "Director" means a member of the Board of the Company who is not an Employee or a Consultant. 

        "Employee" means an employee of the Company or an Affiliate. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Fair Market Value" means the closing sales price of a Unit on the applicable date (or if there is no trading in the Units on such date,
on the next preceding date on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee). In
the event Units are not traded or quoted on a national securities exchange or other trading market at the time a determination of fair market value is required to be made hereunder, the determination
of fair market
value shall be based on the liquidation value of the Units; provided, however, that if the Award is an
Option or UAR that otherwise satisfies the stock right exception for Code Section 409A provided under Section 1.409A-1(b)(5) of the 409A Regulations, the determination of
Fair Market Value will be made consistent with the requirements of such 409A Regulations, but only to the extent inconsistent with the methods for determining Fair Market Value above. 

        "Option" means an option to purchase Units granted under the Plan. 

        "Other Unit-Based Award" means an award granted pursuant to Section 6(C) of the Plan. 

        "Participant" means an Employee, Consultant or Director granted an Award under the Plan. 

        "Partnership" has the meaning set forth in Section 1. 

        "Person" means an individual or a corporation, limited liability company, partnership, joint venture, trust, unincorporated organization,
association, government agency or political subdivision thereof or other entity. 

        "Phantom Unit" means a notional Unit granted under the Plan which upon vesting entitles the Participant to receive a Unit or an amount of
cash equal to (a) the Fair Market Value of a Unit, or (b) any other value established by the Committee including, without limitation, a value derived from multiplying the Fair Market
Value of a Unit by a performance-based multiplier, in each case, as, and to the extent, provided in the applicable Award Agreement pursuant to which the Unit was granted. 

        "Plan" has the meaning set forth in Section 1. 

        "Restricted Period" means the period established by the Committee with respect to an Award during which the Award remains subject to a
substantial risk of forfeiture and is either not exercisable by or payable to the Participant, as the case may be. 

        "Restricted Unit" means a Unit granted under the Plan that is subject to a Restricted Period. 

        "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule
or regulation thereto as in effect from time to time. 

2

 

        "SEC" means the Securities and Exchange Commission, or any successor thereto. 

        "Substitute Award" means an award granted pursuant to Section 6(J) of the Plan. 

        "UDR" means a distribution made by the Partnership with respect to a Restricted Unit. 

        "Unit Appreciation Right" or "UAR" means a contingent right that entitles the holder to
receive the excess of the Fair Market Value of a Unit on the exercise date of the UAR over the exercise price of the UAR. 

        "Unit" means a Common Unit of the Partnership. 

SECTION 3.    Administration    

        The
Plan shall be administered by the Committee. A majority of the Committee shall constitute a quorum, and the acts of the members of the Committee who are present at any meeting
thereof at which a quorum is present, or acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee. Subject to the terms of the Plan and applicable law,
and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants;
(ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Units to be covered by Awards; (iv) determine the terms and conditions of
any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled, exercised, canceled, or forfeited; (vi) interpret and administer the Plan and any
instrument or agreement relating to an Award made under the Plan; (vii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for
the proper administration of the Plan; and (viii) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any inconsistency in the Plan or an Award Agreement in such manner and extent the Committee deems necessary or appropriate. Unless
otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of
the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, the Partnership, any Affiliate, any Participant, and any beneficiary of any
Award. 

SECTION 4.    Units    

        A.    Limits on Units Deliverable.    Subject to adjustment as provided in
Section 4(C), the number of Units that may be delivered with respect to Awards under the Plan is 1,136,160 Units. Units withheld from an Award to
satisfy minimum tax withholding obligations with respect to the Award shall not be considered to be Units delivered under the Plan for this purpose. If any Award is forfeited, cancelled, exercised or
otherwise terminates or expires without the actual delivery of Units pursuant or with respect to such Award, the Units subject to such Award shall again be available for Awards under the Plan. There
shall not be any limitation on the number of Awards that may be granted and paid in cash. 

        B.    Sources of Units Deliverable Under Awards.    Any Units delivered pursuant to an Award
shall consist, in whole or in part, of Units acquired in the open market, from any Affiliate, the Partnership or any other Person, or any combination of the foregoing, as determined by the Committee
in its discretion. 

