Document:

Exhibit 10.1

 

Execution Version

 

 

 

 

$55,000,000 Revolving Loan

 

CREDIT AGREEMENT

 

dated as of

 

February 15, 2005

 

among

 

HILAND OPERATING, LLC,

as Borrower

 

The Lenders Party Hereto

 

and

 

MIDFIRST BANK,

as Administrative Agent

 

 

 

 

 

 

TABLE OF CONTENTS

 

	
   

  	
  ARTICLE I
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
   

  
	
  SECTION 1.02.

  	
  Classification of Loans and Borrowings

  	
   

  
	
  SECTION 1.03.

  	
  Terms Generally

  	
   

  
	
  SECTION 1.04.

  	
  Accounting Terms; GAAP

  	
   

  
	
  SECTION 1.05.

  	
  Annualized Financial Information

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE II The Credits

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 2.01.

  	
  Commitments

  	
   

  
	
  SECTION 2.02.

  	
  Loans and Borrowings

  	
   

  
	
  SECTION 2.03.

  	
  Requests for Revolving Borrowings

  	
   

  
	
  SECTION 2.04.

  	
  Agent Advances

  	
   

  
	
  SECTION 2.05.

  	
  Intentionally Deleted

  	
   

  
	
  SECTION 2.06.

  	
  Letters of Credit

  	
   

  
	
  SECTION 2.07.

  	
  Funding of Borrowings

  	
   

  
	
  SECTION 2.08.

  	
  Interest Elections

  	
   

  
	
  SECTION 2.09.

  	
  Termination and Reduction of Commitments

  	
   

  
	
  SECTION 2.10.

  	
  Repayment of Loans; Evidence of Debt

  	
   

  
	
  SECTION 2.11.

  	
  Prepayment of Loans

  	
   

  
	
  SECTION 2.12.

  	
  Fees

  	
   

  
	
  SECTION 2.13.

  	
  Interest

  	
   

  
	
  SECTION 2.14.

  	
  Alternate Rate of Interest

  	
   

  
	
  SECTION 2.15.

  	
  Increased Costs

  	
   

  
	
  SECTION 2.16.

  	
  Break Funding Payments

  	
   

  
	
  SECTION 2.17.

  	
  Taxes

  	
   

  
	
  SECTION 2.18.

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

  	
   

  
	
  SECTION 2.19.

  	
  Mitigation Obligations; Replacement of
  Lenders

  	
   

  
	
  SECTION 2.20.

  	
  Increase of Revolver A Commitments

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE III Representations and
  Warranties

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
   

  
	
  SECTION 3.02.

  	
  Authorization; Enforceability

  	
   

  
	
  SECTION 3.03.

  	
  No Undisclosed Liabilities

  	
   

  
	
  SECTION 3.04.

  	
  Governmental Approvals; No Conflicts

  	
   

  
	
  SECTION 3.05.

  	
  Financial Condition; No Material Adverse
  Change

  	
   

  
	
  SECTION 3.06.

  	
  Properties

  	
   

  
	
  SECTION 3.07.

  	
  Litigation and Environmental Matters

  	
   

  
	
  SECTION 3.08.

  	
  Compliance with Laws and Agreements

  	
   

  
	
  SECTION 3.09.

  	
  Investment and Holding Company Status

  	
   

  
	
  SECTION 3.10.

  	
  Taxes

  	
   

  
	
  SECTION 3.11.

  	
  ERISA

  	
   

  
	
  SECTION 3.12.

  	
  Disclosure

  	
   

  
	
  SECTION 3.13.

  	
  Labor Matters

  	
   

  
	
  SECTION 3.14.

  	
  Subsidiaries

  	
   

  

 

i

 

	
  SECTION 3.15.

  	
  Margin Stock

  	
   

  
	
  SECTION 3.16.

  	
  Licenses and Permits

  	
   

  
	
  SECTION 3.17.

  	
  Reportable Transaction

  	
   

  
	
  SECTION 3.18.

  	
  Public Utility Holding Company Act

  	
   

  
	
  SECTION 3.19.

  	
  Senior Debt Status

  	
   

  
	
  SECTION 3.20.

  	
  Priority; Security Matters

  	
   

  
	
  SECTION 3.21.

  	
  Solvency

  	
   

  
	
  SECTION 3.22.

  	
  Foreign Assets Control Regulation

  	
   

  
	
  SECTION 3.23.

  	
  Claims and Liabilities

  	
   

  
	
  SECTION 3.24.

  	
  Material Contracts

  	
   

  
	
  SECTION 3.25.

  	
  Certain Representations Regarding the
  Parent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IV Conditions

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 4.01.

  	
  Effective Date

  	
   

  
	
  SECTION 4.02.

  	
  Each Credit Event

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE V Affirmative Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 5.01.

  	
  Financial Statements; Ratings Change and
  Other Information

  	
   

  
	
  SECTION 5.02.

  	
  Notices of Material Events

  	
   

  
	
  SECTION 5.03.

  	
  Existence; Conduct of Business

  	
   

  
	
  SECTION 5.04.

  	
  Payment of Obligations

  	
   

  
	
  SECTION 5.05.

  	
  Maintenance of Properties; Insurance

  	
   

  
	
  SECTION 5.06.

  	
  Books and Records; Inspection Rights

  	
   

  
	
  SECTION 5.07.

  	
  Compliance with Laws

  	
   

  
	
  SECTION 5.08.

  	
  Use of Proceeds and Letters of
  Credit

  	
   

  
	
  SECTION 5.09.

  	
  Compliance with ERISA

  	
   

  
	
  SECTION 5.10.

  	
  Real Property Collateral

  	
   

  
	
  SECTION 5.11.

  	
  Compliance with Environmental Laws

  	
   

  
	
  SECTION 5.12.

  	
  Further Assurances

  	
   

  
	
  SECTION 5.13.

  	
  Tax Shelter Regulations

  	
   

  
	
  SECTION 5.14.

  	
  Compliance with Leases; Material
  Contracts

  	
   

  
	
  SECTION 5.15.

  	
  Clean-Down Period

  	
   

  
	
  SECTION 5.16.

  	
  Subsidiaries

  	
   

  
	
  SECTION 5.17.

  	
  Information Regarding Collateral

  	
   

  
	
  SECTION 5.18.

  	
  Post Closing Matters

  	
   

  
	
  SECTION 5.19.

  	
  Deposit Accounts

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VI Negative Covenants

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 6.01.

  	
  Indebtedness

  	
   

  
	
  SECTION 6.02.

  	
  Liens

  	
   

  
	
  SECTION 6.03.

  	
  Fundamental Changes

  	
   

  
	
  SECTION 6.04.

  	
  Investments, Loans, Advances and
  Guarantees

  	
   

  
	
  SECTION 6.05.

  	
  Swap Agreements

  	
   

  
	
  SECTION 6.06.

  	
  Restricted Payments

  	
   

  
	
  SECTION 6.07.

  	
  Transactions with Affiliates

  	
   

  
	
  SECTION 6.08.

  	
  Sales of Assets

  	
   

  
	
  SECTION 6.09.

  	
  Constituent Documents

  	
   

  

 

ii

 

	
  SECTION 6.10.

  	
  Regulation T, U and X Compliance

  	
   

  
	
  SECTION 6.11.

  	
  Sales and Leasebacks

  	
   

  
	
  SECTION 6.12.

  	
  Changes in Fiscal Year

  	
   

  
	
  SECTION 6.13.

  	
  Change in the Nature of Business

  	
   

  
	
  SECTION 6.14.

  	
  Limitation on Restrictions on
  Subsidiary Distributions

  	
   

  
	
  SECTION 6.15.

  	
  Changes to the Omnibus Agreement

  	
   

  
	
  SECTION 6.16.

  	
  Minimum Consolidated Tangible Net
  Worth

  	
   

  
	
  SECTION 6.17.

  	
  Minimum Interest Coverage Ratio

  	
   

  
	
  SECTION 6.18.

  	
  Maximum Leverage Ratio

  	
   

  
	
  SECTION 6.19.

  	
  Permitted Acquisitions

  	
   

  
	
  SECTION 6.20.

  	
  Negative Pledges, Restrictive
  Agreements, etc.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VII Events of Default

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE VIII The Administrative
  Agent

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  ARTICLE IX Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  
	
  SECTION 9.01.

  	
  Notices

  	
   

  
	
  SECTION 9.02.

  	
  Waivers; Amendments

  	
   

  
	
  SECTION 9.03.

  	
  Expenses; Indemnity; Damage Waiver

  	
   

  
	
  SECTION 9.04.

  	
  Successors and Assigns

  	
   

  
	
  SECTION 9.05.

  	
  Survival

  	
   

  
	
  SECTION 9.06.

  	
  Counterparts; Integration;
  Effectiveness

  	
   

  
	
  SECTION 9.07.

  	
  Severability

  	
   

  
	
  SECTION 9.08.

  	
  Right of Setoff

  	
   

  
	
  SECTION 9.09.

  	
  Governing Law; Jurisdiction; Consent
  to Service of Process

  	
   

  
	
  SECTION 9.10.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
  SECTION 9.11.

  	
  Headings

  	
   

  
	
  SECTION 9.12.

  	
  Confidentiality

  	
   

  
	
  SECTION 9.13.

  	
  Interest Rate Limitation

  	
   

  
	
  SECTION 9.14.

  	
  USA PATRIOT Act

  	
   

  
	
  SECTION 9.15.

  	
  Separateness

  	
   

  
	
  SECTION 9.16.

  	
  No Personal Liability of Directors,
  Officers and Employees

  	
   

  
	
  SECTION 9.17.

  	
  Collateral Matters; Swap Agreements

  	
   

  

 

SCHEDULES:

Schedule 1.01 — Security
Documents

Schedule 2.01 — Commitments

Schedule 3.03 — Disclosed
Matters

Schedule 3.06(a) — Title
Issues

Schedule 3.06(b) — Leases

Schedule 3.06(d) — Location
of Each Loan Party

Schedule 3.14 — Subsidiaries

Schedule 3.24 — Material
Contracts

Schedule 5.18 — Post
Closing Matters

Schedule 6.01 — Existing
Indebtedness

Schedule 6.02 — Existing
Liens

 

 

iii

 

Schedule 6.14 —
Existing Restrictions

 

EXHIBITS:

	
  Exhibit A
  — Form of Assignment and Assumption

  	
   

  
	
  Exhibit B
  — Form of Commitment Increase Agreement

  	
   

  
	
  Exhibit C
  — Form of New Lender Agreement

  	
   

  
	
  Exhibit D
  — Form of Guaranty Agreement (Subsidiary/Parent)

  	
   

  
	
  Exhibit E
  — Form of Borrowing Request

  	
   

  
	
  Exhibit F
  — Form of Compliance Certificate

  	
   

  
	
  Exhibit G
  — Form of Partnership Agreement

  	
   

  

 

 

iv

 

CREDIT AGREEMENT (this “Agreement”)
dated as of February 15, 2005, among HILAND OPERATING, LLC, the LENDERS
party hereto, and MIDFIRST BANK, as Administrative Agent.

 

The parties hereto agree
as follows:

 

ARTICLE I

 

Definitions

 

SECTION 1.01.                 Defined
Terms.  As used in this Agreement,
the following terms have the meanings specified below:

 

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

 

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

 

“Administrative Agent”
means MidFirst Bank, a federally chartered savings association, in its capacity
as administrative agent for the Lenders hereunder.

 

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

 

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

 

“Agent Advances”
shall have the meaning set forth in Section 2.04 hereof.

 

“Agreement” shall
have the meaning set forth in the introductory paragraph hereof.

 

“Alternate Base Rate”
means, for any day, a rate per annum equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1.50% and (c) the Federal Funds Effective Rate in effect on
such day plus 1⁄2 of 1%.  Any change
in the Alternate Base Rate due to a change in the Prime Rate, the Base
CD Rate or the Federal Funds Effective Rate shall be effective from and
including the effective date of such change in the Prime Rate, the Base
CD Rate or the Federal Funds Effective Rate, respectively.

 

“Applicable Percentage”
means, with respect to any Lender, the percentage of the total Commitments represented
by the sum of such Lender’s Revolver A Commitment and Revolver B
Commitment.  If the Commitments have
terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.

 

 

“Applicable Rate”
means, for any day during any period between two successive Financial Statement
Delivery Dates commencing on the first Financial Statement Delivery Date in
such period and ending on the day before the following Financial Statement
Delivery Date, with respect to any ABR Loan, Eurodollar Revolving Loan, or with
respect to the commitment fees payable hereunder, as the case may be, the
applicable margin per annum set forth in the appropriate column below under the
caption “ABR Spread,” “Eurodollar Spread” or “Commitment Fee Rate,” as the case
may be, for the Leverage Ratio for the fiscal period for which such financial
statements were delivered as of the Financial Statement Delivery Date:

 

	
  Leverage Ratio:

  	
   

  	
  ABR

  Spread

  	
   

  	
  Eurodollar

  Spread

  	
   

  	
  Unused

  Commitment 

  Fee
 Rate

  	
   

  
	
  Less than 1.0:1.0

  	
   

  	
  0.50

  	
  %

  	
  1.50

  	
  %

  	
  0.30

  	
  %

  
	
  Greater than or equal to 1.0:1.0 but less than
  2.5:1.0

  	
   

  	
  0.75

  	
  %

  	
  1.75

  	
  %

  	
  0.375

  	
  %

  
	
  Greater than or equal to 2.5:1.0 but less than
  3.0:1.0

  	
   

  	
  1.00

  	
  %

  	
  2.00

  	
  %

  	
  0.50

  	
  %

  
	
  Greater than or equal to 3.0:1.0 but less than
  3.50:1.0

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  	
  0.50

  	
  %

  
	
  Greater than or equal to 3.50 to 1.0

  	
   

  	
  1.75

  	
  %

  	
  2.75

  	
  %

  	
  0.50

  	
  %

  

 

For purposes of the
foregoing, (a) if sufficient information does not exist to calculate the
Applicable Rate, or the Borrower has not delivered such information to the
Administrative Agent in a timely manner, Eurodollar Borrowings shall not be
available to the Borrower and the Applicable Rate for ABR Loans shall be 1.75%
per annum and for the commitment fee shall be 0.50% per annum; and (b) if
the Leverage Ratio shall change upon delivery of any financial statements
required under Section 5.01, such change in the Applicable Rate
shall be effective as of the date on which any such financial statement is
delivered, irrespective of whether it is in the middle of an Interest Period or
when notice of such change shall have been furnished by the Borrower to the
Administrative Agent and the Lenders pursuant to Section 5.01
hereof or otherwise.  Each change in the
Applicable Rate shall apply during the period commencing on the effective date
of such change and ending on the date immediately preceding the effective date
of the next such change.  Notwithstanding
the above, the Applicable Rate from the Effective Date through the first
Financial Statement Delivery Date shall be 0.75% for ABR Loans, 1.75% for
Eurodollar Revolving Loans and 0.375% with respect to the commitment fee.

 

“Approved Fund”
has the meaning assigned to such term in Section 9.04.

 

“Assessment Rate”
means, for any day, the annual assessment rate in effect on such day that is
payable by a member of the Bank Insurance Fund classified as “well-capitalized”
and within supervisory subgroup “B” (or a comparable successor risk
classification) within the meaning of 12 C.F.R. Part 327 (or any successor
provision) to the Federal Deposit Insurance Corporation for insurance by such
Corporation of time deposits made in dollars at the offices of such member in
the United States; provided that if, as a result of any change in any
law, rule or regulation, it is no longer possible to determine the
Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined by the Administrative Agent to be representative of
the cost of such insurance to the Lenders.

 

2

 

“Assignment and
Assumption” means an assignment and assumption entered into by a Lender and
an assignee (with the consent of any party whose consent is required by Section 9.04),
and accepted by the Administrative Agent, in the form of Exhibit A
or any other form approved by the Administrative Agent.

 

“Available Cash”
has the meaning set forth in the Partnership Agreement.

 

“Availability Period”
means the period from and including the Effective Date to but excluding the
earlier of the Maturity Date and the date of termination of the Commitments.

 

“Bakken System”
means the Bakken field gas gathering and processing system in eastern Montana,
located primarily in Richland County, Montana.

 

“Base CD Rate”
means the sum of (a) the Three-Month Secondary CD Rate multiplied by the
Statutory Reserve Rate plus (b) the Assessment Rate.

 

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

 

“Borrower” means
Hiland Operating, LLC, a Delaware limited liability company.

 

“Borrowing” means
Revolver A Borrowing or a Revolver B Borrowing, as applicable.

 

“Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03
and made in a form substantially similar to the form attached hereto as Exhibit E
and incorporated herein by reference.

 

“Business Day”
means any day that is not a Saturday, Sunday or other day on which commercial
banks in Oklahoma City, Oklahoma are authorized or required by Law to remain
closed; provided that, when used in connection with a Eurodollar Loan,
the term “Business Day” shall also exclude any day on which banks are
not open for dealings in dollar deposits in the London interbank market.

 

“Capital Expenditures”
means, for any period, the aggregate amount of all expenditures of the Loan
Parties for fixed or capital assets made during such period which, in
accordance with GAAP, would be classified as capital expenditures.

 

“Capital Lease
Obligations” of any Person means the obligations of such Person to pay rent
or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations
are required to be classified and accounted for as capital leases on a balance
sheet of such Person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.

 

“Change in Control”
means the occurrence of any of the following events:  (a) the Hamm Parties cease to own and
control, directly or indirectly, more than 50% of the economic or voting
interests in the General Partner; (b) the General Partner shall cease to own
and control, of record and beneficially, directly, 100% of the general partner
interests in the Parent; (c) the Parent shall 

 

3

 

cease to own and
control, of record and beneficially, 100% of the membership interests of the
Borrower; or (d) any “person” or “group” (as such terms are used in Sections
13(d) and 14(d) under the Exchange Act), other than the Hamm
Parties, shall become, or obtain rights (whether by means or warrants, options
or otherwise) to become, the “beneficial owner” (as defined in Rules 13(d)-3
and 13(d)-5 under the Exchange Act) directly or indirectly, of, in the
aggregate, more than 20% of the total number of Outstanding Units or
Outstanding Partnership Securities (as defined in the Partnership Agreement).

 

“Change in Law”
means (a) the adoption of any law, rule or regulation after the date of
this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or the Issuing Bank (or,
for purposes of Section 2.15(b), by any lending office of such
Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with
any request, guideline or directive (whether or not having the force of law) of
any Governmental Authority made or issued after the date of this Agreement.

 

“Class”, when used
in reference to any Loan or Borrowing, refers to such Loan, or the Loans
comprising such Borrowing, as Revolver A Loans or Revolver B Loans.

 

“Code” means the
Internal Revenue Code of 1986, as amended from time to time.

 

“Collateral” means
all of the assets of the Borrower and its Subsidiaries, including all accounts,
contract rights/ownership interests in Subsidiaries, all gas purchase
agreements, all gas processing and treating agreements, all gas sales agreements,
gas gathering pipelines, liquids pipelines, gas processing plants, gas treating
plants, gas fractionation facilities, air injection plants, water injection
plants, inventory, vehicles, equipment, furniture, fixtures, general
intangibles, capital stock of Subsidiaries and all real property and leasehold
estates (including improvements thereon) held by such Person.

 

“Commitments”
means the aggregate amount of all of the Lenders’ Revolver A Commitments and
Revolver B Commitments.

 

“Commitment Increase Agreement”
has the meaning assigned to such term in Section 2.20.

 

“Commitment Increase
Notice” has the meaning assigned to such term in Section 2.20.

 

“Consolidated EBITDA”
means, with respect to the Parent, the Borrower and its Subsidiaries for any
period, Consolidated Net Income for such period plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) income tax
expense, (b) interest expense, amortization or write-off of debt discount
and debt issuance costs and commissions, discounts and other fees and charges
associated with Indebtedness (including the Indebtedness hereunder),
(c) depreciation and amortization expense, (d) amortization of
intangibles and organization costs, (e) any extraordinary non-cash
expenses or losses, and (f) any extraordinary, unusual or non-recurring
cash losses, and minus, (i) to the extent included in the statement
of such Consolidated Net Income for such period, any extraordinary, unusual or
non-recurring non-cash income or gains (including, whether or not otherwise
includable as a separate item in the statement of such 

 

4

 

Consolidated Net
Income for such period, gains on the sales of assets outside of the ordinary
course of business) and (ii) any cash payments made during such period in
respect of non-cash expenses or losses and subsequent to the fiscal quarter in
which the relevant non-cash expenses or losses were reflected as a charge in the
statement of Consolidated Net Income, all as determined on a consolidated
basis.  For purposes of calculating
Consolidated EBITDA of the Parent, the Borrower and its Subsidiaries for any
period for the purposes of Section 6.17 and Section 6.18
and of this Agreement, (i) the earnings before interest, taxes, depreciation
and amortization calculated as set forth above of any Person or assets acquired
by the Borrower or its Subsidiaries during such period shall be included (using
the historical financial results of such Person or assets for the trailing four
fiscal quarters prior to such acquisition; provided that with respect to
an acquisition of the Bakken System prior to September 1, 2006, using only
the historical financial results for the trailing three months on an annualized
basis) on a pro forma basis for such period as if such acquisition, and
the incurrence or assumption of any Indebtedness in connection therewith, had
occurred on the first day of such period and based upon the financial
statements and other information delivered to the Administrative Agent pursuant
to Section 5.01 hereof, and (ii) the earnings before interest,
taxes, depreciation and amortization calculated as set forth above of any
Person or assets Disposed of by the Borrower or its Subsidiaries during such
period shall be excluded, on a pro forma basis for such period as if
such Disposition, and the payment of any Indebtedness in connection therewith,
had occurred on the first day of such period and based upon the financial
statements and other information delivered to the Administrative Agent pursuant
to Section 5.01 hereof.

 

“Consolidated
Indebtedness” means the consolidated Indebtedness of the Parent, the
Borrower and its Subsidiaries.

 

“Consolidated Interest
Expense” means, for any period, the sum of aggregate interest expense and
capitalized interest (including the interest portion of any Capital Lease
Obligations) of the Parent, the Borrower and its Subsidiaries determined on a
consolidated basis for such period.

 

“Consolidated
Lease Expense” means, for the relevant period, with respect to the Parent,
the Borrower, and its Subsidiaries on a consolidated basis, the sum of all
rentals in respect of all leases whereunder the Parent, the Borrower or any
Subsidiary is lessee, excluding Capital Lease Obligations to the extent such
are included in Consolidated Interest Expense; provided that,
notwithstanding anything contained in this Agreement to the contrary,
Consolidated Lease Expense shall be deemed to equal zero for any period in question
unless the amount of Consolidated Lease Expense for such period equals or
exceeds $250,000.

 

“Consolidated
Maintenance Capital Expenditures” means, for any period, the sum of the
Maintenance Capital Expenditures of the Parent, the Borrower and its Subsidiaries
determined on a consolidated basis for such period.

 

“Consolidated
Net Income” means for any
period, the consolidated net income (or loss) of the Parent, the Borrower and
its Subsidiaries, as applicable, determined on a consolidated basis in accordance
with GAAP; provided that there shall be excluded (a) the income (or
deficit) of any Person accrued prior to the date it becomes a Subsidiary of the
Borrower, or is merged into or consolidated with the Borrower or any of its
Subsidiaries, as applicable, (b) the income 

 

5

 

(or deficit) of
any Person (other than a Subsidiary of the Borrower, as applicable) in which
the Borrower or any of its Subsidiaries, as applicable, has an ownership
interest, except to the extent that any such income is actually received by the
Borrower or any of its Subsidiaries, as applicable, in the form of dividends or
similar distributions, and (c) the undistributed earnings of any Subsidiary of
the Borrower, to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by the
terms of any Contractual Obligation or by any Law applicable to such
Subsidiary.

