Document:

Exhibit 10.1

 

AMENDED
AND RESTATED TERM LOAN AGREEMENT

Dated
as of April 28, 2006

among

VENOCO,
INC., as Borrower,

and

BMC, LTD.,

WHITTIER PIPELINE CORPORATION,

TEXCAL ENERGY (LP) LLC, TEXCAL ENERGY (GP) LLC,

TEXCAL ENERGY NORTH CAL L.P., TEXCAL ENERGY SOUTH
CAL L.P. and

TEXCAL ENERGY SOUTH TEXAS L.P., as Guarantors,

 

The Several Lenders

from
Time to Time Parties Hereto,

CREDIT
SUISSE, CAYMAN ISLANDS BRANCH

as Administrative Agent,

CREDIT SUISSE SECURITIES (USA)
LLC

and

LEHMAN BROTHERS INC., 

as Joint Lead Arrangers,

HARRIS NESBITT CORP.,

as Co-Arranger, and

LEHMAN BROTHERS INC.,

as Syndication Agent

 

 

 

TABLE OF CONTENTS

	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
  2

  
	
  1.1

  	
  Certain Defined Terms

  	
  2

  
	
  1.2

  	
  Other Interpretive
  Provisions

  	
  25

  
	
  1.3

  	
  Accounting Principles

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDIT

  	
  26

  
	
  2.1

  	
  Amounts and Terms of the
  Loans

  	
  26

  
	
  2.2

  	
  Maturity Date

  	
  27

  
	
  2.3

  	
  Conversion and
  Continuation Elections

  	
  27

  
	
  2.4

  	
  Optional Prepayments

  	
  28

  
	
  2.5

  	
  Mandatory Prepayments

  	
  29

  
	
  2.6

  	
  Repayment

  	
  30

  
	
  2.7

  	
  Interest

  	
  30

  
	
  2.8

  	
  Fees

  	
  31

  
	
  2.9

  	
  Computation of Fees and
  Interest

  	
  31

  
	
  2.10

  	
  Payments by the Company;
  Loans Pro Rata

  	
  31

  
	
  2.11

  	
  [Intentionally Omitted]

  	
  33

  
	
  2.12

  	
  Sharing of Payments, Etc.

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE III TAXES, YIELD
  PROTECTION AND ILLEGALITY

  	
  34

  
	
  3.1

  	
  Taxes

  	
  34

  
	
  3.2

  	
  Illegality

  	
  35

  
	
  3.3

  	
  Increased Costs and Reduction
  of Return

  	
  35

  
	
  3.4

  	
  Funding Losses

  	
  36

  
	
  3.5

  	
  Inability to Determine
  Rates

  	
  36

  
	
  3.6

  	
  Certificates of Lenders

  	
  37

  
	
  3.7

  	
  Substitution of Lenders

  	
  37

  
	
  3.8

  	
  Survival

  	
  37

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV SECURITY

  	
  37

  
	
  4.1

  	
  The Security

  	
  37

  
	
  4.2

  	
  Agreement to Deliver
  Security Documents

  	
  37

  
	
  4.3

  	
  Perfection and Protection
  of Security Interests and Liens

  	
  38

  
	
  4.4

  	
  Offset

  	
  38

  
	
  4.5

  	
  Guaranty

  	
  38

  
	
  4.6

  	
  Production Proceeds

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE V CONDITIONS
  PRECEDENT

  	
  40

  
	
  5.1

  	
  Conditions of the
  Effective Date

  	
  40

  
	
  5.2

  	
  Conditions to All Credit
  Extensions

  	
  43

  
	
  5.3

  	
  Conditions to the
  Restatement Effective Time

  	
  44

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI REPRESENTATIONS
  AND WARRANTIES

  	
  44

  

 

i

 

 

	
  6.1

  	
  Organization, Existence
  and Power

  	
  45

  
	
  6.2

  	
  Corporate Authorization;
  No Contravention

  	
  45

  
	
  6.3

  	
  Governmental Authorization

  	
  45

  
	
  6.4

  	
  Binding Effect

  	
  45

  
	
  6.5

  	
  Litigation

  	
  45

  
	
  6.6

  	
  No Default

  	
  46

  
	
  6.7

  	
  ERISA Compliance

  	
  46

  
	
  6.8

  	
  Use of Proceeds; Margin
  Regulations

  	
  47

  
	
  6.9

  	
  Title to Properties

  	
  47

  
	
  6.10

  	
  Oil and Gas Reserves

  	
  47

  
	
  6.11

  	
  Reserve Report

  	
  47

  
	
  6.12

  	
  Gas Imbalances

  	
  48

  
	
  6.13

  	
  Taxes

  	
  48

  
	
  6.14

  	
  Financial Statements and
  Condition

  	
  48

  
	
  6.15

  	
  Environmental Matters

  	
  49

  
	
  6.16

  	
  Regulated Entities

  	
  49

  
	
  6.17

  	
  No Burdensome Restrictions

  	
  49

  
	
  6.18

  	
  Copyrights, Patents,
  Trademarks and Licenses, etc.

  	
  49

  
	
  6.19

  	
  Subsidiaries

  	
  50

  
	
  6.20

  	
  Insurance

  	
  50

  
	
  6.21

  	
  Full Disclosure

  	
  50

  
	
  6.22

  	
  Solvency

  	
  50

  
	
  6.23

  	
  Labor Matters

  	
  50

  
	
  6.24

  	
  Downstream Contracts

  	
  51

  
	
  6.25

  	
  Derivative Contracts

  	
  51

  
	
  6.26

  	
  Ellwood Subsidiary

  	
  51

  
	
  6.27

  	
  Senior Notes Indenture

  	
  51

  
	
  6.28

  	
  Existing Indebtedness

  	
  51

  
	
  6.29

  	
  TexCal Acquisition
  Documents

  	
  51

  
	
  6.30

  	
  Security Documents

  	
  51

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII AFFIRMATIVE
  COVENANTS

  	
  52

  
	
  7.1

  	
  Financial Statements

  	
  52

  
	
  7.2

  	
  Certificates; Other
  Production and Reserve Information

  	
  53

  
	
  7.3

  	
  Notices

  	
  54

  
	
  7.4

  	
  Preservation of Company
  Existence, Etc.

  	
  55

  
	
  7.5

  	
  Maintenance of Property

  	
  55

  
	
  7.6

  	
  Insurance

  	
  55

  
	
  7.7

  	
  Payment of Obligations

  	
  56

  
	
  7.8

  	
  Compliance with Laws

  	
  56

  
	
  7.9

  	
  Compliance with ERISA

  	
  56

  
	
  7.10

  	
  Inspection of Property and
  Books and Records

  	
  56

  
	
  7.11

  	
  Environmental Laws

  	
  56

  
	
  7.12

  	
  New Subsidiary Guarantors

  	
  57

  
	
  7.13

  	
  Use of Proceeds

  	
  57

  
	
  7.14

  	
  Further Assurances

  	
  57

  
	
  7.15

  	
  Hedging Program

  	
  58

  

 

ii

 

	
  7.16

  	
  TexCal Acquisition

  	
  59

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII NEGATIVE
  COVENANTS

  	
  59

  
	
  8.1

  	
  Limitation on Liens

  	
  59

  
	
  8.2

  	
  Disposition of Assets

  	
  60

  
	
  8.3

  	
  Consolidations and Mergers

  	
  61

  
	
  8.4

  	
  Loans and Investments

  	
  61

  
	
  8.5

  	
  Limitation on Indebtedness

  	
  62

  
	
  8.6

  	
  Transactions with
  Affiliates

  	
  63

  
	
  8.7

  	
  Margin Stock

  	
  63

  
	
  8.8

  	
  Contingent Obligations

  	
  63

  
	
  8.9

  	
  Restricted Payments

  	
  64

  
	
  8.10

  	
  Derivative Contracts

  	
  65

  
	
  8.11

  	
  Sale Leasebacks

  	
  66

  
	
  8.12

  	
  Consolidated Leverage
  Ratio

  	
  66

  
	
  8.13

  	
  Current Ratio

  	
  67

  
	
  8.14

  	
  Minimum Interest Coverage
  Ratio

  	
  67

  
	
  8.15

  	
  Minimum PV 10 to
  Consolidated Total Debt Ratio

  	
  67

  
	
  8.16

  	
  Change in Business

  	
  67

  
	
  8.17

  	
  Accounting Changes

  	
  67

  
	
  8.18

  	
  Certain Contracts;
  Amendments; Multiemployer ERISA Plans

  	
  67

  
	
  8.19

  	
  Senior Notes

  	
  68

  
	
  8.20

  	
  Limitation on Amendments
  to TexCal Acquisition Documents

  	
  68

  
	
  8.21

  	
  First Lien Credit
  Documents

  	
  68

  
	
  8.22

  	
  Forward Sales, Production
  Payments, Etc.

  	
  69

  
	
  8.23

  	
  Use of Proceeds

  	
  69

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX EVENTS OF
  DEFAULT

  	
  69

  
	
  9.1

  	
  Event of Default

  	
  69

  
	
  9.2

  	
  Remedies

  	
  72

  
	
  9.3

  	
  Rights Not Exclusive

  	
  73

  
	
   

  	
   

  	
   

  
	
  ARTICLE X THE
  ADMINISTRATIVE AGENT

  	
  73

  
	
  10.1

  	
  Appointment and
  Authorization; Limitation of Agency

  	
  73

  
	
  10.2

  	
  Delegation of Duties

  	
  73

  
	
  10.3

  	
  Liability of
  Administrative Agent

  	
  73

  
	
  10.4

  	
  Reliance by Administrative
  Agent

  	
  74

  
	
  10.5

  	
  Notice of Default

  	
  74

  
	
  10.6

  	
  Credit Decision

  	
  74

  
	
  10.7

  	
  Indemnification

  	
  75

  
	
  10.8

  	
  Administrative Agent in
  Individual Capacity

  	
  75

  
	
  10.9

  	
  Successor Administrative
  Agent

  	
  76

  
	
  10.10

  	
  Withholding Tax

  	
  76

  
	
  10.11

  	
  Arrangers; Syndication Agents

  	
  77

  
	
  10.12

  	
  Release of Collateral

  	
  78

  
	
  ARTICLE XI MISCELLANEOUS

  	
  78

  

 

iii

 

	
  11.1

  	
  Amendments and Waivers

  	
  78

  
	
  11.2

  	
  Notices

  	
  78

  
	
  11.3

  	
  No Waiver; Cumulative
  Remedies

  	
  79

  
	
  11.4

  	
  Costs and Expenses

  	
  79

  
	
  11.5

  	
  Indemnity

  	
  80

  
	
  11.6

  	
  Payments Set Aside

  	
  80

  
	
  11.7

  	
  Successors and Assigns

  	
  81

  
	
  11.8

  	
  Assignments,
  Participations, etc.

  	
  81

  
	
  11.9

  	
  Interest

  	
  85

  
	
  11.10

  	
  Indemnity and Subrogation

  	
  86

  
	
  11.11

  	
  Automatic Debits of Fees

  	
  86

  
	
  11.12

  	
  Notification of Addresses,
  Lending Offices, Etc.

  	
  86

  
	
  11.13

  	
  Counterparts

  	
  86

  
	
  11.14

  	
  Severability

  	
  87

  
	
  11.15

  	
  No Third Parties Benefited

  	
  87

  
	
  11.16

  	
  Governing Law,
  Jurisdiction

  	
  87

  
	
  11.17

  	
  Submission To
  Jurisdiction; Waivers

  	
  87

  
	
  11.18

  	
  Entire Agreement

  	
  88

  
	
  11.19

  	
  NO ORAL AGREEMENTS

  	
  88

  
	
  11.20

  	
  Accounting Changes

  	
  88

  
	
  11.21

  	
  WAIVER OF JURY TRIAL,
  PUNITIVE DAMAGES, ETC.

  	
  88

  
	
  11.22

  	
  Intercreditor Agreement;
  Collateral Trust Agreement

  	
  89

  
	
  11.23

  	
  USA PATRIOT Act

  	
  89

  
	
  11.24

  	
  Acknowledgments

  	
  89

  
	
  11.25

  	
  Survival of
  Representations and Warranties

  	
  89

  
	
  11.26

  	
  Release of Collateral and
  Guarantee Obligations.

  	
  89

  
	
  11.27

  	
  Amendment and Restatement

  	
  90

  
	
  11.28

  	
  Amendment and Restatement
  of the First Lien Credit Agreement

  	
  91

  

 

 

SCHEDULES

	
  Schedule 1.1(a)

  	
   

  	
  Commitments and Pro Rata Shares

  
	
  Schedule 1.1(b)

  	
   

  	
  TexCal Subsidiaries

  
	
  Schedule 6.5

  	
   

  	
  Litigation

  
	
  Schedule 6.7

  	
   

  	
  ERISA Compliance

  
	
  Schedule 6.14(a)

  	
   

  	
  Material Indebtedness

  
	
  Schedule 6.15

  	
   

  	
  Environmental Matters

  
	
  Schedule 6.17

  	
   

  	
  Burdensome Restrictions

  
	
  Schedule 6.19

  	
   

  	
  Subsidiaries and Minority Interests

  
	
  Schedule 6.24

  	
   

  	
  Downstream Contracts

  
	
  Schedule 6.25

  	
   

  	
  Existing Derivative Contracts

  
	
  Schedule 6.29

  	
   

  	
  Material TexCal Acquisition Documents

  

 

iv

 

	
  Schedule 6.30(a)-1

  	
   

  	
  Security Agreement UCC Filing Jurisdictions

  
	
  Schedule 6.30(a)-2

  	
   

  	
  UCC Financing Statements to Remain on File

  
	
  Schedule 6.30(a)-3

  	
   

  	
  UCC Financing Statements to be Terminated

  
	
  Schedule 6.30(b)

  	
   

  	
  Mortgage Filing Jurisdictions

  
	
  Schedule 8.1

  	
   

  	
  Permitted Liens

  
	
  Schedule 8.2

  	
   

  	
  TexCal Dispositions

  
	
  Schedule 8.6

  	
   

  	
  Transactions with Affiliates

  

 

EXHIBITS

	
  Exhibit A

  	
   

  	
  Form of Notice of
  Borrowing

  
	
  Exhibit B

  	
   

  	
  Form of Notice of
  Conversion/Continuation

  
	
  Exhibit C

  	
   

  	
  Form of Compliance
  Certificate

  
	
  Exhibit D

  	
   

  	
  Form of Security Agreement

  
	
  Exhibit E

  	
   

  	
  Form of Assignment and
  Acceptance

  
	
  Exhibit F

  	
   

  	
  Form of Note

  
	
  Exhibit G

  	
   

  	
  Form of Guaranty Agreement

  
	
  Exhibit H

  	
   

  	
  Form of Intercreditor Agreement

  
	
  Exhibit I

  	
   

  	
  Form of Collateral Trust Agreement

  

 

v

 

AMENDED AND RESTATED TERM LOAN AGREEMENT

This AMENDED AND RESTATED TERM LOAN AGREEMENT is
entered into as of April 28, 2006, among VENOCO, INC., a Delaware corporation
(the “Company”); BMC, LTD., a
California limited partnership (“BMC”), WHITTIER
PIPELINE CORPORATION, a Delaware corporation (“Whittier”),
and each of the TexCal Subsidiaries (defined below), as Guarantors; each of the
financial institutions which is or which may from time to time become a
signatory to this Agreement (individually, a “Lender”
and collectively, the “Lenders”); CREDIT
SUISSE, CAYMAN ISLANDS BRANCH, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative Agent”); CREDIT SUISSE SECURITIES (USA)
LLC and LEHMAN BROTHERS INC., as joint lead arrangers (in such capacities,
collectively, the “Lead
Arrangers”); HARRIS NESBITT CORP., as co-arranger (together with
the Lead Arrangers, the “Arrangers”);
and LEHMAN BROTHERS INC., as syndication agent (in such capacity, the “Syndication Agent”).

RECITALS

WHEREAS, on March 30, 2006, the Company entered into
the TexCal Acquisition Documents (defined below), and, on March 31, 2006,
consummated the TexCal Acquisition (defined below) contemplated thereby;

WHEREAS, in connection therewith, each of the
Company, the Original Guarantors, the Lenders and the Administrative Agent,
among others, entered into that certain Term Loan Agreement dated as of March
30, 2006 (the “Existing Credit Agreement”)
pursuant to which the Lenders made term loans to the Company in an aggregate
principal amount of $350,000,000; and

WHEREAS, the Company has requested that the Existing
Credit Agreement be amended and restated to provide for certain amendments on
the terms set forth in this Agreement (defined below), which Agreement shall be
effective upon satisfaction of certain conditions precedent set forth in this
Agreement;

WHEREAS,
the Lenders are willing to amend and restate the Existing Credit Agreement to
provide for certain amendments on the terms set forth in this Agreement, which
Agreement shall be effective upon satisfaction of certain conditions precedent
set forth in this Agreement;

WHEREAS,
the Company desires to refinance, renew, extend and continue the Existing
Obligations (defined below); and

WHEREAS,
it is the intent of the parties hereto that this Agreement not constitute a
novation of the obligations and liabilities existing under the Existing Loan
Documents (defined below) or evidence payment of all or any of such obligations
and liabilities; that this Agreement amend and restate in its entirety the
Existing Credit Agreement and renew and extend the extensions of credit under
the Existing Credit Agreement, as so amended and restated; and that from and
after the Restatement Effective Time the Existing Credit Agreement be of no
further force or effect except as to evidence the incurrence of the obligations
of the Company and its Subsidiaries thereunder and the representations and
warranties made and the actions or omissions performed or required to be
performed thereunder, in each case prior to the Restatement Effective Time.

 

1

 

NOW, THEREFORE, in consideration of the mutual
agreements, provisions and covenants contained herein and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree that the Existing Credit Agreement shall
be and hereby is amended and restated in its entirety as follows:

ARTICLE I

DEFINITIONS

                1.1           Certain Defined Terms.  The following terms have the following
meanings:

“Acquisition” means
any transaction or series of related transactions for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business or division of
a Person, (b) the acquisition of in excess of 50% of the capital stock of a
corporation (or similar entity), which stock has ordinary voting power for the
election of the members of such entity’s board of directors or persons
exercising similar functions (other than stock having such power only by reason
of the happening of a contingency), or the acquisition of in excess of 50% of
the partnership interests or equity of any Person not a corporation which
acquisition gives the acquiring Person the power to direct or cause the
direction of the management and policies of such Person, or (c) a merger or
consolidation or any other combination with another Person (other than a Person
that is a Subsidiary) provided that the Company or a Subsidiary of the Company
is the surviving entity.

“Adjusted Base Rate” shall mean, for any day and any Base Rate Loan, an
interest rate per annum equal to the greater of (a) the Federal Funds Rate for
such day plus one-half of one percent (0.5%) and (b) the Base Rate for such
day; such rate to be computed on the basis of a year of 365 or 366 days, as the
case may be, and actual days elapsed (including the first day but excluding the
last day) during the period for which payable, but in no event shall such rate
at any time exceed the maximum rate of interest permitted by applicable law.

“Administrative Agent”
has the meaning specified in the introductory clause hereto.

“Administrative Agent-Related
Persons” means Administrative Agent, its Affiliates, and the
officers, directors, employees, agents and attorneys-in-fact of the
Administrative Agent and its Affiliates.

“Administrative
Questionnaire” has the meaning specified in Section 11.8(a).

“Affected
Lender” has the meaning specified in Section 3.7.

“Affiliate” means,
as to any Person, any other Person which, directly or indirectly, is in control
of, is controlled by, or is under common control with, such Person. A Person
shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.

“Agent-Related Persons”
means with respect to each Agent, such Agent, its Affiliates, and each of the
officers, directors, employees, agents and attorneys-in-fact of it and its
Affiliates.

 

2

 

“Agents”
means, collectively, the Administrative Agent, the Arrangers and the
Syndication Agent.

“Agent’s Payment Office”
means the address set forth on the signature pages hereto in relation to the
Administrative Agent, or such other address as the Administrative Agent may
from time to time specify.

“Aggregate
Exposure” means, with respect to any Lender at any time, an
amount equal to (a) if at such time the Commitments have not been reduced to
zero, the sum of the aggregate unpaid principal amount of the Loans of such
Lender and the aggregate amount of such Lender’s Commitments at such time and
(b) if at such time the Commitments have been reduced to zero, the sum of the
aggregate unpaid principal amount of the Loans of such Lender.

“Agreement” means (i) as to any time prior to the
Restatement Effective Time, the Existing Credit Agreement, and (ii) as to any
time at or after the Restatement Effective Time, this Amended and Restated Term
Loan Agreement, as such may be further amended, supplemented or otherwise
modified from time to time pursuant to the terms hereof and of the
Intercreditor Agreement.

“Applicable Margin”
means, with respect to any Base Rate Loan or LIBO Rate Loan on any day, an
amount equal to the percentage for such day under the Pricing Grid for such
type of Loan.

“Applicable
Percentage” means eighty percent (80%).

“Arrangers” has the meaning
specified in the introductory clause hereto.

“Assignee” has the
meaning specified in Section 11.8(a).

“Assignment
and Acceptance” has the meaning specified in Section 11.8(a).

“Attorney Costs”
means and includes all reasonable fees and disbursements of any law firm or
other external counsel, the allocated cost of reasonable internal legal
services and all disbursements of internal counsel.

“Audited
Financial Statements” means the Company’s consolidated financial
statements as of and for the years ended December 31, 2004, 2003 and 2002,
together with the unqualified independent auditors’ report and opinion of
Deloitte & Touche LLP thereon, all in form and substance satisfactory to
the Administrative Agent.

“Available
Borrowing Base” means, at the particular time in question, the
Borrowing Base (as defined in the First Lien Credit Agreement) in effect at
such time minus the applicable Effective Amount (as defined in the First Lien
Credit Agreement) at such time.

“Bankruptcy Code”
means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et seq.).

“Base Rate” means,
for any day, the rate of interest in effect for such day as publicly 

 

3

 

announced from time to time
by Administrative Agent at its New York, New York office as its “base rate” for
Dollar loans made in the United States. 
(The “base rate” is a rate set by Administrative Agent based upon
various factors including costs and desired return, general economic conditions
and other factors, and is used as a reference point for pricing some loans,
which may be priced at, above, or below such announced rate.)  Any change in the base rate announced by
Administrative Agent shall take effect at the opening of business on the day
specified in the public announcement of such change.

“Base Rate Loan”
means a Loan that bears interest based at the Adjusted Base Rate, plus the
Applicable Margin.

“BMC” means BMC,
Ltd., a California limited partnership comprised of the Company, as General
Partner, and Whittier, as Limited Partner.

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York are authorized or required by law to close and, if
the applicable Business Day relates to any LIBO Rate Loan, means such a day on
which dealings are carried on in the applicable offshore dollar interbank
market.

“Capital Adequacy Regulation”
means any guideline, request or directive of any central bank or other
Governmental Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case, regarding capital adequacy of any bank
or of any corporation controlling a bank.

“Capital Lease”
means, when used with respect to any Person, any lease in respect of which the
obligations of such Person constitute Capitalized Lease Obligations.

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

“Capitalized Lease Obligations”
means, when used with respect to any Person, without duplication, all
obligations of such Person to pay rent or other amounts under any lease of (or
other arrangement conveying the right to use) Property, or a combination
thereof, which obligations shall have been or should be, in accordance with
GAAP, capitalized on the books of such Person.

“Carpinteria
Bluffs Dividend” has the meaning specified in Section 8.2(i).

“Cash Dividends” means with
respect to the Company, at any time, the distribution of earnings in Dollars to
shareholders of the Company, determined in conformity with GAAP.

“Cash Equivalents” means:  (a) securities issued or fully guaranteed or
insured by the United States Government or any agency thereof and backed by the
full faith and credit of the United States having maturities of not more than
twelve (12) months from the date of acquisition; (b) certificates of deposit,
time deposits, Eurodollar time deposits, or bankers’ acceptances having in each
case a tenor of not more than twelve (12) months from the date of 

 

4

 

acquisition issued by and
demand deposits with any U.S. commercial bank or any branch or agency of a
non-U.S. commercial bank licensed to conduct business in the U.S. having
combined capital and surplus of not less than Five Hundred Million Dollars
($500,000,000) whose long term securities are rated at least A (or then
equivalent grade) by S&P and A2 (or then equivalent grade) by Moody’s at
the time of acquisition; (c) commercial paper of an issuer rated at least A-1
by S&P or P-1 by Moody’s at the time of acquisition, and in either case
having a tenor of not more than twelve (12) months; (d) repurchase agreements
with a term of not more than seven days for underlying securities of the types
described in clauses (a) and (b) above; and (e) money market mutual or similar
funds having assets in excess of $100,000,000.

“Change of Control”
means (a) a purchase or acquisition, directly or indirectly, by any “person” or
“group” within the meaning of Section 13(d)(3) and 14(d)(2) of the Exchange Act
(a “Group”), other than a
Permitted Holder, of “beneficial ownership” (as such term is defined in Rule
13d-3 under the Exchange Act) of securities of the Company which, together with
any securities owned beneficially by any “affiliates” or “associates” of such
Group (as such terms are defined in Rule 12b-2 under the Exchange Act), shall
represent more than (i) fifty percent (50%) or (ii) after a Qualifying IPO,
thirty percent (30%), in the case of (i) or (ii), of the combined voting power
of the Company’s securities which are entitled to vote generally in the
election of directors and which are outstanding on the date immediately prior
to the date of such purchase or acquisition; provided, however, that no such “Change
of Control” under clause (a)(ii) of this definition of “Change of Control”
shall be deemed to have occurred after a Qualifying IPO, if, and for so long
as, Permitted Holders have “beneficial ownership” (as such term is defined in
Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the
combined voting power of the Company’s securities which are entitled to vote
generally in the election of directors and which are outstanding on the date of
determination; (b) a sale of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any Person or Group; (c) the
liquidation or dissolution of the Company; or (d) the first day on which a
majority of the Board of Directors of the Company are not Continuing Directors
(as herein defined).  As herein defined, “Continuing Directors” means any member of the Board of
Directors of the Company who (x) is a member of such Board of Directors as of
the Effective Date or (y) was nominated for election or elected to such Board
of Directors with the affirmative vote of two-thirds of the Continuing
Directors who were members of such Board of Directors at the time of such
nomination or election.

“Code” means the
Internal Revenue Code of 1986, as amended, and regulations promulgated
thereunder.

“Collateral” means
all Property which is subject to a Lien in favor of the Collateral Trustee, for
the benefit of the Secured Parties, or which under the terms of any Security
Document is purported to be subject to such Lien.

“Collateral
Trust Agreement” means that certain Collateral Trust Agreement
dated as of the Effective Date by and among the Loan Parties, the
Administrative Agent and the Collateral Trustee in the form of “Exhibit I”
hereto, as amended, restated, supplemented or otherwise modified from time to
time pursuant to the terms hereof and thereof.

“Collateral
Trustee” has the meaning assigned to such term in the Collateral
Trust 

 

5

 

Agreement.

“Commitment” means
as to each Lender, such Lender’s obligation to have made, on the Effective
Date, Loans to the Company under this Agreement in an aggregate principal
amount not exceeding the amount set forth under the heading “Commitment”
opposite the name of such Lender on Schedule 1.1(a) hereto, or if
such Lender is a party to an Assignment and Acceptance, the amount set forth on
the most recent Assignment and Acceptance of such Lender, as that amount has
been reduced or terminated pursuant to this Agreement.

“Commitment
Letter” means the commitment letter dated March 30, 2006 by and
among the Company, Harris Nesbitt Corp., Bank of Montreal, Credit Suisse
Securities (USA) LLC, Credit Suisse, Cayman Islands Branch, Lehman Commercial
Paper Inc. and Lehman Brothers Inc., as amended, restated, supplemented or
otherwise modified from time to time.

“Company”
means Venoco, Inc. a Delaware corporation.

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

“Consolidated
EBITDA” means with respect to the Company and its Subsidiaries
on a consolidated basis for any fiscal period, without duplication, (a)
Consolidated Net Income plus (b) depreciation, depletion, amortization,
adjustments resulting from the application of FAS 123R and other non-cash items
reducing Consolidated Net Income plus (c) Consolidated Interest Expense plus
(d) income tax expense minus (e) any non-cash items increasing Consolidated Net
Income, all determined in accordance with GAAP. 
For purposes of Sections 8.12 and 8.14, Consolidated EBITDA shall be
calculated to give pro forma effect to the TexCal Acquisition and other
acquisitions and Dispositions as if such acquisition(s) or Disposition(s) had
been consummated on the first day of the period of four consecutive fiscal
quarters ending on the relevant date of calculation.

“Consolidated Interest Expense”
means, with respect to the Company and its Subsidiaries on a consolidated basis
for any fiscal period, total interest expenses (including that portion
attributable to Capitalized Lease Obligations and capitalized interest) of the
Company and its Subsidiaries in such fiscal period which are classified as
interest expense on the consolidated financial statements of the Company and
its Subsidiaries, all as determined in conformity with GAAP.  Consolidated Interest Expense shall be
calculated to give pro forma effect to the financing of the TexCal Acquisition
or other financing transactions as if such financing had been consummated on
the first day of the period of four consecutive fiscal quarters ending on the
relevant date of calculation.

“Consolidated
Leverage Ratio” means as at the last day of any period of four
consecutive fiscal quarters of the Company, commencing with the fiscal quarter
ended June 30, 2006 as the last quarter in the initial period of four
consecutive fiscal quarters contemplated hereby, the ratio of (a) Consolidated Total
Debt to (b) Consolidated EBITDA for such period.

“Consolidated Liabilities”
means, when used with respect to the Company and its Subsidiaries, all items
which are or should be classified as liabilities on the consolidated financial
statements of the Company and its Subsidiaries, all determined in conformity
with GAAP.

 

6

 

“Consolidated Net Income”
means, with respect to the Company and its Subsidiaries on a consolidated
basis, for any fiscal period, the net income (or net loss) of the Company and
its Subsidiaries for such period determined in accordance with GAAP, but
excluding the effects of the application of FAS 133 and 143 and any expensing
of capitalized costs required by Rule 4-10 of Regulation S-X promulgated by the
SEC as applied to reporting entities employing the full cost method.

“Consolidated Total Debt” means, at
any date, the aggregate principal amount of all Indebtedness of the Company and
its Subsidiaries at such date, determined on a consolidated basis in accordance
with GAAP.

“Contingent Obligation”
means, as to any Person without duplication, any direct or indirect liability
of that Person with or without recourse, (a) with respect to any Indebtedness,
dividend, letter of credit or other similar obligation (the “primary obligations”) of another Person (the “primary obligor”), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for the
payment or discharge of any such primary obligation, or to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase Property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation, or (iv) otherwise to assure or hold harmless the holder of
any such primary obligation against loss in respect thereof (each, a “Guaranty Obligation”); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other Property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other Property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other Property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Derivative Contract.  The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the lesser of
(i) the stated maximum amount, if any, of such Contingent Obligation and (ii)
the maximum stated or determinable amount of the primary obligation in respect
of which such Guaranty Obligation is made or, if not stated or if
indeterminable, the maximum reasonably anticipated liability in respect
thereof, and in the case of other Contingent Obligations, shall be equal to the
lesser of (i) the stated maximum amount, if any, of such Contingent Obligation
and (ii) the maximum reasonably anticipated liability in respect thereof.

“Contractual Obligation”
means, as to any Person, any provision of any security issued by such Person or
of any agreement, undertaking, contract, indenture, mortgage, deed of trust or
other instrument, document or agreement to which such Person is a party or by
which it or any of its Property is bound.

“Conversion/Continuation Date”
means any date on which, under Section 2.3 of this Agreement, the Company (a)
converts Loans of one Interest Rate Type to another Interest Rate Type, or (b)
continues as Loans of the same Interest Rate Type, but with a new Interest
Period, Loans having Interest Periods expiring on such date.

 

7

 

“Credit Extension”
means and includes the making, conversion or continuation of any Loan
hereunder.

“Current Assets” means, for any Person, all assets of
such Person that, in accordance with GAAP, would be included as current assets
on a balance sheet as of a date of calculation; provided, however, an amount
equal to the Available Borrowing Base shall be included as current assets.

“Current Liabilities”
means, for any Person, all liabilities of such Person that, in accordance with
GAAP, would be included as current liabilities on a balance sheet as of the
date of calculation; provided, however, the current portion of the Loans which
are not past due may be excluded from Current Liabilities.

“Declined
Proceeds” has the meaning specified in Section
2.10(e).

“Default” means any
event or circumstance which, with the giving of notice, the lapse of time, or
both, would (if not cured or otherwise remedied during such time) constitute an
Event of Default.

“Default Rate” has
the meaning specified in Section 2.7(c).

“Derivative Contract”
means all futures contracts, forward contracts, swap, put, cap or collar
contracts, option contracts, hedging contracts or other derivative contracts or
similar agreements covering oil and gas commodities or prices or financial,
monetary or interest rate instruments.

“Disposition” has the meaning specified in Section 8.2.

“Disqualified Stock” means, as to any Person, any
Capital Stock of such Person that by its terms (or by the terms of any security
into which it is convertible or for which it is exchangeable) or otherwise
(including upon the occurrence of an event) requires the payment of dividends
(other than dividends payable solely in Capital Stock which does not otherwise
constitute Disqualified Stock) or matures or is required to be redeemed
(pursuant to any sinking fund obligation or otherwise) or is convertible into
or exchangeable for Indebtedness or is redeemable at the option of the holder
thereof, in whole or in part, at any time on or prior to the date six (6) months after the Maturity
Date.