3

 

  
        C.    Adjustments.    In the event of any recapitalization, merger, consolidation,
combination, repurchase, exchange of Units or other securities of the Partnership, or other similar transaction that would constitute the restructuring of Partnership equity, the Committee shall, in
such manner as it may deem equitable, adjust the number and type of Units (or other securities or property) with respect to which Awards may be granted;  provided, however, that the number of Units available under the Plan shall (i) in the event of an
increase in the number of Units outstanding, be proportionately increased and the exercise price or Fair Market Value of the Awards awarded shall be proportionately reduced; and (ii) in the
event of a reduction in the number of Units outstanding, be proportionately reduced, and the exercise price or Fair Market Value of the Awards awarded shall be proportionately increased. 

SECTION 5.    Eligibility    

        Any
Employee, Consultant or Director shall be eligible to be designated a Participant and receive an Award under the Plan. 

SECTION 6.    Awards    

        A.    Options and UARs.    The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Options and/or UARs shall be granted, the number of Units to be covered by each Option or UAR, the purchase price therefor, the Restricted
Period and other conditions and limitations applicable to the exercise of the Option or UAR, including the following terms and conditions and such additional terms and conditions, as the Committee
shall determine, that are not inconsistent with the provisions of the Plan, which all shall be set forth in the Award Agreement. 

        1.    Exercise Price.    The exercise price per Unit purchasable under an Option or UAR shall
be determined by the Committee at the time the Option or UAR is granted but shall not be less than the Fair Market Value of a Unit as of the date of grant, except as otherwise provided in
Section 6(J) with respect to a Substitute Award. 

        2.    Time of Exercise.    The Committee shall determine the Restricted Period with respect to
an Option or UAR grant. The Committee shall determine the time or period during which each Option or UAR may be exercised, provided that, to the extent an Option or UAR constitutes a deferral of
compensation
under Code Section 409A, the Award Agreement shall provide that the times at which such Option or UAR may be exercised and payable satisfy the applicable requirements of Code
Section 409A and the 409A Regulations. 

        3.    Method of Exercise.    The Committee shall also determine the method or methods by which
payment of the exercise price with respect to the Option and/or UAR may be made or deemed to have been made, which may include, without limitation, payment by cash, check acceptable to the Company, a
"cashless-broker" exercise through procedures approved by the Company, withholding Units from the Award upon exercise, or any combination of methods, having a Fair Market Value on the exercise date
equal to the relevant exercise price. 

        4.    Forfeitures.    Except as otherwise provided in the terms of the Option or UAR grant,
upon separation of a Participant's service with, or termination of consulting services to, the Company and its Affiliates or membership on the Board, whichever is applicable, for any reason during the
applicable Restricted Period, all unexercised Options and/or UARs shall be forfeited or shall no longer be exercisable. Subject to the applicable limitations in Section 7(D), the Committee may,
in its discretion, waive in whole or in part such forfeiture, or may extend the exercise period, with respect to a Participant's Options or UARs,  provided such waiver or extension, if adverse to the
Participant to whom such Award was granted, is not made without his consent. 

        B.    Restricted Units and Phantom Units.    The Committee shall have the authority to
determine the Employees, Consultants and Directors to whom Restricted Units or Phantom Units shall be granted, 

4

 

the
number of Restricted Units or Phantom Units to be granted to each such Participant, the Restricted Period, the conditions under which the Restricted Units or Phantom Units may become vested or
forfeited and such other terms and conditions as the Committee may establish with respect to such Awards as specified in the Award Agreements. 

        1.    UDRs.    To the extent provided by the Committee, in its discretion, a grant of
Restricted Units may provide that distributions made by the Partnership with respect to the Restricted Units shall be subject to the same forfeiture and other restrictions as the Restricted Unit and,
if restricted, such distributions shall be held, without interest, until the Restricted Unit vests or is forfeited. A UDR subject to a Restricted Period will vest or be forfeited at the same time as
the Restricted Unit to which it relates vests or is forfeited. 

        2.    DERs.    The Committee shall have the authority to determine the Employees, Consultants
and Directors to whom DERs are granted, and whether any amounts under such DERs shall be paid directly to the Participant, be credited to a bookkeeping account (with or without interest in the
discretion of the Committee), or be subject to other provisions or restrictions as determined by the Committee. The Committee shall also determine the vesting restrictions and payment provisions
applicable to the Award, which shall be specified in the Award Agreements. 