 

“Consolidated Tangible
Net Worth” means the excess of total assets over total liabilities for the
Parent, the Borrower and its Subsidiaries on a consolidated basis, total assets
and total liabilities each to be determined in accordance with GAAP, excluding, however, from the determination
of total assets (a) goodwill, organizational expenses, research and
development expenses, trademarks, trade names, copyrights, patents, patent
applications, licenses and rights in any thereof, and other similar
intangibles, including the value of contracts for the marketing of natural gas,
(b) all unamortized debt discount and expense, (c) all reserves
carried and not deducted from assets, (d) treasury stock and capital
stock, obligations or other securities of, or capital contributions to, or
investments in, any Subsidiary, (e) securities that are not readily
marketable, (f) cash held in a sinking or other analogous fund established
for the purpose of redemption, retirement or prepayment of capital stock or
Indebtedness, (g) any write-up in the book value of any asset resulting
from a revaluation thereof, (h) notes receivable from current or former
officers, employees or equity-holders of the Parent, the Borrower or any
Subsidiary, (i) cash pledged or deposited for the purposes described in
clauses (c) and (d) of the definition of “Permitted Encumbrances,”
and (j) any items not included in clauses (a) through (i) above
that are treated as intangibles in conformity with GAAP.

 

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

 

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

 

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

 

“Default Rate”
shall have the meaning set forth in Section 2.13(c).

 

“Disclosed Matters”
means the actions, suits and proceedings and the environmental matters
disclosed in Section 3.03.

 

“Dispose” means with respect to any property,
to sell, lease, engage in a sale and leaseback with respect thereto, assign,
convey, transfer or otherwise dispose thereof. 
The term “Disposition” shall have a correlative meaning.

 

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

 

6

 

“EDGAR”:  the Electronic Data Gathering, Analysis, and
Retrieval computer system for the receipt, acceptance, review and dissemination
of documents submitted to the SEC in electronic format.

 

“Effective Date”
means the date on which the conditions specified in Section 4.01
are satisfied (or waived in accordance with Section 9.02).

 

“Environmental Laws”
means all applicable laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, or legally enforceable directives issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management or release of any Hazardous Material or to health (with respect to
exposure to Hazardous Materials) and safety matters.

 

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

 

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

 

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

 

“ERISA Affiliate”
means any trade or business (whether or not incorporated) that, together with
the Borrower, is treated as a single employer under Section 414(b) or (c)
of the Code or, solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

 

“ERISA Event”
means (a) any “reportable event”, as defined in Section 4043 of ERISA
or the regulations issued thereunder with respect to a Plan (other than an
event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412
of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of
ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its
ERISA Affiliates of any liability under Title IV of ERISA with respect to
the termination of any Plan; (e) the receipt by the Borrower or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of
any liability with respect to the withdrawal or partial withdrawal from any
Plan or Multiemployer Plan; or (g) the receipt by the Borrower or 

 

7

 

any ERISA
Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Borrower or any ERISA Affiliate of any notice, concerning the imposition of
Withdrawal Liability or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA.

 

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

 

“Event of Default”
has the meaning assigned to such term in Article VII.

 

“Exchange Act”
means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“Excluded Assets”
means any contracts, agreements or permits as to which the granting of a
security interest in same would cause a default, termination or penalty
thereunder or under any applicable requirement of a Governmental Authority.

 

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the Issuing Bank
or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which
its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other jurisdiction
in which the Borrower is located and (c) in the case of a Foreign Lender (other
than an assignee pursuant to a request by the Borrower under Section 2.19(b)),
any withholding tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party to this Agreement (or
designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.17(e), except to the extent that
such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 2.17(a).

 

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

 

“Fee Letter” means
the letter agreement between the Borrower and MidFirst Bank pertaining to
certain fees and expenses payable by Borrower to such parties as set forth in
such letter.

 

8

 

“Financial Officer”
means the chief financial officer, principal accounting officer, treasurer or
controller of the Parent or the Borrower as applicable.

 

“Financial Statement
Delivery Date” means the earlier of the date on which the financial
statements of the Parent are delivered or are required to be delivered to the
Administrative Agent and the Lenders pursuant to Section 5.01(a) or
Section 5.01(b), as the case may be.

 

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

 

“GAAP” means
generally accepted accounting principles in the United States of America, as in
effect from time to time.

 

“General Partner”:
Hiland Partners GP, LLC, a Delaware limited liability company and the sole
general partner of the Parent.

 

“Governmental Approval”
means (i) any authorization, consent, approval, license, waiver, ruling,
permit, tariff, rate, certification, exemption, filing, variance, claim, order,
judgment, decree, sanction or publication of, by or with; (ii) any notice to;
(iii) any declaration of or with; or (iv) any registration by or with, or any
other action by or on behalf of, any Governmental Authority.

 

“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

 

“Guarantee” of or
by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any
obligation of the guarantor, direct or indirect, (a) to purchase or pay
(or advance or supply funds for the purchase or payment of) such Indebtedness
or other obligation or to purchase (or to advance or supply funds for the
purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to
maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.

 

“Guarantor” means
(i) the Parent, and (ii) each Subsidiary of the Borrower in existence on the
Effective Date, along with each Person who becomes a Subsidiary of the Borrower
after the Effective Date.

 

9

 

“Guaranty Agreement”
means any guaranty agreement executed by a Guarantor in favor of the
Administrative Agent and the Lenders and in the form attached hereto as Exhibit D,
together with all extensions, renewals, amendments, substitutions and
replacements thereof or thereto.

 

“Hamm Parties”
means (i) Mr. Harold Hamm, individually, (ii) the Harold Hamm DST Trust
created pursuant to that certain Trust Agreement Establishing Harold Hamm DST
Trust dated December 10, 1998, (iii) the Harold Hamm HJ Trust created
pursuant to that certain Trust Agreement Establishing Harold Hamm HJ Trust
dated December 10, 1998, and (iv) any other foundations, trusts or other
entities formed by Harold Hamm and Controlled by the Hamm Parties.

 

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

 

“Indebtedness” of
any Person means, without duplication, (a) all obligations of such Person
for borrowed money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property acquired by such Person, (d) all obligations of such Person in
respect of the deferred purchase price of property or services (excluding
current accounts payable incurred in the ordinary course of business),
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right to be secured by) any Lien on property owned
or acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (f) all Guarantees by such Person of Indebtedness of others,
(g) all Capital Lease Obligations of such Person, (h) all
obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all
obligations, contingent or otherwise, of such Person in respect of bankers’
acceptances.  The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such
Person is liable therefor as a result of such Person’s ownership interest in or
other relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

 

“Indemnified Taxes”
means Taxes other than Excluded Taxes.

 

“Information
Memorandum” means the Confidential Information Memorandum dated December,
2004 relating to the Borrower and the Transactions.

 

“Interest Coverage
Ratio” means, at any date, the ratio of (i) Consolidated EBITDA to
(ii) the sum of (a) Consolidated Interest Expense, plus
(b) Consolidated Lease Expense, plus (c) Consolidated Maintenance Capital
Expenditures, in each case for the period of four consecutive fiscal quarters
most recently ended on or prior to such date for which financial information is
available.

 

“Interest Election
Request” means a request by the Borrower to convert or continue a Revolving
Borrowing in accordance with Section 2.08.

 

10

 

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

 

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

 

“Issuing Bank”
means MidFirst Bank, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.06(i).  The Issuing Bank may, in its discretion,
arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such
Affiliate with respect to Letters of Credit issued by such Affiliate.

 

“Law” means all
laws, statutes, treaties, ordinances, codes, acts, rules, regulations,
Government Approvals and orders of all Governmental Authorities, whether now or
hereafter in effect.

 

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

 

“LC Exposure”
means, at any time, the sum of (a) the aggregate undrawn amount of all
outstanding Letters of Credit at such time plus (b) the aggregate amount of all
LC Disbursements that have not yet been reimbursed by or on behalf of the
Borrower or converted into a Revolver A Loan pursuant to Section 2.06(e)
at such time.  The LC Exposure of any
Lender at any time shall be its Revolver A Applicable Percentage of the total
LC Exposure at such time.

 

“Leases” means
those certain lease agreements executed by any Person, as lessor, and any Loan
Party, as lessee (or any lease agreement, sublease or other similar arrangement
entered into by any Loan Party after the Effective Date) under the terms of
which the applicable Loan Party occupies or uses real property and any
improvements located thereon in the ordinary course of its business.

 

11

 

“Lenders” means
the Persons listed on Schedule 2.01 (and any Lender or Affiliate of
a Lender that is a counterparty to a Swap Agreement) and any other Person that
shall have become a party hereto pursuant to an Assignment and Assumption,
other than any such Person that ceases to be a party hereto pursuant to an
Assignment and Assumption.

 

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

 

“Letter of Credit
Collateral Account” shall have the meaning set forth in Section 2.06(k).

 

“Leverage Ratio”
means, at any date, the ratio of (i) Consolidated Indebtedness at such date to
(ii) Consolidated EBITDA for the four consecutive fiscal quarters most recently
ended on or prior to such date for which financial information is available.

 

“LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Page 3750 of the Dow Jones Market Service (or on any
successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market) at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. 
In the event that such rate is not available at such time for any
reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing
for such Interest Period shall be the comparable rate as displayed in the
Bloomberg Financial Markets system.

 

“Lien” means, with
respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge, security interest in, or similar
arrangement, on or of such asset, (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention agreement
(or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset and (c) in the case of securities,
any purchase option, call or similar right of a third party with respect to
such securities.

 

“Loan Documents”
means this Agreement, the Security Documents, the Guaranty Agreements, any
promissory notes executed in connection herewith, the Letters of Credit (and
any applications therefor and reimbursement agreements relating thereto), the
Fee Letter, any Swap Agreements and any other agreements and documents executed
and delivered in connection with this Agreement.

 

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

 

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

 

“Maintenance Capital
Expenditures” means Capital Expenditures that are required for the
maintenance of any asset of any of the Loan Parties to the extent permitted
under the Loan Documents.

 

12

 

“Material Adverse
Effect” means a material adverse effect on (a) the business, assets,
operations or condition, financial or otherwise, of the Parent, the Borrower
and its Subsidiaries taken as a whole, (b) the ability of the Borrower to
perform any of its obligations under this Agreement or (c) the rights of
or benefits available to the Lenders under this Agreement.

 

“Material Contracts”
shall have the meaning set forth in Section 3.24 hereof.

 

“Material Indebtedness”
means (i) Indebtedness (other than the Loans and Letters of Credit), and (ii)
obligations in respect of one or more Swap Agreements, of any one or more of
the Parent, the Borrower and its Subsidiaries in an aggregate principal amount
exceeding $1,000,000.  For purposes of
determining Material Indebtedness, the “principal amount” of the obligations of
the Parent, the Borrower or any Subsidiary in respect of any Swap Agreement at
any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Parent, the Borrower or such Subsidiary would be required
to pay if such Swap Agreement were terminated at such time.

 

“Maturity Date”
means February 15, 2008.

 

“Maximum Rate”
shall have the meaning set forth in Section 9.13.

 

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

 

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

 

“New Lender” has
the meaning assigned to such term in Section 2.20(c).

 

“New Lender Agreement”
has the meaning assigned to such term in Section 2.20(c).

 

“Obligations”
means all obligations (monetary or otherwise) of each Loan Party arising under
or in connection with this Agreement and each other Loan Document.

 

“Omnibus Agreement”
means that certain Omnibus Agreement, dated February 15, 2005, by and
among Continental Resources, Inc., Hiland Partners, LLC, Harold Hamm,
Hiland Partners GP, LLC and Hiland Partners, LP, which provides, among other
things, certain non-competition provisions and indemnities for environmental
and tax liabilities.

 

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

 

“Parent” means
Hiland Partners, LP, a Delaware limited partnership.

 

“Participant” has the meaning set
forth in Section 9.04(c).

 

13

 

“Partnership Agreement”
means the First Amended and Restated Agreement of Limited Partnership of the
Parent dated as of February 15, 2005 and in the form attached hereto as Exhibit G,
but shall not include any amendments or changes thereto subsequent to such
date.

 

“PBGC” means the
Pension Benefit Guaranty Corporation referred to and defined in ERISA and any
successor entity performing similar functions.

 

“Permitted
Encumbrances” means:

 

(a)                                  Liens
imposed by law for taxes that are not yet due or are being contested in
compliance with Section 5.04;

 

(b)                                 carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing
obligations that are not overdue by more than 30 days or are being contested in
compliance with Section 5.04;

 

(c)                                  pledges
and deposits made in the ordinary course of business in compliance with workers’
compensation, unemployment insurance and other social security laws or
regulations;

 

(d)                                 deposits
to secure the performance of bids, trade contracts, leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature, in each case in the ordinary course of business;

 

(e)                                  judgment
liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;

 

(f)                                    easements,
zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure
any monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any of its Subsidiaries;

 

(g)                                 Liens
securing obligations (other than obligations representing Indebtedness for
borrowed money) under operating, reciprocal easement or similar agreements
entered into in the ordinary course of business of the Borrower and its
Subsidiaries;

 

(h)                                 licenses
of patents, trademarks and other intellectual property rights granted by the
Borrower or any of its Subsidiaries in the ordinary course of business and not
interfering in any material respect with the ordinary conduct of the business
of the Borrower and its Subsidiaries;

 

(i)                                     the
lien reserved in leases for rent and for compliance with the terms of the lease
in the case of leasehold estates;

 

(j)                                     Liens
arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies and burdening
only deposit accounts or other funds maintained with a creditor depository
institution.

 

14

 

provided
that the term “Permitted Encumbrances” shall not include any Lien securing
Indebtedness except as otherwise permitted above.

 

“Permitted Investments”
means:

 

(a)                                  direct
obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and credit
of the United States of America), in each case maturing within one year from
the date of acquisition thereof;

 

(b)                                 investments
in commercial paper, asset-backed securities, auction rate securities or
similar instruments maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, a credit rating of at least A-2
from S&P or P-2 from Moody’s;

 

(c)                                  investments
in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or
placed with, and money market deposit accounts issued or offered by, any
domestic office of any commercial bank organized under the laws of the United
States of America or any State thereof which has a combined capital and surplus
and undivided profits of not less than $250,000,000;

 

(d)                                 fully
collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial
institution satisfying the criteria described in clause (c) above;

 

(e)                                  money
market funds that (i) comply with the criteria set forth in SEC Rule 2a-7
under the Investment Company Act of 1940, as amended, (ii) are rated AAA by
S&P and Aaa by Moody’s and (iii) have portfolio assets of at least
$5,000,000,000;

 

(f)                                    securities
with maturities of six months or less from the date of acquisition backed by
standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition; and

 

(g)                                 shares
of money market mutual or similar funds which invest exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition,
except that with respect to the maturities of the assets included in such funds
the requirements of clauses (a) through (f) shall not be applied to the
individual assets included in such funds but to the weighted-average maturity
of all assets included in such funds.

 

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

 

“Plan” means any
employee pension benefit plan (other than a Multiemployer Plan) subject to the
provisions of Title IV of ERISA or Section 412 of the Code or Section 302
of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or,
if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an “employer” as defined in Section 3(5) of ERISA.

 

15

 

“Prime Rate” means
the rate of interest per annum publicly announced from time to time by MidFirst
Bank as its prime rate in effect at its principal office in Oklahoma City,
Oklahoma; each change in the Prime Rate shall be effective from and including
the date such change is publicly announced as being effective.

 

“Prior Credit
Agreements” means (i) that certain Credit Agreement by and among
MidFirst Bank, as lender, and Hiland Energy Partners, LLC, as borrower, dated November 24,
2004, as amended and (ii) that certain Credit Agreement by and among Union
Bank of California, as lender, and Continental Gas, Inc., as borrower,
dated October 22, 2003.

 

“Quarterly
Distributions” means the distributions by the Parent of Available Cash.

 

“Re-Allocation Date”
has the meaning assigned to such term in Section 2.20.

 

“Register” has the
meaning set forth in Section 9.04.

 

“Regulation D”
means Regulation D of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.

 

“Regulation T” means
Regulation T of the Board, as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.

 

“Regulation U”
means Regulation U of the Board, as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.

 

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

 

“Required Lenders”
means, at any time, Lenders having Revolving Credit Exposures representing more
than fifty percent (50%) of the sum of the total Revolving Credit Exposures or,
if at such time no Lenders have Revolving Credit Exposure, Lenders having
unused Commitments representing more than fifty percent (50%) of the unused
Commitments at such time, but in any event including the Administrative Agent,
in its capacity as a Lender; provided, however, that notwithstanding the
above, Lenders having Revolving Credit Exposures representing more than
sixty-six and two-thirds percent (66 2/3%) of the sum of the total Revolving
Credit Exposures or, if at such time no Lenders have Revolving Credit Exposure,
Lenders having unused Commitments representing more than sixty-six and
two-thirds percent (66 2/3%) of the unused Commitments at such time, will
constitute Required Lenders irrespective of the fact that the Administrative
Agent, in its capacity as a Lender, is not one of such Lenders.

 

“Response” means
(a) “response” as such term is defined in CERCLA, 42 U.S.C. §9601(25), and (b)
all other actions required by any Governmental Authority or voluntarily
undertaken to:  (i) clean up, remove,
treat, abate, or in any other way address any Hazardous Material in the
environment; (ii) prevent the release of any Hazardous Material; or (iii)
perform studies and investigations in connection with clause (i) or (ii) above.

 

16

 

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

 

“Revolver A
Applicable Percentage” means, with respect to any Lender, the percentage of
the total Revolver A Commitments represented by such Lender’s
Revolver A Commitment.  If the
Revolver A Commitments have terminated or expired, the Revolver A
Applicable Percentages shall be determined based upon the Revolver A
Commitments most recently in effect, giving effect to any assignments.

 

“Revolver A Borrowing”
means a Revolver A Loan of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect

 

“Revolver A
Commitment” means, with respect to each Lender, the commitment of such
Lender to make Revolver A Loans and to acquire participations in Letters
of Credit hereunder, expressed as an amount representing the maximum aggregate
amount of such Lender’s Revolver A Credit Exposure hereunder, as such
commitment may be (a) reduced from time to time pursuant to Section 2.09,
(b) increased from time to time pursuant to Section 2.20, and (c)
reduced or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section 9.04. 
The initial amount of each Lender’s Revolver A Commitment is set
forth on Schedule 2.01, or in the Assignment and Assumption pursuant
to which such Lender shall have assumed its Commitment, as applicable.  The initial aggregate amount of the Lenders’
Revolver A Commitments is $47,500,000.

 

“Revolver A Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolver A Loans and its LC
Exposure at such time.

 

“Revolver A Loan”
means a loan made pursuant to Section 2.01(a).

 

“Revolver B Borrowing”
means a Revolver B Loan of the same Type, made, converted or continued on the
same date and, in the case of Eurodollar Loans, as to which a single Interest
Period is in effect

 

“Revolver B
Commitment” means, with respect to each Lender, the commitment of such
Lender to make Revolver B Loans, expressed as an amount representing the
maximum aggregate amount of such Lender’s Revolver B Credit Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to Section 2.09,
and (b) reduced or increased from time to time pursuant to assignments by or to
such Lender pursuant to Section 9.04.  The initial amount of each Lender’s
Revolver B Commitment is set forth on Schedule 2.01, or in the
Assignment and Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable.  The aggregate
amount of the Lenders’ Revolver B Commitments is $7,500,000.

 

17

 

“Revolver B Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolver B Loans at such
time.

 

“Revolver B Loan”
means a loan made pursuant to Section 2.01(b).

 

“Revolving Borrowing”
means either a Revolver A Borrowing or a Revolver B Borrowing.

 

“Revolving Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s (i) Revolver A Loans, (ii)
Revolver B Loans, and (iii) such Lender’s LC Exposure at such time.

 

“Revolving Loan”
means a Revolver A Loan or a Revolver B Loan made pursuant to Section 2.03.

 

“S&P” means
Standard & Poor’s.

 

“SEC” means the
Securities and Exchange Commission (or successors thereto or an analogous
Governmental Authority).

 

“Security Documents”
means the guaranty of each of the Guarantors, together with any guaranty
delivered pursuant to Section 5.16 hereof, and any and all other
security agreements, pledge agreements, mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, guaranty agreements, landlord’s consents,
estoppels, assignments, UCC financing statements and all similar documents
executed by any Person in connection herewith, including, without limitation,
all documents and instruments listed on Schedule 1.01 attached
hereto, together with any agreements delivered pursuant to Section 5.12
hereof, granting to the Administrative Agent for the benefit of the Lenders a
first Lien and security interest in substantially all of the Collateral of the
Borrower and its Subsidiaries as security for the Obligations, subject only to
Permitted Encumbrances.

 

“Solvent” means,
with respect to any Person on a particular date, that on such date (i) the
fair value of the property of such Person is greater than the total amount of
liabilities, including contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liability of such Person on
its debts as they become absolute and matured, (iii) such Person is able
to realize upon its assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the normal course of
business, (iv) 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, taking into account the possibility of
refinancing such debt or selling such assets, and (v) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person’s property would constitute unreasonably
small capital.  In computing the amount
of contingent liabilities at any time, it is intended that such liabilities
will be computed at the amount which, in light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

 

18

 

“Statutory Reserve
Rate” means a fraction (expressed as a decimal), the numerator of which is
the number one and the denominator of which is the number one minus the
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board to which the Administrative Agent is subject (a) with respect to the
Base CD Rate, for new negotiable non-personal time deposits in dollars of over
$100,000 with maturities approximately equal to three months and
(b) with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently
referred to as “Eurocurrency Liabilities” in Regulation D of the
Board).  Such reserve percentages shall
include those imposed pursuant to such Regulation D.  Eurodollar Loans shall be deemed to
constitute eurocurrency funding and to be subject to such reserve requirements
without benefit of or credit for proration, exemptions or offsets that may be
available from time to time to any Lender under such Regulation D or any
comparable regulation.  The Statutory
Reserve Rate shall be adjusted automatically on and as of the effective date of
any change in any reserve percentage.

 

“subsidiary(ies)”
means, singularly and collectively, with respect to any Person (the “parent”)
at any date, any corporation, limited liability company, partnership,
association or other entity the accounts of which would be consolidated with
those of the parent in the parent’s consolidated financial statements if such
financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership,
association or other entity (a) of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held,
or (b) that is, as of such date, otherwise Controlled, by the parent or
one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.

 

“Subsidiary” means
any direct or indirect subsidiary of the Borrower.

 

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

 

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

 

“Three-Month Secondary
CD Rate” means, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if such
day is not a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve Bank of
New York (which rate will, under the current practices of the Board, be
published in Federal Reserve Statistical Release H.15(519) during the week
following such day).

 

19

 

“Transactions”
means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans, the use of the proceeds thereof and the
issuance of Letters of Credit hereunder and the Security Documents.

 

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

 

“UCC” means the
Uniform Commercial Code as from time to time in effect in the State of Oklahoma
or, where applicable as to specific Collateral, any other relevant state.

 

“Withdrawal Liability”
means liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.

 

SECTION 1.02.                 Classification
of Loans and Borrowings.  For
purposes of this Agreement, Loans may be classified and referred to by Class (e.g.,
a “Revolver A Loan” or a “Revolver B Loan”) or by Type (e.g., a “Eurodollar
Loan”) or by Class and Type (e.g., a “Eurodollar Revolver A Loan” or “Eurodollar
Revolver B Loan”).  Borrowings also may
be classified and referred to by Class (e.g., a “Revolver A Borrowing” or
a “Revolver B Borrowing”) or by Type (e.g., a “Eurodollar Borrowing”) or by Class and
Type (e.g., a “Eurodollar Revolver A Borrowing” or a “Eurodollar Revolver B
Borrowing”).

 

SECTION 1.03.                 Terms
Generally.  The definitions of terms
herein shall apply equally to the singular and plural forms of the terms
defined.  Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.  The words “include”, “includes”
and “including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be
construed to have the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (c) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d)
all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and (e) the words “asset” and “property” shall be construed to
have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.

 

SECTION 1.04.                 Accounting
Terms; GAAP.  Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP, as in effect from time to time; provided
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower 

 

20

 

that the Required Lenders
request an amendment to any provision hereof for such purpose), regardless of
whether any such notice is given before or after such change in GAAP or in the
application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become
effective until such notice shall have been withdrawn or such provision amended
in a manner satisfactory to the Borrower and the Required Lenders.

 

SECTION 1.05.                 Annualized
Financial Information.  Until the
expiration of four fiscal quarters following the Effective Date, compliance
with Section 6.17 and Section 6.18 shall be computed on
an annualized basis.

