Document:

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                                                                   EXHIBIT 10.61

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                            PAGE
                                                            ----
<S>                                                         <C>
Introduction ................................................1
Words with Special Meanings .................................2
Eligibility .................................................4
Vesting .....................................................4
Normal, Early or Late Retirement ............................5
  Normal Retirement .........................................5
  Early Retirement ..........................................5
  Late Retirement ...........................................5
Your Normal Retirement Benefit ..............................6
Your Early Retirement Benefit ...............................8
Your Late Retirement Benefit ................................9
Payment of Your Benefit .....................................9
  Normal Form of Payment ....................................9
  Optional Forms of Payment ................................10
  Small Amounts ............................................11
  Electing a Form of Payment ...............................11
If You Leave the Company ...................................12
If You Become Disabled .....................................12
If You Should Die ..........................................13
Loss of Benefits ...........................................14
Social Security Benefits ...................................14
Claiming Your Benefits .....................................15
What Else You Should Know ..................................15
  Assignment of Benefits ...................................15
  Maximum Benefits .........................................16
  Top Heavy Provisions .....................................16
  Employment Rights ........................................17
  Future of the Plan .......................................17
  Pension Benefit Guaranty Corporation .....................18
Your Rights Under ERISA ....................................19
Administration of the Plan .................................21
About This Booklet .........................................22
</Table>

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INTRODUCTION
--------------------------------------------------------------------------------

The Pension Plan for Employees of Chase Corporation was designed to add to your
income at retirement. Chase Corporation values your continued service and
loyalty and is committed to providing quality benefits while you are employed
and after you retire. For this reason, the Pension Plan is financed completely
through contributions by Chase Corporation. This Pension Plan offers you a
source of income when you retire in addition to personal savings and Social
Security benefits.

The Plan's special features include:

-    Retirement benefits whether you choose to retire at normal, early or late
     retirement age

-    A choice of several benefit payment options

-    Disability benefits if you become disabled before age 65 and have met the
     vesting requirements and

-    Benefits to your beneficiary if you die before retirement and are vested.

This Summary Plan Description (SPD) will explain your benefits and rights under
the Pension Plan for Employees of Chase Corporation as amended in 1995 and as it
applies to employees of Chase Corporation who retire or terminate after December
31, 1995.

We hope you will find this information helpful and will discuss it with your
family. If you have any questions after reading this SPD, please contact the
Plan Administrator at the Company's main office.

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WORDS WITH SPECIAL MEANINGS
--------------------------------------------------------------------------------

This booklet contains special words and phrases that apply to the Plan. The
following definitions will help you understand how the Plan works.

ACCRUED BENEFIT is your monthly retirement benefit payable at normal retirement
age based on a formula which uses your years of credited service with the
Company and your compensation. (See page 6 for the actual benefit formula.)

AVERAGE MONTHLY COMPENSATION means the total of your compensation for the 60
consecutive months out of the most recent 120 months of employment during which
your compensation was highest, divided by 60. (If you received compensation for
less than 60 months, the average will be calculated using the total number of
months you received compensation.)

BREAK-IN-SERVICE is a Plan year in which you are credited with 500 or fewer
hours of service. If you are vested at the time of a break-in-service, your
vesting service and credited service will be restored for purposes of the Plan
once you resume working 500 or more hours of service a year. If you are not
vested at the time of a break-in-service, your pre-break vesting service and
credited service will be restored at the completion of the break, provided the
length of your break is less than five years or less than your years of vesting
service prior to the break, whichever is greater.

COMPENSATION means your total base earnings excluding any overtime pay,
commissions, bonus payments, severance pay or any other additions to or
deductions from regular base compensation.

CREDITED SERVICE is used to determine the amount of your benefit. You will earn
one year of credited service for each Plan year during which you work 1,000 or
more hours of service. If you have less than 1,000 hours of service during a
Plan year, you will be credited with 1/10th of a year for each 100 hours of
service that you earn.

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You will receive a partial year of credited service if you did not complete
1,000 hours of service during the 10-month period between March 1,1987 and
December 31,1987. Your service during this period will be based on your actual
hours of service earned during that period divided by 833.33 rounded to the next
highest 1/10th of a year (but not exceeding one year) . Before March 1,1987, you
earned a year of credited service in accordance with the Plan provisions in
effect at that time.

FINAL-3 COMPENSATION means your average monthly earnings for the last three
consecutive Plan years ending with the last year used in determining your
average monthly compensation. Final-3 compensation does not include compensation
greater than the monthly covered compensation level for that Plan year.

The covered compensation level is a 35-year average of the maximum amount of
wages used to calculate Social Security benefits. Covered compensation levels
vary by your year of birth and change each calendar year. The following are
examples of 1996 annual covered compensation levels:

<Table>
<Caption>
                 YEAR OF BIRTH         1996 COVERED COMPENSATION
                 -------------         -------------------------
                     <S>                            <C>
                     1931                           $     27,576
                     1941                                 45,204
                     1951                                 57,444
                     1961                                 62,592
</Table>

You may contact the Plan Administrator for more information on the covered
compensation level.

HOURS OF SERVICE means the number of hours for which you are paid or are
entitled to be paid by the Company (e.g., paid holidays, vacation, sickness,
disability, paid layoff, jury duty, military duty, an absence for maternity or
paternity leave and any similar non-working time). These hours of service are
used to determine your credited service and vesting service.

PLAN YEAR means the period from January 1 through December 31. Before 1988, a
Plan year was the period from March 1 through February 28. There was a short
Plan year for the 10-month period between March 1, 1987 through December 31,
1987.

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VESTING SERVICE determines your right to receive benefits if you terminate
employment before retirement. You will earn a year of vesting service for each
Plan year in which you are credited with 1,000 or more hours of service. Between
February 28, 1987 and December 31,1987, you earned up to two years of vesting
service if you had 1,000 hours of service in the 12-month period ending on
February 28,1987 and in the 12-month period ending on December 31, 1987. (Prior
to March 1, 1975, you earned a year of vesting service for each full or partial
year of credited service.)

ELIGIBILITY
--------------------------------------------------------------------------------

You are eligible for this Plan on the January 1 following completion of six
months of employment, provided you are at least 21 years of age and are
scheduled to work (or actually work) 1,000 or more hours per year.

VESTING
--------------------------------------------------------------------------------

Vesting means you have a right to receive a retirement benefit from the Plan.
You become vested in your benefits under the Plan once you have completed five
years of vesting service. If you leave the Chase Corporation before completion
of five years of vesting service, you will forfeit your entire accrued benefit.

If the Plan is, or again becomes, top heavy, you will become vested according to
the schedule on page 16.

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NORMAL, EARLY OR LATE RETIREMENT

You may retire and receive a benefit from the Company at normal, early or late
retirement. Your benefit will be payable after you retire.

NORMAL RETIREMENT

The normal retirement age for most participants is age 65. If you were age 60 or
over when you were hired, your normal retirement age is the earlier of the date
you complete five years of vesting service or the fifth anniversary of the date
you began participating in the Plan. You are eligible to receive normal
retirement benefits beginning on your normal retirement date which is the first
of the month on or after your normal retirement age.

EARLY RETIREMENT

You are eligible for early retirement once you are at least age 55 and have
completed five or more years of vesting service. You may elect to receive
benefit payments on the first day of any month after your early retirement date.

LATE RETIREMENT

You are eligible for a late retirement benefit if you continue to work beyond
your normal retirement age. You may elect to receive monthly benefits on the
first day of any month after your late retirement date or a lump sum payment any
time after your normal retirement age, if you continue working.

Federal law requires that you begin receiving benefit payments by the April 1
following the calendar year in which you reach age 70-1/2, even if you have not
yet retired.

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YOUR NORMAL RETIREMENT BENEFIT
--------------------------------------------------------------------------------

The amount you receive from the Plan will equal your vested accrued benefit as
determined on the date of your retirement or termination. IF YOU WERE EMPLOYED
BEFORE MAY 1,1995 OR ARE COVERED BY A COLLECTIVE BARGAINING AGREEMENT, your
accrued benefit is determined using the following formula:

     The sum of (A minus B) plus C where:

(A)  (1.5%) of your average monthly compensation, TIMES your years of credited
     service (to a maximum of 35 years) MINUS

(B)  (.6%) of your final-3 compensation, TIMES your years of credited service
     (to a maximum of 35 years) PLUS

(C)  (.8%) of your average monthly compensation, TIMES your years of credited
     service in excess of 35 years (to a maximum of 5 years)

The amount determined under (13) will not be more than 50% of the amount
determined under (A).

IF YOU BECAME EMPLOYED ON OR AFTER MAY 1,1995 AND YOU ARE NOT COVERED BY A
COLLECTIVE BARGAINING AGREEMENT, your accrued benefit is determined using the
following formula:

     The sum of (A minus B) plus C where:

(A)  (.75%) of your average monthly compensation, TIMES your years of credited
     service (to a maximum of 35 years) MINUS

(B)  (.3%) of your final-3 compensation, TIMES your years of credited service
     (to a maximum of 35 years) PLUS

(C)  (.4%) of your average monthly compensation, TIMES your years of credited
     service in excess of 35 years (to a maximum of 5 years)

The amount determined under (B) will not be more than 50% of the amount
determined under (A).

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EXAMPLE 1
     For example, assume you retire in 1996 at age 65, earning $27,000 each year
and with 10 years of credited service. If your pay remains constant, your
average monthly compensation will equal $2,250. Your final-3 compensation will
also equal $2,250. So the accrued benefit in this example will equal $203 per
month as calculated below:

          A = (1.5% times $2,250) TIMES 10 years = $338

          B = (.6% times $2,300) TIMES 35 years = $483

          C = (.8% times $4,000) TIMES 5 years = $160

     So, (A minus B) plus C equals ($338 minus $135) plus $0, or $203.

EXAMPLE 2
     Assume you retire in 1996 at age 65, earning $48,000 and with 40 years of
credited service. If your pay remains constant, your average monthly
compensation will equal $4,000. Your final-3 compensation will be equal to
$2,300 (the covered compensation level of $27,600 divided by 12). So the accrued
benefit in this example will equal $1,777 per month as calculated below:

          A = (1.5% times $4,000) TIMES 35 years = $2,100

          B = (.6% times $2,250) TIMES 10 years = $135

          C = (.8% times $2,250) TIMES 0 years = $0

     So, (A minus B) plus C equals ($2,100 minus $483) plus $160, or $1,777.

IF YOU WERE HIRED ON OR AFTER MAY 1,1995 AND YOU ARE NOT COVERED BY A COLLECTIVE
BARGAINING AGREEMENT, YOUR ACCRUED BENEFIT WILL BE BASED ON THE BENEFIT FORMULA
DESCRIBED AT THE BOTTOM OF PAGE 6.

If the Plan becomes top heavy, your accrued benefit will be determined under the
formula described on page 16 and if the top heavy formula gives you a larger
benefit than the normal retirement benefit formula, you will receive the larger
benefit.

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YOUR EARLY RETIREMENT BENEFIT
--------------------------------------------------------------------------------

Your early retirement benefit is calculated using the normal retirement benefit
formula based on your credited service and compensation at the time of your
early retirement. You may elect to have benefit payments start on the first of
any month after you retire, up to your normal retirement date.

However, if you retire early and begin receiving benefits before your normal
retirement date, your monthly normal retirement benefit will be reduced for each
full month between your normal retirement date and the date your payments begin.
This reduction is made because your monthly benefit will be paid earlier and
over a longer period of time.

The following chart shows the percentage of your monthly accrued benefit that
you would receive at various ages:

<Table>
<Caption>
       YOUR EXACT AGE WHEN           PERCENTAGE
    RETIREMENT BENEFITS START           PAID
    -------------------------    -------------------
               <S>                     <C>
               65                      100.0%
               64                       93.3%
               63                       86.6%
               62                       80.0%
               61                       73.3%
               60                       66.6%
               59                       63.3%
               58                       60.0%
               57                       56.6%
               56                       53.3%
               55                       50.0%
</Table>

For example, suppose you retire at age 60 and your monthly accrued benefit
payable from this Plan at early retirement is $800.You can postpone your
benefit payments until your normal retirement date and receive your full benefit
of $800 per month.

If you elect to have your payments start as soon as you retire, you would
receive a monthly benefit of approximately $533. This equals your monthly
benefit of $800, multiplied by 66.6%.

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YOUR LATE RETIREMENT BENEFIT
--------------------------------------------------------------------------------

You may also retire after your normal retirement age. Your late retirement
benefit will be equal to the greater of:

1) the actuarial equivalent of your accrued benefit as determined on your normal
   retirement date, or

2) your accrued benefit calculated using your credited service and compensation
   at the time you retire.

Your late retirement benefit will not be less than the normal retirement benefit
you could have received from the Plan.

If your late retirement benefit is paid as a lump sum, this payment will equal
the value of your accrued benefit at the time you receive payment. Any benefits
you receive after the lump sum payment will be reduced to reflect the value of
the lump sum you received.

PAYMENT OF YOUR BENEFIT
--------------------------------------------------------------------------------

NORMAL FORM OF PAYMENT

IF YOU ARE SINGLE AND WERE EITHER EMPLOYED BEFORE MAY 1,1995 OR ARE COVERED BY A
COLLECTIVE BARGAINING AGREEMENT, when you retire and do not choose an optional
form of payment, you will receive a monthly benefit for the rest of your life
including 120 guaranteed monthly benefit payments. If you die before receiving
120 monthly benefit payments, your beneficiary will receive the remaining
guaranteed monthly payments. This is called a 10-year certain and continuous
annuity.

IF YOU ARE SINGLE AND BECAME EMPLOYED ON OR AFTER MAY 1, 1995 AND ARE NOT
COVERED BY A COLLECTIVE BARGAINING AGREEMENT, when you retire and do not choose
an optional form of payment, you will receive a monthly benefit for the rest of
your life. No benefits would be paid upon your death. This is called a life
annuity.

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IF YOU ARE MARRIED when you retire and do not choose an optional form of benefit
payment, you will automatically receive a qualified joint and survivor annuity.
Under this method, a reduced monthly benefit will be payable to you during your
lifetime, and after your death, 50% of this reduced amount will continue to your
spouse for the rest of his or her lifetime. Payments during your lifetime are
reduced because a qualified joint and survivor annuity provides a benefit
payable to your spouse after your death for his or her lifetime. The amount of
the reduced benefit you will receive under the qualified joint and survivor
annuity depends on your age and the age of your spouse on your retirement date.

OPTIONAL FORMS OF PAYMENT

You may wish to take your benefit in a form other than the normal form. The Plan
gives you the option of choosing one of the forms described below. However, if
you are married and elect one of the optional forms of payment, or if you wish
to designate a person other than your spouse as your beneficiary, you must
obtain your spouse's written, notarized consent on the appropriate form. The
Plan Administrator must receive your spouse's written and notarized consent
before payments begin.

The life annuity is a monthly benefit paid during your lifetime. If you elect
this form of payment, your monthly benefit payments will be higher than under
the joint and survivor annuity or the certain and continuous annuity options.
However, with the life annuity, all benefits stop after your death.

THE JOINT AND SURVIVOR ANNUITY means you will receive a reduced benefit during
your lifetime, with a portion of your reduced benefit (either 50%, 66-2/3%, or
100%, depending on your election) continued after your death to your spouse, or
any other person you name as your beneficiary, for the rest of his or her
lifetime. The reduction will be based on your age and your spouse's or
beneficiary's age when your benefits begin. If your designated beneficiary is
someone other than your spouse, you may not elect a joint and survivor annuity
option which reduces the amount of the benefit payable to you to less than 50%
of the value of your total benefit.

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THE CERTAIN AND CONTINUOUS ANNUITY provides a benefit (reduced for employees
hired on or after May 1, 1995) for the rest of your life, with payments
guaranteed for either 60 or 120 months (depending on your election). If you die
before receiving 60 or 120 benefit payments, your beneficiary will continue to
receive the same benefit you were receiving for the remainder of the guaranteed
payment period. If you elect to receive 60 guaranteed monthly payments, your
monthly payment will be higher than the monthly benefit you would receive if you
elect 120 guaranteed monthly payments.

THE LUMP SUM PAYMENT provides you with a single, lump sum payment instead of
monthly retirement benefits. Your benefit will be based on the present value of
your monthly accrued benefit as determined using interest rate assumptions
specified in the Plan.

If you elect a lump sum, your payment will be subject to mandatory federal tax
withholding unless you transfer your payment in a direct rollover to an
Individual Retirement Account or to another employer plan.

SMALL AMOUNTS

If the value of your accrued benefit is $3,500 or less when you terminate or
retire, you (or in the event of your death, your surviving spouse) will receive
a single, lump sum payment.

ELECTING A FORM OF PAYMENT

You must notify the Plan Administrator, in writing, of your intent to retire and
your form of payment within 90 days prior to your retirement. Your payment
election must be approved and confirmed by the Plan Administrator at least 30
days before you begin receiving benefits.

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IF YOU LEAVE THE COMPANY
--------------------------------------------------------------------------------

If you leave the Company and have at least five years of vesting service, you
will be entitled to a benefit from the Plan at your normal retirement age. Your
accrued benefit will be determined according to the normal retirement benefit
formula using your years of credited service and your compensation as of your
termination date.

Your benefit will be payable on your normal retirement date. However, you may
elect to receive a reduced benefit on the first of any month after you reach age
55, provided you had completed five years of vesting service when you
terminated employment.

Your benefit will be paid according to the normal form of payment at the time
you begin receiving payments, unless you elect an optional form of payment. If
you are married, your spouse must provide his or her written, notarized consent
to your election of an optional form of payment.

IF YOU BECOME DISABLED
--------------------------------------------------------------------------------

If you become totally and permanently disabled before age 65, you may be
eligible for a monthly disability benefit, provided you were vested on the date
of your disability. Payment of your monthly disability benefit will begin on
the first day of the month following your termination of employment due to your
disability.

"Total and permanent disability" means you are physically or mentally incapable
of performing any job within or outside the Company for wages or profit (except
for purposes of rehabilitation). You must submit satisfactory evidence of your
disability to the Plan Administrator to receive this benefit. The Company can
also request certification that you continue to be disabled at any time.

If your disability is caused by addiction to alcohol or narcotics, or is the
result of a self-inflicted injury, involvement in a criminal enterprise or
service in the armed forces of any country in which a disability benefit is
payable, it is not covered by the Plan.

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Your disability benefit will be calculated according to your accrued benefit at
the time you become disabled. Your disability benefit will be reduced for
commencement prior to age 65.

As long as you are disabled, payments will continue until you become eligible
for early retirement. At that time, you will begin receiving any early
retirement benefits for which you are eligible. If you die, your spouse may be
eligible for continued benefits based on the form of payment you elected for
your disability benefit.

Once you are no longer permanently disabled, your disability benefits will stop.
If you return to work at Chase Corporation, you may become eligible for a normal
or early retirement benefit. In this case, your vesting service and credited
service prior to your date of disability will be restored. However, the period
of time you were collecting a disability benefit will not be counted as credited
service or vesting service for calculating these benefits.

IF YOU SHOULD DIE
--------------------------------------------------------------------------------

If you should die before retirement from the Company and you are vested in your
benefit, your beneficiary will be eligible to receive a benefit from the Plan .
If you are married, your beneficiary will be your spouse unless you elect
otherwise and your spouse provides his or her written, notarized consent to your
beneficiary election.

Your beneficiary may receive a lump sum payment based on the present value of
100% of your monthly accrued benefit determined as of your date of death.

If your beneficiary is your spouse, he or she may receive a reduced monthly
benefit instead of a lump sum. The amount of the monthly benefit is equal to 50%
of the amount that you would have received under the 50% joint and survivor
annuity if you had terminated employment on your last day of work and survived
to your earliest retirement date allowed under the Plan.

<Page>

Your spouse may begin receiving payments on the first day of any month after
your death or, if later, the earliest date you could have begun receiving
benefit payments. Your spouse must make an election in order to receive payment
in a lump sum instead of the normal monthly pre-retirement survivor benefit. If
your beneficiary is not your spouse, he or she will receive payment in a lump
sum.

If you die after you begin receiving benefits, any payment to your beneficiary
will be determined based on the form of payment you elected when you retired.

LOSS OF BENEFITS
--------------------------------------------------------------------------------

If you terminate employment with Chase Corporation before you have completed
five years of vesting service, you will forfeit any benefits you have earned in
the Plan. If the Plan becomes top heavy (see pages 16 and 17), you will forfeit
any benefits you have accrued if you leave before you complete two years of
vesting service.

SOCIAL SECURITY BENEFITS
--------------------------------------------------------------------------------

Another important part of your retirement income is your Social Security
benefit. This benefit is in addition to the retirement benefit provided under
this Plan. Social Security benefits may also be payable in the event of your
death or disability as well as at retirement. Your Social Security benefits are
based on the amount of your earnings that are subject to Social Security taxes
(FI.C.A.). Chase Corporation pays half of the cost of your Social Security
benefits and you pay the other half by payroll deduction.

The amount you will receive from Social Security will depend on your age at
retirement and your past earnings which have been subject to Social Security
taxes. An estimate of your retirement benefit is available from the Social
Security Administration. Contact your local Social Security Administration
office for details.

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CLAIMING YOUR BENEFITS
--------------------------------------------------------------------------------

If you wish to file a claim for benefits under the Plan, the Company will supply
you with all the necessary forms. These forms should be filed with the Plan
Administrator.

If you (or your beneficiary) make a claim for benefits under the Plan and all or
any part of it is denied, the Plan Administrator will notify you within 60
days, explain the reasons for the denial and describe any additional information
that may be necessary to support or substantiate your claim. In addition, this
notice will explain the claim review procedure and cite the specific Plan
provisions) on which the denial is based.

If any or all of your claim for benefits is denied, you or your beneficiary can
request a full and fair review of the decision within 90 days of your receipt of
the denial notice. You or your beneficiary may request a hearing by the Plan
Administrator, review pertinent documents or submit written issues and comments
for review.

To make such a request, you should send a letter to the Plan Administrator and
include any facts which would be helpful in deciding your case. After the Plan
Administrator reviews your claim, it will send you its final decision, and the
specific reasons for the decision, within 60 days after receipt of your request
(120 days if special circumstances require an extension of time).

WHAT ELSE YOU SHOULD KNOW
--------------------------------------------------------------------------------

ASSIGNMENT OF BENEFITS

You cannot assign, transfer or convey any of the benefits provided by this Plan.
Your benefits will be exempt from the claims of creditors to the maximum extent
permitted by law. However, part or all of your benefit may be used to provide
support to your former spouse or dependents if the Plan is ordered to make
payments under a Qualified Domestic Relations Order.

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MAXIMUM BENEFITS

Federal regulations limit the maximum amount payable from the Plan each year to
any one participant and the maximum amount of compensation which can be
recognized for plan purposes. If you are affected by these limits, you will be
notified by the Plan Administrator.

TOP HEAVY PROVISIONS

If this Plan becomes a "top heavy" plan, certain provisions apply to all Plan
years during which the Plan is top heavy. These top heavy provisions generally
are designed to improve the benefits of all Plan participants except for the
most highly paid participants.

A plan is considered top heavy when the total present value of the accrued
benefits of "key employees" under a plan exceed 60% of the total present value
of the accrued benefits of all employees under the plan. A key employee refers
to certain highly paid employees, or employees who are officers or owners of the
Company.

If the Plan becomes top heavy, you will become vested according to the following
schedule:

<Table>
<Caption>
                YEARS OF VESTING SERVICE     VESTED PERCENTAGE
                ------------------------     -----------------
                    <S>                           <C>
                    Less than 2 years               0%
                    2 but less than 3              20%
                    3 but less than 4              40%
                    4 but less than 5              60%
                     5 or more years              100%
</Table>

If the Plan is deemed to be top heavy, your accrued benefit shall be no less
than the amount determined using the following formula:

           your average compensation for high five years
            TIMES
            the lesser of 20%, or 2% times your years of vesting service.

<Page>

Average compensation for high five years means the average of your compensation
for a five consecutive calendar year period (or period of consecutive years if
less than five) during which you received a year of credited service and had the
greatest aggregate compensation. Compensation while the Plan is top heavy means
your earnings as indicated on your Form W-2. For purposes of this formula,
vesting service will not include any year of vesting service completed while the
Plan was not a top heavy plan.

EMPLOYMENT RIGHTS

Participation in this Plan does not guarantee your continued employment with
Chase Corporation nor does it guarantee your rights to any benefits except as
specified in this Plan.

FUTURE OF THE PLAN

Chase Corporation expects to continue the Plan indefinitely, but reserves the
right to amend or discontinue it at any time. If the Plan is discontinued, you
will become 100% vested in your accrued benefit earned as of the Plan's
termination date. Whether you eventually receive all or part of your Plan
benefit depends on whether there are sufficient assets in the pension fund to
pay for it, and if not, whether the benefit is insured by the Pension Benefit
Guaranty Corporation (PBGC). (See the section on the PBGC below.) The law
establishes priorities as to how the pension fund's assets will be used to
provide Plan benefits after Plan termination. Assets are used to pay for the
following benefits in the order they are listed below, until the assets are
exhausted.

 - Benefits for (a) those who have received Plan benefits for at least three
   years before the termination date, and (b) those who could have started
   receiving benefits at least three years before the termination date. Benefits
   in these instances will be based on any Plan provision in effect during the
   five years prior to termination which would produce the lowest amount. In
   addition, the maximum for those who have received benefits for at least three
   years would be based on the lowest benefit payment received during that
   three-year period;

<Page>

 - All other benefits which are insured by the Pension Benefit Guaranty
   Corporation (see below);

 - Vested benefits that are not insured by the Pension Benefit Guaranty
   Corporation; and

 - Any other benefits earned in the Plan. This includes those benefits which
   became vested only because of Plan termination.

PENSION BENEFIT GUARANTY CORPORATION

Benefits under the Plan are insured by the Pension Benefit Guaranty Corporation
(PBGC). Generally, the PBGC guarantees most vested normal retirement benefits,
early retirement benefits, and certain disability and survivor's benefits.
However, the PBGC does not guarantee all types of benefits under covered plans,
and the amount of benefit protection is subject to certain limitations. The PBGC
guarantees vested benefits at the level in effect on the date of plan
termination. However, if benefits have been increased within the five years
before plan termination, the whole amount of the plan's vested benefits or the
benefit increase may not be guaranteed. In addition, there is a ceiling on the
amount of monthly benefit that the PBGC guarantees, which is adjusted
periodically.

For more information on the PBGC insurance protection and its limitations, ask
the Plan Administrator or the PBGC. Inquiries to the PBGC should be addressed
to: Pension Benefit Guaranty Corporation, Administrative Review and Technical
Assistance Branch, Suite 930,1200 K Street, N.W, Washington, DC 20005 and may
also be reached by calling (202) 326-4000.

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YOUR RIGHTS UNDER ERISA
--------------------------------------------------------------------------------

As a member of the Plan, you are entitled to certain rights and protections
under the Employee Retirement Income Security Act (ERISA). ERISA provides that
all Plan participants shall be entitled to:

 1. Examine, without charge, at the Company's main office or at certain other
    Company locations, all Plan documents, including insurance contracts, and
    copies of all Plan documents filed by the Company with the U.S. Department
    of Labor, such as annual reports and Plan descriptions. However, you may not
    inspect materials containing confidential information about other
    participants.

 2. Obtain copies of all Plan documents and other Plan information upon written
    request to the Plan Administrator. The Administrator may make a reasonable
    charge for the copies.

 3. Receive a summary of the Plan's annual financial report. The Plan
    Administrator is required by law to furnish you with a copy of this
    financial report.

 4. Obtain a statement telling you the amount of your accrued benefit. This
    statement must be requested in writing and is not required to be given more
    than once a year. The Plan Administrator must provide the statement free of
    charge.

 5. Obtain a statement telling you whether you have a right to receive a benefit
    from the Plan at normal retirement age and if so, what your benefits would
    be if you stop working under the Plan now. If you do not have a right to a
    benefit, the statement will tell you how many more years you have to work to
    get a right to a benefit. This statement must be requested in writing and
    is not required to be given more than once a year. The Plan Administrator
    must provide the statement free of charge.

 6. File suit in a federal court if any materials requested are not received
    within 30 days of your request, unless the materials are not sent because of
    matters beyond the control of the Plan Administrator. The court may require
    the Plan Administrator to pay you up to $100 for each day's delay until the
    materials are received.

<Page>

In addition to creating rights for Plan participants, ERISA imposes obligations
upon the persons who are responsible for the Plan's operation. The law refers
to these persons as "fiduciaries." Fiduciaries must act solely in the interest
of participants and beneficiaries and they must exercise prudence in the
performance of their duties. Fiduciaries who violate ERISA may be removed and
required to make good any losses they have caused the Plan.

Your employer may not fire you or discriminate against you as a means of
preventing you from obtaining a Plan benefit or exercising your rights under
ERISA.

If your claim to a Plan benefit is denied in whole or in part, you must receive
a written explanation of the reason for the denial. You have the right to have
the Plan Administrator review and reconsider your claim. If you have any
questions about this Plan, you should contact the Plan Administrator.

If you are improperly denied a Plan benefit in full or in part, you also have a
right to file suit in a federal or state court. If fiduciaries are misusing the
Plan's money, you have a right to file suit in a federal court or request
assistance from the U.S. Department of Labor. If you are successful in your
lawsuit, the court may, if it so decides, require the other party to pay your
legal costs such as court costs and attorney's fees. If you lose your lawsuit,
the court may order you to pay these costs and fees. The court may do so, for
example, if it finds your claim to be frivolous.

If you have any questions about this statement or your rights under ERISA, you
should contact the nearest Area Office of the U.S. Labor-Management Service
Administrator, U.S. Department of Labor.

<Page>

ADMINISTRATION OF THE PLAN
--------------------------------------------------------------------------------

The information below may be helpful if you need further details about Plan
administration.

<Table>
<S>                                          <C>
PLAN SPONSOR:                                Chase Corporation
                                             26 Summer Street
                                             Bridgewater, MA  02324

PLAN ADMINISTRATOR:                          Plan Committee
                                             Chase Corporation
                                             26 Summer Street
                                             Bridgewater, MA  02324
                                             (508) 279-1789

PLAN NAME:                                   Pension Plan for Employees of Chase
                                             Corporation

PLAN YEAR:                                   January 1 - December 31

EFFECTIVE PLAN DATE:                         March 1, 1975

AMENDED:                                     July 1,1995

PLAN NUMBER:                                 001

EMPLOYER I.D. NUMBER:                        11-1797126

TYPE OF PLAN:                                Defined benefit plan

FUNDING METHOD:                              Company contributions based on
                                             recommendations by an enrolled
                                             actuary

FUNDING MEDIUM:                              Group annuity contract with
                                             AUSA Life Insurance Company, Inc.