        3.    Forfeitures.    Except as otherwise provided in the terms of the Award Agreement for
Restricted Units, Phantom Units and/or DERs, upon separation from a Participant's service with, or termination of consulting services to, the Company and its Affiliates or membership on the Board,
whichever is applicable, for any reason during the applicable Restricted Period, all outstanding, unvested Restricted Units, Phantom Units and DERs awarded the Participant shall automatically be
forfeited on such termination. Subject to the applicable limitations in Section 7(D), the Committee may, in its discretion, waive in whole or in part such forfeiture with respect to a
Participant's Restricted Units, Phantom Units, UDRs and/or DERs, provided such waiver, if adverse to the Participant to whom such Award was granted, is
not made without his consent. 

        4.    Lapse of Restrictions.    

        a.    Phantom Units.    Upon or within 70 days of the vesting of each Phantom Unit,
subject to the provisions of Section 8(B), the Participant shall be entitled to receive from the Company one Unit or cash equal to the Fair Market Value of a Unit, as determined by the
Committee in its discretion. 

        b.    Restricted Units.    Upon or within 70 days of the vesting of each Restricted
Unit, subject to satisfying the tax withholding obligations of Section 8(B), the Participant shall be entitled to have the restrictions removed from his or her Unit certificate so that the
Participant then holds an unrestricted Unit. 

        C.    Other Unit-Based Awards.    Other Unit-Based Awards may be
granted under the Plan to such Employees, Consultants and/or Directors as the Committee, in its discretion, may select. An Other Unit-Based Award shall be an award denominated or payable
in, valued in or otherwise based on or related to Units, in whole or part. The Committee shall determine the terms and conditions of any such Other Unit-Based Award. Upon vesting, an Other
Unit-Based Award may be paid in cash, Common Units (including Restricted Units) or any combination thereof as provided in the Award Agreement. 

        D.    General.    

        1.    Awards May Be Granted Separately or Together.    Awards may, in the discretion of the
Committee, be granted either alone or in addition to, in tandem with, or in substitution for any other Award granted under the Plan or any award granted under any other plan of the Company 

5

 

or
any Affiliate. Awards granted in addition to or in tandem with other Awards or awards granted under any other plan of the Company or any Affiliate may be granted either at the same time as or at a
different time from the grant of such other Awards or awards. Notwithstanding the above, no Award will be granted in tandem with an Option or UAR to the extent such tandem Award would constitute a
feature for the deferral of compensation other than the deferral of recognition of income until the exercise of the UAR or Option, the disposition of the Option, or the vesting of the Units acquired
pursuant to the exercise of any Option. 

        2.    Limits on Transfer of Awards.    

        a.     Except as provided in Paragraph (c) below, each Option and Unit Appreciation Right shall be exercisable only by the
Participant during the Participant's lifetime, or by the person to whom the Participant's rights shall pass by will or the laws of descent and distribution. 

        b.     Except as provided in Paragraph (c) below, no Award and no right under any such Award may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Participant and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void and
unenforceable against the Company, the Partnership or any Affiliate. 

        c.     To the extent specifically provided by the Committee with respect to an Option and Unit Appreciation Right, an Option and
Unit Appreciation Right may be transferred by a Participant without consideration to immediate family members or related family trusts, limited partnerships or similar entities or on such terms and
conditions as the Committee may from time to time establish. 

        E.    Term of Awards.    The term of each Award shall be for such
period as may be determined by the Committee and specified in the Award Agreement. 

        F.    Unit Certificates.    All certificates for Units or other
securities of the Partnership delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem
advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Units or other securities are then listed, and any applicable federal or state
laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions. 

        G.    Consideration for Grants.    Awards may be granted for such consideration, including
services, as the Committee determines. 

        H.    Delivery of Units or other Securities and Payment by Participant of
Consideration.    Notwithstanding anything in the Plan or any Award Agreement to the contrary, delivery of Units pursuant to the exercise or vesting of an Award may
be deferred for any period during which, in the good faith determination of the Committee, the Company is not reasonably able to obtain Units to deliver pursuant to such Award without violating the
rules or regulations of any applicable law or securities exchange. No Units or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid
pursuant to the Plan or the applicable Award grant agreement (including, without limitation, any exercise price or tax withholding) is received by the Company. 