 

ARTICLE II

 

The Credits

 

SECTION 2.01.                 Commitments.  (a) Subject to the terms and conditions set
forth herein, each Lender agrees to make Revolver A Loans to the Borrower
from time to time during the Availability Period in an aggregate principal
amount that will not result in (i) such Lender’s Revolver A Credit
Exposure exceeding such Lender’s Revolver A Commitment, or (ii) the
sum of the total Revolver A Credit Exposures exceeding the total
Revolver A Commitments.  Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and re-borrow Revolver A Loans.

 

(b)                                 Subject
to the terms and conditions set forth herein, each Lender agrees to make
Revolver B Loans to the Borrower from time to time during the Availability
Period in an aggregate principal amount that will not result in (i) such
Lender’s Revolver B Credit Exposure exceeding such Lender’s Revolver B
Commitment, or (ii) the sum of the total Revolver B Credit Exposures
exceeding the total Revolver B Commitments. 
Within the foregoing limits and subject to the terms and conditions set
forth herein, the Borrower may borrow, prepay and re-borrow Revolver B Loans.

 

SECTION 2.02.                 Loans
and Borrowings.  (a) Each Revolving
Loan shall be made as part of a Borrowing consisting of Revolving Loans made by
the Lenders ratably in accordance with their respective Revolver A Commitments
or Revolver B Commitments, as applicable. 
The failure of any Lender to make any Loan required to be made by it
shall not relieve any other Lender of its obligations hereunder; provided
that the Commitments of the Lenders are several and no Lender shall be
responsible for any other Lender’s failure to make Loans as required.

 

(b)                                 Subject
to Section 2.14, each Revolving Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith.  Each Lender at its
option may make any Eurodollar Loan by causing any domestic or foreign branch
or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.

 

21

 

(c)                                  At
the commencement of each Interest Period for any Eurodollar Revolving
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000.  At the time that each ABR Revolving Borrowing
is made, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $1,000,000; provided that an
ABR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolver A Commitments or Revolver B
Commitments, as applicable, or that is required to finance the reimbursement of
an LC Disbursement as contemplated by Section 2.06(e).  Borrowings of more than one Type may be
outstanding at the same time; provided that there shall not at any time
be more than a total of five (5) Eurodollar Revolving Borrowings outstanding.

 

(d)                                 Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.

 

SECTION 2.03.                 Requests
for Revolving Borrowings.  To request
a Revolving Borrowing, the Borrower shall notify the Administrative Agent of
such request by telephone (a) in the case of a Eurodollar Borrowing, not
later than 11:00 a.m., Oklahoma City, Oklahoma time, three Business Days
before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 11:00 a.m., Oklahoma City, Oklahoma time, on the
date of the proposed Borrowing; provided that any such notice of an ABR
Revolving Borrowing to finance the reimbursement of an LC Disbursement as
contemplated by Section 2.06(e) may be given not later than 10:00 a.m.,
Oklahoma City, Oklahoma time, on the date of the proposed Borrowing.  Each such telephonic Borrowing Request shall
be irrevocable and shall be confirmed promptly by hand delivery or telecopy to
the Administrative Agent of a written Borrowing Request in a form approved by
the Administrative Agent and signed by the Borrower.  Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.02:

 

(i)                                     the
aggregate amount of the requested Borrowing;

 

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

 

(iii)                               whether
such Borrowing is a Revolver A Borrowing or a Revolver B Borrowing;

 

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

 

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

 

(vi)                              the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section 2.07.

 

If no election as to the
Type of Revolving Borrowing is specified, then the requested Revolving
Borrowing shall be an ABR Borrowing.  If
no Interest Period is specified with respect to any 

 

22

 

 

requested Eurodollar
Revolving Borrowing, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration. 
Promptly following receipt of a Borrowing Request in accordance with
this Section, the Administrative Agent shall advise each Lender of the details
thereof and of the amount of such Lender’s Loan to be made as part of the
requested Borrowing.

 

SECTION 2.04.                 Agent
Advances.  Subject to the limitations
set forth below, the Administrative Agent is authorized by the Borrower and the
Lenders, from time to time, at the request of the Required Lenders and after
the occurrence of a Default or an Event of Default, to make Revolver A Loans
and/or Revolver B Loans on behalf of the Borrower which the Required Lenders,
in their reasonable business judgment, deem necessary or desirable (i) to
preserve or protect the Collateral or any portion thereof, (ii) to enhance the
likelihood of, or maximize the amount of, repayment of the Loans and other
Obligations, or (iii) to pay any other amount chargeable to Borrower pursuant
to the terms of this Agreement, including costs, fees and expenses (any of such
advances are herein referred to as “Agent Advances”); provided,
that the Required Lenders may at any time revoke the Administrative Agent’s authorization
to make Agent Advances.  Any such
revocation must be in writing and shall become effective prospectively upon the
Administrative Agent’s receipt thereof. 
The Agent Advances shall be secured by the liens in the Collateral
created under the Security Documents and shall constitute ABR Revolving
Borrowings and for all purposes shall be part of the Obligations hereunder.

 

SECTION 2.05.                 Intentionally
Deleted.

 

SECTION 2.06.                 Letters
of Credit.  (a) General.  Subject to the terms and conditions set forth
herein, the Borrower may request the issuance of Letters of Credit under the
Revolver A Commitment for its own account or for the account of any Subsidiary,
in a form reasonably acceptable to the Administrative Agent and the Issuing
Bank, at any time and from time to time during the Availability Period.  In the event of any inconsistency between the
terms and conditions of this Agreement and the terms and conditions of any form
of letter of credit application or other agreement submitted by the Borrower
to, or entered into by the Borrower with, the Issuing Bank relating to any
Letter of Credit, the terms and conditions of this Agreement shall control.

 

(b)                                 Notice
of Issuance, Amendment, Renewal, Extension; Certain Conditions.  To request the issuance of a Letter of Credit
(or the amendment, renewal or extension of an outstanding Letter of Credit),
the Borrower shall hand deliver or telecopy (or transmit by electronic
communication, if arrangements for doing so have been approved by the Issuing
Bank) to the Issuing Bank and the Administrative Agent (reasonably in advance
of the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension (which shall be a Business Day), the date on
which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the
name and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit.  If requested by the Issuing Bank, the
Borrower also shall submit a letter of credit application on the Issuing Bank’s
standard form in connection with any request for a Letter of Credit.  A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrower shall be 

 

23

 

deemed to represent and warrant that), after giving
effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $5,000,000 and (ii) the sum of the total Revolver A
Credit Exposures shall not exceed the total Revolver A Commitments.

 

(c)                                  Expiration
Date.  Each Letter of Credit shall
expire at or prior to the close of business on the earlier of (i) the date
one year after the date of the issuance of such Letter of Credit (or, in the
case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the
Maturity Date; provided, however, that any Letter of Credit with a one
year tenor may provide for the renewal thereof for additional one year periods
which shall in no event extend beyond the date that is five Business Days prior
to the Maturity Date unless cash collateral, as set forth in Section 2.06(k)
below shall have been granted to the Issuing Bank as security for the
Indebtedness under the Loan Documents no later than five Business Days prior to
the Maturity Date, in which case such cash collateralized Letter of Credit
shall not have an expiration date later than one year after the Maturity Date.

 

(d)                                 Participations.  By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Lender, and each Lender hereby acquires from the Issuing
Bank, a participation in such Letter of Credit equal to such Lender’s
Revolver A Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit.  In
consideration and in furtherance of the foregoing, each Lender hereby
absolutely and unconditionally agrees to pay to the Administrative Agent, for
the account of the Issuing Bank, such Lender’s Revolver A Applicable
Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed
by the Borrower on the date due as provided in paragraph (e) of this Section,
or of any reimbursement payment required to be refunded to the Borrower for any
reason.  Each Lender acknowledges and agrees
that its obligation to acquire participations pursuant to this paragraph in
respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including any amendment, renewal or
extension of any Letter of Credit or the occurrence and continuance of a
Default or reduction or termination of the Revolver A Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.  Promptly
following receipt of a notice from Borrower requesting the issuance of a Letter
of Credit in accordance with Section 2.06(b), the Administrative
Agent shall advise each Lender of the details thereof and of the amount of such
Lender’s participation in such Letter of Credit.

 

(e)                                  Reimbursement.  If the Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, the Borrower shall reimburse
such LC Disbursement by paying to the Administrative Agent an amount equal to
such LC Disbursement not later than 12:00 noon, Oklahoma City, Oklahoma time,
on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., Oklahoma
City, Oklahoma, on such date, or, if such notice has not been received by the
Borrower prior to such time on such date, then not later than 12:00 noon,
Oklahoma City, Oklahoma time, on (i) the Business Day that the Borrower
receives such notice, if such notice is received prior to 10:00 a.m.,
Oklahoma City, Oklahoma time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that the
Borrower may, subject to the 

 

24

 

conditions to borrowing set forth herein, request in
accordance with Section 2.03 that such payment be financed with an
ABR Revolver A Borrowing in an equivalent amount and, to the extent so
financed, the Borrower’s obligation to make such payment shall be discharged and
replaced by the resulting ABR Revolver A Borrowing.  If the Borrower fails to make such payment
when due, the Administrative Agent shall notify each Lender of the applicable
LC Disbursement, the payment then due from the Borrower in respect thereof and such
Lender’s Revolver A Applicable Percentage thereof.  Promptly following receipt of such notice,
each Lender shall pay to the Administrative Agent its Revolver A
Applicable Percentage of the payment then due from the Borrower, in the same
manner as provided in Section 2.07 with respect to Loans made by
such Lender (and Section 2.07 shall apply, mutatis  mutandis,
to the payment obligations of the Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the
Lenders.  Promptly following receipt by
the Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
Issuing Bank or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuing Bank, then to such Lenders and the Issuing
Bank as their interests may appear.  Any
payment made by a Lender pursuant to this paragraph to reimburse the Issuing Bank
for any LC Disbursement (other than the funding of ABR Revolver A Loans as
contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.

 

(f)                                    Obligations
Absolute.  The Borrower’s obligation
to reimburse LC Disbursements as provided in paragraph (e) of this Section shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement under any and all circumstances
whatsoever and irrespective of (i) any lack of validity or enforceability of
any Letter of Credit or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a
Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing, that
might, but for the provisions of this Section, constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative
Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties,
shall have any liability or responsibility by reason of or in connection with
the issuance or transfer of any Letter of Credit or any payment or failure to
make any payment thereunder (irrespective of any of the circumstances referred
to in the preceding sentence), or any error, omission, interruption, loss or
delay in transmission or delivery of any draft, notice or other communication
under or relating to any Letter of Credit (including any document required to
make a drawing thereunder), any error in interpretation of technical terms or
any consequence arising from causes beyond the control of the Issuing Bank; provided
that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to
consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable Law) suffered by the Borrower
that are caused by the Issuing Bank’s failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof.  The parties
hereto expressly agree that, in the absence of gross negligence or willful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised
care in each such 

 

25

 

determination. 
In furtherance of the foregoing and without limiting the generality
thereof, the parties agree that, with respect to documents presented which
appear on their face to be in substantial compliance with the terms of a Letter
of Credit, the Issuing Bank may, in its sole discretion, either accept and make
payment upon such documents without responsibility for further investigation,
regardless of any notice or information to the contrary, or refuse to accept
and make payment upon such documents if such documents are not in strict
compliance with the terms of such Letter of Credit.

 

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

 

(h)                                 Interim
Interest.  If the Issuing Bank shall
make any LC Disbursement, then, unless the Borrower shall reimburse such LC
Disbursement in full on the date such LC Disbursement is made, the unpaid
amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower
reimburses such LC Disbursement, at the rate per annum then applicable to ABR
Revolving Loans; provided that, if the Borrower fails to reimburse such
LC Disbursement when due pursuant to paragraph (e) of this Section, then Section 2.13(d)
shall apply.  Interest accrued pursuant
to this paragraph shall be for the account of the Issuing Bank, except that
interest accrued on and after the date of payment by any Lender pursuant to
paragraph (e) of this Section to reimburse the Issuing Bank shall be for
the account of such Lender to the extent of such payment.

 

(i)                                     Replacement
of the Issuing Bank.  The Issuing
Bank may be replaced at any time by written agreement among the Borrower, the
Administrative Agent, the replaced Issuing Bank and the successor Issuing
Bank.  The Administrative Agent shall
notify the Lenders of any such replacement of the Issuing Bank.  At the time any such replacement shall become
effective, the Borrower shall pay all unpaid fees accrued for the account of
the replaced Issuing Bank pursuant to Section 2.12(b).  From and after the effective date of any such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the Issuing Bank under this Agreement with respect to Letters of
Credit to be issued thereafter and (ii) references herein to the term “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the replacement of an
Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.

 

(j)                                     Cash
Collateralization.  If any Event of
Default shall occur and be continuing, on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, the Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the 

 

26

 

deposit of cash collateral pursuant to this paragraph,
the Borrower shall deposit in an account with the Administrative Agent, in the
name of the Administrative Agent and for the benefit of the Lenders, an amount
in cash equal to the LC Exposure as of such date plus any accrued and unpaid
interest thereon; provided that the obligation to deposit such cash
collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon
the occurrence of any Event of Default with respect to the Borrower described
in clause (h), (i) or (j) of Article VII.  Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Borrower under this Agreement.  The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account.  Funds held in such account
shall be invested in money market funds of the Administrative Agent or in
another investment if mutually agreed upon by the Borrower and the
Administrative Agent, but the Administrative Agent shall have no other
obligation to make any other investment of the funds therein.  The Administrative Agent shall exercise
reasonable care in the custody and preservation of any funds held in such account
and shall be deemed to have exercised such care if such funds are accorded
treatment substantially equivalent to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent
shall not have any responsibility for taking any necessary steps to preserve
rights against any parties with respect to any such funds.  Interest or profits, if any, on such
investments shall accumulate in such account. 
Moneys in such account shall be applied by the Administrative Agent to
reimburse the Issuing Bank for LC Disbursements for which it has not been
reimbursed and, to the extent not so applied, shall be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time or, if the maturity of the Loans has been accelerated
(but subject to the consent of the Lenders with LC Exposure representing
greater than 50% of the total LC Exposure), be applied to satisfy other
obligations of the Borrower under this Agreement.  If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event
of Default, such amount (to the extent not applied as aforesaid) shall be
returned to the Borrower within three Business Days after all Events of Default
have been cured or waived.

 

(k)                                  In
the event any Letters of Credit shall be outstanding according to their terms
after the Maturity Date, the Borrower shall pay to the Administrative Agent, no
later than the date that is five Business Days prior to the Maturity Date, an
amount equal to the undrawn amount of such Letters of Credit to be held in a
special interest bearing cash collateral account pledged to the Administrative
Agent (the “Letter of Credit Collateral Account”).  The Borrower and the Administrative Agent
shall establish the Letter of Credit Collateral Account and the Borrower shall
execute all documents and agreements, including the Administrative Agent’s
standard form of assignment of deposit accounts, that the Administrative Agent
reasonably requests in connection therewith to establish the Letter of Credit
Collateral Account and grant the Administrative Agent, for the benefit of the
Lenders, a first priority security interest in such account and the funds
therein.  The Borrower hereby pledges to
the Administrative Agent and grants the Administrative Agent a security
interest in the Letter of Credit Collateral Account, whenever established, in
all funds held in the Letter of Credit Collateral Account from time to time,
and in all proceeds thereof as security for the payment of all Indebtedness
existing under the Loan Documents.  Funds
held in the Letter of Credit Collateral Account shall be held as cash
collateral for obligations described in this Section 2.06 and all
other Indebtedness under the Loan Documents and promptly applied by the
Administrative Agent at the request of the Issuing Bank 

 

27

 

to any reimbursement or other obligations under
Letters of Credit that exist or occur in the future during such time as the
Borrower has any outstanding obligations to the Issuing Bank.  To the extent that any surplus funds are held
in the Letters of Credit Collateral Account above the undrawn amount of any
outstanding Letters of Credit, during the existence of an Event of Default the
Administrative Agent may (A) hold such surplus funds in the Letter of Credit
Collateral Account as cash collateral or (B) apply such surplus funds to
satisfy any outstanding Indebtedness under the Loan Documents.  If no Default exists, the Administrative
Agent shall release to the Borrower at the Borrower’s written request any funds
held in the Letter of Credit Collateral Account above the amount required by
this Section.  Funds held in the Letter
of Credit Collateral Account shall be invested in money market funds of the
Administrative Agent or in another investment if mutually agreed upon by the
Borrower and the Administrative Agent, but the Administrative Agent shall have
no other obligation to make any other investment of the funds therein.  The Administrative Agent shall exercise
reasonable care in the custody and preservation of any funds held in the Letter
of Credit Collateral Account and shall be deemed to have exercised such care if
such funds are accorded treatment substantially equivalent to that which the
Administrative Agent accords its own property, it being understood that the
Administrative Agent shall not have any responsibility for taking any necessary
steps to preserve rights against any parties with respect to any such funds.

 

SECTION 2.07.                 Funding
of Borrowings.  (a) Each Lender shall
make each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, Oklahoma City, Oklahoma
time, to the account of the Administrative Agent most recently designated by it
for such purpose by notice to the Lenders. 
The Administrative Agent will make such Loans available to the Borrower
by promptly crediting the amounts so received, in like funds, to an account of
the Borrower maintained with the Administrative Agent in Oklahoma City,
Oklahoma and designated by the Borrower in the applicable Borrowing Request; provided
that ABR Revolver A Loans made to finance the reimbursement of an LC
Disbursement as provided in Section 2.06(e) shall be remitted by
the Administrative Agent to the Issuing Bank.

 

(b)                                 Unless
the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the
Administrative Agent such Lender’s share of such Borrowing, the Administrative
Agent may assume that such Lender has made such share available on such date in
accordance with paragraph (a) of this Section and may, in reliance upon
such assumption, make available to the Borrower a corresponding amount.  In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation or
(ii) in the case of the Borrower, the interest rate applicable to ABR Loans.  If such Lender pays such amount to the
Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.

 

28

 

SECTION 2.08.                 Interest
Elections.  (a) Each Borrowing initially
shall be of the Type specified in the applicable Borrowing Request and, in the
case of a Eurodollar Borrowing, shall have an initial Interest Period as
specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Borrowing to a
different Type or to continue such Borrowing and, in the case of a Eurodollar
Borrowing, may elect Interest Periods therefor, all as provided in this
Section.  The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing.

 

(b)                                 To
make an election pursuant to this Section, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. 
Each such telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Interest Election Request in a form approved by the
Administrative Agent and signed by the Borrower.

 

(c)                                  Each
telephonic and written Interest Election Request shall specify the following
information in compliance with Section 2.02:

 

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

 

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

 

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

 

(iv)                              if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of the term “Interest Period”.  If any such Interest Election Request
requests a Eurodollar Borrowing but does not specify an Interest Period, then
the Borrower shall be deemed to have selected an Interest Period of one month’s
duration.

 

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

 

(e)                                  If
the Borrower fails to deliver a timely Interest Election Request with respect
to a Eurodollar Borrowing prior to the end of the Interest Period applicable
thereto, then, unless such Borrowing is repaid as provided herein, at the end
of such Interest Period such Borrowing shall be converted to an ABR
Borrowing.  Notwithstanding any contrary
provision hereof, if an Event of Default has occurred and is continuing and the
Administrative Agent, at 

 

29

 

the request of the Required Lenders, so notifies the
Borrower, then, so long as an Event of Default is continuing (i) no outstanding
Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii)
unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.

 

SECTION 2.09.                 Termination
and Reduction of Commitments. 
(a) Unless previously terminated, the Commitments shall terminate
on the Maturity Date.

 

(b)                                 The
Borrower may at any time terminate, or from time to time reduce pro rata, the
Commitments as specified in the notice set forth in (c) below; provided
that (i) each reduction of the Commitments shall be in an amount that is an
integral multiple of $1,000,000 and not less than $10,000,000 and (ii) the
Borrower shall not terminate or reduce the Commitments if, after giving effect
to any concurrent prepayment of the Loans in accordance with Section 2.11,
(i) the sum of the Revolving Credit Exposures would exceed the total
Commitments, (ii) the sum of the
Revolver A Credit Exposures would exceed the Revolver A Commitments, or (iii)
the sum of the Revolver B Credit Exposures would exceed the Revolver B
Commitments.

 

(c)                                  The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Commitments under paragraph (b) of this Section at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date thereof as well as
whether such reduction applies to the Revolver A Commitments or the
Revolver B Commitments.  Promptly
following receipt of any notice, the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
notice delivered by the Borrower pursuant to this Section shall be
irrevocable; provided that a notice of termination of the Commitments
delivered by the Borrower may state that such notice is conditioned upon the
effectiveness of other credit facilities, in which case such notice may be
revoked by the Borrower (by notice to the Administrative Agent on or prior to
the specified effective date) if such condition is not satisfied.  Any termination or reduction of the
Commitments shall be permanent and such Commitments shall not be
reinstated.  Each reduction of the
Commitments shall be made ratably among the Lenders in accordance with their
respective Commitments.

 

SECTION 2.10.                 Repayment of
Loans; Evidence of Debt.  (a) The
Borrower hereby unconditionally promises to pay to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving
Loan on the Maturity Date.

 

(b)                                 Each
Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting
from each Loan made by such Lender, including the amounts of principal and
interest payable and paid to such Lender from time to time hereunder.

 

(c)                                  The
Administrative Agent shall maintain accounts in which it shall record
(i) the amount of each Loan made hereunder, the Type thereof, the Interest
Period applicable thereto and whether such loan is a Revolver A Loan or a
Revolver B Loan, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender
hereunder, and (iii) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender’s share thereof.

 

30

 

(d)                                 The
entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima  facie evidence of
the existence and amounts of the obligations recorded therein; provided
that the failure of any Lender or the Administrative Agent to maintain such
accounts or any error therein shall not in any manner affect the obligation of
the Borrower to repay the Loans in accordance with the terms of this Agreement.

 

(e)                                  Any
Lender may request that Loans made by it be evidenced by promissory notes.  In such event, the Borrower shall prepare,
execute and deliver to such Lender two promissory notes, one in the amount of
such Lender’s Revolver A Commitment and one in the amount of such Lender’s
Revolver B Commitment, payable to the order of such Lender (or, if
requested by such Lender, to such Lender and its registered assigns) and in a
form approved by the Administrative Agent. 
Thereafter, the Loans evidenced by such promissory notes and interest
thereon shall at all times (including after assignment pursuant to Section 9.04)
be represented by promissory notes in such form payable to the order of the
payee named therein (or, if such promissory notes are registered notes, to such
payee and its registered assigns).

 

SECTION 2.11.                 Prepayment
of Loans.  (a) The Borrower shall
have the right at any time and from time to time to prepay any Borrowing in
whole or in part, subject to prior notice in accordance with paragraph (b) of
this Section; provided that each such prepayment shall be in an amount
that is an integral multiple of $1,000,000 and not less than $1,000,000.

 

(b)                                 The
Borrower shall notify the Administrative Agent by telephone (confirmed by
telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Revolving Borrowing, not later than 11:00 a.m., Oklahoma City,
Oklahoma time, two Business Days before the date of prepayment, or (ii) in
the case of prepayment of an ABR Revolving Borrowing, not later than 11:00 a.m.,
Oklahoma City, Oklahoma time, on the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment
is given in connection with a conditional notice of termination of the
Commitments as contemplated by Section 2.09, then such notice of
prepayment may be revoked if such notice of termination is revoked in
accordance with Section 2.09. 
Promptly following receipt of any such notice relating to a Borrowing,
the Administrative Agent shall advise the Lenders of the contents thereof.  Each partial prepayment of any Borrowing
shall be in an amount that would be permitted in the case of an advance of a
Borrowing of the same Type as provided in Section 2.02.  Each prepayment of a Borrowing shall be
applied ratably to the Loans included in the prepaid Borrowing.  Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

 

SECTION 2.12.                 Fees.  (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender an unused commitment fee,
which shall accrue at the Applicable Rate on the daily amount of the unused
Commitment of such Lender during the period from and including the date of this
Agreement to but excluding the date on which such Commitment terminates.  Accrued unused commitment fees shall be
payable in arrears on the last day of March, June, September and December of
each year and on the date on which the Commitments terminate, commencing on the
first such date to occur after the date hereof; provided that any
commitment fees accruing after the date on which the Commitments terminate

 

31

 

shall be payable on
demand.  All commitment fees shall be
computed on the basis of a year of 360 days and shall be payable for the actual
number of days elapsed (including the first day but excluding the last day).