“Dollars”, “dollars” and “$”
each mean lawful money of the United States.

“Effective
Amount” means on any date, the aggregate outstanding principal
amount of all Loans after giving effect to any prepayments or repayments of
such Loans occurring on such date.

“Effective
Date” means the date on which the Effective Time occurred, which
date was March 30, 2006.

“Effective Time”
means the time as of which all conditions precedent set forth in
Section 5.1 were satisfied or waived by all Lenders.

 

8

 

“Ellwood” means
Ellwood Pipeline, Inc., a California corporation and a wholly owned Subsidiary
of the Company.

“Environmental Claims”
means all material claims by any Governmental Authority or other Person
alleging potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment.

“Environmental Laws”
means all federal, state or local laws, statutes, common law duties, rules,
regulations, ordinances and codes, together with all administrative orders,
requests, licenses, authorizations and permits of, and agreements with, any
Governmental Authorities, in each case relating to environmental, health, and
safety matters.

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

“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with the Company within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

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

“Eurodollar Reserve Percentage”
has the meaning specified in the definition of “LIBO Rate”.

“Event of Default”
means any of the events or circumstances specified in Section 9.1.

“Exchange Act”
means the Securities and Exchange Act of 1934.

“Existing
Credit Agreement” has the meaning specified in the recitals
hereto.

“Existing
Derivative Contracts” means the contracts listed on Schedule
6.25 hereto.

“Existing
Loan Documents” means the “Loan Documents” (as defined in the
Existing Credit Agreement).

 

9

 

“Existing
Obligations” means the “Obligations” (as defined in the Existing
Credit Agreement) outstanding at the Restatement Effective Time.

“FAS 123R”
means Financial Accounting Statement 123R promulgated by the Financial
Accounting Standards Board.

“FAS 133” means
Financial Accounting Statement 133 promulgated by the Financial Accounting
Standards Board.

“FAS 143” means
Financial Accounting Statement 143 promulgated by the Financial Accounting
Standards Board.

“FDIC” means the
Federal Deposit Insurance Corporation, and any Governmental Authority
succeeding to any of its principal functions.

“Federal Funds Rate”
means, for any day, the rate set forth in the weekly statistical release
designated as H.15(519), or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, “H.15(519)”) on the preceding Business Day opposite the
caption “Federal Funds (Effective)”;
or, if for any relevant day such rate is not so published on any such preceding
Business Day, the rate for such day will be the arithmetic mean as determined
by the Administrative Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York, New York time) on that day
by each of three leading brokers of Federal funds transactions in New York, New
York selected by the Administrative Agent.

“Fee Letter Agreement”
means the letter agreement dated March 30, 2006 among Harris Nesbitt Corp.,
Bank of Montreal, Credit Suisse, Cayman Islands Branch, Credit Suisse
Securities (USA) LLC, Lehman Commercial Paper Inc., Lehman Brothers Inc. and
Venoco, Inc., as amended, restated, supplemented or otherwise modified from
time to time.

“First Lien Commitments” means the aggregate “Commitments” (as defined in the First
Lien Credit Agreement).

“First Lien Credit Agent” means the Administrative Agent (as defined in the First
Lien Credit Agreement).

“First Lien Credit Agreement” means the Second Amended and
Restated Credit Agreement among the Loan Parties, the First Lien Credit Agent,
Harris Nesbitt Corp., as lead arranger, Credit Suisse Securities (USA) LLC and
Lehman Brothers Inc., as co-arrangers, Credit Suisse, Cayman Islands Branch,
and Lehman Commercial Paper Inc., as co-syndication agents and co-documentation
agents, and the other lenders from time to time party
thereto dated as of the Effective Date, as amended, restated, supplemented or
otherwise modified in accordance with the terms hereof.

“First Lien Credit Documents”
means the “First Lien Loan Documents” (as defined in the First Lien Credit
Agreement).

 

10

 

“First Lien Credit Lenders”
means the “Lenders” (as defined in the First Lien Credit Agreement).

“First Lien Loans” means the
loans to be made from time to time under and in accordance with the First Lien
Credit Documents.

“First Lien Maximum Loan Amount”
means “Maximum Loan Amount” (as defined in the First Lien Credit Agreement).

“First Lien Obligations” has
the meaning ascribed thereto in the Intercreditor Agreement.

“First Lien Secured Parties” means the “Secured Parties” (as defined in
the First Lien Credit Agreement).

“First
Liens” has the meaning specified in Section 7.14(b).

“Fiscal Quarter”
means each of the three-month periods coinciding with the fiscal quarters
adopted by the Company for financial reporting purposes.

“FRB” means the
Board of Governors of the Federal Reserve System, and any Governmental
Authority succeeding to any of its principal functions.

“GAAP” means
generally accepted accounting principles set forth from time to time in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the U.S. accounting profession), which
are applicable to the circumstances as of the date of determination.

“Governmental Authority”
means any nation or government, any state or other political subdivision
thereof, any central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through stock or capital ownership or
otherwise, by any of the foregoing.

“Granting Lender” has the
meaning specified in Section 11.8(d).

“Guarantor” means
(i) each of the Original Guarantors, (ii) each of the TexCal Subsidiaries, and
(iii) any new Subsidiary of the Company which is required to execute the
Guaranty under Section 7.12 upon the execution and delivery by such entity of
the Guaranty.

“Guaranty” means
the Guaranty Agreement, substantially in the form of Exhibit
“G” hereto executed by each Guarantor in favor of the Administrative
Agent, for the benefit of the Lender Parties, as the same may be amended,
supplemented or otherwise modified from time to time pursuant to the terms
hereof (including, in the case of any Subsidiary required to execute the
Guaranty pursuant to Section 7.12, by execution and delivery of a joinder thereto
in the form of Annex 1 thereto).

 

11

 

“Guaranty Obligation”
has the meaning specified in the definition of “Contingent
Obligation.”

“Highest Lawful Rate”
means, as of a particular date, the maximum nonusurious interest rate that
under applicable federal and state law may then be contracted for, charged or
received by the Lenders in connection with the Obligations.

“Hydrocarbon Interests”
means leasehold and other interests in or under oil, gas and other liquid or
gaseous hydrocarbon leases, mineral fee interests, overriding royalty and
royalty interests, net profit interests, production payment interests relating
to oil, gas or other liquid or gaseous hydrocarbons wherever located including
any reserved or residual interest of whatever nature, covering lands in or
offshore the continental United States.

“Indebtedness” of
any Person means, without duplication, (a) all indebtedness for borrowed money;
(b) all obligations issued, undertaken or assumed as the deferred purchase
price of Property or services (other than trade payables entered into in the
ordinary course of business on ordinary terms and not past due for more than 90
days after the due date thereof, other than those trade payables disputed in
good faith); (c) all non-contingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of Property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
Property acquired by the Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such Property) including, without limitation,
production payments, net profit interests and other Hydrocarbon Interests
subject to repayment out of future Oil and Gas production; (f) all obligations
with respect to Capital Leases; (g) all non-contingent net obligations with
respect to Derivative Contracts; (h) gas imbalances or obligations under
take-or-pay or prepayment contracts with respect to any of the Oil and Gas
Properties which would require the Company or any of its Subsidiaries to
deliver Oil and Gas from any of the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor; (i) all indebtedness
referred to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon or in Property (including accounts and contracts
rights) owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (j) all Guaranty Obligations
in respect of indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above.

“Indemnified Liabilities”
has the meaning specified in Section 11.5.

“Indemnified Person”
has the meaning specified in Section 11.5.

“Indenture Trustee”
has the meaning ascribed to such term in the Intercreditor Agreement.

“Independent Auditor”
has the meaning specified in Section 7.1(a).

“Independent Engineer”
has the meaning specified in Section 7.2(c).

 

12

 

“Initial Reserve Report”
has the meaning specified in Section 6.11.

“Insolvency Proceeding”
means (a) any case, action or proceeding relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; undertaken under U.S. Federal, state or foreign law, including
the Bankruptcy Code.

“Intercreditor
Agreement” means that certain Intercreditor Agreement dated as
of the Effective Date among the Loan Parties, the First Lien Credit Agent and
the Collateral Trustee in the form of Exhibit “H” hereto, as amended,
restated, supplemented or otherwise modified from time to time pursuant to the
terms hereof and thereof.

“Interest Payment Date”
(a) as to any Base Rate Loan, means May 1, 2006 and the first day of each month
thereafter prior to the Termination Date and each date on which such a Base
Rate Loan is converted into another Interest Rate Type of Loan, and (b) as to
any LIBO Rate Loan, the last day of the Interest Period applicable to such
Loan; provided, however, that if any Interest Period for an LIBO Rate Loan
exceeds three months, the date that falls three months after the beginning of such
Interest Period is also an Interest Payment Date.

“Interest Period”
means, as to any LIBO Rate Loan, the period commencing on the Effective Date or
on the Conversion/Continuation Date on which such Loan is converted into or
continued as LIBO Rate Loan, and ending on the date one, two, three or six
months thereafter as selected by the Company in its Notice of
Conversion/Continuation; provided, however, that:  (a) if any Interest Period would otherwise
end on a day that is not a Business Day, that Interest Period shall be extended
to the following Business Day unless, in the case of an LIBO Rate Loan, the
result of such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the preceding
Business Day; (b) any Interest Period pertaining to an LIBO Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which
there is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of the calendar month
at the end of such Interest Period; and (c) no Interest Period for any Loan
shall extend beyond the Termination Date.

“Interest Rate Type”
means, with respect to any Loan, the interest rate, being either the Base Rate
or the LIBO Rate forming the basis upon which interest is charged against such
Loan hereunder.

“IRS” means the
Internal Revenue Service, and any Governmental Authority succeeding to any of
its principal functions under the Code.

“Lender
Parties” means (i) the Lenders, (ii) the Administrative Agent
and (iii) the holders from time to time of the Obligations.

“Lenders” has the
meaning specified in the introductory clause hereto.

“Lending Office”
means, as to any Lender, the office or offices of such Lender specified 

 

13

 

as its “Lending Office” or “Domestic
Lending Office” or “Offshore Lending Office,”
as the case may be, on the signature pages hereof, or such other office or
offices as such Lender may from time to time notify the Company and the
Administrative Agent.

“Letter of
Credit” has the meaning ascribed thereto in the First Lien
Credit Agreement.

“LIBO Rate” means,
for any Interest Period, with respect to LIBO Rate Loans, the rate of interest
per annum (rounded upward to the next 1/16th of 1%) determined by the
Administrative Agent as follows:

	
  LIBO
  Rate =

  	
   

  	
  LIBOR

  
	
   

  	
   

  	
  1.00 - Eurodollar Reserve Percentage

  
	
   

  	
   

  	
   

  
	
  where,

  	
   

  	
  “Eurodollar Reserve Percentage” means for any day for
  any Interest Period the maximum reserve percentage (expressed as a decimal,
  rounded upward to the next 1/100th of 1%) in effect on such day (whether or
  not applicable to any Lender) under regulations issued from time to time by
  the FRB for determining the maximum reserve requirement (including any
  emergency, supplemental or other marginal reserve requirement) with respect
  to Eurocurrency funding (currently referred to as “Eurocurrency
  liabilities”); and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “LIBOR” means relative to any Interest Period for LIBO
  Rate Loans:

  

 

(a)           the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate that appears on the page, currently
page 3750, of the Telerate screen (or any successor thereto or substitute
therefor) that displays an average British Bankers Association Interest
Settlement Rate for deposits in Dollars (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period, determined as
of approximately 11:00 a.m. (London time) two Business Days prior to the first
day of such Interest Period, or

(b)           if the rate referenced in the preceding clause (a) does
not appear on such page or service or such page or service shall not be
available, the rate per annum equal to the rate determined by the
Administrative Agent to be the offered rate on such other page or other service
that displays an average British Bankers Association Interest Settlement Rate
for deposits in Dollars (for delivery on the first day of such Interest Period)
with a term equivalent to such Interest Period, determined as of approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, or

(c)           if the rates referenced in the
preceding clauses (a) and (b) are not available, the rate per annum determined
by the Administrative Agent as the rate of interest at which deposits in
Dollars for delivery on the first day of such Interest Period in same day funds
in the approximate amount of the LIBO Rate Loan being made, continued or
converted by Credit Suisse and with a term equivalent to such Interest Period
would be offered by Credit Suisse’s London Branch to major banks
in the London interbank eurodollar market at their request at 

 

14

 

approximately 4:00 p.m.
(London time) two Business Days prior to the first day of such Interest Period.

The LIBO Rate shall be adjusted automatically as to all LIBO Rate Loans
then outstanding as of the effective date of any change in the Eurodollar
Reserve Percentage.

“LIBO Rate Loan” means
a Loan that bears interest based on the LIBO Rate plus the Applicable Margin.

“Lien” means any
security interest, mortgage, deed of trust, pledge, hypothecation, assignment,
charge or deposit arrangement, encumbrance, lien (statutory or other) or preferential
arrangement of any kind or nature whatsoever in respect of any Property
(including those created by, arising under or evidenced by any conditional sale
or other title retention agreement and the interest of a lessor under a Capital
Lease), any financing lease having substantially the same economic effect as
any of the foregoing, or the filing of any financing statement naming the owner
of the asset to which such lien relates as debtor, under the Uniform Commercial
Code or any comparable law and any contingent or other agreement to provide any
of the foregoing, but not including (a) the interest of a lessor under a lease
on Oil and Gas Properties or (b) the interest of a lessor under an Operating
Lease.

“Loan Documents”
means this Agreement, the Notes, each Guaranty, the Security Documents, any
Qualifying Derivative Contracts, the Fee Letter Agreement, the Commitment
Letter and all other documents delivered to the Administrative Agent or any
Lender in connection herewith.

“Loans”
has the meaning specified in Section 2.1(a).

“Loan
Parties” means the Company and each Guarantor.

“Mandatory
Prepayment Amount” has the meaning specified in Section 2.10(e).

“Margin Stock”
means “margin stock” as such term is defined in Regulation T, U or X of the
FRB.

“Material Adverse Effect”
means (a) a material adverse change in, or a material adverse effect upon, (i)
the TexCal Acquisition or (ii) the operations, business, properties or
financial condition of the Company and its Subsidiaries, taken as a whole; (b)
a material impairment of the ability of the Company or any Subsidiary to
perform under any material Loan Document and to avoid any Default; or (c) a
material adverse effect upon the legality, validity, binding effect or
enforceability against the Company or any Subsidiary of any material Loan
Document.

“Maturity
Date” means the fifth anniversary of the Effective Date.

“Moody’s”
means Moody’s Investors Service, Inc.

“Mortgages” means
the Mortgages, Deeds of Trust, Security Agreements, Assignments of Production
and Financing Statements from the Company and BMC, and, from and after the
Effective Time, the TexCal Subsidiaries, in favor of the Collateral Trustee,
for the benefit of the 

 

15

 

Secured Parties, covering
the Oil and Gas Properties of the Company and the Guarantors and all
supplements, assignments, assumptions, amendments and restatements thereto (or
any agreement in substitution therefor) which have been or are executed and
delivered to the Administrative Agent for benefit of the Lenders pursuant to
Article IV of this Agreement.

“Mortgaged Properties”
means such Oil and Gas Properties upon which the Company and the Guarantors
have granted the Collateral Trustee for the benefit of the Secured Parties a
valid, second Lien pursuant to the Mortgages, subject to Permitted Liens.

“Multiemployer Plan”
means a “multiemployer plan”, within the meaning of Section 4001(a)(3) of
ERISA, to which the Company or any ERISA Affiliate makes, is making, or is
obligated to make contributions or, during the preceding three calendar years,
has made, or been obligated to make, contributions.

“Net Cash Proceeds” means (a) in
connection with any Disposition or any Recovery Event, all proceeds thereof in
the form of cash and Cash Equivalents of such Disposition or Recovery Event,
net of (i) amounts required by the First Lien Credit Agreement to be applied to
the repayment of the First Lien Obligations or the cash collateralization of
outstanding Letters of Credit, (ii) reasonable and customary Attorney Costs,
accountants’ fees and investment banking fees, (iii) amounts required to be
applied to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any Property which is the subject of such Disposition or Recovery
Event, (iv) other reasonable and customary fees and expenses actually incurred
in connection therewith and (v) taxes paid or reasonably estimated to be
payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements) and (b) in connection
with any issuance or sale of equity securities or debt securities or
instruments or the incurrence of loans, the cash proceeds received from such
issuance or incurrence (other than the exercise price of stock options issued
for compensatory purposes), net of (i) amounts required by Section 2.6(f) of
the First Lien Credit Agreement to be applied to the repayment of the First
Lien Obligations or the cash collateralization of outstanding Letters of
Credit, (ii) Attorney Costs, investment banking fees, accountants’ fees and
underwriting discounts and commissions and (iii) other customary fees and
expenses actually incurred in connection therewith.

“Net Present Value” means the
PV 10 Value of the Oil and Gas Properties and adjusted at the date of
determination on the same basis as the most recent Reserve Report previously
delivered pursuant to Section 6.11 or Section 7.2(c) for Dispositions and
purchases of Hydrocarbon Interests occurring since the date of such report.  The Net Present Value shall be calculated by
the Company as of each date of determination.

“Net Proceeds of Production”
means the amounts attributable to the Company’s and its Subsidiaries’ interest
in the proceeds received from the sale of Oil and Gas produced from Mortgaged
Properties after deduction of (a) royalties existing as of the effective date
on which the Company or its Subsidiaries first mortgaged its interests in such
Mortgaged Properties in favor of the Lenders or their predecessors; (b) third party
pipeline and transportation charges; (c) production, ad valorem and severance
taxes chargeable against such production; (d) marketing costs; (e) overriding
royalties existing as of the effective date on which the Company or its
Subsidiaries first mortgaged its interests in such Mortgaged Properties in
favor of the Lenders or 

 

16

 

their predecessors; (f)
other interests in and measured by production burdening the Mortgaged
Properties existing as of the effective date on which the Company or its
Subsidiaries first mortgaged its interests in such Mortgaged Properties in
favor of the Lenders or their predecessors; and (g) the current portion of
direct operating or production costs which is allocable to such interest in
such Mortgaged Properties.

“Non-U.S.
Lender” has the meaning specified in Section 3.1(f).

“Notes”
means the promissory notes, whether one or more, specified in Section 2.1(c),
substantially in the same form as Exhibit “F”,
including any amendments, modifications, renewals or replacements of such
promissory notes.

“Notice of Conversion/Continuation”
means a notice in substantially the form of Exhibit ”B”
to this Agreement.

“NYMEX”
means the New York Mercantile Exchange.

“Obligations” means
the unpaid principal of and interest (including interest accruing at the then
applicable rate provided herein after the maturity of the Loans and interest
accruing at the then applicable rate provided herein after the filing of any
petition for an Insolvency Proceeding, or the commencement of any Insolvency
Proceeding, whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) on the Loans and all other advances, debts,
liabilities, obligations, covenants and duties arising under any Loan Document
owing by the Company to any Lender, the Administrative Agent, any Qualifying
Derivative Contract Counterparty or any Indemnified Person, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all fees, charges and disbursements of counsel) or
otherwise.

“Oil and Gas” means
petroleum, natural gas and other related hydrocarbons or minerals or any of
them and all other substances produced or extracted in association therewith.

“Oil and Gas Liens” means (a) Liens arising under oil and gas
leases, overriding royalty agreements, net profits agreements, royalty trust
agreements, farm-out agreements, division orders, contracts for the sale,
purchase, exchange, transportation, gathering or processing of oil, gas or
other hydrocarbons, unitizations and pooling designations, declarations, orders
and agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements that are customary in the oil and gas business
and are entered into by the Company in the ordinary course of business;
provided, however, in all instances that such Liens are limited to the assets
that are the subject of the relevant agreement; and (b) Liens on pipelines or
pipeline facilities that arise by operation of law.

“Oil and Gas Properties”
means Hydrocarbon Interests now or hereafter owned by the Company and the Guarantors
and contracts executed in connection therewith and all tenements,
hereditaments, appurtenances, and properties belonging, affixed or incidental
to such 

 

17

 

Hydrocarbon Interests,
including, without limitation, any and all Property, now owned by the Company
and the Guarantors and situated upon or to be situated upon, and used, built
for use, or useful in connection with the operating, working or developing of
such Hydrocarbon Interests, including, without limitation, any and all
petroleum or natural gas wells, buildings, structures, field separators, liquid
extractors, plant compressors, pumps, pumping units, field gathering systems,
tank and tank batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, taping, tubing and rods, surface leases, rights of way,
easements and servitudes, and all additions, substitutions, replacements for,
fixtures and attachments to any and all of the foregoing owned directly or
indirectly by the Company and the Guarantors.

“Operating Agreements”
mean those agreements now or hereafter executed in connection with the
operation of the Oil and Gas Properties.

“Operating Lease”
means an operating lease determined in accordance with GAAP.

“Optionee
Payment” means cash bonus payments in the aggregate amount not
to exceed $1,500,000 that certain existing holders of options outstanding under
the Company’s 2000 Stock Incentive Plan are entitled to receive upon the
declaration and payment  of any dividends
paid by the Company on its common stock (including the non-cash dividends
described on Schedule 8.6).”

“Organization Documents”
means, for any corporation, the certificate or articles of incorporation, the
bylaws, any certificate of determination or instrument relating to the rights
of preferred shareholders of such corporation, any shareholder rights
agreement, and all applicable resolutions of the board of directors (or any
committee thereof) of such corporation and for any limited liability company
means the limited liability company agreement, initial resolution of members
and all other documents filings and instruments necessary to create and
constitute such company, or for any limited partnership means the original
agreement of limited partnership as same has been amended from time to time.

“Original
Guarantor” means BMC or Whittier.

“Originating
Lender” has the meaning specified in Section 11.8(f).

“Other Taxes” means
any present or future stamp or documentary taxes or any other excise or
Property Taxes, charges or similar levies which arise from any payment made
hereunder or from the execution, delivery or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.

“Participant” has
the meaning specified in Section 11.8(f).

“PBGC” means the
Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding
to any of its principal functions under ERISA.

“Pension Plan”
means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV
of ERISA, other than a Multiemployer Plan, which the Company or any of its
Subsidiaries sponsors, maintains, or to which it makes, is making, or is
obligated to make 

 

18

 

contributions, or in the
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.

“Permitted
Holder” means Timothy M. Marquez and Bernadette B. Marquez,
individually or as Trustees of the Marquez Trust dated February 26, 2002 (a
trust of which Timothy M. Marquez and Bernadette B. Marquez have sole
discretionary authority), and any entity of which any such Person owns,
directly or indirectly, and exercises voting power with respect to, 80% or more
of the capital stock, partnership or membership interests or other ownership
interests entitled (without regard to the occurrence of any contingency, to
vote in the election of (a) the board of directors of such entity, if such
entity is a corporation, (b) the board of directors of its general partner, if
such entity is a limited partnership or (c) the board or committee of such
entity serving a function comparable to that to the board of directors of a
corporation, if such entity is neither a corporation nor limited partnership.

“Permitted
Indebtedness” has the meaning specified in Section 8.5.

“Permitted
Liens” means the collective reference to (i) in the case of
Collateral other than Pledged Stock, Liens permitted by Section 8.1 and (ii) in
the case of Collateral consisting of Pledged Stock, (A) Liens permitted by
Sections 8.1(b) and (j) and (B) non-consensual Liens permitted by Section 8.1
to the extent arising by operation of law.

“Person”
means an individual, partnership, corporation, limited liability company,
business trust, joint stock company, trust, unincorporated association, joint
venture or Governmental Authority.

“Plan” means an
employee benefit plan (as defined in Section 3(3) of ERISA) which is subject to
ERISA, other than a Multiemployer Plan.

“Pledged
Stock” means “Pledged Stock”
as such term is defined in the Security Agreement.

“Premium” has the meaning specified
in Section 2.4(b).

“Pricing Grid”
means the annualized rates (stated in terms of basis points (“bps”)) set forth
below which shall be computed as of each day during the term hereof for the
Applicable Margin as follows:

 

19

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
  Applicable Margin

  
	
  Pricing

  Level

  	
   

  	
   

  	
  Criteria

  	
   

  	
  Base
  Rate Loan

  (bps)

  	
   

  	
  LIBO Rate Loan

  (bps)

  
	
  Level
  II

  	
   

  	
  •

  	
  Pre-Qualifying IPO or

  	
   

  	
  350
  bps

  	
   

  	
  450 bps

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Consolidated Leverage
  Ratio equal to or greater than 3.00 to 1.00

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level
  I

  	
   

  	
  •

  	
  Post-Qualifying IPO and

  	
   

  	
  300
  bps

  	
   

  	
  400 bps

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  •

  	
  Consolidated Leverage
  Ratio less than 3.00 to 1.00

  	
   

  	
   

  	
   

  	
   

  

 

“Principal Business”
means the business of the exploration for, and development, acquisition,
production, and upstream marketing and transportation of Oil and Gas.

“Pro Forma Financial
Statements” has the meaning specified in Section
6.14(b).

“Pro Rata Share”
means, as to any Lender at any time, the percentage equivalent (expressed as a
decimal, rounded to the ninth decimal place) at such time of such Lender’s
Aggregate Exposure divided by the combined Aggregate Exposure of all Lenders.

“Production Sales Contracts”
mean those agreements now or hereafter executed in connection with the sale of
Oil and Gas attributable to the Oil and Gas Properties.

“Projected
Oil and Gas Production” has the meaning specified in Section
7.15.

“Property” means
any interest in any kind of property or asset, whether real, personal or mixed,
tangible or intangible.

“Proved Developed Producing Reserves”
means those Oil and Gas Properties designated as proved developed producing (in
accordance with the Definitions for Oil and Gas Reserves approved by the Board
of Directors of the Society of Petroleum Engineers, Inc. from time to time) in
the Reserve Report.

“Proved Reserves” means those
Oil and Gas Properties designated as proved (in accordance with the Definitions
for Oil and Gas Reserves approved by the Board of Directors of the Society of
Petroleum Engineers, Inc. from time to time) in the Reserve Report.

“PV 10
Value” means, as of any date of determination, the present value
of future cash flows from Proved Reserves included in the Oil and Gas
Properties as set forth in the most recent Reserve Report delivered pursuant to
Section 6.11 or 7.2(c), utilizing the average of the Three-Year Strip Price for
crude oil (WTI Cushing) and natural gas (Henry Hub), quoted on the New York
Mercantile Exchange (or its successor) and utilizing a 10% discount rate.  The PV 10 Value shall be adjusted to give
effect to the Company’s and its Subsidiaries’ Derivative

 

20

 

Contracts for the purpose of
hedging prices of Oil and Gas.  The
PV 10 Value shall be calculated by the Company as of each date of
determination.

“Qualifying Derivative Contract”
means any Derivative Contract between any Loan Party and any Qualifying Derivative
Contract Counterparty.

“Qualifying Derivative Contract Counterparty”
means, with respect to a Qualifying Derivative Contract, any Person that was a
Lender or an Affiliate thereof at the time such Qualifying Derivative Contract
was originally entered into.

“Qualifying IPO” means the
initial firm commitment underwritten offering of Capital Stock of the Company
that is not Disqualified Stock to the general public that is registered under
the Securities Act of 1933, as amended and pursuant to which the Company
receives cash proceeds of at least $200,000,000, net of (i) Attorney Costs,
investment banking fees, accountants’ fees and underwriting discounts and
commissions and (ii) other customary fees and expenses actually incurred in
connection therewith.

“Quarterly Status Report”
means a status report prepared quarterly by the Company in form, scope and
content acceptable to the Administrative Agent for such quarter then ended (a)
detailing production from the Mortgaged Properties, the volumes of Oil and Gas
produced and saved, the volumes of Oil and Gas sold, gross revenue, net income,
related leasehold operating expenses, severance taxes, other taxes, capital
costs and any production imbalances incurred during such period, (b) describing
the Company’s position regarding its Derivative Contracts including, as of the
last Business Day of such quarter, a summary of its hedging positions under its
Derivative Contracts, including the type, term, price, effective date and
notional principal amount or volumes (in total and as a percentage of the
Company’s total anticipated production), “mark to market” and margin
calculations, the hedged price(s), interest rate(s) or exchange rate(s), as
applicable, and any collateral therefor and credit support agreements relating
thereto and the counterparty to each Derivative Contract, (c) containing a
table that demonstrates the Company’s compliance with the requirements set
forth in Section 8.10 and (d) containing such additional information with
respect to any of Company’s Oil and Gas Properties as may be reasonably
requested by Administrative Agent.

“Real Estate Contingent Obligations”
means the Contingent Obligations of the Company under the Guaranty and
Indemnity (Third Party-Unsecured) and the Environmental Indemnity Agreement
(Third Party-Unsecured), each dated December 8, 2004 and made in favor of
German American Capital Corporation and as in effect at the Effective Time.

“Recovery Event” means any
settlement of or payment in respect of any Property of the Company or any Subsidiary
arising from a casualty insurance claim or any condemnation proceeding.

“Register” means a register for the recordation of the
names and addresses of the Lenders and the Commitments thereof, and the
principal amount of the Loans owing to such Lender from time to time.

 

21

 

“Regulation U” and “Regulation
X” means Regulation U and Regulation X, respectively, of the FRB
from time to time in effect and shall include any successor or other
regulations or official interpretations of the FRB relating to the subject
matter addressed therein.

“Related Funds” has the
meaning specified in Section 11.8(a).

“Replacement
Lender” has the meaning specified in Section 3.7.

“Reportable Event”
means any of the events set forth in Section 4043(b) of ERISA or the
regulations thereunder, other than any such event for which the 30-day notice
requirement under ERISA has been waived in regulations issued by the PBGC.

“Required Lenders”
means, at any time, subject to Section 11.1, the Administrative Agent and the
Lenders holding at least 50% of the sum of the Effective Amount at such time
or, if there is no Effective Amount at such time, the Administrative Agent and
the Lenders holding at least 50% of the aggregate Commitments at such time.

“Requirement of Law”
means, as to any Person, any law (statutory or common), treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon the Person or any of its Property or to
which the Person or any of its Property is subject.

“Reserve Report”
means (i) the Initial Reserve Report, (ii) the TexCal Reserve Report and
(iii) each subsequent report delivered pursuant to Section 7.2(c), each of
which shall be a report, in form, scope and content acceptable to the
Administrative Agent, covering proved developed and proved undeveloped reserves
attributable to the Company’s and its Subsidiaries’ Oil and Gas Properties and
setting forth with respect thereto, (a) the total quantity of proved developed
and proved undeveloped Oil and Gas reserves (separately classified as to
producing, shut in, behind pipe, and undeveloped), (b) the estimated future net
revenues and cumulative estimated future net revenues, (c) the present discounted
value of future net revenues, and (d) such other information and data with
respect to the Mortgaged Properties as the Administrative Agent may reasonably
request.

“Responsible Officer”
means, with respect to any Person, the chief executive officer, president,
chief financial officer or treasurer of the Person.

“Restatement
Effective Date” means the date on which the Restatement
Effective Time occurs.

“Restatement
Effective Time” means the time as of which all conditions
precedent set forth in Section 5.3 are satisfied or waived by all Lenders.

“Restricted
Payments” has the meaning specified in Section 8.9.

“S&P”
means Standard & Poor’s Rating Services.

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

 

22

 

“Secured Parties” has the
meaning ascribed thereto in the Security Agreement.

“Security Agreement”
means the Security Agreement in substantially the form of Exhibit “D” executed by the Company and each
Guarantor pledging to the Collateral Trustee for benefit of the Secured Parties
all of the Property of the Company and each Guarantor, as security for the
payment of the Sharing Obligations, as the same may be amended, supplemented or
otherwise modified from time to time pursuant to the terms hereof (including,
in the case of any Subsidiary required to execute the Security Agreement
pursuant to Section 7.12, by execution and delivery of a joinder thereto in the
form of Annex 2 thereto).

“Security Documents”
means the Intercreditor Agreement, the Collateral Trust Agreement, the
Mortgages, the Security Agreement, and related financing statements as same may
be amended from time to time and any and all other instruments now or hereafter
executed in connection with or as security for the payment of the Sharing
Obligations.

“Senior
Note Debt Documents” has the meaning ascribed to such term in
the Intercreditor Agreement.

“Senior Note Debt Instrument” has the
meaning ascribed to such term in the Collateral Trust Agreement.

“Senior
Note Lien Termination Time” has the meaning ascribed to such
term in the Intercreditor Agreement.

“Senior
Note Subsidiary Guarantees” has the meaning ascribed to such
term in the Intercreditor Agreement.

“Senior Notes”
means the 8.75% Senior Unsecured Notes due 2011 originally
issued in aggregate principal amount of $150,000,000 under the Senior Notes
Indenture.

“Senior
Notes Indenture” means that certain indenture dated as of
December 20, 2004 among the Company, the Guarantors and U.S. Bank National
Association, as Trustee.

“Sharing
Collateral” has the meaning ascribed to such term in the
Collateral Trust Agreement.

“Sharing
Obligations” has the meaning ascribed to such term in the
Collateral Trust Agreement.