AGENT FOR SERVICE
OF LEGAL PROCESS:                            Chase Corporation
                                             26 Summer Street
                                             Bridgewater, MA  02324
</Table>QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.1    
    

 
 

SENIOR REVOLVING CREDIT AGREEMENT    
    

DATED AS OF

NOVEMBER 23, 2004  

 AMONG  

 PETROHAWK ENERGY CORPORATION,

AS BORROWER,  

 BNP PARIBAS,

AS ADMINISTRATIVE AGENT,  

 FLEET NATIONAL BANK,

AS SYNDICATION AGENT,  

 FORTIS CAPITAL CORP.,

U.S. BANK NATIONAL ASSOCIATION, AND

KEYBANK, NATIONAL ASSOCIATION

AS CO-DOCUMENTATION AGENTS,  

 AND  

 THE LENDERS PARTY HERETO  

 LEAD ARRANGER AND SOLE BOOKRUNNER  

 BNP PARIBAS  

 
  
 

    TABLE OF CONTENTS    
    

	 
	 
	 	Page

	ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS
	

Section 1.01	

Terms Defined Above	
 	

1
	Section 1.02	Certain Defined Terms	 	1
	Section 1.03	Types of Loans and Borrowings	 	18
	Section 1.04	Terms Generally; Rules of Construction	 	19
	Section 1.05	Accounting Terms and Determinations; GAAP	 	19
	

ARTICLE II

THE CREDITS
	

Section 2.01	

Commitments	
 	

19
	Section 2.02	Loans and Borrowings	 	19
	Section 2.03	Requests for Borrowings	 	20
	Section 2.04	Interest Elections	 	21
	Section 2.05	Funding of Borrowings	 	22
	Section 2.06	Termination and Reduction of Aggregate Maximum Credit Amounts	 	23
	Section 2.07	Borrowing Base and Threshold Amount	 	23
	Section 2.08	Letters of Credit	 	24
	

ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES	
 	

 
	

Section 3.01	

Repayment of Loans	
 	

29
	Section 3.02	Interest	 	29
	Section 3.03	Alternate Rate of Interest	 	30
	Section 3.04	Prepayments	 	30
	Section 3.05	Fees	 	32
	

ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS	
 	

 
	

Section 4.01	

Payments Generally; Pro Rata Treatment; Sharing of Set-offs	
 	

33
	Section 4.02	Presumption of Payment by the Borrower	 	34
	Section 4.03	Certain Deductions by the Administrative Agent	 	34
	Section 4.04	Disposition of Proceeds	 	34
	

ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY	
 	

 
	

Section 5.01	

Increased Costs	
 	

34
	Section 5.02	Break Funding Payments	 	35
	Section 5.03	Taxes.	 	36
	Section 5.04	Mitigation Obligations; Replacement of Lenders	 	36
	Section 5.05	Illegality	 	37
	

ARTICLE VI

CONDITIONS PRECEDENT	
 	

 
	

Section 6.01	

Effective Date	
 	

37
	Section 6.02	Each Credit Event	 	41
	 	 	 	 

i

 

	

ARTICLE VII

REPRESENTATIONS AND WARRANTIES	
 	

 
	

Section 7.01	

Organization; Powers	
 	

42
	Section 7.02	Authority; Enforceability	 	42
	Section 7.03	Approvals; No Conflicts	 	42
	Section 7.04	Financial Condition; No Material Adverse Change	 	42
	Section 7.05	Litigation	 	43
	Section 7.06	Environmental Matters	 	43
	Section 7.07	Compliance with the Laws and Agreements; No Defaults	 	44
	Section 7.08	Investment Company Act	 	45
	Section 7.09	Public Utility Holding Company Act	 	45
	Section 7.10	Taxes	 	45
	Section 7.11	ERISA	 	45
	Section 7.12	Disclosure; No Material Misstatements	 	46
	Section 7.13	Insurance	 	46
	Section 7.14	Restriction on Liens	 	46
	Section 7.15	Subsidiaries	 	46
	Section 7.16	Location of Business and Offices	 	47
	Section 7.17	Properties; Titles, Etc	 	47
	Section 7.18	Maintenance of Properties	 	48
	Section 7.19	Gas Imbalances, Prepayments	 	48
	Section 7.20	Marketing of Production	 	48
	Section 7.21	Swap Agreements	 	48
	Section 7.22	Use of Loans and Letters of Credit	 	49
	Section 7.23	Solvency	 	49
	Section 7.24	Specified Senior Indebtedness	 	49
	Section 7.25	Mergers	 	49
	

ARTICLE VIII

AFFIRMATIVE COVENANTS	
 	

 
	

Section 8.01	

Financial Statements; Ratings Change; Other Information	
 	

49
	Section 8.02	Notices of Material Events	 	52
	Section 8.03	Existence; Conduct of Business	 	52
	Section 8.04	Payment of Obligations	 	52
	Section 8.05	Performance of Obligations under Loan Documents	 	53
	Section 8.06	Operation and Maintenance of Properties	 	53
	Section 8.07	Insurance	 	53
	Section 8.08	Books and Records; Inspection Rights	 	54
	Section 8.09	Compliance with Laws	 	54
	Section 8.10	Environmental Matters	 	54
	Section 8.11	Further Assurances	 	55
	Section 8.12	Reserve Reports	 	55
	Section 8.13	Title Information	 	56
	Section 8.14	Additional Collateral; Additional Guarantors	 	57
	Section 8.15	ERISA Compliance	 	58
	Section 8.16	Swap Agreements	 	58
	Section 8.17	Unrestricted Subsidiaries	 	58
	Section 8.18	Marketing Activities	 	58
	 	 	 	 

ii

 

	

ARTICLE IX

NEGATIVE COVENANTS	
 	

 
	

Section 9.01	

Financial Covenants	
 	

59
	Section 9.02	Debt	 	59
	Section 9.03	Liens	 	60
	Section 9.04	Dividends, Distributions and Redemptions; Repayment of Senior Subordinated Convertible Note and Second Lien Term Loan Agreement	 	60
	Section 9.05	Investments, Loans and Advances	 	61
	Section 9.06	Designation and Conversion of Restricted and Unrestricted Subsidiaries; Debt of Unrestricted Subsidiaries	 	63
	Section 9.07	Nature of Business; International Operations	 	63
	Section 9.08	Limitation on Leases	 	63
	Section 9.09	Proceeds of Notes	 	63
	Section 9.10	ERISA Compliance	 	64
	Section 9.11	Sale or Discount of Receivables	 	65
	Section 9.12	Mergers, Etc	 	65
	Section 9.13	Sale of Properties	 	65
	Section 9.14	Environmental Matters	 	65
	Section 9.15	Transactions with Affiliates	 	66
	Section 9.16	Subsidiaries	 	66
	Section 9.17	Negative Pledge Agreements; Dividend Restrictions	 	66
	Section 9.18	Gas Imbalances, Take-or-Pay or Other Prepayments	 	66
	Section 9.19	Swap Agreements	 	66
	Section 9.20	Merger Documents	 	67
	

ARTICLE X

EVENTS OF DEFAULT; REMEDIES	
 	

 
	

Section 10.01	

Events of Default	
 	

67
	Section 10.02	Remedies	 	69
	

ARTICLE XI

THE AGENTS	
 	

 
	

Section 11.01	

Appointment; Powers	
 	

69
	Section 11.02	Duties and Obligations of Administrative Agent	 	69
	Section 11.03	Action by Administrative Agent	 	69
	Section 11.04	Reliance by Administrative Agent	 	70
	Section 11.05	Subagents	 	70
	Section 11.06	Resignation or Removal of Agents	 	71
	Section 11.07	Agents as Lenders	 	71
	Section 11.08	No Reliance	 	71
	Section 11.09	Authority of Administrative Agent to Release Collateral and Liens	 	72
	Section 11.10	The Arranger, the Syndication Agent and the Documentation Agent	 	72
	 	 	 	 

iii

 

	

ARTICLE XII

MISCELLANEOUS	
 	

 
	

Section 12.01	

Notices	
 	

72
	Section 12.02	Waivers; Amendments	 	73
	Section 12.03	Expenses, Indemnity; Damage Waiver.	 	74
	Section 12.04	Successors and Assigns	 	76
	Section 12.05	Survival; Revival; Reinstatement	 	79
	Section 12.06	Counterparts; Integration; Effectiveness	 	79
	Section 12.07	Severability	 	80
	Section 12.08	Right of Setoff	 	80
	Section 12.09	GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS	 	80
	Section 12.10	Headings	 	81
	Section 12.11	Confidentiality	 	81
	Section 12.12	Interest Rate Limitation	 	82
	Section 12.13	EXCULPATION PROVISIONS	 	82
	Section 12.14	Specified Senior Indebtedness	 	83
	Section 12.15	Collateral Matters; Swap Agreements	 	83
	Section 12.16	No Third Party Beneficiaries	 	83
	Section 12.17	USA Patriot Act Notice	 	98

iv

 
 
 

ANNEXES, EXHIBITS AND SCHEDULES    
    

	Annex I	List of Maximum Credit Amounts
	

Exhibit A	

Form of Note
	Exhibit B	Form of Borrowing Request
	Exhibit C	Form of Interest Election Request
	Exhibit D	Form of Compliance Certificate
	Exhibit E-1	Form of Legal Opinion of Hinkle Elkouri Law Firm L.L.C., special counsel to the Borrower
	Exhibit E-2	Form of Legal Opinion of Local Counsel
	Exhibit F-1	Security Instruments
	Exhibit F-2	Form of Guaranty and Collateral Agreement
	Exhibit G	Form of Assignment and Assumption
	

Schedule 7.05	

Litigation
	Schedule 7.15	Subsidiaries and Partnerships; Unrestricted Subsidiaries
	Schedule 7.19	Gas Imbalances
	Schedule 7.20	Marketing Contracts
	Schedule 7.21	Swap Agreements
	Schedule 9.05	Investments

v

        THIS SENIOR REVOLVING CREDIT AGREEMENT dated as of November 23, 2004, is among: Petrohawk Energy Corporation, a corporation duly
formed and existing under the laws of the State of Delaware (the "Borrower"); each of the Lenders from time to time party hereto; BNP Paribas (in its
individual capacity, "BNP Paribas"), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the "Administrative
Agent"); Fleet National Bank, as syndication agent for the Lenders (in such capacity, together with its successors in such capacity, the "Syndication
Agent"); and Fortis Capital Corp., U.S. Bank National Association and Key Bank, National Association as co-documentation agents for the Lenders (in such capacity,
together with its successors in such capacity, the "Documentation Agents"). 

R E C I T A L S  

        A.    The
Borrower has requested that the Lenders provide certain loans to and extensions of credit on behalf of the Borrower. 

        B.    The
Lenders have agreed to make such loans and extensions of credit subject to the terms and conditions of this Agreement. 

        C.    In
consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter referred to, the parties
hereto agree as follows: 

 
 

ARTICLE I
  Definitions and Accounting Matters    
    

        Section 1.01    Terms Defined Above.    As used in this Agreement, each term defined above has the meaning
indicated above. 

        Section 1.02    Certain Defined Terms.    As used in this Agreement, the following terms have the meanings
specified below: 

        "ABR", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Alternate Base Rate. 

        "Adjusted LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate. 

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

        "Affected Loans" has the meaning assigned such term in Section 5.05. 

        "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. 

        "Agents" means, collectively, the Administrative Agent, the Syndication Agent and the Documentation Agent; and "Agent" shall mean either
the Administrative Agent, the Syndication Agent or the Documentation Agent, as the context requires. 

        "Aggregate Maximum Credit Amounts" at any time shall equal the sum of the Maximum Credit Amounts, as the same may be reduced or terminated
pursuant to Section 2.06. 

        "Agreement" means this Senior Revolving Credit Agreement, as the same may from time to time be amended, modified, supplemented or
restated. 

        "Alternate Base Rate" means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day and
(b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds 

 

Effective
Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. 

        "Applicable Margin" means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as
the case may be, the rate per annum set forth in the Threshold Utilization Grid below based upon the Threshold Utilization Percentage then in effect: 

	 
	 	Threshold Utilization Grid
	 
	Threshold Utilization Percentage
 
	 	<50%
	 	350%

<75%
	 	375%

<90%
	 	390%

<100%
	 	3100%
	 
	LIBOR Margin	 	1.250	%	1.500	%	1.750	%	2.000	%	2.500	%
	ABR Margin	 	0.000	%	0.000	%	0.250	%	0.500	%	1.000	%
	Commitment Fee Rate	 	0.250	%	0.375	%	0.375	%	0.500	%	0.500	%

        Each
change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the
next such change, provided, however, that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then the "Applicable
Margin" means the rate per annum set forth on the grid when the Threshold Utilization Percentage is at its highest level. 

        "Applicable Percentage" means, with respect to any Lender, the percentage of the Aggregate Maximum Credit Amounts represented by such
Lender's Maximum Credit Amount as such percentage is set forth on Annex I. 

        "Approved Counterparty" means (a) any Lender or any Affiliate of a Lender or (b) any other Person whose long term senior
unsecured debt rating is A/A2 by S&P or Moody's (or their equivalent) or higher. 

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

        "Approved Petroleum Engineers" means Netherland, Sewell & Associates, Inc. and any other independent petroleum engineers
reasonably acceptable to the Administrative Agent. 

        "Arranger" means BNP Paribas, in its capacity as the lead arranger and sole bookrunner hereunder. 

        "Assignment and Assumption" means an assignment and assumption entered into by a Lender and an assignee (with the consent of any party
whose consent is required by Section 12.04(b)), and accepted by the Administrative Agent, in the form of Exhibit G or any other form approved by the Administrative Agent. 

        "Availability Period" means the period from and including the Effective Date to but excluding the Termination Date. 

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

        "Borrowing" means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which
a single Interest Period is in effect. 

        "Borrowing Base" means at any time an amount equal to the amount determined in accordance with Section 2.07 and
Section 6.01(r), as the same may be adjusted from time to time pursuant to Section 8.13(c) or Section 9.13(e). 

2

 

        "Borrowing Request" means a request by the Borrower for a Borrowing in accordance with Section 2.03. 

        "Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Houston, Texas are
authorized or required by law to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any day which is also a day
on which dealings in dollar deposits are carried out in the London interbank market. 

        "Capital Leases" means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded
as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder. 

        "Cash Equivalent" means cash held in US dollars and all Investments of the type identified in Section 9.05(c). 

        "Casualty Event" means any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by
condemnation or similar proceeding of, any Property of the Borrower or any of its Restricted Subsidiaries having a fair market value in excess of $250,000. 

        "Change in Control" means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) other than the Permitted Holders, of Equity Interests representing
more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower, (b) occupation of a majority of the seats
(other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed by directors so
nominated or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group other than the Permitted Holders. 

        "Change in Law" means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in
any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement or (c) compliance by any Lender or the Issuing Bank
(or, for purposes of Section 5.01(b)), by any lending office of such Lender or by such Lender's or the Issuing Bank's holding company, if any) with any request, guideline or directive (whether
or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement. 

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

        "Commitment" means, with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of
Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender's Revolving Credit Exposure hereunder, as such commitment may be (a) modified from time to time
pursuant to Section 2.06 and (b) modified from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b). The amount representing each Lender's
Commitment shall at any time be the lesser of (A) the lesser of such Lender's Maximum Credit Amount and such Lender's Applicable Percentage of the then effective Borrowing Base or (B) an
amount equal to such Lender's Applicable Percentage of $200,000,000. 

        "Commitment Fee Rate" has the meaning set forth in the definition of "Applicable Margin". 

        "Consolidated Net Income" means with respect to the Borrower and the Consolidated Restricted Subsidiaries, for any period, the aggregate
of the net income (or loss) of the Borrower and the 

3

 

Consolidated
Restricted Subsidiaries after allowances for taxes for such period determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income
(to the extent otherwise included therein) the following: (a) the net income of any Person in which the Borrower or any Consolidated Restricted Subsidiary has an interest (which interest does
not cause the net income of such other Person to be consolidated with the net income of the Borrower and the Consolidated Restricted Subsidiaries in accordance with GAAP), except to the extent of the
amount of dividends or distributions actually paid in cash during such period by such other Person to the Borrower or to a Consolidated Restricted Subsidiary, as the case may be; (b) the net
income (but not loss) during such period of any Consolidated Restricted Subsidiary to the extent that the declaration or payment of dividends or similar distributions or transfers or loans by that
Consolidated Restricted Subsidiary is not at the time permitted by operation of the terms of its charter or any agreement, instrument or Governmental Requirement applicable to such Consolidated
Restricted Subsidiary or is otherwise restricted or prohibited, in each case determined in accordance with GAAP; (c) any extraordinary non-cash gains or losses during such period
and (d) any gains or losses attributable to writeups or writedowns of assets, including ceiling test writedowns; and provided further that if the Borrower or any Consolidated Restricted
Subsidiary shall acquire or dispose of any Property during such period or a Subsidiary shall be redesignated as either an Unrestricted Subsidiary or a Restricted Subsidiary, then Consolidated Net
Income shall be calculated after giving pro forma effect to such acquisition, merger, disposition or redesignation, as if such acquisition, merger,
disposition or redesignation had occurred on the first day of such period. 

        "Consolidated Restricted Subsidiaries" means any Restricted Subsidiaries that are Consolidated Subsidiaries. 

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

        "Consolidated Unrestricted Subsidiaries" means any Unrestricted Subsidiaries that are Consolidated Subsidiaries. 

        "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. For the purposes of this definition, and without limiting the generality of the foregoing, any Person that owns
directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of the directors or other governing body of a Person (other than as a limited partner of such
other Person) will be deemed to "control" such other Person. "Controlling" and "Controlled" have
meanings correlative thereto. 

        "Debt" means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money
or evidenced by bonds, bankers' acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of
credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of
Property or services; (d) all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses of this definition) of
others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by
such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Debt
(howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or
undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or 

4

 

Property
of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services whether or not such goods or services are actually received or utilized by such Person;
(k) any Debt of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability;
(l) Disqualified Capital Stock; and (m) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received
payment. The Debt of any Person shall include all obligations of such Person of the character described above to the extent such Person remains legally liable in respect thereof notwithstanding that
any such obligation is not included as a liability of such Person under GAAP. 

        "Default" means any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless
cured or waived, become an Event of Default. 

        "Designated Preferred Stock" means the Borrower's Series B 8% Automatically Convertible Preferred Stock issued under certificate of
designation dated November 23, 2004. 

        "Disqualified Capital Stock" means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable) or upon the happening of any event, matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified
Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests (which would not
constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, on or prior to the date that is one year after the earlier of (a) the Maturity Date and
(b) the date on which there are no Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated. 

        "dollars" or "$" refers to lawful money of the United States of America. 

        "Domestic Subsidiary" means any Restricted Subsidiary that is organized under the laws of the United States of America or any state
thereof or the District of Columbia. 

        "EBITDA" means, for any period, the sum of Consolidated Net Income for such period plus the following expenses or charges to the extent
deducted from Consolidated Net Income in such period: interest, income taxes, depreciation, depletion, amortization and other similar noncash charges, minus all noncash income added to Consolidated
Net Income. 

        "Effective Date" means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with
Section 12.02). 

        "Engineering Reports" has the meaning assigned such term in Section 2.07(c)(i). 

        "Environmental Laws" means any and all Governmental Requirements pertaining in any way to health, safety the environment or the
preservation or reclamation of natural resources, in effect in any and all jurisdictions in which the Borrower or any Restricted Subsidiary is conducting or at any time has conducted business, or
where any Property of the Borrower or any Restricted Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976
("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements. The term "oil" shall have
the meaning specified in OPA, the terms 

5

 

"hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA and the term "oil
and gas waste" shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code
("Section 91.1011"); provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent the laws of the state or other
jurisdiction in which any Property of the Borrower or any Restricted Subsidiary is located establish a meaning for "oil,"
"hazardous substance," "release," "solid waste,"
"disposal" or "oil and gas waste" which is broader than that specified in either OPA, CERCLA, RCRA or
Section 91.1011, such broader meaning shall apply. 

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

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute. 

        "ERISA Affiliate" means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be
deemed to be a "single employer" within the meaning of section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the Code. 

        "ERISA Event" means (a) a "Reportable Event" described in section 4043 of ERISA and the regulations issued thereunder,
(b) the withdrawal of the Borrower, a Subsidiary or any ERISA Affiliate 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, (e) receipt of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) any other event or condition which might constitute grounds
under section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. 

        "Eurodollar", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are
bearing interest at a rate determined by reference to the Adjusted LIBO Rate. 

        "Event of Default" has the meaning assigned such term in Section 10.01. 

        "Excepted Liens" means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which
are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; (b) Liens in connection with workers' compensation,
unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP; (c) statutory landlord's liens, operators', vendors', carriers', warehousemen's, repairmen's, mechanics', suppliers', workers',
materialmen's, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas
Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas
leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual
interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, 

6

 

development
agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits
or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not delinquent or which are being contested in good faith by appropriate
action and for which adequate reserves have been maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not materially impair the use of the Property covered
by such Lien for the purposes for which such Property is held by the Borrower or any Restricted Subsidiary or materially impair the value of such Property subject thereto; (e) Liens arising
solely by virtue of any statutory or common law provision relating to banker's liens, rights of set-off or similar rights and remedies and burdening only deposit accounts or other funds
maintained with a creditor depository institution, provided that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess
of those set forth by regulations promulgated by the Board and no such deposit account is intended by Borrower or any of its Restricted Subsidiaries to provide collateral to the depository
institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any Restricted Subsidiary for the purpose of
roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of
real estate, rights of way, facilities and equipment, that do not secure any monetary obligations and which in the aggregate do not materially impair the use of such Property for the purposes of which
such Property is held by the Borrower or any Restricted Subsidiary or materially impair the value of such Property subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of
a like nature incurred in the ordinary course of business and (h) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may
have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to
enforce such Lien has been commenced; provided, further that Liens described in clauses (a) through (e) shall remain "Excepted Liens" only for so long as no action to enforce such Lien
has been commenced and no intention to subordinate the first priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby implied or expressed by the permitted existence
of such Excepted Liens. 

        "Excluded Taxes" means, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be
made by or on account of any obligation of the Borrower or any Guarantor hereunder or under any other Loan Document, (a) income or franchise taxes imposed on (or measured by) its net income by
the United States of America or such other jurisdiction 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 the Borrower or any
Guarantor is located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 5.04(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to
comply with Section 5.03(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 with respect to such withholding tax pursuant to Section 5.03 or Section 5.03(c). 

7

 

        "Existing Credit Agreements" means: 

        (i)    that
certain Credit Agreement dated as of September 30, 1996, between Wynn-Crosby 1994, Ltd., a Texas limited partnership, and Union Bank of
California, N.A. ("UBOC"), as agent, and the lenders party thereto; 

        (ii)   that
certain Credit Agreement dated as of January 24, 1996, between Wynn-Crosby 1995, Ltd., a Texas limited partnership, and UBOC, as agent,
and the lenders party thereto; 

        (iii)  that
certain Credit Agreement dated as of February 28, 1997, between Wynn-Crosby 1996, Ltd., a Texas limited partnership, and UBOC, as agent,
and the lenders party thereto; 

        (iv)  that
certain Credit Agreement dated as of August 31, 2000, among Wynn-Crosby 1997, Ltd., a Texas limited partnership, and UBOC, as agent, and
the lenders party thereto; 

        (v)   that
certain Credit Agreement dated as of April 30, 2001, among Wynn-Crosby 1998, Ltd., a Texas limited partnership, and UBOC, as agent, and
the lenders party thereto; 

        (vi)  that
certain Credit Agreement dated as of May 30, 2000, among Wynn-Crosby 1999, Ltd., a Texas limited partnership, and UBOC, as agent, and the
lenders party thereto; 

        (vii) that
certain Revolving Credit Agreement dated as of March 30, 2001, among Wynn-Crosby 2000, Ltd., a Texas limited partnership, and UBOC, as
agent, and the lenders party thereto; 

        (viii) that
certain Credit and Security Agreement dated as of February 21, 2003 between Wynn-Crosby 2002, Ltd., a Texas limited partnership, and
UBOC, as agent, and the lenders party thereto; 

        (ix)  that
certain Credit and Security Agreement dated as of November 14, 1997 between Wynn-Crosby Energy, Inc., a Texas corporation, and UBOC, as
agent, and the lenders party thereto; and 

        (x)   that
certain Credit and Security Agreement dated as of March 30, 1999 between the Borrower, and Bank of Oklahoma, as agent, and the lenders party thereto; 

in
each case, as amended prior to the Effective Date. 

        "Federal Funds Effective Rate" means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. 

        "Financial Officer" means, for any Person, the chief financial officer, principal accounting officer, treasurer or controller of such
Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower. 

        "Financial Statements" means the financial statement or statements of the Borrower and its Consolidated Subsidiaries referred to in
Section 7.04(a). 

        "Foreign Lender" means any Lender that is organized under the laws of a jurisdiction other than that in which the Borrower is located. 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. 

        "Foreign Subsidiary" means any Restricted Subsidiary that is not a Domestic Subsidiary. 

8

 

        "GAAP" means generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms
and conditions set forth in Section 1.05. 

        "Gas Balancing Obligations" means those obligations set forth on Schedule 7.19. 

        "Governmental Authority" means the government of the United States of America, any other nation or 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 over the Borrower, any Restricted Subsidiary, any of their Properties, any Agent, the Issuing Bank or any Lender. 

        "Governmental Requirement" means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls, of any Governmental Authority. 

        "GP" means, collectively: 

	•
	Kara
Nicole Limited, a Texas limited partnership;

	•
	Kristen
Lee Limited, a Texas limited partnership;

	•
	Eric
Wynn Limited, a Texas limited partnership;

	•
	Christopher
David Limited, a Texas limited partnership;

	•
	Paige
Lee Limited, a Texas limited partnership;

	•
	Bernadien
Wynn Limited, a Texas limited partnership;

	•
	Roger
Lee Limited, a Texas limited partnership; and

	•
	George
Heaps Limited, a Texas limited partnership. 

        "Guarantors" means, collectively: 

        (a)   

	•
	Wynn-Crosby
Energy, Inc., a Texas corporation;

	•
	P-H
Energy, LLC, a Texas limited liability company;

	•
	Wynn-Crosby
1994, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
1995, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
1996, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
1997, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
1998, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
1999, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
2000, Ltd., a Texas limited partnership;

	•
	Wynn-Crosby
2002, Ltd., a Texas limited partnership;

	•
	Beta
Operating Company, L.L.C., an Oklahoma limited liability company;

	•
	TCM,
L.L.C., an Oklahoma limited liability company; and 

9

 

	•
	Red
River Field Services, L.L.C., an Oklahoma limited liability company. 

        (b)   each
other Material Domestic Subsidiary or other Domestic Subsidiary that guarantees the Indebtedness pursuant to Section 8.14(b). 

        "Guaranty Agreement" means an agreement executed by the Guarantors in substantially the form of Exhibit F-2
unconditionally guarantying on a joint and several basis, payment of the Indebtedness, as the same may be amended, modified or supplemented from time to time. 

        "Highest Lawful Rate" means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Notes or on other Indebtedness under laws applicable to such Lender which are presently in effect or, to the extent allowed by
law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof. 

        "Hydrocarbon Interests" means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas
and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any
reserved or residual interests of whatever nature. 

        "Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom. 

        "Indebtedness" means any and all amounts owing or to be owing by the Borrower, any Restricted Subsidiary or any Guarantor: (a) to
the Administrative Agent, the Issuing Bank or any Lender under any Loan Document, (b) to any Lender or any Affiliate of a Lender under any Swap Agreement between the Borrower or any Restricted
Subsidiary and such Lender or Affiliate of a Lender while such Person (or in the case of its Affiliate, the Person affiliated therewith) is a Lender hereunder and (c) all renewals, extensions
and/or rearrangements of any of the above. 

        "Indemnified Taxes" means Taxes other than Excluded Taxes. 

        "Information Memorandum" means the Confidential Information Memorandum dated November 2004 relating to the Borrower and the
Transactions. 

10

  

        "Initial Reserve Report" means the reports of Netherland, Sewell & Associates, Inc. dated as of July 1, 2004, with
respect to certain Oil and Gas Properties of the Borrower and its Restricted Subsidiaries and of the Targets. 

        "Intercreditor Agreement" means in respect of the Second Lien Term Loan Agreement, the terms of subordination as attached as Annex II and
in respect to the Senior Subordinated Convertible Note, the Subordination Agreement. 

        "Interest Election Request" means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04. 

        "Interest Expense" means, for any period, the sum (determined without duplication) of the aggregate of (i) all cash dividends paid
on the Borrower's preferred Equity Interests and (ii) gross interest expense of the Borrower and the Consolidated Restricted Subsidiaries for such period, including to the extent included in
interest expense under GAAP: (a) amortization of debt discount, (b) capitalized interest and (c) the portion of any payments or accruals under Capital Leases allocable to interest
expense, plus the portion of any payments or accruals under Synthetic Leases allocable to interest expense whether or not the same constitutes interest expense under GAAP. 

        "Interest Payment Date" means (a) with respect to any ABR Loan, the last day of each March, June, September and December and
(b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day prior to the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period. 

        "Interest Period" means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Lender, nine or twelve months) thereafter, as the Borrower may elect; provided,
that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that
commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last
Business Day of the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing. 

        "Interim Redetermination" has the meaning assigned such term in Section 2.07(b). 

        "Interim Redetermination Date" means the date on which a Borrowing Base and Threshold Amount that has been redetermined pursuant to an
Interim Redetermination becomes effective as provided in Section 2.07(d). 

        "Investment" means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity
Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any "short sale" or any sale of any securities at a time when such securities are not owned
by the Person entering into such short sale); (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of Property from
another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not
exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business) or (c) the entering into of any guarantee of,
or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or 

11

 

other
liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person. 

        "Issuing Bank" means BNP Paribas, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.08(i). The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term
"Issuing Bank" shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate. 

        "Knowledge" means, with respect to an individual, his or her actual knowledge and with respect to any corporation, limited liability
company, partnership or other business entity, the actual knowledge of any officer, general partner or individual being a member of the executive management of such entity. 

        "LC Commitment" at any time means Twenty-Five Million Dollars ($25,000,000). 

        "LC Disbursement" means a payment made by the Issuing Bank pursuant to a Letter of Credit. 

        "LC Exposure" means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time
plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time. 

        "Lenders" means the Persons listed on Annex I and any Person that shall have become a party hereto pursuant to an Assignment and
Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. 

        "Letter of Credit" means any letter of credit issued pursuant to this Agreement. 

        "Letter of Credit Agreements" means all letter of credit applications and other agreements (including any amendments, modifications or
supplements thereto) submitted by the Borrower, or entered into by the Borrower, with the Issuing Bank relating to any Letter of Credit. 

        "LIBO Rate" means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Page 3750 of the Dow Jones
Market Service (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such
page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market)
at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest
Period. In the event that such rate is not available at such time for any reason, then the "LIBO Rate" with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest
Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two
Business Days prior to the commencement of such Interest Period. 

        "Lien" means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property,
whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments
and the like payable out of Oil and Gas Properties. The term "Lien" shall include easements, restrictions, servitudes, permits, conditions, covenants,
exceptions or reservations. For the purposes of this Agreement, the Borrower and its Restricted Subsidiaries shall be deemed to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, or 

12

 

leases
under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing. 

        "Loan Documents" means this Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Security Instruments, the
Intercreditor Agreement and the Subordination Agreement. 

        "Loans" means the loans made by the Lenders to the Borrower pursuant to this Agreement. 

        "Majority Lenders" means, at any time while no Loans or LC Exposure is outstanding, Lenders having at least sixty-six and
two-thirds percent (662/3%) of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding at least
sixty-six and two-thirds percent (662/3%) of the outstanding aggregate principal amount of the Loans or participation interests in Letters of Credit (without
regard to any sale by a Lender of a participation in any Loan under Section 12.04(c)). 

        "Material Adverse Effect" means a material adverse effect on (a) the business, operations, Property, condition (financial or
otherwise) or prospects of the Borrower and the Restricted Subsidiaries taken as a whole, (b) the ability of the Borrower, any Restricted Subsidiary or any Guarantor to perform any of its
obligations under any Loan Document, (c) the validity or enforceability of any Loan Document or (d) the rights and remedies of or benefits available to the Administrative Agent, any
other Agent, the Issuing Bank or any Lender under any Loan Document. 

        "Material Domestic Subsidiary" means, as of any date, any Domestic Subsidiary that (a) is a Wholly-Owned Subsidiary and
(b) together with its Restricted Subsidiaries, owns Property having a fair market value of $250,000 or more. 

        "Material Indebtedness" means Debt (other than the Loans and Letters of Credit), or obligations in respect of one or more Swap Agreements,
of any one or more of the Borrower and its Restricted
Subsidiaries in an aggregate principal amount exceeding $500,000. For purposes of determining Material Indebtedness, the "principal amount" of the obligations of the Borrower or any Restricted
Subsidiary in respect of any Swap Agreement at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Borrower or such Subsidiary would be required to pay if
such Swap Agreement were terminated at such time. 

        "Maturity Date" means November 23, 2008. 

        "Maximum Credit Amount" means, as to each Lender, the amount set forth opposite such Lender's name on Annex I under the caption "Maximum
Credit Amounts", as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b) or (b) modified from time to time pursuant to any assignment permitted by Section 12.04(b). 

        "Mergers" means the merger of a Wholly-Owned Subsidiary of the Borrower into WCE pursuant to the WCE Merger Agreement and the merger of
eight (8) limited partnership subsidiaries of the Borrower into the Guarantors (other than P-H Energy, LLC) pursuant to the Partnerships Merger Agreement. 

        "Merger Documents" means the Partnerships Merger Agreement and the WCE Merger Agreement, both of which are dated as of October 13,
2004, and all other agreements, instruments and documents executed in connection with the Mergers. 

        "Moody's" means Moody's Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency. 

        "Mortgaged Property" means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under
the terms of the Security Instruments. 

13

 

        "Multiemployer Plan" means a Plan which is a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of ERISA. 

        "New Borrowing Base Notice" has the meaning assigned such term in Section 2.07(d). 

        "Non-Recourse Debt" means any Debt of any Unrestricted Subsidiary, in each case in respect of which: (a) the holder or
holders thereof (i) shall have recourse only to, and shall have the right to require the obligations of such Unrestricted Subsidiary to be performed, satisfied, and paid only out of, the
Property of such Unrestricted Subsidiary and/or one or more of its Subsidiaries (but only to the extent that such Subsidiaries are Unrestricted Subsidiaries) and/or any other Person (other than
Borrower and/or any Restricted Subsidiary) and (ii) shall have no direct or indirect recourse (including by way of guaranty, support or indemnity) to the Borrower or any Restricted Subsidiary
or to any of the Property of Borrower or any Restricted Subsidiary, whether for principal, interest, fees, expenses or otherwise; and (b) the terms and conditions relating to the
non-recourse nature of such Debt are in form and substance reasonably acceptable to the Administrative Agent. 

        "Notes" means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of
Exhibit A, together with all amendments, modifications, replacements, extensions and rearrangements thereof. 

        "Oil and Gas Properties" means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with
Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and
other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from
or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks,
and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties
in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or referred to above, including
any and all Property, real or personal, now owned or hereinafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such
Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for
other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors,
pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements,
cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing. 

        "Other Taxes" means any and 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 from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement and any other Loan Document. 

        "Participant" has the meaning set forth in Section 12.04(c)(i). 

        "Partnerships Merger Agreement" means the Agreement and Plan of Merger dated October 13, 2004 between the Borrower, the Targets and
others. 

        "PBGC" means the Pension Benefit Guaranty Corporation, or any successor thereto. 