 

(b)                                 The
Borrower agrees to pay (i) to the Administrative Agent for the account of
each Lender a participation fee with respect to its participations in Letters
of Credit, which shall accrue at the same Applicable Rate used to determine the
interest rate applicable to Eurodollar Revolving Loans on the average daily
amount of such Lender’s LC Exposure (excluding any portion thereof attributable
to un-reimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate of one percent (1.00%) per annum, on the average daily amount of
the LC Exposure (excluding any portion thereof attributable to un-reimbursed LC
Disbursements) during the period from and including the Effective Date to but
excluding the later of the date of termination of the Commitments and the date
on which there ceases to be any LC Exposure, as well as the Issuing Bank’s
standard fees with respect to the issuance, amendment, renewal or extension of
any Letter of Credit or processing of drawings thereunder.  Participation fees and fronting fees accrued
through and including the last day of March, June, September and December of
each year shall be payable on the third Business Day following such last day,
commencing on the first such date to occur after the Effective Date; provided
that all such fees shall be payable on the date on which the Commitments
terminate and any such fees accruing after the date on which the Commitments
terminate shall be payable on demand. 
Any other fees payable to the Issuing Bank pursuant to this paragraph
shall be payable within 10 days after demand. 
All participation fees and fronting fees shall be computed on the basis
of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).

 

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

 

(d)                                 All
fees payable hereunder shall be paid on the dates due, in immediately available
funds, to the Administrative Agent (or to the Issuing Bank, in the case of fees
payable to it) for distribution, in the case of commitment fees and
participation fees or to the Lenders, as applicable.  Fees paid shall not be refundable under any
circumstances.

 

SECTION 2.13.                 Interest.  (a) The Loans comprising each
ABR Borrowing shall bear interest at the Alternate Base Rate plus the
Applicable Rate.

 

(b)                                 The
Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted
LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.

 

(c)                                  Notwithstanding
the foregoing, if any principal of or interest on any Loan or any fee or other
amount payable by the Borrower hereunder is not paid when due, whether at
stated maturity, upon acceleration or otherwise, such overdue amount shall bear
interest, after as well as before judgment, at a rate per annum equal to (i) in
the case of overdue principal of any 

 

32

 

Loan, two percent (2%) plus the rate otherwise
applicable to such Loan as provided in the preceding paragraphs of this Section or
(ii) in the case of any other amount, two percent (2%) plus the rate applicable
to ABR Loans as provided in paragraph (a) of this Section (such applicable
rate being herein referred to as the “Default Rate”).

 

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

 

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

 

SECTION 2.14.                 Alternate
Rate of Interest.  If prior to the
commencement of any Interest Period for a Eurodollar Borrowing:

 

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

 

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

 

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

 

SECTION 2.15.                 Increased
Costs.  (a) If any Change in Law
shall:

 

(i)                                     impose,
modify or deem applicable any reserve, special deposit or similar requirement
against assets of, deposits with or for the account of, or credit extended by, 

 

33

 

any Lender (except any such reserve requirement reflected in the
Adjusted LIBO Rate) or the Issuing Bank; or

 

(ii)                                  impose
on any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or
any Letter of Credit or participation therein;

 

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

 

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

 

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

 

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

 

34

 

SECTION 2.16.                 Break
Funding Payments.  In the event of
(a) the payment of any principal of any Eurodollar Loan other than on the last
day of an Interest Period applicable thereto (including as a result of an Event
of Default), (b) the conversion of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow,
convert, continue or prepay any Eurodollar Loan on the date specified in any
notice delivered pursuant hereto (regardless of whether such notice may be
revoked under Section 2.11(b) and is revoked in accordance
therewith), or (d) the assignment of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto as a result of a request by the
Borrower pursuant to Section 2.19, then, in any such event, the
Borrower shall compensate each Lender for the loss, cost and expense
attributable to such event.  In the case
of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed
to include an amount determined by such Lender to be the excess, if any, of (i)
the amount of interest which would have accrued on the principal amount of such
Loan had such event not occurred, at the Adjusted LIBO Rate that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.  A certificate of any Lender
setting forth any amount or amounts that such Lender is entitled to receive
pursuant to this Section shall be delivered to the Borrower and shall be
conclusive absent manifest error.  The
Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

 

SECTION 2.17.                 Taxes.  (a) Any and all payments by or on account of
any obligation of the Borrower hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided
that if the Borrower shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance with
applicable Law.

 

(b)                                 In
addition, the Borrower shall pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable Law.

 

(c)                                  The
Borrower shall indemnify the Administrative Agent, each Lender and the Issuing
Bank, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender
or the Issuing Bank, as the case may be, on or with respect to any payment by
or on account of any obligation of the Borrower hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts
payable under this Section) and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified
Taxes or Other Taxes were correctly or legally imposed or asserted by the
relevant Governmental Authority, except to the extent such sums are determined
by a court of competent jurisdiction by 

 

35

 

final and non-appealable judgment to have resulted
from the gross negligence or willful misconduct of the Administrative Agent,
the Issuing Bank or such Lender, as applicable. 
A certificate as to the amount of such payment or liability delivered to
the Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on
its own behalf or on behalf of a Lender or the Issuing Bank, shall be
conclusive absent manifest error. 
Neither the Administrative Agent, the Issuing Bank nor any Lender shall
be entitled to receive any payment with respect to Indemnified Taxes that are
incurred or accrued more than 180 days prior to the date such party gives
notice and demand with respect thereto to the Borrower.

 

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

 

(e)                                  Any
Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable Law, such
properly completed and executed documentation prescribed by applicable Law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate of withholding.

 

(f)                                    If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes
or Other Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section 2.17,
it shall pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.17 with respect to the Taxes or Other Taxes giving rise
to such refund), net of all out-of-pocket expenses of the Administrative Agent
or such Lender and without interest (other than any interest paid by the
relevant Governmental Authority with respect to such refund); provided,
that the Borrower, upon the request of the Administrative Agent or such Lender,
agrees to repay the amount paid over to the Borrower (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to
the Administrative Agent or such Lender in the event the Administrative Agent
or such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or
any Lender to make available its tax returns (or any other information relating
to its taxes which it deems confidential) to the Borrower or any other Person.

 

(g)                                 If
the Administrative Agent or any Lender or Issuing Bank becomes entitled to receive
payment of Indemnified Taxes, Other Taxes or additional sums pursuant to this Section 2.17, it shall give
notice and demand thereof to the Borrower, and the Borrower (unless the
Administrative Agent, Lender or Issuing Bank shall withdraw such notice and
demand or the Borrower is not obligated to pay such amounts) shall pay such
Indemnified Taxes, Other Taxes or additional sums within 10 days after the
Borrower’s receipt of such notice and demand; provided that any failure
or delay on the part of the Administrative Agent or any Lender or Issuing Bank
to demand compensation pursuant to the Section shall not constitute a
waiver of 

 

36

 

the Administrative Agent’s, such Lender’s or the
Issuing Bank’s right to demand such compensation.

 

SECTION 2.18.                 Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.  (a) The Borrower shall make each payment
required to be made by it hereunder (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
Section 2.16 or Section 2.17,
or otherwise) prior to 12:00 noon, Oklahoma City, Oklahoma time, on the date
when due, in immediately available funds, without set-off or counterclaim.  Any amounts received after such time on any
date may, in the discretion of the Administrative Agent, be deemed to have been
received on the next succeeding Business Day for purposes of calculating
interest thereon.  All such payments
shall be made to the Administrative Agent at its offices at MidFirst Bank,
MidFirst Plaza, 501 NW Grand Boulevard, Suite 100, Oklahoma City,
Oklahoma, Attention: James P. Boggs, Vice President, except payments to be made
directly to the Issuing Bank as expressly provided herein and except that
payments pursuant to Section 2.15, Section 2.16, Section 2.17 and Section 9.03
shall be made directly to the Persons entitled thereto.  The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.  If any payment hereunder shall be due on a
day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such
extension.  All payments hereunder shall
be made in dollars.

 

(b)                                 If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, un-reimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be
applied (i) first, towards payment of interest and fees then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
interest and fees then due to such parties, (ii) second, towards payment of
principal and un-reimbursed LC Disbursements then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of principal and
un-reimbursed LC Disbursements then due to such parties, and (iii) third,
toward the payment of the Borrower’s obligations under any Swap Agreements, if
any, owing to the Lenders or their Affiliates, in each case ratably to each
Lender and Affiliate.

 

(c)                                  If
any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Revolving Loans or participations in LC Disbursements resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its
Revolving Loans and participations in LC Disbursements and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans and participations in LC Disbursements of
other Lenders to the extent necessary so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of principal of and accrued interest on their respective Revolving Loans and
participations in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment
made by the Borrower pursuant to and in accordance with the express 

 

37

 

terms of this Agreement or any payment obtained by a
Lender as consideration for the assignment of or sale of a participation in any
of its Loans or participations in LC Disbursements to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).  The Borrower consents to the foregoing and
agrees, to the extent it may effectively do so under applicable Law, that any
Lender acquiring a participation pursuant to the foregoing arrangements may
exercise against the Borrower rights of set-off and counterclaim with respect
to such participation as fully as if such Lender were a direct creditor of the
Borrower in the amount of such participation.

 

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

 

(e)                                  If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.06(e), Section 2.07(b), Section 2.18(d)
or Section 9.03(c), then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts
thereafter received by the Administrative Agent for the account of such Lender
to satisfy such Lender’s obligations under such Sections until all such
unsatisfied obligations are fully paid.

 

SECTION 2.19.                 Mitigation
Obligations; Replacement of Lenders. 
(a) If any Lender requests compensation under Section 2.15,
or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 2.17, then such Lender
shall use reasonable efforts to designate a different lending office for
funding or booking its Loans hereunder or to assign its rights and obligations
hereunder to another of its offices, branches or affiliates, if, in the
judgment of such Lender, such designation or assignment (i) would eliminate or
reduce amounts payable pursuant to Section 2.15 or Section 2.17, as the case may be,
in the future and (ii) would not subject such Lender to any un-reimbursed cost
or expense and would not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any
such designation or assignment.

 

(b)                                 If
any Lender requests compensation under Section 2.15, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.17, or if any Lender
defaults in its obligation to fund Loans hereunder, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without 

 

38

 

recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights
and obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment); provided that (i) the Borrower shall have received the
prior written consent of the Administrative Agent (and if a Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and participations in LC Disbursements,
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) in the case of any such assignment resulting from a claim for
compensation under Section 2.15 or payments required to be made
pursuant to Section 2.17,
such assignment will result in a reduction in such compensation or
payments.  A Lender shall not be required
to make any such assignment and delegation if, prior thereto, as a result of a
waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.

 

SECTION 2.20.                 Increase
of Revolver A Commitments.  (a) If,
prior to and after giving effect to any increase in the Revolver A Commitments
pursuant to this Section 2.20, no Default, Event of Default or
Material Adverse Effect shall have occurred and be continuing, the Borrower may
at any time and from time to time, but in no event more than one (1) time in
any fiscal year, request an increase of the aggregate Revolver A
Commitments by notice to the Administrative Agent in writing of the amount of
such proposed increase (such notice, a “Commitment Increase Notice”); provided,
however, that (i) each such increase shall be at least $10,000,000,
(ii) the cumulative increase in Revolver A Commitments pursuant to
this Section 2.20 shall not exceed $35,000,000, (iii) the
Revolver A Commitment of any Lender may not be increased without such Lender’s
consent, (iv) the aggregate amount of the Lenders’ Revolver A
Commitments shall not exceed $82,500,000, and (v) Borrower shall have provided reasonable evidence that
collateral reasonably acceptable to the Required Lenders, in addition to any
and all Collateral securing the Obligations as of the date of the Commitment
Increase Notice, has been acquired, or will be acquired with Borrowings made in
connection with such increase in the Revolver A Commitments, to secure the full
amount of the Obligations, as increased as contemplated by the Commitment
Increase Notice.  Each Lender will notify
the Administrative Agent within fifteen (15) days after receipt of the evidence
described in clause (v) immediately above whether or not the additional
collateral, and the evidence thereof, is acceptable to such Lender provided
that if such notice is not received by the Administrative Agent within such
time, such Lender shall be deemed to be satisfied with such evidence.  If the conditions in clauses (i) through (v)
above have been satisfied, the Administrative Agent shall, within five (5) Business
Days after Administrative Agent is aware that such conditions have been
satisfied, notify each Lender thereof. 
Each Lender desiring to increase its Revolver A Commitment shall
notify the Administrative Agent in writing no later than fifteen (15) days
after receipt by the Lender of such notice from the Administrative Agent.  Any Lender that accepts an offer to it by the
Borrower to increase its Revolver A Commitment pursuant to this Section 2.20
shall, in each case, execute an agreement (a “Commitment Increase Agreement”),
in substantially the form attached hereto as Exhibit B, with the
Borrower and the Administrative Agent, whereupon such Lender shall be bound by
and entitled to the benefits of this Agreement with respect to the full amount
of its Revolver A Commitment as so increased, and the definition of
Revolver A Commitment in Section 1.01 and Schedule 2.01
hereof shall be deemed to be amended to reflect such increase.  

 

39

 

Any Lender that
does not notify the Administrative Agent within such period that it will
increase its Revolver A Commitment shall be deemed to have rejected such
offer to increase its Revolver A Commitment.  No Lender shall have any obligation
whatsoever to agree to increase its Revolver A Commitment.  Any agreement to increase a Lender’s pro rata
share of the increased Revolver A Commitment shall be irrevocable and
shall be effective upon notice thereof by the Administrative Agent at the same
time as that of all other increasing Lenders.

 

(b)                                 If
any portion of the increased Revolver A Commitments is not subscribed for
by such Lenders, the Borrower may, in its sole discretion, but with the consent
of the Administrative Agent as to any Person that is not at such time a Lender
(which consent shall not be unreasonably withheld or delayed), offer to any
existing Lender or to one or more additional banks or financial institutions
the opportunity to participate in all or a portion of such unsubscribed portion
of the increased Revolver A Commitments pursuant to paragraph (c)
below by notifying the Administrative Agent. 
Promptly and in any event within five (5) Business Days after receipt of
notice from the Borrower of its desire to offer such unsubscribed commitments
to certain existing Lenders, to the additional banks or to financial
institutions identified therein or such additional banks or financial
institutions identified by the Administrative Agent and approved by the
Borrower, the Administrative Agent shall notify such proposed lenders of the
opportunity to participate in all or a portion of such unsubscribed portion of
the increased Revolver A Commitments.

 

(c)                                  Any
additional bank or financial institution that the Borrower selects to offer
participation in the increased Revolver A Commitments shall execute and deliver
to the Administrative Agent a New Lender Agreement (a “New Lender Agreement”),
in substantially the form attached hereto as Exhibit C, setting
forth its Revolver A Commitment, and upon the effectiveness of such New Lender
Agreement such bank or financial institution (a “New Lender”) shall
become a Lender for all purposes and to the same extent as if originally a
party hereto and shall be bound by and entitled to the benefits of this
Agreement, and the signature pages hereof shall be deemed to be amended to
add the name of such New Lender and the definition of Revolver A Commitment in Section 1.01
and Schedule 2.01 hereof shall be deemed amended to increase the
aggregate Revolver A Commitments of the Lenders by the Revolver A Commitment of
such New Lender, provided that the Revolver A Commitment of any New
Lender shall be an amount not less than $5,000,000.  Each New Lender Agreement shall be
irrevocable and shall be effective upon notice thereof by the Administrative
Agent at the same time as that of all other New Lenders.

 

(d)                                 The
effectiveness of any New Lender Agreement or Commitment Increase Agreement
shall be contingent upon (i) receipt by the Administrative Agent of (x) such
corporate resolutions of the Borrower and legal opinions of counsel to the
Borrower as the Administrative Agent shall reasonably request with respect
thereto, in each case in form and substance reasonably satisfactory to the
Administrative Agent, and (y) mortgages, deeds of trust, security agreements
and other documents (including, without limitation, those described in Article IV
applicable to such additional collateral) in form and substance reasonably
acceptable to the Administrative Agent, granting a first priority perfected
Lien subject to the Liens permitted by Section 6.02 hereof on and
otherwise relating to the additional collateral securing the Obligations
increased as contemplated in clause (v) of Section 2.20(a) above,
and (ii) there not having occurred any event that would cause a material
diminution in value of the additional collateral.  

 

40

 

Once a New Lender Agreement or Commitment Increase
Agreement becomes effective, the Administrative Agent shall reflect the
increases in the Commitments effected by such agreements by appropriate entries
in the Register.

 

(e)                                  If
any bank or financial institution becomes a New Lender pursuant to Section 2.20(c)
or any Lender’s Revolver A Commitment is increased pursuant to Section 2.20(a),
additional Revolver A Loans made on or after the effectiveness thereof
(the “Re-Allocation Date”) shall be made pro rata based on their
respective Revolver A Commitments in effect on or after such Re-Allocation Date
(except to the extent that any such pro rata borrowings would result in any
Lender making an aggregate principal amount of Loans in excess of its Revolver
A Commitment, in which case such excess amount will be allocated to, and made
by, such New Lender and/or Lenders with such increased Revolver A Commitments
to the extent of, and pro rata based on, their respective Revolver A
Commitments), and continuations of Loans outstanding on such Re-Allocation Date
shall be effected by repayment of such Loans on the last day of the Interest
Period applicable thereto or, in the case of ABR Loan, on the date of such
increase, and the making of new Loans of the same Type pro rata based on the
respective Revolver A Commitments in effect on and after such Re-Allocation
Date.

 

(f)                                    If
on any Re-Allocation Date there is an unpaid principal amount of Eurodollar
Loans, such Eurodollar Loans shall remain outstanding with the respective
holders thereof until the expiration of their respective Interest Periods
(unless the Borrower elects to prepay any thereof in accordance with the
applicable provisions of this Agreement), and interest on and repayments of
such Eurodollar Loans will be paid thereon to the respective Lenders holding
such Eurodollar Loans pro rata based on the respective principal amounts
thereof outstanding.

 

ARTICLE III

 

Representations and
Warranties

 

The Borrower represents
and warrants to the Lenders that:

 

SECTION 3.01.                 Organization;
Powers.  Each Loan Party and each
general partner or managing member of each Loan Party is (i) duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization, (ii) has all requisite power and authority to carry on its
business as now conducted, and (iii) is qualified to do business in, and is in
good standing in, every jurisdiction where such qualification is required,
except in each case where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

SECTION 3.02.                 Authorization;
Enforceability.  The Transactions are
within each Loan Party’s corporate, partnership or limited liability company
powers and have been duly authorized by all necessary corporate, partnership or
limited liability company action.  This
Agreement and each Loan Document have been duly executed and delivered by the
Loan Party(ies) thereto and constitute legal, valid and binding obligations of
such Loan Party(ies) thereto, enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, 

 

41

 

reorganization,
moratorium or other laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at law.

 

SECTION 3.03.                 No
Undisclosed Liabilities.  The Loan
Parties have no material liabilities or obligations of any nature except for
(i) liabilities or obligations reflected or reserved against in the financial
statements described in Section 3.05 below or in the financial
statements most recently delivered by the Parent pursuant to Section 5.01,
as applicable, (ii) current liabilities incurred in the ordinary course of
business since the date of such financial statements, (iii) liabilities or
obligations that are not required to be included in financial statements
prepared in accordance with GAAP, and (iv) those set forth in Schedule 3.03
attached to this Agreement or previously disclosed in the Parent’s filings with
the SEC or otherwise disclosed in writing to the Administrative Agent and the
Lenders.

 

SECTION 3.04.                 Governmental
Approvals; No Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority, except such
as have been obtained or made and are in full force and effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any
indenture, agreement or other instrument binding upon any Loan Party or its
assets, or give rise to a right thereunder to require any payment to be made by
any Loan Party, and (d) will not result in the creation or imposition of any
Lien on any asset of the Borrower or any Loan Party other than such Liens created
by the Security Documents.

 

SECTION 3.05.                 Financial
Condition; No Material Adverse Change. 
(a) The Borrower has heretofore furnished to the Lenders the Parent’s
consolidated balance sheet and statements of income and cash flows (i) as of
and for the fiscal year ended December 31, 2003, reported on by Grant
Thornton LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended September 30, 2004,
certified by its Financial Officer.  Such
financial statements present fairly, in all material respects, the financial
position and results of operations and cash flows of the Parent and its
consolidated Subsidiaries as of such dates and for such periods in accordance
with GAAP, subject to year-end audit adjustments and the absence of footnotes
in the case of the statements referred to in clause (ii) above.

 

(b)                                 Since
December 31, 2003, no event has occurred that could reasonably expected to
have a Material Adverse Effect.

 

SECTION 3.06.                 Properties.  (a) Except as set forth in Schedule 3.06(a),
Borrower has good and marketable title to, or, as applicable, valid leasehold
interests in, all its real and personal property material to its business,
which is free and clear of any and all Liens or encumbrances of any nature or
kind except for the Permitted Encumbrances and Liens in favor of the
Administrative Agent and other Liens permitted by Section 6.02
hereof and has full corporate power and lawful authority to bargain, grant,
sell, mortgage, assign, transfer, convey and grant a security interest in all
of the property and without obtaining the waiver, consent or approval of any
lessor, sublessor, governmental agency or entity or other party whomsoever or 

 

42

 

whatsoever other than
with respect to the Excluded Assets and then only to the extent that the
failure to obtain such waiver, consent or approval would not cause a Material
Adverse Effect.

 

(b)                                 Schedule 3.06(b)
describes all of the Leases (whether or not material, but not including
rights-of-way or similar agreements that are part of the Collateral covered by
the Security Documents) in effect as of the Effective Date (copies of each of
which have been provided to the Administrative Agent), each of which to the knowledge
of the Loan Party that is a party thereto, (i) has been duly executed and
delivered by and constitutes the legal, valid and binding obligation of, the
Loan Party that is party thereto in accordance with its terms, except for
creditors’ rights and equitable principles, (ii) is in full force and effect
and there is no default thereunder in the payment of rent or otherwise and
(iii) has not been amended or modified, nor any provisions thereof waived,
except, in each case, for matters which in the aggregate could not reasonably
be expected to result in a Material Adverse Effect.

 

(c)                                  Each
Loan Party owns, or is licensed to use, all trademarks, trade names,
copyrights, patents and other intellectual property material to its business,
and the use thereof by the Loan Parties does not infringe upon the rights of
any other Person, except for any such infringements that, individually or in
the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

 

(d)                                 The
place of business or chief executive office of each Loan Party is at the
location shown on Schedule 3.06(d) or at such other locations as
disclosed to the Administrative Agent in writing after the date hereof.  The “Location” of each Loan Party as
determined by Section 9.307 of the UCC is shown on Schedule 3.06(d).  The federal employee identification number
for each Loan Party is set forth on Schedule 3.06(d).

 

(e)                                  Borrower
has all easements, rights of way, licenses, permits, leases and fee simple
ownership necessary for the operation of the pipelines, the plants, and the
systems.  Borrower has obtained all
necessary consents from third parties necessary for the operation of the
pipelines, plants and systems.

 

SECTION 3.07.                 Litigation
and Environmental Matters.  (a) There
are no actions, suits or proceedings by or before any arbitrator or
Governmental Authority pending against or, to the knowledge of the Borrower,
threatened against or affecting any Loan Party (i) as to which there is a
reasonable possibility of an adverse determination and that, if adversely
determined, would reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect (other than the Disclosed Matters) or
(ii) that involve this Agreement or the Transactions.

 

(b)                                 Except
for the Disclosed Matters and except with respect to any other matters that,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect, no Loan Party (i) has failed to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license or
other approval required under any Environmental Law, (ii) has become
subject to any Environmental Liability, (iii) has received notice of any
claim with respect to any Environmental Liability or (iv) knows of any
basis for any Environmental Liability.

 

43

 

(c)                                  Since
the date of this Agreement, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or
materially increased the likelihood of, a Material Adverse Effect.

 

SECTION 3.08.                 Compliance
with Laws and Agreements.  Each Loan
Party is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.  No Default has occurred and is continuing.