“Solvent” means, as
to any Person at any time, that (a) the fair value of all of the Property of
such Person is greater than the amount of such Person’s liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(32) of the Bankruptcy
Code; (b) the present fair salable value of all of the Property of such Person
is not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature; and (d) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person’s 

 

23

 

Property would constitute
unreasonably small capital.

“SPC” has the
meaning specified in Section 11.8(d).

“Special
Damages” has the meaning specified in Section 11.21.

“Subsidiary” of a
Person means any corporation, association, partnership, joint venture or other
business entity of which more than 50% of the voting stock or other equity
interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly, at the relevant time, by the Person, or one
or more of the Subsidiaries of the Person, or a combination thereof.  From and after the TexCal Closing Time,
references herein to a “Subsidiary”
of the Company shall include each of the TexCal Subsidiaries.  Unless the context otherwise clearly
requires, references herein to a “Subsidiary” refer
to a Subsidiary of the Company, except that for purposes of Article IV only, “Subsidiary”
excludes Ellwood.

“Surety Instruments”
means all letters of credit (including standby), banker’s acceptances, bank
guaranties, shipside bonds, surety bonds, performance bonds (including plugging
and abandonment bonds) and similar instruments.

“Syndication
Agent” has the meaning specified in the introductory clause
hereto.

“Taxes” means any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings which arise from any payment made hereunder, and all liabilities
with respect thereto, excluding, in the case of each Lender and the
Administrative Agent, such taxes (including income taxes or franchise taxes) as
are imposed on or measured by each Lender’s net income, gross receipts or
capital by the jurisdiction (or any political subdivision thereof) under the
laws of which such Lender or the Administrative Agent, as the case may be, is
organized or maintains a lending office or conducts business (other than solely
by reason of the transactions evidenced hereby or taking any action
contemplated by the Loan Documents).

“Termination Date”
means the earlier of (a) the Maturity Date or (b) the date on which all
Obligations (other than those to Qualified Derivative Contract Counterparties
in respect of Qualified Derivative Contracts) have been satisfied and all
Commitments have terminated, in each case in accordance with the provisions of
this Agreement.

“TexCal
Acquisition” means the acquisition on March 31, 2006 by the
Company of all of the outstanding Capital Stock in TexCal Energy pursuant to
the TexCal Acquisition Agreement.

“TexCal
Acquisition Agreement” means the Agreement and Plan of Merger
dated effective as of March 30, 2006 by and among TexCal Energy, the Company,
and Bicycle Acquisition Company, LLC, a Delaware limited liability company and
a wholly owned Subsidiary of the Company, as amended, supplemented, replaced or
otherwise modified from time to time in accordance with this Agreement.

“TexCal
Acquisition Documents” means, collectively, the TexCal
Acquisition Agreement and all schedules, exhibits, annexes and amendments
thereto and all side letters and agreements affecting the terms thereof or
entered into in connection therewith, in each case, as amended, supplemented or
otherwise modified from time to time.

 

24

 

“TexCal
Audited Financial Statements” means (a) TexCal Energy’s
consolidated balance sheet at December 31, 2005, together with the statements
of operations, cash flows and members’ equity for the year then ended and (b)
TexCal Energy’s consolidated balance sheet at December 31, 2004 together with
the statements of operations, cash flows and members’ equity of TexCal Energy
for the three months then ended, in each case together with the unqualified
independent auditors’ report and opinion of BDO Seidman, LLP thereon.

“TexCal
Closing Time” means the time of the closing of the TexCal
Acquisition.

“TexCal
Energy” means TexCal Energy (LP) LLC, a Delaware limited
liability company.

“TexCal
Reserve Report” has the meaning specified in Section 6.11.

“TexCal Subsidiaries” means
TexCal Energy and each of the entities specified on Schedule 1.1(b) hereto.

“Three-Year
Strip Price” shall mean, as of any date of determination, (a)
for the 36-month period commencing with the month immediately following the
month in which the date of determination occurs, the monthly futures contract
prices for crude oil and natural gas for the 36 succeeding months as quoted on
the applicable commodities exchange as contemplated in the definition of “PV 10
Value” and (b) for periods after such 36-month period, the average of such
quoted prices for the period from and including the 25th month in such 36-month
period through the 36th month in such period.

“Transaction
Documents” means, collectively, the Loan Documents and the
TexCal Acquisition Documents.

“Triggering
Event” has the meaning ascribed thereto in the Collateral Trust
Agreement.

“Trust
Estate” has the meaning ascribed thereto in the Collateral Trust
Agreement.

“UCC” means the
Uniform Commercial Code as adopted and in effect in any applicable
jurisdiction.

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

“United States” and
“U.S.” each means the United
States of America.

“Ventura
Dividend” has the meaning specified in Section 8.2(i).

“Whittier” means
Whittier Pipeline Corporation, a Delaware corporation.

                1.2           Other
Interpretive Provisions.  The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.  Unless
otherwise specified or 

 

25

 

the context clearly requires
otherwise, the words “hereof”, “herein”, “hereunder”
and similar words refer to this Agreement as a whole and not to any particular
provision of this Agreement; and subsection, Section, Schedule and Exhibit
references are to this Agreement.  The
term “documents”
includes any and all instruments, documents, agreements, certificates,
indentures, notices and other writings, however evidenced.  The term “including” is not limiting
and means “including without limitation.”  The term “or” has, except where otherwise
indicated, the inclusive meaning represented by the phrase “and/or”.  In the computation of periods of time from a
specified date to a later specified date, the word “from” means “from and including”;
the words “to” and “until” each mean “to but
excluding”, and the word “through” means “to and
including.”  Unless
otherwise expressly provided herein, (a) references to agreements (including
this Agreement) and other contractual instruments shall be deemed to include
all subsequent amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited by the terms
of any Loan Document, and (b) references to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting the statute or
regulation.  The recitals, captions and
headings of this Agreement are for convenience of reference only and shall not
affect the interpretation of this Agreement. 
This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters.  All such limitations, tests and measurements
are cumulative and shall each be performed in accordance with their terms.  This Agreement and the other Loan Documents
are the result of negotiations among and have been reviewed by counsel to the
Administrative Agent, the Company and the other parties, and are the products
of all parties.  Accordingly, they shall
not be construed against the Lenders or the Administrative Agent merely because
of the Administrative Agent’s or Lenders’ involvement in their
preparation.  The terms “Lender”, “Administrative
Agent”, “First Lien Credit Agent” and “First Lien Credit Lenders” include their
respective successors.

                1.3           Accounting Principles.

(a)           Unless
the context otherwise clearly requires, all accounting terms not expressly
defined herein shall be construed, and all financial computations required
under this Agreement shall be made, in accordance with GAAP, consistently
applied.  References to “consolidated”,
when it precedes any accounting term, means such term as it would apply to the
Company and its Subsidiaries on a consolidated basis, determined in accordance
with GAAP.

(b)           References
herein to “fiscal year” and “fiscal quarter”
refer to such fiscal periods of the Company.

ARTICLE II

THE
CREDIT

                2.1           Amounts and Terms of the Loans.

(a)           Each
Lender, subject to the terms and conditions set forth in this Agreement, made
term loans (together with any conversions or continuations thereof, the “Loans”) to the Company on the
Effective Date in an aggregate principal amount of 

 

26

 

$350,000,000.  Principal amounts paid on account of the
Loans may not be reborrowed.

(b)           The
Commitment of each Lender was permanently reduced on the date of funding of the
Loans pursuant to Section 2.1(a) of the Existing Credit Agreement by the
principal amount of the Loans funded. 
Such Commitment reductions were made for the account of the Lenders pro
rata in accordance with their respective Pro Rata Shares.

(c)           Each
Lender made the amount of its Pro Rata Share of the Loans available to the
Administrative Agent for the account of the Company at the Agent’s Payment
Office by 4:00 p.m. (New York, New York time) on the Effective Date in funds
immediately available to the Administrative Agent.  The proceeds of all such Loans were made
available to the Company by the Administrative Agent by wire or intrabank
transfer of funds for payment of a portion of the purchase price for the TexCal
Acquisition.

(d)           The Company agrees
that upon the request to the Administrative Agent by any Lender, the Company
will promptly execute and deliver to any Lender a promissory note of the
Company evidencing any Loans of such Lender, substantially in the form of Exhibit F (a “Note”),
with appropriate insertions as to date and principal amount; provided,
however, that delivery of Notes shall not be a condition precedent to the
occurrence of the Restatement Effective Date. 
The amount of principal owing on any Lender’s Note, if any, at any given
time shall be the aggregate amount of all Loans theretofore made by such Lender
minus all payments of principal theretofore received by such Lender on such
Note.  Interest on each Note shall accrue
and be due and payable as provided herein and therein.

                2.2           Maturity Date. 
The Loans of each Lender shall mature on the Maturity Date.

                2.3           Conversion and Continuation
Elections.

(a)           Prior
to the Termination Date, the Company may, upon irrevocable written notice to
the Administrative Agent in accordance with Section 2.3(b) (i) elect, as of any
Business Day in the case of Base Rate Loans, or as of the last day of the
applicable Interest Period in the case of LIBO Rate Loans, to convert any such
Loans into Loans of any other Interest Rate Type; or (ii) elect as of the last
day of the applicable Interest Period, to continue any Loans having Interest
Periods expiring on such day; provided,
however, that if at any time an LIBO Rate Loan is reduced, by payment,
prepayment, or conversion of part thereof to less than $1,000,000, such LIBO
Rate Loan shall automatically convert into a Base Rate Loan.

(b)           The
Company shall deliver a Notice of Conversion/Continuation to be received by the
Administrative Agent not later than 12:00 p.m. (New York, New York time) at
least three Business Days in advance of the Conversion/Continuation Date, if
the Loans are to be converted into or continued as LIBO Rate Loans; and (ii) on
the Conversion/Continuation Date, if the Loans are to be converted into Base
Rate Loans, specifying: (A) the proposed Conversion/Continuation Date; (B) the
aggregate amount of Loans to be converted or continued; (C) the Interest Rate
Type of Loans resulting from the proposed conversion or continuation; and (D)
other than in the case of conversions into Base Rate Loans, the duration of the
requested Interest Period.

(c)           If,
upon the expiration of any Interest Period applicable to LIBO Rate 

 

27

 

Loans, the Company has
failed to select in a timely manner a new Interest Period to be applicable to
LIBO Rate Loans, or if any Default or Event of Default then exists, the Company
shall be deemed to have elected to convert such LIBO Rate Loans into Base Rate
Loans effective as of the expiration date of such Interest Period.

(d)           The
Administrative Agent will promptly notify each Lender of its receipt of a
Notice of Conversion/Continuation, or, if no timely notice is provided by the
Company, the Administrative Agent will promptly notify each Lender of the
details of any automatic conversion.  All
conversions and continuations shall be made ratably according to the respective
Lender’s Pro Rata Share of outstanding principal amounts of the Loans with
respect to which the notice was given.

(e)           The
number of tranches outstanding of LIBO Rate Loans, whether under a conversion
or continuation, shall not exceed eight (8) at any one time.

                2.4           Optional Prepayments.

(a)           Subject to Section
3.4, the Company may, at any time or from time to time, subject to the
concurrent payment of the Premium:

(i)            prepay
Base Rate Loans upon irrevocable notice to the Administrative Agent not less
than one (1) Business Day, ratably as to each Lender, in whole or in part, in
aggregate minimum principal amounts of $100,000 or integral multiples thereof,
plus all interest and expenses then outstanding on such Base Rate Loans, and

(ii)           prepay
LIBO Rate Loans upon irrevocable notice to the Administrative Agent not less
than three (3) Business Days, ratably as to each Lender, in whole or in part,
in aggregate minimum principal amounts of $500,000 or integral multiples
thereof plus
all interest and expenses then outstanding on such LIBO Rate Loans.

Such notice of prepayment
shall specify the date and amount of such prepayment and the Interest Rate
Type(s) of Loans to be prepaid.

The Administrative Agent will promptly notify each
Lender of its receipt of any such notice, and of such Lender’s Pro Rata Share
of such prepayment.  The payment amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to each such date on the amount
prepaid, the applicable Premium, and any amounts required pursuant to Section
3.4.

(b)           For purposes hereof,
the “Premium” shall be a cash
amount equal to the percentages of principal amount of the Loans being prepaid
set forth below:

	
  If prepaid after the Effective Date, but prior to the first
  anniversary of the Effective Date

  	
   

  	
  2.0

  	
  %

  

 

28

 

	
  If prepaid on or after the first anniversary of the Effective Date,
  but prior to second anniversary of the Effective Date

  	
   

  	
  1.0

  	
  %

  
	
  If prepaid on or after the second anniversary of the Effective Date

  	
   

  	
  0.0

  	
  %

  

 

                2.5           Mandatory Prepayments.

(a)           If the Company or
any of its Subsidiaries shall receive Net Cash Proceeds from any Disposition
described in Sections 8.2(f) or (g) or any Recovery Event that exceeds, as to
any Disposition or Recovery Event, $500,000, to the extent (A) such Disposition
and related receipt of Net Cash Proceeds do not result in an automatic
reduction to the Borrowing Base (as defined in the First Lien Credit Agreement
as in effect at the Restatement Effective Date) pursuant to Section 8.2(f) of
the First Lien Credit Agreement (as in effect at the Restatement Effective
Date) and (B) such Net Proceeds are not used to cure a Deficiency (as defined
in the First Lien Credit Agreement as in effect on the Restatement Effective
Date) or otherwise applied as required by Section 2.6(f)(iii) of the First Lien
Credit Agreement as in effect on the Restatement Effective Date, the Company
shall (i) first, apply such portion of such Net
Cash Proceeds to the repayment of the Loans under the First Lien Credit
Agreement as shall be necessary to cause the Utilization Percentage (as defined
in the First Lien Credit Agreement in effect on the Effective Date) to be no
greater than 75% and (ii) second, to the
extent otherwise permitted by Section 8.9 of the First Lien Credit Agreement,
offer to prepay the Loans in an amount equal to the amount of the remaining Net
Cash Proceeds after making any payments required under clause (i) of this
Section 2.5(a), as set forth in Sections 2.5(e) and 2.10.  The provisions of this Section 2.5(a) do not
constitute a consent to the consummation of any Disposition not permitted by
Section 8.2(f) or otherwise requiring the prior written consent of the Required
Lenders.

(b)           If the Company or
any of its Subsidiaries shall issue any Capital Stock resulting in the receipt
by the issuer of Net Cash Proceeds, then on the third Business Day following
the date of such issuance, the Company shall (i) first,
apply such portion of such Net Cash Proceeds to the repayment of the Loans
under the First Lien Credit Agreement as shall be necessary to cause the
Utilization Percentage (as defined in the First Lien Credit Agreement in effect
on the Effective Date) to be no greater than 75% and (ii) second,
to the extent otherwise permitted by Section 8.9 of the First Lien Credit
Agreement, cause the Loans to be prepaid in an amount equal to 50% of the Net
Cash Proceeds remaining after making payments required under clause (i) of this
2.5(b), as set forth in Sections 2.5(e) and 2.10; provided, however, that if at the time of such
issuance of Capital Stock the Consolidated Leverage Ratio (after giving effect
to such issuance and the proposed use of the Net Cash Proceeds thereof) would
be less than 3.00 to 1.00 but equal to or greater than 2.00 to 1.00, then the
amount required to be so applied shall be reduced to 25% of such Net Cash
Proceeds; and provided
further, however,
that if at the time of such issuance of Capital Stock the Consolidated Leverage
Ratio (after giving effect to such issuance and the proposed use of the Net
Cash Proceeds thereof) would be less than 2.00 to 1.00, no prepayment shall be
required as a result of such issuance. 
The provisions of this Section 2.5(b) do not constitute a consent to the
issuance of any Capital Stock by any Person whose Capital Stock is pledged
pursuant to the Security Documents.

 

29

 

(c)           If the Company or
any of its Subsidiaries shall incur any Indebtedness (other than Permitted
Indebtedness) then on the date of such incurrence, the Company shall (i) first, apply such portion of such Net Cash Proceeds to the
repayment of the Loans under the First Lien Credit Agreement as shall be
necessary to cause the Utilization Percentage (as defined in the First Lien
Credit Agreement in effect on the Effective Date) to be no greater than 75% and
(ii) second, to the extent otherwise
permitted by Section 8.9 of the First Lien Credit Agreement, cause the Loans to
be prepaid in an amount equal to the Net Cash Proceeds of such incurrence, as
set forth in Sections 2.5(e) and 2.10. 
The provisions of this Section 2.5(c) do not constitute a consent to the
incurrence of any such Indebtedness by the Company or any of its Subsidiaries.

(d)           [Intentionally
omitted].

(e)           All mandatory
prepayments provided for in this Section 2.5 shall be made together with
interest accrued on the principal amount prepaid and any amount required by
Section 3.4, but without any Premium. 
Any amount required to be prepaid pursuant to this Section 2.5 shall be
applied to prepay the Loans.

                2.6           Repayment.

(a)           Principal. 
The Company shall repay to the Administrative Agent for the benefit of
the Lenders the outstanding principal balance of the Loans (and the outstanding
principal of the Loans shall be due and payable) on the Maturity Date or on
such date on which the Loans become due and payable pursuant to Sections 2.4 or
2.5 or Article IX.

(b)           Each Lender shall
maintain in accordance with its usual practice an account or accounts
evidencing Indebtedness of the Company to such Lender resulting from each Loan
of such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this
Agreement.

(c)           The Administrative
Agent, on behalf of the Company, shall maintain the Register, and a subaccount
therein for each Lender, in which shall be recorded (i) the amount of each Loan
made hereunder, (ii) the amount of any principal or interest due and payable or
to become due and payable from the Company to each Lender hereunder and (iii)
both the amount of any sum received by the Administrative Agent hereunder from
the Company and each Lender’s share thereof. 
The Register shall be available for inspection by each Loan Party, the
Administrative Agent and any Lender at any reasonable time and from time to
time upon reasonable prior notice.

(d)           The entries made in
the Register and the accounts of each Lender maintained pursuant to Section
2.7(b) shall, to the extent permitted by applicable law, be prima facie
evidence of the existence and amounts of the obligations of the Company therein
recorded; provided,
however, that the failure of any Lender or the Administrative Agent to maintain
the Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Company to repay (with applicable interest) the
Loans made to the Company by such Lender in accordance with the terms of this
Agreement or the Company’s entitlement to credit for any payment of principal
or interest on the Loans.

                2.7           Interest.

 

30

 

(a)           Each Loan shall bear interest on the
principal amount thereof from the Effective Date or date of conversion or
continuation pursuant to Section 2.3 of this Agreement, as the case may be, at
a rate per annum equal to the lesser of (i) the LIBO Rate or the Adjusted Base
Rate, as the case may be, plus the Applicable Margin and (ii) the Highest
Lawful Rate.

(b)           Interest on each Loan shall be paid
in arrears on each Interest Payment Date. 
Interest shall also be paid on the date of any prepayment of Loans under
Section 2.4 or 2.5 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event
of Default, interest shall be paid on demand of the Administrative Agent.

(c)           Notwithstanding paragraph (a) of this
Section 2.7, while any Event of Default exists or after acceleration, the
Company shall pay interest (after as well as before entry of judgment thereon
to the extent permitted by law) on the principal amount of all outstanding
Loans, at a rate per annum equal to the lesser of (i) the Highest Lawful Rate
and (ii) the rate otherwise applicable plus two percent (2%) (“Default Rate”).

                2.8           Fees.  The
Company has paid or will pay (as applicable) fees to the parties and in the
amounts specified in the Fee Letter Agreement.

                2.9           Computation of Fees and Interest.

(a)           All
computations of interest for Base Rate Loans shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more interest being paid than if computed on the basis of a 365 day
year).  Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof.

(b)           Each
determination of an interest rate by the Administrative Agent shall be conclusive
and binding on the Company and the Lenders in the absence of manifest error.

                2.10         Payments by the Company; Loans Pro
Rata.

(a)           All
payments to be made by the Company shall be made without set off, recoupment or
counterclaim.  Except as otherwise
expressly provided herein, all payments by the Company shall be made to the
Administrative Agent for the account of the Lenders at the Agent’s Payment
Office, and shall be made in dollars and in immediately available funds, no
later than 12:00 p.m. (New York, New York time) on the date specified
herein.  Except to the extent otherwise
expressly provided herein, (i) each payment by the Company of fees shall be
made for the account of the Lenders pro rata in accordance with their
respective Pro Rata Shares, (ii) each payment of principal of Loans shall be
made for the account of the Lenders pro rata in accordance with their
respective outstanding principal amount of such Loans, and (iii) each payment
of interest on Loans shall be made for the account of the Lenders pro rata in
accordance with their respective shares of the aggregate amount of interest due
and payable to the Lenders.  The
Administrative Agent will promptly distribute to each Lender its applicable
share of such payment in like funds as received.  Any payment received by the Administrative
Agent later than 12:00 p.m. (New York, New York time) shall be deemed to have
been received on the following 

 

31

 

Business Day and any applicable interest or fee shall continue to
accrue.

(b)           Subject
to the provisions set forth in the definition of “Interest
Period” herein, whenever any payment is due on a day other than
a Business Day, such payment shall be made on the following Business Day, and
such extension of time shall in such case be included in the computation of
interest or fees, as the case may be.

(c)           Unless
the Administrative Agent receives notice from the Company prior to the date on
which any payment is due to the Lenders that the Company will not make such
payment in full as and when required, the Administrative Agent may assume that
the Company has made such payment in full to the Administrative Agent on such
date in immediately available funds and the Administrative Agent may (but shall
not be so required), in reliance upon such assumption, distribute to each
Lender on such due date an amount equal to the amount then due such
Lender.  If and to the extent the Company
has not made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent on demand such amount distributed to
such Lender, together with interest thereon at the Federal Funds Rate for each
day from the date such amount is distributed to such Lender until the date
repaid.

(d)           Except
to the extent otherwise expressly provided herein, the Loans hereunder shall be
from the Lenders pro rata in accordance with their respective Pro Rata Shares.

(e)           Notwithstanding
anything to the contrary in Sections 2.5(a), (b), (c) or elsewhere in this
Section 2.10, with respect to the amount of any mandatory prepayment described
in Sections 2.5(a), (b) or (c) that is allocated to the Loans (such amount, the
“Mandatory Prepayment Amount”),
any Lender may elect, by notice to the Administrative Agent at or prior to the
time and in the manner specified by the Administrative Agent, prior to any
prepayment of Loans required to be made by the Company pursuant to Sections
2.5(a), (b) or (c), to decline all (but not a portion) of its pro rata share of
such Mandatory Prepayment Amount (such declined amounts, the “Declined Proceeds”).  Any Declined Proceeds shall be offered one
additional time to the Lenders not so declining such prepayment (with such
Lenders having the right to decline any prepayment with Declined Proceeds at
the time and in the manner specified by the Administrative Agent).  Any remaining Declined Proceeds shall be
applied as determined by the Company in accordance with this Agreement.

(f)            The Company shall
deliver to the Administrative Agent, at the time of each prepayment required
under Sections 2.5(a), (b) or (c), (i) a certificate signed by a Responsible
Officer setting forth in reasonable detail the calculation of the applicable
Mandatory Prepayment Amount and (ii) to the extent practicable, at least three
days prior written notice of such prepayment. Each notice of prepayment shall
specify the prepayment date, the type of each Loan being prepaid (i.e.,
specifying Base Rate Loans or LIBO Rate Loans) and the principal amount of each
Loan (or portion thereof) to be prepaid; provided, however, that, if at the time of any
prepayment pursuant to Sections 2.5(a), (b) or (c) there shall be Loans of
different types or LIBO Rate Loans with different Interest Periods, and if some
but not all Lenders shall have accepted such mandatory prepayment, then the
aggregate amount of such mandatory prepayment shall be allocated ratably to
each outstanding Loan of the accepting Lenders.

 

32

 

(g)           Notwithstanding
anything to the contrary contained herein, after the occurrence and during the
continuance of any Event of Default, each payment in respect of principal or
interest on the Loans, each payment in respect of fees payable hereunder and
any proceeds of Collateral, and Net Cash Proceeds received by the
Administrative Agent and not required to be turned over to the First Lien
Credit Agent pursuant to the Intercreditor Agreement shall be applied in the
following order:

(i)            first,
to the payment or reimbursement of the Administrative Agent for all costs,
expenses, disbursements and losses incurred by the Administrative Agent and
which the Company is required to pay or reimburse pursuant to the Loan
Documents;

(ii)           second,
to the payment or reimbursement of the Lenders for all costs, expenses,
disbursements and losses incurred by such Persons and which any Loan Party is
required to pay or reimburse pursuant to the Loan Documents;

(iii)          third,
to the payment or prepayment to the Lenders of all Obligations; and

(iv)          fourth,
to whomsoever shall be legally entitled thereto.

If
any Lender owes payments to the Administrative Agent hereunder, any amounts
otherwise distributable under this Section 2.10(g) to such Lender shall be
deemed to belong to the Administrative Agent to the extent of such unpaid payments,
and the Administrative Agent shall apply such amounts to make such unpaid
payments rather than distribute such amounts to such Lender.  All distributions of amounts described in
paragraphs second and third above
shall be made by the Administrative Agent to each Lender based on its Pro Rata
Share.

                2.11         [Intentionally Omitted].

                2.12         Sharing of Payments, Etc.  If any Lender shall obtain on account of the
Obligations held by it any payment (whether voluntary, involuntary, through the
exercise of any right of set off, or otherwise) or receive any collateral in
respect thereof in excess of the amount such Lender was entitled to receive
pursuant to the terms hereof, such Lender shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Lenders such
participations in the Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment according to the terms hereof;
provided, however, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of such
paying Lender’s required repayment to (ii) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered.  The Company agrees that any Lender so
purchasing a participation from another Lender may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set off, but subject to Section 11.9) with respect to such participation as
fully as if such Lender were the direct creditor of the Company in the amount
of such participation.  The
Administrative Agent will keep records (which shall be conclusive and binding
in the absence of manifest error) of participations purchased under this
Section 2.12 and will in each case notify 

 

33

 

the Lenders following any such purchases or repayments.

ARTICLE III

TAXES,
YIELD PROTECTION AND ILLEGALITY

                3.1           Taxes.

(a)           Any
and all payments by the Company to each Lender or the Administrative Agent
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes.  In addition, the Company shall pay all Other
Taxes.

(b)           Subject
to Section 3.1(f), the Company
agrees to indemnify and hold harmless each Lender and the Administrative Agent
for the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 3.1) paid by
the Lender or the Administrative Agent and any liability (including penalties,
interest, additions to Tax and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted.  Payment under this
indemnification shall be made within 30 days after the date the affected Lender
or the Administrative Agent makes written demand therefor.

(c)           If
the Company shall be required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the
Administrative Agent, then: (i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under this
Section 3.1), such Lender or the Administrative Agent, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Company shall make such
deductions and withholdings; (iii) the Company shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and (iv) the Company shall also pay to each
affected Lender or the Administrative Agent for the account of such Lender, at
the time interest is paid, all additional amounts which such Lender specifies
as necessary to preserve the after-tax yield such Lender would have received if
such Taxes or Other Taxes had not been imposed.

(d)           Within
30 days after the date of any payment by the Company of Taxes or Other Taxes
under Section 3.1(c) above, the Company shall furnish the Administrative Agent
the original or a certified copy of a receipt evidencing payment thereof, or
other evidence of payment satisfactory to the Administrative Agent.

(e)           If
the Company is required to pay additional amounts to any Lender or the
Administrative Agent pursuant to Section 3.1(c), then upon written request of
the Company such Lender shall use reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by the Company which may thereafter
accrue, if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.

 

34

 

(f)            No
Lender that is required to comply with Section 10.10 shall be entitled to any
indemnification under this Section 3.1 if the obligation with respect to which
indemnification is sought would not have arisen but for a failure of the
affected Lender to comply with such Section 10.10.

                3.2           Illegality.

(a)           If
any Lender determines that the introduction of any Requirement of Law, or any
change in any Requirement of Law, or in the interpretation or administration of
any Requirement of Law, has made it unlawful, or that any central bank or other
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make LIBO Rate Loans, then, on notice thereof by
the Lender to the Company through the Administrative Agent, any obligation of
that Lender to make LIBO Rate Loans shall be suspended until such Lender
notifies the Administrative Agent and the Company that the circumstances giving
rise to such determination no longer exist.

(b)           If
a Lender determines that it is unlawful to maintain any LIBO Rate Loan, the
Company shall, upon its receipt of notice of such fact and demand from such
Lender (with a copy to the Administrative Agent), prepay in full such LIBO Rate
Loans of that Lender then outstanding, together with interest accrued thereon
and amounts required under Section 3.4, either on the last day of the Interest
Period thereof, if the Lender may lawfully continue to maintain such LIBO Rate
Loans to such day, or immediately, if the Lender may not lawfully continue to
maintain such LIBO Rate Loan.  If the
Company is required to so prepay any LIBO Rate Loan, then concurrently with
such prepayment, the Company shall borrow from the affected Lender, in the
amount of such repayment, a Base Rate Loan.

(c)           If
the obligation of any Lender to make or maintain LIBO Rate Loans has been so
terminated or suspended, all Loans which would otherwise be made by the Lender
as LIBO Rate Loans shall be instead Base Rate Loans.

(d)           Before
giving any notice to the Administrative Agent under this Section 3.2, the
affected Lender shall designate a different Lending Office with respect to its
LIBO Rate Loans if such designation will avoid the need for giving such notice
or making such demand and will not, in the judgment of such Lender, be illegal
or otherwise disadvantageous to such Lender.

                3.3           Increased Costs and Reduction of
Return.

(a)           If
any Lender determines that, due to either (i) the introduction of or any change
(other than any change by way of imposition of or increase in reserve
requirements included in the calculation of the LIBO Rate) in or in the
interpretation of any law or regulation or (ii) the compliance by that Lender with
any guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to such Lender of agreeing to make or making, funding or maintaining any
LIBO Rate Loans, then the Company shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the Administrative
Agent), pay to the Administrative Agent for the account of such Lender,
additional amounts as are sufficient to compensate such Lender for such
increased costs.

 

35

 

(b)           If
any Lender shall have determined that (i) the introduction of any Capital
Adequacy Regulation, (ii) any change in any Capital Adequacy Regulation, (iii) any
change in the interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority charged with the
interpretation or administration thereof, or (iv) compliance by such Lender (or
its Lending Office) or any Affiliate controlling such Lender with any Capital
Adequacy Regulation, affects or would affect the amount of capital required or
expected to be maintained by such Lender or any Affiliate controlling such
Lender and (taking into consideration such Lender’s or such Affiliate’s
policies with respect to capital adequacy and such Lender’s desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, Loans, other Credit Extensions, or Obligations
under this Agreement, then, upon demand of such Lender to the Company through
the Administrative Agent, the Company shall pay to such Lender, from time to
time as specified by such Lender, additional amounts sufficient to compensate
such Lender for such increase.

                3.4           Funding Losses.  The Company shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur as a consequence of (a) the failure of the Company to make on a timely
basis any payment of principal of any LIBO Rate Loan; (b) the failure of the
Company to continue a LIBO Rate Loan or to convert a Base Rate Loan to a LIBO
Rate Loan after the Company has given (or is deemed to have given) a Notice of
Conversion/Continuation (including by reason of the failure to satisfy any
condition precedent thereto); (c) the failure of the Company to make any
prepayment in accordance with any notice delivered under Sections 2.4 or 2.5;
(d) the prepayment (including pursuant to Sections 2.4 or 2.5) or other payment
(including after acceleration thereof) of a LIBO Rate Loan on a day that is not
the last day of the relevant Interest Period; or (e) the automatic conversion
under Section 2.3 of any LIBO Rate Loan to a Base Rate Loan on a day that is
not the last day of the relevant Interest Period; including any such loss or
expense arising from the liquidation or reemployment of funds obtained by it to
maintain its LIBO Rate Loans or from fees payable to terminate the deposits
from which such funds were obtained.  For
purposes of calculating amounts payable by the Company to the Lenders under
this Section 3.4 and under Section 3.3(a), each LIBO Rate Loan made by a Lender
(and each related reserve, special deposit or similar requirement) shall be
conclusively deemed to have been funded at the LIBOR used in determining the
LIBO Rate for such LIBO Rate Loan by a matching deposit or other borrowing in
the interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such LIBO Rate Loan is in fact so funded.

                3.5           Inability to Determine Rates.  If the Administrative Agent determines that
for any reason adequate and reasonable means do not exist for determining the
LIBO Rate for any requested Interest Period with respect to a proposed LIBO
Rate Loan, or that the LIBO Rate applicable pursuant to Section 2.7(b) for any
requested Interest Period with respect to a proposed LIBO Rate Loan does not
adequately and fairly reflect the cost to the Lenders of funding such Loan, the
Administrative Agent will promptly so notify the Company and each Lender.  Thereafter, the obligation of the Lenders to
make or maintain LIBO Rate Loans hereunder shall be suspended until the
Administrative Agent upon the instruction of the Lenders revokes such notice in
writing.  Upon receipt of such notice,
the Company may revoke any Notice of Conversion/Continuation then submitted by
it.  If the Company does not revoke such
notice, the Lenders shall make, convert or continue the Loans, as proposed by
the Company, in the amount specified in the applicable notice submitted by the
Company, but such Loans shall be made, 

 

36

 

converted or continued as Base Rate Loans instead of LIBO Rate Loans.