14

 

        "Permitted Holders" means PHAWK LLC, a Delaware limited liability company, EnCap Investments, L.P., Liberty Energy Holdings, each of their
respective Affiliates, and Floyd C. Wilson. 

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

        "Plan" means any employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is currently or hereafter
sponsored, maintained or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar years preceding the date hereof, sponsored, maintained
or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate. 

        "Prime Rate" means the rate of interest per annum publicly announced from time to time by the Administrative Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. Such rate is set by
the Administrative Agent as a general reference rate of interest, taking into account such factors as the Administrative Agent may deem appropriate; it being understood that many of the Administrative
Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that the Administrative Agent may make
various commercial or other loans at rates of interest having no relationship to such rate. 

        "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including,
without limitation, cash, securities, accounts and contract rights. 

        "Proposed Borrowing Base" has the meaning assigned to such term in Section 2.07(c)(i). 

        "Proposed Borrowing Base Notice" has the meaning assigned to such term in Section 2.07(c)(ii). 

        "Proposed Threshold Amount" has the meaning assigned to such term in Section 2.07(c)(i). 

        "Redemption" means with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or
retirement for value (or the segregation of funds with respect to any of the foregoing) of such Debt. "Redeem" has the correlative meaning thereto. 

        "Redetermination Date" means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined
Borrowing Base and Threshold Amount related thereto becomes effective pursuant to Section 2.07(d). 

        "Register" has the meaning assigned such term in Section 12.04(b)(iv). 

        "Regulation D" means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time. 

        "Related Parties" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers, employees,
agents and advisors (including attorneys, accountants and experts) of such Person and such Person's Affiliates. 

        "Remedial Work" has the meaning assigned such term in Section 8.10(a). 

        "Required Lenders" means, at any time while no Loans or LC Exposure is outstanding, Lenders having in excess of eighty-seven and one half
percent (871/2%) of the Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure is outstanding, Lenders holding in excess of eighty-seven and one half percent
(871/2%) of the outstanding aggregate principal amount of the Loans or participation interests in such Letters of Credit (without regard to any sale by a Lender of a participation in
any Loan under Section 12.04(c)). 

        "Reserve Report" means a report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each
January 1st or July 1st (or such other date in the event 

15

 

of
an Interim Redetermination) the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Restricted Subsidiaries, together with a projection of the rate of production
and future net income, taxes, operating expenses and capital expenditures with respect thereto as of such date, based upon the pricing assumptions consistent with SEC reporting requirements at the
time. 

        "Responsible Officer" means, as to any Person, the Chief Executive Officer, the President, any Financial Officer or any Vice President of
such Person. Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower. 

        "Restricted Payment" means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity
Interests in the Borrower, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any such Equity Interests in the Borrower or any option, warrant or other right to acquire any such Equity Interests in the Borrower. 

        "Restricted Subsidiary" means any Subsidiary of the Borrower that is not an Unrestricted Subsidiary. 

        "Restructured Subordinated Note" means any unsecured note issued by the Borrower in exchange for the Senior Subordinated Convertible Note
in an amount not to exceed $35,000,000, the cash-pay coupon of which does not exceed 8% per annum, the maturity of which is at least February 24, 2010, which is not guaranteed by
any Subsidiary of the Borrower and which is subordinated on terms substantially identical to the Senior Subordinated Convertible Note, as amended pursuant to Section 9.04(b). 

        "Revolving Credit Exposure" means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender's
Loans and its LC Exposure at such time. 

        "Scheduled Redetermination" has the meaning assigned such term in Section 2.07(b). 

        "Scheduled Redetermination Date" means the date on which a Borrowing Base and Threshold Amount that has been redetermined pursuant to a
Scheduled Redetermination becomes effective as provided in Section 2.07(d). 

        "SEC" means the Securities and Exchange Commission or any successor Governmental Authority. 

        "Second Lien Term Loan Agreement" means that certain Second Lien Term Loan Credit Agreement dated as of the Effective Date among the
Borrower, BNP Paribas, as the Second Lien Administrative Agent, and the lenders party thereto pursuant to which the lenders party thereto made a term loan in an original principal amount of
$50,000,000, as hereafter amended or supplemented pursuant to Section 9.04(b). 

        "Second Lien Term Loan Documents" means the Second Lien Term Loan Agreement, any "Loan Documents" (as defined therein), in each case, as
hereafter amended or supplemented pursuant to Section 9.04(b). 

        "Security Instruments" means the Guaranty Agreement, mortgages, deeds of trust and other agreements, instruments or certificates described
or referred to in Exhibit F-1, and any and all other agreements, instruments or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than
Swap Agreements with the Lenders or any Affiliate of a Lender or participation or similar agreements between any Lender and any other lender or creditor with respect to any Indebtedness pursuant to
this Agreement) in connection with, or as security for the payment or performance of the Indebtedness, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such
agreements may be amended, modified, supplemented or restated from time to time. 

16

 

        "Senior Subordinated Convertible Note" means that certain $35,000,000 8% Convertible Promissory Note dated as of May 25, 2004, due
2009, made by the Borrower, as issuer, in favor of PHAWK, LLC, as payee, as hereafter amended or supplemented pursuant to Section 9.04(b). 

        "S&P" means Standard & Poor's Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor
thereto that is a nationally recognized rating agency. 

        "Statutory Reserve Rate" means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which
the Administrative Agent is subject with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of the Board). Such
reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject
to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable
regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage. 

        "Subordinated Debt" means the Second Lien Term Loan Documents and the Senior Subordinated Convertible Note. 

        "Subordination Agreement" means that certain Subordination Agreement dated as of the Effective Date among the Borrower, BNP Paribas, as
the Administrative Agent and PHAWK, LLC. 

        "Subsidiary" means: (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof
ordinary voting power to elect a majority of the board of directors, manager or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or
classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of
its Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any partnership of which the Borrower or any of its Subsidiaries is a general partner. Unless otherwise indicated
herein, each reference to the term "Subsidiary" shall mean a Subsidiary of the Borrower. 

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

        "Synthetic Leases" means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP,
treated as operating leases on the financial statements of the Person liable (whether contingently or otherwise) for the payment of rent thereunder and which were properly treated as indebtedness for
borrowed money for purposes of U.S. federal income taxes, if the lessee in respect thereof is obligated to either purchase for an amount in excess of, or pay upon early termination an amount in excess
of, 80% of the residual value of the Property subject to such operating lease upon expiration or early termination of such lease. 

        "Target" means, collectively, the GP's and the Guarantors (other than P-H Energy, LLC). 

17

 

        "Taxes" means any and all present or future taxes, levies, imposts, duties, deductions, charges or withholdings imposed by any
Governmental Authority. 

        "Termination Date" means the earlier of the Maturity Date and the date of termination of the Commitments. 

        "Threshold Amount" means, in conjunction with each redetermination of the Borrowing Base, an amount, the initial amount having been
determined prior to closing, equal to the amount determined in accordance with Section 2.07 and Section 6.01(r), as the same may be adjusted from time to time pursuant to
Section 8.13(c) or Section 9.13(e). 

        "Threshold Utilization Percentage" means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the
Revolving Credit Exposures of the Lenders on such day, and the denominator of which is the Threshold Amount in effect on such day. 

        "Total Debt" means, at any date, all Debt of the Borrower and the Consolidated Restricted Subsidiaries on a consolidated basis net of Cash
Equivalents and excluding the Senior Subordinated Convertible Note (but not excluding the Restructured Subordinate Note or any other Debt that refinances or replaces the Senior Subordinated
Convertible Note). 

        "Transactions" means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement,
each other Loan Document and each Merger Document to which it is a party, the Mergers, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, and the
grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments and (b) each Guarantor, the execution, delivery and performance by such
Guarantor of each Loan Document and Merger Document to which it is a party, the Mergers, the guaranteeing of the Indebtedness and the other obligations under the Guaranty Agreement by such Guarantor
and such Guarantor's grant of the security interests and provision of collateral thereunder, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the
Security Instruments. 

        "Type", when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising
such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate. 

        "Unrestricted Subsidiary" means any Subsidiary of the Borrower designated as such on Schedule 7.15 or which the Borrower has
designated in writing to the Administrative Agent to be an Unrestricted Subsidiary pursuant to Section 9.06. 

        "WCE" means Wynn-Crosby Energy, Inc., a Texas corporation. 

        "WCE Merger Agreement" means that certain Agreement and Plan of Merger between the Borrower and WCE. 

        "Wholly-Owned Subsidiary" means any Restricted Subsidiary of which all of the outstanding Equity Interests (other than any directors'
qualifying shares mandated by applicable law), on a fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or by the Borrower and one or more of the
Wholly-Owned Subsidiaries. 

        "Wildcard Management Agreements" means those management agreements between WCE and Wildcard Oil & Gas Company, Inc.,
Wildcard Family partnership and Wynn-Crosby Royalty Company, as referenced in the Merger Documents. 

        Section 1.03    Types of Loans and Borrowings.    For purposes of this Agreement, Loans and Borrowings,
respectively, may be classified and referred to by Type (e.g., a "Eurodollar Loan" or a "Eurodollar
Borrowing"). 

18

 

        Section 1.04    Terms Generally; Rules of Construction.    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 law shall
be construed as referring to such law as amended, modified, codified or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be
construed to include such Person's successors and assigns (subject to the restrictions contained herein), (d) the words "herein", "hereof" and "hereunder", and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) with respect to the determination of any time period, the word "from" means "from and
including" and the word "to" means "to and including" and (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections
of, and Annexes, Exhibits and Schedules to, this Agreement. No provision of this Agreement or any other Loan Document shall be interpreted or construed against any Person solely because such Person or
its legal representative drafted such provision. 

        Section 1.05    Accounting Terms and Determinations; GAAP.    Unless otherwise specified herein, all accounting
terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters
required to be furnished to the Administrative Agent or the Lenders hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the Financial Statements except for changes
in which Borrower's independent certified public accountants concur and which are disclosed to Administrative Agent on the next date on which financial statements are required to be delivered to the
Lenders pursuant to Section 8.01(a); provided that, unless the Borrower and the Majority Lenders shall otherwise agree in writing, no such change shall modify or affect the manner in which
compliance with the covenants contained herein is computed such that all such computations shall be conducted utilizing financial information presented consistently with prior periods. 

 
 

ARTICLE II
  The Credits    
    

        Section 2.01    Commitments.    Subject to the terms and conditions set forth herein, each Lender agrees to
make Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in (a) such Lender's Revolving Credit Exposure exceeding such Lender's Commitment
or (b) the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay
and reborrow the Loans. 

        Section 2.02    Loans and Borrowings.    

        (a)    Borrowings; Several Obligations.    Each Loan shall be made as part of a Borrowing consisting of Loans made by
the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender's failure to make Loans as required. 

        (b)    Types of Loans.    Subject to Section 3.03, each Borrowing shall be comprised entirely of ABR Loans or
Eurodollar Loans as the Borrower may request in accordance herewith. Each 

19

 

Lender
at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect
the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement. 

        (c)    Minimum Amounts; Limitation on Number of Borrowings.    At the commencement of each Interest Period for any
Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000. At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.08(e). Borrowings of more than one Type may be
outstanding at the same time, provided that there shall not at any time be more than a total of 8 Eurodollar Borrowings outstanding. Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date. 

        (d)    Notes.    The Loans made by each Lender shall be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit A, dated, in the case of (i) any Lender party hereto as of the date of this Agreement, as of the date of this Agreement or (ii) any Lender that
becomes a party hereto pursuant to an Assignment and Assumption, as of the effective date of the Assignment and Assumption, payable to the order of such Lender in a principal amount equal to its
Maximum Credit Amount as in effect on such date, and otherwise duly completed. In the event that any Lender's Maximum Credit Amount increases or decreases for any reason (whether pursuant to
Section 2.06, Section 12.04(b) or otherwise), the Borrower shall deliver or cause to be delivered on the effective date of such increase or decrease, a new Note payable to the order of
such Lender in a principal amount equal to its Maximum Credit Amount after giving effect to such increase or decrease, and otherwise duly completed. The date, amount, Type, interest rate and, if
applicable, Interest Period of each Loan made by each Lender, and all payments made on account of the principal thereof, shall be recorded by such Lender on its books for its Note, and, prior to any
transfer, may be endorsed by such Lender on a schedule attached to such Note or any continuation thereof or on any separate record maintained by such Lender. Failure to make any such notation or to
attach a schedule shall not affect any Lender's or the Borrower's rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of its Note. 

        Section 2.03    Requests for Borrowings.    To request a Borrowing, the Borrower shall notify the
Administrative Agent of such request by telephone, fax (or transmit by electronic communication, if arrangements for
doing so have been approved by the Administrative Agent) (a) in the case of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of the proposed Borrowing; provided that no such
notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e). Each such telephonic (or electronic
communication) Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Borrowing Request in substantially the form
of Exhibit B and signed by the Borrower. Each such telephonic, electronic communication, and written Borrowing Request shall specify the following information in compliance with
Section 2.02: 

        (i)    the
aggregate amount of the requested Borrowing; 

        (ii)   the
date of such Borrowing, which shall be a Business Day; 

20

 

        (iii)  whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; 

        (iv)  in
the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term
"Interest Period"; 

        (v)   the
amount of the then effective Borrowing Base and Threshold Amount, the current total Revolving Credit Exposures (without regard to the requested Borrowing) and the  pro forma total Revolving Credit
Exposures (giving effect to the requested Borrowing); and 

        (vi)  the
location and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05. 

If
no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing,
then the Borrower shall be deemed to have selected an Interest Period of one month's duration. Each Borrowing Request shall constitute a representation that the amount of the requested Borrowing shall
not cause the total Revolving Credit Exposures to exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base). 

Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such
Lender's Loan to be made as part of the requested Borrowing. 

        Section 2.04    Interest Elections.    

        (a)    Conversion and Continuance.    Each Borrowing initially shall be of the Type specified in the applicable
Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04. The Borrower may elect
different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. 

        (b)    Interest Election Requests.    To make an election pursuant to this Section 2.04, the Borrower shall
notify the Administrative Agent of such election by telephone, fax (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election.
Each such telephonic (or electronic communication) Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written
Interest Election Request in substantially the form of Exhibit C and signed by the Borrower. 

        (c)    Information in Interest Election Requests.    Each telephonic, electronic communication and written Interest
Election Request shall specify the following information in compliance with Section 2.02: 

        (i)    the
Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting
Borrowing); 

        (ii)   the
effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day; 

21

 

        (iii)  whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and 

        (iv)  if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term "Interest Period". 

If
any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month's
duration. 

        (d)    Notice to Lenders by the Administrative Agent.    Promptly following receipt of an Interest Election Request,
the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing. 

        (e)    Effect of Failure to Deliver Timely Interest Election Request and Events of Default on Interest Election.    If
the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred
and is continuing: (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to,
or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the
Interest Period applicable thereto. 

        Section 2.05    Funding of Borrowings.    

        (a)    Funding by Lenders.    Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof
by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the
Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the
Administrative Agent in New York, New York and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as
provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank. 

        (b)    Presumption of Funding by the Lenders.    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 Section 2.05(a) 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 made available to the Borrower to but excluding the
date of payment to the Administrative Agent, at (i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to ABR Loans. If such Lender pays such amount to the Administrative
Agent, then such amount shall constitute such Lender's Loan included in such Borrowing. 

22

 

        Section 2.06    Termination and Reduction of Aggregate Maximum Credit Amounts.    

        (a)    Scheduled Termination of Commitments.    Unless previously terminated, the Commitments shall terminate on the
Maturity Date. If at any time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate on the effective date of such
termination or reduction. 

        (b)    Optional Termination and Reduction of Aggregate Credit Amounts.    

        (i)    The
Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction of the Aggregate
Maximum Credit Amounts shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum
Credit Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c), the total Revolving Credit Exposures would exceed the total Commitments. 

        (ii)   The
Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at
least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable; provided that a
notice of termination of the Aggregate Maximum Credit Amounts delivered by the Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such
notice may be revoked by the Borrower (by notice to the
Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may
not be reinstated. Each reduction of the Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in accordance with each Lender's Applicable Percentage. 

        Section 2.07    Borrowing Base and Threshold Amount.    

        (a)    Initial Borrowing Base.    For the period from and including the Effective Date to but excluding the first
Redetermination Date, the amount of the Borrowing Base shall be $200,000,000 and the Threshold Amount shall be $180,000,000. Notwithstanding the foregoing, the Borrowing Base and Threshold Amount may
be subject to further adjustments from time to time pursuant to Section 8.13(c) or Section 9.13. 

        (b)    Scheduled and Interim Redeterminations.    The Borrowing Base and the Threshold Amount shall be redetermined
semi-annually in accordance with this Section 2.07 (a "Scheduled Redetermination"), and, subject to Section 2.07(d), such
redetermined Borrowing Base and Threshold Amount shall become effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on April 1st and October 1st of each
year, commencing April 1, 2005. In addition, the Borrower may, by notifying the Administrative Agent thereof, and the Administrative Agent may, at the direction of the Majority Lenders, by
notifying the Borrower thereof, one time during any 12-month period, each elect to cause the Borrowing Base and the Threshold Amount to be redetermined between Scheduled Redeterminations
(an "Interim Redetermination") in accordance with this Section 2.07. 

        (c)    Scheduled and Interim Redetermination Procedure.    

        (i)    Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve
Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in 

23

 

the
case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c), and, in the case of an Interim Redetermination, pursuant to Section 8.12(b) and (c), and (B) such
other reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.12(c), as may, from time to time, be reasonably requested by the
Majority Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the "Engineering Reports"), the
Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in its sole discretion, propose a new Borrowing Base (the "Proposed
Borrowing Base") and a new Threshold Amount (the "Proposed Threshold Amount") based upon such information and such other
information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt) as
the Administrative Agent deems appropriate and consistent with its normal oil and gas lending criteria as it exists at the particular time. In no event shall the Proposed Borrowing Base or the
Proposed Threshold Amount exceed the Aggregate Maximum Credit Amounts. 

        (ii)   The
Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base and the Proposed Threshold Amount (the
"Proposed Borrowing Base Notice"): 

        (A)  in
the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before March 15th and September 15th of such year following the date of delivery or
(2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and
complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base
and the Proposed Threshold Amount in accordance with Section 2.07(c)(i); and 

        (B)  in
the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required
Engineering Reports. 

        (iii)  Any
Proposed Borrowing Base that would increase the Borrowing Base then in effect and any Proposed Threshold Amount that would increase the Threshold Amount then in
effect must be approved or deemed to have been approved by the Required Lenders as provided in this Section 2.07(c)(iii); and any Proposed Borrowing Base that would decrease or maintain the
Borrowing Base then in effect and any Proposed Threshold Amount that would decrease or maintain the Threshold Amount then in effect must be approved or be deemed to have been approved by the Majority
Lenders as provided in this Section 2.07(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base
and Proposed Threshold Amount or disagree with the Proposed Borrowing Base and Proposed Threshold Amount by proposing an alternate Borrowing Base and Threshold Amount. If at the end of such fifteen
(15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the Proposed Borrowing Base and
the Proposed Threshold Amount. If, at the end of such 15-day period, the Required Lenders, in the case of a Proposed Borrowing Base and a Proposed Threshold Amount that would increase the
Borrowing Base and the Threshold Amount then in effect, or the Majority Lenders, in the case of a Proposed Borrowing Base and a Proposed Threshold Amount that would decrease or maintain the Borrowing
Base and the Threshold Amount then in effect, have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the 

24

 

new
Borrowing Base and the Proposed Threshold Amount shall become the new Threshold Amount, effective on the date specified in Section 2.07(d). If, however, at the end of such
15-day period, the Required or Majority Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall poll the Lenders to
ascertain the highest Borrowing Base and Threshold Amount then acceptable to the Majority Lenders for purposes of this Section 2.07 and, so long as such amount does not increase the Borrowing
Base and Threshold Amount then in effect, such amount shall become the new Borrowing Base and the new Threshold Amount, effective on the date specified in Section 2.07(d). 

        (d)    Effectiveness of a Redetermined Borrowing Base and Threshold Amount.    After a redetermined Borrowing Base and
Threshold Amount is approved or is deemed to have been approved by the Required Lenders or the Majority Lenders, as applicable, pursuant to Section 2.07(c)(iii), the Administrative Agent shall
notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base and the redetermined Threshold Amount (the "New Borrowing Base
Notice"), and such amount shall become the new Borrowing Base and the new Threshold Amount, effective and applicable to the Borrower, the Agents, the Issuing Bank and the
Lenders: 

        (i)    in
the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the April 1st or October 1st, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on
the Business Day next succeeding delivery of such notice; and 

        (ii)   in
the case of an Interim Redetermination, on the Business Day next succeeding delivery of such notice. 

Such
amount shall then become the Borrowing Base and the Threshold Amount until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing
Base and the Threshold Amount under Section 8.13(c) or Section 9.13, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall
become effective until the New Borrowing Base Notice and the New Threshold Amount Notice related thereto is received by the Borrower. 

        Section 2.08    Letters of Credit.    

        (a)    General.    Subject to the terms and conditions set forth herein, the Borrower may request the issuance of
dollar denominated Letters of Credit for its own account or for the account of any of its Restricted Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at
any time and from time to time during the Availability Period. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter
of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control. 

25

  

        (b)    Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.    To request the issuance of a Letter
of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than three (3) Business Days in advance of the requested date of issuance, amendment,
renewal or extension) a notice: 

        (i)    requesting
the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended; 

        (ii)   specifying
the date of issuance, amendment, renewal or extension (which shall be a Business Day); 

        (iii)  specifying
the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c)); 

        (iv)  specifying
the amount of such Letter of Credit; 

        (v)   specifying
the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; and 

        (vi)  specifying
the amount of the then effective Borrowing Base and Threshold Amount, the current total Revolving Credit Exposures (without regard to the requested Letter of
Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving
effect to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit). 

Each
notice shall constitute a representation that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed the LC
Commitment and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments (i.e. the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base). 

If
requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. 

        (c)    Expiration Date.    Each Letter of Credit shall expire at or prior to the close of business on the earlier of
(i) the date one year after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (ii) the
date that is five Business Days prior to the Maturity Date. 

        (d)    Participations.    By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the
amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a
participation in such Letter of Credit equal to such Lender's Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of
the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Applicable Percentage of each LC
Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.08(e), or of any reimbursement payment required to be refunded to the Borrower
for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the 

26

 

Commitments,
and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever. 

        (e)    Reimbursement.    If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the
Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such notice has not been received by the
Borrower prior to such time on such date, then not later than 12:00 noon, New York City time, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior
to such time on the day of receipt; provided that if such LC Disbursement is equal to or greater than $1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth herein, be deemed
to have requested, and the Borrower does hereby request under such circumstances, that such LC Disbursement be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed,
the Borrower's obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall
notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender's Applicable Percentage thereof. Promptly following receipt of such
notice, each Lender shall
pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender
(and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to
the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e), the
Administrative Agent shall distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to reimburse the Issuing Bank, then to
such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other than
the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement. 

        (f)    Obligations Absolute.    The Borrower's obligation to reimburse LC Disbursements as provided in
Section 2.08(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by
the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply substantially with the terms of such Letter of Credit or any Letter of Credit
Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f), constitute a
legal or equitable discharge of, or provide a right of setoff against, the Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other
communication under or relating to any Letter of Credit (including any document required to 

27

 

make
a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be
construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as
finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite care in each such determination. In furtherance of the foregoing and without
limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its reasonable discretion, either accept and make payment upon such documents without responsibility for further investigation, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such Letter of Credit. 

        (g)    Disbursement Procedures.    The Issuing Bank shall, promptly following its receipt thereof, examine all
documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed by telecopy)
of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement. 

        (h)    Interim Interest.    If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have
reimbursed the Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e)), the unpaid amount thereof shall bear interest, for each day from and
including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued
pursuant to this Section 2.08(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.08(e) to
reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment. 

        (i)    Replacement of the Issuing Bank.    The Issuing Bank may be replaced at any time by written agreement among the
Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time
any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b). From and after the
effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be
issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. 

        (j)    Cash Collateralization.    If (i) any Event of Default shall occur and be continuing and the Borrower
receives notice from the Administrative Agent or the Majority Lenders demanding the deposit of cash collateral pursuant to this Section 2.08(j), or (ii) the Borrower is required to pay
to 

28

 

the
Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in an account with the
Administrative Agent, in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of a
payment required by Section 3.04(c), the amount of such excess as provided in Section 3.04(c), as of such date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower or any Restricted Subsidiary described in Section 10.01(h) or Section 10.01(i). The Borrower hereby grants to the Administrative Agent, for
the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and Lien on such account and all cash, checks, drafts, certificates and
instruments, if any, from time to time deposited or held in such account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all
interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing,
and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor. The Borrower's obligation to deposit amounts pursuant to this
Section 2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or recoupment
which the Borrower or any of its Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason
whatsoever. Such deposit shall be held as collateral securing the payment and performance of the Borrower's and the Guarantor's obligations under this Agreement and the other Loan Documents. The
Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Interest, if any, on such deposit shall accumulate in such account.
Moneys in such account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, and the Borrower is not otherwise required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to
Section 3.04(c), then such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three Business Days after all Events of Default have been cured or waived. 

 
 

ARTICLE III
  Payments of Principal and Interest; Prepayments; Fees    
    

        Section 3.01    Repayment of Loans.    The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date. 

        Section 3.02    Interest.    

        (a)    ABR Loans.    The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate. 

29

 

        (b)    Eurodollar Loans.    The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate. 

        (c)    Post-Default Rate.    Notwithstanding the foregoing, if any principal of or interest on any Loan or
any fee or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a), but in
no event to exceed the Highest Lawful Rate. 

        (d)    Interest Payment Dates.    Accrued interest on each Loan shall be payable in arrears on each Interest Payment
Date for such Loan and on the Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or
prepayment of any Loan (other than an optional prepayment of an ABR Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable
on the effective date of such conversion. 

        (e)    Interest Rate Computations.    All interest hereunder shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year),
except that interest computed by reference to the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or
366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto. 

        Section 3.03    Alternate Rate of Interest.    If prior to the commencement of any Interest Period for a
Eurodollar Borrowing: 

        (a)   the
Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the
Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or 

        (b)   the
Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and
fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period; 

then
the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies the
Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation
of any Borrowing as, a Eurodollar Borrowing shall be ineffective, and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing. 

        Section 3.04    Prepayments.    

        (a)    Optional Prepayments.    The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(b). 

30

 

        (b)    Notice and Terms of Optional Prepayment.    The Borrower shall notify the Administrative Agent by telephone
and/or fax (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before
the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, on the date of prepayment. Each such notice shall be irrevocable
and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Borrowing, the
Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing
of the same Type as provided in Section 2.02. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 3.02. 

        (c)    Mandatory Prepayments.    

        (i)    If,
after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), the total Revolving Credit Exposures
exceeds the total Commitments, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and
(B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held
as cash collateral as provided in Section 2.08(j). 

        (ii)   Upon
any redetermination of or adjustment to the amount of the Borrowing Base in accordance with Section 2.07 or Section 8.13(c), if the total Revolving
Credit Exposures exceeds the redetermined or adjusted Borrowing Base, then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, and (B) if
any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(j). The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral within forty-five (45) days following its
receipt of the New Borrowing Base Notice in accordance with Section 2.07(d) or the date the adjustment occurs; provided that all payments required to be made pursuant to this
Section 3.04(c)(ii) must be made on or prior to the Termination Date. 

        (iii)  Upon
any adjustments to the Borrowing Base pursuant to Section 9.13, if the total Revolving Credit Exposures exceeds the Borrowing Base as adjusted, then the
Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of an LC
Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as cash collateral as provided in Section 2.08(j). 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 3.04(c)(iii) must be made on or prior to the Termination Date. 

        (iv)  Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding, and, second, to any
Eurodollar Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing
with the least number of days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the Interest Period applicable
thereto. 

31

 

        (v)   Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied ratably to the Loans included in the prepaid Borrowings. Prepayments pursuant to
this Section 3.04(c) shall be accompanied by accrued interest to the extent required by Section 3.02. 

        (d)    No Premium or Penalty.    Prepayments permitted or required under this Section 3.04 shall be without
premium or penalty, except as required under Section 5.02. 

        Section 3.05    Fees.    

        (a)    Commitment Fees.    The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Lender during the period from and including the date
of this Agreement to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination
Date, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 365 days, unless such computation would exceed the
Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). 

        (b)    Letter of Credit Fees.    The Borrower agrees to pay (i) to the Administrative Agent for the account of
each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to Eurodollar
Loans on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the date of this
Agreement to but excluding the later of the date on which such Lender's Commitment terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a
fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the
period from and including the date of this Agreement to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, provided that in
no event shall such fee be less than $125 during any quarter, and (iii) to the Issuing Bank, for its own account, its
standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and
including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the date
of this Agreement; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand. Any other fees payable to the
Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of
360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year),
and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). 

        (c)    Administrative Agent Fees.    The Borrower agrees to pay to the Administrative Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent. 

32

 

 
 

ARTICLE IV
  Payments; Pro Rata Treatment; Sharing of Set-offs    
    

        Section 4.01    Payments Generally; Pro Rata Treatment; Sharing of Set-offs.    

        (a)    Payments by the Borrower.    The Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 12:00 noon, New York
City time, on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall not be refundable under any
circumstances. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon, but shall be considered received on the date paid for purposes of Section 10.01. All such payments shall be made to the Administrative Agent at its offices
specified in Section 12.01, except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01, Section 5.02,
Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any
other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment
accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars. 

        (b)    Application of Insufficient Payments.    If at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of
interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment
of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to
such parties. 

        (c)    Sharing of Payments by Lenders.    If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements resulting in such Lender receiving payment of a greater
proportion of the aggregate amount of its Loans and participations in LC Disbursements and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the Loans and participations in LC Disbursements of other Lenders to the extent necessary so that the benefit of all such
payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and participations in LC Disbursements; 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 4.01(c) shall not be construed to apply to any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC
Disbursements to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 4.01(c) shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against
the Borrower rights of set-off and counterclaim with respect to such 

33

 

participation
as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation. 

        Section 4.02    Presumption of Payment by the Borrower.    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 Bank 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 Bank, 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 Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such Lender or
Issuing Bank 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 Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. 

        Section 4.03    Certain Deductions by the Administrative Agent.    If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such
Sections until all such unsatisfied obligations are fully paid. 

        Section 4.04    Disposition of Proceeds.    The Security Instruments contain an assignment by the Borrower
and/or the Guarantors unto and in favor of the Administrative Agent for the benefit of the Lenders of all of the Borrower's or each Guarantor's interest in and to production and all proceeds
attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of
the Indebtedness and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, until the occurrence of an Event of Default,
(a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted
to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Restricted Subsidiaries and (b) the Lenders hereby authorize the
Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Restricted Subsidiaries. 

 
 

ARTICLE V
  Increased Costs; Break Funding Payments; Taxes; Illegality    
    

        Section 5.01    Increased Costs.    

        (a)    Eurodollar Changes in Law.    If any Change in Law shall: 

        (i)    impose,
modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any
Lender (except any such reserve requirement reflected in the Adjusted LIBO Rate); or 

        (ii)   impose
on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender; 

and
the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to reduce
the amount of any sum received or receivable by such Lender (whether of principal, 

34

 

interest
or otherwise), then the Borrower will pay to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. 

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

        (c)    Certificates.    A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to
compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Section 5.01(a) or (b) shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof. 

        (d)    Effect of Failure or Delay in Requesting Compensation.    Failure or delay on the part of any Lender or the
Issuing Bank to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any increased costs or reductions incurred more than 180 days prior to the
date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180-day period referred to
above shall be extended to include the period of retroactive effect thereof. 

        Section 5.02    Break Funding Payments.    In the event of (a) the payment of any principal of any
Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an ABR Loan
other than on the last day of the Interest Period applicable thereto, or (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto, or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to
Section 5.04(b), then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost
or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current
Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest
which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable
amount and period from other banks in the eurodollar market. 

A
certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive
absent manifest 

35

 

error.
The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof. 

        Section 5.03    Taxes.    

        (a)    Payments Free of Taxes.    Any and all payments by or on account of any obligation of the Borrower or any
Guarantor under any Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower or any Guarantor shall be required to
deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.03), the Administrative Agent, Lender or Issuing Bank (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 or such Guarantor shall make such deductions and (iii) the Borrower or such Guarantor shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law. 

        (b)    Payment of Other Taxes by the Borrower.    The Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law. 

        (c)    Indemnification by the Borrower.    The Borrower shall indemnify the Administrative Agent, each Lender and the
Issuing Bank, within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, on or with respect to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section 5.03) 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 of the Administrative Agent, a Lender or the Issuing Bank as to the amount of such payment or liability
under this Section 5.03 shall be delivered to the Borrower and 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 or a Guarantor 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)    Foreign 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 located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement or 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, such properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made without withholding or at a reduced rate. 

        Section 5.04    Mitigation Obligations; Replacement of Lenders.    

        (a)    Designation of Different Lending Office.    If any Lender requests compensation under Section 5.01, or
if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender shall use
reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 5.01 or Section 5.03, as the case
may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not 

36

 

otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. 