 

SECTION 3.09.                 Investment
and Holding Company Status.  No Loan
Party is (a) an “investment company” as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a “holding company”
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.

 

SECTION 3.10.                 Taxes.  Each Loan Party has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid
or caused to be paid all Taxes required to have been paid by it, except (a)
Taxes that are being contested in good faith by appropriate proceedings and for
which such Loan Party has set aside on its books adequate reserves or (b) to
the extent that the failure to do so could not reasonably be expected to result
in a Material Adverse Effect.

 

SECTION 3.11.                 ERISA.  No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events
for which liability is reasonably expected to occur, could reasonably be
expected to result in a Material Adverse Effect.  The present value of all accumulated benefit
obligations under each Plan (based on the assumptions used for purposes of
Statement of Financial Accounting Standards No. 87) did not, as of the
date of the most recent financial statements reflecting such amounts, exceed
the fair market value of the assets of such Plan by an amount that would
reasonably be expected to have a Material Adverse Effect, and the present value
of all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No. 87)
did not, as of the date of the most recent financial statements reflecting such
amounts, exceed the fair market value of the assets of all such underfunded
Plans by an amount that would reasonably be expected to have a Material Adverse
Effect.

 

SECTION 3.12.                 Disclosure.  The Borrower has disclosed to the Lenders all
agreements, instruments and corporate or other restrictions to which any Loan
Party is subject, and all other matters known to it, that, individually or in
the aggregate, could reasonably be expected to result in a Material Adverse
Effect.  Neither the Information
Memorandum nor any of the other reports, financial statements, certificates or
other information furnished by or on behalf of the Borrower to the
Administrative Agent or any Lender in connection with the negotiation of this
Agreement or delivered hereunder (as modified or supplemented by other
information so furnished) contains any material misstatement of fact or omits
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading; provided
that, with respect to projected financial information, the Borrower represents
only that such information was prepared in good faith based upon assumptions
believed to be reasonable at the time.

 

44

 

SECTION 3.13.                 Labor
Matters.  There are no strikes,
lockouts or slowdowns against any Loan Party pending or, to the knowledge of
the Borrower, threatened that could reasonably be expected to have a Material
Adverse Effect.  The hours worked by and
payments made to employees of the Borrower and its Subsidiaries have not been
in violation of the Fair Labor Standards Act or any other Law dealing with such
matters to the extent that such violation could reasonably be expected to have
a Material Adverse Effect.

 

SECTION 3.14.                 Subsidiaries.  Schedule 3.14 lists, for each
Subsidiary of the Borrower as of the date hereof, its full legal name, its
jurisdiction of organization, the number of shares of capital stock or other
Equity Interests outstanding and the owner(s) of such shares or Equity
Interests.  The Parent is the sole member
of the Borrower and the Borrower is the sole Subsidiary of the Parent.

 

SECTION 3.15.                 Margin
Stock.  No Loan Party is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock (within
the meaning of Regulation T, U or X of the Board), and no part of the proceeds
of any Loan will be used to purchase or carry any margin stock in violation of
said Regulation T, U or X or to extend credit to others for the purpose of
purchasing or carrying margin stock in violation of said Regulation T, U or X.

 

SECTION 3.16.                 Licenses
and Permits.  Each Loan Party
possesses all licenses, permits, authorizations, registrations, approvals and
similar rights necessary under Law for such Person to conduct its operations as
now being conducted, each of such licenses, permits, authorizations,
registrations, approvals and similar rights is valid and subsisting, in full
force and effect and enforceable by such Person, and such Person is in
compliance with all terms, conditions or other provisions of such permits,
authorizations, registrations, approvals and similar rights except where, in
each case, such failure to possess, such invalidity, or such noncompliance
would not reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.17.                 Reportable
Transaction.  The Borrower does not
intend to treat the Loans as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4).  In the event the Borrower determines to take
any action inconsistent with such intention, it will promptly notify the
Administrative Agent thereof. 
Furthermore, the Borrower acknowledges that one or more of the Lenders
may treat its Loans as part of a transaction that is subject to Treasury
Regulation Section 1.6011-4 or Section 301.6112-1, and the
Administrative Agent and such Lender or Lenders, as applicable, may file such
IRS forms or maintain such lists and other records as they may determine are
required by such Treasury Regulations.

 

SECTION 3.18.                 Public
Utility Holding Company Act.  No Loan
Party is a non-exempt “holding company,” or subject to regulation as such, or,
to the knowledge of the Borrower’s or such Subsidiary’s officers, an “affiliate”
of a “holding company” or a “subsidiary company” of a “holding company,” within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

 

SECTION 3.19.                 Senior
Debt Status.  As of the Effective
Date, all Indebtedness outstanding under the Loan Documents constitutes senior
Indebtedness of the 

 

45

 

Borrower and ranks at
least pari passu in priority of payment with all other Indebtedness owed by the
Borrower, except Indebtedness of the Borrower which may be secured by Liens
permitted pursuant to Section 6.02 hereof.

 

SECTION 3.20.                 Priority;
Security Matters.  The Obligations
are and shall be at all times secured by valid, perfected Liens in favor of the
Administrative Agent for the benefit of the Lenders in all Collateral to the
extent perfection has or will occur by the filing of a Uniform Commercial Code
Financing Statement in the relevant jurisdiction, filing or recording a
mortgage in real property records of the county in which such real property or
fixtures is located, or by possession or control, and, except for Liens
permitted by Section 6.02 hereof, all such Liens shall be first
priority Liens.

 

SECTION 3.21.                 Solvency.  After giving effect to the Loans and the
terms of this Agreement, the Borrower is, and will be, individually and
together with its Subsidiaries, and the Parent, Solvent.

 

SECTION 3.22.                 Foreign
Assets Control Regulation.  Borrower’s
use of the proceeds of the Loans will not violate the Trading with the Enemy
Act, as amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any
enabling legislation or executive order relating thereto.

 

SECTION 3.23.                 Claims
and Liabilities.  No Loan Party has accrued any
liabilities under gas purchase contracts for gas not taken, but for which it is
liable to pay if not made up and which, if not paid, could reasonably be
expected to have a Material Adverse Effect. No known claims exist against the
Borrower or any of its Subsidiaries for gas imbalances, which claims, if
adversely determined, could reasonably be expected to have a Material Adverse
Effect. To the knowledge of the Borrower, no purchaser of product supplied by
the Borrower or any of its Subsidiaries has any claim against the Borrower or
any of its Subsidiaries for product paid for, but for which delivery was not
taken as and when paid for, which claim, if adversely determined, could
reasonably be expected to have a Material Adverse Effect.

 

SECTION 3.24.                 Material
Contracts.  The agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements and other instruments set forth on Schedule 3.24
include all material contracts and agreements (including, without limitation,
any contract, lease, agreement, or commitment, written or oral, providing for
receipt or payment, contingent or otherwise, of $250,000 or more annually or
which may not be terminated without payment or penalty in excess of $50,000
with notice of thirty (30) days or less) of the Borrower and its Subsidiaries
as of the date of this Agreement relating to the ownership and operation of the
assets of the Borrower and its Subsidiaries (collectively, the “Material
Contracts”).  Except as set forth on Schedule 3.24,
as of the date of this Agreement, each Material Contract is in full force and
effect, except for such matters in respect of all Material Contracts that
individually, or in the aggregate, are not reasonably likely to have a Material
Adverse Effect.  The Borrower and its
Subsidiaries (or their predecessors in interest) have in all respects performed
all obligations required to be performed by them as of the date of this
Agreement under the Material Contracts, and are not in default under any
obligation of any Material Contract except where the failure to perform or
default is, in respect of all Material Contracts, individually or in the
aggregate, not reasonably likely to 

 

46

 

have a Material Adverse
Effect.  As of the date of this
Agreement, to the knowledge of the Borrower, no other party to any Material
Contract is in default thereunder.  As of
the date of this Agreement, the Borrower and its Subsidiaries have not assigned
to any Person any of their rights under the Material Contracts.  As of the date of this Agreement, the
Borrower and its Subsidiaries have not waived any of their rights of material
value under the Material Contracts.

 

SECTION 3.25.                 Certain
Representations Regarding the Parent. 
(i) The Parent has not amended its charter or by-laws or other
constituent documents in any manner that would materially and adversely affect
the rights of the Lenders under this Agreement or their ability to enforce the
same; (ii) the Parent has not changed the end of its fiscal year to a date
other than December 31; (iii) the Parent has not engaged in any business
that a master limited partnership would not be entitled to engage in pursuant
to applicable Law nor has the Parent engaged in any business activity that
would cause less than 90% of the gross income of the Parent to constitute “qualifying
income” within the meaning of Section 7704(d) of the Code; (iv) the Parent
has not made any changes to the Omnibus Agreement that the Borrower and its
Subsidiaries would be prohibited from making pursuant to Section 6.15
of this Agreement; and (v) the Parent has kept proper books of record and
account in which full, true and correct entries have been made of all dealings
and transactions in relation to its business and activities.

 

ARTICLE IV

 

Conditions

 

SECTION 4.01.                 Effective
Date.  The obligations of the Lenders
to make Loans and of the Issuing Bank to issue Letters of Credit hereunder
shall not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.02):

 

(a)                                  The
Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement and all other documents
required by Lender in connection with this Agreement signed on behalf of such
party or (ii) written evidence satisfactory to the Administrative Agent (which
may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement and all
other documents required by Lender in connection with this Agreement.

 

(b)                                 The
Administrative Agent shall have received each of the Security Documents, duly
executed and completed in sufficient number of counterparts for recording, if necessary,
and they shall constitute satisfactory security documentation to create first
priority security interests in the Collateral (free and clear of all Liens,
other than Liens permitted by Section 6.02 hereof).

 

(c)                                  The
Administrative Agent shall have received the following:

 

(i)                                     Uniform
Commercial Code Financing Statements (Form UCC-1) and such evidence of
filing or arrangements for filing as may be acceptable to the Administrative
Agent, naming the relevant Loan Party as the debtor and the Administrative
Agent as the secured party, or other similar instruments or documents, filed or
to be filed under the 

 

47

 

Uniform Commercial Code of all jurisdictions as may be necessary or, in
the opinion of the Administrative Agent, desirable to perfect the security
interest of the Administrative Agent pursuant to the Security Documents; and

 

(ii)                                  certified
copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11),
or a similar search report certified by a party acceptable to the
Administrative Agent, dated a date reasonably near to the date of the initial
Borrowing, listing all effective financing statements which name any Loan Party
(under its present name and any previous names) as the debtor and which are
filed in the jurisdictions in which filings of any Security Documents are made
pursuant to this Agreement, together with copies of such financing statements
none of which (other than those (i) securing the Obligations, if such Form UCC-11
or search report, as the case may be, is current enough to list such financing
statements, or (ii) that are terminated as of the Effective Date or within
a time frame otherwise acceptable to the Administrative Agent) shall cover any
Collateral described in the Security Documents; and

 

(iii)                               copies
of tax Lien searches for each jurisdiction in which a Security Document is
filed or recorded pursuant to this Agreement, certified by a party acceptable
to the Administrative Agent, listing all tax Liens imposed on any Loan Party or
any of its assets (none of which shall cover any Collateral described in the
Security Documents).

 

(d)                                 The
Administrative Agent shall have received, and be satisfied with, the title
information with respect to the Collateral and shall, in its sole and absolute
discretion, be satisfied with the status of title to the Collateral.

 

(e)                                  The
Parent shall have (i) consummated its initial public offering of Common Units
(as such term is defined in the Partnership Agreement) as contemplated in the
S-1 filed by the Parent with the SEC and shall have delivered to the
Administrative Agent copies of all filings (including any filings on Form S-1
or Form 8 or Form 10) made with the SEC in connection therewith,
including, without limitation, that Vinson & Elkins, as counsel to the
Parent, shall have issued a tax opinion in connection therewith acceptable to
the parties underwriting such initial public offering; and (ii) has received
net proceeds of an aggregate amount of not less than $38,000,000 as a result of
such initial public offering.

 

(f)                                    The
Administrative Agent shall have received, and shall be satisfied in its sole
discretion with the contents, results and scope of, the report by Barnes &
Click with respect to the Collateral.

 

(g)                                 The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
Vinson Elkins, LLP, counsel for the Borrower, relating to the Parent, the
Borrower and its Subsidiaries, this Agreement or the Transactions and any other
matters as the Required Lenders shall reasonably request.  The Borrower hereby requests such counsel to
deliver such opinion.

 

(h)                                 The
Administrative Agent shall have received a favorable written opinion (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
outside counsel for the Borrower, relating to the Parent, the Borrower and its
Subsidiaries, this 

 

48

 

Agreement or the Transactions and any other matters as
the Required Lenders shall reasonably request. 
The Borrower hereby requests such counsel to deliver such opinion.

 

(i)                                     The
Administrative Agent shall have received favorable written opinions (addressed
to the Administrative Agent and the Lenders and dated the Effective Date) of
each local counsel of the Borrower approved by Administrative Agent, for each
state where any portion of the Collateral is located, relating to the
enforceability of the Security Documents in such State and any other matters as
the Required Lenders shall reasonably request.

 

(j)                                     The
Administrative Agent shall have received such documents and certificates as the
Administrative Agent or its counsel may reasonably request relating to the
organization, existence and good standing of the Borrower, Parent and the
General Partner, the authorization of the Transactions and any other legal
matters relating to the Borrower, Parent and the General Partner, this
Agreement or the Transactions, all in form and substance satisfactory to the
Administrative Agent and its counsel.

 

(k)                                  The
Administrative Agent shall have received a certificate, dated the Effective
Date and signed by the President, a Vice President or a Financial Officer of
the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.

 

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

 

(m)                               The
Lenders shall have received (i) satisfactory audited consolidated financial
statements of Hiland Partners, LLC and Continental Gas, Inc. for the
period ended December 31, 2003 and for the two (2) most recent fiscal
years ended prior to the Effective Date as to which such financial statements
are available, and (ii) satisfactory unaudited interim consolidated
financial statements of September 30, 2004 for each quarterly period ended
subsequent to the date of the latest financial statements delivered pursuant to
clause (i) immediately above as to which such financial statements are
available.

 

(n)                                 The
Administrative Agent shall have received satisfactory evidence that the Prior
Credit Agreements have been terminated and of the occurrence of the following
with respect to the Prior Credit Agreements: 
(i) all obligations owing to any lender, agent or any other Person
thereunder shall have been paid in full and all commitments of any lender,
agent or any other Person thereunder to make any future loans shall have been
terminated, (ii) each Letter of Credit issued thereunder shall have been
terminated or canceled, or the Issuer thereof shall have accepted cash
collateral or a Letter of Credit as security therefor; and (iii) there shall
have been no defaults thereunder immediately prior to the satisfaction of the
items set forth in (i) and (ii) immediately above.

 

(o)                                 The
Administrative Agent shall have received certificates of insurance showing the
Administrative Agent as loss payee or additional insured, as appropriate, and a
schedule of existing insurance, in each case reasonably satisfactory to
the Administrative Agent 

 

49

 

evidencing the existence
of all insurance required to be maintained pursuant to Section 5.05
hereof.

 

(p)                                 The
Administrative Agent shall have received evidence that all governmental and
third-party approvals or consents necessary, or in the discretion of the
Administrative Agent, advisable in connection with the Transactions and the
continuing operations of the Loan Parties have been granted.

 

(q)                                 The
Administrative Agent shall have received a reliance letter from Envirotech
Engineering and Consulting, Inc. with respect to the following
environmental reports, which reliance letter entitles the Administrative Agent
and Lenders to rely on such reports as if such reports had been issued directly
to the Administrative Agent for the benefit of the Lenders: (i) Phase I
Environmental Site Assessment for the Hiland Gas Gathering System, Washakie and
Big Horn Counties, Wyoming, dated September 2004; (ii) Phase I
Environmental Site Assessment for the Badlands Gas Gathering System, Bowman &
Slope Counties, North Dakota, dated September 2003; (iii) Phase I
Environmental Site Assessment for the Eagle Chief Gas Gathering System, Alfalfa
and Major Counties, Oklahoma, dated September 2003; (iv) Phase I
Environmental Site Assessment for the Matli Gas Gathering System, Blaine
County, Oklahoma, dated September 2003; and (v) Phase I Environmental Site
Assessment for the Great Plains Pipeline, Major, Woods, and Alfalfa Counties,
Oklahoma, dated August 2003.

 

(r)                                    No
event shall have occurred with respect to the Parent, the Borrower and its
Subsidiaries, taken as a whole, which has had, or could reasonably be expected
to have, a Material Adverse Effect.

 

The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of the Issuing Bank to issue
Letters of Credit hereunder shall not become effective unless each of the foregoing
conditions is satisfied (or waived pursuant to Section 9.02) at or
prior to 3:00 p.m., Oklahoma City, Oklahoma time, on February 28,
2005 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

 

SECTION 4.02.                 Each
Credit Event.  The obligation of each
Lender to make a Loan on the occasion of any Borrowing, and of the Issuing Bank
to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:

 

(a)                                  The
representations and warranties of the Borrower set forth in this Agreement
shall be true and correct on and as of the date of such Borrowing or the date
of issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representation or warranty is stated
to relate to an earlier date in which case such representation and warranty
will be true and correct on and as of such earlier date.

 

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

 

50

 

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

 

ARTICLE V

 

Affirmative Covenants

 

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

 

SECTION 5.01.                 Financial
Statements; Ratings Change and Other Information.  The Borrower will furnish to the
Administrative Agent:

 

(a)                                  within
90 days after the end of each
fiscal year of the Parent, on EDGAR (or (i) upon the request of any Lender, the
Borrower shall provide a copy of such statement or report described below to
any Lender that does not have access to EDGAR, or (ii) if such statement or
report is no longer available on EDGAR for any reason, a copy of such statement
or report described below to each Lender and the Administrative Agent), the
Parent audited consolidated balance sheet and related statements of operations,
partners’ capital and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal
year, all reported on by Grant Thornton LLP or other independent public
accountants of recognized national standing (without a “going concern” or like
qualification or exception and without any qualification or exception as to the
scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of
operations of the Parent, the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied;

 

(b)                                 within
45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Parent on EDGAR (or (i) upon the request of any Lender, the
Borrower shall provide a copy of such statement or report described below to
any Lender that does not have access to EDGAR, or (ii) if such statement
or report is no longer available on EDGAR for any reason, a copy of such statement
or report described below to each Lender and the Administrative Agent), the
Parent’s consolidated balance sheet and related statements of operations and
cash flows as of the end of and for such fiscal quarter and the then elapsed
portion of the fiscal year, setting forth in each case in comparative form the
figures for the corresponding period or periods of (or, in the case of the
balance sheet, as of the end of) the previous fiscal year, all certified by one
of the Parent’s Financial Officers as presenting fairly in all material
respects the financial condition and results of operations of the Parent, the
Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit adjustments
and the absence of footnotes;

 

(c)                                  concurrently
with any delivery of financial statements under clause (a) or
(b) above, a certificate of a Financial Officer of the Borrower
substantially in the form of Exhibit F attached hereto
(i) certifying as to whether a Default has occurred and is continuing and,
if a 

 

51

 

Default has occurred, specifying the details thereof
and any action taken or proposed to be taken with respect thereto,
(ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 6.16, Section 6.17 and Section 6.18,
and (iii) stating whether any change in GAAP or in the application thereof
has occurred since the date of the last audited financial statements delivered
pursuant to Section 5.01(a) above and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate;

 

(d)                                 promptly
after the same become publicly available, on EDGAR (or (i) upon the request of
any Lender, the Borrower shall provide a copy of such statement or report
described below to any Lender that does not have access to EDGAR, or (ii) if
such statement or report is no longer available on EDGAR for any reason, a copy
of such statement or report described below to each Lender and the
Administrative Agent) copies of all periodic and other reports, proxy
statements and other materials filed by the Parent, the Borrower or any
Subsidiary with the SEC, or with any national securities exchange, as the case
may be;

 

(e)                                  within
fifteen (15) days after the filing thereof, copies of all income tax returns,
attachments, forms, exhibits and extensions of each Loan Party; and

 

(f)                                    promptly
following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Parent, the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.

 

SECTION 5.02.                 Notices
of Material Events.  The Borrower
will furnish to the Administrative Agent and each Lender prompt written notice
of the following:

 

(a)                                  the
occurrence of any Default of which Borrower has, or could reasonably be
expected to have, knowledge;

 

(b)                                 the
filing or commencement of any action, suit or proceeding by or before any
arbitrator or Governmental Authority against or affecting the Parent, the
Borrower or any Subsidiary thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;

 

(c)                                  the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Parent, the Borrower and its Subsidiaries in an aggregate amount that
could reasonably be expected to have a Material Adverse Effect; and

 

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

 

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

 

52

 

 

SECTION 5.03.                 Existence;
Conduct of Business.  Each Loan Party
will do or cause to be done all things necessary to preserve, renew and keep in
full force and effect its legal existence and the rights, licenses, permits,
privileges and franchises material to the conduct of its business except where
the failure to do so in each case could not reasonably be expected to have a
Material Adverse Effect; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation or dissolution permitted under Section 6.03.

 

SECTION 5.04.                 Payment of
Obligations.  Each Loan Party will
pay its obligations before the same shall become delinquent or in default,
including Tax liabilities, that, if not paid, could result in a Material
Adverse Effect, except where (a) the validity or amount thereof is being
contested in good faith by appropriate proceedings, (b) such Loan Party has set
aside on its books adequate reserves with respect thereto in accordance with
GAAP, and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.05.                 Maintenance of
Properties; Insurance.  (a) The
Borrower will, and will cause each of its Subsidiaries to, keep and maintain
all property material to the conduct of its business in good working order and
condition in accordance with industry practice, ordinary wear and tear
excepted.

 

(b)                                 The Borrower
will, and will cause each of its Subsidiaries to, maintain insurance with
respect to its properties and businesses against such liabilities, causalities,
risks and contingencies as is customary in the relevant industry and sufficient
to prevent a Material Adverse Effect; all such insurance to be in amounts and
from insurers reasonably acceptable to the Administrative Agent and on the
Effective Date or upon any renewal, of any such insurance and at other times
upon the reasonable request of the Administrative Agent, furnish to the
Administrative Agent, for the review and distribution to the Lenders, evidence,
satisfactory in the good faith judgment of the Administrative Agent of the
maintenance of such insurance. All insurance policies required pursuant to this
Section 5.05 shall (i) name the Administrative Agent on behalf of
the Lenders as mortgagee (in the case of property insurance) or additional
insured (in the case of liability insurance), as applicable, and provide that
no cancellation or modification of the policies will be made without thirty
(30) days’ prior written notice to the Administrative Agent.

 

SECTION 5.06.                 Books and
Records; Inspection Rights.  Each
Loan Party will keep proper books of record and account in which full, true and
correct entries are made of all dealings and transactions in relation to its
business and activities.  Each Loan Party
will, and will cause each of its Subsidiaries to, permit any representatives
designated by the Administrative Agent or any Lender, upon reasonable prior
notice and subject to applicable safety rules and regulations, to visit
and inspect its properties, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and independent accountants, all at such reasonable times and as often as
reasonably requested.

 

SECTION 5.07.                 Compliance
with Laws.  Each Loan Party will, and
will cause each of its Subsidiaries to, comply with all laws, rules,
regulations and orders of any Governmental Authority applicable to it or its
property, except where the failure to do so,

 

53

 

individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

SECTION 5.08.                 Use of
Proceeds and Letters of Credit.  (a)
The proceeds of the Revolver A Loans will be used only (i) to pay the fees, expenses
and other transaction costs of the Transactions contemplated hereby; (ii) for
development capital expenditure projects, (iii) to fund acquisitions permitted
hereunder and engage in other transactions permitted hereby, (iv) in connection
with the issuances of Letters of Credit as set forth herein, (v) for
Maintenance Capital Expenditures, and (vi) for other general corporate
purposes.  Notwithstanding anything to
the contrary contained in this Agreement, in no event shall proceeds of the
Revolver A Loans be used to make Restricted Payments.

 

(b)                                 The proceeds of
the Revolver B Loans will be used only (i) to fund working capital needs, and
(ii) to fund Restricted Payments permitted pursuant to Section 6.06.