                3.6           Certificates of Lenders.  Any Lender claiming reimbursement or
compensation under this Article III shall deliver to the Company (with a copy
to the Administrative Agent) a certificate setting forth in reasonable detail
the amount payable to such Lender hereunder and such certificate shall be
conclusive and binding on the Company in the absence of manifest error;
provided, however, that such Lender shall only be entitled to collect amounts
incurred within 180 days of such notice.

                3.7           Substitution of Lenders.  Upon the receipt by the Company from any
Lender of a claim for compensation under this Article III and, as a result, the
Company elects by written notice to the Administrative Agent to replace such
dissenting Lender pursuant to this Section 3.7 (such Lender, an “Affected Lender”), the Company may:  (a) obtain a replacement bank or financial
institution satisfactory to the Administrative Agent to acquire and assume all
or a ratable part of all of such Affected Lender’s Loans (a “Replacement Lender”); or (b) request one more of the
other Lenders to acquire and assume all or part of such Affected Lender’s Loans
but none of the Lenders shall have any obligation to do so.  Any such designation of a Replacement Lender
under clause (a) shall be subject to the prior written consent of the Administrative
Agent, which consent shall not be unreasonably withheld.

                3.8           Survival.  The agreements and obligations of the Company
in this Article III shall survive the payment of all other Obligations.

ARTICLE IV

SECURITY

                4.1           The Security.  The Obligations will be secured by the
Security Documents.

                4.2           Agreement to Deliver Security
Documents.  The Company shall, and
shall cause its Subsidiaries to, execute and deliver to the Collateral Trustee,
with an executed copy of each thereof provided to the Administrative Agent, to
further secure the Sharing Obligations, whenever requested by the
Administrative Agent in its sole and absolute discretion, deeds of trust,
mortgages, chattel mortgages, security agreements, financing statements and
other Security Documents, for the benefit of the Secured Parties, in form and
substance satisfactory to the Administrative Agent, for the purpose of
granting, confirming, and perfecting, for the benefit of the Secured Parties,
second and prior Liens or security interests in any Property now owned or
hereafter acquired by the Company or any of its Subsidiaries, as applicable,
subject only to Permitted Liens.  The
Company shall, and shall cause its Subsidiaries to, deliver, and cause its
Subsidiaries, where applicable, to deliver, in each case to the Collateral
Trustee, with an executed copy of each thereof provided to the Administrative
Agent, whenever requested by the Administrative Agent, favorable title opinions
from legal counsel acceptable to the Administrative Agent, title insurance
policies, or such other evidence of title satisfactory to the Administrative
Agent with respect to the Mortgaged Properties designated by the Administrative
Agent, based upon abstract or record examinations acceptable to the
Administrative Agent and (a) stating that the Company or its Subsidiary, as
applicable, has good and marketable title to the Mortgaged Properties, free and
clear of all Liens except Permitted Liens, (b) confirming that 

 

37

 

such Mortgaged Properties are subject to Security Documents securing
the Sharing Obligations that constitute and create legal, valid and duly
perfected deed of trust or mortgage Liens in such Mortgaged Properties and
interests, and assignments of and security interests in the Oil and Gas
attributable to such Mortgaged Properties comprised of Oil and Gas Properties
and interests and the proceeds thereof, in each case subject only to Permitted
Liens, and (c) covering such other matters as the Administrative Agent may reasonably
request.

                4.3           Perfection and Protection of
Security Interests and Liens.  The
Company shall, and shall cause its Subsidiaries to, from time to time deliver
to the Collateral Trustee, with a copy of each thereof to the Administrative
Agent, any financing statements, amendment, assignment and continuation
statements, extension agreements and other documents, properly completed and
executed (and acknowledged when required) by the Company or its Subsidiary, as
applicable, in form and substance satisfactory to the Administrative Agent,
which the Administrative Agent reasonably requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Sharing Obligations, for the benefit of the Secured Parties.

                4.4           Offset.  To secure the repayment of the Sharing
Obligations, the Company hereby grants the Administrative Agent and each Lender
a security interest, a Lien, and a right of offset, each of which shall be in
addition to all other interests, Liens, and rights of the Administrative Agent
and the Lenders at common law, under the Loan Documents, or otherwise, and each
of which shall be upon and against (a) any and all moneys, securities or other
Property (and the proceeds therefrom) of the Company now or hereafter held or
received by or in transit to the Administrative Agent or any Lender from or for
the account of the Company, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, (b) any and all deposits (general or
special, time or demand, provisional or final) of the Company with the
Administrative Agent or any Lender, and (c) any other credits and claims of the
Company at any time existing against the Administrative Agent or any Lender,
including claims under certificates of deposit. During the existence of any
Event of Default, the Administrative Agent or any Lender is hereby authorized
to foreclose upon, offset, appropriate, and apply, at any time and from time to
time, without notice to the Company, any and all items hereinabove referred to
against the Obligations then due and payable.

                4.5           Guaranty.

(a)           Each
Original Guarantor and each TexCal Subsidiary has executed and delivered to the
Administrative Agent, and each Subsidiary of the Company now existing or
created, acquired or coming into existence after the Restatement Effective Date
that is required under Section 7.12 to be a Guarantor shall, promptly upon
request by the Administrative Agent, execute and deliver to the Administrative
Agent, a Guaranty (or a joinder thereto). 
The Company will cause each of its Subsidiaries to deliver to the
Administrative Agent, simultaneously with its delivery of such a Guaranty,
written evidence satisfactory to the Administrative Agent and its counsel that
such Subsidiary has taken all corporate, limited liability company or
partnership action necessary to duly approve and authorize its execution,
delivery and performance of such Guaranty and any Security Documents and other
documents which it is required to execute.

 

38

 

(b)           Guaranty
Representations.  To induce the
Lenders and the Administrative Agent to enter into this Agreement, the Company
and each
Guarantor represents and warrants to each such Person, (i) as of and after
giving effect to the making of the Loans at the Effective Time, (ii) after
giving effect to the TexCal Acquisition, as of the TexCal Closing Time and
(iii) as of the Restatement Effective Time:

(i)            Benefit to Guarantors.  The Company and each Guarantor are mutually
dependent on each other in the conduct of their respective businesses, with the
credit needed from time to time by each often being provided by another or by
means of financing obtained by one such Affiliate with the support of the other
for their mutual benefit and the ability of each to obtain such financing is
dependent on the successful operations of the other.  The board of directors, manager or general
partner, where applicable, of each Guarantor has determined that such Guarantor’s
execution, delivery and performance of this Agreement may reasonably be
expected to directly or indirectly benefit such Guarantor and is in the best
interests of such Guarantor.

(ii)           Reasonable Consideration for Guaranties.  The direct or indirect value of the
consideration received and to be received by such Guarantor in connection
herewith is reasonably worth at least as much as the liability and obligations
of each Guarantor hereunder and its Guaranty, and the incurrence of such
liability and obligations in return for such consideration may reasonably be
expected to benefit such Guarantor, directly or indirectly.

(iii)          No Insolvencies. 
Neither the Company nor any Guarantor is “insolvent” (that is, the sum
of such Person’s absolute and contingent liabilities, including the Obligations,
does not exceed the fair market value of such Person’s assets, including any
rights of contribution, reimbursement or indemnity).  Each of the Company and each Guarantor has
capital which is adequate for the businesses in which such Person is engaged
and intends to be engaged.  None of  the Company nor any Guarantor has incurred
(whether hereby or otherwise), nor does the Company or Guarantor intend to
incur or believe that it will incur, liabilities which will be beyond its
ability to pay as such liabilities mature.

                4.6           Production Proceeds.  Notwithstanding that, by the terms of the
various Security Documents, the Company is and will be assigning to the
Collateral Trustee all of the Net Proceeds of Production accruing to the
Mortgaged Properties covered thereby, so long as no Event of Default has
occurred and is continuing, pursuant to Section 7.03 of the Collateral Trust
Agreement, the Collateral Trustee, on behalf of the Secured Parties, has
granted each of the Company and its Subsidiaries a revocable license to
continue to receive from the purchasers of production all such Net Proceeds of
Production, subject, however, to the Liens created under the Security
Documents, which Liens are hereby affirmed and ratified.  During the continuance of an Event of Default
described under Sections 9.1(g) or (h), pursuant to Section 7.03 of the
Collateral Trust Agreement, this license shall be automatically revoked, and
during the continuance of any other Event of Default, this license shall be
revocable by the Collateral Trustee, subject to Section 3.04(b) of the
Collateral Trust Agreement, upon the written direction of the Administrative
Agent in the sole discretion of the Administrative Agent, by notice to the 

 

39

 

Company, and the Collateral Trustee may exercise all rights and
remedies granted under the Security Documents, including the right to obtain
possession of all Net Proceeds of Production then held by the Company and its
Subsidiaries or to receive directly from the purchasers of production all other
Net Proceeds of Production.  In no case
shall any failure, whether purposeful or inadvertent, by the Collateral Trustee
to collect directly any such Net Proceeds of Production constitute in any way a
waiver, remission or release of any of its rights under the Security Documents,
nor shall any release of any Net Proceeds of Production by the Collateral
Trustee to the Company and its Subsidiaries constitute a waiver, remission, or
release of any other Net Proceeds of Production or of any rights of the
Collateral Trustee to collect other Net Proceeds of Production thereafter.

ARTICLE V

CONDITIONS
PRECEDENT

                5.1           Conditions of the Effective Date.  The effectiveness of the Existing Credit
Agreement was subject to the condition that on or before the Effective Time the
Administrative Agent received all of the following, in form and substance
satisfactory to the Administrative Agent and each Lender, and in sufficient
copies for each Lender (or, in the case of clauses (g), (i), or (r), the
conditions specified therein shall have been satisfied):

(a)           Credit Agreement and Related Documents.  This Agreement, the Notes, the Guaranty and
the Security Documents, duly executed and delivered by each of the Company and
the Original Guarantors party thereto;

(b)           First Lien Credit Documents;
Collateral Trust Agreement; Senior Notes Indenture.  (i) Evidence that (x) each of the First Lien
Credit Documents has been duly executed and delivered by each of the parties
thereto; and (y) each of the Intercreditor Agreement and the Collateral Trust
Agreement has been duly executed and delivered by each of the parties thereto
other than the Administrative Agent; and (ii) true and correct copies,
certified as to authenticity by the Company, of (x) the First Lien Credit
Documents and (y) the Senior Notes Indenture;

(c)           Resolutions; Incumbency; Organization Documents.  (i) Resolutions of the board of directors of
the Company and members or the board of directors of each Original Guarantor or
its general partner, as applicable, authorizing the transactions contemplated
hereby, certified as of the Effective Time by the Secretary or an Assistant
Secretary of such Person; (ii) Certificates of the Secretary of the Company and
the Secretary of each Original Guarantor certifying the names and true
signatures of the officers of such Person authorized to execute, deliver and
perform, as applicable, this Agreement, the Security Documents, the Guaranty,
and all other Loan Documents to be delivered by it hereunder; and (iii) the
Organization Documents of the Company and of each Original Guarantor as in
effect on the Effective Time, certified by the Secretary or Assistant Secretary
of the such Person as of the Effective Time;

(d)           Good Standing. 
A good standing certificate for the Company and each Original Guarantor
from its state of incorporation or formation, and evidencing its qualification
to do business in (i) California for the Company and each Original Guarantor,
(ii) Texas for the Company, and (iii) in each other jurisdiction where its
ownership, lease or operation of

 

40

 

properties or the conduct of its business requires such qualification,
in each case as of a recent date;

(e)           Payment of Fees. 
Evidence of payment by the Company of all accrued and unpaid fees, costs
and expenses owed pursuant to the Existing Credit Agreement (as defined in the
First Lien Credit Agreement as in effect on the Effective Date), the First Lien
Credit Agreement and under this Agreement, including the Fee Letter Agreement,
in each case to the extent then due and payable at the Effective Time, including
any such costs, fees and expenses arising under or referenced in Sections 2.8
and 11.4;

(f)            Certificate. 
A certificate signed by a Responsible Officer, dated as of the Effective
Time, stating that (i) the representations and warranties contained in Article
VI and Section 4.5(b) are true and correct on and as of the Effective Date, as
though made on and as of such date; (ii) no litigation is pending or threatened
against the Company or any Subsidiary or any TexCal Subsidiary in which there
is a reasonable probability of an adverse decision which would result in a
Material Adverse Effect; and (iii) there has occurred no event or circumstance
that has resulted or would reasonably be expected to result in a Material
Adverse Effect since December 31, 2004;

(g)           [Intentionally
omitted];

(h)           Title. 
Evidence that the Company and its Subsidiaries have and, upon
consummation of the TexCal Acquisition, will have good and marketable title on
at least 85% of the Net Present Value of the Proved Reserves subject to no
other Liens, other than Permitted Liens, evidenced by title information
satisfactory to the Administrative Agent and the Lenders;

(i)            Environmental. 
The Administrative Agent shall have completed a review satisfactory to
the Administrative Agent of current public environmental data sources,
registers and lists regarding the Company, each Original Guarantor and each
TexCal Subsidiary and their respective Oil and Gas Properties and the
Administrative Agent and the Lenders shall be satisfied with all environmental
matters;

(j)            Insurance Certificates.  Insurance certificates in form and substance
reasonably satisfactory to the Administrative Agent, from the Company’s
insurance carriers reflecting the current insurance policies required under
Section 7.6 (such insurance will be primary and not contributing) including any
necessary endorsements to reflect the Administrative Agent as loss payee for
the ratable benefit of the Lenders, with the right to receive at least 30 days
prior notice of cancellation of any such policy;

(k)           Other Documents. 
Such other approvals, opinions, documents or materials as the
Administrative Agent or any Lender may request, including those in connection
with the TexCal Acquisition;

(l)            Opinions of Counsel.  (i) An opinion of Davis Graham & Stubbs
LLP covering such matters as the Administrative Agent may require and in form
and substance satisfactory to the Administrative Agent dated as of the
Effective Time, (ii) an opinion of Bracewell & Giuliani LLP covering such
matters of New York law as the Administrative Agent may require in form and
substance satisfactory to the Administrative Agent dated as of the 

 

41

 

Effective Time and (iii) opinions of Haynes and Boone, LLP and Downey
Brand LLP as to the enforceability and perfection of the Liens and security
interests created under the Mortgages filed or to be filed in Texas and
California, respectively;

(m)          TexCal Acquisition.  (i) Evidence that all conditions precedent
under the TexCal Acquisition Agreement other than payment of the “Closing Date
Merger Consideration” (as defined therein) have been satisfied or waived by all
parties thereto; and (ii) true and correct copies (in a form reasonably
satisfactory to the Administrative Agent), certified as to authenticity by a Responsible
Officer of the Company, of the TexCal Acquisition Documentation;

(n)           Initial Reserve Report, TexCal Reserve Report, Financial
Statements and  Pro Forma Financial
Statements.  The Initial
Reserve Report, the TexCal Reserve Report, the Audited Financial Statements,
the Company’s unaudited consolidated financial statements as of and for the
fiscal year ended December 31, 2005, the TexCal Audited Financial Statements
and the Pro Forma Financial Statements, each in form and substance satisfactory
to the Administrative Agent;

(o)           Lien
Searches.  Evidence of the results of
a recent lien search in each of the jurisdictions in which UCC financing
statements or other filings or recordations should be made to evidence or perfect
security interests in any assets of the Company, any Original Guarantor or any
TexCal Subsidiary, and such search shall reveal no Liens on any of the Property
of the Company, any Original Guarantor or any TexCal Subsidiary, except for
Permitted Liens;

(p)           MMS
Operational Matters.  Evidence that
the Company is qualified by the Minerals Management Service of the United
States Department of Interior to operate its Hydrocarbon Interests comprised of
leases covering submerged lands on the federal Outer Continental Shelf;

(q)           Filings, Registrations and Recordings.  Each document (including, without limitation,
any UCC financing statement) required by the Security Documents or under law or
reasonably requested by the Administrative Agent to be filed, registered or
recorded in order to create in favor of the Collateral Trustee, for the benefit
of the Secured Parties, a second priority perfected Lien on the Shared
Collateral described in any Security Document to which the Company or any
Original Guarantor is (or, upon consummation of the TexCal Acquisition, any Tex
Cal Subsidiary will be) a party, prior and superior in right to any other
Person (other than with respect to Permitted Liens), shall have been filed,
registered or recorded or shall have been delivered to the Collateral Trustee
in proper form for filing, registration or recordation;

(r)            Approvals.  All government and third party approvals
(including any consents) necessary in connection with the TexCal Acquisition,
the continuing operations of the Company and its Subsidiaries and the
transactions contemplated by the Transaction Documents shall have been obtained
and be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority
which would restrain, prevent or otherwise impose adverse conditions on the
TexCal Acquisition or the financing contemplated hereby;

 

42

 

(s)           Solvency.  A certificate from a Responsible Officer of
the Company certifying that, on a consolidated basis, the Company and its
Subsidiaries (i) as of the Effective Time, are, and (ii) after giving effect to
the transactions contemplated hereby, including the TexCal Acquisition, will
be, Solvent;

(t)            Pledged Stock;
Stock Powers; Acknowledgment and Consent; Pledged Notes.  The First Lien Credit Agent, on behalf of
itself, for the benefit of the First Lien Secured Parties, and as agent and
bailee for the Collateral Trustee, for the benefit of the Secured Parties,
shall have received (i) the certificates representing the shares of Capital
Stock of the Company’s Subsidiaries pledged pursuant to the Security Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof, and (ii) each
promissory note pledged by the Company and the Guarantors pursuant to the
Security Agreement endorsed (without recourse) in blank (or accompanied by an
executed transfer form in blank satisfactory to the First Lien Credit Agent) by
the pledgor thereof; and

(u)           Notice of
Borrowing.  The Administrative Agent
shall have received a Notice of Borrowing in the form of Exhibit A with
respect to the initial Credit Extensions hereunder contemplated by Section 2.1.

                5.2           Conditions to All Credit
Extensions.  The obligation of each
Lender to have made the Loans on the Effective Date and to continue or convert
any Loan under Section 2.3 (but specifically excluding the conversion of LIBO
Rate Loans on the last day of the Interest Period therefor into Base Rate
Loans) from and after the Effective Time was and is subject to the satisfaction
of the following conditions precedent on the Effective Date or Conversion/Continuation
Date, as applicable:

(a)           Notice. 
The Administrative Agent shall have received a Notice of
Conversion/Continuation (if applicable);

(b)           Continuation of Representations and Warranties.  The representations and warranties in Article
VI and Section 4.5(b) shall be true and correct in all material respects on and
as of the Effective
Date or
Conversion/Continuation Date with the same effect as if made on and as of the Effective Date or
Conversion/Continuation Date (except to the extent such representations and
warranties expressly refer to an earlier date, in which case they shall be true
and correct as of such earlier date);

(c)           No Existing Default.  No Default or Event of Default shall exist or
shall result from such making, continuation or conversion;

(d)           No Event or Condition of Material Adverse Effect.
 No event or condition having a Material
Adverse Effect shall have occurred since December 31, 2004, or if applicable
the date of the most recent annual audited consolidated financial statements of
the Company delivered to the Administrative Agent pursuant to Section 7.1(a);
and

(e)           Mortgaged Properties.  The Administrative Agent shall be satisfied
that the Loan Parties have granted to the Collateral Trustee, for the benefit
of the Secured Parties, at such time, fully perfected Liens on Oil and Gas
Properties that are Mortgaged Properties, subject only to Permitted Liens,
sufficient to cause the Mortgaged Properties to include eighty-five 

 

43

 

percent (85%) of the Net
Present Value of the Proved Reserves and at least ninety-five percent (95%) of
the Net Present Value of the Proved Developed Producing Reserves.

Each Notice of Conversion/Continuation submitted by the Company
hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice and as of the
Conversion/Continuation Date that the conditions in Section 5.2 are satisfied.

                5.3           Conditions to the Restatement Effective Time.  The effectiveness of this Agreement is
subject to the condition that on or before the Restatement Effective Time the
Administrative Agent shall have received all of the following, in form and
substance satisfactory to the Administrative Agent and each Lender, and in
sufficient copies for each Lender:

(a)           Credit Agreement. 
This Agreement, duly executed and delivered by each of the Company and
the Guarantors party thereto;

(b)           Resolutions; Incumbency; Organization Documents.  (i) Resolutions of the board of directors of
the Company and members or the board of directors of each Guarantor or its
general partner, as applicable, authorizing the transactions contemplated
hereby, certified as of the Restatement Effective Time by the Secretary or an
Assistant Secretary of such Person; (ii) Certificates of the Secretary of the
Company and the Secretary of each Guarantor certifying the names and true
signatures of the officers of such Person authorized to execute, deliver and
perform, as applicable, this Agreement; and (iii) the Organization Documents of
the Company and of each Guarantor as in effect on the Restatement Effective
Time, certified by the Secretary or Assistant Secretary of the such Person as
of the Restatement Effective Time;

(c)           Payment of Fees. 
Evidence of payment by the Company of all accrued and unpaid fees, costs
and expenses owed pursuant to this Agreement, including the Fee Letter
Agreement, in each case to the extent then due and payable at the Restatement
Effective Time, including any such costs, fees and expenses arising under or
referenced in Sections 2.8 and 11.4;

(d)           Certificate. 
A certificate signed by a Responsible Officer, dated as of the
Restatement Effective Time, stating that (i) the representations and warranties
contained in Article VI and Section 4.5(b) are true and correct on and as of
the Restatement Effective Date, as though made on and as of such date; (ii) no
litigation is pending or threatened against the Company or any Subsidiary in
which there is a reasonable probability of an adverse decision which would
result in a Material Adverse Effect; and (iii) there has occurred no event or
circumstance that has resulted or would reasonably be expected to result in a
Material Adverse Effect since December 31, 2004; and

(e)           Other Documents. 
Such other approvals, opinions, documents or materials as the
Administrative Agent or any Lender may request.

ARTICLE VI

REPRESENTATIONS
AND WARRANTIES

To induce the Lenders and the Administrative Agent
to enter into this Agreement, the Company and each Guarantor represents and
warrants to each such Person, (i) as of and after 

 

44

 

giving effect to the making of the Loans at the Effective Time and (ii)
as of the Restatement Effective Time:

                6.1           Organization, Existence and Power.  Each of the Company and its Subsidiaries: (a)
is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its formation; (b) has the power and authority and all material
governmental licenses, authorizations, consents and approvals to own its
assets, carry on its business and to execute, deliver, and perform its
obligations under the Transaction Documents; (c) is duly qualified as a foreign
corporation, limited partnership or limited liability company and is licensed
and in good standing under the laws of each jurisdiction where its ownership,
lease or operation of Property or the conduct of its business requires such
qualification or license, except where failure to do so would not reasonably be
expected to have a Material Adverse Effect; and (d) is in compliance in all
material respects with all Requirements of Law.

                6.2           Corporate Authorization; No
Contravention.  The execution,
delivery and performance by the Company and its Subsidiaries of this Agreement
and each other Transaction Document to which such Person is a party have been
duly authorized by all necessary organizational action, and do not and will
not: (a) contravene the terms of any of that Person’s Organization Documents;
(b) contravene the First Lien Credit Agreement; (c) contravene the Senior Notes
Indenture; (d) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any material
Contractual Obligation to which such Person is a party that would be prior to
the Liens granted to the Collateral Trustee for the benefit of the Secured
Parties or otherwise that would constitute a Material Adverse Effect, or any
order, injunction, writ or decree of any Governmental Authority to which such
Person or its material Property is subject; or (e) violate in any material
respect any Requirement of Law.

                6.3           Governmental Authorization.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary in connection with the execution, delivery
or performance by, or enforcement against, the Company or any of its
Subsidiaries of this Agreement or any other Transaction Document to which it is
a party, except for the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware with respect to the TexCal Acquisition; filings
necessary to obtain and maintain perfection of Liens; routine filings related
to the Company and the operation of its business; and such filings as may be
necessary in connection with the Lenders’ exercise of remedies hereunder.

                6.4           Binding Effect.  This Agreement and each other Transaction
Document to which the Company or such Subsidiary is a party constitute the
legal, valid and binding obligations of the Company and any of its Subsidiaries
to the extent it is a party thereto, enforceable against such Person in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors’ rights generally or by equitable principles relating to
enforceability.

                6.5           Litigation.  Unless specifically disclosed in Schedule 6.5
attached hereto, there are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of the Company, threatened or contemplated,
at law, in equity, in arbitration or before any Governmental Authority, against
the Company or its Subsidiaries or any of their respective Properties which (i)
purport to affect or pertain to this Agreement or any other Transaction 

 

45

 

Document, or any of the transactions contemplated hereby or thereby; or
(ii) if determined adversely to the Company or its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.  No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Transaction Document, or directing
that the transactions provided for herein or therein not be consummated as
herein or therein provided.

                6.6           No Default. 
No Default or Event of Default exists or would be reasonably expected to
result from the incurring of any Obligations by the Company.  No “Default” or “Event of Default” (as those
terms are defined in the First Lien Credit Agreement or the Senior Notes
Indenture) exists under the First Lien Credit Agreement or the Senior Notes
Indenture, respectively.  Neither the
Company nor any Subsidiary is in default under or with respect to any other
Contractual Obligation in any respect which, individually or together with all
such defaults, would reasonably be expected to have a Material Adverse Effect.

                6.7           ERISA Compliance.  Except as specifically disclosed in Schedule
6.7:

(a)           Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law. 
Each Plan that is intended to be qualified under Code Section 401(a) is
either (i) a prototype plan entitled to rely on the opinion letter issued
by the IRS as to the qualified status of such plan under Section 401 of the
Code to the extent provided in Revenue Procedure 2005-16, or (ii) the
recipient of a determination letter from the IRS to the effect that such Plan
is qualified, and the plans and trusts related thereto are exempt from federal
income Taxes under Sections 401(a) and 501(a), respectively, of the Code.  To the best knowledge of the Company, nothing
has occurred which would cause the loss of such qualification.  The Company and each ERISA Affiliate have
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.

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

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

 

46

 

                6.8           Use of Proceeds; Margin
Regulations.  The proceeds of the
Loans are or were used (as applicable) solely for the purposes set forth in and
permitted by Section 7.13.  Neither the
Company nor any Subsidiary is generally engaged in the business of purchasing
or selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.

                6.9           Title to Properties.  The Company and each Subsidiary have good and
marketable title to the Mortgaged Properties subject only to Permitted Liens,
and, except for such defects in title as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, have good
and marketable title to, or valid leasehold interests in, all other Property
necessary or used in the ordinary conduct of their respective businesses.  The Mortgaged Properties of the Company and
its Subsidiaries are subject to no Liens, other than Permitted Liens.

                6.10         Oil and Gas Reserves.  The Company and each Subsidiary is and will
hereafter be, in all material respects, the owner of the Oil and Gas that it
purports to own from time to time in and under its Oil and Gas Properties,
together with the right to produce the same. 
The Oil and Gas Properties are not subject to any Lien other than as set
forth in the financial statements referred to in Section 6.14, as disclosed in
such financial statements to the Lenders in writing prior to the Effective Time
and Permitted Liens.  All Oil and Gas has
been and will hereafter be produced, sold and delivered by the Company and its
Subsidiaries in accordance in all material respects with all applicable laws and
regulations of every Governmental Authority; each of the Company and its
Subsidiaries has complied in all material respects (from the time of
acquisition by the Company or a Subsidiary) and will hereafter use commercially
reasonable efforts to comply with all material terms of each oil, gas and
mineral lease comprising its Oil and Gas Properties; and all such material oil,
gas and mineral leases under which the Company or a Subsidiary is a lessee or
co-lessee have been and will hereafter be maintained in full force and effect;
provided, however, that nothing in this Section 6.10 shall prevent the Company
or its Subsidiaries from abandoning any well or forfeiting, surrendering or
releasing any lease in the ordinary course of business which is not materially
disadvantageous in any way to the Lenders and which, in the opinion of the
Company or its Subsidiaries, is in its best interest, and following which the
Company and its Subsidiaries are and will hereafter be in compliance with all
obligations hereunder and the other Loan Documents.  To the best of the knowledge of the Company
and its Subsidiaries, all of the Hydrocarbon Interests comprising its Oil and
Gas Properties are and will hereafter be enforceable in all material respects
in accordance with their terms, except as such may be modified by applicable
bankruptcy law or an order of a court in equity.

                6.11         Reserve Report.  The Company has heretofore delivered to the
Administrative Agent a true and complete copy of (x) a report, dated effective
as of January 1, 2006, prepared by Netherland Sewell & Associates, Inc.  (the “Initial
Reserve Report”) covering certain of the Company’s Oil and Gas
Properties located in or offshore California relating to an evaluation of the
Oil and Gas attributable to certain of the Mortgaged Properties described therein
and (y) a report, dated as of December 31, 2005, as amended through the
Restatement Effective Date, prepared by DeGolyer and MacNaughton covering
certain Oil and Gas Properties of the TexCal Subsidiaries (the “TexCal Reserve Report”).  To the best knowledge of the Company, (i) the
assumptions stated or used in the preparation of any Reserve Report are
reasonable, (ii) all information furnished by the Company or any Guarantor to
the Independent Engineer for use in 

 

47

 

the preparation of any Reserve Report was accurate in all material
respects, (iii) there has been no material adverse change in the amount of the
estimated Oil and Gas reserves shown in any Reserve Report since the date
thereof, except for changes which have occurred as a result of production in
the ordinary course of business, and (iv) each Reserve Report does not, in any
case, omit any material statement or information necessary to cause the same
not to be misleading to the Lenders.

                6.12         Gas Imbalances.  Except as disclosed to the Lenders in writing
prior to the Effective Time, there are no gas imbalances, take or pay or other
prepayments with respect to any of the Oil and Gas Properties in excess of
$400,000 in the aggregate which would require the Company or its Subsidiaries
to deliver Oil and Gas produced from any of the Oil and Gas Properties at some
future time without then or thereafter receiving full payment therefor.

                6.13         Taxes.  The Company and its Subsidiaries have filed
all federal Tax returns and reports required to be filed, and have paid all
federal Taxes, assessments, fees and other governmental charges levied or
imposed upon them or their Properties, income or assets otherwise due and
payable, except those which are being contested in good faith by appropriate
proceedings and for which adequate reserves have been provided in accordance
with GAAP.  The Company and its
Subsidiaries have filed all state and other non-federal Tax returns and reports
required to be filed, and have paid all state and other non-federal Taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their Properties, income or assets prior to delinquency thereof, except those
which are being contested in good faith by appropriate proceedings and for
which adequate reserves have been provided in accordance with GAAP.  To the Company’s knowledge, there is no
proposed Tax assessment against the Company or any Subsidiary that would, if
made, reasonably be expected to have a Material Adverse Effect.

                6.14         Financial Statements and Condition.

(a)           The
Audited Financial Statements, the Company’s audited consolidated financial
statements as of and for the year ended December 31, 2005 and the TexCal
Audited Financial Statements (i) were prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, except as
otherwise expressly noted therein; (ii) fairly present in all material respects
the consolidated financial condition of the Company and its Subsidiaries or the
TexCal Subsidiaries, as the case may be, as of the dates thereof and results of
operations for the periods covered thereby; and (iii) except as specifically
disclosed in Schedule 6.14(a) or (A) in the case of the Company and its
Subsidiaries, in the Audited Financial Statements or the Company’s audited
consolidated financial statements as of and for the year ended December 31,
2005 and (B) in the case of the TexCal Subsidiaries, the TexCal Audited
Financial Statements, neither the Company and its Subsidiaries, on the one
hand, nor the TexCal Subsidiaries, on the other hand, respectively, have any
material Indebtedness or other material liabilities, direct or contingent, as
of the Effective Date, including liabilities for Taxes, material commitments or
Contingent Obligations.

(b)           The unaudited pro
forma consolidated balance sheet of the Company and its consolidated
Subsidiaries as of December 31, 2005, and the unaudited pro forma consolidated
statements of income and cash flows of the Company and its Subsidiaries on a
consolidated basis 

 

48

 

for the year ended December 31, 2005 (including the notes thereto)
(collectively, the “Pro Forma
Financial Statements”), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events
had occurred on such date or the beginning of such period) to (i) the TexCal
Acquisition, (ii) the extensions of credit to be made under this Agreement and
the First Lien Credit Agreement prior to or in connection with the TexCal
Acquisition and (iii) the payment of fees and expenses in connection with the
foregoing.  The Pro Forma Financial
Statements have been prepared based on assumptions that the Company believes
are reasonable as of the Effective Time, and present fairly on a pro forma
basis the estimated financial position and results of operations of the Company
and its Subsidiaries on a consolidated basis as at December 31, 2005 and for
the year then ended, assuming that the events specified in the preceding
sentence had actually occurred at such date or at the beginning of such period.

(c)           During
the period from December 31, 2005 to and including the Restatement Effective
Date there has been no Disposition by the Company or any Subsidiaries of any
material part of its business or Property, other than (i) the dividend of the
membership interests in 6267 Carpinteria Avenue, LLC and (ii) Dispositions
permitted by Section 8.2(a), (b), (c), (d) or (e).

(d)           Since
December 31, 2004 through the Effective Time or the Restatement Effective Time
(as applicable), there has been no Material Adverse Effect.