        (b)    Replacement of Lenders.    If any Lender requests compensation under Section 5.01, or if the Borrower is
required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 5.03, or if any Lender defaults in its obligation to fund
Loans hereunder, then the Borrower may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 12.04(b)), all its interests, rights and obligations under this Agreement to an assignee that shall assume such obligations
(which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) the Borrower shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrower (in
the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 5.01 or payments required to be made pursuant to
Section 5.03, such assignment will result in a reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation cease to apply. 

        Section 5.05    Illegality.    Notwithstanding any other provision of this Agreement, in the event that it
becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender's obligation to make such Eurodollar Loans shall be suspended (the
"Affected Loans") until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then
outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans,
all payments of principal which would otherwise be applied to such Lender's Affected Loans shall be applied instead to its ABR Loans. 

 
 

ARTICLE VI
  Conditions Precedent    
    

        Section 6.01    Effective Date.    The obligations of the Lenders to make Loans and of the Issuing Bank to
issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02): 

        (a)   The
Administrative Agent, the Arranger and the Lenders shall have received all fees and other amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder. 

        (b)   The
Administrative Agent shall have received a certificate of the Secretary or an Assistant Secretary of the Borrower and each Guarantor setting forth
(i) resolutions of its board of directors with respect to the authorization of the Borrower or such Guarantor to execute and deliver the Loan Documents to which it is a party and to enter into
the transactions contemplated in those documents, (ii) the officers of the Borrower or such Guarantor (y) who are authorized to 

37

 

sign
the Loan Documents to which the Borrower or such Guarantor is a party and (z) who will, until replaced by another officer or officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen
signatures of such authorized officers, and (iv) the articles or certificate of incorporation and bylaws (or other organizational documents) of the Borrower and such Guarantor, certified as
being true and complete. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Borrower to the contrary. 

        (c)   The
Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence, qualification and good standing of the
Borrower and each Guarantor. 

        (d)   The
Administrative Agent shall have received a compliance certificate which shall be substantially in the form of Exhibit D, duly and properly executed by a
Responsible Officer and dated as of the date of Effective Date. 

        (e)   The
Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement
signed on behalf of such party. 

        (f)    The
Administrative Agent shall have received duly executed Notes payable to the order of each Lender in a principal amount equal to its Maximum Credit Amount dated as of
the date hereof. 

        (g)   The
Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of the
Security Instruments, including the Guaranty Agreement and the other Security Instruments described on Exhibit F-1. In connection with the execution and delivery of the Security
Instruments, the Administrative Agent shall: 

        (i)    be
reasonably satisfied that the Security Instruments create first priority, perfected Liens (subject only to Excepted Liens identified in clauses (a) to
(d) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on at least 80% of the total value of the Oil and Gas Properties evaluated in the
Initial Reserve Report; 

        (ii)   have
received certificates, together with undated, blank stock powers for each such certificate, representing all of the issued and outstanding Equity Interests of each
of the Guarantors and not less than 65% of all of the issued and outstanding capital stock of each Foreign Subsidiary with total assets in excess of $250,000 that is not a Guarantor, which is directly
owned by either the Borrower or a Domestic Subsidiary; and 

        (iii)  be
reasonably satisfied that it has a Lien on all Property constituting security for the Second Lien Term Loan Agreement. 

        (h)   The
Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that (i) the Borrower shall be selling shares of
the Borrower's preferred stock which shall result in net cash proceeds of not less than $150,000,000, (ii) the Borrower shall be contemporaneously closing the Second Lien Term Loan Agreement
which shall result in net cash proceeds up to $50,000,000 and (iii) attached to such certificate is a true and complete copy of the Senior Subordinated Convertible Note. The structure, terms,
conditions and documentation, including execution and delivery of appropriate inter-creditor and/or subordination documentation for each of the foregoing shall be reasonably satisfactory to the
Administrative Agent. 

38

 

        (i)    The
Administrative Agent shall have received an opinion of (i) Hinkle Elkouri Law Firm L.L.C., special counsel to the Borrower, substantially in the form of
Exhibit E-1 hereto, and (ii) local counsel in each of the following states: Texas, Oklahoma, New Mexico and Louisiana and any other jurisdictions requested by the
Administrative Agent, substantially in the form of Exhibit E-2. 

        (j)    The
Administrative Agent shall have received a certificate of insurance coverage of the Borrower evidencing that the Borrower is carrying insurance in accordance with
Section 7.13. 

        (k)   The
Administrative Agent shall be reasonably satisfied with the status of title to the Oil and Gas Properties evaluated in the Initial Reserve Report. 

        (l)    The
Administrative Agent shall be reasonably satisfied with the environmental condition of the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries. 

        (m)  The
Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that the Borrower has received all consents and approvals
required by Section 7.03. 

        (n)   The
Administrative Agent shall have received evidence satisfactory to it that the Borrower is repaying in full and terminating the Existing Credit Agreements, and all
credit facilities and funded Debt of the Targets are being repaid and terminated, contemporaneously with the funding of the initial Loans under this Agreement, and the Administrative Agent shall have
received a certificate dated as of the Effective Date, signed by a Responsible Officer, to that effect. The Administrative Agent shall have received evidence satisfactory to it that all Liens
associated with the Existing Credit Agreements and all credit facilities and funded Debt of the Targets have been released or terminated contemporaneously with the making of such payments and that
arrangements satisfactory to the Administrative Agent has been made for recording and filing of such releases. 

        (o)   The
Administrative Agent shall have received the financial statements referred to in Section 7.04(a) and the Initial Reserve Report accompanied by a certificate
covering the matters described in Section 8.12(c). 

        (p)   The
Administrative Agent shall have received appropriate UCC search certificates reflecting no prior Liens encumbering the Properties of the Borrower and the Restricted
Subsidiaries for each of the following jurisdictions: Texas, Oklahoma, Louisiana and New Mexico and any other jurisdiction requested by the Administrative Agent; other than those being assigned or
released on or prior to the Effective Date or Liens permitted by Section 9.03. 

39

  

        (q)   The
Administrative Agent shall have received evidence that the Borrower or one of its Restricted Subsidiaries has purchased one or more commodity price floors, collars
or price swaps with one or more Approved Counterparties which have (i) fixed price payor or floor prices acceptable to the Administrative Agent and consistent with the assumed prices utilized
in establishing the Borrowing Base under Section 2.07(a) as of the Effective Date, and (ii) aggregate notional volumes of not less than approximately 80% during the calendar year 2005
and 2006 and approximately 50% during calendar year 2007 and 2008 of the reasonably estimated projected crude oil production and of the reasonably estimated projected natural gas production (for
informational purposes, as of November 19, 2004, the aggregate notional volumes of Borrower's commodity price floors, collars or price swaps are approximately 79% during calendar year 2005,
approximately 77% during calendar year 2006, approximately 52% during calendar year 2007 and approximately 50% during calendar year 2008 of the reasonably estimated projected crude oil production, and
approximately 78% during calendar year 2005, approximately 72% during calendar year 2006, approximately 53% during calendar year 2007 and approximately 55% during calendar year 2008 of the reasonably
estimated projected natural gas production), in each case, from its proved developed, producing Oil and Gas Properties as determined by reference to the Initial Reserve Reports for each year during
the period commencing with the Effective Date and ending on December 31, 2006. 

        (r)   The
Administrative Agent shall have received (i) a certificate of a Responsible Officer of the Borrower certifying: (A) that the Borrower is concurrently
consummating the Mergers in accordance with the terms of the Merger Documents (with all of the material conditions precedent thereto having been satisfied in all material respects by the parties
thereto, including termination of the Wildcard Management Agreements); and (B) as to the final purchase price after giving effect to all adjustments as of the closing date contemplated by the
Merger Documents and specifying, by category, the amount of such adjustment as (1) title defect, (2) casualty loss, (3) environmental defect, (4) gas imbalance,
(5) cash distributions made to equity owners subsequent to June 30, 2004, (6) state income tax liability for the accounting period of January 1, 2004 through
June 30, 2004, (7) current liabilities as of June 30, 2004, (8) long-term outstanding debt as of June 30, 2004, (9) negative or positive amount
(if any) of the marked-to-market value of commodity derivatives as of June 30, 2004, determined in accordance with GAAP, (10) cost of preparing such Target's tax
returns and (11) an amount equal to any damages incurred pursuant to Section I.F.(xi) of the Merger Documents; (ii) a true and complete executed copy of each of the Merger
Documents and (iii) such other related documents and information as the Administrative Agent shall have reasonably requested. 

The
Administrative Agent shall be reasonably satisfied with the terms, conditions and documentation of the Mergers and the Merger Documents. The Borrower recognizes and agrees that (a) it shall
have delivered to the Administrative Agent notice of any price adjustments to the purchase price of the Mergers for the items listed in B (1), (2), (3) and (4) above not less than three
(3) days prior to the Effective Date and (b) if the purchase price adjustment is greater than $2,500,000, then the Administrative Agent shall suggest to the Majority Lenders a reduced
Borrowing Base and Threshold Amount and the Majority Lenders shall reach a consensus as to an adjusted Borrowing Base and
Threshold Amount. Promptly upon the decision by the Majority Lenders of such new values, the Administrative Agent shall notify the Borrower and each Lender of such allocation. 

        (s)   The
Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that: (i) Targets and the Borrower are concurrently
consummating the Mergers in accordance with the terms of the Merger Documents (with all of the material conditions thereto having been satisfied in all material respects by the parties thereto), and
(ii) attached thereto is a true and complete copy of each Certificate of Merger to be filed with the Texas Secretary of State. 

40

 

        (t)    The
Administrative Agent shall have received a copy, certified by a Responsible Officer as true and complete, of the Merger Documents (together with all amendments, if
any), the Senior Subordinated Convertible Note and the Second Lien Term Loan Documents, the terms and conditions of which shall be reasonably acceptable to the Administrative Agent. 

        (u)   The
Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative Agent may reasonably request. 

        The
Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations
of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to
Section 12.02) at or prior to 2:00 p.m., New York City time, on December 15, 2004 (and, in the event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time). 

        Section 6.02    Each Credit Event.    The obligation of each Lender to make a Loan on the occasion of any
Borrowing (including the initial funding), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions: 

        (a)   At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default
shall have occurred and be continuing. 

        (b)   At
the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no event,
development or circumstance has
occurred or shall then exist that has resulted in, or could reasonably be expected to have, a Material Adverse Effect. 

        (c)   The
representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be true and correct on and as of
the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent any such representations and warranties are expressly
limited to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such specified earlier date. 

        (d)   The
making of such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, would not conflict with, or cause any Lender or the
Issuing Bank to violate or exceed, any applicable Governmental Requirement, and no Change in Law shall have occurred, and no litigation shall be pending or threatened, which does or, with respect to
any threatened litigation, seeks to, enjoin, prohibit or restrain, the making or repayment of any Loan, the issuance, amendment, renewal, extension or repayment of any Letter of Credit or any
participations therein or the consummation of the transactions contemplated by this Agreement or any other Loan Document. 

        (e)   The
receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit in accordance with
Section 2.08(b), as applicable. 

        Each
Borrowing and each issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof
as to the matters specified in Section 6.02(a) through (e). 

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ARTICLE VII
  Representations and Warranties    
    

        The Borrower represents and warrants to the Lenders that: 

        Section 7.01    Organization; Powers.    Each of the Borrower and the Restricted Subsidiaries is duly
organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all material governmental licenses,
authorizations, consents and
approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is
required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect. 

        Section 7.02    Authority; Enforceability.    The Transactions are within the Borrower's and each Guarantor's
corporate powers and have been duly authorized by all necessary corporate and, if required, stockholder action (including, without limitation, any action required to be taken by any class of directors
of the Borrower, whether interested or disinterested, in order to ensure the due authorization of the Transactions). Each Loan Document and Merger Document to which the Borrower and each Guarantor is
a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law. 

        Section 7.03    Approvals; No Conflicts.    The Transactions (a) do not require any consent or approval
of, registration or filing with, or any other action by, any Governmental Authority or any other third Person, nor is any such consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the Transactions, except such as have been obtained or made and are in full force and effect other than (i) the recording
and filing of the Security Instruments as required by this Agreement and (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could
not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, (b) will not violate any applicable law or regulation
or the charter, by-laws or other organizational documents of the Borrower or any Restricted Subsidiary or any order of any Governmental Authority, (c) will not violate or result in
a default under any indenture, agreement or other instrument binding upon the Borrower or any Restricted Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be
made by the Borrower or such Restricted Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Restricted Subsidiary (other than the
Liens created by the Loan Documents). 

        Section 7.04    Financial Condition; No Material Adverse Change    

        (a)   The
Borrower has heretofore furnished to the Lenders (i) its consolidated balance sheet and statements of income, stockholders equity and cash flows (x) as
of and for the fiscal year ended December 31, 2003, reported on by Ernst & Young LLP, independent public accountants and (y) as of and for the fiscal quarter and the portion of
the fiscal year ended June 30, 2004, reviewed by KPMG LLP, (ii) the consolidated balance sheet and statements of income, stockholders equity and cash flows of each Target (x) as
of and for the 2001, 2002 and 2003 fiscal years, reported on by KPMG LLP, independent public accountants and (y) as of and for the fiscal quarter and the portion of the fiscal year ended
June 30, 2004, certified by its chief financial officer and (iii) the consolidated balance sheet and statements of income, stockholders equity and cash flows of each GP as of and for the
fiscal quarter and the portion of the fiscal year ended June 30, 2004, certified by its chief financial officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower 

42

 

and
its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the
unaudited quarterly financial statements. The Borrower has heretofore furnished to the Lenders the unaudited, pro forma consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the six-month period ended June 30, 2004 adjusted to give effect to the Mergers, this Agreement, and the other transactions contemplated by
Section 6.01(h), certified by its chief financial officer as presenting fairly, in all material respects, the consolidated pro forma financial position and results of operations and cash flows
of the Borrower and its Consolidated Subsidiaries as of such date and for such period in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the
case of the unaudited quarterly financial statements. 

        (b)   Since
December 31, 2003, (i) there has been no event, development or circumstance that has had or could reasonably be expected to have a Material Adverse
Effect and (ii) the business of the Borrower and its Restricted Subsidiaries has been conducted only in the ordinary course consistent with past business practices. 

        (c)   Neither
the Borrower nor any Restricted Subsidiary has on the date hereof any material Debt (including Disqualified Capital Stock) or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable
commitments (other than the Gas Balancing Obligations and the Swap Agreements listed on Schedule 7.21) which are not referred to or reflected or provided for in the Financial Statements. 

        Section 7.05    Litigation.    

        (a)   Except
as set forth on Schedule 7.05, there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending
against or, to the Knowledge of the Borrower, threatened against or affecting the Borrower, any Restricted Subsidiary, any Target, or
involving the Mergers (i) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable possibility of an adverse determination that, if adversely determined,
could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, (ii) that involve any Loan Document, any Merger Document or the Transactions or
(iii) that could impair the consummation of the Mergers on the time and in the manner contemplated by the Merger Documents. 

        (b)   Since
the date of this Agreement, there has been no change in the status of the matters disclosed in Schedule 7.05 that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse Effect. 

        Section 7.06    Environmental Matters.    Except as could not be reasonably expected to have a Material Adverse
Effect (or with respect to (c), (d) and (e) below, where the failure to take such actions could not be reasonably expected to have a Material Adverse Effect): 

        (a)   neither
any Property of the Borrower or any Restricted Subsidiary nor the operations conducted thereon violate any order or requirement of any court or Governmental
Authority or any Environmental Laws. 

        (b)   no
Property of the Borrower or any Restricted Subsidiary nor the operations currently conducted thereon or, to the Knowledge of the Borrower, by any prior owner or
operator of such Property or operation, are in violation of or subject to any existing, pending or threatened action, suit, investigation, inquiry or proceeding by or before any court or Governmental
Authority or to any remedial obligations under Environmental Laws. 

43

 

        (c)   all
notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection with the operation or use of any
and all Property of the Borrower and each Restricted Subsidiary, including, without limitation, past or present treatment, storage, disposal or release of a hazardous substance, oil and gas waste or
solid waste into the environment, have been duly obtained or filed, and the Borrower and each Restricted Subsidiary are in compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations. 

        (d)   all
hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of the Borrower or any Restricted Subsidiary have in the past been
transported, treated and disposed of in accordance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment, and, to the
Knowledge of the Borrower, all such transport carriers and treatment and disposal facilities have been and are operating in compliance with Environmental Laws and so as not to pose an imminent and
substantial endangerment
to public health or welfare or the environment, and are not the subject of any existing, pending or threatened action, investigation or inquiry by any Governmental Authority in connection with any
Environmental Laws. 

        (e)   the
Borrower has taken all steps reasonably necessary to determine and has determined that no oil, hazardous substances, solid waste or oil and gas waste, have been
disposed of or otherwise released and there has been no threatened release of any oil, hazardous substances, solid waste or oil and gas waste on or to any Property of the Borrower or any Restricted
Subsidiary except in compliance with Environmental Laws and so as not to pose an imminent and substantial endangerment to public health or welfare or the environment. 

        (f)    to
the extent applicable, all Property of the Borrower and each Restricted Subsidiary currently satisfies all design, operation, and equipment requirements imposed by
the OPA, and the Borrower does not have any reason to believe that such Property, to the extent subject to the OPA, will not be able to maintain compliance with the OPA requirements during the term of
this Agreement. 

        (g)   neither
the Borrower nor any Restricted Subsidiary has any known contingent liability or Remedial Work in connection with any release or threatened release of any oil,
hazardous substance, solid waste or oil and gas waste into the environment. 

        Section 7.07    Compliance with the Laws and Agreements; No Defaults.    

        (a)   Each
of the Borrower and each Restricted Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property
and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. 

        (b)   Neither
the Borrower nor any Restricted Subsidiary is in default nor has any event or circumstance occurred which, but for the expiration of any applicable grace period
or the giving of notice, or both, would constitute a default or would require the Borrower or a Restricted Subsidiary to Redeem or make any offer to Redeem under any indenture, note, credit agreement
or instrument pursuant to which any Material Indebtedness is outstanding or by which the Borrower or any Restricted Subsidiary or any of their Properties is bound. 

        (c)   No
Default has occurred and is continuing. 

44

 

        Section 7.08    Investment Company Act.    Neither the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company," within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended. 

        Section 7.09    Public Utility Holding Company Act.    Neither the Borrower nor any Subsidiary is a "holding
company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," or a "public utility" within the meaning of,
or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended. 

        Section 7.10    Taxes.    Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all
Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate. No Tax Lien has been filed and, to the Knowledge of the Borrower, no claim is being asserted with respect to any such Tax
or other such governmental charge. 

        Section 7.11    ERISA.    

        (a)   The
Borrower, the Subsidiaries and each ERISA Affiliate have complied in all material respects with ERISA and, where applicable, the Code regarding each Plan. 

        (b)   Each
Plan is, and has been, maintained in substantial compliance with ERISA and, where applicable, the Code. 

        (c)   No
act, omission or transaction has occurred which could result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of
(i) either a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or
(ii) breach of fiduciary duty liability damages under section 409 of ERISA. 

        (d)   No
Plan (other than a defined contribution plan) or any trust created under any such Plan has been terminated since September 2, 1974. No liability to the PBGC
(other than for the payment of current premiums which are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA
Affiliate to be incurred with respect to any Plan. No ERISA Event with respect to any Plan has occurred. 

        (e)   Full
payment when due has been made of all amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or applicable law
to have paid as contributions to such Plan as of the date hereof, and no accumulated funding deficiency (as defined in section 302 of ERISA and section 412 of the Code), whether or not
waived, exists with respect to any Plan. 

        (f)    The
actuarial present value of the benefit liabilities under each Plan which is subject to Title IV of ERISA does not, as of the end of the Borrower's most recently
ended fiscal year, 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. The term
"actuarial present value of the benefit liabilities" shall have the meaning specified in section 4041 of ERISA. 

        (g)   Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan, as defined in section 3(1)
of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such 

45

 

entities,
that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time without any material liability. 

        (h)   Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year period preceding the
date hereof sponsored, maintained or contributed to, any Multiemployer Plan. 

        (i)    Neither
the Borrower, the Subsidiaries nor any ERISA Affiliate is required to provide security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan. 

        Section 7.12    Disclosure; No Material Misstatements.    The Borrower has disclosed to the Administrative
Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Restricted Subsidiaries is subject, and all other matters known to it, that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. Neither the
Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Restricted Subsidiary to the
Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document
(as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good
faith based upon assumptions believed to be reasonable at the time. There is no fact peculiar to the Borrower or any Restricted Subsidiary which could reasonably be expected to have a Material Adverse
Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and
statements furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Restricted Subsidiary prior to, or on, the date hereof in connection with the transactions
contemplated hereby. No statements or conclusions exist in any Reserve Report which are based upon or include misleading information or which fail to take into account material information regarding
the matters reported therein to the extent such misstatement, misleading information or failure could reasonably be expected to have a Material Adverse Effect. 

        Section 7.13    Insurance.    The Borrower has, and has caused all its Restricted Subsidiaries to have,
(a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least
amounts and against such risk (including, without limitation, public liability) that are usually insured against by companies similarly situated and engaged in the same or a similar business for the
assets and operations of the Borrower and its Restricted Subsidiaries. The Administrative Agent and the Lenders have been named as additional insureds in respect of such liability insurance policies
and the Administrative Agent has been named as loss payee with respect to Property loss insurance. 

        Section 7.14    Restriction on Liens.    Neither the Borrower nor any of the Restricted Subsidiaries is a party
to any material agreement or arrangement (other than Capital Leases creating Liens permitted by Section 9.03(c), but then only on the Property subject of such Capital Lease), or subject to any
order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure
the Indebtedness and the Loan Documents. 

        Section 7.15    Subsidiaries.    Except as set forth on Schedule 7.15 or as disclosed in writing to the
Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule 7.15, the Borrower has no Subsidiaries and the Borrower has no Foreign 

46

 

Subsidiaries.
Schedule 7.15 identifies each Subsidiary as either Restricted or Unrestricted, and each Restricted Subsidiary on such schedule is a Wholly-Owned Subsidiary. 

        Section 7.16    Location of Business and Offices.    The Borrower's jurisdiction of organization is Delaware;
the name of the Borrower as listed in the public records of its jurisdiction of organization is Petrohawk Energy Corporation; and the organizational identification number of the Borrower in its
jurisdiction of organization is 3828463 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(m) in accordance with Section 12.01).
The Borrower's principal place of business and chief executive offices are located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to
Section 8.01(m) and Section 12.01(c)). Each Restricted Subsidiary's jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of its principal place of business and chief executive office is stated on Schedule 7.15 (or as set forth in a notice
delivered pursuant to Section 8.01(m)). 

        Section 7.17    Properties; Titles, Etc.    

        (a)   Each
of the Borrower and the Restricted Subsidiaries has good and defensible title to the Oil and Gas Properties evaluated in the most recently delivered Reserve Report
and good title to all its personal Properties, in each case, free and clear of all Liens except Liens permitted by Section 9.03. After giving full effect to the Excepted Liens, the Borrower or
the Restricted Subsidiary specified as the owner owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the
ownership of such Properties shall not in any material respect obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower's or such Restricted Subsidiary's net revenue interest in such Property. 

        (b)   All
material leases and agreements necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases, which could
reasonably be expected to have a Material Adverse Effect. 

        (c)   The
rights and Properties presently owned, leased or licensed by the Borrower and the Restricted Subsidiaries including, without limitation, all easements and rights of
way, include all rights and Properties necessary to permit the Borrower and the Restricted Subsidiaries to conduct their business in all material respects in the same manner as its business has been
conducted prior to the date hereof. 

        (d)   All
of the Properties of the Borrower and the Restricted Subsidiaries which are reasonably necessary for the operation of their businesses are in good working condition
and are maintained in accordance with prudent business standards. 

        (e)   The
Borrower and each Restricted Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by the Borrower and such Restricted Subsidiary does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower and its Restricted Subsidiaries either own or have valid licenses or other rights to use all databases,
geological data, geophysical data, engineering data, seismic data, maps, interpretations and other technical information used in their businesses as presently conducted, subject to the limitations
contained in 

47

 

the
agreements governing the use of the same, which limitations are customary for companies engaged in the business of the exploration and production of Hydrocarbons, with such exceptions as could not
reasonably be expected to have a Material Adverse Effect. 

        Section 7.18    Maintenance of Properties.    Except for such acts or failures to act as could not be
reasonably expected to have a Material Adverse Effect, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Restricted Subsidiaries have been maintained, operated and
developed in a good and workmanlike manner and in conformity with all Government Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the
Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries. Specifically in connection with the foregoing,
except for those as could not be reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any Restricted Subsidiary is subject to having allowable
production reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and
(ii) none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower or any Restricted Subsidiary is deviated from the vertical more than
the maximum permitted by Government Requirements, and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case
of wells located on Properties unitized therewith, such unitized Properties) of the Borrower or such Restricted Subsidiary. All pipelines, wells, gas processing plants, platforms and other material
improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Restricted Subsidiaries that are necessary to conduct normal operations are being maintained in a state
adequate to conduct normal operations, and with respect to such of the foregoing which are operated by the Borrower or any of its Restricted Subsidiaries, in a manner consistent with the Borrower's or
its Restricted Subsidiaries' past practices (other than those the failure of which to maintain in accordance with this Section 7.18 could not reasonably be expected to have a Material Adverse
Effect). 

        Section 7.19    Gas Imbalances, Prepayments.    As of the date hereof, except as set forth on
Schedule 7.19 or on the most recent certificate delivered pursuant to Section 8.12(c), on a net basis there are no gas imbalances, take or pay or other prepayments which would require
the Borrower or any of its Restricted Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor
exceeding 0.8 bcf of gas (on an mcf equivalent basis) in the aggregate. 

        Section 7.20    Marketing of Production.    Except for contracts listed and in effect on the date hereof on
Schedule 7.20, and thereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report (with respect to all of which contracts the
Borrower represents that it or its Restricted Subsidiaries are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant
contract and are not having deliveries curtailed substantially below the subject Property's delivery capacity), no material agreements exist which are not cancelable on 60 days notice or less
without penalty or detriment for the sale of production from the Borrower's or its Restricted Subsidiaries' Hydrocarbons (including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a) pertain to the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six
(6) months from the date hereof. 

        Section 7.21    Swap Agreements.    Schedule 7.21, as of the date hereof, and after the date hereof,
each report required to be delivered by the Borrower pursuant to Section 8.01(e), sets forth, a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the
material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied) and the counterparty to each such agreement. 

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        Section 7.22    Use of Loans and Letters of Credit.    The proceeds of the Loans and the Letters of Credit
shall be used for general corporate purposes, including the issuance of letters of credit. The Borrower and its Subsidiaries are not engaged principally, or as one of its or their important
activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the
Board). No part of the proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions of Regulations T, U or X of the Board. 

        Section 7.23    Solvency.    After giving effect to the transactions contemplated hereby, (a) the
aggregate assets (after giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt becomes absolute and matures, (b) each of the Borrower and
the Guarantors will not have incurred or intended to incur, and will not believe that it will incur, Debt beyond its ability to pay such Debt (after taking into account the timing and amounts of cash
to be received by each of the Borrower and the Guarantors and the amounts to be payable on or in respect of its liabilities, and giving effect to amounts that could reasonably be received by reason of
indemnity, offset, insurance or any similar arrangement) as such Debt becomes absolute and matures and (c) each of the Borrower and the Guarantors will not have (and will have no reason to
believe that it will have thereafter) unreasonably small capital for the conduct of its business. 

        Section 7.24    Specified Senior Indebtedness.    The Indebtedness of the Borrower constitutes "Senior
Indebtedness" and "Specified Senior Indebtedness," and the Indebtedness of each Guarantor under the Loan Documents to which it is a party constitutes "Guarantor Senior Indebtedness" and "Specified
Guarantor Senior Indebtedness," in each case, under and as defined in the Second Lien Term Loan Documents and the Senior Subordinated Convertible Note. 

        Section 7.25    Mergers.    The copies of the Merger Documents previously delivered by the Borrower to the
Administrative Agent are true, accurate and complete and have not been amended or modified in any manner, other than pursuant to amendments or modifications previously delivered to the Administrative
Agent. Neither the Borrower nor any Person constituting a Subsidiary prior to the effectiveness of the Mergers is in default in respect of any material term or obligation set forth in the Merger
Documents. To the Knowledge of the Borrower, none of the Targets or any of each Target's respective shareholders, members, partners or other holders of Equity Interests is in default in respect of any
material term or obligation set forth in the Merger Documents. 

 
 

ARTICLE VIII
  Affirmative Covenants    
    

        Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable
under the Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that: 

        Section 8.01    Financial Statements; Ratings Change; Other Information.    The Borrower will furnish to the
Administrative Agent and each Lender: 

        (a)    Annual Financial Statements.    As soon as available, but in any event in accordance with then applicable law
and not later than 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders' equity and cash flows as
of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by independent public accountants of recognized national
standing (without a "going concern" or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such 

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consolidated
financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied. 

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

        (c)    Certificate of Financial Officer—Compliance.    Concurrently with any delivery of financial
statements under Section 8.01(a) or Section 8.01(b), a certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying as to whether a
Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Section 8.13(b) and Section 9.01 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date
of the audited financial statements referred to in Section 7.04 and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such
certificate. 

        (d)    Certificate of Financial Officer—Consolidating Information.    If, at any time, all of the
Consolidated Subsidiaries of the Borrower are not Consolidated Restricted Subsidiaries, then concurrently with any delivery of financial statements under Section 8.01(a) or
Section 8.01(b), a certificate of a Financial Officer setting forth consolidating spreadsheets that show all Consolidated Unrestricted Subsidiaries and the eliminating entries, in such form as
would be presentable to the auditors of the Borrower. 

        (e)    Certificate of Financial Officer—Swap Agreements.    Concurrently with any delivery of financial
statements under Section 8.01(a) and Section 8.01(b), a certificate of a Financial Officer, in form and substance satisfactory to the Administrative Agent, setting forth as of the last
Business Day of such fiscal quarter or fiscal year, a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the material terms thereof (including the type,
term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto not listed on
Schedule 7.21, any margin required or supplied under any credit support document, and the counterparty to each such agreement. 

        (f)    Certificate of Insurer—Insurance Coverage.    Concurrently with any delivery of financial
statements under Section 8.01(a), a certificate of insurance coverage from each insurer with respect to the insurance required by Section 8.07, in form and substance satisfactory to the
Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies. 

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

50

 

        (h)    SEC and Other Filings; Reports to Shareholders.    Promptly after the same become publicly available, and upon
the request of the Lenders, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC, or with any national securities
exchange and distributed by the Borrower to its shareholders. 

        (i)    Notices Under Material Instruments.    Promptly after the furnishing thereof, copies of any financial
statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation, 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 8.01. 

        (j)    Lists of Purchasers.    Concurrently with the delivery of any Reserve Report to the Administrative Agent
pursuant to Section 8.12, a list of Persons who purchase (or did purchase in the last six months) at least 70% Hydrocarbons from the Borrower or any Restricted Subsidiary. 

        (k)    Notice of Sales of Oil and Gas Properties.    In the event the Borrower or any Restricted Subsidiary intends to
sell, transfer, assign or otherwise dispose of at least $250,000 worth of any Oil or Gas Properties or any Equity Interests in any Subsidiary in accordance with Section 9.13, prior written
notice of such disposition, the price thereof and the anticipated date of closing. 

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

        (m)    Information Regarding Borrower and Guarantors.    Prompt written notice (and in any event within thirty
(10) days prior thereto) of any change (i) in the Borrower or any Guarantor's corporate name or in any trade name used to identify such Person in the conduct of its business or in the
ownership of its Properties, (ii) in the location of the Borrower or any Guarantor's chief executive office or principal place of business, (iii) in the Borrower or any Guarantor's
identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in the Borrower or any Guarantor's jurisdiction of organization or such Person's
organizational identification number in such jurisdiction of organization, and (v) in the Borrower or any Guarantor's federal taxpayer identification number. 

        (n)    Production Report and Lease Operating Statements.    With the delivery of quarterly financial statements under
Section 8.01(b) and in any event, no later than 60 days after the end of each fiscal quarter, a report setting forth, for each calendar month during the then current fiscal year to date
on a production date basis, the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar
month from the Oil and Gas Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar
month. 

        (o)    Notices of Certain Changes.    Promptly, but in any event within five (5) Business Days after the
execution thereof, copies of any amendment, modification or supplement to the certificate or articles of incorporation, by-laws, any preferred stock designation or any other organic
document of the Borrower or any Restricted Subsidiary. 

        (p)    Ratings Change.    Promptly after Moody's or S&P shall have announced a change in the rating, established or
deemed to have been established for the Borrower or any Material Indebtedness, written notice of such rating change. 

        (q)    Notices Relating to Mergers.    In the event that the purchase price of the Mergers is adjusted, the Borrower
shall promptly give the Administrative Agent notice in reasonable detail of such circumstances as set forth in Section 6.01(r). 

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        (r)    Other Requested Information.    Promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower or any Subsidiary (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to
be filed under ERISA), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request. 

        (s)    Delivery of Information Electronically.    Notices to the Administrative Agent and the Lenders under this
Section 8.01 may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent, including broadcast email to the Lenders that the available
information has been made available to the Lenders on either the Borrower's "Intralinks" page or the Borrower's website at  www.Petrohawk.com. 