 

(c)                                  No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the regulations of the Board,
including Regulations T, U and X. 
Letters of Credit will be issued only to support the working capital
needs and general corporate obligations of the Borrower and its Subsidiaries
relating to their respective lines of business.

 

SECTION 5.09.                 Compliance
with ERISA.  In addition to and
without limiting the generality of Section 5.07, each Loan Party
shall (a) comply in all material respects with all applicable provisions of
ERISA and the regulations and published interpretations thereunder with respect
to all employee benefit plans (as defined in ERISA), (b) not take any action or
fail to take action the result of which could be (i) a liability to the PBGC or
(ii) a past due liability to any Multiemployer Plan, (c) not participate in any
prohibited transaction that could result in any civil penalty under ERISA or
any tax under the Code, and (d) operate each employee benefit plan in such a manner
that will not incur any tax liability under Section 4980B of the Code or
any liability to any qualified beneficiary as defined in Section 4980B of
the Code except to the extent, in each case, where the failure to do so would
not reasonably be expected to result in a Material Adverse Effect.  Each Loan Party shall furnish to the
Administrative Agent upon the Administrative Agent’s request such additional
information about any employee benefit plan sponsored, maintained or
contributed to by any of said Persons and/or the Parent, as may be reasonably
requested by the Administrative Agent.

 

SECTION 5.10.                 Real Property
Collateral.  (a) Except with respect
to Excluded Assets, within thirty (30) days of the acquisition of any fee,
leasehold, easement estate or other interest in any real property by the
Borrower or any Subsidiary that (A) at any time causes the aggregate book value
of all real property interests then owned by Borrower and its Subsidiaries and
not covered by a deed of trust, mortgage, leasehold deed of trust or leasehold
mortgage, as applicable, to exceed $500,000; or (B) is material to the
operation of any portion of the Borrower’s or any Subsidiary’s business, the
Borrower will, and will cause each of such Subsidiaries to, (i) execute in
form and substance reasonably satisfactory to the Administrative Agent, a deed
of trust or mortgage, as applicable, in respect of any such fee interest or
easement estate as well as in respect of all other fee interests or easement
estates of the Borrower and its Subsidiaries not then subject to a deed of
trust or mortgage, as applicable, and (ii) execute in

 

54

 

form and substance reasonably satisfactory to the Administrative Agent,
a leasehold deed of trust or mortgage, as applicable, in respect of any
leasehold interest as well as in respect of all other leasehold interests of
the Borrower and its Subsidiaries not then subject to a deed of trust or
mortgage, in each case granting a first priority perfected Lien on such
property as collateral for the Obligations, subject only to Liens permitted
pursuant to Section 6.02 hereof, (iii) provide other title
information in form and substance reasonably satisfactory to the Administrative
Agent for any property on which a lien is granted pursuant to clause (i) or
(ii) above, and (iv) for any property acquired for which the Borrower or any
such Subsidiary obtains an owner’s policy of title insurance, provide a copy of
such owner’s policy.   The Borrower
shall, concurrently with any delivery of financial statements under Section 5.01
(a) or (b) and otherwise within ten (10) days following the
date that any interest in real property described in clause (A) or (B) of this Section 5.10(a)
is acquired, deliver a report in form and substance reasonably acceptable to
the Administrative Agent describing all real property interests then owned by
Borrower and its Subsidiaries and not covered by a deed of trust, mortgage,
leasehold deed of trust or leasehold mortgage, as applicable, along with the
book value of each such real property interest as determined in accordance with
GAAP.

 

(b)                                 The Borrower
will, and will cause each of its Subsidiaries to, use commercially reasonable
efforts in negotiating any new Lease, right-of-way or similar instrument or the
renewal or extension of any existing Lease, easement estate, right-of-way or
similar instrument covering real property to provide in such Lease, easement
estate, right-of-way or similar instrument that the interest of the lessee or
grantee may be hypothecated without any further approval of or notice to the
landlord under such lease or the grantor under any such easement, right-of-way
or similar instrument.

 

SECTION 5.11.                 Compliance
with Environmental Laws.  (a) In
addition to and without limiting the generality of Section 5.07,
each Loan Party shall (i) comply in all material respects with all
Environmental Laws applicable to its operations and real property except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect; (ii) obtain and renew all
material Governmental Approvals required under Environmental Laws applicable to
its operations and real property except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect; and (iii) conduct any Response legally required
by any Loan Party in accordance with applicable Environmental Laws except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

 

(b)                                 Without
limiting the Borrower’s obligations pursuant to Section 5.11(a)
above, the Borrower covenants and agrees that:

 

(i)                                     With regard to
the Main Plant, formerly known as the RAM Energy Carmen Gas Plant, SW/4 Section 12-24N-13W,
Woods County, Oklahoma, the Borrower shall, or shall cause its applicable
Subsidiary to, promptly commence and diligently pursue to completion any and
all actions necessary to comply with and complete all requirements for
remediation as directed by the Oklahoma Corporation Commission’s Pollution
Abatement Section and shall, or shall cause its applicable Subsidiary to,
diligently pursue and obtain written confirmation from the Oklahoma Corporation

 

55

 

Commission that no further remediation of such site will be required
and that the open pollution abatement case with respect thereto has been
closed.

 

(ii)                                  With regard to
the North Booster Station, Section 18-23N-12W, Alfalfa County, Oklahoma,
the Borrower shall, or shall cause its applicable Subsidiary to, promptly, but
in any event within 90 days following the date of this Agreement, implement all
remediation recommendations made by EnviroTech Engineering & Consulting, Inc.
in that certain Site Remediation Update For Earl Land Farm Site, North Booster
Station and Ram (Magic Circle) Main Plant prepared for Continental Gas, Inc.
and dated January 2005, and shall, or shall cause its applicable
Subsidiary to, diligently pursue the completion of such remediation.

 

(iii)                               With regard to
the Earl Land Farm Site, Section 2-23N-14W, Woods County, Oklahoma, the
Borrower shall, or shall cause its applicable Subsidiary to, promptly, but in
any event within 90 days following the date of this Agreement, implement all
remediation recommendations made by EnviroTech Engineering &
Consulting, Inc. in that certain Site Remediation Update For Earl Land
Farm Site, North Booster Station and Ram (Magic Circle) Main Plant prepared for
Continental Gas, Inc. and dated January 2005, and shall, or shall
cause its applicable Subsidiary to, diligently pursue, the completion of such
remediation.

 

SECTION 5.12.                 Further
Assurances.  (a) The Borrower will
cause each Loan Party, at its own cost and expense, to promptly
(i) correct any material defect or error that may be discovered in any
Loan Document or in the execution, acknowledgment, filing or recordation
thereof and (ii) do, execute, acknowledge, deliver, record, re-record,
file, re-file, register and re-register any and all such further acts, deeds,
certificates, assurances and other instruments the Administrative Agent may
reasonably require from time to time in order to carry out more effectively the
purposes of the Loan Documents.

 

(b)                                 The Borrower
agrees to promptly (and in any event within fifteen (15) days after
request therefor) deliver and to cause its Subsidiaries to deliver, to further
secure the Obligations whenever reasonably requested by the Administrative
Agent in good faith, deeds of trust, mortgages, chattel mortgages, security
agreements, pledge agreements, financing statements, continuation statements,
extension agreements and opinions or other evidence or other similar agreements
or instruments, substantially similar to the Security Documents delivered
pursuant to Article IV or otherwise in form and substance
reasonably satisfactory to the Administrative Agent for the purpose of
granting, confirming, perfecting and maintaining first and prior liens or
security interests in any and all real or personal property which (i) is
at such time Collateral or which was intended to be or purported to be
Collateral pursuant to any Loan Document and not then released by the
Administrative Agent; or (ii) constitutes real or personal property of any
Loan Party, which is requested by the Administrative Agent to be mortgaged,
pledged or otherwise used as security for the Obligations. The Borrower also
agrees to deliver, and to cause its Subsidiaries to deliver, whenever requested
by the Administrative Agent in good faith, promptly but in no event later than
ninety (90) days after request therefor, additional favorable title
opinions (in addition to any title opinions previously delivered to the
Administrative Agent) from legal counsel reasonably acceptable to the
Administrative Agent in good faith, or favorable title insurance policies from
insurers acceptable to the Administrative

 

56

 

Agent
in good faith, with respect to any material Collateral (with the determination
as to materiality being made by the Administrative Agent in its reasonable
discretion), as to which the Administrative Agent in good faith believes that
the record ownership of such Collateral, or the status of Liens securing the
Obligations, is in question, and (A) stating that the Borrower has good
and marketable title to such properties and interest, free and clear of all
Liens, except for Liens permitted pursuant to Section 6.02;
(B) confirming that such properties and interest are subject to Security
Documents securing Obligations that constitute and create legal, valid and duly
perfected first priority deed of trust or mortgage liens in such properties and
interests and first priority assignments of and security interests in such
properties and interests and the proceeds thereof except for Liens permitted
pursuant to Section 6.02; and (C) covering such other matters
as the Administrative Agent may request in good faith.

 

(c)                                  The Borrower
(i) will from time to time deliver or cause to be delivered to the
Administrative Agent any financing statements, continuation statements,
extension agreements and other documents, properly completed (and executed and
acknowledged when required) by the relevant Loan Party, as the case may be, 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 the Collateral; and
(ii) hereby authorizes the Administrative Agent to execute and file or
record, on behalf of such Loan Party, any financing statements, continuation
statements, extension agreements and other documents that the Administrative
Agent deems necessary or advisable to perfect, confirm or protect any Liens or
other rights in the Collateral in favor or the Administrative Agent for the
benefit of the Lenders.

 

SECTION 5.13.                 Tax Shelter
Regulations.  If the Borrower
determines to take any action inconsistent with Section 3.17, the
Borrower will promptly notify the Administrative Agent thereof and will
promptly deliver to the Administrative Agent a duly completed copy of IRS Form 8886
(or any successor form).  The Borrower
acknowledges that, upon any such notification, any Lender may treat its Loans
hereunder as part of a transaction that is subject to Treasury Regulation Section 301.6112-1,
and such Lender will maintain the lists and other records required by such
Treasury Regulation.

 

SECTION 5.14.                 Compliance
with Leases; Material Contracts. 
Each Loan Party will perform and observe, or cause to be performed and
observed, all of the covenants and conditions required to be performed by it or
any of its Subsidiaries under each Lease and each Material Contract, except
where such failure could not reasonably be expected to have a Material Adverse
Effect.  The Borrower will promptly
notify the Administrative Agent in writing of the receipt by the Borrower or
any Subsidiary of any notice from any third party to the Borrower or any Subsidiary
of any material default under, or the termination of, any Material Contract
pursuant to the provisions of such Material Contract, and will promptly cause a
copy of each such notice received by the Borrower or any Subsidiary from any
third party to be delivered to the Administrative Agent.  The Borrower will not, nor will it permit any
Subsidiary to, without the prior written consent of the Required Lenders, (i)
terminate or surrender, or suffer or permit any termination or surrender, of
any Material Contract during the initial term thereof or any valid extension
thereto; or (ii) amend any Material Contract in any manner which would, or
could reasonably be expected to, have a Material Adverse Effect.

 

57

 

SECTION 5.15.                 Clean-Down
Period. The Borrower will cause the aggregate outstanding principal balance
of the Revolver B Loans to be zero for a period of at least fifteen (15)
consecutive days during each twelve month period.

 

SECTION 5.16.                 Subsidiaries.
Immediately upon the formation or acquisition of any entity which meets the
definition of a Guarantor, such Guarantor shall execute and deliver to the
Administrative Agent for the benefit of the Lenders a Guaranty Agreement
substantially in the form of Exhibit D attached hereto.  Each such Guarantor shall also execute and
deliver to the Administrative Agent one or more (i) mortgages or deeds of
trust granting, as security for the Obligations, a first priority lien subject
to the liens permitted by Section 6.02 hereunder in all real
property of such Subsidiary, and (ii) security agreements (or supplements
thereto) granting, as security for the Obligations, a security interest to the
Administrative Agent for the benefit of the Lenders in all the assets of each
such Person in which a security interest can be created under the UCC, and all
documents and instruments, including UCC financing statements, required by law
or reasonably requested by the Administrative Agent to be filed, registered or
recorded to create the security interests intended to be created by such
security agreements and perfect such Liens to the extent required by, and with
the priority required by, the security agreements, shall have been filed,
registered or recorded (or arrangements satisfactory to the Collateral Agent
for such filing, registration or recording shall have been made).  Additionally, the Borrower and each
Subsidiary shall have pledged at all times 100% of such Person’s Equity
Interest in any Subsidiary to the Administrative Agent for the benefit of the
Lenders pursuant to a pledge agreement in form and substance reasonably
satisfactory to the Administrative Agent. 
The Borrower will, and will cause each of its Subsidiaries to, ensure
that all Equity Interests in its Subsidiaries are owned directly or indirectly
at all times only by the Borrower or one or more of the Subsidiaries and that
all the Equity Interests of such Subsidiaries are pledged to secure the
Obligations.

 

SECTION 5.17.                 Information
Regarding Collateral.  The Borrower
will furnish to the Administrative Agent prompt written notice of any change
(i) in any Loan Party’s corporate name or in any trade name used to identify it
in the conduct of its business or in the ownership of its properties, (ii) in
the location of any Loan Party’s chief executive office, its principal place of
business, any office in which it maintains books or records relating to
Collateral owned by it or any office or facility at which Collateral owned by
it is located (including the establishment of any such new office or facility),
(iii) in any Loan Party’s identity or corporate structure or (iv) in any Loan
Party’s Federal Taxpayer Identification Number. 
The Borrower agrees not to effect or permit any change referred to in
the preceding sentence unless all filings have been made under the UCC or
otherwise that are required in order for the Administrative Agent to continue
at all times following such change to have a valid, legal and perfected
security interest in all the Collateral. 
The Borrower also agrees promptly to notify the Administrative Agent if
any material portion of the Collateral is damaged or destroyed.

 

SECTION 5.18.                 Post Closing
Matters.  The Borrower shall execute
and deliver, or cause to be executed and delivered, the documents and complete
the other items set forth on Schedule 5.18, in each case, within
the time limits set forth on such Schedule.

 

SECTION 5.19.                 Deposit
Accounts.  The Borrower will, and
will cause each Loan Party to, maintain its primary bank depository
relationship with MidFirst Bank.

 

58

 

ARTICLE VI

 

Negative Covenants

 

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

 

SECTION 6.01.                 Indebtedness.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Indebtedness,
except:

 

(a)                                  Indebtedness
created hereunder;

 

(b)                                 unsecured
Indebtedness of the Borrower so long as the incurrence or maintenance of such
Indebtedness does not cause a Default or an Event of Default under any other
provision of this Agreement; provided that the aggregate principal amount of
Indebtedness permitted by this clause (b) shall not exceed $5,000,000 at any
time outstanding;

 

(c)                                  Indebtedness
existing on the date hereof and set forth in Schedule 6.01, and any
extensions, refinancing, renewals or replacements of any such Indebtedness; provided
that such Indebtedness is not increased in connection therewith except for
increases in an amount equal to a reasonable premium or other reasonable amount
paid, and fees and expenses reasonably incurred, in connection with such
extension, renewal, refinancing, or replacement and in an amount equal to any
existing commitments unutilized thereunder, and is not secured by any
additional assets;

 

(d)                                 purchase money
Indebtedness (including Capital Lease Obligations) of the Subsidiaries
representing the portion of the purchase price of any office equipment, data
processing equipment (including, without limitation, computer and computer
peripheral equipment), compression equipment, trucks, tractors, trailers and
other transportation equipment which may be secured by Liens permitted under Section 6.02
hereof; provided that the aggregate principal amount of Indebtedness
permitted by this clause (d) shall not exceed $2,000,000 at any time
outstanding;

 

(e)                                  any
Indebtedness incurred or assumed in connection with any transaction or
acquisition permitted by Section 6.19 hereof; provided that the
aggregate principal amount of Indebtedness permitted by this clause (e) shall
not exceed $5,000,000 at any time outstanding;

 

(f)                                    Indebtedness of
the Borrower to any Subsidiary and of any Subsidiary to the Borrower or any
other Subsidiary;

 

(g)                                 Guarantees by
the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of
Indebtedness of the Borrower or any other Subsidiary;

 

(h)                                 Indebtedness
consisting of surety bonds that the Borrower or any Subsidiary is required to
obtain in order to comply with applicable Law or the requirements of any
Governmental Authority.

 

59

 

SECTION 6.02.                 Liens.  The Borrower will not, and will not permit
any Subsidiary to, create, incur, assume or permit to exist any Lien on any
property or asset now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect of any
thereof, except:

 

(a)                                  Permitted
Encumbrances;

 

(b)                                 any Lien on any
property or asset of the Borrower or any Subsidiary existing on the date hereof
and set forth in Schedule 6.02 hereof; provided that (i)
such Lien shall not apply to any other property or asset of the Borrower or any
Subsidiary and (ii) such Lien shall secure only those obligations which it
secures on the date hereof, and any extensions, renewals and replacements
thereof;

 

(c)                                  any Lien on any
property or asset prior to the acquisition thereof by the Borrower or any
Subsidiary or existing on any property or asset of any Person that becomes a
Subsidiary after the date hereof prior to the time such Person becomes a
Subsidiary; provided that (i) such Lien is not created in
contemplation of or in connection with such acquisition or such Person becoming
a Subsidiary, as the case may be, (ii) such Lien shall not apply to any
other property or assets of the Borrower or any Subsidiary; (iii) such Lien
shall secure only those obligations which it secures on the date of such
acquisition or the date such Person becomes a Subsidiary, as the case may be,
and any extensions, renewals and replacements thereof; and (iv) the
Indebtedness secured by such Lien does not exceed 100% of the fair market value
of the assets acquired in such transaction or acquisition;

 

(d)                                 Liens securing
the Indebtedness permitted by clause (d) of Section 6.01 and placed
on the property described therein contemporaneously with the purchase thereof
or within 90 days thereafter, by the Borrower or any of its Subsidiaries to
secure all or a portion of the purchase price thereof; provided that
such Lien shall not extend to any other property or assets of the Borrower or
its Subsidiaries;

 

(e)                                  Liens securing
Indebtedness on fixed or capital assets acquired, constructed or improved by
the Borrower or any Subsidiary; provided that (i) such security
interests and the Indebtedness secured thereby are incurred prior to or within
180 days after such acquisition or the completion of such construction or
improvement, (ii) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing or improving such fixed or capital assets;
(iii) such security interests shall not apply to any other property or
assets of the Borrower or any Subsidiary; and (iv) the aggregate outstanding
principal amount of the Indebtedness secured thereby does not exceed (as to the
Borrower and all its Subsidiaries) $2,000,000 at any one time;

 

(f)                                    any interest or
title of a lessor under any lease entered into by the Borrower or any of its
Subsidiaries in the ordinary course of its business and covering only the
assets so leased, and any interest of a landowner in the case of easements
entered into by the Borrower or any of its Subsidiaries in the ordinary course
of its business and covering only the property subject to the easement;

 

60

 

(g)                                 Liens not
otherwise permitted by this Section so long as the aggregate outstanding
principal amount of the obligations secured thereby does not exceed (as to the
Borrower and all its Subsidiaries) $500,000 at any one time;

 

(h)                                 any Lien
created or assumed by the Borrower or any Subsidiary in connection with the
issuance of Indebtedness, the interest on which is excludable from gross income
of the holder of such Indebtedness pursuant to the Code, for the purpose of
financing, in whole or in part, the acquisition or construction of property or
assets to be used by the Borrower or its Subsidiaries;

 

(i)                                     Liens on any
additions, improvements, replacements, repairs, fixtures, appurtenances or
component parts thereof attaching to or required to be attached to property or
assets pursuant to the terms of any mortgage, pledge agreement, security
agreement or other similar instrument, creating a Lien upon such property or
asset otherwise permitted under this Section;

 

(j)                                     any Liens
arising out of the refinancing, extension, renewal or refunding of any
Indebtedness secured by any Lien permitted by any of the foregoing clauses of
this Section, provided that such Indebtedness is not increased except
for increases in an amount equal to a reasonable premium or other reasonable
amount paid, and fees and expenses reasonably incurred, in connection with such
extension, renewal, refinancing, or replacement and in an amount equal to any
existing commitments unutilized thereunder, and is not secured by any
additional assets; and

 

(k)                                  Liens securing
Indebtedness permitted by Section 6.01(e); provided that the
Indebtedness secured thereby does not exceed 100% of the fair market value of
the assets or Equity Interests acquired in such transaction or acquisition.

 

SECTION 6.03.                 Fundamental
Changes. Neither the Borrower nor any Subsidiary will merge or consolidate
with or into any other Person nor shall any Subsidiary liquidate or dissolve,
except that if before and after giving effect to such merger or consolidation,
there exists no Default or Event of Default (A) the Borrower or any Subsidiary
may merge or consolidate with any Person so long as the Borrower or such
Subsidiary is the surviving Person; (B) a Subsidiary may merge into the
Borrower in a transaction in which the Borrower is the surviving Person; (C) a
Subsidiary may merge into any other Subsidiary; and (D) any Subsidiary may
liquidate or dissolve if such liquidation or dissolution is in the best
interests of the Borrower and is not materially disadvantageous to the Lenders.

 

SECTION 6.04.                 Investments,
Loans, Advances and Guarantees.  The
Borrower will not, and will not permit any of its Subsidiaries to, purchase,
hold or acquire (including pursuant to any merger with any Person that was not
a wholly-owned Subsidiary prior to such merger) any capital stock, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, or Guarantee any Indebtedness of, or make or permit to exist any
investment or any other interest in, any other Person, except that, so long as
no Default or Event of Default shall have occurred and be continuing or will
result therefrom, the Borrower and its Subsidiaries may make:

 

61

 

(a)                                  Permitted
Investments;

 

(b)                                 investments by
the Borrower in the Equity Interests of its Subsidiaries and investments by any
Subsidiary in the Borrower or any other Subsidiary;

 

(c)                                  loans or
advances made by the Borrower to any Subsidiary and made by any Subsidiary to
the Borrower or any other Subsidiary;

 

(d)                                 Guarantees
constituting Indebtedness permitted by Section 6.01;

 

(e)                                  Swap Agreements
to the extent permitted under Section 6.05;

 

(f)                                    any purchases
or other acquisitions of all or substantially all of the Equity Interests in
any Person permitted by Section 6.19; provided that,
immediately upon consummation thereof, such Person will be a Guarantor
(including, without limitation, as a result of a merger or consolidation
otherwise permitted under this Agreement) and any other purchase or acquisition
of any property or assets of any Person permitted by Section 6.19;

 

(g)                                 investments
consisting of extensions of credit, including without limitation, in the nature
of accounts receivable arising from the grant of trade credit or prepayments or
similar transactions entered into in the ordinary course of business and
investments by the Borrower or any Subsidiary in satisfaction or partial
satisfaction thereof from financially troubled account debtors to prevent or
limit financial loss; and

 

(h)                                 investments not
otherwise permitted by this Section 6.04 in an aggregate amount not
to exceed $500,000 at anytime outstanding.

 

SECTION 6.05.                 Swap
Agreements.  The Borrower will not,
and will not permit any of its Subsidiaries to, enter into any Swap Agreement,
except (a) Swap Agreements entered into between (i) the Borrower or one of
its Subsidiaries, and (ii) the Administrative Agent or any Person that is
a Lender at the time of the execution of such agreement or arrangement or any
Affiliate of such Person; provided, that such Swap Agreements are in
respect of interest rates which are entered into with the purpose and effect of
fixing or capping interest rates on a principal amount of indebtedness of the
Borrower that is accruing interest at a variable rate; provided, further
that (A) the floating rate index of each such Swap Agreement generally
matches the index used to determine the floating rates of interest on the
corresponding indebtedness of the Borrower to be hedged by such Swap Agreement;
and (B) the Borrower shall not establish or maintain any margin accounts
with respect to such Swap Agreements; and (C) such Swap Agreements are in
compliance with the Borrowers’ risk management policies, and (b) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
of its Subsidiaries has actual exposure.