                6.15         Environmental Matters.  Each of the Company and its Subsidiaries
conducts in the ordinary course of business a review of the effect of existing Environmental
Laws and existing Environmental Claims on its business, operations and
Properties, and such Properties which it is acquiring or planning to acquire
and as a result thereof the Company has reasonably concluded that, unless
specifically disclosed in Schedule 6.15, such Environmental Laws and
Environmental Claims would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

                6.16         Regulated Entities.  None of the Company, its Subsidiaries, any
Person controlling the Company, or any Subsidiary, is an “investment company”
within the meaning of the Investment Company Act of 1940.  None of the Company, any Person controlling
the Company or any Subsidiary, is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, the Interstate
Commerce Act, any state public utilities code, or any other federal or state
statute or regulation limiting its ability to incur Indebtedness.

                6.17         No Burdensome Restrictions.  Except as set forth on Schedule 6.17, neither
the Company nor any Subsidiary is a party to or bound by any Contractual
Obligation, or subject to any restriction in any Organization Document, or any
Requirement of Law, which would reasonably be expected to have a Material Adverse
Effect.

                6.18         Copyrights, Patents, Trademarks and
Licenses, etc.  The Company and each
Subsidiary own or are licensed or otherwise have the right to use all of the
material patents, trademarks, service marks, trade names, copyrights,
contractual franchises, authorizations and other rights that are reasonably
necessary for the operation of their respective businesses, without material
conflict with the rights of any other Person. 
To the best knowledge of the Company, no 

 

49

 

slogan or other advertising device, product, process, method,
substance, part or other material now employed, or now contemplated to be
employed, by the Company or any Subsidiary infringes upon any rights held by
any other Person.  Except as specifically
disclosed in Schedule 6.5, no claim or litigation regarding any of the
foregoing is pending or, to the knowledge of the Company, threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Company,
proposed, which, in either case, would reasonably be expected to have a
Material Adverse Effect.

                6.19         Subsidiaries. 
As of the Effective Time and, after giving effect to the TexCal Acquisition
as of the TexCal Closing Time and as of the Restatement Effective Time, the
Company has no Subsidiary other than those specifically disclosed in part (a)
of Schedule 6.19 hereto (and, with respect to the TexCal Closing Time and the
Restatement Effective Time, those specified in Schedule 1.1(c) hereto) and has
no material equity investments in any other Person other than those
specifically disclosed in part (b) of Schedule 6.19.

                6.20         Insurance.  The Properties of the Company and each
Subsidiary are insured with financially sound and reputable insurance companies
that are not Affiliates of the Company, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in
similar businesses and owning similar Properties in localities where the
Company or such Subsidiary operates. 
Such insurance is primary and not contributing.

                6.21         Full Disclosure.  None of the representations or warranties
made by the Company or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, written statement or certificate
furnished by or on behalf of the Company or any Subsidiary in connection with
the Loan Documents, taken as whole, contains any untrue statement of a material
fact known to the Company or omits any material fact known to the Company
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they are made, not misleading as of
the time when made or delivered.

                6.22         Solvency.  The
Company and its Subsidiaries, taken as a whole are, and the Company,
individually, and each Guarantor, and after giving effect to (a) the TexCal
Acquisition and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith, and (b) all rights of
contribution of such Person against other Loan Parties under the Guaranty, at
law, in equity or otherwise, will be and will continue to be, Solvent.

                6.23         Labor Matters.  Except to the extent such matters do not to
constitute a Material Adverse Effect, (a) no actual or threatened strikes,
labor disputes, slowdowns, walkouts, work stoppages, or other concerted
interruptions of operations that involve any employees employed at any time in
connection with the business activities or operations at the Property of the
Company or any Subsidiary exist, (b) hours worked by and payment made to the
employees of the Company have not been in violation of the Fair Labor Standards
Act
or any other applicable laws pertaining to labor matters, (c) all payments due
from the Company or any Subsidiary for employee health and welfare insurance,
including, without limitation, workers compensation insurance, have been paid
or accrued as a liability on its books, and (d) except as set forth in Item 3
of Schedule 6.5, the business activities and
operations of the Company and each Subsidiary are in compliance with the
Occupational Safety and Health Act and other applicable health and 

 

50

 

safety laws.

                6.24         Downstream Contracts.  The Company’s marketing, gathering,
transportation, processing and treating facilities and equipment, together with
any marketing, gathering, transportation, processing and treating contracts in
effect among, inter alia, Company and any other Person, are, except as set
forth on Schedule 6.24, sufficient to
market, gather, transport, process or treat, as applicable, reasonably
anticipated volumes of production of Oil and Gas from the Company’s Oil and Gas
Properties.  Any such contracts with
Affiliates are disclosed on Schedule 6.24 hereto.

                6.25         Derivative Contracts. 
Neither the Company nor any Subsidiary is party to any Derivative
Contract other than (a) as of the Effective Time, the Existing Derivative
Contracts or (b) after the Effective Time, Derivative Contracts permitted
by Sections 7.15 or 8.10.

                6.26         Ellwood Subsidiary. 
Ellwood (a) has not engaged in any business other than the ownership and
operation of common carrier crude oil pipelines and (b) as a result of
Requirements of Law in effect as of the Effective Date and as of the
Restatement Effective Time, is prevented from duly executing and delivering to
the Administrative Agent and the Lenders a Guaranty (or a joinder thereto) or
the Security Agreement (or a joinder thereto).

                6.27         Senior Notes Indenture.  The Obligations incurred in connection with
the Loan Documents, after giving effect to the transactions and extensions of
credit contemplated hereby, including the TexCal Acquisition, (a) constitute “Senior
Debt”, as defined in the Senior Notes Indenture and (b) constitutes
Indebtedness (as defined in the Senior Notes Indenture) that is permitted to be
incurred under the Indenture pursuant to Section 3.3(a) of the Senior Notes
Indenture.  The Senior Notes and the
Senior Note Subsidiary Guarantees are secured by the Liens granted under the
Security Documents on an “equal and ratable” basis with the Liens securing the
Obligations.

                6.28         Existing Indebtedness.  Other than Permitted Indebtedness, after
giving effect to the transactions contemplated hereby, including the TexCal
Acquisition, no Loan Party has any Indebtedness or Disqualified Stock
outstanding.

                6.29         TexCal Acquisition Documents.  The TexCal Acquisition Documents listed on
Schedule 6.29 constitute all of the material agreements, instruments and
undertakings with TexCal Energy or its Affiliates to which the Company or any
of its Subsidiaries is bound or by which such Person or any of its property or
assets is bound or affected relating to the TexCal Acquisition (other than
agreements, instruments or undertakings of TexCal and its Subsidiaries existing
prior to the completion of the TexCal Acquisition).

                6.30         Security Documents.

(a)           The Security
Agreement is effective to create in favor of the Collateral Trustee, for the
benefit of the Secured Parties, a legal, valid, binding and enforceable
security interest in the Collateral described therein and proceeds and products
thereof.  In the case of the Pledged
Stock described in the Security Agreement, when any stock certificates
representing such Pledged Stock are delivered to the First Lien Credit Agent,
as agent and bailee for the Collateral Trustee, and in the case of the other Collateral
described in the Security Agreement, 

 

51

 

when financing statements in appropriate form are filed in the offices
specified on Schedule 6.30(a)-1 (which financing statements may be filed
by the Collateral Trustee) at any time and such other filings as are specified
on Schedule 3 to the Security Agreement have been completed (all of which
filings may be filed by the Collateral Trustee) at any time, the Security
Agreement shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in such Collateral and the
proceeds and products thereof, as security for the Sharing Obligations, in each
case prior and superior in right to any other Person (except Permitted
Liens).  Schedule 6.30(a)-2 lists each
UCC financing statement that (i) names any Loan Party as debtor and (ii)
remains on file at the Restatement Effective Time.  Schedule 6.30(a)-3 lists each UCC financing
statement that (i) names any Loan Party as debtor and (ii) was terminated at or
promptly after the Effective Time or the TexCal Closing Time (as applicable).

(b)           Each of the
Mortgages is effective to create in favor of the Collateral Trustee, for the
benefit of the Secured Parties, a legal, valid, binding and enforceable Lien on
the Mortgaged Properties described therein and proceeds and products thereof;
and when the Mortgages are filed in the offices specified on
Schedule 6.30(b) (in the case of Mortgages to be executed and delivered on
the Effective Date or the TexCal Closing Time (as applicable)) or in the
recording office designated by the Company (in the case of any Mortgage to be
executed and delivered pursuant to Section 7.14(b)), each Mortgage shall
constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in the Mortgaged Properties described
therein and the proceeds and products thereof, as security for the Sharing
Obligations, in each case prior and superior in right to any other Person
(other than Persons holding Liens or other encumbrances or rights permitted by
the relevant Mortgage).

ARTICLE VII

AFFIRMATIVE
COVENANTS

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

                7.1           Financial Statements.  The Company and each Guarantor shall, and
shall cause each of its Subsidiaries to, (i) maintain for itself and each of
its respective Subsidiaries, on a consolidated basis a system of accounting
established and administered in accordance with GAAP and (ii) deliver to the
Administrative Agent who will make available to each Lender:

(a)           as
soon as available, not later than 90 days after the end of each fiscal year, a
copy of the annual audited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such year, and the related consolidated
statements of operations and retained earnings, comprehensive income and cash
flows for such year, setting forth in each case in comparative form the figures
for the previous fiscal year; the Company’s financial statements shall be
accompanied by the unqualified opinion (or, if qualified, of a non-material
nature (e.g. FASB changes of accounting principles) or nothing indicative of
going concern or material misrepresentation nature) and a copy of the
management letter of Deloitte & Touche LLP or other nationally recognized
independent public accounting firm acceptable to the Administrative Agent (the “Independent Auditor”), which report shall state that
such consolidated financial 

 

52

 

statements present fairly in all material respects the consolidated
financial position of the Company and its Subsidiaries at the end of such
periods and the results of their operations and their cash flows for the
periods indicated in conformity with GAAP; and

(b)           as
soon as available, but not later than 60 days after the close of each of the
first three quarterly periods, a copy of the unaudited consolidated balance
sheet of the Company as of the end of such quarter and the related consolidated
statements of operations and retained earnings, comprehensive income and cash
flows for the period commencing on the first day and ending on the last day of
such period, setting forth in each case in comprehensive form the figures for
the comparable period in the previous fiscal year and certified by a
Responsible Officer as fairly presenting in all material respects, in
accordance with GAAP (subject to normal and recurring year-end audit adjustments),
the consolidated financial position of the Company and its Subsidiaries at the
end of such periods and the results of their operations and their cash flows.

                7.2           Certificates; Other Production and
Reserve Information.  The Company
shall furnish to the Administrative Agent, who will make available to each
Lender:

(a)           as
soon as available, but not later than 60 days after the close of each quarter,
a Quarterly Status Report in a form reasonably acceptable to the Administrative
Agent, as of the last day of the immediately preceding quarter;

(b)           concurrently
with the delivery of the financial statements referred to in Sections 7.1(a)
and (b), and the reports referred to in Section 7.2(a), a Compliance
Certificate executed by a Responsible Officer;

(c)           on or before (i)
April 1, effective as of January 1, of each year during the term of this
Agreement, a Reserve Report prepared by Ryder Scott Co. L.P., Netherland Sewell
& Associates, Inc., DeGolyer and MacNaughton or other independent petroleum
engineer acceptable to the Administrative Agent (the “Independent
Engineer”) and (ii) October 1, effective as of July 1, of each
year during the term of this Agreement, a Reserve Report prepared by the
Company in substantially the same form as the January 1 Reserve Report and
certified by a Responsible Officer as true and correct in all material
respects, in each case in form and substance reasonably acceptable to the
Administrative Agent;

(d)           promptly
upon the request of the Administrative Agent, at the request of any Lender,
such copies of all geological, engineering and related data contained in the
Company’s files or readily accessible to the Company relating to its and its
Subsidiaries’ Oil and Gas Properties as may reasonably be requested;

(e)           on
request by the Administrative Agent, based upon the Administrative Agent’s or
the Required Lenders’ good faith belief that the Company’s or its Subsidiaries’
title to the Mortgaged Properties or the Administrative Agent’s Lien thereon is
subject to claims of third parties, or if required by regulations to which the
Administrative Agent or any of the Lenders is subject, title and mortgage Lien
evidence satisfactory to the Administrative Agent covering such Mortgaged
Property as may be designated by the Administrative Agent, covering the Company’s
or its Subsidiaries’ title thereto and evidencing that the Obligations are
secured by Liens and 

 

53

 

security interests as provided in this Agreement and the Security
Documents;

(f)            promptly
upon its completion in each fiscal year of the Company commencing with the 2006
fiscal year through and including the 2011 fiscal year, and not later than
January 30 of each such fiscal year, a copy of the annual budget of the Company
and its Subsidiaries on a consolidated basis for such fiscal year, projecting
total Oil and Gas revenue, total revenue, total operating costs and expenses,
Consolidated Net Income, Consolidated Interest Expense, Consolidated EBITDA and
total capital expenditures, by fiscal quarter;

(g)           simultaneously
with transmission thereof, such notices, certificates, documents and
information (other than interest rate elections relating to the selection of
the LIBO Rate (as defined in the First Lien Credit Agreement) and routine correspondence
and other communications) as any Loan Party may furnish the Indenture Trustee
or any holders of Senior Notes, the First Lien Credit Agent or any First Lien
Credit Lender;

(h)           no
later than ten Business Days prior to the effectiveness thereof, copies of
substantially final drafts of any proposed amendment, supplement, waiver or
other modification in respect of any First Lien Credit Document or Senior Note
Debt Document, or any agreements, instruments or other documents in respect of
the termination, replacement or refinancing thereof; and

(i)            promptly,
such additional information regarding the business, financial or corporate
affairs of the Company or any Subsidiary as the Administrative Agent, at the
request of any Lender, may from time to time reasonably request.

                7.3           Notices.  The Company shall promptly notify the
Administrative Agent and each Lender in writing:

(a)           of
the occurrence of any Default or Event of Default, and of the occurrence or
existence of any event or circumstance that would reasonably be expected to
become a Default or Event of Default;

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

(c)           of
any material change in accounting policies or financial reporting practices by
the Company or any of its consolidated Subsidiaries;

(d)           of
the formation or acquisition of any Subsidiary;

(e)           of
any new plugging bond or performance bond issued for the account of the Company
or any of its Subsidiaries if the uninsured portion of the obligation
underlying such bond is greater than or equal to $6,000,000; and

 

54

 

(f)            any
proposed amendment, supplement, waiver or other modification to, or in respect
of, or the proposed termination, replacement or refinancing of, any of the
First Lien Credit Documents or Senior Note Debt Documents.

Each notice under this Section 7.3 shall be
accompanied by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what action the
Company or any affected Subsidiary proposes to take with respect thereto and at
what time.  Each notice under Section
7.3(a) shall describe with particularity any and all clauses or provisions of
this Agreement or other Loan Document that have been (or foreseeably will be)
breached or violated.

                7.4           Preservation of Company Existence, Etc.  The Company and each Guarantor shall, and
shall cause each of its respective Subsidiaries to:

(a)           preserve
and maintain in full force and effect its legal existence, and maintain its
good standing under the laws of its state or jurisdiction of formation except
where the failure to do so would not reasonably be expected to have a Material
Adverse Effect;

(b)           preserve
and maintain in full force and effect all governmental rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the
normal conduct of its business except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect;

(c)           use
reasonable efforts, in the ordinary course of business, to preserve its
business organization and goodwill except where the failure to do so would not
reasonably be expected to have a Material Adverse Effect; and

(d)           preserve
or renew all of its registered patents, trademarks, trade names and service
marks, the non preservation of which would reasonably be expected to have a
Material Adverse Effect.

                7.5           Maintenance of Property.  The Company and each Guarantor shall, and
shall cause each of its respective Subsidiaries to, maintain and preserve all
its Property which is used or useful in its business in good working order and
condition, ordinary wear and tear excepted and to use the standard of care
typical in the industry in the operation and maintenance of its facilities
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect; provided, however, that nothing in this Section 7.5
shall prevent the Company or any of its Subsidiaries from abandoning any well
or forfeiting, surrendering or releasing any lease in the ordinary course of
business which is not materially disadvantageous in any way to the Lenders and
which, in its opinion, is in the best interest of the Company, and following
which the Company and each of its Subsidiaries is and will hereafter be in
compliance with all obligations hereunder and the other Loan Documents.

                7.6           Insurance. 
The Company and each Guarantor shall, and shall cause each of its
respective Subsidiaries to, maintain, with financially sound and reputable
independent insurers, insurance with respect to its Properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other 

 

55

 

Persons
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect.  Such insurance
will be primary and not contributing.

                7.7           Payment of Obligations.  Unless being contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP are being
maintained by the Company or such Subsidiary, the Company and each Guarantor
shall, and shall cause each of its respective Subsidiaries to, pay and
discharge prior to delinquency, all their respective obligations and
liabilities, including: (a) all Tax liabilities, assessments and governmental
charges or levies upon it or its Properties or assets; (b) all lawful claims
which, if unpaid, would by law become a Lien upon its Property; and (c) all
Indebtedness, as and when due and payable, but subject to any subordination
provisions contained in any instrument or agreement evidencing such Indebtedness;
except where the failure to do so would not reasonably be expected to have a
Material Adverse Effect.

                7.8           Compliance with Laws.  The Company and each Guarantor shall, and
shall cause each of its respective Subsidiaries to, comply in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair Labor
Standards Act), including with respect to the transactions contemplated by the
TexCal Acquisition, except (a) such as may be contested in good faith or as to
which a bona fide dispute may exist or (b) where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.

                7.9           Compliance with ERISA.  The Company and each Guarantor shall, and
shall cause each of its ERISA Affiliates to: (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other federal or state law; (b) cause each Plan which is qualified
under Section 401(a) of the Code to maintain such qualification; and (c) make
all required contributions to any Plan subject to Section 412 of the Code.

                7.10         Inspection of Property and Books and Records.  The Company and each Guarantor shall, and
shall cause each of its respective Subsidiaries to, maintain proper books of
record and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions and
matters involving the assets and business of the Company and such
Subsidiaries.  The Company and each
Guarantor shall, and shall cause each of its respective Subsidiaries to, permit
representatives and independent contractors of the Administrative Agent or any
Lender to visit and inspect any of their respective Properties, to examine
their respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective managers, directors, officers, and
independent public accountants, all at the expense of the Company and at such
reasonable times during normal business hours and as often as may be reasonably
desired, upon reasonable advance notice to the Company; provided, however, when
an Event of Default exists the Administrative Agent or any Lender may do any of
the foregoing at the expense of the Company at any time during normal business
hours and without advance notice.

                7.11         Environmental Laws. 
The Company and each Guarantor shall, and shall cause each of its
respective Subsidiaries to, conduct its respective operations and keep and
maintain 

 

56

 

their
respective Properties in compliance with all Environmental Laws, except where
the failure to do so would not reasonably be expected to have a Material
Adverse Effect.

                7.12         New Subsidiary Guarantors.  If, at any time after the Effective Date,
there exists any Subsidiary with total assets with a book value of $100,000 or
more, then the Company and each Guarantor shall, and shall cause each of its
respective Subsidiaries to, on the date any such Subsidiary is acquired or
acquires or otherwise becomes possessed of such amount of total assets, (a)
cause each such Subsidiary (excluding Ellwood) to execute and deliver the
Guaranty (or a joinder thereto) to the Administrative Agent and the Security
Agreement to the Collateral Trustee, (b) pledge to the Collateral Trustee for
the benefit of the Secured Parties all of the outstanding Capital Stock thereof
pursuant to a Security Document satisfactory to the Administrative Agent, to be
held by the First Lien Credit Agent on behalf of itself, for the benefit of the
First Lien Secured Parties, and the Collateral Trustee, for the benefit of the
Secured Parties, and (c) cause such Subsidiary to execute and deliver such
Security Documents as may be required pursuant to Sections 4.2, 4.5(a) or
7.14(b).  Upon the execution and delivery
by any Subsidiary of a Guaranty, such Subsidiary shall automatically and
immediately, and without any further action on the part of any Person, (i)
become a Guarantor for all purposes of this Agreement and (ii) be deemed to
have made the representations and warranties, as applied to and including such
new Subsidiary from and after such time, set forth in this Agreement.

                7.13         Use of Proceeds. 
The Company and each Guarantor shall, and shall cause each of its
respective Subsidiaries to, use, or cause to be used, the proceeds of the Loans
only for the following purposes: (i) at the TexCal Closing Time, together with
approximately $160,000,000 in
proceeds of the First Lien Loans, to pay the Closing Date Merger Consideration
(as defined in the TexCal Acquisition Agreement) for the TexCal Acquisition
(other than fees and expenses described in (ii) below) in an aggregate amount
not to exceed $485,000,000; (ii) to pay fees and expenses incurred in
connection with the TexCal Acquisition; (iii) to fund the acquisition,
exploration and development of Hydrocarbon Interests; (iv) the acquisition of
the real Property described in Section 8.2(h) for a cash purchase price not to
exceed $300,000; and (v) for working capital and other general corporate
purposes.

                7.14         Further Assurances.

(a)           The Company and each
Guarantor shall, and shall cause each of its respective Subsidiaries to,
promptly (and in no event later than twenty (20) days after becoming aware of
the need therefor) cure any defects in the creation and issuance of the Notes
and the execution and delivery of this Agreement, the Security Documents or any
other instruments referred to or mentioned herein or therein.  The Company and each Guarantor shall, and
shall cause each of its respective Subsidiaries to, at the Company’s expense,
promptly (and in no event later than twenty (20) days after becoming aware of
the need therefor) do all acts and things, and will execute and file or record,
all instruments reasonably requested by the Administrative Agent, to establish,
perfect, maintain and continue the perfected security interest of the Lenders
in or the Lien of the Lenders on the Mortgaged Properties.

(b)           The Company shall promptly (and in no
event later than ten (10) Business Days after the need arises) execute and
cause its Subsidiaries that are Guarantors to execute such additional Security
Documents in form and substance satisfactory to Administrative Agent, 

 

57

 

granting to the
Collateral Trustee, for the benefit of the Secured Parties, fully perfected
Liens on Oil and Gas Properties that are not then part of the Mortgaged
Properties, subject only to the Liens securing the Collateral in respect of the
First Lien Credit Documents (the “First Liens”) and other Permitted Liens,
sufficient to cause the Mortgaged Properties to include at all times
eighty-five percent (85%) of the Net Present Value of the Proved Reserves and
at least ninety-five percent (95%) of the Net Present Value of the Proved
Developed Producing Reserves, in each case as set forth in the most recent
Reserve Report.  In addition, the Company
and each Guarantor shall, and shall cause each of its respective Subsidiaries
to, furnish to the Administrative Agent title due diligence in form and
substance satisfactory to the Administrative Agent and will furnish all other
documents and information relating to such Mortgaged Properties as the
Administrative Agent may reasonably request. 
The Company shall pay the costs and expenses of all filings and
recordings and all searches deemed necessary by the Administrative Agent to
establish and determine the validity and the priority of the Liens created or
intended to be created by the Security Documents; and the Company and each
Guarantor shall, and shall cause each of its respective Subsidiaries to,
satisfy all other claims and charges which in the reasonable opinion of the
Administrative Agent might prejudice, impair or otherwise affect any of the
Mortgaged Properties or the Lien thereon of the Collateral Trustee, for the
benefit of the Secured Parties.

(c)           With respect to any
Property acquired after the Effective Date by the Company or any of its
Subsidiaries as to which the Collateral Trustee, for the benefit of the Secured
Parties, does not otherwise have fully perfected Liens subject only to the
First Liens, promptly (and in no event later than twenty (20) days after
becoming aware of the need therefor) take all actions necessary or advisable to
grant to the Collateral Trustee, for the benefit of the Secured Parties, fully
perfected security interest subject only to the First Liens and other Permitted
Liens in such Property, including without limitation, the filing of UCC
financing statements in such jurisdictions as may be required by the Security
Documents or by law or as may be requested by the Administrative Agent.

                7.15         Hedging Program. 
As of the Effective Date, the Company has entered into or caused its
Subsidiaries to enter into, and shall maintain at all times thereafter during
the relevant period, Derivative Contracts for the purpose of hedging prices on
the Oil and Gas thereafter expected to be produced by the Company or any of its
Subsidiaries, which contracts shall (a) at all times through the third
anniversary of the Effective Date cover not less than 50% of the Company’s and
its Subsidiaries’ aggregate Projected Oil and Gas Production anticipated to be
sold in the ordinary course of such Persons’ business during such three-year
period, (b) thereafter, roll forward on a semi-annual basis in order to cover
not less than 50% of the Company’s and its Subsidiaries’ aggregated Projected
Oil and Gas Production anticipated to be sold in the ordinary course of such
Person’s business during the ensuing four fiscal quarters and (c) otherwise be
in form and substance reasonably acceptable to the Administrative Agent.  As used in this Agreement, the term “Projected Oil and Gas Production”
means the projected production of oil or gas (measured by volume unit or BTU
equivalent, not sales price) for the term of the contracts or a particular
half-year, as applicable, from Oil and Gas Properties and interests owned by the
Company and its Subsidiaries which have attributable to them Proved Developed
Producing Reserves, as such production is projected in the most recent Reserve
Report delivered pursuant to Section 7.2(c), after deducting projected
production from any Oil and Gas Properties sold or under contract for sale that
had been included in such report and after 

 

58

 

adding
projected production from any Oil and Gas Properties or Hydrocarbon Interests
that had not been reflected in such report but that are reflected in a separate
or supplemental reports prepared on the same basis as the reports delivered
pursuant to Section 7.2(c) above and otherwise are satisfactory to the
Administrative Agent.  The Company shall
provide copies to the Administrative Agent of all Derivative Contracts then in
effect not later than January 1 and July 1 of each year beginning July 1, 2006.

                7.16         TexCal Acquisition. 
The TexCal Acquisition has been consummated on the terms described in
the TexCal Acquisition Agreement.

ARTICLE VIII

NEGATIVE
COVENANTS

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

                8.1           Limitation on Liens.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
make, create, incur, assume or suffer to exist any Lien upon or with respect to
any part of its Property, whether now owned or hereafter acquired, other than
the following:

(a)           any
Lien on Property of the Company or any Subsidiary as set forth in Schedule 8.1
securing Indebtedness outstanding on the Effective Date;

(b)           any
Lien created under any Loan Document;

(c)           Liens
for Taxes, fees, assessments or other governmental charges which are not
delinquent or remain payable without penalty, or to the extent that non payment
thereof is permitted by Section 7.7;

(d)           carriers’,
warehousemen’s, mechanics’, landlords’, materialmen’s, repairmen’s or other
similar Liens arising in the ordinary course of business (whether by law or by
contract) which are not delinquent or remain payable without penalty or which
are being contested in good faith and by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
Property subject thereto;

(e)           Liens
consisting of pledges or deposits required in the ordinary course of business
in connection with workers’ compensation, unemployment insurance and other
social security legislation;

(f)            easements,
rights of way, restrictions, defects or other exceptions to title and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, are not incurred to secure
Indebtedness, and which do not in any case materially detract from the value of
the Property subject thereto or interfere with the ordinary conduct of the
businesses of the Company, the Guarantors and their respective Subsidiaries;

 

59

 

(g)           Liens
on the Property of the Company, any Guarantor or any Subsidiary of such Person
securing (i) the non-delinquent performance of bids, trade contracts (other
than for borrowed money) or statutory obligations, (ii) Contingent Obligations
on surety and appeal bonds, and (iii) other non-delinquent obligations of a
like nature; in each case, incurred in the ordinary course of business;

(h)           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 as to deposit accounts or
other funds maintained with a creditor depository institution or under any
deposit account agreement entered into in the ordinary course of business;
provided, however, that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
Company, (ii) the Company (or applicable Subsidiary) maintains (subject to such
right of set off) dominion and control over such account(s), and (iii) such
deposit account is not intended by the Company, any Guarantor or any Subsidiary
to provide cash collateral to the depository institution;

(i)            Oil
and Gas Liens to secure obligations which are not delinquent and which do not
in any case materially detract from the value of the Oil and Gas Property
subject thereto;

(j)            Liens on the
Collateral securing the First Lien Obligations; provided, however, that such
Liens are subject to the Intercreditor Agreement; and

(k)           Liens not otherwise
permitted pursuant to this Section 8.1 securing Permitted Indebtedness to the
extent that the aggregate principal amount of the obligations of the Loan
Parties secured thereby does not exceed $5,000,000 at any one time outstanding.

                8.2           Disposition of Assets.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
sell, assign, lease, convey, transfer or otherwise dispose of (whether in one
or a series of transactions) (collectively, “Dispositions”)
any Property (including accounts and notes receivable, with or without
recourse) or enter into any agreement to do any of the foregoing, except:

(a)           as
permitted under Sections 6.10, 7.5, 8.3, 8.4, or 8.10;

(b)           Dispositions
of inventory including produced Oil and Gas in the ordinary course of business;

(c)           Dispositions
among the Company and wholly-owned Subsidiaries which are Guarantors;

(d)           used,
worn out or surplus equipment in the ordinary course of business;

(e)           Dispositions
of accounts and notes receivable in the ordinary course of business consistent
with past practices;

(f)            Dispositions
of interests in Oil and Gas Properties, or portions thereof, that are sold for
fair cash consideration (considering any net production proceeds from the
effective

 

60

 

date of any such Disposition to the closing thereof that are credited
against the purchase price payable at such closing as Net Cash Proceeds
received by the Company or such Guarantor); provided, however, that the
aggregate sales prices (as of the
effective date of each particular Disposition) for Dispositions made pursuant
to this Section 8.2(f) during any Borrowing Base Period (as defined in the
First Lien Credit Agreement as in effect on the Effective Date) shall not
exceed five percent (5%) of the present value of the future cash flows from
Proved Reserves included in the Oil and Gas Properties as set forth in the most
recent Reserve Report delivered pursuant to Section 6.11 or 7.2(c);

(g)           Dispositions of
interests in the Oil and Gas Properties listed on Schedule 8.2, or portions
thereof, that are sold for fair cash consideration (considering any net
production proceeds from the effective date of any such Disposition to the
closing thereof that are credited against the purchase price payable at such closing
as Net Cash Proceeds received by the Company or such Guarantor), each of which
were acquired as a result of the TexCal Acquisition;

(h)           the Disposition of a
50% undivided interest in approximately ten acres of real Property located in
Carpinteria, California, which interest may hereafter be acquired by the
Company from ExxonMobil Corporation or an Affiliate thereof; or

(i)            the dividend of the
Company’s interest in real Property located in Carpinteria, California (the “Carpinteria Bluffs Dividend”)
and the dividend of the Company’s interest in real Property located in Ventura
County, California (the “Ventura
Dividend”), none of which constitutes Oil and Gas Properties.

                8.3           Consolidations and Mergers.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
merge, consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except:

(a)           any
Guarantor may merge with the Company or another Guarantor; provided, however,
that the Company shall be the continuing or surviving corporation in the case
of a merger involving the Company;

(b)           any
Subsidiary that is not a Guarantor may merge with the Company or a Guarantor;
provided, however, that the Company or such Guarantor shall be the continuing
or surviving corporation in the case of a merger involving the Company or a
Guarantor;

(c)           any
Guarantor or other Subsidiary may make Dispositions to the Company or another
Guarantor; and

(d)           Bicycle
Acquisition Company, LLC may be merged with and into TexCal Energy in
consummation of the TexCal Acquisition.

                8.4           Loans and Investments.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisitions, or 

 

61

 

make or commit to make any advance, loan, extension of credit or
capital contribution to or any other investment in, any Person, including any
Affiliate of the Company, except for:

(a)           investments
in Cash Equivalents;

(b)           extensions
of credit in the nature of accounts receivable or notes receivable arising from
the sale or lease of goods or services in the ordinary course of business;

(c)           investments in
Guarantors that are directly or indirectly wholly-owned Subsidiaries of the
Company;

(d)           investments
in Derivative Contracts permitted under Section 8.10;

(e)           investments
resulting from transactions specifically permitted under Section 8.3;

(f)            investments
with third parties that are (i) customary in the oil and gas business, (ii)
made in the ordinary course of the Company’s business, and (iii) made in the
form of or pursuant to operating agreements, processing agreements, farm-in
agreements, farm-out agreements, joint venture agreements, development
agreements, unitization agreements, pooling agreements, joint bidding
agreements, service contracts and other similar agreements that do not, in any
case, (x) constitute an investment in any state law partnership or other Person
or (y) involve the Disposition of any Mortgaged Property covering Proved
Reserves;

(g)           advances
by the Company to any of its full-time employees for housing loans and for the
payment of relocation expenses which do not exceed $2,000,000 at any time
outstanding in the aggregate to all such employees;

(h)           acquisitions
of proved Hydrocarbon Interests and related assets;

(i)            provided that there
shall not have occurred and be continuing a Default hereunder, and no such
Default would result therefrom, the Company may make cash investments in
Ellwood not to exceed an aggregate amount of $2,000,000 in any fiscal year;

(j)            the TexCal
Acquisition; and

(k)           in addition to
investments otherwise expressly permitted by this Section 8.4, other
investments of the Loan Parties not to exceed $10,000,000 in the aggregate at
any time outstanding.