        I.    Specified Employees.    In the event a Participant who is a "specified employee" as
defined in 409A Regulations is issued an Award that provides amounts that (i) constitute a deferral of compensation subject to Code Section 409A and (ii) are to be paid upon a
"separation from service," as is defined in the 409A Regulations, then payment of such amounts shall be delayed for a six-month 

6

 

period,
as outlined in the 409A Regulations, and such delay shall be reflected in the Participant's Award Agreement. 

        J.    Substitute Awards.    Subject to the limitations in Section 7(D), awards may be
granted under the Plan in substitution of similar awards held by individuals who become Employees, Consultants or Directors as a result of a merger, consolidation or acquisition by the Company or an
Affiliate of another entity or the assets of another entity; provided, however, if the Award that is to
be substituted otherwise satisfies the stock right exception to Code Section 409A provided under Section 1.409A-1(b)(5) of the 409A Regulations, such substitution shall
satisfy the requirements of Section 1.409A-1(b)(5)(v)(D) of such regulations. 

SECTION 7.    Amendment and Termination    

        Except
to the extent prohibited by applicable law: 

        A.    Amendments to the Plan.    Except as required by the rules of the principal securities
exchange on which the Units are traded and subject to Section 7(B) and (D) below, the Board may amend, alter, suspend, discontinue, or terminate the Plan in any manner, including
increasing the number of Units available
for Awards under the Plan, without the consent of any partner, Participant, other holder or beneficiary of an Award, or any other Person. 

        B.    Amendments to Awards.    Subject to Section 7(A) and (D), the Committee may waive
any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no change to any Award shall be made, other than pursuant to Section 7(C), unless it
(i) is not adverse to the Participant to whom such Award was granted or (ii) is consented to by the Participant. 

        C.    Actions Upon the Occurrence of Certain Events.    Subject to 7(D) below, in connection
with any event described in Section 4(C) of the Plan, a Change of Control, or any changes in applicable laws, regulations, or accounting principles affecting the financial statements of the
Partnership, the Committee may, in its sole discretion and on such terms and conditions as it deems appropriate, take any one or more of the following actions in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available under the Plan or an outstanding Award: 

        1.     provide for either (i) the termination of any Award in exchange for an amount of cash, if any, equal to the amount
that would have been attained upon the exercise of such Award or realization of the Participant's rights (and, for the avoidance of doubt, if as of the date of the occurrence of such transaction or
event the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant's rights, then such Award may be terminated by
the Company without payment) or (ii) the replacement of such Award with other rights or property selected by the Committee in its sole discretion; 

        2.     subject to Section 4(C), provide that such Award be assumed by the successor or survivor entity, or a parent or
subsidiary thereof, or be substituted by similar options, rights or awards covering the equity of the successor or survivor, or a parent or subsidiary thereof, with appropriate adjustments as to the
number and kind of equity interests and prices; 

        3.     make adjustments in the number and type of Units (or other securities or property) subject to outstanding Awards, and in
the number and kind of outstanding Awards and/or in the terms and conditions of (including the exercise price), and the vesting/performance criteria included in, outstanding Awards; 

        4.     provide that such Award shall be exercisable or payable, notwithstanding anything to the contrary in the Plan or the
applicable Award Agreement; and 

7

 

        5.     provide that the Award cannot be exercised or become payable after such event, i.e., shall terminate upon such
event. 

        D.    Limitations under Code Section 409A.    

        Notwithstanding
as otherwise provided in this Section 7, no action shall be taken under this Section 7 that: 

        1.     with
respect to an Option or UAR that satisfies the stock right exception to Code Section 409A provided under Section 1.409A-1(b)(5) of the 409A
Regulations, constitutes the modification or extension of a stock right within the meaning of Section 1.409A-1(b)(5)(v) that would adversely impact the rights of the Participant to
whom such Award is granted without his consent; 

        2.     with
respect to any Awards that are not subject to Code Section 409A as of the date of such action, would cause such Award to be subject to the requirements of
Code Section 409A without satisfying such requirements; or 

        3.     with
respect to Awards subject to Code Section 409A, would constitute (i) a change in the time and form of payment under such award, unless consented to by
the Participant and otherwise satisfies the requirements of Section 1.409A-2(b) of the 409A Regulations or (ii) an acceleration of payment under the Award in prohibition of
Code Section 409A(a)(3) and the 409A Regulations thereunder, taking into consideration the exceptions provided under Section 1.409A-3(j)(4) of the 409A Regulations for
certain accelerations. 