        Section 8.02    Notices of Material Events.    The Borrower will furnish to the Administrative Agent and each
Lender prompt written notice of the following: 

        (a)   the
occurrence of any Default; 

        (b)   the
filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental
Authority against or affecting the Borrower or any Affiliate thereof not previously disclosed in writing to the Lenders or any material adverse development in any action, suit, proceeding,
investigation or arbitration previously disclosed to the Lenders that, if adversely determined, could reasonably be expected to result in liability in excess of $1,000,000 not fully covered by
insurance, subject to normal deductibles; 

        (c)   the
occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding $500,000; and 

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

Each
notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any
action taken or proposed to be taken with respect thereto. 

        Section 8.03    Existence; Conduct of Business.    The Borrower will, and will cause each Restricted Subsidiary
to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the
conduct of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Oil and Gas Properties is located or the ownership of its Properties
requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 9.12. 

        Section 8.04    Payment of Obligations.    The Borrower will, and will cause each Restricted Subsidiary to, pay
its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or such Restricted Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any Property of the
Borrower or any Subsidiary. 

52

 

        Section 8.05    Performance of Obligations under Loan Documents.    The Borrower will pay the Notes according
to the reading, tenor and effect thereof, and the Borrower will, and will cause each Restricted Subsidiary to, do and perform every act and discharge all of the obligations to be performed and
discharged by them under the Loan Documents, including, without limitation, this Agreement, at the time or times and in the manner specified. 

        Section 8.06    Operation and Maintenance of Properties.    The Borrower, at its own expense, will, and will
cause each Restricted Subsidiary to: 

        (a)   operate
its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including,
without limitation, applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to
regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom, except, in each case, where the failure to comply could
not reasonably be expected to have a Material Adverse Effect. 

        (b)   keep
and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted preserve, maintain and keep
in good repair, working order and efficiency (ordinary wear and tear excepted) all of its Oil and Gas Properties and other Properties, including, without limitation, all equipment, machinery and
facilities except, in each case, where the failure to do so could not reasonably be expected to have a Material Adverse Effect. 

        (c)   promptly
pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and will do all other things necessary to keep unimpaired their rights with respect thereto and prevent any
forfeiture thereof or default thereunder. 

        (d)   promptly
perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations required by each and all of
the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Oil and Gas Properties and other material Properties. 

        (e)   operate
its Oil and Gas Properties and other material Properties or cause or make reasonable and customary efforts to cause such Oil and Gas Properties and other
material Properties to be operated in accordance with the practices of the industry and in material compliance with all applicable contracts and agreements and in compliance in all material respects
with all Governmental Requirements. 

        (f)    to
the extent the Borrower is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06. 

        Section 8.07    Insurance.    The Borrower will, and will cause each Restricted Subsidiary to, maintain, with
financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in
the same or similar locations. The loss payable clauses or provisions in said insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in favor of and made payable
to the Administrative Agent as its interests may appear and such policies shall name the Administrative Agent and the Lenders as "additional insureds" and provide that the insurer will endeavor to
give at least 30 days prior notice of any cancellation to the Administrative Agent. 

53

 

        Section 8.08    Books and Records; Inspection Rights.    The Borrower will, and will cause each Restricted
Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities. The Borrower will,
and will cause each Restricted Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its Properties, to
examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as
reasonably requested. 

        Section 8.09    Compliance with Laws.    The Borrower will, and will cause each Restricted Subsidiary to,
comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. 

        Section 8.10    Environmental Matters.    

        (a)   The
Borrower shall at its sole expense: (i) comply, and shall cause its Properties and operations and each Subsidiary and each Subsidiary's Properties and
operations to comply, with all applicable Environmental Laws, the breach of which could be reasonably expected to have a Material Adverse Effect; (ii) not dispose of or otherwise release, and
shall cause each Subsidiary not to dispose of or otherwise release, any oil, oil and gas waste, hazardous substance, or solid waste on, under, about or from any of the Borrower's or its Subsidiaries'
Properties or any other Property to the extent caused by the Borrower's or any of its Subsidiaries' operations except in compliance with applicable Environmental Laws, the disposal or release of which
could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all notices, permits, licenses,
exemptions, approvals, registrations or other authorizations, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Borrower's or
its Subsidiaries' Properties, which failure to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and
shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the "Remedial Work") in the event any Remedial Work is required or reasonably necessary under
applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal or other release of any oil, oil and gas waste, hazardous substance or solid
waste on, under, about or from any of the Borrower's or its Subsidiaries' Properties, which failure to commence and diligently prosecute to completion could reasonably be expected to have a Material
Adverse Effect; and (v) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be necessary to continuously determine and assure that the
Borrower's and its Subsidiaries' obligations under this Section 8.10(a) are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have a Material
Adverse Effect. 

        (b)   The
Borrower will promptly, but in no event later than five days of the occurrence of a triggering event, notify the Administrative Agent and the Lenders in writing of
any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any landowner or other third party against the Borrower or its Subsidiaries or
their Properties of which the Borrower has Knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the Borrower reasonably anticipates that such action
will result in liability (whether individually or in the aggregate) in excess of $500,000, not fully covered by insurance, subject to normal deductibles. 

54

 

        (c)   The
Borrower will, and will cause each Subsidiary to, provide environmental audits and tests in accordance with American Society of Testing Materials standards upon
request by the Administrative Agent and the Lenders and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Administrative Agent or the
Lenders by any Governmental Authority), in connection with any future acquisitions of Oil and Gas Properties or other Properties. 

        Section 8.11    Further Assurances.    

        (a)   The
Borrower at its expense will, and will cause each Restricted Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Administrative Agent to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any
Restricted Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe the collateral intended as security for the Indebtedness, or to
correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this
Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith. 

        (b)   The
Borrower hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of
the Mortgaged Property without the signature of the Borrower or any other Guarantor where permitted by law. A carbon, photographic or other reproduction of the Security Instruments or any financing
statement covering the Mortgaged Property or any part thereof shall be sufficient as a financing statement where permitted by law. 

        Section 8.12    Reserve Reports.    

        (a)   On
or before March 1st and September 1st of each year, commencing January 1, 2005, the Borrower shall furnish to the Administrative Agent and the
Lenders a Reserve Report. The Reserve Report as of January 1 of each year shall be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve Report of each year shall
be prepared by or under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures
used in the immediately preceding January 1 Reserve Report. 

        (b)   In
the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report prepared by or under the supervision
of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding
January 1 Reserve Report. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to Section 2.07(b), the Borrower shall provide such Reserve
Report with an "as of" date as required by the Administrative Agent as soon as possible, but in any event no later than thirty (30) days following the receipt of such request. 

        (c)   With
the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders a certificate from a Responsible Officer certifying that
in all material respects: (i) the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct and no statements or conclusions
exist in such Reserve Report which are based upon or include misleading information or which fail to take into account material information regarding the matters reported therein to the extent such
misstatement, misleading information or failure could reasonably be expected to have a Material 

55

 

Adverse
Effect, (ii) the Borrower or its Restricted Subsidiaries owns good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of
all Liens except for Liens permitted by Section 9.03, (iii) 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 in excess of the volume specified in Section 7.19 with respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the Borrower or any Restricted
Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of
their 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 Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to
the later of the date hereof or the most recently delivered Reserve Report which the Borrower could reasonably be expected to have been obligated to list on Schedule 7.20 had such agreement
been in effect on the date hereof and (vi) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the
percentage of the Borrowing Base that the value of such Mortgaged Properties represent in compliance with Section 8.14(a). 

        Section 8.13    Title Information.    

        (a)   On
or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.12(a), the Borrower will deliver title
information in form and substance acceptable to the Administrative Agent covering enough of the Oil and Gas Properties evaluated by such Reserve Report that were not included in the immediately
preceding Reserve Report, so that the Administrative Agent shall be reasonably satisfied with the status of title to the Oil and Gas Properties evaluated by such Reserve Report. 

        (b)   If
the Borrower has provided title information for additional Properties under Section 8.13(a), the Borrower shall, within 90 days of notice from the
Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any such title defects or exceptions (including defects or exceptions as
to priority) which are not permitted by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions except for Excepted
Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such definition) having an equivalent value or (iii) deliver title information in form and substance
acceptable to the Administrative Agent so that the Administrative Agent shall be reasonably satisfied with the status of title to the Oil and Gas Properties evaluated by such Reserve Report. 

        (c)   If
the Borrower is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the 90-day period or the Borrower
does not comply with the requirements to provide acceptable title information to the Oil and Gas Properties evaluated in the most recent Reserve Report, such default shall not be a Default, but
instead the Administrative Agent and/or the Majority Lenders shall have the right to exercise the following remedy in their sole discretion from time to time, and any failure to so exercise this
remedy at any time shall not be a waiver as to future exercise of the remedy by the Administrative Agent or the Lenders. To the extent that the Administrative Agent or the Majority Lenders are not
satisfied with title to any Mortgaged Property after the 90-day period has elapsed, the Administrative Agent may send a notice to the Borrower and the Lenders that the then outstanding
Borrowing Base and Threshold Amount shall be reduced by an amount as determined by the Majority Lenders to cause the Borrower to be in compliance with the requirement to provide acceptable title
information to the Oil and Gas Properties. This new Borrowing Base and Threshold Amount shall become effective immediately after receipt of such notice. 

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        Section 8.14    Additional Collateral; Additional Guarantors.    

        (a)   In
connection with each redetermination of the Borrowing Base and Threshold Amount, the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties represent at least 80% of the total value of the Oil and Gas Properties evaluated in the most
recently completed Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent
at least 80% of such total value, then the Borrower shall, and shall cause its Restricted Subsidiaries to, grant, within thirty (30) days of delivery of the certificate required under
Section 8.12(c), to the Administrative Agent as security for the Indebtedness a first-priority Lien interest (subject only to Excepted Liens of the type described in clauses (a) to
(d) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties not already subject to a Lien of the Security
Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least 80% of such total value. All such Liens will be created and perfected by and in accordance with the
provisions of deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in
sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its Oil
and Gas Properties and such Restricted Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b). The Borrower agrees that it will not, and will not permit
any Restricted Subsidiary to, grant a Lien on any Property to secure the Second Lien Term Loan Agreement without (i) giving prior written notice to the Administrative Agent and
(ii) granting to the Administrative Agent to secure the Indebtedness a first-priority Lien on this same Property. 

        (b)   In
the event that (i) the Borrower determines that any Restricted Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic Subsidiary incurs or
guarantees any Debt, the Borrower shall promptly
cause such Restricted Subsidiary to guarantee the Indebtedness pursuant to the Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause such Restricted Subsidiary
to, (A) execute and deliver a supplement to the Guaranty Agreement executed by such Subsidiary, (B) pledge all of the Equity Interests of such new Subsidiary (including, without
limitation, delivery of original stock certificates evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank by
the registered owner thereof) and (C) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent. 

        (c)   In
the event that the Borrower or any Domestic Subsidiary becomes the owner of a Foreign Subsidiary which has total assets in excess of $500,000, then the Borrower shall
promptly, or shall cause such Domestic Subsidiary to promptly, guarantee the Indebtedness pursuant to the Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause
such Domestic Subsidiary to, (i) execute and deliver a supplement to the Guaranty Agreement, (ii) pledge 65% of all the Equity Interests of such Foreign Subsidiary (including, without
limitation, delivery of original stock certificates evidencing such Equity Interests of such Foreign Subsidiary, together with appropriate stock powers for each certificate duly executed in blank by
the registered owner thereof) and (iii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative
Agent. 

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        Section 8.15    ERISA Compliance.    The Borrower will promptly furnish and will cause the Subsidiaries and
any
ERISA Affiliate to promptly furnish to the Administrative Agent (i) promptly after the filing thereof with the United States Secretary of Labor, the Internal Revenue Service or the PBGC, copies
of each annual and other report with respect to each Plan or any trust created thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA Event or of any "prohibited
transaction," as described in section 406 of ERISA or in section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President
or the principal Financial Officer, the Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate is taking
or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto, and
(iii) immediately upon receipt thereof, copies of any notice of the PBGC's intention to terminate or to have a trustee appointed to administer any Plan. With respect to each Plan (other than a
Multiemployer Plan), the Borrower will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any Lien, all of the contribution and funding requirements of section 412 of the Code (determined without regard to subsections (d), (e),
(f) and (k) thereof) and of section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a
timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA. 

        Section 8.16    Swap Agreements.    The Borrower shall or shall cause one or more of its Restricted
Subsidiaries (which is a Guarantor) to maintain the hedged position established by the Swap Agreements required under Section 6.01(q) during the period specified therein and shall neither
assign, terminate or unwind any such Swap Agreements nor sell any Swap Agreements if the effect of such action (when taken together with any other Swap Agreements executed contemporaneously with the
taking of such action) would have the effect of canceling its positions under such Swap Agreements required hereby. 

        Section 8.17    Unrestricted Subsidiaries.    The Borrower: 

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

        (b)   will
not, and will not permit any of the Restricted Subsidiaries to, incur, assume, guarantee or be or become liable for any Debt of any of the Unrestricted
Subsidiaries. 

        (c)   will
not permit any Unrestricted Subsidiary to hold any Equity Interest in, or any Debt of, the Borrower or any Restricted Subsidiary. 

        Section 8.18    Marketing Activities.    The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, engage in marketing activities for any Hydrocarbons or enter into any contracts related thereto other than (i) contracts for the sale of Hydrocarbons scheduled or reasonably
estimated to be produced from their proved Oil and Gas Properties during the period of such contract, (ii) contracts for the sale of Hydrocarbons scheduled or reasonably estimated to be
produced from proved Oil and Gas Properties of third parties during the period of such contract associated with the Oil and Gas Properties of the Borrower and its Restricted Subsidiaries that the
Borrower or one of its Restricted Subsidiaries has the right to market pursuant to joint operating agreements, unitization agreements or other similar contracts that are usual and customary in the oil
and gas business and 

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(iii) other
contracts for the purchase and/or sale of Hydrocarbons of third parties (A) which have generally offsetting provisions (i.e. corresponding pricing mechanics, delivery dates
and points and volumes) such that no "position" is taken and (B) for which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto. 

 
 

ARTICLE IX
  Negative Covenants    
    

        Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under
the Loan Documents have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, the Borrower covenants and agrees with the Lenders
that: 

        Section 9.01    Financial Covenants.    

        (a)    Interest Coverage Ratio.    The Borrower will not, as of the last day of any fiscal quarter, permit its ratio
of EBITDA for the period of four fiscal quarters then ending to Interest Expense for such period to be less than 2.5 to 1.0. 

        (b)    Ratio of Total Debt to EBITDA.    The Borrower will not, at any time, permit its ratio of Total Debt as of such
time to EBITDA for the period of four fiscal quarters ending on the last day of the fiscal quarter immediately preceding the date of determination for which financial statements are available to be
greater than 4.0 to 1.0. 

        (c)    Current Ratio.    The Borrower will not permit, as of the last day of any fiscal quarter, its ratio of
(i) consolidated current assets including the unused amount of the total Commitments, to (ii) consolidated current liabilities to be less than 1.0 to 1.0. 

        Section 9.02    Debt.    The Borrower will not, and will not permit any Restricted Subsidiary to, incur,
create, assume or suffer to exist any Debt, except: 

        (a)   the
Notes or other Indebtedness arising under the Loan Documents or any guaranty of or suretyship arrangement for the Notes or other Indebtedness arising under the Loan
Documents. 

        (b)   Debt
of the Borrower and its Restricted Subsidiaries existing on the date hereof that is reflected in the Financial Statements. 

        (c)   accounts
payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of Property or services, from time to time incurred in the
ordinary course of business which are not greater than sixty (60) days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which
adequate reserves have been maintained in accordance with GAAP. 

        (d)   Debt
under Capital Leases not to exceed $1,000,000. 

        (e)   Debt
associated with bonds or surety obligations required by Governmental Requirements in connection with the operation of the Oil and Gas Properties. 

        (f)    intercompany
Debt between the Borrower and any Restricted Subsidiary or between Restricted Subsidiaries to the extent permitted by Section 9.05(g); provided that
such Debt is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or one of its Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by
either the Borrower or a Guarantor shall be subordinated to the Indebtedness on terms set forth in the Guaranty Agreement. 

        (g)   endorsements
of negotiable instruments for collection in the ordinary course of business. 

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        (h)   Debt
(i) under the Senior Subordinated Convertible Note or the Restructured Subordinated Note and (ii) under the Second Lien Term Loan Agreement and any
guarantees thereof, the principal amount of which Debt under clauses (i) and (ii) of this Section 9.02(h) does not exceed $85,000,000 in the aggregate. 

        (i)    other
Debt not to exceed $1,000,000 in the aggregate at any one time outstanding. 

        Section 9.03    Liens.    The Borrower will not, and will not permit any Restricted Subsidiary to, create,
incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except: 

        (a)   Liens
securing the payment of any Indebtedness. 

        (b)   Excepted
Liens. 

        (c)   Liens
securing Capital Leases permitted by Section 9.02(d) but only on the Property under lease. 

        (d)   Liens
on Letters of Credit issued hereunder pledged to secure obligations under any Swap Agreement permitted by Section 9.19. 

        (e)   Liens
on Property not constituting collateral for the Indebtedness and not otherwise permitted by the foregoing clauses of this Section 9.03; provided that the
aggregate principal or face amount of all Debt secured under this Section 9.03(e) shall not exceed $1,000,000 at any time. 

        (f)    Liens
on Property securing the Second Lien Term Loan Agreement permitted by Section 9.02(h)(ii) provided; however, that (i) such Liens securing the
Second Lien Term Loan Agreement and any guarantees thereof are subordinated on terms satisfactory to the Administrative Agent, (ii) each and every Lien securing the Second Lien Term Loan
Agreement shall be subordinate to the Liens securing the Indebtedness, this Agreement and the other Loan Documents and (iii) no Lien shall be
granted on any Property to secure the Second Lien Term Loan Agreement unless the Lien is also being granted to secure the Indebtedness, this Agreement and the other Loan Documents. 

        Section 9.04    Dividends, Distributions and Redemptions; Repayment of Senior Subordinated Convertible Note and Second Lien Term Loan
Agreement.    

        (a)    Restricted Payments.    The Borrower will not, and will not permit any of its Subsidiaries to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders or make any distribution of its Property to its Equity Interest holders, except
(i) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock),
(ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Borrower may make Restricted Payments pursuant to and in accordance with stock
option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (iv) the Borrower may redeem fractional shares of its common stock for cash in connection
with the conversion of the Senior Subordinated Note, provided that the aggregate amount so redeemed does not exceed $50,000, (v) the Borrower may declare and pay scheduled cash dividends from
and after April 1, 2005 with respect to its Designated Preferred Stock at a coupon not to exceed 8% per annum, provided that at the time such dividend is declared and paid (1) no
Borrowing Base deficiency exists and (2) no Event of Default exists or would result from the payment of such dividend and (vi) the Borrower may terminate its directors' or employees'
option agreements or restricted stock agreements under any of Borrower's incentive stock plans provided; however, that the aggregate amounts paid in respect thereof do not exceed $500,000. 

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        (b)    Redemption of Senior Subordinated Convertible Note and Second Lien Term Loan Agreement; Amendment of Senior Subordinated Convertible Note and
Second Lien Term Loan Documents.    The Borrower will not, and will not permit any Restricted Subsidiary to: (i) prior to the date that is
ninety-one (91) days after the Maturity Date, call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or
in part) the Senior Subordinated Convertible Note or the Second Lien Term Loan Agreement in respect thereof, provided that the Borrower may (A) optionally prepay the Second Lien Term Loan
Agreement if (1) no Default or Event of Default has occurred and is continuing or would exist after giving effect to such prepayment, and (2) after giving effect to each prepayment, the
Borrower would have at least $15,000,000 of unused availability under the Commitments, (B) Redeem the Senior Subordinated Convertible Note with the cash proceeds of one or more sales of Equity
Interests (other than Disqualified Capital Stock) either after the Effective Date or on the Effective Date with the gross proceeds of the sale of Equity Interests contemplated by
Section 6.01(h) to the extent the gross proceeds exceed $175,000,000, provided that if the gross proceeds from the sale of such Equity Interests contemplated by Section 6.01(h) is
$200,000,000 or more, the Borrower may Redeem the entire outstanding balance of the Senior Subordinated Convertible Note, provided in any case under this clause (B) (1) no Default or
Event of Default has occurred or is continuing or would occur after giving effect thereto and (2) the Borrower would have at least $15,000,000 of unused availability under the Commitments,
(C) exchange the Senior Subordinated Convertible Note with the Restructured Subordinated Note and (D) prepay the Senior Subordinated Convertible Note, in whole, but not in part,
with the net cash proceeds of any increases in the Second Lien Term Loan Agreement subject to the terms of Section 9.02(h), (ii) amend, modify, waive or otherwise change, consent or
agree to any amendment, modification, waiver or other change to, any of the terms of the Senior Subordinated Convertible Note, the Second Lien Term Loan Agreement or Second Lien Term Loan Documents if
(A) the effect thereof would be to shorten its maturity to a date that is earlier than the 91st day after the Maturity Date or shorten the average life other than as a result in a change to its
final maturity permitted by this clause (ii)(A) or increase the amount of any payment of principal thereof or increase the rate or add call or pre-payment premiums or shorten any
period for payment of interest thereon, (B) such action requires the payment of a consent fee (howsoever described), (C) such action includes additional Property as collateral to secure
the Second Lien Term Loan Agreement unless the Borrower complies with Section 8.14 or (D) such action adds any covenants or defaults without this Agreement being contemporaneously
amended to add substantially similar covenants or defaults, provided that the foregoing shall not prohibit the execution of supplemental agreements to add guarantors if required by the terms thereof
provided such Person complies with Section 8.14(b), and (iii) designate any Debt (other than obligations of the Borrower and the Restricted Subsidiaries pursuant to the Loan Documents)
as "Specified Senior Indebtedness" or "Specified Guarantor Senior Indebtedness" or give any such other Debt any other similar designation for the purposes of any Subordinated Debt. 

        Section 9.05    Investments, Loans and Advances.    The Borrower will not, and will not permit any Restricted
Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to: 

        (a)   Investments
reflected in the Financial Statements or which are disclosed to the Lenders in Schedule 9.05. 

        (b)   accounts
receivable arising in the ordinary course of business. 

        (c)   direct
obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one
year from the date of creation thereof. 

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        (d)   commercial
paper maturing within one year from the date of creation thereof rated in the highest grade by S&P or Moody's. 

        (e)   deposits
maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any office located in the United
States of any other bank or trust
company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust
company's most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody's, respectively or, in the case
of any Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary conducts operations having assets in excess of $500,000,000 (or its equivalent in another currency). 

        (f)    deposits
in money market funds investing exclusively in Investments described in Section 9.05(c), Section 9.05(d) or Section 9.05(e). 

        (g)   Investments
(i) made by the Borrower in or to the Guarantors, (ii) made by any Restricted Subsidiary in or to the Borrower or any Guarantor,
(iii) made by the Borrower or any Restricted Subsidiary in or to all other Domestic Subsidiaries which are not Guarantors in an aggregate amount at any one time outstanding not to exceed
$200,000, and (iv) made by the Borrower or any Restricted Subsidiary in or to any Foreign Subsidiary in an aggregate amount at any one time outstanding not to exceed $100,000. 

        (h)   subject
to the limits in Section 9.07, Investments (including, without limitation, capital contributions) in general or limited partnerships or other types of
entities (each a "venture") entered into by the Borrower or a Restricted Subsidiary with others in the ordinary course of business; provided that
(i) any such venture is engaged exclusively in oil and gas exploration, development, production, processing and related activities, including transportation, (ii) the interest in such
venture is acquired in the ordinary course of business and on fair and reasonable terms and (iii) such venture interests acquired and capital contributions made (valued as of the date such
interest was acquired or the contribution made) do not exceed, in the aggregate at any time outstanding an amount equal to $500,000. 

        (i)    subject
to the limits in Section 9.07, Investments in direct ownership interests in additional Oil and Gas Properties and gas gathering systems related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual interest agreements, gathering systems, pipelines or other similar arrangements which are usual
and customary in the oil and gas exploration and production business located within the geographic boundaries of the United States of America. 

        (j)    loans
or advances to employees, officers or directors in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, in each case only as
permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of 2002, but in any event not to exceed $50,000 in the aggregate at any time. 

        (k)   Investments
in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05 owing to the Borrower
or any Restricted Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon the enforcement of any Lien in favor of the Borrower or any of
its Restricted Subsidiaries; provided that the Borrower shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held at any one time under
this Section 9.05(k) exceeds $500,000. 

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        (l)    Investments
in Unrestricted Subsidiaries, provided that the aggregate amount of all such Investments at any one time shall not exceed $5,000,000 (or its equivalent in
other currencies as of the date of Investment). 

        Section 9.06    Designation and Conversion of Restricted and Unrestricted Subsidiaries; Debt of Unrestricted
Subsidiaries.    

        (a)   Unless
designated as an Unrestricted Subsidiary on Schedule 7.15 as of the date hereof or thereafter, assuming compliance with Section 9.06(b), any Person
that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary. 

        (b)   The
Borrower may designate by written notification thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary,
as an Unrestricted Subsidiary if (i) prior, and after giving effect, to such designation, neither a Default nor a Borrowing Base deficiency would exist and (ii) such designation is
deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date of such designation of the Borrower's direct and indirect ownership interest in such
Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 9.05(l). Except as provided in this Section 9.06(b), no Restricted Subsidiary
may be redesignated as an Unrestricted Subsidiary. 

        (c)   The
Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and
warranties of the Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as of such date as if made on and as of the date of such redesignation
(or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (ii) no Default would exist and (iii) the Borrower complies with the
requirements of Section 8.14, Section 8.17 and Section 9.16. Any such designation shall be treated as a cash dividend in an amount equal to the lesser of the fair market value of
the Borrower's direct and indirect ownership interest in such Subsidiary or the amount of the Borrower's cash investment previously made for purposes of the limitation on Investments under
Section 9.05(l). 

        (d)   The
Borrower shall not permit the aggregate principal amount of all Non-Recourse Debt outstanding at any one time to exceed $10,000,000. 

        Section 9.07    Nature of Business; International Operations.    Neither the Borrower nor any Restricted
Subsidiary will allow any material change to be made in the character of its business as an independent oil and gas exploration and production company. From and after the date hereof, the Borrower and
its Domestic Subsidiaries will not acquire or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties not located within
the geographical boundaries of the United States. 

        Section 9.08    Limitation on Leases.    Neither the Borrower nor any Restricted Subsidiary will create, incur,
assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal but excluding Capital Leases and leases of Hydrocarbon Interests), under
leases or lease agreements which would cause the aggregate amount of all payments made by the Borrower and the Restricted Subsidiaries pursuant to all such leases or lease agreements, including,
without limitation, any residual payments at the end of any lease, to exceed $3,000,000 in any period of twelve consecutive calendar months during the life of such leases. 

        Section 9.09    Proceeds of Notes.    The Borrower will not permit the proceeds of the Notes to be used for any
purpose other than those permitted by Section 7.22. Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case
as 

63

 

now
in effect or as the same may hereinafter be in effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing
effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board, as the case
may be. 

        Section 9.10    ERISA    Compliance.    The Borrower and the Subsidiaries will not at any time: 

        (a)   engage
in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to
either a civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code. 

        (b)   terminate,
or permit any 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 of
the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC. 

        (c)   fail
to make, or permit any 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 law, the Borrower, a Subsidiary or any ERISA Affiliate is required to pay as contributions thereto. 

        (d)   permit
to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency 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 ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the Borrower, a 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. The term "actuarial present value of the benefit liabilities" shall have the meaning specified in section 4041 of ERISA. 

        (f)    contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan. 

        (g)   acquire,
or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Borrower or a
Subsidiary or with respect to any ERISA Affiliate of the Borrower or a Subsidiary 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, (i) any Multiemployer Plan, or (ii) 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. 

        (h)   incur,
or permit any ERISA Affiliate to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA. 

        (i)    contribute
to or assume an obligation to contribute to, or permit any 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, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated
by such entities in their sole discretion at any time without any material liability. 

        (j)    amend,
or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that the Borrower, a Subsidiary or any ERISA Affiliate is
required to provide security to such Plan under section 401(a)(29) of the Code. 

64

 

        Section 9.11    Sale or Discount of Receivables.    Except for receivables obtained by the Borrower or any
Restricted Subsidiary out of the ordinary course of business or the settlement of joint interest billing accounts in the ordinary course of business or discounts granted to settle collection of
accounts receivable or the sale of defaulted accounts arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor any Restricted Subsidiary will discount or sell (with or without recourse) any of its notes receivable or accounts receivable. 

        Section 9.12    Mergers, Etc.    With the exception of the Mergers, the Borrower will not, and will not permit
any Restricted Subsidiary to, merge into or consolidate with any other Person, or permit any other Person to merge into or consolidate with it, or sell, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially all of its Property to any other Person (whether now owned or hereafter acquired) (any such transaction, a
"consolidation"), or liquidate or dissolve; provided that the Borrower or any Restricted Subsidiary may participate in a consolidation with any other Person; provided that: 

        (a)   any
Restricted Subsidiary (including a Foreign Subsidiary) may participate in a consolidation with the Borrower (provided that the Borrower shall be the continuing or
surviving corporation) or any other Restricted Subsidiary that is a Domestic Subsidiary (provided that if one of such parties to the consolidation is a Foreign Subsidiary, such Domestic Subsidiary
shall be the continuing or surviving Person) and if one of such Restricted Subsidiaries is a Wholly-Owned Subsidiary, then the surviving Person shall be a Wholly-Owned Subsidiary; and 

        (b)   any
Foreign Subsidiary of the Borrower may participate in a consolidation with any one or more Foreign Subsidiaries; provided that if one of such Foreign Subsidiaries is
a Wholly-Owned Subsidiary, the survivor shall be a Wholly-Owned Subsidiary. 

        Section 9.13    Sale of Properties.    The Borrower will not, and will not permit any Restricted Subsidiary to,
sell, assign, farm-out, convey or otherwise transfer any Property except for (a) the sale of Hydrocarbons in the ordinary course of business; (b) farmouts of undeveloped
acreage and assignments in connection with such farmouts; (c) the sale or transfer of equipment that is no longer necessary for the business of the Borrower or such Restricted Subsidiary or is
replaced by equipment of at least comparable value and use; (d) the sale, transfer or other disposition of Equity Interests in Unrestricted Subsidiaries; (e) the sale or other
disposition (including Casualty Events) of any Oil and Gas Property
or any interest therein or any Restricted Subsidiary owning Oil and Gas Properties; provided that (i) 100% of the consideration received in respect of such sale or other disposition shall be
cash, (ii) the consideration received in respect of such sale or other disposition shall be equal to or greater than the fair market value of the Oil and Gas Property, interest therein or
Restricted Subsidiary subject of such sale or other disposition (as reasonably determined by the board of directors of the Borrower and, if requested by the Administrative Agent, the Borrower shall
deliver a certificate of a Responsible Officer of the Borrower certifying to that effect), (iii) if such sale or other disposition of Oil and Gas Property or Restricted Subsidiary owning Oil
and Gas Properties included in the most recently delivered Reserve Report during any period between two successive Scheduled Redetermination Dates is sold for a price in excess of $7,500,000,
individually or in the aggregate, then the Borrowing Base and Threshold Amount shall be reduced, effective immediately upon such sale or disposition, by an amount equal to the value, if any, assigned
such Property in the most recently delivered Reserve Report and (iv) if any such sale or other disposition is of a Restricted Subsidiary owning Oil and Gas Properties, such sale or other
disposition shall include all the Equity Interests of such Restricted Subsidiary; and (f) sales and other dispositions of Properties not regulated by Section 9.13(a) to (e) having
a fair market value not to exceed $2,000,000 during any 12-month period. 

        Section 9.14    Environmental Matters.    The Borrower will not, and will not permit any Restricted Subsidiary
to, cause or permit any of its Property to be in violation of, or do anything or permit 

65

 

anything
to be done which will subject any such Property to any Remedial Work under any Environmental Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such Property where such violations or remedial obligations could reasonably be expected to have a Material Adverse Effect. 

        Section 9.15    Transactions with Affiliates.    The Borrower will not, and will not permit any Restricted
Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than the
Guarantors and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm's length transaction with a Person not an Affiliate. 

        Section 9.16    Subsidiaries.    The Borrower will not, and will not permit any Restricted Subsidiary to,
create or acquire any additional Restricted Subsidiary or redesignate an Unrestricted Subsidiary as a Restricted Subsidiary unless the Borrower gives written notice to the Administrative Agent of such
creation or acquisition and complies with Section 8.14(b) and Section 8.14(c). The Borrower shall not, and shall not permit any Restricted Subsidiary to, sell, assign or otherwise
dispose of any Equity Interests in any Restricted Subsidiary except in compliance with Section 9.13(e). 

        Section 9.17    Negative Pledge Agreements; Dividend Restrictions.    The Borrower will not, and will not
permit any Restricted Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Security Instruments or Capital Leases creating
Liens
permitted by Section 9.03(c)) which in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and
the Lenders or restricts any Restricted Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, or which requires the consent of or notice to other Persons in
connection therewith. 