                8.5           Limitation on Indebtedness.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
create, incur, assume, suffer to exist, or otherwise become or remain liable
with respect to, any Indebtedness, except (collectively, “Permitted
Indebtedness”):

(a)           Indebtedness
incurred pursuant to this Agreement;

(b)           Indebtedness
incurred pursuant to the First Lien Credit Agreement;

 

62

 

(c)           Indebtedness
consisting of Contingent Obligations permitted pursuant to Section 8.8;

(d)           [intentionally
omitted];

(e)           in addition to the
Indebtedness otherwise permitted under this Section 8.5, Indebtedness described
in the definition thereof of the Loan Parties not to exceed $10,000,000 in the aggregate at any time
outstanding;

(f)            Indebtedness
represented by the Senior Notes and the Senior Notes Indenture in an aggregate
principal amount not to exceed $150,000,000; and

(g)           in addition to the
Indebtedness otherwise permitted under this Section 8.5, Indebtedness of the
Company and the Guarantors for borrowed money (including, for the avoidance of
doubt, Indebtedness incurred under the Senior Notes Indenture in addition to
the Indebtedness set forth in Section 8.5(f)) that is unsecured not to exceed
$200,000,000 in the aggregate at any time outstanding; provided, however, that
(i) the Company and its Subsidiaries are in pro forma compliance (after giving
effect to the incurrence of such Indebtedness) with the financial covenants set
forth in Sections 8.12, 8.13, 8.14 and 8.15, recomputed as at the last day of
the most recently ended fiscal quarter of the Company for which financial
statements are available, (ii) no Default or Event of Default (x) shall have
occurred and be continuing at the time of incurrence thereof or (y) would
result therefrom, (iii) such Indebtedness shall mature at least six months
after the Maturity Date and shall require no scheduled payment of principal
(including any payment at the option of the holders of such Indebtedness and
any payment pursuant a sinking fund obligation) prior to the date that is at
least six months after the Maturity Date and (iv) the other terms of such
Indebtedness shall be reasonably satisfactory to the Administrative Agent.

                8.6           Transactions with Affiliates.  Except as set forth on Schedule 8.6 and for
the Optionee Payment, the Company and each Guarantor shall not, and shall not
permit any of its respective Subsidiaries to, directly or indirectly, enter
into any transaction with or make any payment or transfer to any Affiliate of
the Company or its shareholders, except in the ordinary course of business and
upon fair and reasonable terms no less favorable to the Company, such Guarantor
or such Subsidiary than would obtain in a comparable arm’s length transaction
with a Person not an Affiliate of the Company, such Guarantor or such Subsidiary
or to the extent permitted under Sections 8.2(h), 8.2(i), 8.8(g), or 8.9.

                8.7           Margin Stock.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
suffer or permit any Subsidiary to, use any portion of the proceeds of the
Loans (i) to purchase or carry Margin Stock, (ii) to repay or otherwise
refinance Indebtedness of the Company or others incurred to purchase or carry
Margin Stock, (iii) to extend credit for the purpose of purchasing or carrying
any Margin Stock, or (iv) to acquire any security in any transaction that is
subject to Section 13 or 15(d) of the Exchange Act.

                8.8           Contingent Obligations.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
create, incur, assume or suffer to exist any Contingent Obligations except:

 

63

 

(a)           endorsements
for collection or deposit in the ordinary course of business;

(b)           Derivative
Contracts permitted under Section 8.10 hereof;

(c)           obligations
under plugging bonds, performance bonds and fidelity bonds issued for the
account of the Company or its Subsidiaries, obligations to indemnify or make
whole any surety and similar agreements incurred in the ordinary course of
business and obligations of the Company under the Purchase and Sale Agreement
dated November 4, 1998, as amended by the First Amendment to Purchase and Sale
Agreement dated January 13, 1999, among the Company, Ellwood, Chevron U.S.A.,
Inc. and Chevron Pipeline Company;

(d)           this
Agreement and each Guaranty;

(e)           the Real Estate
Contingent Obligations;

(f)            Guaranty
Obligations of the Guarantors under or in respect of (i) the First Lien Credit
Documents, (ii) the Senior Note Debt Documents and (iii) Indebtedness incurred
pursuant to Section 8.5(e);

(g)           indemnity
obligations of the Company under the Purchase and Sale Agreement dated as of
December 3, 2004 among the Company and the members of Marquez Energy, LLC;

(h)           obligations of the
TexCal Subsidiaries in respect of “Assumed Liabilities” as such term is defined
in the Purchase and Sale Agreement dated as of August 20, 2004 among Tri-Union
Development Corporation and Tri-Union Operating Company, as Sellers and TexCal
Energy, as Purchaser; and

(i)            Guaranty
Obligations of the Guarantors under or in respect of Permitted Indebtedness
described in Section 8.5(g), which obligations are unsecured.

                8.9           Restricted Payments.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
(i) purchase, redeem or otherwise acquire for value any of its Capital Stock,
now or hereafter outstanding from the holders thereof (other than from such
holders that are Loan Parties); (ii) declare or pay any distribution, dividend
or return capital to its members, partners or stockholders or holders of
warrants, rights or options to acquire its membership interests, partnership
interests or shares (other than to such Persons that are Loan Parties), or make
any distribution of assets in cash or in kind to its members, partners,
stockholders or holders of warrants, rights or options to acquire its
membership interests, partnership interests or shares (other than to such
Persons that are Loan Parties); or (iii) make any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Indebtedness (A) outstanding under
or in respect of the Senior Notes Indenture or (B) constituting Permitted
Indebtedness under clause (g) of the definition of “Permitted Indebtedness”
(collectively “Restricted Payments”); provided,
however,
that the Company may (w) make regularly scheduled payments of interest or
mandatory prepayments in respect of Indebtedness constituting Permitted
Indebtedness under clause (g) of the definition of “Permitted Indebtedness”,
but only to the extent required by the 

 

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agreement or document governing such Indebtedness; (x) make regularly
scheduled payments of interest or mandatory prepayments in respect of
Indebtedness under or in respect of the Senior Notes Indenture in accordance
with the terms of the Senior Notes Indenture and the Intercreditor Agreement,
but only to the extent required by the Senior Notes Indenture; (y) make optional prepayments in respect of
any (1) Senior Note Debt Instrument or (2) Indebtedness constituting
Permitted Indebtedness under clause (g) of the definition of “Permitted
Indebtedness”, in the case of (1) or (2), using the Net Cash Proceeds of an “Equity Offering” (as defined in the
Senior Notes Indenture); and (z) declare and pay the Carpinteria Bluffs
Dividend and the Ventura Dividend; provided,
further, however that, in the case of any Restricted
Payments permitted under clauses (w), (x) and (z) and, in respect of
prepayments with respect to the Senior Notes Indenture or Indebtedness
constituting Permitted Indebtedness under clause (g) of the definition of “Permitted
Indebtedness”, Restricted Payments permitted under clauses (w), (x) and (y),
(A) no Default has occurred and is continuing and (B) no such payment shall
cause a Default.

                8.10         Derivative Contracts.

(a)           The Company and each
Guarantor shall not, and shall not permit any of its respective Subsidiaries
to, directly or indirectly, enter into or in any manner be liable on any
Derivative Contract except:

(i)            Derivative
Contracts entered into with the purpose and effect of fixing prices on oil or
gas expected to be produced by such Person; provided, however, that at all
times (i) no such contract shall be for speculative purposes; (ii) as of any
date (the “Calculation Date”)
no such contract, when aggregated with all Derivative Contracts permitted under
this Section 8.10(a)(i), but excluding Derivative Contracts described in clause
(v) of this Section 8.10, shall cover a notional volume in excess of the
Applicable Percentage of the total Projected Oil and Gas Production to be
produced in  any  month
from the Proved Developed Producing Reserves reflected in the most recent
Reserve Report; (iii) each such contract (excluding Derivative Contracts
offered by national commodity exchange) shall be with the Administrative Agent,
or any of the Lenders, the First Lien Credit Agent or any First Lien Lender or
with a counterparty or have a guarantor of the obligation of the counterparty
which, at the time the contract is made, has long-term obligations rated BBB+ or
Baa1 or better, respectively, by S&P or Moody’s; (iv) no such contract
requires the Company to put up money, assets, letters of credit or other
security against the event of its non-performance prior to actual default by
the Company in performing its obligations thereunder, except Liens in favor of
the Collateral Trustee for the benefit of the Secured Parties under the
Security Documents or the First Liens; and (v) with respect to Derivative
Contracts under which the Company’s, a Guarantor’s or any of their respective
Subsidiaries’ only interest is a “put” right or which is a commodity price
hedge by means of a price “floor” (A) either (1) there exists no deferred
obligation to pay the related premium or other purchase price or (2) if there
exists any deferred obligation to pay the related premium or other purchase
price, the Company’s, such Guarantor’s or such Subsidiary’s aggregate net
exposure does not exceed at any time prior to April 30, 2006, $15,000,000, and at any time thereafter
until April 30, 2007, $5,000,000, 

 

65

 

following which date no such contracts are permitted to exist and (B)
all such contracts are with Qualifying Derivative Contract Counterparties.

(ii)           The
Existing Derivative Contracts; provided, however, that no Existing Derivative
Contract may be amended, restated, supplemented or otherwise modified or
extended without the prior written consent of the Administrative Agent; or

(iii)          Derivative
Contracts entered into with the purpose and effect of fixing interest rates on
a principal amount of Indebtedness of the Company that is accruing interest at
a variable rate; provided,
however, that (i) no such contract shall be for
speculative purposes; (ii) the floating rate index of each such contract
generally matches the index used to determine the floating rates of interest on
the corresponding Indebtedness of the Company to be hedged by such contract,
(iii) no such contract requires the Company to put up money, assets, letters of
credit, or other security against the event of its non-performance prior to
actual default by the Company in performing its obligations thereunder, (iv)
the aggregate notional amount of the Derivative Contracts shall not exceed
fifty percent (50%) of the Borrowing Base (as defined in the First Lien Credit
Agreement as in effect on the Effective Date) during any Borrowing Base Period
(as defined in the First Lien Credit Agreement as in effect on the Effective
Date), and (v) each such contract shall be with a Lender or with a counterparty
or have a guarantor of the obligation of the counterparty who, at the time the
contract is made, has long-term obligations rated BBB+ or Baa1 or better,
respectively, by S&P or Moody’s.

(b)           In
the event the Company enters into a Derivative Contract with any Lender, the
Contingent Obligation evidenced under such Derivative Contract shall not be
applied against such Lender’s Commitment nor against the Effective Amount.  The benefits of the Security Documents and of
the provisions of the Loan Documents relating to the Collateral shall also
extend to and be available on a pro rata basis to each Qualifying Derivative
Contract Counterparty in respect to all Obligations with respect to the related
Qualifying Derivative Contract.

                8.11         Sale Leasebacks.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
become liable, directly or by way of any Guaranty Obligation, with respect to
any lease of any Property (whether real, personal or mixed) whether now owned
or hereafter acquired, (a) which the Company or such Subsidiary has sold or
transferred (excluding transfers effected by means of dividends of Property or
Capital Stock permitted hereunder) or is to sell or transfer to any other
Person or (b) which the Company or such Subsidiary of the Company intends to
use for substantially the same purposes as any other Property which has been or
is to be sold or transferred (excluding transfers effected by means of
dividends of Property or Capital Stock permitted hereunder) by the Company or
such Subsidiary to any other Person in connection with such lease.

                8.12         Consolidated Leverage Ratio.  The Company shall not permit the Consolidated
Leverage Ratio to exceed 4.50 to 1.00 for each fiscal quarter through the
fiscal quarter ending December 31, 2006; 4.00 to 1.00 for each of the fiscal quarters ending
March 31 and June 30, 

 

66

 

2007; and 3.50 to 1.00 for each fiscal quarter ending
thereafter.

                8.13         Current Ratio.  The Company shall not permit the ratio of
Current Assets to Current Liabilities to be less than 1.00 to
1.00; provided, however, that for purposes of such ratio, assets or liabilities
required by FAS 133 and 143 shall be excluded from current assets and current
liabilities, respectively.

                8.14         Minimum Interest Coverage Ratio.  The Company shall not permit the ratio of
Consolidated EBITDA for any period of four consecutive fiscal quarters of the
Company, commencing with the fiscal quarter ended June 30, 2006 as the last
quarter in the initial period of four consecutive fiscal quarters contemplated
hereby, to Consolidated Interest Expense for such period to be less than 2.50 to 1.00 for each such period ending with each fiscal
quarter through the fiscal quarter ending December 31, 2006; 3.00 to 1.00 for
each such period ending with each of the fiscal quarters ending March 31 and
June 30, 2007; and 3.50 to 1.00 for each such period ending thereafter.

                8.15         Minimum PV 10 to Consolidated Total Debt Ratio.  The Company shall not permit the ratio of Net
Present Value to Consolidated Total Debt at the end of any fiscal quarter to be
less than 1.25 to 1.00 for each
fiscal quarter through the fiscal quarter ending December 31, 2006 and
1.50 to 1.00 for each fiscal quarter ending thereafter.

                8.16         Change in Business. 
The Company and each Guarantor shall not, and shall not permit any of
its respective Subsidiaries to, directly or indirectly, engage in any business
or activity other than the Principal Business. 
The Company and each Guarantor shall not permit Ellwood to, directly or
indirectly, engage in any business other than the ownership and operation of
common carrier crude oil pipelines.

                8.17         Accounting Changes.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
make any significant change in accounting treatment or reporting practices,
except as required by GAAP, or change the fiscal year of the Company or of any
Subsidiary.

                8.18         Certain Contracts; Amendments;
Multiemployer ERISA Plans.  Except
for the restrictions expressly set forth in the Loan Documents, the First Lien
Credit Documents and the Senior Notes Indenture, the Company and each Guarantor
shall not, and shall not permit any of its respective Subsidiaries to, directly
or indirectly, enter into, create, or otherwise allow to exist any contract or
other consensual restriction on the ability of any Subsidiary of the Company
to: (a) pay dividends or make other distributions to the Company, (b) redeem
equity interests held in it by the Company, (c) repay loans and other
Indebtedness owing by it to the Company, or (d) transfer any of its assets to
the Company.  The Company and each
Guarantor shall not, and shall not permit any of its respective Subsidiaries
to, directly or indirectly, enter into any “take-or-pay” contract or other
contract or arrangement for the purchase of goods or services which obligates
it to pay for such goods or service regardless of whether they are delivered or
furnished to it, except as permitted by Section 8.5(e).  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
amend or permit any amendment to any other contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects the
rights and benefits of the Administrative Agent or any Lender 

 

67

 

under or acquired pursuant to any Security Documents.  The Company and each Guarantor shall not, and
shall not permit any ERISA Affiliate to, incur any obligation to contribute to
any Multiemployer Plan.

                8.19         Senior Notes. 
The Company and each Guarantor shall not, and shall not permit any of
its respective Subsidiaries to, directly or indirectly:

(a)           amend or modify any
of the terms or provisions of the Senior Notes Indenture or the Senior Notes if
such amendment or modification would have the effect of (i) accelerating the
maturity date of the principal amount thereof, or any scheduled interest
payment thereon; (ii) increasing the principal amount thereof or interest rate
thereon; (iii) causing, or purporting to cause the Liens securing the
Obligations to cease to be permitted under the Senior Notes Indenture,
(iv) causing, or purporting to cause, the Senior Notes and the Senior Note
Subsidiary Guarantees to be secured (x) at any time prior to the Senior Note
Lien Termination Time, other than on an “equal and ratable” basis with the
Liens securing the Obligations, or (y) thereafter other than as (and only to
the extent) required under Section 3.5 of the Senior Note Indenture as in
effect on the Effective Date; or (v) requiring the Company to grant any Lien
for the benefit of the holders thereof, other than as (and only to the extent)
required under Section 3.5 of the Senior Note Indenture as in effect on the
Effective Date (it being understood in all events that no Lien which would
cause the Company to be required to grant any such Lien may be granted if
prohibited by any term of this Agreement);

(b)           amend or modify any
other term or provision of the Senior Notes Indenture or Senior Notes if such
amendment or modification would be materially adverse to the Lenders; or

(c)           prepay, redeem,
purchase or defease any Senior Notes (except with proceeds of an Equity Offering (as
defined in the Senior Notes Indenture) and subject to compliance with Sections
8.9 and 2.5 hereof).

                8.20         Limitation on Amendments to TexCal Acquisition Documents.  The Company shall not, directly or
indirectly:

(a)           amend, supplement or
otherwise modify any material term or condition (pursuant to a waiver granted
by or to such Person or otherwise) or fail to enforce strictly the terms and
conditions of the indemnities and rights furnished to the Company or any of its
Subsidiaries pursuant to the TexCal Acquisition Documents such that after
giving effect thereto such indemnities or rights shall be materially less
favorable to the interests of the Loan Parties or the Lenders with respect thereto;
or

(b)           otherwise amend,
supplement or otherwise modify or fail to enforce the terms and conditions of
the TexCal Acquisition Documents except to the extent that any such amendment,
supplement or modification or failure to enforce could not reasonably be
expected to have a Material Adverse Effect.

                8.21         First Lien Credit Documents.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, amend, waive or modify
any term or 

 

68

 

provision
of any First Lien Credit Document unless such amendment or modification is
permitted by Section 5.3(a) of the Intercreditor Agreement.

                8.22         Forward Sales, Production Payments, Etc.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly:

(a)           enter into any
forward sales transaction or agreement with respect to physical deliveries of
Oil and Gas outside the ordinary course of business as conducted prior to the
Effective Time; or

(b)           sell or convey any
production payment, term overriding interest, net profits interest or any
similar interest (except for overriding
royalty or net profits interests granted to employees or consultants of the
Company or any Subsidiary in the ordinary course of business in connection with
the generation of prospects or the development of Oil and Gas Properties).

                8.23         Use of Proceeds. 
The Company and each Guarantor shall not, and shall not permit any of
its respective Subsidiaries to, directly or indirectly, use or permit the use
of all or any portion of the Loans for any purpose other than those set forth
in Section 7.13.

ARTICLE IX

EVENTS
OF DEFAULT

                9.1           Event of Default.  Any of the following shall constitute an “Event of Default”:

(a)           Principal Non Payment.  The Company fails to pay, when and as
required to be paid herein, any amount of scheduled principal payment of any
Loan, including any mandatory prepayment under Section 2.5 of this Agreement;

(b)           Interest and Expense Non-Payment.  Any Loan Party fails to pay, when and as
required to be paid herein, any interest due on any Interest Payment Date, any
other payments for fees, expenses, or other amount payable hereunder or under
any other Loan Document within three (3) Business Days after the same becomes
due and payable;

(c)           Representation or Warranty.  Any written representation or warranty by the
Company, any Guarantor or any other Subsidiary made or deemed made herein, in
any other Loan Document, or which is contained in any certificate, document or
financial or other statement by the Company, any Guarantor, any other
Subsidiary, or any Responsible Officer, furnished at any time under this
Agreement, or in or under any other Loan Document, is incorrect in any material
respect on or as of the date made or deemed made;

(d)           Specific Defaults.  Any Loan Party fails to perform or observe
any term, covenant or agreement contained in Sections 7.3(a), 7.6, 7.12, 7.13
or 7.15 or in Article VIII, in the Commitment Letter or the Fee Letter
Agreement;

(e)           Other Defaults. 
The Company, any Guarantor or any other Subsidiary fails to perform or
observe any other term or covenant contained in this Agreement or any other 

 

69

 

Loan Document, and such default shall continue unremedied for a period
of (i) 15 days, in the case of Sections 7.1 and 7.14 and (ii) 30 days, in all
other cases after the earlier of (x) the date upon which a Responsible Officer
knew or reasonably should have known of such default or (y) the date upon which
written notice thereof is given to the Company by the Administrative Agent or
any Lender;

(f)            Cross Default. 
(i) The Company, any Guarantor or any other Subsidiary (x) fails to make
any payment of more than $5,000,000 in respect of any Indebtedness or
Contingent Obligation (other than in respect of the First Lien Credit
Agreement) when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document
on the date of such failure; or (y) fails after the applicable grace or notice
period, if any, specified in the relevant document on the date of such failure
to perform or observe any other condition or covenant, or any other event shall
occur or condition exist, under any agreement or instrument relating to any
such Indebtedness or Contingent Obligation having an aggregate principal amount
of more than $5,000,000 (other than in respect of the First Lien Credit
Agreement) if the effect of such failure, event or condition is to cause, or to
permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness
to be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof
to be demanded; or (ii) any Indebtedness or Contingent Obligation of the
Company, any Guarantor or any other Subsidiary in excess of $5,000,000 shall be
declared due and payable prior to its stated maturity or cash collateral is
demanded in respect of such Contingent Obligation; or (iii) an “Event of
Default” (as defined in the Senior Notes Indenture as in effect on the
Restatement Effective Date), or any other or additional “Event of Default”
which may be added to or otherwise be included or exist after the Restatement
Effective Date in the Senior Notes Indenture, shall occur and be continuing; or
(iv) a Triggering Event shall occur; or (v) (x) an “Event of Default” (as
defined in the First Lien Credit Agreement as in effect on the Restatement
Effective Date), or any other or additional “Event of Default” which may be
added to or otherwise be included or exist after the Effective Date in the
First Lien Credit Agreement, shall have occurred and be continuing and (y) (A)
such “Event of Default” shall continue unremedied for a period of 45 days after
the earlier of (1) the date upon which a Responsible Officer knew or reasonably
should have known of such “Event of Default” or (2) the date upon which notice
of such “Event of Default” is given by the First Lien Credit Agent or a First
Lien Credit Lender to the Company, or by the Company to the First Lien Credit
Agent or a First Lien Credit Lender or (B) the acceleration of the maturity of
any of the First Lien Loans shall have occurred as a result of such “Event of
Default” or (C) any of the First Lien Commitments shall have been terminated as
a result of such “Event of Default”;

(g)           Insolvency; Voluntary Proceedings.  The Company, any Guarantor or any Subsidiary
(i) generally fails to pay, or admits in writing its inability to pay, its
debts as they become due, subject to applicable grace periods, if any, whether
at stated maturity or otherwise; (ii) commences any Insolvency Proceeding with
respect to itself; or (iii) takes any action to effectuate or authorize any of
the foregoing;

(h)           Involuntary Proceedings. (i) Any involuntary
Insolvency Proceeding is commenced or filed against the Company, any Guarantor
or any Subsidiary, or any writ, 

 

70

 

judgment, warrant of attachment, execution or similar process, is
issued or levied against all or a substantial part of the Company’s, any
Guarantor’s or any Subsidiary’s Properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company, any
Guarantor or any Subsidiary admits the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the
Company, any Guarantor or any Subsidiary acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial
portion of its Property or business;

(i)            Monetary Judgments.  One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company, any Guarantor or any other Subsidiary involving in the aggregate a
liability (to the extent not covered by independent third-party insurance as to
which the insurer does not dispute coverage) as to any single or related series
of transactions, incidents or conditions, of $5,000,000 or more, and the same
shall remain unsatisfied, unvacated and unstayed pending appeal for a period of
30 days after the entry thereof;

(j)            Change of Control.  There occurs any Change of Control;

(k)           Loss of Permit. 
Any Governmental Authority revokes or fails to renew any material
license, permit or franchise of the Company, any Guarantor or any other
Subsidiary, or the Company, any Guarantor or any other Subsidiary for any
reason loses any material license, permit or franchise, or the Company, any
Guarantor or any other Subsidiary suffers the imposition of any restraining
order, escrow, suspension or impound of funds in connection with any proceeding
(judicial or administrative) with respect to any material license, permit or franchise
and, in each case, such revocation, failure or loss could reasonably be
expected to have a Material Adverse Effect; and such default remains unremedied
for a period of 30 days after the earlier of (i) the date upon which a
Responsible Officer knew or reasonably should have known of such default or
(ii) the date upon which written notice thereof is given to the Company by the
Administrative Agent or any Lender;

(l)            Adverse Change. 
There occurs a Material Adverse Effect;

(m)          Guaranty Default. 
A Guaranty is for any reason partially (including with respect to future
advances) or wholly revoked or invalidated, or otherwise ceases to be in full
force and effect, or such Guarantor or any other Person contests in any manner
the validity or enforceability thereof or denies that it has any further
liability or obligation thereunder;

(n)           Enforceability or Perfection of Loan Documents.  (i) Any Loan Document shall, at any time
after its execution and delivery and for any reason, cease to be in full force
and effect or shall be declared to be null and void, the validity or
enforceability thereof shall be contested by any Person party thereto (other
than the Administrative Agent or any Lender) or any such Person party thereto
(other than the Administrative Agent or any Lender) shall deny that it has any
or further liability or obligation thereunder, or the Obligations shall be
subordinated for any reason (other than by the consent of the Lenders); or (ii)
any Lien created 

 

71

 

under any Loan Document shall fail to constitute a fully perfected Lien
in a material portion of the Collateral, subject only to Permitted Liens, and
such failure shall continue for at least 30 days after the earlier of (A) the
date upon which a Responsible Officer knew or reasonably should have known of
such default or (B) the date upon which written notice thereof is given to the
Company by the Administrative Agent or any Lender;

(o)           Material Agreements.  The Company, any Guarantor or any other
Subsidiary fails to duly observe, perform or comply with any agreement with any
Person or any term or condition of any instrument, if such failure is not
remedied within the applicable period of grace (if any) provided in such
agreement or instrument and the termination of the instrument or agreement
would have a Material Adverse Effect; or

(p)           ERISA. 
Either (i) any “accumulated funding deficiency” (as defined in Section
412(a) of the Code) in excess of $100,000 exists with respect to any ERISA
Plan, whether or not waived by the Secretary of the Treasury or his delegate,
or (ii) the Company or any ERISA Affiliate institutes steps to terminate any
ERISA Plan and the then current value of such ERISA Plan’s benefit liabilities
exceeds the then current value of such ERISA Plan’s assets available for the
payment of such benefit liabilities by more than $100,000.

                9.2           Remedies.  If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders:

(a)           declare
the Commitment, if any, of each Lender to make Loans to be terminated, or
declare all or any part of the unpaid principal of the Loans, all interest
accrued and unpaid thereon and all other amounts payable under the Loan Documents
to be immediately due and payable, whereupon the same shall, without
presentment, demand, protest, notice of intention to accelerate, notice of
acceleration, or any other notice of any kind, all of which are hereby
expressly waived by the Company and each Guarantor;

(b)           give notice thereof
to the Collateral Trustee and issue directions to the Collateral Trustee to
commence exercise of any of the Collateral Trustee’s rights and remedies under
the Collateral Trust Agreement and the other Security Documents and otherwise
direct the time, method and place of conducting any proceeding for the exercise
of any right or remedy available to the Collateral Trustee with respect to the
Collateral, or of exercising any trust or power conferred on the Collateral Trustee,
or for the taking of any other action authorized by the instruments comprising
the Trust Estate (including the making of any determinations to be made by the
Collateral Trustee thereunder); and

(c)           exercise
on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents or applicable law; provided,
however,
that upon the occurrence of any event specified in Section 9.1(g) or (h) (in
the case of clause (i) of Section 9.1(h) upon the expiration of the 60-day
period mentioned therein), the obligation of each Lender to make Loans shall
automatically terminate and the unpaid principal amount of all outstanding
Loans and all interest and other amounts as aforesaid shall automatically
become due and payable without further act of the Administrative Agent, or any
Lender and without presentment, demand, protest, notice of intention to
accelerate, notice of acceleration or any other notice of any kind, all of
which are hereby expressly waived by the Company and each 

 

72

 

Guarantor.

                9.3           Rights Not Exclusive.  The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.

ARTICLE X

THE
ADMINISTRATIVE AGENT

                10.1         Appointment and Authorization;
Limitation of Agency.  Each Lender
hereby irrevocably (subject to Section 10.9) appoints, designates and
authorizes the Administrative Agent to take such action on its behalf under the
provisions of this Agreement and each other Loan Document and to exercise such
powers and perform such duties as are expressly delegated to it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto.  The
duties of the Administrative Agent shall be administrative and mechanical in
nature; notwithstanding any provision to the contrary contained elsewhere in
this Agreement or in any other Loan Document, the Administrative Agent shall
not have any duty or responsibility, except those expressly set forth herein,
nor shall the Administrative Agent, under any circumstances, have or be deemed
to have any fiduciary relationship with any Person, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.

                10.2         Delegation of Duties.  The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys in fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties.  The Administrative Agent shall not be
responsible for the negligence or misconduct of any agent or attorney in fact
that it selects with reasonable care.

                10.3         Liability of Administrative Agent.  None of the Administrative Agent-Related
Persons shall (i) be liable for any action taken or omitted to be taken by any
of them under or in connection with this Agreement or any other Loan Document
or the transactions contemplated hereby (except for its own gross negligence or
willful misconduct), or (ii) be responsible in any manner to any of the Lenders
for any recital, statement, representation or warranty made by the Company, any
Guarantor or any Subsidiary or Affiliate of the Company, or any officer
thereof, contained in this Agreement or in any other Loan Document, or in any
certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document, or the validity, effectiveness (other
than such Administrative Agent-Related Person’s own due execution and
delivery), genuineness, enforceability or sufficiency of this Agreement or any
other Loan Document, or for any failure of the Company, any Guarantor or any
other party to any Loan Document to perform its obligations hereunder or
thereunder.  No Administrative
Agent-Related Person shall be under any obligation to any Lender to ascertain
or to inquire as to the observance or performance of any of the agreements contained
in, or conditions of, this Agreement or any other Loan Document, or to inspect
the Properties, books or records of the Company or any of 

 

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the Company’s Subsidiaries or Affiliates.

                10.4         Reliance by Administrative Agent.

(a)           The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any writing, resolution, notice, consent, certificate, affidavit,
letter, telegram, facsimile, telex or telephone message, statement or other
document or conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and upon advice and
statements of legal counsel, independent accountants and other experts selected
by the Administrative Agent. The Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or concurrence of the
Lenders as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Lenders against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action.  The Administrative
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement or any other Loan Document in accordance with a
request or consent of the Lenders and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Lenders.

(b)           For
purposes of determining compliance with the conditions specified in Sections
5.1, 5.2 and 5.3, each Lender that has made available to the Administrative
Agent its Pro Rata Share of the initial Credit Extension or subsequent Credit
Extension, as the case may be, shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter either sent
by the Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to the Lender as a condition precedent to such
initial Credit Extension or subsequent Credit Extension, as applicable.

                10.5         Notice of Default.  The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to Defaults in the payment of principal, interest
and fees required to be paid to the Administrative Agent for the account of the
Lenders, unless the Administrative Agent shall have received written notice
from a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a “notice of
default”.  The Administrative Agent will
notify the Lenders of its receipt of any such notice.  Subject to Section 10.4(a), the
Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Lenders in accordance with Article IX;
provided, however, that unless and until the Administrative Agent has received
any such request, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Lenders.

                10.6         Credit Decision.  Each Lender acknowledges that no
Administrative Agent-Related Person has made any representation or warranty to
it, and that no act by any Administrative Agent-Related Person hereafter taken,
including any review of the affairs of the Company, any Guarantor or their
respective Subsidiaries, shall be deemed to constitute any representation or
warranty by any Administrative Agent-Related Person to any Lender.  Each 

 

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Lender represents to the Administrative Agent that it has,
independently and without reliance upon any Administrative Agent-Related Person
and based on such documents and information as it has deemed appropriate, made
its own appraisal of and investigation into the business, prospects,
operations, Property, financial and other condition and creditworthiness of the
Company, and all applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this Agreement and
to extend credit to the Company hereunder. 
Each Lender also represents that it will, independently and without
reliance upon any Administrative Agent-Related Person and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigations as it deems necessary to inform itself as to the business,
prospects, operations, Property, financial and other condition and
creditworthiness of the Company.  Except
for notices, reports and other documents expressly herein required to be
furnished to the Lenders by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, Property,
financial and other condition or creditworthiness of the Company which may come
into the possession of any of the Administrative Agent-Related Persons.

                10.7         Indemnification.  Whether or not the transactions contemplated
hereby are consummated, the Lenders shall indemnify upon demand the Administrative
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so), pro rata
according to each respective Lender’s Pro Rata Share, each Administrative
Agent-Related Person from and against any and all Indemnified Liabilities
INCLUDING SUCH INDEMNIFIED LIABILITIES AS MAY ARISE OR BE CAUSED BY THE
NEGLIGENCE, SOLE, JOINT, CONCURRENT, COMPARATIVE OR OTHERWISE OF SUCH
ADMINISTRATIVE AGENT-RELATED PERSONS; provided, however, that no Lender shall
be liable for the payment to any Administrative Agent-Related Persons of any
portion of such Indemnified Liabilities to the extent the same arise from (i)
the gross negligence or willful misconduct of any Administrative Agent-Related
Person or (ii) a claim or action asserted by one or more other Administrative
Agent-Related Persons.  Without
limitation of the foregoing, each Lender shall reimburse the Administrative
Agent upon demand for its ratable share of any costs or out of pocket expenses
(including Attorney Costs) incurred by the Administrative Agent in connection
with the preparation, execution, delivery, administration, modification,
amendment or enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or responsibilities under,
this Agreement, any other Transaction Document or any document contemplated by
or referred to herein, to the extent that the Administrative Agent is not
reimbursed for such expenses by or on behalf of the Company.  The undertaking in this Section 10.7 shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent.