SECTION 8.    General Provisions    

        A.    No Rights to Award.    No Person shall have any claim to be granted any Award under the
Plan, and there is no obligation for uniformity of treatment of Participants. The terms and conditions of Awards need not be the same with respect to each recipient. 

        B.    Tax Withholding.    Unless other arrangements have been made that are acceptable to the
Company, the Company or any Affiliate is authorized to withhold from any Award, from any payment due or transfer made under any Award or from any compensation or other amount owing to a Participant
the amount (in cash or Units that would otherwise be issued pursuant to such Award or other property) of any applicable taxes payable in respect of the grant of an Award, its exercise, the lapse of
restrictions thereon, or any payment or transfer under an Award or under the Plan, and to take such other action
as may be necessary in the opinion of the Company to satisfy its withholding obligations for the payment of such taxes. 

        C.    No Right to Employment or Services.    The grant of an Award shall not be construed as
giving a Participant the right to be retained in the employ of the Company or any Affiliate, continue consulting services or to remain on the Board, as applicable. Further, the Company or an Affiliate
may at any time dismiss a Participant from employment or consulting free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan, any Award Agreement or other
agreement. 

        D.    Governing Law.    The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be determined in accordance with the laws of the State of Delaware without regard to its conflict of laws principles. 

        E.    Severability.    If any provision of the Plan or any Award is or becomes or is deemed to
be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the 

8

 

Plan
or the Award, such provision shall be stricken as to such jurisdiction, person or award and the remainder of the Plan and any such Award shall remain in full force and effect. 

        F.    Other Laws.    The Committee may refuse to issue or transfer any Units or other
consideration under an Award if, in its sole discretion, it determines that the issuance or transfer of such Units or such other consideration might violate any applicable law or regulation, the rules
of the principal securities exchange on which the Units are then traded, or entitle the Partnership or an Affiliate to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary. 

        G.    No Trust or Fund Created.    Neither the Plan nor any Award shall create or be construed
to create a trust or separate fund of any kind or a fiduciary relationship between the Company or any participating Affiliate and a Participant or any other Person. To the extent that any Person
acquires a right to receive payments from the Company or any participating Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the
Company or any participating Affiliate. 

        H.    No Fractional Units.    No fractional Units shall be issued or delivered pursuant to the
Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be
paid or transferred in lieu of any fractional Units or whether such fractional Units or any rights thereto shall be canceled, terminated, or otherwise eliminated. 

        I.    Headings.    Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 

        J.    Facility Payment.    Any amounts payable hereunder to any person under legal disability
or who, in the judgment of the Committee, is unable to properly manage his financial affairs, may be paid to the legal representative of such person, or may be applied for the benefit of such person
in any manner which the Committee may select, and the Company shall be relieved of any further liability for payment of such amounts. 

        K.    Participation by Affiliates.    In making Awards to Employees employed by an entity
other than the Company, the Committee shall be acting on behalf of the Affiliate, and to the extent the Partnership has an obligation to reimburse the Company for compensation paid for services
rendered for the benefit of the Partnership, such payments or reimbursement payments may be made by the Partnership directly to the Affiliate, and, if made to the Company, shall be received by the
Company as agent for the Affiliate. 

        L.    Gender and Number.    Words in the masculine gender shall include the feminine gender,
the plural shall include the singular and the singular shall include the plural. 

SECTION 9.    Term of the Plan    

        The
Plan shall be effective on the date of its approval by the Board and shall continue until the earliest of (i) the date terminated by the Board, (ii) all Units available
under the Plan have been paid to Participants, or (iii) the tenth (10th) anniversary of the date the Plan is approved by the Company on behalf of the Partnership, in its capacity
as the general partner of the Partnership. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted prior to such termination, and the authority
of the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date. 

9

QuickLinks

Exhibit 10.5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00141-of-00352.parquet"}]]