 

SECTION 6.06.                 Restricted
Payments.  The Borrower will not, and
will not permit any of its Subsidiaries to, declare or make, or agree to pay or
make, directly or indirectly, any Restricted Payments, except that so long as
no Default or Event of Default shall have occurred and be continuing and
provided that no Default or Event of Default would result from the making of
such Restricted Payment:

 

62

 

(i)                                     any Subsidiary
may make Restricted Payments to the Borrower or any Subsidiary; and

 

(ii)                                  the Borrower
may declare, make or incur a liability to make distributions to the Parent to
fund Quarterly Distributions; provided that (A) such Quarterly
Distributions are made in accordance with the provisions of the Partnership
Agreement, and (B) the aggregate amount of Quarterly Distributions made by
the Parent with respect to any fiscal quarter shall not exceed Available Cash
for such fiscal quarter.

 

SECTION 6.07.                 Transactions
with Affiliates.  Except as otherwise
permitted hereunder, the Borrower will not, and will not permit any of its
Subsidiaries to, sell, lease or otherwise transfer any property or assets to,
or purchase, lease or otherwise acquire any property or assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
(a) as permitted by the Partnership Agreement, and (b) transactions between or
among the Borrower and its Subsidiaries not involving any other Affiliate.

 

SECTION 6.08.                 Sales of
Assets.  Neither the Borrower nor any
Subsidiary shall enter into any arrangement, direct or indirect, with any
Person other than a Loan Party pursuant to which the Borrower or any Subsidiary
shall sell or otherwise transfer or dispose of any property, real, personal or
mixed, whether now owned or hereafter acquired, except (i) sales,
transfers or dispositions in the ordinary course of business and the granting
of any option or other right to purchase or otherwise acquire property in the
ordinary course of business, (ii) sales, transfers or dispositions not in
the ordinary course of business provided that the aggregate proceeds of all
such sales, transfers and dispositions permitted by this item (ii) shall
not exceed, (A) from the date hereof during any period of twelve (12)
consecutive months more than $1,000,000 and (B) during the term hereof
more than $2,500,000, (iii) sales of wetlands credits; (iv) sales,
transfers or dispositions of property that are no longer commercially viable to
maintain or obsolete, surplus or worn-out property, whether now owned or
hereafter acquired; (v) sales, transfers or dispositions of equipment or
real property to the extent that (A) such equipment or real property is
exchanged for credit against the purchase price of similar replacement
equipment or real property, or (B) the proceeds of such sales, transfers
or dispositions are reasonably promptly, but in any event within 90 days,
applied to the purchase price of such replacement equipment or real property;
(vi) dispositions resulting from the bona fide exercise by a Governmental
Authority of its actual power of eminent domain or other dispositions otherwise
required by applicable law, and (vii) dispositions of property subject to
a Permitted Encumbrance that are transferred to a lienholder or its designee in
satisfaction or settlement of the lienholder’s claim or a realization upon a
security interest permitted under this Agreement.  The Lender’s hereby authorize and direct the
Administrative Agent to execute and deliver releases on the Liens on the
Collateral created by the Security Documents with respect to Assets permitted
to be sold under this Section.

 

SECTION 6.09.                 Constituent
Documents.  No Loan Party will amend
its charter or by-laws or other constituent documents in any manner that would
materially and adversely affect the rights of the Lenders under this Agreement
or their ability to enforce the same.

 

63

 

SECTION 6.10.                 Regulation T,
U and X Compliance.  The Borrower
shall not and shall not permit any Subsidiary to use the proceeds of the Loans
to purchase or carry Margin Stock (as defined in Regulation U), or
otherwise act so as to cause any Lender, in extending credit hereunder, to be
in contravention of Regulations T, U or X.

 

SECTION 6.11.                 Sales and
Leasebacks.  Except to the extent
such leases in the aggregate would not require total payments of more than
$2,000,000 per annum, the Borrower shall not, and shall not permit any of its
Subsidiaries to, directly or indirectly, become or remain liable as lessee or
as a guarantor or other surety with respect to any lease of any property
(whether real, personal or mixed), whether now owned or hereafter acquired that
(i) the Borrower or any of its Subsidiaries has sold or transferred or is to
sell or transfer to any other Person (other than the Borrower or any of its
Subsidiaries) or (ii) the Borrower or any of its Subsidiaries intends to use
for substantially the same purpose as any other property that has been or is to
be sold or transferred by the Borrower or any of its Subsidiaries to any Person
(other than the Borrower or any of its Subsidiaries) in connection with such
lease.

 

SECTION 6.12.                 Changes in
Fiscal Year.  No Loan Party shall
change the end of its fiscal year to a date other than December 31.

 

SECTION 6.13.                 Change in the
Nature of Business.  The Borrower
shall not engage directly or indirectly in any business activity that would
cause less than 90% of the gross income of such Person to constitute “qualifying
income” within the meaning of Section 7704(d) of the Code.

 

SECTION 6.14.                 Limitation on
Restrictions on Subsidiary Distributions. 
The Borrower shall not, and shall not permit any of its Subsidiaries to
enter into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary to make Restricted Payments in
respect of any Equity Interests of such Subsidiary held by, or pay any
Indebtedness owed to, the Borrower or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions imposed
by applicable Law or by this Agreement, (ii) the foregoing shall not apply to
restrictions and conditions existing on the date hereof (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition) to the extent such restrictions are
listed on Schedule 6.14 attached hereto, (iii) the foregoing shall
not apply to customary restrictions and conditions contained in agreements
relating to the sale of a Subsidiary pending such sale, provided such
restrictions and conditions apply only to the Subsidiary that is to be sold and
such sale is permitted hereunder, and (iv) the foregoing shall not apply to
restrictions and conditions contained in the documentation evidencing any
Indebtedness permitted hereunder; provided that in no event shall such
restrictions and conditions contained in such documentation evidencing such
permitted Indebtedness be more restrictive than the restrictions and conditions
set forth in Section 6.06 of this Agreement and this Section 6.14.

 

SECTION 6.15.                 Changes to the
Omnibus Agreement.  Without the prior
written consent of the Administrative Agent, which consent shall not be
unreasonably withheld or delayed, neither the Borrower nor any of its
Subsidiaries shall (i) make any material change to the terms of the
Omnibus Agreement, (ii) release any party from its obligations under the
Omnibus Agreement or (iii) fail to diligently enforce the Omnibus
Agreement and avail itself of

 

64

 

the rights and indemnities available
thereunder, except in each case, where such change, release or failure could
not reasonably be expected to have a Material Adverse Effect.

 

SECTION 6.16.                 Minimum
Consolidated Tangible Net Worth.  The
Borrower will not permit Consolidated Tangible Net Worth as of any date to be
less than $55,000,000.

 

SECTION 6.17.                 Minimum
Interest Coverage Ratio.  The
Borrower shall not permit the Interest Coverage Ratio as of the last day of any
fiscal quarter to be less than 3.0 to 1.0.

 

SECTION 6.18.                 Maximum
Leverage Ratio.  The Borrower shall
not permit the Leverage Ratio as of the last day of any fiscal quarter to
exceed 4.0 to 1.0.

 

SECTION 6.19.                 Permitted
Acquisitions.  The Borrower shall
not, except as otherwise permitted or required in this Agreement, purchase or
otherwise acquire, or permit any Subsidiary to purchase or acquire, any Equity
Interests in, any obligations or stock of, or any other interest in, or all or
substantially all of the assets of, any Person whatsoever unless
(i) permitted by Section 6.03 above, or (ii)
(a) immediately prior to and after giving effect to any such purchase or
acquisition, no Default or Event of Default shall have occurred or be
continuing or will result therefrom, (b) such purchase or acquisition is
consummated in accordance with applicable Law, and (c) immediately after giving
effect to such purchase or acquisition of a company or business pursuant to
this Section 6.19, the Borrower shall be in pro forma compliance
with the covenants set forth in Section 6.16, Section 6.17
and Section 6.18 above, as evidenced by a certificate of the
Financial Officer of the Borrower delivered to the Administrative Agent on the
earlier of (i) the date that Borrower submits a Borrowing Request if Borrower
is making a Borrowing in connection therewith, or (ii) the date that Borrower
consummates the transaction requiring the delivery of such certificate.

 

SECTION 6.20.                 Negative
Pledges, Restrictive Agreements, etc.  The Borrower will not, and
will not permit any of its Subsidiaries to, enter into (a) any agreement for
the borrowing of money (excluding this Agreement) prohibiting the creation or
assumption of any Lien upon its properties, revenues or assets, whether now
owned or hereafter acquired (provided that this provision is not
intended to limit in any manner the Borrower’s and its Subsidiaries’
obligations to grant liens securing the Collateral as otherwise set forth in
this Agreement or any of the Loan Documents); or (b) any agreement (excluding
this Agreement) prohibiting the ability of any Borrower or any other Loan Party
to amend or otherwise modify this Agreement or any other Loan Document.  The Borrower shall, and shall cause each of
its Subsidiaries to, use good faith efforts to cause any other agreement
entered into by the Borrower or its Subsidiaries to not contain the
prohibitions set forth in (a) above.

 

65

 

ARTICLE VII

 

Events of Default

 

If any of the following events (“Events of
Default”) shall occur:

 

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

 

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

 

(c)                                  any
representation or warranty made or deemed made by or on behalf of any Loan Party
in or in connection with this Agreement, the Loan Documents or any amendment or
modification hereof or thereof or waiver hereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with this Agreement or any amendment or modification hereof or
waiver hereunder, shall prove to have been incorrect when made or deemed made;

 

(d)                                 any Loan Party
shall fail to observe or perform any covenant, condition or agreement contained
in Section 5.02, Section 5.03 (with respect to
existence) or Section 5.08 or in Article VI;

 

(e)                                  any Loan Party
shall fail to observe or perform any covenant, condition or agreement contained
in this Agreement (other than those specified in clause (a), (b) or (d) of this
Article) or in any other Loan Document, and such failure shall continue
unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);

 

(f)                                    any Loan Party
shall fail to make any payment (whether of principal or interest and
regardless of amount) in respect of any Material Indebtedness, when and as the
same shall become due and payable or within any applicable grace period;

 

(g)                                 any event or
condition occurs that results in any Material Indebtedness becoming due prior
to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided
that this clause (g) shall not apply to secured Indebtedness that becomes
due as a result of the voluntary sale or transfer of the property or assets
securing such Indebtedness;

 

(h)                                 an involuntary
proceeding shall be commenced or an involuntary petition shall be filed seeking
(i) liquidation, reorganization or other relief in respect of any Loan
Party or the General Partner or its debts, or of a substantial part of its
assets, under any  Federal, state or

 

66

 

foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in effect
or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for any Loan Party or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;

 

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

 

(j)                                     any Loan Party
or the General Partner shall become unable, admit in writing its inability or
fail generally to pay its debts as they become due;

 

(k)                                  one or more
final non-appealable judgments for the payment of money in an aggregate amount
in excess of $500,000 (net of insurance coverage which is reasonably expected
to be paid by the insurer thereunder as confirmed by such insurer) shall be
rendered against any Loan Party or any combination thereof and the same shall
remain undischarged for a period of 60 consecutive days during which
execution shall not be effectively stayed, or any action shall be legally taken
by a judgment creditor to attach or levy upon any assets of any Loan Party to
enforce any such judgment and is not released, vacated or fully bonded within
60 days after its attachment or levy;

 

(l)                                     an ERISA Event
shall have occurred that, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Parent, the Borrower and its Subsidiaries in an aggregate amount that could
reasonably be expected to have a Material Adverse Effect;

 

(m)                               a Change in
Control shall occur;

 

(n)                                 this Agreement
or any other Loan Document ceases to be valid and binding on any Loan Party in
any material respect or is declared null and void in any material respect, or
the validity or enforceability thereof is contested by any Loan Party or any
Loan Party denies it has any or further liability under this Agreement or under
the other Loan Documents to which it is a party or there shall occur a “Default”
or “Event of Default” as defined in any Loan Document;

 

then, and in every such event (other than an event with respect to the
Borrower described in clause (h) or (i) of this Article), and at any time
thereafter during the continuance of such event, the Administrative Agent, at
the request of the Required Lenders, shall, by notice to the Borrower, take
either or both of the following actions, at the same or different

 

67

 

times: (i) terminate the Commitments, and thereupon the Commitments
shall terminate immediately, and (ii) declare the Loans then outstanding to be
due and payable in whole (or in part, in which case any principal not so
declared to be due and payable may thereafter be declared to be due and
payable), and thereupon the principal of the Loans so declared to be due and
payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then outstanding,
together with accrued interest thereon and all fees and other obligations of
the Borrower accrued hereunder, shall automatically become due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby waived by the Borrower.

 

ARTICLE VIII

 

The Administrative Agent

 

Each of the Lenders and the Issuing Bank
hereby irrevocably appoints the Administrative Agent as its agent and
authorizes the Administrative Agent to take such actions on its behalf and to
exercise such powers as are delegated to the Administrative Agent by the terms
hereof, together with such actions and powers as are reasonably incidental
thereto.

 

The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not the
Administrative Agent, and such bank and its Affiliates may accept deposits
from, lend money to and generally engage in any kind of business with the
Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Administrative Agent hereunder.

 

The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any
fiduciary or other implied duties, regardless of whether a Default has occurred
and is continuing, (b) the Administrative Agent shall not have any duty to
take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby that the
Administrative Agent is required to exercise in writing as directed by the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02), and
(c) except as expressly set forth herein, the Administrative Agent shall not
have any duty to disclose, and shall not be liable for the failure to disclose,
any information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Administrative Agent or any
of its Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) or in the absence of its
own gross negligence or willful misconduct. 
The Administrative Agent shall be deemed not to have knowledge of any
Default unless and until written notice thereof is given to the Administrative
Agent by the Borrower or a Lender, and the Administrative Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement,

 

68

 

(ii) the contents of any certificate, report or other document
delivered hereunder or in connection herewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement or any other agreement, instrument or document,
or (v) the satisfaction of any condition set forth in Article IV
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

 

The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
Person.  The Administrative Agent also
may rely upon any statement made to it orally or by telephone and believed by
it to be made by the proper Person, and shall not incur any liability for
relying thereon.  The Administrative
Agent may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

 

The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to
any such sub-agent and to the Related Parties of the Administrative Agent and
any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

 

Subject to the appointment and acceptance of
a successor Administrative Agent as provided in this paragraph, the
Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower.  Upon any
such resignation, the Required Lenders shall have the right, with the consent
of the Borrower (which consent shall not be unreasonably withheld, conditioned
or delayed), to appoint a successor.  If
no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor
Administrative Agent.  Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent, and the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the Borrower
to a successor Administrative Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Administrative
Agent’s resignation hereunder, the provisions of this Article and Section 9.03
shall continue in effect for the benefit of such retiring Administrative Agent,
its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as
Administrative Agent.

 

Each Lender acknowledges that it has, independently
and without reliance upon the Administrative Agent or any other Lender and
based on such documents and information as it

 

69

 

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

 

ARTICLE IX

 

Miscellaneous

 

SECTION 9.01.                 Notices.  (a) Except in the case of notices and other
communications expressly permitted to be given by telephone (and subject to
paragraph (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as
follows:

 

(i)                                     if to the
Borrower, to it at Hiland Partners, LP, 205 West Maple, Suite 1100, Enid,
Oklahoma 73701, Attention of Ken Maples (Telecopy No. (580)
548-5188);

 

(ii)                                  if to the
Administrative Agent, to it at MidFirst Bank, 501 NW Grand Boulevard, Suite 100,
Oklahoma City, Oklahoma 73188, Attention of James P. Boggs (Telecopy No. (405)
767-7120); and

 

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

 

(b)                                 Notices and
other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant
to Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender.  The Administrative
Agent or the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may
be limited to particular notices or communications.

 

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

 

SECTION 9.02.                 Waivers;
Amendments.  (a) No failure or delay
by the Administrative Agent, the Issuing Bank or any Lender in exercising any
right or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power.  The rights and remedies of the Administrative
Agent, the Issuing Bank and the Lenders hereunder are

 

70

 

cumulative and are not exclusive of any
rights or remedies that they would otherwise have.  No waiver of any provision of this Agreement
or consent to any departure by the Borrower therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) of this Section, and
then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. 
Without limiting the generality of the foregoing, the making of a Loan
or issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether the Administrative Agent, any Lender or the
Issuing Bank may have had notice or knowledge of such Default at the time.

 

(b)                                 Neither this
Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements in writing entered into by the Borrower
and the Required Lenders or by the Borrower and the Administrative Agent with
the consent of the Required Lenders; provided that no such agreement
shall (i) increase the Commitment of any Lender without the written consent of
such Lender, (ii) reduce the principal amount of any Loan or LC Disbursement or
reduce the rate of interest thereon, or reduce any fees payable hereunder,
without the written consent of each Lender affected thereby, (iii) release
any Guarantor or release any Collateral (except for releases of Collateral
related to asset sales otherwise expressly permitted pursuant to the terms of this
Agreement) securing the Obligations without the written consent of each Lender,
(iv) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby, (v) change Section 2.18(b) or (c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, or (vi) change any of the
provisions of this Section or the definition of “Required Lenders” or any
other provision hereof specifying the number or percentage of Lenders required
to waive, amend or modify any rights hereunder or make any determination or
grant any consent hereunder, without the 
written consent of each Lender; provided  further that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Issuing Bank hereunder without the prior
written consent of the Administrative Agent or the Issuing Bank, as the case
may be.

 

SECTION 9.03.                 Expenses;
Indemnity; Damage Waiver.  (a) The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by
the Administrative Agent and its Affiliates, including the reasonable fees,
charges and disbursements of counsel (including local counsel) for the
Administrative Agent, in connection with the syndication of the credit
facilities provided for herein, the preparation and administration of this
Agreement or any amendments, modifications or waivers of the provisions hereof
(whether or not the Transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Issuing Bank in connection with the issuance, amendment, renewal or extension
of any Letter of Credit or any demand for payment thereunder and (iii) all
reasonable out-of-pocket expenses incurred by the Administrative Agent, the Issuing
Bank or any Lender, including the fees, charges and disbursements of any
counsel for the Administrative Agent, the Issuing Bank or any Lender, in
connection with the enforcement or protection of its rights in connection with
this Agreement, including its rights under this Section, or in connection with
the Loans made or Letters of Credit issued hereunder, including all such out-of-pocket
expenses incurred during  any workout,
restructuring or negotiations in respect of such Loans or Letters of Credit.

 

71

 

(b)                                 The Borrower
shall indemnify the Administrative Agent, the Issuing Bank and each Lender, and
each Related Party of any of the foregoing Persons (each such Person being
called an “Indemnitee”) against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses,
including the fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against any Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance
by the parties hereto of their respective obligations hereunder or the
consummation of the Transactions or any other transactions contemplated hereby,
(ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under
a Letter of Credit if the documents presented in connection with such demand do
not strictly comply with the terms of such Letter of Credit), (iii) any
actual or alleged presence or release of Hazardous Materials on or from any
property owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is
a party thereto; provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent jurisdiction
by final and non-appealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee.

 

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

 

(d)                                 Each Loan Party
shall defend and indemnify the Administrative Agent and each Lender and hold
them harmless from and against all loss, liability, damage, expense, claims,
costs, fines, penalties, assessments (including interest on any of the
foregoing) and reasonable attorneys’ fees, suffered or incurred by the
Administrative Agent or any Lender which arise, result from or in any way
relate to a breach or violation by any Loan Party of any applicable
Environmental Laws, either prior to or subsequent to the date hereof, including
the assertion or imposition of any Lien on any Loan Party’s assets, or which
relate to or arise out of any Environmental Liability.  Each Loan Party’s obligations hereunder shall
survive the termination of this Agreement and the repayment of the Loans.

 

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

 

72

 

(f)                                    All amounts due
under this Section shall be payable not later than ten (10) days after
written demand therefor.

 

SECTION 9.04.                 Successors and
Assigns.  (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that
(i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), Participants
(to the extent provided in paragraph (c) of this Section) and, to the extent
expressly contemplated hereby, the Related Parties of each of the Administrative
Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy
or claim under or by reason of this Agreement.

 

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

 

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

 

(B)                                the
Administrative Agent, provided that no consent of the Administrative
Agent shall be required for an assignment to a Lender, an Affiliate of a Lender
or an Approved Fund; and

 

(C)                                the Issuing
Bank.

 

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

 

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

 

73

 

(B)                                each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement, provided
that this clause shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender’s rights and obligations in
respect of one Class of Commitments or Loans;

 

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

 

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

 

For the purposes of this Section 9.04(b),
the term “Approved Fund” has the following meaning:

 

“Approved Fund” means any Person
(other than a natural person) that is engaged in making, purchasing, holding or
investing in bank loans and similar extensions of credit in the ordinary course
of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

 

(iii)                               Subject to
acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and
Assumption the assignee thereunder shall be a party hereto and, to the extent
of the interest assigned by such Assignment and Assumption, have the rights and
obligations of a Lender under this Agreement, and the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment and
Assumption, be released from its obligations under this Agreement (and, in the
case of an Assignment and Assumption covering all of the assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Section 2.15,
Section 2.16, Section 2.17 and Section 9.03).  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this Section 9.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with paragraph (c)
of this Section.

 

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

 

74

 

shall be available for inspection by the Borrower, the Issuing Bank and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

(v)                                 Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) of this Section and any
written consent to such assignment required by paragraph (b) of this Section,
the Administrative Agent shall accept such Assignment and Assumption and record
the information contained therein in the Register; provided that if
either the assigning Lender or the assignee shall have failed to make any
payment required to be made by it pursuant to Section 2.06 (d), Section 2.06(e),
Section 2.07(b), Section 2.18(d) or Section 9.03(c),
the Administrative Agent shall have no obligation to accept such Assignment and
Assumption and record the information therein in the Register unless and until
such payment shall have been made in full, together with all accrued interest
thereon.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

 

(c)                                  (i) Any Lender
may, without the consent of the Borrower, the Administrative Agent or the
Issuing Bank, sell participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided that (A) such Lender’s obligations under this
Agreement shall remain unchanged, (B) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (C) the Borrower, the Administrative Agent, the Issuing Bank and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement.  Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such
Participant.  Subject to paragraph
(c)(ii) of this Section, the Borrower agrees that each Participant shall be
entitled to the benefits of Section 2.15, Section 2.16
and Section 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this
Section.  To the extent permitted by law,
each Participant also shall be entitled to the benefits of Section 9.08
as though it were a Lender, provided such Participant agrees to be subject to Section 2.18(c)
as though it were a Lender.

 

(ii)                                  A Participant
shall not be entitled to receive any greater payment under Section 2.15
or Section 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that
would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.17 unless the Borrower is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrower, to comply with Section 2.17(e) as though
it were a Lender.

 

75

 

(d)                                 Any Lender may
at any time pledge or assign a security interest in all or any portion of its
rights under this Agreement to secure obligations of such Lender, including
without limitation any pledge or assignment to secure obligations to a Federal
Reserve Bank, and this Section shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.

 

SECTION 9.05.                 Survival.  All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments  delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans and issuance of any Letters of Credit,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that the Administrative Agent, the Issuing Bank or any
Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is outstanding and unpaid or any Letter of Credit is outstanding and
so long as the Commitments have not expired or terminated.  The provisions of Section 2.15, Section 2.16,
Section 2.17 and Section 9.03 and Article VIII
shall survive and remain in full force and effect regardless of the
consummation of the Transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof.

 

SECTION 9.06.                 Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and any separate letter
agreements with respect to fees payable to the Administrative Agent constitute
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. 
Except as provided in Section 4.01, this Agreement shall
become effective when it shall have been executed by the Administrative Agent
and when the Administrative Agent shall have received counterparts hereof
which, when taken together, bear the signatures of each of the other parties
hereto, and thereafter shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as
delivery of a manually executed counterpart of this Agreement.

 

SECTION 9.07.                 Severability.  Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision
in a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.

 

SECTION 9.08.                 Right of
Setoff.  If an Event of Default shall
have occurred and be continuing, each Lender and each of its Affiliates is
hereby authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits

 

76

 

(general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured.  The rights
of each Lender under this Section are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.

 

SECTION 9.09.                 Governing Law;
Jurisdiction; Consent to Service of Process.  (a) This Agreement shall be construed in
accordance with and governed by the law of the State of Oklahoma.

 

(b)                                 The Borrower
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of the courts of the State of Oklahoma sitting in
Oklahoma City, Oklahoma County, Oklahoma, 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
State of Oklahoma 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, the Issuing
Bank or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower or its properties in the courts
of any jurisdiction.