                10.8         Administrative Agent in Individual
Capacity.  Credit Suisse, Cayman
Islands Branch, and its Affiliates may make loans to, accept deposits from,
acquire or underwrite equity or debt securities of and generally engage in any
kind of banking, investment banking, trust, financial advisory, underwriting or
other business with the Company and its Affiliates as though Credit Suisse,
Cayman Islands Branch, was not the Administrative Agent hereunder and without
notice to or consent of the Lenders.  The
Lenders acknowledge that, pursuant to such activities, 

 

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Credit Suisse, Cayman Islands Branch, or its Affiliates may receive
information regarding the Company or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Company or such
Affiliate) and acknowledge that the Administrative Agent-Related Persons shall
be under no obligation to provide such information to them.  With respect to Obligations held by it,
Credit Suisse, Cayman Islands Branch, shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Administrative Agent.

                10.9         Successor Administrative Agent.  The Administrative Agent may resign as
Administrative Agent upon 30 days’ notice to the Lenders.  If the Administrative Agent resigns under
this Agreement, the Lenders shall appoint from among the Lenders a successor
administrative agent for the Lenders.  If
no successor administrative agent is appointed prior to the effective date of
the resignation of the Administrative Agent, the Administrative Agent may
appoint, after consulting with the Lenders, a successor administrative agent
from among the Lenders.  Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term “Administrative Agent”
shall mean such successor administrative agent and the retiring Administrative
Agent’s appointment, powers and duties as Administrative Agent shall be
terminated. After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article X and Sections 11.4 and
11.5 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.  If no successor agent has accepted
appointment as Administrative Agent by the date which is 30 days following a
retiring Administrative Agent’s notice of resignation, the retiring Administrative
Agent’s resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Lenders appoint a successor administrative
agent as provided for above.

                10.10       Withholding Tax.

(a)           If
any Lender is a “foreign corporation, partnership or trust”
within the meaning of the Code and such Lender claims exemption from, or a
reduction of, U.S. withholding Tax under Sections 1441 or 1442 of the Code,
such Lender agrees with and in favor of the Administrative Agent, to deliver to
the Administrative Agent:

(i)            if such Lender claims an exemption from, or a reduction
of, withholding Tax under a United States Tax treaty, properly completed IRS
Forms 1001 and W 8 before the payment of any interest in the first calendar
year and before the payment of any interest in each third succeeding calendar
year during which interest may be paid under this Agreement;

(ii)           if such Lender claims that interest paid under this Agreement
is exempt from United States withholding Tax because it is effectively
connected with a United States trade or business of such Lender, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid under this
Agreement, and IRS 

 

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Form W 9; and

(iii)          such other form or forms as may be required under the Code
or other laws of the United States as a condition to exemption from, or
reduction of, United States withholding Tax.

Such Lender agrees to promptly notify the Administrative Agent of any
change in circumstances which would modify or render invalid any claimed
exemption or reduction.

(b)           If
any Lender claims exemption from, or reduction of, withholding Tax under a
United States Tax treaty by providing IRS Form 1001 and such Lender sells,
assigns, grants a participation in, or otherwise transfers all or part of the
Obligations held by such Lender, such Lender agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations held by such Lender.  To the extent of such percentage amount, the
Administrative Agent will treat such Lender’s IRS Form 1001 as no longer valid.

(c)           If
any Lender claiming exemption from United States withholding Tax by filing IRS
Form 4224 with the Administrative Agent sells, assigns, grants a participation
in, or otherwise transfers all or part of the Obligations held by such Lender,
such Lender agrees to undertake sole responsibility for complying with the
withholding Tax requirements imposed by Sections 1441 and 1442 of the Code.

(d)           If
any Lender is entitled to a reduction in the applicable withholding Tax, the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable withholding Tax after taking into account
such reduction.  If the forms or other
documentation required by Section 10.10(a) of this Section are not delivered to
the Administrative Agent, then the Administrative Agent may withhold from any
interest payment to such Lender not providing such forms or other documentation
an amount equivalent to the applicable withholding Tax.

(e)           If
the IRS or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Administrative Agent did not properly
withhold Tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered, was not properly executed, or because such
Lender failed to notify the Administrative Agent of a change in circumstances
which rendered the exemption from, or reduction of, withholding Tax
ineffective, or for any other reason) such Lender shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as Tax or otherwise, including penalties and interest, and
including any Taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section 10.10(e), together with all costs and
expenses (including Attorney Costs).  The
obligation of the Lenders under this Section 10.10(e) shall survive the payment
of all Obligations and the resignation or replacement of the Administrative
Agent.

                10.11       Arrangers; Syndication Agents.  Each of the Arrangers and the Syndication
Agent, in their respective capacities as such, shall have no duties or
responsibilities, and shall incur no liability, under this Agreement or the
other Loan Documents.

 

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                10.12       Release of Collateral. 
The Administrative Agent is hereby irrevocably authorized by each of the
Lenders to instruct the Collateral Trustee to effect any release of Liens or
guarantee obligations contemplated by Section 11.26.

ARTICLE XI

MISCELLANEOUS

                11.1         Amendments and Waivers.  No amendment, modification, termination or
waiver of any provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the Company, any Guarantor or any
applicable Subsidiary therefrom, shall be effective unless the same shall be in
writing and signed by the Required Lenders (or by the Administrative Agent at
the written request of the Required Lenders) and the Company and acknowledged
by the Administrative Agent, and then any such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
it is given; provided, however, that no such waiver, amendment, modification,
termination or consent shall, unless in writing and signed by all the Lenders
and the Company and acknowledged by the Administrative Agent, do any of the
following:

(a)           increase
or extend the Commitment of any Lender;

(b)           postpone
the final maturity date of any Loan, or postpone or delay any date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder
(including any mandatory prepayments thereof) or under any other Loan Document;

(c)           reduce
the principal of, or the rate of interest specified herein on any Loan, or
(subject to clause (ii) below) any fees or other amounts payable hereunder
(including any mandatory prepayments thereof) or under any other Loan Document;

(d)           change
the Pro Rata Shares or change in any manner the definition of “Required Lenders”
or the Lenders required to rescind or annul an acceleration;

(e)           amend
this Section 11.1 or Section 9.1, or any provision of this Agreement which, by
its terms, expressly requires the approval or concurrence of all Lenders; or

(f)            release
all, substantially all, or any material portion of the Collateral (except for
releases in connection with Dispositions which are permitted hereunder or under
any Loan Document), or release any Guarantor from any Guaranty;

provided further, however, that (i) any amendment, modification,
termination or waiver of any of the provisions contained in Article V shall be
effective only if evidenced by a writing signed by or on behalf of the
Administrative Agent and the Required Lenders, and (ii) no amendment, waiver or
consent shall, unless in writing and signed by the Administrative Agent in
addition to the Required Lenders or all the Lenders, as the case may be, affect
the rights or duties of the Administrative Agent under this Agreement or any
other Loan Document.

                11.2         Notices.

 

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(a)           All
notices, requests and other communications shall be in writing and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
the signature pages hereof; or, as directed to the Company or the
Administrative Agent, to such other address as shall be designated by such
party in a written notice to the other parties, and as directed to any other
party, at such other address as shall be designated by such party in a written
notice to the Company and the Administrative Agent.

(b)           All
such notices, requests and communications shall, when transmitted by overnight
delivery, or faxed, be effective when delivered for overnight (next-day)
delivery, or transmitted in legible form by facsimile machine, respectively, or
if mailed, upon the third Business Day after the date deposited into the U.S. mail,
or if delivered, upon delivery; except that notices pursuant to Article II or
IX shall not be effective until actually received by the Administrative Agent.

(c)           Any
agreement of the Administrative Agent and the Lenders herein to receive certain
notices by telephone or facsimile is solely for the convenience and at the
request of the Company.  The
Administrative Agent and the Lenders shall be entitled to rely on the authority
of any Person purporting to be a Person authorized by the Company to give such
notice and the Administrative Agent and the Lenders shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Administrative Agent or the Lenders in reliance upon such
telephonic or facsimile notice.  The
obligation of the Company to repay the Loans shall not be affected in any way
or to any extent by any failure by the Administrative Agent and the Lenders to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Administrative Agent and the Lenders of a confirmation which is
at variance with the terms understood by the Administrative Agent and the
Lenders to be contained in the telephonic or facsimile notice.

                11.3         No Waiver; Cumulative Remedies.  No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof;  nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege.

                11.4         Costs and Expenses.  The Company shall:

(a)           whether
or not the transactions contemplated hereby are consummated, pay or reimburse
the Administrative Agent within five Business Days after demand (subject to
Section 5.3(c)) for all reasonable costs and expenses incurred by the
Administrative Agent or any other Agent, the Lenders or any of their Affiliates
in connection with the syndications of the extensions of credit hereunder
(other than fees payable to syndicate members) and the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not consummated),
this Agreement, any Loan Document and any other documents prepared in
connection herewith or therewith, the consummation of the transactions
contemplated hereby and thereby, and the syndication of the credit facilities
provided herein, including Attorney Costs incurred by the any such Person with
respect thereto except such costs and expenses as may be incurred by the
assignor Lenders or Assignee under Section 11.8(a); and

 

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(b)           pay
or reimburse the Administrative Agent, any other Agent and each Lender within
five Business Days after demand (subject to Section 5.3(c)) for all costs and
expenses (including Attorney Costs) incurred by each of them in connection with
the enforcement, attempted enforcement, or preservation of any rights or
remedies under this Agreement or any other Loan Document during the existence
of an Event of Default or after acceleration of the Loans (including in
connection with any “workout” or restructuring regarding the Loans, and
including in any Insolvency Proceeding or appellate proceeding).

                11.5         Indemnity.  Whether or not the transactions contemplated
hereby are consummated, the Company shall indemnify and hold each Agent-Related
Person and each Lender and each of their respective Affiliates, successors and
assignors and its and their respective officers, directors, employees, counsel,
agents, advisors, controlling Persons, members and attorneys in fact (each, an “Indemnified Person”) harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including Attorney Costs) of
any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans, and the termination, resignation or
replacement of the Administrative Agent or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein, including any of the Transaction Documents, or the transactions
contemplated hereby, including the TexCal Acquisition, or any action taken or
omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement, any Transaction Agreement, the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the “Indemnified
Liabilities”), WHETHER OR NOT SUCH INDEMNIFIED LIABILITIES ARISE
OUT OF OR AS A RESULT OF ANY INDEMNIFIED PARTY’S NEGLIGENCE IN WHOLE OR IN
PART, INCLUDING, WITHOUT LIMITATION, THOSE CLAIMS WHICH RESULT FROM THE SOLE,
JOINT, CONCURRENT OR COMPARATIVE NEGLIGENCE OF THE INDEMNIFIED PARTY, OR ANY
ONE OR MORE OF THEM; provided,
however, that the Company shall have no obligation hereunder to any Indemnified
Person with respect to Indemnified Liabilities to the extent same arise from
the gross negligence or willful misconduct of any Indemnified Person.  No Indemnified Person shall be liable for any
damages arising from the use by unauthorized Persons of information or other
materials sent through electronic, telecommunications or other information
transmission systems that are intercepted by such Persons or for any special,
indirect, consequential or punitive damages in connection with this Agreement.  All amounts due under this Section shall be
payable not later than thirty (30) days after written demand therefor.  The agreements in this Sections 11.4 and 11.5
shall survive payment of all other Obligations.

                11.6         Payments Set Aside.  To the extent that the Company makes a payment
to the Administrative Agent or the Lenders, or the Administrative Agent or the
Lenders exercise their right of set-off, and such payment or the proceeds of
such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Lender in its
discretion) to be repaid to a trustee, debtor-in-possession, receiver or any
other Person, in connection with any Insolvency Proceeding or otherwise, then
(a) to the extent of such recovery

 

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the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b) each Lender severally
agrees to pay to the Administrative Agent or such Lender upon demand its Pro
Rata Share of any amount so recovered from or repaid by the Administrative
Agent or such Lender.

                11.7         Successors and Assigns.  This Agreement shall become effective at the
Restatement Effective Time after it shall have been executed by the Company,
each Original Guarantor, each TexCal Subsidiary and the Administrative Agent
and after the Administrative Agent shall have been notified by each Lender that
such Lender has executed it and thereafter this Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns, except that the Company may not assign or transfer any of its
rights or obligations under this Agreement without the prior written consent of
the Administrative Agent and each Lender.

                11.8         Assignments, Participations, etc.

(a)           Each
Lender may assign to one or more assignees (each, an “Assignee”) all or a portion of its
interests, 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 of the Administrative Agent (not to be unreasonably withheld or
delayed); provided, however, that (i) the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance in the form of Exhibit “E” (the “Assignment and Acceptance”) with respect to such
assignment is delivered to the Administrative Agent and determined on an
aggregate basis in the event of concurrent assignments to Related Funds (as
defined below)) shall not, unless consented to by the Administrative Agent, be
less than $1,000,000 (or, if less, the entire remaining amount of such Lender’s
Commitment or Loans), (ii) the parties to each such assignment shall execute
and deliver to the Administrative Agent an Assignment and Acceptance via an
electronic settlement system acceptable to the Administrative Agent (or, if
previously agreed with the Administrative Agent, manually) and shall pay to the
Administrative Agent a processing and recordation fee in the amount of
$3,500.00 (which fee may be waived or reduced in the sole discretion of the
Administrative Agent), provided, however, that
only one such fee shall be payable in the case of concurrent assignments to
Persons that, after giving effect to such assignments, will be Related Funds
and (iii) the Assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an administrative questionnaire in such form as supplied
from time to time by the Administrative Agent (an “Administrative Questionnaire”) and all
applicable tax forms. Upon acceptance and recording pursuant to Section
11.8(c), from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to the
extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an 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 Article III and Section 11.5, as well as to any
fees accrued for its account prior to the effective date specified in such
Assignment and Acceptance and not yet paid). The term “Related 

 

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Funds” shall mean with respect to
any Lender that is a fund or combined investment vehicle that invests in bank
loans, any other fund that invests in bank loans and is managed or advised by
the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

(b)           By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder shall be deemed to confirm to and agree
with each other and the other parties hereto as follows: (i) such assigning
Lender warrants that it is the legal and beneficial owner of the interest being
assigned thereby free and clear of any adverse claim and that its Commitment,
and the outstanding balances of its Loans, in each case without giving effect
to assignments thereof which have not become effective, are as set forth in
such Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement, or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement,
any other Loan Document or any other instrument or document furnished pursuant
hereto, or the financial condition of the Company or any Subsidiary or the
performance or observance by the Company or any Subsidiary of any of its
obligations under this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto; (iii) such Assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such Assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements referred to in Section 5.1 or delivered pursuant to Section 7.1, the
Intercreditor Agreement, the Collateral Trust Agreement and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance; (v) such
Assignee will independently and without reliance upon the Administrative Agent,
such assigning Lender 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 this Agreement; (vi) such
Assignee appoints and authorizes the Administrative Agent and the Collateral
Trustee to take such action as agent on its behalf and to exercise such powers
under this Agreement and the Collateral Trust Agreement, respectively, as are
delegated to the Administrative Agent and the Collateral Trustee, respectively,
by the terms hereof and thereof, together with such powers as are reasonably
incidental thereto; and (vii) such Assignee agrees that it will perform in
accordance with their terms all the obligations which by the terms of this
Agreement are required to be performed by it as a Lender and will be bound by
and will take no actions contrary to the provisions of the Intercreditor
Agreement or the Collateral Trust Agreement. The Administrative Agent shall be
entitled to rely, without any independent investigation, on the representations
and warranties and other statements deemed to be made by the assigning Lender
and the Assignee pursuant to this Section 11.8(c) and shall not incur any
liability for relying thereon.

(c)           The
Administrative Agent, acting for this purpose as an agent of the Company, shall
maintain at one of its offices in The City of New York a copy of each
Assignment and Acceptance delivered to it. 
Upon its receipt of, and consent to, a duly completed Assignment and
Acceptance executed by an assigning Lender and an Assignee, an Administrative
Questionnaire completed in respect of the Assignee (unless the Assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section 11.8(b) above, if applicable, and the written consent of the
Administrative Agent to such assignment and any applicable tax forms, the
Administrative Agent shall (i) accept such Assignment and 

 

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Acceptance and (ii) record the information contained therein in the
Register. No assignment shall be effective unless it has been recorded in the
Register as provided in Section 11.8(c). 
The Register shall be available for inspection by the Company or any
Lender (with respect to any entry relating to such Lender’s Loans) at any
reasonable time and from time to time upon reasonable prior notice.

(d)           Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special
purpose funding vehicle (an “SPC”), identified
as such in writing from time to time by the Granting Lender to the
Administrative Agent and the Company, the option to provide to the Company all
or any part of any Loan that such Granting Lender would otherwise be obligated
to make to the Company on the Effective Date pursuant to this Agreement;
provided, however, that (i) nothing herein shall constitute a commitment by any
SPC to make any Loan and (ii) if an SPC elects not to exercise such option or
otherwise fails to provide all or any part of such Loan, the Granting Lender
shall be obligated to make such Loan pursuant to the terms hereof. The making
of a Loan by an SPC hereunder shall utilize the Commitment of the Granting
Lender to the same extent, and as if, such Loan were made by such Granting
Lender. Each party hereto hereby agrees that no SPC shall be liable for any
indemnity or similar payment obligation under this Agreement (all liability for
which shall remain with the Granting Lender). In furtherance of the foregoing,
each party hereto hereby agrees (which agreement shall survive the termination
of this Agreement) that, prior to the date that is one year and one day after
the payment in full of all outstanding commercial paper or other senior
Indebtedness of any SPC, it will not institute against, or join any other
person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof. In addition, notwithstanding anything to the
contrary contained in this Section 11.8, any SPC may (i) with notice to, but
without the prior written consent of, the Company and the Administrative Agent
and without paying any processing fee therefor, assign all or a portion of its
interests in any Loans to the Granting Lender or to any financial institutions
(consented to by the Administrative Agent) providing liquidity and/or credit
support to or for the account of such SPC to support the funding or maintenance
of Loans and (ii) disclose on a confidential basis any non-public
information relating to its Loans to any rating agency, commercial paper dealer
or provider of any surety, guarantee or credit or liquidity enhancement to such
SPC.

(e)           Within
five Business Days after its receipt of notice by the Administrative Agent that
it has received an executed Assignment and Acceptance and payment of the
processing fee, if a Note was issued in respect of the assigned interests, upon
the request of the Administrative Agent by the Assignee, the Company shall
execute and deliver to the Administrative Agent a new Note evidencing such
Assignee’s assigned Loans and, if the assignor Lender has retained a portion of
its Loans and its Commitment, a replacement Note, upon the request of the
Administrative Agent by the assignor Lender, in the principal amount equal to
the Loans and Commitments, if any, retained by the assignor Lender (such Note
to be in exchange for, but not in payment of, the Note held by such Lender).

(f)            Any
Lender may at any time sell to one or more commercial banks or other Persons
not Affiliates of the Company (a “Participant”)
participating interests in any Loans, the Commitment of that Lender, if any,
and the other interests of that Lender (the “Originating Lender”)
hereunder and under the other Loan Documents; provided, however, that 

 

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(i) the Originating Lender’s obligations under this Agreement shall
remain unchanged, the Originating Lender shall remain a Lender for all purposes
hereof and the other Loan Documents to which such Originating Lender is a
party, and the Participant may not become a Lender for purposes hereof or for
any other of the Loan Documents, (ii) the Originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Administrative Agent shall continue to deal solely and directly with
the Originating Lender in connection with the Originating Lender’s rights and
obligations under this Agreement and the other Loan Documents, and (iv) no
Lender shall transfer or grant any participating interest under which the
Participant has rights to approve any amendment to, or any consent or waiver
with respect to, this Agreement or any other Loan Document, except to the
extent such amendment, consent or waiver would require unanimous consent of the
Lenders. In the case of any such participation, the Participant shall not have
any rights under this Agreement, or any of the other Loan Documents (the
Participant’s rights against the Originating Lender in respect of such
participation being those set forth in the agreement creating or evidencing
such participation with such Lender), and all amounts payable by the Company
hereunder shall be determined as if such Lender had not sold such participation;
except that, if amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall be deemed to have the
right of set off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement.

(g)           Each
Lender agrees to take normal and reasonable precautions and exercise due care
to maintain the confidentiality of all information identified as “confidential”
or “secret”  by the Company and provided to it by the
Company or any of its Subsidiaries, or by the Administrative Agent on such
Company’s or Subsidiary’s behalf, under or in connection with this Agreement or
any other Loan Document, and neither it nor any of its Affiliates shall use any
such information other than in connection with or in enforcement of this
Agreement and the other Loan Documents, except to the extent such information
(i) was or becomes generally available to the public other than as a result of
disclosure by such Lender, or (ii) was or becomes available on a non
confidential basis from a source other than the Company, provided,  however, that such
source is not bound by a confidentiality agreement with the Company known to
the Lender; provided
further, however,
that any Lender may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which such Lender is subject
or in connection with an examination of such Lender by any such authority; (B)
pursuant to subpoena or other court process; (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to the
extent reasonably required in connection with any litigation or proceeding to
which the Administrative Agent, any Lender or their respective Affiliates may
be party; (E) to the extent reasonably required in connection with the exercise
of any remedy hereunder or under any other Loan Document; (F) to such Lender’s
independent auditors and other professional advisors; (G) to any Affiliate of
such Lender, or to any Participant or Assignee, actual or potential, provided
that such Affiliate, Participant or Assignee agrees to keep such information
confidential to the same extent required of the Lenders hereunder, and (H) as
to any Lender, as expressly permitted under the terms of any other document or
agreement regarding confidentiality to which the Company is party or is deemed
party with such Lender.

 

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(h)           Notwithstanding
any other provision in this Agreement, any Lender may at any time create a
security interest in, or pledge, all or any portion of its rights under and
interest in this Agreement and the Notes held by it in favor of any Federal
Reserve Lender in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR §203.14, and such Federal Reserve Lender may enforce such pledge
or security interest in any manner permitted under applicable law.  Any Lender may at any time assign all or any
portion of its rights under this Agreement to secure extensions of credit to
such Lender or in support of obligations owed by such Lender; provided,
however, that no such assignment shall release a Lender from any of its
obligations hereunder or substitute any such assignee for such Lender as a
party hereto.

(i)            Notwithstanding
anything to the contrary in Section 11.8(g) or any other provision of this
Agreement or any other Loan Document, any party hereto or thereto (and each
employee, representative, or other agent of such party) may disclose to any and
all Persons, without limitation of any kind, the Tax treatment and Tax
structure of the transactions contemplated herein and therein and all materials
of any kind in each case within the meaning of United States Treasury
Regulation Section 1.6011-4 (including opinions or other Tax analyses) that are
provided to such party relating to such Tax treatment and Tax structure;
provided, however, that with respect to any document or similar item that in
either case contains information concerning Tax treatment or Tax structure of
the transactions contemplated by this Agreement as well as other information,
this Section 11.8(i) shall only apply to such portions of the document or
similar item that relate to such Tax treatment or Tax structure.

                11.9         Interest.  It is the intention of the parties hereto to
comply with applicable usury laws, if any; accordingly, notwithstanding any
provision to the contrary in this Agreement, the Notes or in any of the other
Loan Documents securing the payment hereof or otherwise relating hereto, in no
event shall this Agreement, the Notes or such other Loan Documents require or
permit the payment, taking, reserving, receiving, collection, or charging of
any sums constituting interest under applicable laws which exceed the Highest
Lawful Rate.  If any such excess interest
is called for, contracted for, charged, taken, reserved, or received in
connection with the Loans evidenced by the Notes or in any of the Loan
Documents securing the payment thereof or otherwise relating thereto, or in any
communication by the Administrative Agent or the Lenders or any other Person to
the Company or any other Person, or in the event all or part of the principal
or interest thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of
principal actually outstanding from time to time under the Notes or any other
Loan Document shall exceed the Highest Lawful Rate, then in any such event it
is agreed as follows:  (i) the provisions
of this Section 11.9 shall govern and control, (ii) neither any Company nor any
other Person now or hereafter liable for the payment of the Notes shall be
obligated to pay the amount of such interest to the extent such interest is in
excess of the Highest Lawful Rate, (iii) any such excess which is or has been
received notwithstanding this Section 11.9 shall be credited against the then
unpaid principal balance of the Notes or, if the Notes have been or would be
paid in full, refunded to the Company, and (iv) the provisions of this
Agreement, the Notes and the other Loan Documents securing the payment thereof
and otherwise relating thereto, and any communication to the Company, shall
immediately be deemed reformed and such excess interest reduced, without the
necessity of executing any other document, to the Highest Lawful Rate as now or
hereafter construed by 

 

85

 

courts having jurisdiction hereof or thereof.  Without limiting the foregoing, all
calculations of the rate of the interest contracted for, charged, collected,
taken, reserved, or received in connection with the Notes, this Agreement or
any other Loan Document which are made for the purpose of determining whether
such rate exceeds the Highest Lawful Rate shall be made to the extent permitted
by applicable laws by amortizing, prorating, allocating and spreading during
the period of the full term of the Loans, including all prior and subsequent
renewals and extensions, all interest at any time contracted for, charged,
taken, collected, reserved, or received. 
The terms of this Section 11.9 shall be deemed to be incorporated in
every document and communication relating to the Notes, the Loans or any other
Loan Document.

                11.10       Indemnity and Subrogation.  In addition to all such rights of indemnity
and subrogation as any Guarantor may have under applicable law, the Company
agrees that in the event a payment shall be made by a Guarantor under a
Guaranty in respect of a Credit Extension to the Company, the Company shall indemnify
such Guarantor for the full amount of such payment and such Guarantor shall be
subrogated to the rights of the Person to whom such payment shall have been
made to the extent of such payment subject to the provisions of the Guaranty
executed by such Guarantor. 
Notwithstanding any provision of this Agreement to the contrary, all
rights of the Guarantors under this Section 11.10 and all other rights of
indemnity, contribution or subrogation under applicable law or otherwise shall
be fully subordinated to the indefeasible payment in full of the Obligations,
and no payments may be made in respect of such rights of indemnity,
contribution or subrogation until all the Obligations have been paid in full
and the Commitment shall have expired. 
No failure on the part of the Company to make the payments required by
this Section 11.10 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of the
Guarantors with respect to any Guaranty, and each Guarantor shall remain liable
for the full amount of the obligation of the Guarantors under each such
Guaranty in accordance therewith.

                11.11       Automatic Debits of Fees.  With respect to any fee or any other cost or
expense (including Attorney Costs) due and payable to the Administrative Agent
under the Loan Documents, the Company hereby irrevocably authorizes the
Administrative Agent, after giving reasonable prior notice to the Company, to
debit any deposit account of the Company with the Administrative Agent in an
amount such that the aggregate amount debited from all such deposit accounts
does not exceed such fee or other cost or expense.  If there are insufficient funds in such
deposit accounts to cover the amount of the fee or other cost or expense then
due, such debits will be reversed (in whole or in part, in the Administrative
Agent’s sole discretion) and such amount not debited shall be deemed to be
unpaid.  No such debit under this Section
11.11 shall be deemed a set-off.

                11.12       Notification of Addresses, Lending
Offices, Etc.  Each Lender shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Lender should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.

                11.13       Counterparts.  This Agreement may be executed in any number
of separate counterparts, no one of which need be signed by all parties; each
of which, when so executed, shall be deemed an original, and all of such
counterparts taken together shall be deemed to 

 

86

 

constitute but one and the same instrument.  A fully executed counterpart of this
Agreement by facsimile signatures shall be binding upon the parties hereto.

                11.14       Severability.  The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.

                11.15       No Third Parties Benefited.  This Agreement is made and entered into for
the sole protection and legal benefit of the Company, the Guarantors, the
Lenders, the Administrative Agent, the Administrative Agent-Related Persons and
the Indemnified Persons, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.

                11.16       Governing Law, Jurisdiction.  THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

11.17       Submission To Jurisdiction; Waivers.  Each of the Company and each Guarantor hereby
irrevocably and unconditionally, and shall cause each of their respective
Subsidiaries to irrevocably and unconditionally:

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

(b)           waive, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (a) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c)           consent to service
of process in the manner provided for notices herein. Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

 

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                11.18       Entire Agreement.  This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Guarantors, the Lenders and the Administrative Agent, and supersedes all
prior or contemporaneous agreements and understandings of such Persons, oral or
written, relating to the subject matter hereof and thereof.

                11.19       NO ORAL AGREEMENTS.  THIS WRITTEN AMENDED AND RESTATED TERM LOAN
AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED IN
CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

                11.20       Accounting Changes. 
In the event that any “Accounting Change” (as defined below) shall occur
and such change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Company and the
Administrative Agent agree to enter into negotiations in order to amend such
provisions of this Agreement so as to equitably reflect such Accounting Change
with the desired result that the criteria for evaluating the Company’s
financial condition shall be the same after such Accounting Change as if such
Accounting Change had not been made. 
Until such time as such an amendment shall have been executed and delivered
by the Company, the Administrative Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue to be
calculated or construed as if such Accounting Change had not occurred.  “Accounting Change”
refers to any change in accounting principles required by the promulgation of
any rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants or,
if applicable, the SEC.

                11.21       WAIVER OF JURY TRIAL, PUNITIVE
DAMAGES, ETC.  THE COMPANY AND EACH
LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY (A)
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR
INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH,
BEFORE OR AFTER MATURITY; (B) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY
LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY “SPECIAL DAMAGES”, AS DEFINED BELOW, (C) CERTIFIES THAT
NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS, AND (D)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION
11.21.  AS USED IN THIS SECTION, “SPECIAL
DAMAGES” INCLUDES ALL SPECIAL, CONSEQUENTIAL, EXEMPLARY, OR 

 

88

 

PUNITIVE DAMAGES (REGARDLESS OF HOW NAMED), BUT DOES NOT INCLUDE ANY
PAYMENTS OR FUNDS WHICH ANY PARTY HERETO HAS EXPRESSLY PROMISED TO PAY OR
DELIVER TO ANY OTHER PARTY HERETO.

                11.22       Intercreditor Agreement; Collateral Trust Agreement.  Each Lender (a) hereby agrees that it will be
bound by and take no actions contrary to the Intercreditor Agreement or the
Collateral Trust Agreement and (b) hereby irrevocably authorizes and instructs
the Administrative Agent to enter into and perform the Intercreditor Agreement
and the Collateral Trust Agreement on its behalf.

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

                11.24       Acknowledgments. 
Each of the Company and each Guarantor hereby acknowledges that:

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

(b)           neither the
Administrative Agent nor the other Agents nor any Lender has any fiduciary
relationship with or duty to the Company or any Guarantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent, the other Agents and the
Lenders, on one hand, and the Company and the Guarantors, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor; and

(c)           no joint venture is
created hereby or by the other Loan Documents or otherwise exists by virtue of
the transactions contemplated hereby among the Administrative Agent, the other
Agents and the Lenders or among the Company and the Guarantors and the Lenders.

                11.25       Survival of Representations and Warranties.  All representations and warranties made
herein, in the other Loan Documents and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the
execution and delivery of this Agreement, the consummation of the TexCal
Acquisition and the making of the Loans and other extensions of credit
hereunder.

                11.26       Release
of Collateral and Guarantee Obligations. 

(a)           Notwithstanding
anything to the contrary contained herein or in any other Loan Document (other
than the Intercreditor Agreement and the Collateral Trust Agreement), upon
request of the Company in connection with any Disposition of Property permitted
by the Loan Documents, but subject to the provisions of the Intercreditor
Agreement and the Collateral Trust Agreement, unless a Triggering Event has
occurred and is continuing, the Administrative Agent shall (without notice to,
or vote or consent of, any Lender or any Qualified Derivative 

 

89

 

Contract Counterparty) (i) issue written directions to the
Collateral Trustee in accordance with Section 7.02 of the Collateral Trust
Agreement authorizing the Collateral Trustee to release its security interest
in any Collateral being Disposed of in such Disposition and (ii) take such
actions as shall be required to release any guarantee obligations under any
Loan Document of any Person being Disposed of in such Disposition, to the
extent necessary to permit consummation of such Disposition in accordance with
the Loan Documents; provided, however, that the Company shall have delivered to
the Administrative Agent and the Collateral Trustee, at least ten Business Days
prior to the date of the proposed release (or such shorter period agreed to by
the Administrative Agent and the Collateral Trustee), a written request for
release identifying the relevant Collateral being Disposed of in such
Disposition and the terms of such Disposition in reasonable detail, including
the date thereof, the price thereof and any expenses in connection therewith,
together with a certification by the Company stating that such transaction is
in compliance with this Agreement and the other Loan Documents and that the
proceeds of such Disposition will be applied in accordance with this Agreement
and the other Loan Documents.

(b)           Notwithstanding
anything to the contrary contained herein or any other Loan Document, when all
Obligations (other than obligations in respect of any Qualified Derivative
Contract) have been paid in full and all Commitments have terminated or
expired, upon request of the Company, the Administrative Agent shall (without
notice to, or vote or consent of, any Lender, or any Qualified Derivative
Contract Counterparty) (i) issue written directions to the Collateral
Trustee in accordance with Section 7.02 of the Collateral Trust Agreement
authorizing the Collateral Trustee to release its security interest in all
Collateral, and (ii) take such actions as shall be required to release all
guarantee obligations provided for in any Loan Document, whether or not on the
date of such release there may be outstanding Obligations in respect of the
Qualified Derivative Contracts.  Any such
release of guarantee obligations shall be deemed subject to the provision that
such guarantee obligations shall be reinstated if after such release any
portion of any payment in respect of the Obligations guaranteed thereby shall
be rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of the Company or any
Guarantor, or upon or as a result of the appointment of a receiver, intervenor
or conservator of, or trustee or similar officer for, the Company or any
Guarantor or any substantial part of its property, or otherwise, all as though
such payment had not been made.