        Section 9.18    Gas Imbalances, Take-or-Pay or Other Prepayments.    The Borrower will
not allow gas imbalances, take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Restricted Subsidiary that would require the
Borrower or such Restricted Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor to exceed 0.8 bcf of gas (on an mcf equivalent basis) in
the aggregate. 

        Section 9.19    Swap Agreements.    The Borrower will not, and will not permit any Restricted Subsidiary to,
enter into any Swap Agreements with any Person other than (a) Swap Agreements in respect of commodities (i) with an Approved Counterparty and (ii) the notional volumes for which
(when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such
Swap Agreement is executed, 85% of the reasonably anticipated projected production (as shown in the Borrower's most recent Engineering Report) from proved, developed, producing Oil and Gas Properties
for each month during the period during which such Swap Agreement is in effect for each of crude oil and natural gas, calculated separately, (b) Swap Agreements in respect of interest rates
with an Approved Counterparty, as follows: (i) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Restricted Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 50% of the then outstanding principal amount of
the Borrower's Debt for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which
(when aggregated with all other Swap Agreements of the Borrower and its Restricted Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 75% of the
then outstanding principal amount of the Borrower's Debt for borrowed money which bears interest at a floating rate, and (c) Swap Agreements required under Section 6.01(q). In no event
shall any Swap Agreement contain any requirement, agreement or covenant for the Borrower or any Restricted Subsidiary to post 

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collateral
or margin to secure their obligations under such Swap Agreement or to cover market exposures except to the extent permitted by Section 9.03(d). 

        Section 9.20    Merger Documents.    The Borrower will not, and will not permit any of its Subsidiaries to,
amend, modify or supplement any of the Merger Documents if the effect thereof could reasonably be expected to have a Material Adverse Effect (and provided that the Borrower promptly furnishes to the
Administrative Agent a copy of such amendment, modification or supplement). 

 
 

ARTICLE X
  Events of Default; Remedies    
    

        Section 10.01    Events of Default.    One or more of the following events shall constitute an
"Event of Default": 

        (a)   the
Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and
payable, whether at the due date thereof or at a date fixed for prepayment thereof or otherwise. 

        (b)   the
Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in Section 10.01(a)) payable under any
Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days. 

        (c)   any
representation or warranty made or deemed made by or on behalf of the Borrower or any Restricted Subsidiary in or in connection with any Loan Document or any
amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any
Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect when made or deemed made. 

        (d)   the
Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01(i),
Section 8.01(m), Section 8.01(p), Section 8.02, Section 8.03, Section 8.15 or in ARTICLE IX. 

        (e)   the
Borrower or any Restricted Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified
in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any other Loan Document, and such failure shall continue unremedied for a period of 30 days after the earlier
to occur of (A) notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender) or (B) a Responsible Officer of the Borrower or
such Restricted Subsidiary otherwise becoming aware of such default. 

        (f)    the
Borrower or any Restricted Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material
Indebtedness prior to the longer of (i) three (3) Business Days after the same shall become due and payable or (ii) the expiration of any applicable grace period. 

        (g)   any
event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to
require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Restricted Subsidiary to make an offer in respect
thereof. 

        (h)   an
involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the
Borrower or any Restricted 

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Subsidiary
or its debts, or of a substantial part of its assets, under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Restricted Subsidiary or for a substantial part of its assets, and, in any such
case, such proceeding or petition shall continue undismissed for 30 days or an order or decree approving or ordering any of the foregoing shall be entered. 

        (i)    the
Borrower or any Restricted Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief
under any Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or petition described in Section 10.01(h), (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator
or similar official for the Borrower or any Restricted Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it
in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing. 

        (j)    the
Borrower or any Restricted Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due. 

        (k)   one
or more judgments for the payment of money in an aggregate amount in excess of $1,000,000 (to the extent not covered by independent third party insurance provided by
insurers of the highest claims paying rating or financial strength as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) shall be rendered against the
Borrower, any Restricted Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Restricted Subsidiary to
enforce any such judgment. 

        (l)    the
Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms against the Borrower or a Guarantor party thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the
priority required thereby on any of the collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or the Borrower or any Restricted Subsidiary or any
of their Affiliates shall so state in writing. 

        (m)  the
Intercreditor Agreement, after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and
valid, binding and enforceable in accordance with their terms against the Borrower, PHAWK, LLC, any party thereto or holder of the Senior Subordinated Convertible Note or shall be repudiated by any of
them, or cause the payment of the obligations of the Senior Subordinated Convertible Note to be senior in right to the payment of obligations of this Credit Agreement or the Second Lien Term Loan
Agreement, or any payment by the Borrower in violation of the terms of the Intercreditor Agreement. 

        (n)   an
ERISA Event shall have occurred that, in the opinion of the Majority Lenders, when taken together with all other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding (i) $250,000 in any year or (ii) $500,000 for all periods. 

        (o)   a
Change in Control shall occur. 

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        Section 10.02    Remedies.    

        (a)   In
the case of an Event of Default other than one described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), at any time thereafter
during the continuance of such Event of Default, the Administrative Agent, at the direction of the Majority Lenders, shall, by notice to the Borrower, take either or both of the following actions, at
the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and
all fees and other obligations of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or
other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(h), Section 10.01(i) or
Section 10.01(j), the Commitments shall automatically terminate and the Notes and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other
obligations of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC
Exposure as provided in Section 2.08(j)), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the
Borrower and each Guarantor. 

        (b)   In
the case of the occurrence of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity. 

        (c)   All
proceeds realized from the liquidation or other disposition of collateral or otherwise received after maturity of the Notes, whether by acceleration or otherwise,
shall be applied: first, to reimbursement of expenses and indemnities provided for in this Agreement and the Security Instruments;  second, to accrued
interest on the Notes; third, to fees;  fourth, pro rata to principal outstanding on the Notes and Indebtedness referred to in clause (b) of the
definition of "Indebtedness" owing to a
Lender or an Affiliate of a Lender; fifth, to any other Indebtedness; sixth, to serve as cash collateral
to be held by the Administrative Agent to secure the LC Exposure; and any excess shall be paid to the Borrower or as otherwise required by any Governmental Requirement. 

 
 

ARTICLE XI
  The Agents    
    

        Section 11.01    Appointment; Powers.    Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent 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 and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. 

        Section 11.02    Duties and Obligations of Administrative Agent.    The Administrative Agent shall not have any
duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing, (b) the Administrative Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except as provided in Section 11.03, and (c) except as expressly set forth herein, 

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the
Administrative Agent shall not 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 Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall be deemed not to have knowledge of any Default unless
and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and 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 under any other Loan Document 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
in any other Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document,
(v) the satisfaction of any condition set forth in ARTICLE VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or as to
those conditions precedent expressly required to be to the Administrative Agent's satisfaction, (vi) the existence, value, perfection or priority of any collateral security or the financial or
other condition of the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any failure by the Borrower or any other Person (other than itself) to perform any of its
obligations hereunder or under any other Loan Document or the performance or observance of any covenants, agreements or other terms or conditions set forth herein or therein. 

        Section 11.03    Action by Administrative Agent.    The Administrative Agent shall not have any duty to take
any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby that the Administrative Agent is required to exercise in writing as
directed by the Majority Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02) and in all cases the
Administrative Agent shall be fully justified in failing or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive written instructions from the Majority
Lenders or the Lenders, as applicable, (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02) specifying the action to be
taken and (b) be indemnified to its satisfaction by the Lenders against any and all liability and expenses which may be incurred by it by reason of taking or continuing to take any such action.
The instructions as aforesaid and any action taken or failure to act pursuant thereto by the Administrative Agent shall be binding on all of the Lenders. If a Default has occurred and is continuing,
then the Administrative Agent shall take such action with respect to such Default as shall be directed by the requisite Lenders in the written instructions (with indemnities) described in this
Section 11.03, provided that, unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall deem advisable in the best interests of the Lenders. In no event, however, shall the Administrative Agent be required to take
any action which exposes the Administrative Agent to personal liability or which is contrary to this Agreement, the Loan Documents or applicable law. If a Default has occurred and is continuing,
neither the Syndication Agent nor the Documentation Agent shall have any
obligation to perform any act in respect thereof. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Majority Lenders or the Lenders (or such
other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 12.02), and otherwise no Agent shall be liable for any action taken or not taken
by it hereunder or under any other Loan Document or under any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith INCLUDING ITS OWN
ORDINARY NEGLIGENCE, except for its own gross negligence or willful misconduct. 

        Section 11.04    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 believed by it to be genuine and to have been signed 

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or
sent 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 be made by the proper Person, and shall not incur any
liability for relying thereon and each of the Borrower, the Lenders and the Issuing Bank hereby waives the right to dispute the Administrative Agent's record of such statement, except in the case of
gross negligence or willful misconduct by the Administrative Agent. 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. The Agents may deem and treat the
payee of any Note as the holder thereof for all purposes hereof unless and until a written notice of the assignment or transfer thereof permitted hereunder shall have been filed with the
Administrative Agent. 

        Section 11.05    Subagents.    The Administrative Agent may perform any and all its duties and exercise its
rights and powers 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 its
duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of the preceding Sections of this ARTICLE XI shall apply to any such
sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Administrative Agent. 

        Section 11.06    Resignation or Removal of Agents.    Subject to the appointment and acceptance of a successor
Agent as provided in this Section 11.06, any Agent may resign at any time by notifying the Lenders, the Issuing Bank and the Borrower, and any Agent may be removed at any time with or without
cause by the Majority Lenders. Upon any such resignation or removal, the Majority Lenders shall have the right, with the consent of the Borrower, which consent shall not be unreasonably withheld or
delayed, to appoint a successor. If no successor shall have been so appointed and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation or
removal of the retiring Agent, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall
be discharged from its duties and obligations hereunder. The fees payable by the Borrower to a successor Agent shall be the
same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Agent's resignation hereunder, the provisions of this ARTICLE XI and
Section 12.03 shall continue in effect for the benefit of such retiring Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent. 

        Section 11.07    Agents as Lenders.    Each bank serving as an 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 an Agent, and such bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder. 

        Section 11.08    No Reliance.    Each Lender acknowledges that it has, independently and without reliance upon
the Administrative Agent, any other Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this
Agreement and each other Loan Document to which it is a party. Each Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent, any other Agent or any
other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this
Agreement, any other Loan Document, any related agreement or any document furnished hereunder or thereunder. The Agents shall not be required to keep themselves informed as to the 

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performance
or observance by the Borrower or any of its Subsidiaries of this Agreement, the Loan Documents or any other document referred to or provided for herein or to inspect the Properties or
books of the Borrower or its Subsidiaries. Except for notices, reports and other documents and information expressly required to be furnished to the Lenders by the Administrative Agent hereunder, no
Agent or the Arranger shall have any duty or responsibility to provide any Lender with any credit or other information concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of its Affiliates. In this regard, each Lender acknowledges that Vinson & Elkins L.L.P. is acting in this transaction
as special counsel to the Administrative Agent only, except to the extent otherwise expressly stated in any legal opinion or any Loan Document. Each other party hereto will consult with its own legal
counsel to the extent that it deems necessary in connection with the Loan Documents and the matters contemplated therein. 

        Section 11.09    Authority of Administrative Agent to Release Collateral and Liens.    Each Lender and the
Issuing Bank hereby authorizes the Administrative Agent to release any collateral that is permitted to be sold or released pursuant to the terms of the Loan Documents. Each Lender and the Issuing Bank
hereby authorizes the Administrative Agent to execute and deliver to the Borrower, at the Borrower's sole cost and expense, any and all releases of Liens, termination statements, assignments or other
documents reasonably requested by the Borrower in connection with any sale or other disposition of Property to the extent such sale or other disposition is permitted by the terms of
Section 9.13 or is otherwise authorized by the terms of the Loan Documents. 

        Section 11.10    The Arranger, the Syndication Agent and the Documentation Agent.    The Arranger, the
Syndication Agent and the Documentation Agent shall have no duties, responsibilities or liabilities under this Agreement and the other Loan Documents other than their duties, responsibilities and
liabilities in their capacity as Lenders hereunder. 

 
 

ARTICLE XII
  Miscellaneous    
    

        Section 12.01    Notices.    

        (a)   Except
in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: 

        (i)    if
to the Borrower, to it at 1100 Louisiana, Suite 4400, Houston, Texas 77002, Attention: Shane Bayless (Telecopy No. (832) 204-2827); with a copy to
Hinkle Elkouri Law Firm, L.L.C., 301 North Main, Suite 2000, Wichita, Kansas 67202, Attention: David S. Elkouri (Telecopy No. (316) 660-6011); 

        (ii)   if
to the Administrative Agent, to it at 919 Third Avenue, New York, New York 10022, Attention: Millie Carillo, Loan Assistant (Telecopy No.
(212) 841-2683), with a copy to 1200 Smith Street, Suite 3100, Houston, Texas 77002, Attention: Brian Malone (Telecopy No. (713) 659-6915; 

        (iii)  if
to the Issuing Bank, to it at 919 Third Avenue, New York, New York 10022, Attention: Millie Carillo, Loan Assistant (Telecopy No.
(212) 841-2683), with a copy to 1200 Smith Street, Suite 3100, Houston, Texas 77002, Attention: Brian Malone (Telecopy No. (713) 659-6915; and 

        (iv)  if
to any other Lender, to it at its address (or telecopy number) set forth in its Administrative Questionnaire. 

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        (b)   Notices
and other communications to the Lenders hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices pursuant to ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V unless otherwise agreed by the Administrative Agent and the
applicable Lender. 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. 

        (c)   Any
party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other
communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt. 

        Section 12.02    Waivers; Amendments.    

        (a)   No
failure on the part of the Administrative Agent, the Issuing Bank or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any
right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies of the Administrative Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they
would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same
shall be permitted by Section 12.02(b), and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any Lender or the Issuing Bank
may have had notice or knowledge of such Default at the time. 

        (b)   Neither
this Agreement nor any provision hereof nor any Security Instrument nor any provision thereof may be waived, amended or modified except pursuant to an agreement
or agreements in writing entered into by the Borrower and the Majority Lenders or by the Borrower and the Administrative Agent with the consent of the Majority Lenders; provided that no such agreement
shall (i) increase the Commitment or the Maximum Credit Amount of any Lender without the written consent of such Lender, (ii) increase the Borrowing Base and the Threshold Amount without
the written consent of the Required Lenders, decrease or maintain the Borrowing Base and the Threshold Amount without the consent of the Majority Lenders, or modify Section 2.07 without the
consent of each Lender, (iii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other
Indebtedness hereunder or under any other Loan Document, without the written consent of each Lender affected thereby, (iv) postpone the scheduled date of payment or prepayment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Indebtedness hereunder or under any other Loan Document, or reduce the amount of, waive or
excuse any such payment, or postpone or extend the Termination Date without the written consent of each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c) in a
manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (vi) waive or amend Section 3.04(c), Section 6.01,
Section 8.14, Section 10.02(c) or Section 12.15 or change the definition of the terms "Domestic Subsidiary", "Foreign Subsidiary", "Material Domestic Subsidiary" or "Subsidiary",
without the written consent of each Lender, (vii) release any Guarantor (except as set forth in the 

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Guaranty
Agreement), release a substantial portion of the collateral (other than as provided in Section 11.09), or reduce the percentage set forth in Section 8.14(a) to less than 80%,
without the written consent of each Lender, (viii) change the Applicable Percentage of a Lender holding 12.5% or more of the Maximum Credit Amounts without the written consent of such Lender or
(ix) change any of the provisions of this Section 12.02(b) or the definitions of "Required Lenders" or "Majority Lenders" or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents,
without the written consent of each Lender; provided further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or the Issuing Bank
hereunder or under any other Loan Document without the prior written consent of the Administrative Agent or the Issuing Bank, as the case may be. Notwithstanding the foregoing, any supplement to
Schedule 7.15 (Subsidiaries) shall be effective simply by delivering to the Administrative Agent a supplemental schedule clearly marked as such and, upon receipt, the Administrative Agent will
promptly deliver a copy thereof to the Lenders. 

        Section 12.03    Expenses, Indemnity; Damage Waiver.    

        (a)   The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including,
without limitation, the reasonable fees, charges and disbursements of counsel and other outside consultants for the Administrative Agent, the reasonable travel, photocopy, mailing, courier, telephone
and other similar expenses, including all Intralinks expenses, and the cost of environmental audits and surveys and appraisals, in connection with the
syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of
counsel
to the Administrative Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments,
modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs,
expenses, Taxes, assessments and other charges incurred by any Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this
Agreement or any Security Instrument or any other document referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent,
the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its
rights in connection with this Agreement or any other Loan Document, including its rights under this Section 12.03, or in connection with the Loans made or Letters of Credit issued hereunder,
including, without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit. 

        (b)   THE
BORROWER SHALL INDEMNIFY EACH AGENT, THE ISSUING BANK, THE ARRANGER AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING
CALLED AN "INDEMNITEE") AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES,
INCLUDING THE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE 

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PARTIES
HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OTHER LOAN
DOCUMENT, (ii) THE FAILURE OF THE BORROWER OR ANY RESTRICTED SUBSIDIARY TO COMPLY WITH THE TERMS OF ANY LOAN DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT,
(iii) ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY INSTRUMENTS, DOCUMENTS OR
CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM, INCLUDING, WITHOUT LIMITATION, (A) ANY REFUSAL BY THE ISSUING
BANK 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, OR (B) THE
PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION OF THE DOCUMENTS PRESENTED IN CONNECTION
THEREWITH, (v) ANY OTHER ASPECT OF THE LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY
ASSERTION THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY OR
ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND
GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY SUBSIDIARY WITH ANY ENVIRONMENTAL LAW
APPLICABLE TO THE BORROWER OR ANY SUBSIDIARY, (x) THE PAST OWNERSHIP BY THE BORROWER OR ANY SUBSIDIARY OF ANY OF THEIR PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH
LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE, TRANSPORT,
ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY
SUBSIDIARY OR 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, (xii) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, AND SUCH
INDEMNITY SHALL EXTEND TO EACH INDEMNITEE NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN OMISSION,
INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT 

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CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR MORE OF THE INDEMNITEES; 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 WILFUL MISCONDUCT OF SUCH INDEMNITEE. 

        (c)   To
the extent that the Borrower fails to pay any amount required to be paid by it to any Agent or the Issuing Bank under Section 12.03(a) or (b), each Lender
severally agrees to pay to such Agent or the Issuing Bank, as the case may be, such Lender's Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted
against such Agent or the Issuing Bank in its capacity as such. 

        (d)   To
the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. 

        (e)   All
amounts due under this Section 12.03 shall be payable not later than 5 days after written demand therefor. 

        Section 12.04    Successors and Assigns.    

        (a)   The
provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with this Section 12.04. 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 (including any Affiliate of the Issuing Bank that issues any Letter of Credit), Participants (to the
extent provided in Section 12.04(c)) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement. 

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        (b)   (i) Subject
to the conditions set forth in Section 12.04(b)(ii), any Lender may assign to one or more assignees all or a portion of its rights and
obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it) with the prior written consent (such consent not to be unreasonably withheld) of: 

        (A)  the
Borrower, provided that no consent of the Borrower shall be required for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other assignee; and 

        (B)  the
Administrative Agent, provided that no consent of the Administrative Agent shall be required for an assignment to an assignee that is a Lender immediately prior to
giving effect to such assignment. 

        (ii)   Assignments
shall be subject to the following additional conditions: 

        (A)  except
in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender's Commitment or
Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent) shall not be less than $5,000,000 unless each of the Borrower and the Administrative Agent otherwise consent, provided that no such consent of the Borrower shall
be required if an Event of Default has occurred and is continuing; 

        (B)  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; 

        (C)  the
parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and 

        (D)  the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. 

        (iii)  Subject
to Section 12.04(b)(iv) and the acceptance and recording thereof, from and after the effective date specified in each Assignment and Assumption
the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment
and Assumption covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Section 5.01, Section 5.02, Section 5.03 and Section 12.03). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with
this Section 12.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 12.04(c). 

        (iv)  The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each Assignment and Assumption delivered
to it and a register for the recordation of the names and addresses of the Lenders, and the Maximum Credit Amount of, and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive, and the Borrower, the Administrative
Agent, the Issuing Bank and the Lenders may treat each Person whose name is recorded in the Register pursuant to 

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the
terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior notice. In connection with any changes to the Register, if necessary, the Administrative Agent will reflect the revisions
on Annex I and forward a copy of such revised Annex I to the Borrower, the Issuing Bank and each Lender. 

        (v)   Upon
its receipt of a duly completed Assignment and Assumption executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 12.04(b) and any written consent to such assignment required by
Section 12.04(b), the Administrative Agent shall accept such Assignment and Assumption and record the information contained therein in the Register. No assignment shall be effective for
purposes of this Agreement unless it has been recorded in the Register as provided in this Section 12.04(b). 

        (c)   (i)
Any Lender may, without the consent of the Borrower, the Administrative Agent or the Issuing Bank, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the
Loans owing to it); provided that (A) such Lender's obligations under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible to the other parties hereto
for the performance of such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank 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, modification or waiver described in the proviso to Section 12.02 that affects such Participant. In addition
such agreement must provide that the Participant be bound by the provisions of Section 12.03. Subject to Section 12.04(c)(ii), the Borrower agrees that each Participant shall be entitled
to the benefits of Section 5.01, Section 5.02 and Section 5.03 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to
Section 12.04(b). To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender, provided such Participant agrees to
be subject to Section 4.01(c) as though it were a Lender. 

        (ii)   A
Participant shall not be entitled to receive any greater payment under Section 5.01 or Section 5.03 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 5.03 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 5.03(e) as though it were a Lender. 

        (d)   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,
without limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section 12.04(d) shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto. 

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        (e)   Notwithstanding
any other provisions of this Section 12.04, no transfer or assignment of the interests or obligations of any Lender or any grant of participations
therein shall be permitted if such transfer, assignment or grant would require the Borrower and the Guarantors to file a registration statement with the SEC or to qualify the Loans under the
"Blue Sky" laws of any state. 

        Section 12.05    Survival; Revival; Reinstatement.    

        (a)   All
covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the
making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not
expired or terminated. The provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 and ARTICLE XI shall survive and remain in full force and effect
regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of
this Agreement, any other Loan Document or any provision hereof or thereof. 

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

        Section 12.06    Counterparts; Integration; Effectiveness.    

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

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

        (c)   Except
as provided in Section 6.01, 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 which, when taken together, bear the signatures of each of the other 

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parties
hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. 

        Section 12.07    Severability.    Any provision of this Agreement or any other Loan Document held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction. 

        Section 12.08    Right of Setoff.    If an Event of Default shall have occurred and be continuing, each Lender
and each of its Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations (of whatsoever kind, including, without limitations obligations under Swap Agreements) at any time owing by such Lender or
Affiliate to or for the credit or the account of the Borrower or any Restricted Subsidiary against any of and all the obligations of the Borrower or any Restricted Subsidiary owed to such Lender now
or hereafter existing under this Agreement or any other Loan Document, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured. The rights of each Lender under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender
or its Affiliates may have. 

        Section 12.09    GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.    

        (a)   THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL LAW
PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER IS LOCATED. CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH
REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR THE NOTES. 

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

        (c)   EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY
REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OR SUCH 

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OTHER
ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION. 

        (d)   EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN
ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 12.09. 

        Section 12.10    Headings.    Article and Section headings and the Table of Contents used herein are for
convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. 

        Section 12.11    Confidentiality.    Each of the Administrative Agent, the Issuing Bank 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, (c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement or any other Loan Document, (e) in connection with the exercise of any remedies hereunder or under any other
Loan Document or any suit, 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 12.11, 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 Agreement relating to the Borrower and its obligations, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than the Borrower. For the purposes of this Section 12.11,
"Information" means all information received from the Borrower or any Restricted Subsidiary relating to the Borrower or any Restricted Subsidiary and
their businesses, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the Borrower or a
Restricted Subsidiary; provided that, in the case of information received from the Borrower or any Restricted Subsidiary 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 12.11 shall be considered to have 

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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. 

        Section 12.12    Interest Rate Limitation.    It is the intention of the parties hereto that each Lender shall
conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United
States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Notes, it is agreed as follows: (i) the aggregate
of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if
theretofore paid shall be credited by such Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid
in full, refunded by
such Lender to the Borrower); and (ii) in the event that the maturity of the Notes is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this
Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Lender may never include more than the
maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall
have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans evidenced by the Notes until payment in full so
that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of
interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to
such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such
Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed
without giving effect to this Section 12.12. To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest Lawful Rate applicable to a Lender,
such Lender elects to determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time in effect. Chapter 346 of the Texas Finance Code does not apply to the Borrower's
obligations hereunder. 

        Section 12.13    EXCULPATION PROVISIONS.    EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY
TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS
AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE
THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS 

82

 

RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT
IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT
WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR
THAT THE PROVISION IS NOT "CONSPICUOUS." 

        Section 12.14    Specified Senior Indebtedness.    The Parties acknowledge and agree that the Indebtedness
hereunder is specifically designated "Specified Senior Indebtedness" as required by the Senior Subordinated Convertible Note and Second Lien Term Loan Documents. 

        Section 12.15    Collateral Matters; Swap Agreements.    The benefit of the Security Instruments and of the
provisions of this Agreement relating to any collateral securing the Indebtedness shall also extend to and be available to those Lenders or their Affiliates which are counterparties to any Swap
Agreement with the Borrower or any of its Subsidiaries on a pro rata basis in respect of any obligations of the Borrower or any of its Subsidiaries
which arise under any such Swap Agreement entered into while such Person or its Affiliate is a Lender, including any Swap Agreements between such Persons in existence prior to the date hereof. No
Lender or any Affiliate of a Lender shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Swap Agreements. 

        Section 12.16    No Third Party Beneficiaries.    This Agreement, the other Loan Documents, and the agreement
of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person (including, without
limitation, any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or materialsman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan
Document against the Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason whatsoever. There are no third party beneficiaries. 

        Section 12.17    USA Patriot Act Notice.    Each Lender hereby notifies the Borrower that pursuant to the
requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "Act"), it is required to
obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the
Borrower in accordance with the Act. 

SIGNATURES
BEGIN NEXT PAGE 

83

   
        The parties hereto have caused this Agreement to be duly executed as of the day and year first above written. 

	BORROWER:	 	PETROHAWK ENERGY CORPORATION
	

 	
 	

By:	

/s/  FLOYD C. WILSON      
 Floyd C. Wilson
 President and Chief Executive Officer
	

 	
 	

 	

 

	ADMINISTRATIVE AGENT:	 	BNP PARIBAS, as Administrative Agent
	

 	
 	

By:	

/s/  BRIAN M. MALONE      
	 	 	 	
 Name: Brian M. Malone

Title: Authorized Signatory
	

 	
 	

By:	

/s/  GABE ELLISOR      
 Name: Gabe Ellisor

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	BNP PARIBAS, as a Lender
	

 	
 	

By:	

/s/  BRIAN M. MALONE      
 Name: Brian M. Malone

Title: Authorized Signatory
	

 	
 	

 	

 

	 	 	FLEET NATIONAL BANK, as Syndication Agent and as a Lender
	

 	
 	

By:	

/s/  ALLISON R. GOODWIN      
 Name: Allison R. Goodwin

Title: Authorized Signatory
	

 	
 	

 	

 

	 	 	FORTIS CAPITAL CORP., as Co-Documentation Agent and as a Lender
	

 	
 	

By:	

/s/  DEIRDE SANBORN      
 Name: Deirde Sanborn

Title: Authorized Signatory
	

 	
 	

 	

 

84

 

	 	 	U.S. BANK NATIONAL ASSOCIATION, as Co-Documentation Agent and as a Lender
	

 	
 	

By:	

/s/  MONTE E. DECKERD      
 Name: Monet E. Deckerd

Title: Authorized Signatory
	

 	
 	

 	

 

	 	 	KEYBANK, NATIONAL ASSOCIATION, as Co-Documentation Agent and as a Lender
	

 	
 	

By:	

/s/  THOMAS RAJAN      
 Name: Thomas Rajan

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	STERLING BANK
	

 	
 	

By:	

/s/  C. SCOTT WILSON      
 Name: C. Scott Wilson

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	SUNTRUST BANK
	

 	
 	

By:	

/s/  JAMES M. WARREN      
 Name: James M. Warren

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	SOUTHWEST BANK OF TEXAS, N.A.
	

 	
 	

By:	

/s/  W. BRYAN CHAPMAN      
 Name: W. Bryan Chapman

Title: Authorized Signatory
	

 	
 	

 	

 

85

 

	LENDERS:	 	WELLS FARGO BANK, N.A.
	

 	
 	

By:	

/s/  JEFF DALTON      
 Name: Jeff Dalton

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	COMERICA BANK
	

 	
 	

By:	

/s/  CHARLES E. HALL      
 Name: Charles E. Hall

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	COMPASS BANK
	

 	
 	

By:	

/s/  DOROTHY MARCHAND      
 Name: Dorothy Marchand

Title: Authorized Signatory
	

 	
 	

 	

 

	LENDERS:	 	FORTIS CAPITAL CORP.
	

 	
 	

By:	

/s/  DARRELL W. HOLLEY      
 Name: Darrell W. Holley

Title: Authorized Signatory
	

 	
 	

 	

 

[Signature Page—Credit Agreement] 

86

  

 
 

ANNEX I
  LIST OF MAXIMUM CREDIT AMOUNTS    
    

Aggregate Maximum Credit Amounts  

	Name of Lender
 
	 	Applicable Percentage
	 	Maximum Credit Amount

	BNP Paribas	 	15.00	%	$	60,000,000
	Fleet National Bank	 	15.00	%	$	60,000,000
	Fortis Capital Corp.	 	12.50	%	$	50,000,000
	U.S. Bank National Association	 	7.50	%	$	30,000,000
	Keybank, National Association	 	7.50	%	$	30,000,000
	Sterling Bank	 	7.50	%	$	30,000,000
	SunTrust Bank	 	7.50	%	$	30,000,000
	Southwest Bank of Texas, N.A.	 	7.50	%	$	30,000,000
	Wells Fargo Bank, N.A.	 	7.50	%	$	30,000,000
	Comerica Bank	 	6.25	%	$	25,000,000
	Compass Bank	 	6.25	%	$	25,000,000
	TOTAL	 	100.00	%	$	400,000,000

Annex I - 1

  

 
 

EXHIBIT A
  FORM OF NOTE    
    

	$[            ]	 	[            ],
2004                        

        FOR
VALUE RECEIVED, Petrohawk Energy Corporation, a Delaware corporation (the "Borrower") hereby promises to pay to the order of
[            ] (the "Lender"), at the principal office of BNP Paribas, as administrative agent (the
"Administrative Agent"), at [            ], the principal sum of [            ]
Dollars
($[            ]) (or such lesser amount as shall equal the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under the Credit Agreement, as
hereinafter defined), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the
rates per annum and on the dates provided in the Credit Agreement. 

        The
date, amount, Type, interest rate, Interest Period and maturity of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be
recorded by the Lender on its books and, prior to any transfer of this Note, may be endorsed by the Lender on the schedules attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a schedule shall not affect any Lender's or the Borrower's rights or obligations in respect of such Loans or affect the
validity of such transfer by any Lender of this Note. 

        This
Note is one of the Notes referred to in the Senior Revolving Credit Agreement dated as of November 23, 2004 among the Borrower, the Administrative Agent, and the other agents
and lenders signatory thereto (including the Lender), and evidences Loans made by the Lender thereunder (such Senior Revolving Credit Agreement as the same may be amended, supplemented or restated
from time to time, the "Credit Agreement"). Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement. 

        This
Note is issued pursuant to the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the other Loan Documents. The Credit Agreement provides for
the acceleration of the maturity of this Note upon the occurrence of certain events, for prepayments of Loans upon the terms and conditions specified therein and other provisions relevant to this
Note. 

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

	 	 	PETROHAWK ENERGY CORPORATION
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	

	 	 	Name:	 	 
	 	 	 	 	

	 	 	Title:	 	 
	 	 	 	 	

Exhibit A-1

  

 
 

EXHIBIT B
  FORM OF BORROWING REQUEST    
    

[                        ],
200[  ] 

        PETROHAWK
ENERGY COPRORAIOTN, a Delaware corporation (the "Borrower"), pursuant to Section 2.03 of the Credit Agreement dated as of
November 23, 2004 (together with all amendments, restatements, supplements or other modifications thereto, the "Credit Agreement") among the
Borrower, BNP Paribas, as Administrative Agent and the other agents and lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Credit Agreement), hereby requests a Borrowing as follows: 

          (i)  Aggregate
amount of the requested Borrowing is $[                        ]; 

         (ii)  Date
of such Borrowing is [                        ], 200[    ]; 

        (iii)  Requested
Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing]; 

        (iv)  In
the case of a Eurodollar Borrowing, the initial Interest Period applicable thereto is [                        ]; 

         (v)  Amount
of Borrowing Base or Threshold Amount in effect on the date hereof is $[                        ]; 

        (vi)  Total
Revolving Credit Exposures on the date hereof (i.e., outstanding principal amount of Loans and total LC Exposure) is $
[                        ];
and 

       (vii)  Pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing) is
$[                        ]; and 

      (viii)  Location
and number of the Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05 of the Credit
Agreement, is as follows: 

[                                         
       ]

[                                         
       ]

[                                         
       ]

[                                         
       ]

[                                         
       ] 

Exhibit B-1

 

        The
undersigned certifies that he/she is the [                        ] of the Borrower, and that as such he/she is authorized to
execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled to receive the requested Borrowing under the terms and conditions of the
Credit Agreement. 