                11.27       Amendment and Restatement.

(a)           From and after the
Restatement Effective Time, this Agreement amends and restates in its entirety
the Existing Credit Agreement; the Existing Credit Agreement shall thereafter
be of no further force and effect except to evidence (i) the incurrence by
the Company of the Loans and the other “Obligations” under and as defined
therein (whether or not such “Obligations” are contingent as of the Restatement
Effective Time), (ii) the representations and warranties made by any Loan
Party prior to the Restatement Effective Time and (iii) any action or
omission performed or required to be performed pursuant to the Existing Credit
Agreement prior to the Restatement Effective Time (including any failure, prior
to the Restatement Effective Time, to comply with the covenants contained in
such Existing Credit Agreement).  The
amendments and restatements set forth herein shall not cure any breach thereof
or any “Default” or “Event of Default” under and as defined in the Existing
Credit Agreement existing prior to the Restatement Effective Time.  This Agreement does not constitute and shall
not be construed to 

 

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evidence a novation of or a payment and readvance of any of the “Obligations”
(as defined in the Existing Credit Agreement) heretofore outstanding under the
Existing Credit Agreement, it being the intention of the parties hereto that
this Agreement provide for the terms and conditions of the same Loans and other
“Obligations” as were then outstanding under the Existing Credit Agreement.

(b)           The terms and
conditions of this Agreement and the Administrative Agent’s and the Lenders’
rights and remedies under this Agreement and the other Loan Documents shall
apply to all of the Loans and other “Obligations” incurred under the Existing
Credit Agreement.

(c)           The Company
reaffirms the Liens granted pursuant to the Existing Loan Documents to the
Collateral Trustee for the benefit of the Secured Parties, which Liens shall
continue in full force and effect during the term of this Agreement and any
renewals or extensions thereof and shall continue to secure the Sharing
Obligations.

(d)           From and after the
Restatement Effective Time, except as the context otherwise provides,
(i) all references to the Existing Credit Agreement (or to any amendment,
supplement, modification or amendment and restatement thereof) in the Loan
Documents (other than this Agreement) shall be deemed to refer to the Existing
Credit Agreement as amended and restated hereby and as the same may be further
amended, restated, supplemented or otherwise modified from time to time
pursuant to the terms of this Agreement and of the Intercreditor Agreement,
(ii) all references to any section (or subsection) of the Existing Credit
Agreement in any Loan Document (but not herein) shall be amended to become mutatis mutandis, references to the corresponding provisions
of the Existing Credit Agreement, as amended and restated by this Agreement and
as the same may be further amended, restated, supplemented or otherwise
modified from time to time pursuant to the terms of this Agreement and of the
Intercreditor Agreement, and (iii) all references to this Agreement herein
(including for purposes of indemnification and reimbursement of fees) shall be
deemed to be references to the Existing Credit Agreement as amended and
restated hereby and as the same may be further amended, restated, supplemented
or otherwise modified from time to time pursuant to the terms of this Agreement
and of the Intercreditor Agreement.

(e)           This amendment and
restatement is limited as written and is not a consent to any other amendment,
restatement, waiver or other modification, whether or not similar, and, except
as expressly provided herein or in any other Loan Document, all terms and
conditions of the Loan Documents remain in full force and effect unless
otherwise specifically amended by this Agreement or any other Loan Document.

                11.28       Amendment and Restatement of the First Lien Credit
Agreement.  Each Agent and each
Lender hereby consents to the First Amendment to the Second Amended and
Restated Credit Agreement of the Company described in the definition of “First
Lien Credit Agreement”.

[THE REMAINDER OF THIS PAGE IS LEFT BLANK]

 

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

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VENOCO, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WHITTIER PIPELINE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BMC, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Venoco, Inc., General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (LP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (GP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY NORTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH TEXAS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice to the Company and the
  Guarantors: 

  
	
   

  	
  Principal Place of Business and Chief
  Executive Office:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  370 17th Street, Suite 2950

  
	
   

  	
   

  	
   

  	
  Denver, Colorado 80202-1370 

  
	
   

  	
   

  	
   

  	
  Attention: Chief Financial Officer 

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (303) 626-8315

  

 

 

	
   

  	
  ADMINISTRATIVE
  AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS
  BRANCH, as Administrative Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  
	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Gregory S. Richards

  
	
   

  	
   

  	
  Name: 

  	
  Gregory S. Richards

  
	
   

  	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Eleven
  Madison Avenue

  
	
   

  	
   

  	
   

  	
  New
  York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.1:

  	
  (212)
  448-3755

  
	
   

  	
  Facsimile
  No.2:

  	
  (212)
  322-0419

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Vanessa
  Gomez

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Credit
  Suisse

  
	
   

  	
   

  	
   

  	
  Transaction
  Management Group

  
	
   

  	
   

  	
   

  	
  Eleven
  Madison Avenue

  
	
   

  	
   

  	
   

  	
  New
  York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (212)
  743-2375

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Lillian
  Cortes

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Applicable
  Lending Office

  
	
   

  	
  for
  Base Rate Loans and

  
	
   

  	
  LIBO
  Rate Loans:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  One
  Madison Avenue

  
	
   

  	
   

  	
   

  	
  New
  York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.1:

  	
  (212)
  538-6851

  
	
   

  	
  Facsimile
  No.2:

  	
  (212)
  325-8317

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Ed
  Markowski

  

 

 

	
   

  	
  SYNDICATION
  AGENT:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN
  BROTHERS INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Ogden

  
	
   

  	
   

  	
  Name:

  	
  Jeff Ogden

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile
  No.:

  	
  646-758-1986

  
	
   

  	
  Attention:

  	
  Frank
  Turner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile
  No.:

  	
  212-520-0450

  
	
   

  	
  Attention:

  	
  Cindy EngExhibit 10.2

FIRST AMENDMENT TO THE

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIRST AMENDMENT TO THE SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”), dated
and effective as of April 28, 2006 (the “Amendment Effective Date”), which amends that
certain Second Amended and Restated Credit Agreement dated as of March 30, 2006
by and among VENOCO, INC., a Delaware corporation (the “Company”),
the Original Guarantors, each of the Lenders party thereto, BANK OF MONTREAL, a
Canadian chartered bank acting through certain of its U.S. branches or
agencies, as Administrative Agent (in such capacity, the “Administrative
Agent”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, and LEHMAN
COMMERCIAL PAPER INC., as Co-Syndication Agents and Co-Documentation Agents (as
in effect immediately prior to the Amendment Effective Date, the “Credit Agreement”), is by and among the Company, each of
the Original Guarantors and each of the TexCal Subsidiaries, as Guarantors,
each of the Lenders party hereto and the Administrative Agent.

WHEREAS, the Company has requested that the Credit
Agreement be amended to allow FORTIS CAPITAL CORP., ALLIED IRISH BANKS
P.L.C., AMEGY BANK NATIONAL ASSOCIATION, UNION BANK OF CALIFORNIA, N.A. AND BANK OF OKLAHOMA, NATIONAL
ASSOCIATION (collectively, the “New Lenders”) to
become “Lenders” party to the Credit Agreement, as set forth herein;

WHEREAS, the Company has
requested that the Credit Agreement be amended to reflect the resignation of
each of Credit Suisse, Cayman Islands Branch and Lehman Commercial Paper Inc.
as a Co-Documentation Agent under the Credit Agreement and to appoint Fortis Capital Corp. as Documentation
Agent under the Credit Agreement, as set forth herein;

WHEREAS, the Company has
requested that the Credit Agreement be amended to make certain other changes to
the Credit Agreement on the terms and conditions set forth in this Amendment;
and

WHEREAS, all of the Lenders (including the New
Lenders) have agreed to such amendments subject to the terms and conditions set
forth in this Amendment.

                NOW, THEREFORE, in consideration
of the mutual agreements, provisions and covenants contained herein and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows.  As used herein, the term “Current Lenders” means the Lenders
identified as the Current Lenders on Schedule I hereto.  Capitalized terms used but not otherwise
defined herein shall have the meanings assigned such terms in the Credit
Agreement.  The rules of interpretation
set forth in Section 1.2 of the Credit Agreement are incorporated in this
Amendment as if set forth herein.

Section 1.               Lender Transactions.

 

1

 

(a)           Each Current Lender hereby sells,
transfers and assigns to the other Current Lenders and the New Lenders, and
each other Current Lender and each New Lender hereby purchases, assumes and undertakes
from such Current Lender, without recourse and without representation or
warranty (except as provided in this Section 1) a percentage equal to the
percentage set forth opposite such Lender’s name on Schedule I hereto
under the column “Pro Rata Shares Purchased on the Amendment Effective Date” of
(i) the Maximum Loan Amount and the Loans of such Current Lender and (ii) all
related rights, benefits, obligations, liabilities and indemnities of such
Current Lender under and in connection with the Credit Agreement, each
Guaranty, the Mortgages, each other Security Document and the other Loan
Documents and all Collateral and other security for the Obligations.  

(b)           Upon the effectiveness of this
Amendment and by its execution and delivery hereof, each of the
New Lenders shall be a party to the Credit Agreement, shall have all the rights
and obligations of a “Lender” under the Credit Agreement and the other Loan
Documents as if each were a signatory thereto, and shall agree, and does hereby
agree, to be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents to which the Lenders are a party, in
each case, as if each were a signatory thereto.

(c)           Each of the New Lenders hereby
represents and warrants as follows:  (i)
such New Lender has fully reviewed the terms of the Credit Agreement and the
other Loan Documents, copies of which, together with copies of the documents
which were required to be delivered as a condition to the making of the initial
Loans thereunder, have been delivered to such New Lender by the Administrative
Agent, and such New Lender has independently and without reliance upon any
other Lender or the Administrative Agent, and based on such information as such
New Lender has deemed appropriate, made its own credit analysis and decision to
enter into this Amendment and (ii) if such New Lender is not incorporated,
formed or organized under the laws of the United States of America or a state
thereof, such New Lender has contemporaneously herewith delivered to the
Administrative Agent and the Company such documents as are required by the
Credit Agreement.  Each of the New
Lenders hereby (x) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such powers and discretion
under the Loan Documents as are delegated to the Administrative Agent by the
terms thereof, together with such powers and discretion as are reasonably
incidental thereto; and (y) agrees that it will perform in accordance with
their terms all of the obligations that by the terms of the Credit Agreement or
any other Loan Document are required to be performed by it as a Lender.

(d)           Each of the New
Lenders and each of the Current Lenders hereby advise each other party hereto
that its respective address for notices and its respective Lending Office(s)
shall be as set forth below its name on its respective signature page hereto.

(e)           Upon the
effectiveness of this Amendment and by its execution and delivery hereof, each
of Credit Suisse, Cayman Islands Branch and Lehman Commercial Paper Inc. shall
resign as Co-Documentation Agent under the Credit Agreement and Fortis Capital Corp. shall become Documentation Agent under the Credit
Agreement.

(f)            Renewal Notes. 
In furtherance of the foregoing transactions, the Company shall execute
and deliver to each of the Lenders its replacement promissory notes 

 

2

 

dated
the Amendment Effective Date in the form of Annexes “A-1” through “A-8”
attached hereto (“Renewal Notes”).  The principal amount of each Renewal Note
delivered to each Lender shall equal such Lender’s Maximum Loan Amount.  The Renewal Notes shall, upon acceptance by
the Lenders, and as of the Amendment Effective Date constitute replacements and
substitutions for the Notes delivered pursuant to the Credit Agreement.  All references in the Credit Agreement and
the other Loan Documents to the Notes shall, from and after the Amendment
Effective Date, be deemed to refer to the Renewal Notes, the same as if such
Renewal Notes were the Notes defined, described and referred to in the Credit
Agreement.

(g)           As a result of the
transactions effected by this Section 1 and after giving effect to the other
agreements set forth in this Amendment, upon effectiveness of this Amendment,
for purposes of Section 2.1(a) of the Credit Agreement, as amended hereby and
for all other purposes of the Credit Agreement, as amended hereby, each Lender’s
Maximum Loan Amount and Pro Rata Share shall be as set forth in Schedule I
hereto.

Section 2.               Amendments.  The Credit Agreement is hereby amended as follows:

(a)           The definition of “Change
of Control” is amended and restated to read in its entirety as follows:

                “Change of Control”
means (a) a purchase or acquisition, directly or indirectly, by any “person” or
“group” within the meaning of Section 13(d)(3) and 14(d)(2) of the Exchange Act
(a “Group”), other than a
Permitted Holder, of “beneficial ownership” (as such term is defined in Rule
13d-3 under the Exchange Act) of securities of the Company which, together with
any securities owned beneficially by any “affiliates” or “associates” of such
Group (as such terms are defined in Rule 12b-2 under the Exchange Act), shall
represent more than (i) fifty percent (50%) or (ii) after a Qualifying IPO,
thirty percent (30%), in the case of (i) or (ii), of the combined voting power
of the Company’s securities which are entitled to vote generally in the
election of directors and which are outstanding on the date immediately prior
to the date of such purchase or acquisition; provided, however, that no such “Change
of Control” under clause (a)(ii) of this definition of “Change of Control”
shall be deemed to have occurred after a Qualifying IPO, if, and for so long
as, Permitted Holders have “beneficial ownership” (as such term is defined in
Rule 13d-3 under the Exchange Act) of more than fifty percent (50%) of the
combined voting power of the Company’s securities which are entitled to vote
generally in the election of directors and which are outstanding on the date of
determination; (b) a sale of all or substantially all of the assets of the
Company and its Subsidiaries taken as a whole to any Person or Group; (c) the
liquidation or dissolution of the Company; or (d) the first day on which a
majority of the Board of Directors of the Company are not Continuing Directors
(as herein defined).  As herein defined, “Continuing Directors” means any member of the Board of
Directors of the Company who (x) is a member of such Board of Directors as of
the Effective Date or (y) was nominated for election or elected to such Board
of Directors with 

 

3

 

the affirmative vote of
two-thirds of the Continuing Directors who were members of such Board of
Directors at the time of such nomination or election.

(b)           The definition of “Commitment
Letter” is hereby amended by replacing the period at the end of such definition
with the phrase “, as amended, restated, supplemented or otherwise modified
from time to time.”.

(c)           The definition of “Fee
Letter Agreement” is hereby amended by replacing the period at the end of such
definition with the phrase “, as amended, restated, supplemented or otherwise
modified from time to time.”.

(d)           The following new
definition of “Optionee Payment” is hereby inserted into the Credit Agreement
in the appropriate alphabetical order:

                “Optionee Payment”
means cash bonus payments in the aggregate amount not to exceed $1,500,000 that
certain existing holders of options outstanding under the Company’s 2000 Stock
Incentive Plan are entitled to receive upon the declaration and payment  of any dividends paid by the Company on its
common stock (including the non-cash dividends described on Schedule 8.6).”

(e)           The definition of “Second
Lien Debt Documents” is hereby amended and restated to read in its entirety as
follows:

                “Second
Lien Debt Documents” means each of the Second Lien Loan
Documents and the Senior Note Debt Documents.”

(f)            The definition of “Second
Lien Debt Instruments” is hereby amended and restated to read in its entirety
as follows:

                “Second Lien Debt
Instruments” means each of the Second Lien Term Loan Agreement
and the Senior Notes Indenture.”

(g)           The definition of “Second
Lien Term Loan Agreement” is hereby amended and restated to read in its
entirety as follows:

                “Second Lien Term Loan
Agreement” means the Amended and Restated Term Loan Agreement
among the Company, the Guarantors party thereto, the several lenders from time
to time party thereto, Credit Suisse, Cayman Islands Branch, as Administrative
Agent, Credit Suisse Securities (USA) LLC and Lehman Brothers Inc., as Joint
Lead Arrangers, Harris Nesbitt Corp., as Co-Arranger and Lehman Brothers Inc.,
as Syndication Agent, dated as of
April 28, 2006, which amends and restates that certain Term Loan Agreement
dated as of the Effective Date, as such may be further amended, restated,
supplemented or otherwise modified in accordance with the terms hereof.

 

4

 

(h)           Section 2.8(b) is hereby amended and
restated to read in its entirety as follows:

“(b)         Letter of
Credit Fees. The Company agrees to pay (i) to the Administrative
Agent for the account of the Lenders a Letter of Credit fee for each Letter of
Credit, due and payable quarterly on the first day of the month following the
last Business Day of each quarter and at the Termination
Date, in arrears from the date of Issuance in an amount per annum equal to the
product equal to the Letter of Credit Rate set forth on the Pricing Grid
multiplied by the aggregate amount available under each Letter of Credit from
the date of Issuance thereof to the date on which such Letter of Credit expires
or is terminated (such fees shall be prorated for any period less than a full
year but shall not be refunded in the event any such Letter of Credit is
terminated prior to its expiry date), (ii) to the Issuing Lender for its
account a fee, due and payable quarterly on the first day of the month
following the last Business Day of each quarter and
at the Termination Date, for the Issuance of each Letter of Credit in an amount
per annum (calculated on the basis of a year of 360 days) equal to 0.00125
multiplied by the aggregate amount available under each Letter of Credit from
the date of Issuance thereof to the date on which such Letter of Credit expires
or is terminated (such fees shall be prorated for any period less than a full
year but shall not be refunded in the event any such Letter of Credit is
terminated prior to its expiry date) and (iii) to the Issuing Lender, for its
account on demand its customary letter of credit transactional fees and
out-of-pocket expenses for each Letter of Credit Issued by it, including
amendment fees, payable with respect to each such Letter of Credit. The
Administrative Agent shall pay to each Lender its pro-rata share of the Letter
of Credit fees paid pursuant to this Section 2.8(b)(i).  The Administrative Agent shall pay to the
Issuing Lender the Letter of Credit fees paid pursuant to this Section
2.8(b)(ii) and (iii).”

(i)            Section 6.11 is
hereby amended by replacing the phrase “December 31, 2005” contained therein
with the phrase “December 31, 2005, as amended through April 28, 2006”.

(j)            The introduction to
Article VII is hereby amended by deleting the phrase “unless the Lenders waive
compliance in writing” contained therein.

(k)           Section 7.1(a) is
hereby amended by replacing the phrase “Required Lenders” contained therein
with the phrase “Administrative Agent”.

(l)            Section 7.2(c) is
hereby amended by (i) replacing the phrase “the Lenders” contained therein with
the phrase “the Administrative Agent” and (ii) replacing the phrase “acceptable
to the Administrative Agent and the Required Lenders in their sole discretion”
contained therein with the phrase “reasonably acceptable to the Administrative
Agent”

(m)          Section 7.2(d) is
hereby amended by replacing the phrase “Lenders” contained therein with the
phrase “Administrative Agent, at the request of any Lender”.

(n)           Section 7.13 is
hereby amended by replacing the phrase “and (v)” contained therein with the
phrase “(v) the acquisition of the real Property described in Section 8.2(g)
for a cash purchase price not to exceed $300,000; and (vi)”.

 

5

 

(o)           The introduction to
Article VIII is hereby amended by deleting the phrase “unless the Lenders waive
compliance in writing” contained therein.

(p)           Section 8.2(g) is
hereby amended and restated to read in its entirety as follows:

“(g)         the Disposition of a 50% undivided interest in approximately
ten acres of real Property located in Carpinteria, California, which interest
may hereafter be acquired by the Company from ExxonMobil Corporation or an
Affiliate thereof; or”

(q)           Section 8.4(f) is
hereby amended by (i) replacing the word “process” contained therein with the
word “processing” and (ii) replacing the phrase “, which do not in any case,”
contained therein with the phrase “that do not, in any case, (x) constitute an
investment in any state law partnership or other Person or (y)”.

(r)            Section 8.4(i) is
hereby amended by deleting the phrase “solely to finance capital expenditures
and expenditures mandated by applicable Requirements of Law” contained therein.

(s)           Section 8.5(e) is
hereby amended and restated to read in its entirety as follows:

“(e)         in addition to the Indebtedness otherwise permitted under
this Section 8.5, Indebtedness described in the definition thereof of the Loan
Parties not to exceed $5,000,000 in the aggregate at any time outstanding; and”

(t)            Section 8.6 is
hereby amended by replacing the phrase “Except as set forth on Schedule 8.6”
contained therein with the phrase “Except as set forth on Schedule 8.6 and for
the Optionee Payment”.

(u)           Section 8.8(f) is
hereby amended and restated to read in its entirety as follows:

“(f)          Guaranty Obligations of the Guarantors
under or in respect of (i) the Second Lien Debt Documents and (ii) Indebtedness
incurred pursuant to Section 8.5(e).”

(v)           Section 8.9(i) is
hereby amended and restated to read in its entirety as follows:

“(i)
purchase, redeem or otherwise acquire for value any of its Capital Stock, now
or hereafter outstanding from the holders thereof (other than from such holders
that are Loan Parties);”

(w)          Section 8.9(ii) is
hereby amended and restated to read in its entirety as follows:

 

6

 

“(ii)
declare or pay any distribution, dividend or return capital to its members,
partners or stockholders or holders of warrants, rights or options to acquire
its membership interests, partnership interests or shares (other than to such
Persons that are Loan Parties), or make any distribution of assets in cash or
in kind to its members, partners, stockholders or holders of warrants, rights
or options to acquire its membership interests, partnership interests or shares
(other than to such Persons that are Loan Parties);”

(x)            Section 8.10(a)(ii)
is hereby amended by replacing the phrase “Required Lenders” contained therein
with the phrase “Administrative Agent”.

(y)           Section 8.11 is
hereby amended by replacing the word “transferred” in the two places in which
such word appears in such Section, in each case, with the phrase “transferred
(excluding transfers effected by means of dividends of Property or Capital
Stock permitted hereunder)”.

Section 3.               Amendment and Ratification.  Upon the effectiveness hereof as provided in
Section 4 of this Amendment, this Amendment shall be deemed to be an
amendment to the Credit Agreement, and the Credit Agreement, as modified
hereby, is hereby ratified, approved and confirmed to be in full force and
effect in each and every respect.  Except
as expressly provided by the amendments set forth in Section 2 of this
Amendment, the execution, delivery and effectiveness of this Amendment shall
neither operate as a waiver of any right, power or remedy of any Lender or any
Agent, nor constitute a waiver of any provision of any of the Loan
Documents.  All references to the Credit
Agreement in any other document, instrument, agreement or writing shall
hereafter be deemed to refer to the Credit Agreement as amended hereby.

Section 4.               Conditions to Effectiveness.  The effectiveness of this Amendment is
subject to the condition that, on or before the Amendment Effective Date, the Administrative Agent shall have received
all of the following, in form and substance satisfactory to the Administrative
Agent and each Lender (including each New Lender), and in sufficient copies for
each Lender (including each New Lender):

(a)           Amendment. 
This Amendment, duly executed and delivered by each of the Company and
the Guarantors;

(b)           Resolutions; Incumbency; Organization Documents.  (i) Resolutions of the board of directors of
the Company and members or the board of directors of each Guarantor or its
general partner, as applicable, authorizing this Amendment, certified as of the
Amendment Effective Date by the Secretary or an Assistant Secretary of such
Person; (ii) certificates of the Secretary of the Company and the Secretary of
each Guarantor certifying the names and true signatures of the officers of such
Person authorized to execute, deliver and perform, as applicable, this
Amendment; and (iii) the Organization Documents of the Company and of each
Guarantor as in effect on the Amendment Effective Date, certified by the
Secretary or Assistant Secretary of the such Person as of the Amendment
Effective Date;

 

7

 

(c)           Payment of Fees. 
Evidence of payment by the Company of all accrued and unpaid fees, costs
and expenses owed pursuant to the Credit Agreement or this Amendment, including
the Fee Letter Agreement, in each case to the extent then due and payable at
the Amendment Effective Date, including any such costs, fees and expenses
arising under or referenced in Sections 2.8 and 11.4 of the Credit Agreement;

(d)           Certificate. 
A certificate signed by a Responsible Officer, dated as of the Amendment
Effective Date, stating that (i) the representations and warranties contained
in Article VI and Section 4.5(b) of the Credit Agreement are true and correct
on and as of the Amendment Effective Date, as though made on and as of such
date; (ii) no litigation is pending or threatened against the Company or any
Subsidiary in which there is a reasonable probability of an adverse decision
which would result in a Material Adverse Effect; and (iii) there has occurred
no event or circumstance that has resulted or would reasonably be expected to
result in a Material Adverse Effect since December 31, 2004; and

(e)           Other Documents. 
Such other approvals, opinions, documents or materials as the
Administrative Agent or any Lender (including any New Lender) may reasonably request.

Section 5.               Representations and Warranties.  The Company and each Guarantor hereby
represents and warrants that, as of the Amendment Effective Date, after giving
effect to this Amendment:

(a)           Bring-Down
of Representations and Warranties. 
The representations and warranties of the Company and each Guarantor
contained in Article VI and Section 4.5(b) of the Credit Agreement are true and
correct on and as of the Amendment Effective Date, as though made on and as of
such date.

(b)           No
Litigation.  No litigation is pending
or threatened against the Company or any Subsidiary in which there is a
reasonable probability of an adverse decision which would result in a Material
Adverse Effect.

(c)           No
Material Adverse Effect.  There has
occurred no event or circumstance that has resulted or would reasonably be
expected to result in a Material Adverse Effect since December 31, 2004.

(d)           No
Default or Event of Default.  No
event has occurred and is continuing which constitutes a Default, an Event of
Default or both.

Section 6.               Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS
AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.

Section 7.               Costs
and Expenses.  The Company shall pay
all reasonable costs and expenses incurred by the Administrative Agent or any
other Agent, the Lenders or any of their Affiliates in connection with the
development, preparation, administration and execution of this Amendment,
including Attorney Costs incurred by any such Person with respect thereto.

 

8

 

Section 8.               Counterparts.  This Amendment may be executed in any number
of separate counterparts, no one of which need be signed by all parties; each
of which, when so executed, shall be deemed an original, and all of such
counterparts taken together shall be deemed to constitute but one and the same
instrument.  A fully executed counterpart
of this Amendment by facsimile signatures shall be binding upon the parties
hereto.

[Signature Pages Follow]

 

 

9

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers as of
the date first set forth above, to be effective as of the Amendment Effective
Date.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VENOCO, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WHITTIER PIPELINE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BMC, LTD.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Venoco, Inc., General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (LP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (GP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

 

	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY NORTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH TEXAS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M.
  Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice to the Company and the
  Guarantors: 

  
	
   

  	
  Principal Place of Business and Chief
  Executive Office:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  	
  370 17th Street, Suite 2950

  
	
   

  	
   

  	
   

  	
  Denver, Colorado 80202-1370 

  
	
   

  	
   

  	
   

  	
  Attention: Chief Financial Officer 

  
	
   

  	
   

  	
   

  	
  Facsimile No.: (303) 626-8315

  

 

 

	
   

  	
  ADMINISTRATIVE
  AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK
  OF MONTREAL, acting through its U.S. branches and agencies,
  including its Chicago, Illinois branch, as Administrative Agent and as a
  Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Bliss

  
	
   

  	
   

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  115
  South LaSalle Street

  
	
   

  	
   

  	
   

  	
  11th
  Floor West

  
	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (312)
  765-8078

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Terri
  Perez-Ford, Specialist

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Bank
  of Montreal

  
	
   

  	
   

  	
   

  	
  Houston
  Agency

  
	
   

  	
   

  	
   

  	
  700 Louisiana Street

  
	
   

  	
   

  	
   

  	
  4400
  Bank of America Center

  
	
   

  	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (713)
  223-4007

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Joseph
  A. Bliss

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Applicable
  Lending Office

  
	
   

  	
  for
  Base Rate Loans and

  
	
   

  	
  LIBO
  Rate Loans:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  115
  South LaSalle Street,

  
	
   

  	
   

  	
   

  	
  11th
  Floor West

  
	
   

  	
   

  	
   

  	
  Chicago,
  Illinois 60603

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (312)
  765-8078

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Terri
  Perez-Ford, Specialist

  

 

 

	
   

  	
  CO-SYNDICATION
  AGENT AND A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  
	
   

  	
   

  	
  Name:

  	
  Vanessa Gomez

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gregory S. Richards

  
	
   

  	
   

  	
  Name:

  	
  Gregory S. Richards

  
	
   

  	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Eleven
  Madison Avenue

  
	
   

  	
   

  	
   

  	
  New
  York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.1:

  	
  (212)
  448-3755

  
	
   

  	
  Facsimile
  No.2:

  	
  (212)
  322-0419

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Vanessa
  Gomez

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Credit
  Suisse

  
	
   

  	
   

  	
   

  	
  Transaction Management Group

  
	
   

  	
   

  	
   

  	
  Eleven Madison Avenue

  
	
   

  	
   

  	
   

  	
  New York, NY 10010

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (212)
  743-2375

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Lillian
  Cortes

  

 

 

	
   

  	
  CO-SYNDICATION
  AGENT AND A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN
  COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeff Ogden

  
	
   

  	
   

  	
  Name:

  	
  Jeff Ogden

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile
  No.:

  	
  646-758-1986

  
	
   

  	
  Attention:

  	
  Frank
  Turner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile
  No.:

  	
  212-520-0450

  
	
   

  	
  Attention:

  	
  Cindy
  Eng

  

 

 

	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FORTIS CAPITAL CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David Montgomery

  
	
   

  	
   

  	
  Name:

  	
  David Montgomery

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Trond Rokholt

  
	
   

  	
   

  	
  Name:

  	
  Trond Rokholt

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  15455 North Dallas Parkway,

  
	
   

  	
   

  	
   

  	
  Suite 1400

  
	
   

  	
   

  	
   

  	
  Addision, Texas 75001

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (203)
  705-5898

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Sharon
  D. Hill-Bryant

  

 

 

	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ALLIED IRISH BANKS P.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Connelly

  
	
   

  	
   

  	
  Name:

  	
  Mark Connelly

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aidan Lanigan

  
	
   

  	
   

  	
  Name:

  	
  Aidan Lanigan

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  405 Park Avenue, 4th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No.:

  	
  (212) 339-8325

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Mark Connelly

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  405 Park Avenue, 4th Floor

  
	
   

  	
   

  	
   

  	
  New York, NY 10022

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (212)
  339-8325

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Bridget
  Doyle

  

 

 

	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMEGY BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tracy T. Butz

  
	
   

  	
   

  	
  Name:

  	
  Tracy T. Butz

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  4400 Post Oak Parkway #404

  
	
   

  	
   

  	
   

  	
  Houston, TX 77027

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No.:

  	
  (713) 561-0345

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  W. Bryan Chapman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  P.O. Box 27459

  
	
   

  	
   

  	
   

  	
  Houston, TX 77227

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No.:

  	
  (713)
  639-7467

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Dana
  Chargois

  

 

 

	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNION BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kimberly Coll

  
	
   

  	
   

  	
  Name:

  	
  Kimberly Coll

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  600 N. Akard, Suite 4200

  
	
   

  	
   

  	
   

  	
  Dallas, TX 75201

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No.:

  	
  (214) 922-4209

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Kimberly Coil

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  with
  a copy to:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1980 Saturn Street,

  
	
   

  	
   

  	
   

  	
  Mail Code V01-120

  
	
   

  	
   

  	
   

  	
  Monterey Park, CA 91755

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile
  No. 1:

  	
  (323)
  720-2251

  
	
   

  	
  Facsimile
  No. 2:

  	
  (323)
  720-2252

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Silvia
  Cruz

  

 

 

	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF OKLAHOMA,

  
	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Allen Rheem

  
	
   

  	
   

  	
  Name:

  	
  Allen Rheem

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notices:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  1625 Broadway, Suite 1570

  
	
   

  	
   

  	
   

  	
  Denver, CO 80202

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No.:

  	
  303-534-9499

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Allen Rheem

  

 

 

SCHEDULE
I

 

	
  Lender

  	
   

  	
  Pro Rata Shares

  on the

  Amendment

  Effective Date

  	
   

  	
  Maximum

  Loan Amount

  	
   

  
	
  CURRENT LENDERS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of Montreal

  	
   

  	
  $

  	
  73,000,000

  	
   

  	
  $

  	
  109,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Credit Suisse, Cayman
  Islands Branch

  	
   

  	
  $

  	
  13,500,000

  	
   

  	
  $

  	
  20,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lehman Commercial Paper
  Inc.

  	
   

  	
  $

  	
  13,500,000

  	
   

  	
  $

  	
  20,250,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  NEW LENDERS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Fortis Capital Corp.

  	
   

  	
  $

  	
  35,000,000

  	
   

  	
  $

  	
  52,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Allied Irish Banks p.l.c.

  	
   

  	
  $

  	
  25,000,000

  	
   

  	
  $

  	
  37,500,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Amegy Bank National
  Association

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  $

  	
  30,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Union Bank of California,
  N.A.

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  $

  	
  15,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of Oklahoma, National
  Association

  	
   

  	
  $

  	
  10,000,000

  	
   

  	
  $

  	
  15,000,000

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00103-of-00352.parquet"}]]