	 	 	PETROHAWK ENERGY CORPORATION
	
 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

Exhibit B-2

  

 
 

EXHIBIT C
  FORM OF INTEREST ELECTION REQUEST    
    

[                        ],
200[  ] 

        PETROHAWK
ENERGY CORPORATION, a Delaware corporation (the "Borrower"), pursuant to Section 2.04 of the Credit Agreement dated as of
November 23, 2004 (together with all amendments, restatements, supplements or other modifications thereto, the "Credit Agreement") among the
Borrower, BNP Paribas, as Administrative Agent and the other agents and lenders (the "Lenders") which are or become parties thereto (unless otherwise
defined herein, each capitalized term used herein is defined in the Credit Agreement), hereby makes an Interest Election Request as follows: 

          (i)  The
Borrowing to which this Interest Election Request applies, and if different options are being elected with respect to different portions thereof, the portions
thereof to be allocated to each resulting Borrowing (in which case the information specified pursuant to (iii) and (iv) below shall be specified for each resulting Borrowing) is
[                  ]; 

         (ii)  The
effective date of the election made pursuant to this Interest Election Request is [                  ],
200[    ];[and] 

        (iii)  The
resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][; and] 

        [(iv)
[If the resulting Borrowing is a Eurodollar Borrowing] The Interest Period applicable to the resulting Borrowing after giving effect to such
election is [                  ]]. 

        The
undersigned certifies that he/she is the [                  ] of the Borrower, and that as such he/she is authorized to execute this certificate on behalf of
the
Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled to receive the requested continuation or conversion under the terms and
conditions of the Credit Agreement. 

	 	 	PETROHAWK ENERGY CORPORATION
	
 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

Exhibit C-1

  

 
 

EXHIBIT D
  FORM OF COMPLIANCE CERTIFICATE    
    

        The undersigned hereby certifies that he/she is the [            ] of PETROHAWK ENERGY CORPORATION, a Delaware corporation
(the
"Borrower"), and that as such he/she is authorized to execute this certificate on behalf of the Borrower. With reference to the Credit Agreement dated
as of November 23, 2004 (together with all amendments, restatements, supplements or other modifications thereto being the "Agreement") among the
Borrower, BNP Paribas, as Administrative Agent, and the other agents and lenders (the "Lenders") which are or become a party thereto, and such Lenders,
the undersigned represents and warrants as follows (each capitalized term used herein having the same meaning given to it in the Agreement unless otherwise specified): 

        (a)   The
representations and warranties of the Borrower contained in Article VII of the Agreement and in the Loan Documents and otherwise made in writing by or on
behalf of the Borrower pursuant to the Agreement and the Loan Documents were true and correct when made, and are repeated at and as of the time of delivery hereof and are true and correct in all
material respects at and as of the time of delivery hereof, except to the extent such representations and warranties are expressly limited to an earlier date or the Majority Lenders have expressly
consented in writing to the contrary. 

        (b)   The
Borrower has performed and complied with all agreements and conditions contained in the Agreement and in the Loan Documents required to be performed or complied with
by it prior to or at the time of delivery hereof [or specify default and describe]. 

        (c)   Since
December 31, 2003, no change has occurred, either in any case or in the aggregate, in the condition, financial or otherwise, of the Borrower or any
Restricted Subsidiary which could reasonably be expected to have a Material Adverse Effect [or specify event]. 

        (d)   There
exists no Default or Event of Default [or specify Default and describe]. 

        (e)   Attached
hereto are the detailed computations necessary to determine whether the Borrower is in compliance with Section 9.01 and Section 8.14 as of the end
of the [fiscal quarter][fiscal year] ending [                        ]. 

        EXECUTED
AND DELIVERED this [        ] day of [                  ]. 

	 	 	PETROHAWK ENERGY CORPORATION
	
 	
 	

By:	

 
	 	 	 	

	 	 	Name:	 
	 	 	 	

	 	 	Title:	 
	 	 	 	

Exhibit D-1

  

 
 

EXHIBIT E-1
  FORM OF LEGAL OPINION OF HINKLE ELKOURI LAW FIRM L.L.C.    
    

Exhibit E-1 - 1

  

 
 

EXHIBIT E-2
  FORM OF LEGAL OPINION OF LOCAL COUNSEL    
    

November
[    ], 2004 

BNP
Paribas,

as Administrative Agent

919 Third Avenue

New York, New York 10022

Attention: Millie Carillo, Loan Assistant 

	Re:
	Credit
Agreement dated as of November 23, 2004 among Petrohawk Energy Corporation, a Delaware corporation (the "Borrower"), the
banks now or hereafter signatory thereto (the "Lenders"), and BNP Paribas, as administrative agent for the Lenders (in such capacity the
"Administrative Agent"), and other agents for the Lenders (the "Credit Agreement"). 

Gentlemen:

        We
have acted as special [                        ] counsel to the Borrower and its Subsidiaries, including
[                        ], a
[            ] ("Mortgagor"), in connection with the execution and delivery of that certain Deed of Trust, Mortgage,
Assignment of As-Extracted Collateral, Security Agreement and Financing Statement dated November [    ], 2004 by the Mortgagor in favor of the
Administrative Agent, for its benefit and the benefit of the Lenders and others (the "Mortgage"). This opinion is being furnished to you pursuant to
Section 6.01(i)(ii) of the Credit Agreement. All capitalized terms not defined herein shall have the same meanings assigned to them in the Credit Agreement. In connection with the
opinions set forth herein, we have examined originals, or copies certified or otherwise identified to our satisfaction, of the following documents (the "Loan
Documents"): 

	[(A)
	] the
Mortgage[; and]

	[(B)
	the
UCC-1 Financing Statement covering as-extracted collateral and goods that are or are to become fixtures prepared in connection with the
Mortgage (the "Financing Statement")].(1) 

	(1)
	Under
Section 9.502 of UCC, a record of our form of mortgage is effective as a financing statement filed as a fixture filing or as a financing statement covering as-extracted
collateral or timber to be cut. Some counties, however, maintain separate indexes for UCC filings, and in such case, a UCC-1 financing statement covering such collateral should be prepared and filed
separately. 

        In
rendering the opinions set forth herein, we have relied upon certificates of officers of the Mortgagor, certificates or telegrams of public officials and such other documents, records
and information as we have deemed necessary or appropriate. We have assumed that all signatures are genuine; that all documents submitted to us as originals are authentic; that all documents submitted
to us as copies conform to the originals; and that the facts stated in all such documents are true and correct. In rendering this opinion, we have not made any independent investigation as to accuracy
or completeness of any facts or representations, warranties, data or other information, whether written or oral, that may have been made by or on behalf of the parties, except as specifically set
forth herein. 

        Based
upon the foregoing, and subject to the qualifications set forth herein, it is our opinion that: 

        1.     The
form of the Mortgage, including the form of acknowledgments thereto, [and the Financing Statement,] comply with the laws of the State of
[            ], including all applicable recording, filing and registration laws and regulations, and are adequate and legally sufficient for the purposes intended to be
accomplished thereby. 

Exhibit E-2 - 1

 

        2.     The
descriptions of those portions of the Mortgaged Property located within the State of [            ] which are shown on Exhibit "A" attached
to the Mortgage are legally sufficient descriptions for the purpose of creating and maintaining the Liens purported to be created by the Mortgage and for the purposes of all applicable recording,
filing and registration laws in the State of [            ]. 

        3.     The
Mortgagor is duly qualified as a foreign corporation to do business and to own its Property and is in good standing in the State of
[            ]. 

        4.     So
far as the law of the State of [            ] is concerned, the Mortgage constitutes legal, valid and binding obligations of the Mortgagor
enforceable against it in accordance with their terms except as limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws of general application relating to or affecting
creditors' rights generally and to general principles of equity. 

        5.     The
Mortgage is effective to create in favor of the Administrative Agent (or the Trustee named therein, as applicable) for the benefit of the Administrative Agent and the
Lenders, for the payment of the obligations described therein, a valid mortgage Lien on all of the Mortgagor's right, title and interest in and to the portion of the Mortgaged Property constituting
real property described in the Mortgage as being mortgaged thereby and a valid security interest in all of the Mortgagor's right, title and interest in and to as-extracted collateral
located in the county in which the Mortgaged Property is situated and all fixtures located on the real property described in the Mortgage. 

        6.     Fully
executed counterparts of the Mortgage and the Financing Statement should be filed for record in each county in the State of
[            ] where any portion of the Mortgaged Property is located [or if other, please specify]. Other than the foregoing, no authorization,
consent, approval, license or exemption of, or filing or registration with, any Governmental Authority of the State of [            ] is necessary for either the due
execution and delivery by the Mortgagor of the Mortgage, the perfection of the Liens intended to be created thereby or with the holding and enforcement by the Administrative Agent of the Mortgage or
the obligations secured thereby. 

        7.     After
the recordings and filings specified in paragraph 6 have occurred, the Liens created by the Mortgage will be perfected. 

        8.     After
the recordings and filings specified in paragraph 6 have occurred, no instruments need be recorded, registered or filed or re-recorded,
re-registered or re-filed in any public office in the State of [            ] in connection with the execution and delivery of the Mortgage in order
to maintain the perfection and priority of the Liens created thereby after the date of recordation, other than [state rule if necessary] and continuation statements as required
by the Uniform Commercial Code as in effect in the State of [            ]. 

        9.     No
state or local recording tax, stamp tax or other similar fee, tax or governmental charge (other than statutory filing and recording fees to be paid upon the filing of
the Mortgage [or the Financing Statement]) is required to be paid in connection with the filing and recording of [either] the Mortgage [or
the Financing Statement][, except as follows: explain if necessary]. 

        10.   The
execution, delivery and performance by the Mortgagor of its obligations under the Mortgage will not result in a violation of any laws, rules and regulations of the
State of [            ] which, in our experience, exercising customary professional diligence, are normally applicable to transactions of the type provided for in the Loan
Documents. 

        11.   A
[                        ]state court of competent jurisdiction or a federal court sitting in the State of
[                        ] of
competent jurisdiction and applying conflicts of laws principles of the State of [                        ]presented with a choice
of law issue, will honor the choice of Texas law to
govern the Credit Agreement, the Notes and the Mortgage that state such documents shall be governed by the laws of the State of Texas. 

Exhibit E-2 - 2

 

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

[add
appropriate qualifications, if any]. 

        The
opinions rendered herein are for the sole benefit of, and may only be relied upon by, the addressee and the Persons from time to time Lenders under the Credit Agreement, and the
opinions
herein expressed are not to be used, circulated or otherwise referred to in connection with any transaction other than those contemplated by the Loan Documents. This opinion is specifically limited to
the presently effective laws of the State of [            ]. We have not been asked to, and we do not, render any opinion as to any matter except as specifically set forth
herein. 

	 	 	Very truly yours,
	 	 	 
	 	 	 
	 	 	

Exhibit E-2 - 3

  

 
 

EXHIBIT F-1
  SECURITY INSTRUMENTS    
    

	1)
	Guaranty
and Collateral Agreement dated as of November 23, 2004 by the Borrower, the Restricted Subsidiaries party thereto as Guarantors, in favor of the Administrative Agent
and the Lenders.

	2)
	Financing
Statements in respect of item 1, by:

	a)
	the
Borrower;

	b)
	Wynn-Crosby
Energy, Inc., a Texas corporation;

	c)
	P-H
Energy, LLC, a Texas limited liability company;

	d)
	Wynn-Crosby
1994, Ltd., a Texas limited partnership;

	e)
	Wynn-Crosby
1995, Ltd., a Texas limited partnership;

	f)
	Wynn-Crosby
1996, Ltd., a Texas limited partnership;

	g)
	Wynn-Crosby
1997, Ltd., a Texas limited partnership;

	h)
	Wynn-Crosby
1998, Ltd., a Texas limited partnership;

	i)
	Wynn-Crosby
1999, Ltd., a Texas limited partnership;

	j)
	Wynn-Crosby
2000, Ltd., a Texas limited partnership;

	k)
	Wynn-Crosby
2002, Ltd., a Texas limited partnership;

	l)
	Beta
Operating Company, L.L.C., an Oklahoma limited liability company;

	m)
	TCM,
L.L.C., an Oklahoma limited liability company; and

	n)
	Red
River Field Services, L.L.C., an Oklahoma limited liability company.

	3)
	Stock
Powers delivered in respect of item 1:

	a)
	Wynn-Crosby
Energy, Inc., a Texas corporation; and

	b)
	Petrohawk
Energy, LLC, a Texas limited liability company.

	4)
	Deed
of Trust, Mortgage, Assignment of As-Extracted Collateral, Security Agreement and Financing Statement dated as of November [    ],
2004 by the [Guarantor(s)], as mortgagor, in favor of Brian Malone, as Trustee, for the benefit the Administrative Agent, the Lenders and others.

	5)
	Financing
Statement in respect of item 4.

	6)
	Fee
Letter with Administrative Agent. 

Exhibit F-1 - 1

  

 
 

EXHIBIT F-2
  FORM OF GUARANTY AND COLLATERAL AGREEMENT    
    

Exhibit F-2 - 1

  

 
 

EXHIBIT G
  FORM OF ASSIGNMENT AND ASSUMPTION    
    

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

        For
an agreed consideration, the Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor's
rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage
interest identified below of all of such outstanding rights and obligations of the Assignor under the respective facilities identified below (including any letters of credit and guarantees included in
such facilities) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender)
against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed
thereby or in any way based on or related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the
rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the "Assigned Interest"). Such sale and assignment is without recourse to the 

Exhibit G - 1

 

Assignor
and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor. 

	1.	 	Assignor:	 	 
	 	 	 	 	

	

2.	
 	

Assignee:	
 	

 
	 	 	 	 	
 [and is an Affiliate/Approved Fund of [identify Lender](2)]
	

3.	
 	

Borrower:	
 	

Petrohawk Energy Corporation
	

4.	
 	

Administrative Agent:	
 	

BNP Paribas, as the administrative agent under the Credit Agreement
	

5.	
 	

Credit Agreement:	
 	

The Credit Agreement dated as of November 23, 2004 among Petrohawk Energy Corporation, the Lenders parties thereto, BNP Paribas, as Administrative Agent, and the other agents parties thereto
	

6.	
 	

Assigned Interest:	
 	

 

	(2)
	Select
as applicable. 

	Commitment Assigned
 
	 	Aggregate Amount of

Commitment/Loans for

all Lenders
	 	Amount of

Commitment/Loans

Assigned
	 	Percentage Assigned of

Commitment/Loans(3)
	 
	 	 	$	 	 	$	 	 	 	%
	 	 	$	 	 	$	 	 	 	%
	 	 	$	 	 	$	 	 	 	%

	(3)
	Set
forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder. 

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

Exhibit G - 2

 

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

	 	 	ASSIGNOR
	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Title:
	 	 	 	 	 
	 	 	 	 	 
	 	 	ASSIGNEE
	 	 	 	 	 
	 	 	[NAME OF ASSIGNEE]
	 	 	 	 	 
	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	 	
 Title:

	Consented to and Accepted:	 	 
	 	 	 	 	 
	BNP Paribas, as

  Administrative Agent	 	 
	 	 	 	 	 
	 	 	 	 	 
	By	 	 	 	 
	 	 	
 Title:	 	 
	 	 	 	 	 
	 	 	 	 	 
	By	 	 	 	 
	 	 	
 Title:	 	 
	 	 	 	 	 
	 	 	 	 	 
	[Consented to:](4)	 	 
	 	 	 	 	 
	Petrohawk Energy Corporation	 	 
	 	 	 	 	 
	 	 	 	 	 
	By	 	 	 	 
	 	 	
 Title:	 	 

	(4)
	To
be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement. 

Exhibit G - 3

 
 
 

ANNEX 1    
    

 
 

PETROHAWK ENERGY CORPORATION SENIOR REVOLVING CREDIT AGREEMENT    
    
    STANDARD TERMS AND CONDITIONS FOR
  ASSIGNMENT AND ASSUMPTION    
    

        1.    Representations and Warranties.    

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

        1.2.    Assignee.    The Assignee (a) represents and warrants that (i) it has full power and authority,
and has taken all action necessary, to execute and deliver this Assignment and Assumption and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement,
(ii) it satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender,
(iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together with copies of the most recent financial statements delivered pursuant to Section 8.01
thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase
the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of
the obligations which by the terms of the Loan Documents are required to be performed by it as a Lender. 

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

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

Exhibit G - 4

  

 
 

SCHEDULE 7.05
  LITIGATION    
    

None. 

Schedule 7.05 - 1

  

 
 

SCHEDULE 7.15
  SUBSIDIARIES AND PARTNERSHIPS; UNRESTRICTED SUBSIDIARIES    
    

	Restricted Subsidiaries
 
	 	Jurisdiction of

Organization
	 	Organizational

Identification

Number
	 	Principal Place of

Business

and Chief Executive

Office

	Wynn-Crosby Energy, Inc.	 	Texas	 	01262202-00	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	P-H Energy, LLC	 	Texas	 	800414887	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Beta Operating Company, L.L.C.	 	Oklahoma	 	3500593601	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Red River Field Services, L.L.C.	 	Oklahoma	 	3500620355	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	TCM, L.L.C.	 	Oklahoma	 	3500593600	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	
Partnerships	
 	

 	
 	

 	
 	

 
	

Wynn-Crosby 1994, Ltd.	
 	

Texas	
 	

00076385-10	
 	

1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 1995, Ltd.	 	Texas	 	00085893-10	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 1996, Ltd.	 	Texas	 	00095234-10	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 1997, Ltd.	 	Texas	 	00097592-10	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 1998, Ltd.	 	Texas	 	00111816-10	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 1999, Ltd.	 	Texas	 	0013341610	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 2000, Ltd.	 	Texas	 	0014728210	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	Wynn-Crosby 2002, Ltd.	 	Texas	 	800131427	 	1100 Louisiana

Suite 4400

Houston, TX 77002
	
Unrestricted Subsidiaries	
 	

 	
 	

 	
 	

 
	

BETAustralia, LLC	
 	

California	
 	

199805110004	
 	

1100 Louisiana

Suite 4400

Houston, TX 77002

Schedule 7.15 - 1

  

 
 

SCHEDULE 7.19
  GAS IMBALANCES    
    

	Well
 
	 	Working Interest
	 	Net Revenue

Interest
	 	Cumulative

Over/(Under) Balance

to Working Interest (Mcf)
	 	As of Date
	 	Cumulative

Over/(Under)

Balance to Net

Revenue

Interest (Mcf)
	 
	Wynn-Crosby 1994, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	None	 	 	 	 	 	 	 	 	 	 	 
	Wynn-Crosby 1995, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Adkerson #1	 	6.45800	%	5.60310	%	(2,636	)	12/03	 	(2,287	)
	Alexander, C.S. #1-24	 	11.08140	%	8.61940	%	(50	)	5/04	 	(39	)
	Allison #1-35	 	10.05050	%	7.66890	%	241	 	5/04	 	184	 
	Bar "D" #1-36	 	17.13530	%	13.97250	%	(300	)	9/03	 	(245	)
	Barbee, Alma #1	 	4.08830	%	3.36240	%	11,632	 	6/04	 	9,567	 
	Barrow #1-36	 	8.00000	%	5.68000	%	12	 	3/04	 	9	 
	Barrow #2-36	 	8.00000	%	5.68000	%	(96	)	4/04	 	(68	)
	Barter Island #2-25	 	11.11700	%	8.54550	%	(79	)	5/04	 	(61	)
	Bean, J. #1-10	 	7.50000	%	5.55000	%	(9,311	)	5/04	 	(6,890	)
	Bean, J. #3-10	 	15.63940	%	11.59210	%	20,346	 	5/04	 	15,081	 
	Bean, J. #4-10	 	16.35610	%	12.18630	%	463	 	5/04	 	345	 
	Bear #1-19	 	1.06180	%	0.81940	%	236	 	6/04	 	182	 
	Brauchi #1-22	 	5.20540	%	2.17960	%	11,907	 	5/04	 	4,986	 
	Buckmaster #1-30	 	5.72540	%	4.41500	%	6,800	 	6/04	 	5,244	 
	Carpenter 6-21	 	3.00290	%	2.24800	%	(1,222	)	6/04	 	(915	)
	Clay #1-33	 	0.79890	%	0.64050	%	130	 	6/04	 	104	 
	Clear #1-33	 	0.84280	%	0.67500	%	(1,420	)	6/04	 	(1,137	)
	Clift Thorton 1-36 (C.G.)	 	4.99740	%	3.56680	%	(247	)	12/03	 	(176	)
	Coker #1-30	 	31.52540	%	25.78290	%	41	 	6/04	 	34	 
	Cook #1-24	 	14.24810	%	11.27450	%	(410	)	8/02	 	(324	)
	Copeland #1	 	7.50000	%	6.32740	%	14,404	 	6/04	 	12,152	 
	Copeland #2	 	8.96910	%	7.56680	%	3,952	 	5/04	 	3,334	 
	Cupp #1	 	9.36190	%	7.80770	%	(310	)	6/04	 	(259	)
	Cupp #2	 	13.69710	%	11.43600	%	231	 	6/04	 	193	 
	Cupp 3-27	 	11.00560	%	8.88860	%	(13,641	)	5/04	 	(11,017	)
	Cupp "A" #1	 	6.49930	%	5.52250	%	22,340	 	5/04	 	18,982	 
	Cupp "A" #2	 	6.61880	%	5.61170	%	791	 	11/98	 	671	 
	Cupp "B" #2	 	14.05470	%	11.74340	%	(3,098	)	11/98	 	(2,589	)
	Cupp "B" #5	 	1.59800	%	1.34400	%	(1,891	)	6/04	 	(1,590	)
	Cupp "C" #1	 	11.01670	%	9.54610	%	(15,332	)	2/00	 	(13,285	)
	Cupp "C" #2	 	9.70000	%	7.90420	%	2,146	 	12/03	 	1,749	 
	Cupp "D" #2	 	5.05200	%	4.24000	%	931	 	6/02	 	781	 
	Cupp "D" #3	 	9.70000	%	7.90420	%	138	 	5/04	 	112	 
	Dessie 1-11	 	3.37500	%	2.60300	%	93	 	4/04	 	72	 
	Ellis #1-33	 	3.33230	%	2.90750	%	4,793	 	4/97	 	4,182	 
	Ellis #2-33	 	3.32290	%	2.90750	%	964	 	5/04	 	843	 
	Ellis #3-33	 	3.32290	%	2.90750	%	(484	)	5/04	 	(424	)
	Ethel #1-29	 	10.05910	%	8.02510	%	449	 	6/04	 	358	 
	Evans 2-6	 	5.66880	%	4.25160	%	1,263	 	6/04	 	947	 
	Felton #1-24	 	17.47500	%	14.15790	%	(9,677	)	6/01	 	(7,840	)
	Freida #1-25	 	25.00000	%	18.40630	%	(327	)	6/02	 	(241	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 1

 

	Gates #1-33	 	4.34780	%	3.08690	%	(6,181	)	12/03	 	(4,388	)
	Gates 8-33	 	4.34780	%	3.08690	%	13	 	4/04	 	9	 
	Gill #1-13	 	12.77540	%	10.17760	%	703	 	6/04	 	560	 
	Goldston 46	 	25.00000	%	20.50780	%	(8,616	)	6/04	 	(7,068	)(1)
	Gray, Donald #1-28	 	1.17300	%	0.95350	%	22,544	 	3/04	 	18,325	 
	Green #2-1	 	28.26770	%	21.46300	%	(23	)	5/04	 	(17	)
	Green #4-1A	 	9.44640	%	6.99250	%	447	 	5/04	 	331	 
	Green Estate #2	 	1.40600	%	1.23050	%	(1,796	)	6/04	 	(1,572	)
	Green Estate #3	 	0.00030	%	0.00030	%	(127	)	3/04	 	(127	)
	Gunter #2-35	 	10.05050	%	7.66890	%	637	 	6/04	 	486	 
	Hatcher Farms #1A-19	 	16.66670	%	13.49200	%	14	 	5/04	 	11	 
	Hay 5-33	 	4.34780	%	3.15150	%	(1,639	)	6/04	 	(1,188	)
	Hay 7-33	 	4.34780	%	3.15150	%	26	 	4/04	 	19	 
	Heriford #1-18	 	6.65920	%	5.03170	%	95	 	5/04	 	72	 
	Heriford #2-18	 	6.04450	%	0.04749	%	(7,314	)	6/03	 	(57	)
	Heriford #4-18	 	6.43110	%	4.95050	%	(609	)	5/04	 	(469	)
	Heriford #5A-18	 	6.04450	%	4.74840	%	(495	)	5/04	 	(389	)
	Heriford #6-18	 	6.04450	%	4.74840	%	(320	)	5/04	 	(251	)
	Heriford #7-18	 	6.04450	%	4.74840	%	(805	)	5/04	 	(632	)
	Hinz #1-22	 	11.19000	%	8.17580	%	(2,199	)	6/03	 	(1,607	)
	Ima Woods 1-2	 	6.25000	%	4.74220	%	(7,010	)	9/03	 	(5,319	)
	Isch #1-11	 	3.53660	%	3.01550	%	28,035	 	5/04	 	23,904	 
	Jahnel #1	 	10.00000	%	6.90000	%	1,064	 	12/03	 	734	 
	Jennings #1-29	 	5.94060	%	4.97910	%	24	 	6/04	 	20	 
	Keck "A" 1-A	 	11.31400	%	4.67360	%	18,349	 	6/04	 	7,580	 
	Keck #2-30	 	7.60250	%	5.84970	%	(457	)	6/04	 	(352	)
	Kendall Family	 	3.37500	%	2.48110	%	(27	)	4/04	 	(20	)
	Larson #1-32	 	25.54570	%	21.40110	%	40	 	6/04	 	34	 
	Larson 1-31	 	4.58950	%	3.69890	%	(8,050	)	6/04	 	(6,488	)
	Larson 1-32	 	25.54570	%	21.40110	%	40	 	6/04	 	34	 
	Lasley #2-11	 	0.83300	%	0.67640	%	340	 	5/04	 	276	 
	Littauer #1	 	6.67900	%	5.16540	%	(69	)	6/04	 	(53	)
	Lorene #1-33	 	1.31990	%	1.05270	%	(106	)	2/03	 	(85	)
	Lovett 1-11	 	3.37500	%	2.60300	%	246	 	6/04	 	190	 
	Lubinus #1-15	 	9.37500	%	7.08410	%	3,989	 	5/04	 	3,014	 
	Marshall Lake 1-31	 	12.53650	%	8.44200	%	(403	)	1/02	 	(271	)
	McClellan #1-11	 	3.74970	%	2.89700	%	(1,513	)	4/04	 	(1,169	)
	McColgin State #1-21	 	25.78130	%	19.07810	%	248	 	3/04	 	184	 
	Meacham #2-19	 	2.84700	%	2.18400	%	425	 	11/00	 	326	 
	Meacham #3-19	 	3.70130	%	2.83050	%	130	 	3/00	 	99	 
	Medders #4-1	 	9.44640	%	6.99250	%	(5,942	)	5/04	 	(4,398	)
	Medders #6-1	 	3.13800	%	2.28520	%	3	 	5/04	 	2	 
	Mikles 1-10	 	9.34300	%	7.23260	%	22,689	 	12/03	 	17,564	 
	Mikles #1-12	 	4.68750	%	3.32230	%	(1,197	)	6/04	 	(848	)
	Mogg-Hawkins #1-27	 	0.88000	%	0.76150	%	6,739	 	3/04	 	5,832	 
	Moore #1-30	 	6.30510	%	5.15660	%	68	 	12/03	 	56	 
	Morse #1-13	 	1.13810	%	0.91180	%	7,798	 	5/04	 	6,247	 
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 2

 

	Murray #1-19	 	9.44800	%	6.87650	%	115	 	6/00	 	84	 
	Nichols #1-22	 	7.10820	%	5.40090	%	(28	)	5/04	 	(21	)
	Oklahoma St. #1-13	 	4.38300	%	3.53610	%	(40,951	)	12/03	 	(33,038	)
	Page #1-13	 	4.34020	%	3.33660	%	(1,822	)	6/03	 	(1,401	)
	Page #5-13	 	3.97160	%	3.21310	%	92	 	5/04	 	74	 
	Page #6-13	 	3.97160	%	3.21310	%	1,240	 	5/04	 	1,003	 
	Page #7-13	 	3.97160	%	3.21310	%	(1,255	)	6/03	 	(1,015	)
	Patricia #1-24	 	3.97160	%	3.21310	%	917	 	5/04	 	742	 
	Pauline #1-19	 	25.00000	%	17.43750	%	7,549	 	5/04	 	5,265	 
	Peggy #1-30	 	25.38130	%	20.75800	%	(1,661	)	12/03	 	(1,358	)
	Donnie Johnson #1-1(Atoka B)	 	4.05830	%	2.87630	%	11,025	 	5/03	 	7,814	(2)
	Phillips 27-1	 	0.88010	%	0.76130	%	(66	)	4/04	 	(57	)
	Pond #1-34 (Redfork)	 	18.34200	%	14.38540	%	4,245	 	5/04	 	3,329	 
	Reeves 1-31	 	12.53650	%	8.44200	%	2,407	 	11/03	 	1,621	 
	Rennels #1-35	 	10.05050	%	7.68380	%	450	 	5/04	 	344	 
	Reynolds 1-30	 	17.31350	%	13.48980	%	(1,340	)	6/04	 	(1,044	)
	Roger #1-2	 	7.50000	%	5.23220	%	208	 	12/03	 	145	 
	S.-McMurrey #7 Lobo 1,3	 	15.00000	%	10.65000	%	1,604	 	6/00	 	1,139	 
	Sanborn #1-32	 	16.55150	%	6.83220	%	10	 	6/04	 	4	 
	Sanborn #2-32	 	13.81610	%	11.50150	%	(3,270	)	6/04	 	(2,722	)
	Sanborn #3-32	 	6.22250	%	5.05920	%	481	 	6/04	 	391	 
	Sanborn #4-32	 	8.57420	%	6.82090	%	48	 	6/04	 	38	 
	Sanborn #5-32	 	4.43940	%	3.71600	%	(477	)	6/04	 	(399	)
	Sara #2-13	 	4.56230	%	3.78400	%	4,836	 	6/04	 	4,011	 
	Saunders #1-33	 	2.22340	%	1.76560	%	43	 	12/03	 	34	 
	Sears #1-29	 	12.28750	%	5.33260	%	1,009	 	5/04	 	438	 
	Sooner #1 Unit	 	4.38820	%	3.72970	%	2,090	 	5/04	 	1,776	 
	Sooner #2-35	 	10.67040	%	9.48110	%	1,345	 	5/04	 	1,195	 
	State #1-36 (Harper State)	 	75.00000	%	60.02330	%	8	 	5/04	 	6	 
	Stevens #1-17	 	1.07820	%	0.86530	%	377	 	3/04	 	303	 
	Stevens #1-18	 	1.17830	%	0.95780	%	5	 	6/04	 	4	 
	Stratton Farms #1-26	 	5.10420	%	3.70560	%	278	 	6/97	 	202	 
	Sutton #1-17	 	1.43560	%	1.10090	%	(155	)	3/04	 	(119	)
	Sutton #2-17	 	5.74220	%	4.40370	%	90	 	6/04	 	69	 
	Taylor Estate #1-27	 	9.37510	%	6.67970	%	51,407	 	5/04	 	36,627	 
	Ten Bears #1-5	 	3.12500	%	2.31250	%	(41	)	12/03	 	(30	)
	Thetford #1-34	 	0.08560	%	0.05920	%	(247	)	3/04	 	(171	)
	Thomas 6-33	 	4.34780	%	3.15150	%	20	 	6/04	 	14	 
	Tolle #1-1	 	9.44640	%	6.88040	%	(35,594	)	5/04	 	(25,925	)
	Viers #1-32	 	23.97520	%	13.24750	%	8,958	 	5/04	 	4,950	 
	Viers #2-32	 	6.72200	%	4.43580	%	(53	)	5/04	 	(35	)
	Wagner #1-A	 	0.15020	%	0.11680	%	7,555	 	3/96	 	5,875	 
	Wagner #4-19	 	2.84700	%	2.18400	%	266	 	6/04	 	204	 
	Wagner #5-19	 	5.78380	%	4.43770	%	(121	)	6/04	 	(93	)
	Walter #2-17 (Atoka C)	 	5.09640	%	3.61770	%	2,681	 	1/04	 	1,903	 
	Warren King 1-27	 	0.88030	%	0.76130	%	(367	)	5/04	 	(317	)
	Whitfield 1-34	 	12.50000	%	10.15630	%	(807	)	6/04	 	(656	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 3

 

	Wright #22-1	 	0.46670	%	0.38890	%	(104	)	7/03	 	(87	)
	Young #1-33	 	0.10980	%	0.09490	%	676	 	12/03	 	584	 
	Young, E L 1-28	 	1.17300	%	0.95300	%	4,400	 	3/04	 	3,575	 
	Zac #1-9	 	21.03620	%	16.57160	%	(51	)	12/03	 	(40	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	95,098	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby, 1996, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Bartlett & Bailey #1	 	47.04340	%	39.04600	%	9,516	 	6/04	 	7,898	 
	Bartlett & Bailey #2	 	47.04340	%	39.04600	%	8,435	 	6/04	 	7,001	 
	Bartlett & Bailey #3	 	47.04340	%	39.04600	%	28,384	 	6/04	 	23,559	 
	Bartlett & Bailey #4	 	47.04340	%	39.04600	%	52,872	 	6/04	 	43,884	 
	E. Texas Gas System PL Imbalance	 	95.56000	%	73.67198	%	5,694	 	6/04	 	4,390	 
	Golden Gas Unit 2	 	3.71340	%	3.10420	%	(407	)	6/04	 	(340	)
	Golden Gas Unit 1	 	3.71340	%	3.10420	%	(295	)	6/04	 	(246	)
	James Gas Unit 4, 706357	 	10.25610	%	8.94030	%	(4,181	)	6/04	 	(3,645	)
	James Gas Unit 1, 805069	 	4.91010	%	4.29630	%	2,447	 	6/04	 	2,141	 
	Jones, RD 2-23	 	9.38430	%	7.24560	%	2,013	 	4/04	 	1,554	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	86,196	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby, 1997, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Hi A-446A	 	0.79037	%	0.65864	%	221,539	 	6/04	 	184,616	 
	Hi A-447 A-1, 2&5	 	4.16520	%	3.47100	%	(14,147	)	6/04	 	(11,789	)
	Hi A-447 B-14	 	4.16520	%	3.47100	%	22,927	 	3/03	 	19,106	 
	Hi A-447 "B" wells	 	4.16520	%	3.47100	%	11,677	 	3/03	 	9,731	 
	Hi A-448A	 	1.87207	%	1.56006	%	(2,410	)	6/04	 	(2,008	)
	Hi A-448 9	 	3.96271	%	3.30226	%	(1,741	)	6/04	 	(1,451	)
	OCS 00828 SS0214	 	6.23239	%	5.19366	%	165,884	 	6/04	 	138,237	 
	OCSG01528 SS0233	 	11.85570	%	9.87975	%	(78,197	)	6/04	 	(65,164	)
	OCSG03169 SS0238	 	12.11916	%	10.09930	%	(12,545	)	6/04	 	(10,454	)
	OCSG01025 SS0239	 	5.26920	%	4.39100	%	8,713	 	6/04	 	7,261	 
	South Marsh Island 265	 	3.99580	%	3.32980	%	(2,569	)	4/02	 	(2,141	)
	South Marsh Island 256	 	3.99580	%	3.33300	%	(171	)	4/02	 	(143	)
	State Lease 6618 1	 	6.93750	%	5.40580	%	1,731	 	7/99	 	1,349	 
	State Lease 6618 3	 	18.07780	%	14.36500	%	(4,247	)	7/99	 	(3,375	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	263,774	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby, 1998, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Avery #4	 	17.01560	%	14.84890	%	9,955	 	5/04	 	8,687	 
	Avery 1-26	 	50.81720	%	39.99400	%	25,517	 	6/04	 	20,082	 
	Avery 2-26	 	75.12970	%	61.38400	%	(4	)	6/04	 	(3	)
	Avery 3-26	 	51.65210	%	43.59560	%	297	 	6/04	 	251	 
	Ballard 1-6	 	2.34970	%	1.90420	%	593	 	5/04	 	481	 
	Biggers 1-6	 	7.41460	%	5.56090	%	156	 	3/02	 	117	 
	Boucher 1-5	 	20.69580	%	16.29790	%	8,703	 	6/04	 	6,854	 
	Brinks 1	 	35.23300	%	29.46980	%	(5,232	)	12/99	 	(4,376	)
	Brinks 2-28	 	41.67250	%	34.05920	%	1,802	 	4/04	 	1,473	 
	Davis, ET #1	 	2.43750	%	1.95000	%	9,715	 	6/04	 	7,772(3	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 4

 

	Floyd 1-27	 	76.07860	%	58.14460	%	(58	)	6/04	 	(44	)
	Gunter #1	 	57.36050	%	48.36660	%	3,741	 	6/04	 	3,154	 
	Holt, Delia #1	 	43.01128	%	32.66172	%	3,718	 	6/04	 	2,823	 
	Hunter Tucker #1-31	 	17.02600	%	14.89780	%	1,240	 	4/04	 	1,085	 
	Jarrad 1-35	 	29.06380	%	21.88270	%	(184	)	6/04	 	(139	)
	Jarrad 2-35	 	60.50000	%	47.55490	%	92	 	6/04	 	72	 
	Jones, RD 2-23	 	12.50030	%	9.88000	%	2,013	 	4/04	 	1,591	 
	Kluckner 1-26	 	1.83340	%	1.46670	%	(112	)	8/01	 	(90	)
	Kluckner 2-26	 	0.91670	%	0.87500	%	203	 	12/03	 	194	 
	Lackey 1-32	 	55.53120	%	46.10920	%	(33	)	6/04	 	(27	)
	Lackey Twin	 	55.53120	%	45.86270	%	(1,504	)	6/04	 	(1,242	)
	LeFlore, Lillie 1	 	97.60240	%	77.32320	%	910	 	4/04	 	721	 
	Legrand 2-32	 	2.71283	%	2.03451	%	2,152	 	6/04	 	1,614	 
	Lizzabell 1	 	22.61030	%	17.06400	%	714	 	6/04	 	539	 
	Loudermilk 1-28	 	30.27350	%	24.81520	%	299	 	6/04	 	245	 
	Mackey 1-20	 	47.59100	%	35.51060	%	22,189	 	6/04	 	16,557	 
	Martin Est 1-35	 	0.32550	%	0.26450	%	6	 	6/04	 	5	 
	Mason 3A	 	41.06980	%	33.11740	%	(491	)	6/04	 	(396	)
	Parkway 16	 	56.52000	%	40.17510	%	1,958	 	7/04	 	1,392	 
	Parkway West 10	 	1.17190	%	0.95210	%	(172	)	8/03	 	(140	)
	Parkway West 2	 	9.50520	%	8.24390	%	621	 	8/03	 	539	 
	Parkway West 3	 	9.50520	%	8.24390	%	(3,043	)	8/03	 	(2,639	)
	Parkway West 5	 	11.25380	%	9.43860	%	(856	)	8/03	 	(718	)
	Parkway West 6	 	9.61390	%	8.33130	%	3,775	 	8/03	 	3,271	 
	Parkway West 7	 	9.50520	%	8.24390	%	11,168	 	8/03	 	9,686	 
	Parkway West 8	 	8.33330	%	7.29170	%	14	 	8/03	 	12	 
	Parkway West 9	 	9.50520	%	8.24380	%	(20	)	8/03	 	(17	)
	Pearl 1-32	 	15.66720	%	11.95280	%	(35	)	12/02	 	(27	)
	Powell 1-24	 	43.33990	%	33.71200	%	(12,515	)	3/04	 	(9,735	)
	Rees #1	 	25.45460	%	20.24370	%	177	 	6/04	 	141	 
	Ritter 2-35	 	48.69850	%	33.37730	%	(91	)	6/04	 	(62	)
	Smith 1	 	60.93750	%	53.32030	%	64,870	 	11/03	 	56,761	  (4)
	Smith 2	 	53.12500	%	46.48440	%	51,730	 	10/03	 	45,264	  (4)
	Spring Mountain 1	 	64.93130	%	53.40935	%	(387	)	6/04	 	(318	)
	Thronton #2-17	 	4.87500	%	3.79780	%	19,010	 	6/04	 	14,809	 
	Tipton 5-29	 	2.44050	%	1.81320	%	8,781	 	6/04	 	6,524	 
	Tipton 6-29	 	2.44050	%	1.83030	%	1,948	 	6/04	 	1,461	 
	Todd 26G Federal 1	 	3.00320	%	2.37770	%	4,118	 	6/04	 	3,260	 
	University 18-29 GU#1	 	3.04670	%	2.66590	%	13,348	 	6/04	 	11,680	 
	University 18-29 GU#10	 	3.04670	%	2.66590	%	1,322	 	6/04	 	1,157	 
	University 18-29 GU#2	 	3.04670	%	2.66590	%	(29	)	6/04	 	(25	)
	University 18-29 GU#3	 	3.04670	%	2.66590	%	(565	)	6/04	 	(494	)
	University 18-29 GU#4	 	3.04670	%	2.66590	%	5,482	 	6/04	 	4,797	 
	University 18-29 GU#5	 	3.04670	%	2.66590	%	(894	)	6/04	 	(782	)
	University 18-29 GU#6	 	3.04670	%	2.66590	%	3,127	 	6/04	 	2,736	 
	University 18-29 GU#7	 	3.04670	%	2.66590	%	(556	)	6/04	 	(487	)
	University 18-29 GU#8	 	3.04670	%	2.66590	%	(2,178	)	6/04	 	(1,906	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 5

 

	University 18-30 GU#2	 	3.04670	%	2.66590	%	5,336	 	6/04	 	4,669	 
	University 18-30 GU#3	 	3.04670	%	2.66590	%	(446	)	6/04	 	(390	)
	University 18-31 GU#3	 	3.62380	%	2.66590	%	3,527	 	6/04	 	2,595	 
	University 18-31 GU#4	 	3.62380	%	2.66590	%	5,389	 	6/04	 	3,964	 
	University 18-31 GU#6	 	3.62380	%	2.66590	%	2,629	 	6/04	 	1,934	 
	Young 1-3	 	41.42280	%	31.98770	%	(7,776	)	6/04	 	(6,005	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	220,906	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby 1999, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Arco Fee #3	 	0.20240	%	0.15220	%	(43	)	6/04	 	(32	)
	Arco Fee #4	 	0.20240	%	0.15220	%	1	 	6/04	 	1	 
	Arco Fee GU #1	 	0.20240	%	0.15220	%	(2	)	6/04	 	(2	)
	Arco Fee GU #2	 	0.20240	%	0.15220	%	48	 	6/04	 	36	 
	DS&B #1 (Dibert Stark & Brown)	 	9.28063	%	6.98208	%	(6,350	)	6/04	 	(4,777	)
	Gingrich #1-26	 	21.37500	%	15.74490	%	1,376	 	2/01	 	1,014	 
	Kincaid JW A-1	 	4.87060	%	4.31690	%	(823	)	12/03	 	(729	)
	La Main Cam a Ra Unit	 	0.15806	%	0.11855	%	(622	)	6/04	 	(467	)
	Lillie Mae #1-18	 	1.35100	%	1.16360	%	(7	)	4/04	 	(6	)
	Long Arroyo Federal 1	 	0.46470	%	0.40660	%	(2	)	6/04	 	(2	)
	Rawls 1	 	5.60070	%	4.90060	%	872	 	6/04	 	763	 
	Rawls 2	 	5.60070	%	4.90060	%	985	 	6/04	 	862	 
	Regan #1	 	8.90630	%	6.67970	%	270	 	6/04	 	202	 
	Walker, WE A#4	 	2.57410	%	2.57410	%	176	 	4/01	 	176	 
	Waskow, H. A#1	 	1.90270	%	1.54460	%	(2,299	)	3/04	 	(1,866	)
	Williams, Lorende D 1	 	5.26090	%	6.24030	%	433	 	6/04	 	514	 
	Williams, LD GU 1 #2	 	5.68500	%	6.24030	%	57	 	6/04	 	63	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	(4,251	)
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby 2000, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	Abbott 1-8	 	23.43750	%	19.88280	%	23274	 	5/04	 	19,744	 
	Baker #1-28	 	3.10420	%	2.71620	%	(32	)	3/04	 	(28	)
	Bakke Unit	 	5.33170	%	5.04550	%	13	 	6/04	 	12	 
	Bannister 1-8	 	23.43750	%	19.62890	%	958	 	5/04	 	802	 
	Barton #1	 	3.12500	%	2.34380	%	41,796	 	6/04	 	31,348	 
	Bartlett, Arnold #1	 	6.07740	%	5.31780	%	9,191	 	3/04	 	8,042	 
	Bartlett, Arnold #2	 	6.07740	%	5.31780	%	6	 	3/04	 	5	 
	Belva 1-33	 	62.61400	%	47.24740	%	2,758	 	5/04	 	2,081	 
	Caprito 82 1L/1U	 	23.46590	%	19.26480	%	(1,027	)	3/04	 	(843	)
	Caprito 100 Unit 1	 	0.87710	%	0.76760	%	11,686	 	5/04	 	10,227	 
	Carlson 1-27	 	1.56250	%	1.56250	%	309	 	6/04	 	309	 
	Champlin Cities Service #6	 	37.94000	%	29.01460	%	14,660	 	6/04	 	11,211	 
	Champlin Cities Service #7	 	37.93999	%	29.01457	%	79,776	 	6/04	 	61,009	 
	Champlin Cities Service #8	 	8.95320	%	7.27450	%	(633	)	6/04	 	(514	)
	Clarke-State 2-26	 	18.75000	%	16.40630	%	(362	)	12/03	 	(317	)
	Clift #1-4	 	1.03930	%	0.90930	%	(18	)	12/03	 	(16	)
	Clift #2-4	 	1.03930	%	0.90930	%	(262	)	12/03	 	(229	)
	Clift #3-4	 	1.03930	%	0.90930	%	(59	)	12/03	 	(52	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 6

 

	Cooper Gas Com 1 DK	 	15.75000	%	13.58440	%	734	 	5/04	 	633	 
	Cooper Gas Com 1E DK	 	15.75000	%	13.58440	%	(487	)	5/04	 	(420	)
	Cooper Gas Com 1E CH	 	15.75000	%	13.58440	%	(6,893	)	5/04	 	(5,945	)
	Daniels #2	 	19.16420	%	16.76870	%	(3,662	)	6/04	 	(3,204	)
	Deal #2	 	37.50000	%	29.25540	%	(3,535	)	6/04	 	(2,758	)
	Elbow Canyon	 	65.62500	%	46.94810	%	(4,589	)	3/03	 	(3,283	)
	Fort #1-23	 	5.38000	%	4.54663	%	98	 	3/04	 	83	 
	Frost #4-PC	 	50.00000	%	43.75000	%	(6,267	)	6/04	 	(5,483	)
	Frost #501-FC	 	50.00000	%	43.75000	%	(32,114	)	6/04	 	(28,100	)
	Garland 1-29	 	53.52000	%	39.73500	%	(13	)	6/04	 	(10	)
	Gum 28 #1	 	30.53170	%	23.79840	%	1,852	 	5/04	 	1,443	 
	Glenn #2	 	0.07010	%	0.04910	%	20	 	7/04	 	14	 
	Glenn #3	 	0.07010	%	0.06540	%	(250	)	7/04	 	(233	)
	Glenn #5	 	1.55110	%	1.09210	%	1,055	 	7/04	 	743	 
	Harney 1-5	 	37.73310	%	30.65820	%	695	 	6/04	 	565	 
	Harrison Estate #1-23	 	7.45900	%	6.48100	%	(11,560	)	06/04	 	(10,044	)
	Heavin #1-31	 	2.99190	%	2.23620	%	201	 	6/04	 	150	 
	Irene #3-6	 	4.72890	%	4.13780	%	628	 	6/04	 	550	 
	Johnston, D.L.	 	3.65140	%	3.19500	%	3,907	 	6/03	 	3,419	 
	JV-S ROC #1	 	2.77910	%	2.43170	%	(5,140	)	10/03	 	(4,497	)
	Lamar #1-31	 	8.92920	%	7.81310	%	(1,114	)	6/04	 	(975	)
	LeJeune #1	 	5.72190	%	3.60010	%	1,319	 	6/04	 	830	 
	Lisa 3-30	 	1.67570	%	1.46630	%	61	 	6/04	 	53	 
	Lockhart #1	 	38.74150	%	33.89880	%	3,961	 	6/04	 	3,466	 
	Mae West 2-26	 	5.55774	%	4.88020	%	(1,768	)	6/04	 	(1,552	)
	Marriott 1-36	 	9.37500	%	7.19670	%	(507	)	12/03	 	(389	)
	Martindale 1-33	 	9.25310	%	7.51820	%	(248	)	5/04	 	(202	)
	Martin 8-2	 	18.84260	%	13.83290	%	78	 	8/03	 	57	 
	Marvin 1-6	 	65.71800	%	49.83200	%	(17	)	5/04	 	(13	)
	McDonald 6-1	 	50.00000	%	37.50000	%	22,943	 	6/04	 	17,207	 
	McDonald 6-2	 	50.00000	%	37.50000	%	14,435	 	6/04	 	10,826	 
	Monroe 2	 	23.75000	%	20.78130	%	6,160	 	3/04	 	5,390	 
	Monroe 3	 	23.75000	%	20.78130	%	(44,962	)	9/02	 	(39,342	)
	Quattlebaum 4	 	1.51580	%	1.13690	%	611	 	6/04	 	458	 
	Quattlebaum 1	 	1.51580	%	1.13690	%	11,001	 	6/04	 	8,251	 
	Quattlebaum 2	 	1.51580	%	1.13690	%	(831	)	6/04	 	(624	)
	Rowley COM 500 PC	 	12.98540	%	10.97270	%	2,006	 	6/04	 	1,695	 
	Rowley COM 500 FC	 	19.46110	%	16.44470	%	667	 	6/04	 	563	 
	Russell 1-20	 	9.64060	%	7.62740	%	(1,334	)	12/03	 	(1,055	)
	Sandra Kay 1-26	 	5.57740	%	4.88020	%	(1	)	6/04	 	(1	)
	Schenk #1-22	 	14.04750	%	12.03630	%	(31,161	)	6/04	 	(26,700	)
	Shelton 1-10	 	1.04170	%	0.91150	%	11,090	 	6/04	 	9,704	 
	Shelton 2-10	 	1.04170	%	0.91150	%	(968	)	3/03	 	(847	)
	Shwen 1-14	 	6.2500	%	4.91410	%	(100,782	)	6/04	 	(79,240	)
	SL 5419 #1	 	0.29790	%	0.17910	%	(193	)	6/04	 	(116	)
	Sprowls #1-5	 	4.66700	%	3.74140	%	1,799	 	6/04	 	1,442	 
	Sprowls #2-5	 	4.66700	%	3.74140	%	(28,711	)	6/04	 	(23,017	)
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 7

 

	Sprowls #4-5	 	4.66700	%	3.74140	%	(5,731	)	6/04	 	(4,594	)
	Spurlin #25-1	 	74.18980	%	58.90200	%	108,568	 	6/04	 	86,196	  (5)
	State 1-16	 	39.37290	%	32.84490	%	151	 	6/00	 	126	 
	State M #1 DK	 	15.75000	%	13.78130	%	1,407	 	6/04	 	1,231	 
	State M #1 DK	 	15.75000	%	13.78130	%	(1,660	)	6/04	 	(1,452	)(6)
	State M #1E DK	 	15.75000	%	13.78130	%	1,198	 	6/04	 	1,048	 
	State M #1E DK	 	15.75000	%	13.78130	%	(477	)	6/04	 	(417	)(6)
	State Com AM #37 DK	 	31.89850	%	27.90970	%	92	 	6/04	 	80	 
	State Com Am #37 DK	 	31.89850	%	27.90970	%	(46	)	6/04	 	(40	)(6)
	Stewart A Com LS 2 Ron	 	28.66500	%	24.43610	%	282	 	2/04	 	240	 
	Stewart A Com LS #2B MV	 	28.66500	%	24.43690	%	(10,315	)	6/04	 	(8,794	)
	Stewart A Com LS 2M MV	 	28.66500	%	24.43610	%	3,359	 	6/04	 	2,863	 
	Stewart A Com LS 2M MV	 	28.66500	%	24.43610	%	(13,003	)	6/04	 	(11,085	)(6)
	Stewart A Com LS #2 MV	 	28.66500	%	24.43610	%	272	 	6/04	 	232	 
	Stewart A Com LS #2 MV	 	28.66500	%	24.43610	%	(860	)	6/04	 	(733	)(6)
	Stewart A Com LS #2M DK	 	28.66500	%	24.43610	%	1,560	 	6/04	 	1,330	 
	Stewart A Com LS #2M DK	 	28.66500	%	24.43610	%	(1,315	)	6/04	 	(1,121	)(6)
	Switzer, Larry 3	 	1.56250	%	1.36720	%	265	 	6/04	 	231	 
	Switzer, Larry 2	 	1.56250	%	1.36720	%	7	 	6/04	 	7	 
	Switzer, Larry 1	 	1.56250	%	1.36720	%	73,874	 	6/04	 	64,640	 
	Three States Com #1A MV	 	15.75000	%	13.78130	%	(1,167	)	6/04	 	(1,021	)
	Three States Com #1A MV	 	15.75000	%	13.78130	%	482	 	6/04	 	422(6	)
	Three States Com #1 MV	 	15.75000	%	13.78130	%	(223	)	6/04	 	(195	)
	Three States Com #1 MV	 	15.75000	%	13.78130	%	537	 	6/04	 	470(6	)
	Three States Com #1 PC	 	15.75000	%	13.78130	%	(482	)	6/04	 	(422	)
	Thurmond Ranch #1-2	 	1.59340	%	1.39420	%	2,811	 	3/04	 	2,460	 
	Todd #14-1	 	1.136000	%	1.56250	%	(4	)	6/04	 	(6	)
	Todd #19-1	 	1.136000	%	1.56250	%	(12	)	6/04	 	(17	)
	Todd #15-1	 	1.136000	%	1.56250	%	(5	)	6/04	 	(7	)
	Touchstone 1-14	 	1.56250	%	1.36720	%	(39	)	12/03	 	(34	)
	Waid #1	 	11.25000	%	9.53130	%	32,122	 	6/03	 	27,215	 
	Walker #1-3	 	1.04100	%	0.91090	%	(2,418	)	6/04	 	(2,116	)
	Whitfield 1-34	 	12.50000	%	10.15630	%	(807	)	6/04	 	(656	)
	Young 1-3	 	41.42280	%	31.98770	%	3458	 	6/04	 	2,670	 
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	131,038	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Wynn-Crosby 2002, Ltd.	 	 	 	 	 	 	 	 	 	 	 
	LeJenue #1	 	5.09870	%	3.39960	%	1,290	 	6/04	 	860	 
	Blackburn #3T	 	14.04264	%	12.00100	%	315	 	6/04	 	269	 
	Blackburn #3C	 	14.04264	%	12.00100	%	(117	)	6/04	 	(100	)
	Blackburn #4	 	21.06395	%	18.00150	%	(10,469	)	6/04	 	(8,947	)
	Blackburn #5	 	14.92030	%	12.75110	%	(576	)	6/04	 	(492	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	(8,410	)
	 	 	
	 	
	 	
	 	
	 	
	 
	Wildcard Oil & Gas Company	 	 	 	 	 	 	 	 	 	 	 
	Bartlett & Bailey #1	 	2.18580	%	1.81420	%	442	 	6/04	 	367	 
	Bartlett & Bailey #2	 	2.18580	%	1.81420	%	392	 	6/04	 	325	 
	Bartlett & Bailey #3	 	2.18580	%	1.81420	%	1,319	 	6/04	 	1,095	 
	 	 	 	 	 	 	 	 	 	 	 	 

Schedule 7.19 - 8

 

	Bartlett & Bailey #4	 	2.18580	%	1.81420	%	2,457	 	6/04	 	2,039	 
	E. Texas Gas System PL Imbalance	 	4.440000	%	4.440000	%	265	 	6/04	 	265	 
	Golden Gas Unit #2, 805545	 	0.17250	%	0.14420	%	(407	)	6/04	 	(340	)
	Golden Gas Unit #1, 957595	 	0.17250	%	0.14420	%	(295	)	6/04	 	(247	)
	James Gas Unit 1, 805069	 	0.22810	%	0.19960	%	386	 	6/04	 	338	 
	James Gas Unit 4, 706357	 	0.47640	%	0.41530	%	(284	)	6/04	 	(248	)
	 	 	
	 	
	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	3,595	 
	 	 	
	 	
	 	
	 	
	 	
	 
	Combined Total	 	 	 	 	 	 	 	 	 	787,946	 
	 	 	
	 	
	 	
	 	
	 	
	 

	(1)
	Field
imbalance due from Shell.

	(2)
	Imbalance
is disputed, well ceased production in 1992, well acquired in 1996 w/ (1028) gas imbalance. Received revised imbalance in May 2004.

	(3)
	Dispute
balance Statement has obvious errors

	(4)
	Per
Jack Roach, Wynn-Crosby 1998, Ltd did not assume this imbalance. No GBA.

	(5)
	Oneok
measurement problem. Wynn-Crosby 200, Ltd. estimates this volume by comparing field estimates to Oneok statements. Oneok has not sent Wynn-Crosby any statement claiming they are
owed this gas.

	(6)
	Wynn-Crosby
2002, Ltd. acquired 70% of this property from Neward along with Neward's imbalance Conoco has not made adjustments to allocate 70% of Neward's imbalance. 

Schedule 7.19 - 9

  

 
 

SCHEDULE 7.20
  MARKETING CONTRACTS    
    

None. 

Schedule 7.20-1

SCHEDULE 7.21

SWAP AGREEMENTS  

Commodity Hedges as of November 18, 2004 

	Trade Type
 
	 	Quantity
	 	Trade Date
	 	Basis
	 	Period
	 	Floor Price
	 	Ceiling Price
	 	Swap Price
	 	Counterparty

	WC oil swaps	 	5,000 bbl/month	 	11/18/2004	 	NYMEX WTI	 	Jan-Mar 05	 	 	 	 	 	$32.31 avg.	 	Cinergy/Coral
	WC gas swaps	 	148,000 mmtu/mo avg	 	 	 	NYMEX gas	 	Jan-Jun 05	 	na	 	na	 	$4.08 avg.	 	Cinergy/Coral
	WC gas collar	 	400,000 mmbtu/mo	 	10/21/2004	 	NYMEX gas	 	cal 05	 	$6.35	 	$10.05	 	 	 	Paribas
	WC oil collar	 	5,000 bbl/mo	 	11/18/2004	 	NYMEX WTI	 	cal 05	 	38.00	 	$51.40	 	 	 	Paribas
	HAWK gas collar	 	90,000 mmbtu/mo	 	9/14/2004	 	NYMEX gas	 	cal 05	 	$5.50	 	$7.59	 	 	 	Paribas
	HAWK gas collar	 	45,000 mmbtu/mo	 	8/26/2004	 	NYMEX gas	 	cal 05	 	$5.00	 	$7.82	 	 	 	B of A
	HAWK gas collar	 	35,000 mmbtu/mo	 	10/29/2004	 	NYMEX gas	 	cal 05	 	$7.00	 	$8.75	 	 	 	B of A
	WC gas collar	 	170,000 mmbtu/mo	 	11/18/2004	 	NYMEX gas	 	Jul-Dec 05	 	$6.00	 	$7.68	 	 	 	Paribas
	WC oil collar	 	27,000 bbl/mo	 	10/21/2004	 	NYMEX WTI	 	cal 05	 	$43.00	 	$57.00	 	 	 	Paribas
	HAWK oil collar	 	9,000 bbl/mo	 	10/29/2004	 	NYMEX WTI	 	cal 05	 	$43.00	 	$52.30	 	 	 	B of A
	WC oil collar	 	27,000 bbl/mo	 	10/21/2004	 	NYMEX WTI	 	cal 06	 	$40.00	 	$49.30	 	 	 	Paribas
	HAWK gas collar	 	150,000 mmbtu/mo	 	10/29/2004	 	NYMEX gas	 	cal 06	 	$6.00	 	$8.26	 	 	 	B of A
	WC gas collar	 	400,000 mmbtu/mo	 	10/21/2004	 	NYMEX gas	 	cal 06	 	$5.50	 	$9.54	 	 	 	Paribas
	HAWK oil collar	 	7,000 bbl/mo	 	10/29/2004	 	NYMEX WTI	 	cal 06	 	$40.00	 	$47.30	 	 	 	B of A
	HAWK gas swap	 	100,000 mmbtu/mo	 	11/9/2004	 	NYMEX gas	 	cal 07	 	 	 	 	 	$6.06	 	B of A
	HAWK oil collar	 	6,000 bbl/mo	 	11/5/2004	 	NYMEX WTI	 	cal 07	 	$36.00	 	$45.75	 	 	 	B of A
	WC gas collar	 	240,000 mmbtu/mo	 	11/18/2004	 	NYMEX gas	 	cal 07	 	$5.30	 	$7.12	 	 	 	Paribas
	WC oil collar	 	14,000 bbl/mo	 	11/18/2004	 	NYMEX WTI	 	cal 07	 	$35.00	 	$43.20	 	 	 	Paribas
	HAWK oil collar	 	5,000 bbl/month	 	11/5/2004	 	NYMEX WTI	 	cal 08	 	$34.00	 	$45.30	 	 	 	B of A
	WC gas collar	 	210,000 mmbtu/mo	 	11/18/2004	 	NYMEX gas	 	cal 08	 	$5.00	 	$6.45	 	 	 	Paribas
	WC oil swap	 	12,000 bbl/mo	 	11/18/2004	 	NYMEX WTI	 	cal 08	 	 	 	 	 	$38.10	 	Paribas
	HAWK gas collar	 	90,000 mmbtu/mo	 	11/5/2004	 	NYMEX gas	 	cal 08	 	$5.15	 	$6.71	 	 	 	B of A

Schedule 7.21-1

   Petrohawk Energy Corporation

Commodities Trade Summary  

Banc of America  

	Trade Date
 
	 	Start Date
	 	End Date
	 	MMBTU
	 	Price
	 	MTM for

09.30.04
	 	Current

Month

Change
	 	MTM for

10.29.04
	 
	

Natural Gas	
 	

 	
 	

 	
 	

 	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	

08.26.04	
 	

12.23.04	
 	

11.28.05	
 	

547,500	
 	
$	

7.83	
 	

(252,765	
)	

(193,305	
)	

(446,070	
)
	08.26.04	 	12.23.04	 	11.28.05	 	547,500	 	$	5.00	 	51,036	 	(32,851	)	18,185	 
	 	 	 	 	 	 	 	 	 	 	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	(201,729	)	(226,156	)	(427,885	)
	 	 	 	 	 	 	 	 	 	 	 	
	 	
	 	
	 

BNP Paribas  

	                 
 
	 	                  
	 	                 
	 	                
	 	         
	 	              
	 	              
	 	              
	 
	

Natural Gas	
 	

 	
 	

 	
 	

 	
 	
 	

 	
 	

 	
 	

 	
 	

 	
 
	

09.14.01	
 	

01.04.05	
 	

12.05.05	
 	

1,095,000	
 	
$	

7.59	
 	

(586,665	
)	

(429,106	
)	

(1,015,771	
)
	09.14.01	 	01.04.05	 	12.05.05	 	1,095,000	 	$	5.50	 	195,898	 	(121,185	)	74,713	 
	 	 	 	 	 	 	 	 	 	 	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	(390,767	)	(550,291	)	(941,058	)
	 	 	 	 	 	 	 	 	 	 	 	
	 	
	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	(592,496	)	(776,447	)	(1,368,943	)
	 	 	 	 	 	 	 	 	 	 	 	
	 	
	 	
	 

Schedule 7.21 - 1

  

 
 

SCHEDULE 9.05
  INVESTMENTS    
    

None. 

Schedule 9.05 - 1

QuickLinks

Exhibit 10.1

SENIOR REVOLVING CREDIT AGREEMENT

TABLE OF CONTENTS

ANNEXES, EXHIBITS AND SCHEDULES

ARTICLE I Definitions and Accounting Matters

ARTICLE II The Credits

ARTICLE III Payments of Principal and Interest; Prepayments; Fees

ARTICLE IV Payments; Pro Rata Treatment; Sharing of Set-offs

ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality

ARTICLE VI Conditions Precedent

ARTICLE VII Representations and Warranties

ARTICLE VIII Affirmative Covenants

ARTICLE IX Negative Covenants

ARTICLE X Events of Default; Remedies

ARTICLE XI The Agents

ARTICLE XII Miscellaneous

ANNEX I LIST OF MAXIMUM CREDIT AMOUNTS

EXHIBIT A FORM OF NOTE

EXHIBIT B FORM OF BORROWING REQUEST

EXHIBIT C FORM OF INTEREST ELECTION REQUEST

EXHIBIT D FORM OF COMPLIANCE CERTIFICATE

EXHIBIT E-1 FORM OF LEGAL OPINION OF HINKLE ELKOURI LAW FIRM L.L.C.

EXHIBIT E-2 FORM OF LEGAL OPINION OF LOCAL COUNSEL

EXHIBIT F-1 SECURITY INSTRUMENTS

EXHIBIT F-2 FORM OF GUARANTY AND COLLATERAL AGREEMENT

EXHIBIT G FORM OF ASSIGNMENT AND ASSUMPTION

ANNEX 1

PETROHAWK ENERGY CORPORATION SENIOR REVOLVING CREDIT AGREEMENT STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT AND ASSUMPTION

SCHEDULE 7.05 LITIGATION

SCHEDULE 7.15 SUBSIDIARIES AND PARTNERSHIPS; UNRESTRICTED SUBSIDIARIES

SCHEDULE 7.19 GAS IMBALANCES

SCHEDULE 7.20 MARKETING CONTRACTS

SCHEDULE 9.05 INVESTMENTS

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00075-of-00352.parquet"}]]