 

(c)                                  The Borrower
hereby irrevocably and unconditionally waives, 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 (b) 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.

 

(d)                                 Each party to
this Agreement irrevocably consents to service of process in the manner
provided for notices in Section 9.01.  Nothing in this Agreement will affect the
right of any party to this Agreement to serve process in any other manner
permitted by law.

 

SECTION 9.10.                 WAIVER OF JURY
TRIAL.  EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
(WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE

 

77

 

 

BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 9.11.                 Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

SECTION 9.12.                 Confidentiality.  Each of the Administrative Agent, the Issuing
Bank and the Lenders agrees to maintain the confidentiality of the Information
(as defined below), except that Information may be disclosed (a) to its
and its Affiliates’ directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority,
(c) to the extent required by applicable Laws or regulations or by any
subpoena or similar legal process, (d) to any other party to this Agreement,
(e) in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or (ii)  any actual
or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Borrower and its obligations, (g) with the consent
of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or
(ii) becomes available to the Administrative Agent, the Issuing Bank or
any Lender on a non-confidential basis from a source other than the
Borrower.  For the purposes of this
Section, “Information” means all information received from the Borrower
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
non-confidential basis prior to disclosure by the Borrower; provided
that, in the case of information received from the Borrower after the date
hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to
maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

SECTION 9.13.                 Interest Rate
Limitation.  Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan, together with all fees, charges and other amounts which are treated as
interest on such Loan under applicable law (collectively the “Charges”),
shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such
Loan in accordance with applicable law, the rate of interest payable in respect
of such Loan hereunder, together with all Charges payable in respect thereof,
shall be limited to the Maximum Rate and, to the extent lawful, the interest
and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated
and the interest and Charges payable to such Lender in respect of other Loans
or periods shall be increased (but not above the Maximum Rate therefor) until
such cumulated amount, together with interest thereon at the Federal Funds
Effective Rate to the date of repayment, shall have been received by such
Lender.

 

78

 

SECTION 9.14.                 USA PATRIOT
Act.  Each Lender that is subject to
the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”) hereby notifies the
Borrower that pursuant to the requirements of the Act, it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the
Act.

 

SECTION 9.15.                 Separateness.  The Lenders acknowledge that (i) the Lenders
have advanced funds to the Borrower in reliance upon the separateness of the
Parent and the Borrower from each other and from any other Persons, and (ii)
the Borrower has assets and liabilities that are separate from those of other
Persons, including the Parent.

 

SECTION 9.16.                 No Personal
Liability of Directors, Officers and Employees.  No director, officer, partner, employee,
member or manager of the General Partner will have any liability for any
obligations of the Borrower, or for any claim based on, in respect of, or by
reason of, such obligations or their creation. 
Each Lender waives and releases all such liability. This waiver and
release are part of the consideration for the making of the Loans and the
issuance of Letters of Credit.

 

SECTION 9.17.                 Collateral
Matters; Swap Agreements.    The benefit of the
Security Documents and of the provisions of this Agreement relating to the
Collateral shall also extend to and be available to any counterparty to any
Swap Agreements on a pro rata basis (subject to Section 2.18(b)
hereof) in respect of any obligations of the Borrowers which arise under any
Swap Agreement, provided that such counterparty is a Lender or an Affiliate of
a Lender at the time such counterparty entered into such Swap Agreement.

 

[END
OF TEXT]

 

79

 

 

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

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  HILAND OPERATING, LLC,

  
	
   

  	
  a Delaware limited liability company

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Randy Moeder

  	
   

  
	
   

  	
   

  	
  Randy Moeder

  
	
   

  	
   

  	
  Chief Executive Officer, President

  
	
   

  	
   

  	
  and Director

  

 

[Signature Page to Credit Agreement]

 

 

 

	
   

  	
  MIDFIRST BANK,

  
	
   

  	
  a federally chartered savings association,

  
	
   

  	
  in its capacity as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ James P. Boggs

  	
   

  
	
   

  	
  By:

  	
  James P. Boggs

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MidFirst Bank

  	
   

  
	
   

  	
  MidFirst Plaza

  	
   

  
	
   

  	
  501 N.W. Grand Blvd., Suite 100

  	
   

  
	
   

  	
  Oklahoma City, Oklahoma 73118

  	
   

  
	
   

  	
  Attention: James P. Boggs

  	
   

  
	
   

  	
  Telephone No. (405) 767-7115

  	
   

  
	
   

  	
  Telecopy No. (405) 767-7120

  	
   

  
	
   

  	
  e-mail: james.boggs@midfirst.com

  	
   

  
	
   

  	
  State:   Oklahoma

  	
   

  
	
   

  	
  Wire Instructions:

  	
   

  
	
   

  	
  MidFirst Bank (OKC, OK)

  	
   

  
	
   

  	
  ABA No.:

  	
  303087995

  
	
   

  	
  Reference:

  	
  Account 1901000 for Hiland

  
	
   

  	
  Operating, LLC for Further Credit to Loan #
  909590

  
	
   

  	
  Attention:

  	
  Mary Nash/Sharon Bales

  
	
   

  	
   

  	
  (MFB Loan Operations)

  
							

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  MIDFIRST BANK,

  
	
   

  	
  a federally chartered savings association,

  
	
   

  	
  in its capacity as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   /s/ James P. Boggs

  	
   

  
	
   

  	
  By:

  	
  James P. Boggs

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  MidFirst Bank

  	
   

  
	
   

  	
  MidFirst Plaza

  	
   

  
	
   

  	
  501 N.W. Grand Blvd., Suite 100

  	
   

  
	
   

  	
  Oklahoma City, Oklahoma 73118

  	
   

  
	
   

  	
  Attention: James P. Boggs

  	
   

  
	
   

  	
  Telephone No. (405) 767-7115

  	
   

  
	
   

  	
  Telecopy No. (405) 767-7120

  	
   

  
	
   

  	
  e-mail: james.boggs@midfirst.com

  	
   

  
	
   

  	
  State:   Oklahoma

  	
   

  
	
   

  	
  Wire Instructions:

  	
   

  
	
   

  	
  MidFirst Bank (OKC, OK)

  	
   

  
	
   

  	
  ABA No.:

  	
  303087995

  
	
   

  	
  Reference:

  	
  Account 1901000 for Hiland

  
	
   

  	
  Operating, LLC for Further Credit to Loan #
  909590

  
	
   

  	
  Attention:

  	
  Mary Nash/Sharon Bales

  
	
   

  	
   

  	
  (MFB Loan Operations)

  
							

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  BANK OF SCOTLAND

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Amena Nabi

  	
   

  
	
   

  	
  Name:

  	
  Amena Nabi

  	
   

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  	
   

  
						

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  FORTIS CAPITAL CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Christopher S. Parada

  	
   

  
	
   

  	
  Name:

  	
  Christopher
  S. Parada

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Darrell Holley

  	
   

  
	
   

  	
  Name:

  	
  Darrell
  Holley

  	
   

  
	
   

  	
  Title:

  	
  Managing
  Director

  	
   

  
						

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  COMPASS BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Kathleen J. Bowen

  	
   

  
	
   

  	
  Name:

  	
  Kathleen J.
  Bowen

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice
  President

  	
   

  
						

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/
  Matthew J. Purchase

  	
   

  
	
   

  	
  Name:

  	
  Matthew J.
  Purchase

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
						

 

[Signature Page to Credit Agreement]

 

 

	
   

  	
  BANK OF OKLAHOMA

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark
  Morris

  	
   

  
	
   

  	
  Name:

  	
  Mark Morris

  	
   

  
	
   

  	
  Title:

  	
  Vice
  President

  	
   

  
						

 

[Signature Page to Credit Agreement]

 

 

EXHIBIT A

 

 

ASSIGNMENT
AND ASSUMPTION

 

1

 

EXHIBIT B

 

FORM OF
COMMITMENT INCREASE AGREEMENT

 

1

 

EXHIBIT C

 

FORM OF
NEW LENDER AGREEMENT

 

1

 

EXHIBIT D

 

FORM OF
GUARANTY AGREEMENT

 

1

 

EXHIBIT E

 

FORM OF
BORROWING REQUEST

 

1

 

EXHIBIT F

 

FORM OF
COMPLIANCE CERTIFICATE

 

HILAND
OPERATING, LLC

 

COMPLIANCE
CERTIFICATE

 

1

 

EXECUTION
COPY

 

 

EXHIBIT G

 

FORM OF
PARTNERSHIP AGREEMENT

 

HILAND
PARTNERS, LP

 

FIRST
AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

 

 

OF

 

 

HILAND
PARTNERS, LP

 

1Exhibit
10.3

 

 

 

COMPRESSION SERVICES AGREEMENT

 

among

 

HILAND PARTNERS, LP

 

and

 

CONTINENTAL RESOURCES, INC.

 

Effective as of

 

January 28, 2005

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
  ARTICLE II
  INDEPENDENCE OF THE PARTIES

  	
   

  
	
  ARTICLE III
  REPRESENTATIONS OF THE PARTIES

  	
   

  
	
  ARTICLE IV
  RESPONSIBILITIES OF THE PARTIES

  	
   

  
	
  ARTICLE V OPERATING
  FEE

  	
   

  
	
  ARTICLE VI BILLING
  AND PAYMENT

  	
   

  
	
  ARTICLE VII FORCE
  MAJEURE

  	
   

  
	
  ARTICLE VIII
  INDEMNITY AND INSURANCE

  	
   

  
	
  ARTICLE IX TERM

  	
   

  
	
  ARTICLE X DEFAULT

  	
   

  
	
  ARTICLE XI
  ASSIGNMENT

  	
   

  
	
  ARTICLE XII
  ADDRESS

  	
   

  
	
  ARTICLE XIII
  NON-WAIVER

  	
   

  
	
  ARTICLE XIV MERGER

  	
   

  
	
  ARTICLE XV
  GOVERNING LAW, VENUE

  	
   

  
	
  ARTICLE XVI
  MUTUAL DRAFTSMANSHIP

  	
   

  
	
  ARTICLE XVII
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Exhibits

  	
   

  
	
  “A”—Delivery Points

  	
   

  
	
  “B”—Operating Fee

  	
   

  
	
  “C”—Insurance

  	
   

  

 

i

 

COMPRESSION SERVICES
AGREEMENT

 

THIS COMPRESSION SERVICES AGREEMENT (“Agreement”), effective as of
January 28, 2005 (the “Effective Date”), by and between Hiland Partners, LP (“Hiland”) and
Continental Resources, Inc. (“Continental”). Hiland and Continental are sometimes
referred to herein individually as a “Party” or collectively as the “Parties.”

 

RECITALS:

 

A.                                   Continental
desires to have Hiland provide compression services with respect to air and
water for use in its secondary recovery operations located in Bowman and Slope
Counties in North Dakota and in Fallon County, Montana (the “Services”).

 

B.                                     Hiland
agrees to provide compression services with respect to air and water and
Continental agrees to accept such compression services with respect to air and
water subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, Hiland and Continental agree as follows:

 

ARTICLE I

DEFINITIONS

 

“Adjusted
Guarantee Percentage” shall have the meaning given to such term
in Section 4.3(c)(iii).

 

“Adjusted
Performance Guarantee” shall have the meaning given to such term
in Section 4.3(c)(ii).

 

“Agreement”
shall have the meaning given to such term in the introduction.

 

“Assets”
shall have the meaning given to such term in Section 9.2.

 

“Business Day”
shall mean any day on which the banks in Houston, Texas are open.

 

“Cedar Air”
shall mean the compressed air delivered from the Cedar Hills Air Injection
facility listed on Exhibit A.

 

“Cedar Water”
shall mean the pressurized water delivered from the Cedar Hills Water Injection
facility listed on Exhibit A.

 

“Commodity”
shall mean each of the Cedar Air, Cedar Water, and HC Air.

 

“Continental”
shall mean Continental Resources Inc.

 

“Continental
Permit” shall mean air permit number No. O97008 for the Horse
Creek Compressor Station.

 

 

“day”
as used herein shall mean a period of 24 consecutive hours, beginning at 7:00
a.m. Central Standard or Daylight time, as the case may be.

 

“Delivery Point”
shall mean each of the points specified on Exhibit
A attached hereto.

 

“Dispute”
shall have the meaning given to such term in Section 17.5.

 

“Due Date”
shall have the meaning given to such term in Section 6.1.

 

“Entity”
shall mean a corporation, limited liability company, partnership (including a
general partnership, joint venture, limited partnership, limited liability
partnership, or partnership association), trust (including a business trust),
estate, Government Authority, or any other entity.

 

“Effective Date”
shall have the meaning given to such term in the introduction.

 

“Force Majeure”
shall have the meaning given to such term in Section 7.2.

 

“Governmental
Authority” shall mean a federal, state, local, or foreign
governmental authority; a state, province, commonwealth, territory, or district
thereof; a county or parish; a city, town, township, village, or other
municipality; a district, ward, or other subdivision of any of the foregoing;
any executive, legislative, or other governing body of any of the foregoing;
any agency, authority, board, department, system, service, office, commission,
committee, council, or other administrative body of any of the foregoing; any
court or other judicial body; and any officer, official, or other
representative of any of the foregoing.

 

“Guarantee
Percentage” shall have the meaning given to such term in Section
4.3(a).

 

“HC Air”
shall mean the compressed air delivered from the Horse Creek Compressor Station
listed on Exhibit A.

 

“Hadley
Compressor Station” shall mean that certain compressor station
owned by Hiland in Bowman County, North Dakota.

 

“Hiland”
shall mean Hiland Partners, LP.

 

“Indemnified
Party” shall have the meaning given to such term in Section 8.2.

 

“Indemnifying
Party” shall have the meaning given to such term in Section 8.2.

 

“LD Cap”
shall have the meaning given to such term in Section 4.3(f).

 

“Liquidated
Damages” shall have the meaning given to such term in Section
4.3(c).

 

“Monthly
Delivery Notice” shall have the meaning given to such term in
Section 4.1(b).

 

“Operating Fee”
shall mean individually each of the monthly fees set forth for a Commodity on Exhibit B.

 

“Party”
or “Parties”
shall have the meanings given to such terms in the introduction.

 

2

 

“Performance
Guarantee” and “Performance Guarantees” shall have the meaning given to
such terms in Section 4.3(a).

 

“Person”
shall mean a natural person or an Entity.

 

“Prime Rate”
shall have the meaning given to such term in Section 6.2.

 

“Proceeding”
shall mean a judicial, administrative, or arbitral proceeding (including a
lawsuit or an investigation by a Government Authority), commencing with the
institution of such proceeding through the issuance, service, or delivery of
the applicable claim or other applicable event.

 

“Services”
shall have the meaning given to such term in Recital A.

 

ARTICLE II

INDEPENDENCE OF THE
PARTIES

 

Hiland shall be an independent contractor and not an agent of
Continental, except to the limited extent and for those limited purposes
specifically set forth herein. Nothing in this Agreement or the arrangement for
which it is written shall constitute or create a joint venture, partnership, or
any other similar agreement between Hiland and Continental, nor shall it be
deemed to limit the Parties to perform similar activities with third parties
even while this Agreement is in full force and effect.

 

ARTICLE III

REPRESENTATIONS OF THE
PARTIES

 

3.1                                 In order to induce Hiland to enter into this
Agreement, Continental represents and warrants to Hiland that, as of the
Effective Date:

 

(a)                                  Continental is a corporation duly formed,
validly existing and in good standing under the laws of the State of Oklahoma.
Continental has the power to own its property and to execute, deliver and
perform this Agreement and to carry on its business as it is currently being
conducted.

 

(b)                                 The execution, delivery and performance by
Continental of this Agreement have been duly authorized by all necessary action
of Continental. This Agreement is the legal, valid and binding obligation of
Continental, duly enforceable against Continental in accordance with its terms
(subject, however, to the effects of bankruptcy, insolvency, reorganization,
moratorium, and similar laws from time to time in effect relating to the rights
and remedies of creditors as well as to general principles of equity).

 

(c)                                  The execution, delivery and performance by
Continental of this Agreement do not and will not result in a violation of,
conflict with or default under (i) the terms of Continental’s organizational,
formation or governing documents; (ii) any applicable law; or (iii) any
contract, agreement, or other obligation or restriction to which Continental
may be bound; nor, to the best of Continental’s knowledge after due inquiry,

 

3

 

does there exist any
condition that, upon the passage of time, the giving of notice or both, would
cause any such violation, conflict or default.

 

(d)                                 Except for the transfer of the Continental
Permit to Hiland, no approval, consent, waiver, order or authorization of, or
registration, qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required on the part of
Continental in connection with the execution of this Agreement or the
consummation of the transactions contemplated hereby.

 

(e)                                  There are no Proceedings pending or, to the
best of Continental’s knowledge after due inquiry, threatened against
Continental that would adversely affect its ability to execute, deliver and
perform this Agreement.

 

3.2                                 In order to induce Continental to enter into
this Agreement, Hiland represents and warrants to Continental that, as of the
Effective Date:

 

(a)                                  Hiland is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware.
Hiland has the power to own its property and to execute, deliver and perform
this Agreement and to carry on its business as it is currently being conducted.

 

(b)                                 The execution, delivery and performance by
Hiland of this Agreement have been duly authorized by all necessary action of
Hiland. This Agreement is the legal, valid and binding obligation of Hiland,
duly enforceable against Hiland in accordance with its terms (subject, however,
to the effects of bankruptcy, insolvency, reorganization, moratorium, and
similar laws from time to time in effect relating to the rights and remedies of
creditors as well as to general principles of equity).

 

(c)                                  The execution, delivery and performance by
Hiland of this Agreement do not and will not result in a violation of, conflict
with or default under (i) the terms of Hiland’s organizational, formation or
governing documents; (ii) any applicable law; or (iii) any contract, agreement,
or other obligation or restriction to which Hiland may be bound; nor, to the
best of Hiland’s knowledge after due inquiry, does there exist any condition
that, upon the passage of time, the giving of notice or both, would cause any
such violation, conflict or default.

 

(d)                                 Except for the transfer of the Continental
Permit to Hiland, no approval, consent, waiver, order or authorization of, or
registration, qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required on the part of Hiland
in connection with the execution of this Agreement or the consummation of the
transactions contemplated hereby.

 

(e)                                  There are no Proceedings pending or, to the
best of Hiland’s knowledge after due inquiry, threatened against Hiland that
would adversely affect its ability to execute, deliver and perform this
Agreement.

 

4

 

ARTICLE IV

RESPONSIBILITIES OF THE
PARTIES

 

4.1                                 (a) Hiland agrees to provide the Services in
a manner that results in the delivery to Continental at the Delivery Points, on
a monthly basis, of the quantities of Cedar Air, Cedar Water, and HC Air
requested by Continental for each Commodity set forth in the Monthly Delivery
Notice. This monthly quantity at any one site will not exceed the maximum
output from all equipment located at any one site, as determined from the
original design.

 

(b)                                 Continental
will nominate the volumes of Cedar Air, Cedar Water, and HC Air that it will
request at the Delivery Points for any calendar month on or before the 25th
(23rd in the month of February) day of the preceding calendar month in an email
to a designated Hiland representative (the “Monthly Delivery Notice”).

 

4.2                                 (a) Continental agrees to provide, at no cost
to Hiland, all fuel, whether gas or electric, and water, in the quantities
necessary for Hiland to provide the Services required to deliver each of the
Commodities as set forth in Section 4.1 above.

 

(b)                                 Hiland
agrees to obtain written consent from the then designated Continental manager
before starting up more than 4 of the 6 compressors at the Hadley Compressor
Station. Should Hiland fail to obtain such consent, Hiland agrees to pay the
actual excess demand and usage charges for electricity incurred by Continental
related to such start-up and operations.

 

4.3                                 (a) Subject to: (i) Article VII below; (ii)
the provision of fuel (including, but not limited to, consent as necessary to
start-up additional compressors at the Hadley Compressor Station), and water by
Continental as required in Section 4.2 above; Hiland guarantees the provision
of Services adequate to produce 96.5% (the “Guarantee Percentage”) of the quantities
of Cedar Air, Cedar Water, and HC Air set forth in each Monthly Delivery Notice
for such calendar month (for each Commodity, the “Performance Guarantee,” and collectively
the “Performance
Guarantees”) as determined in accordance with Section 4.3(c)
below.

 

(b)                                 Hiland
will use its best efforts to inform Continental 30 days in advance of the dates
when it expects its equipment to be down for scheduled maintenance.

 

(c)                                  In
the event that Hiland is not able to meet the Performance Guarantee for any
particular Commodity in any month, Hiland shall credit or pay to Continental an
amount determined as follows:

 

(i)                                     Within
15 days after the end of each calendar month, the Continental Baker District
Area Supervisor (or designee) and the Hiland designee will perform a performance
review of each Hiland location that produces a Commodity;

 

(ii)                                  If,
as a result of the performance review, it is determined that the quantity of a
Commodity produced at such location for the preceding month was equal to or
greater than the Performance Guarantee for such Commodity for such month less
quantities attributable to the times during such month Hiland was

 

5

 

unable to deliver such Commodity due to an event set forth in
4.3(a)(i), (ii) above (the “Adjusted Performance Guarantee”), no further calculation
will be made and no Liquidated Damages will be assessed for such Commodity;

 

(iii)                               If
the quantity for a Commodity determined in accordance with Section 4.3(c)(ii)
above is less than the Adjusted Performance Guarantee, and the run-time data
for the particular Hiland location which was used to produce such Commodity is
equal to or greater than the Guarantee Percentage as adjusted for the
percentage of time during such month Hiland was unable to deliver such
Commodity due to an event set forth in 4.3(a)(i), or (ii) above (the “Adjusted Guarantee Percentage”),
no further calculation will be made and no Liquidated Damages will be assessed
for such Commodity;

 

(iv)                              If
the quantity for a Commodity determined in accordance with Section 4.3(c)(ii)
above is less than the Adjusted Performance Guarantee, and the run-time data
for the particular Hiland location which was used to produce such Commodity is
less than the Adjusted Guarantee Percentage, Hiland will credit or pay (as set
forth in Section 4.3(d) below) an amount determined by (I) subtracting from 1
the amount determined by dividing the actual percentage of such Commodity
delivered during such month by the Adjusted Performance Guarantee for such
Commodity for such month and (II) multiplying such number times the Operating
Fee for such Commodity, as liquidated damages (the “Liquidated Damages”).

 

(d)                                 The
Liquidated Damages, if any, shall be determined within 30 days after the end of
the calendar month in which such occurred and credited on the next invoice from
Continental to Hiland after their determination, or paid to Continental within
15 days after such determination at the address set forth in Section 12.1.

 

(e)                                  The
sums payable by Hiland to Continental as Liquidated Damages have been
calculated as representing the anticipated loss to Continental as a result of
any failure to achieve the Performance Guarantees and, except as provided in
Section 10.2, shall be Continental’s sole and exclusive remedy for Hiland’s
failure to meet the Performance Guarantees. The Parties agree (i) that
Continental’s damages arising out of such performance failure are impossible to
calculate with precision and (ii) that the terms and amount set forth above for
Liquidation Damages are reasonable.

 

(f)                                    Notwithstanding
anything else in this Agreement to the contrary, Hiland shall not be obligated
to pay Liquidated Damages in any Contract Year in excess of the aggregate of
the Operating Fees for each Commodity for such Contract Year (the “LD Cap”).

 

ARTICLE V

OPERATING FEE

 

In consideration for Hiland making available the necessary equipment
and labor to perform the Services, and for the actual provision of the Services
in the manner and on the terms

 

6

 

set forth in this Agreement, Continental shall pay to
Hiland the Operating Fees per month set forth on Exhibit B in accordance with the terms set forth in Article
VI.

 

ARTICLE VI

BILLING AND PAYMENT

 

6.1                                 Hiland will invoice Continental for the
Operating Fees less a credit for Liquidated Damages, if any, at the address
provided in Section 12.1 on or before the 5th of each month for Services
performed in the preceding month, and Continental agrees to make payment to
Hiland by wire transfer to the account set forth in Section 12.1 or by other
means to be received by Hiland within 15 days of the date of receipt of Hiland’s
invoice (the “Due Date”).
When the Due Date falls on a day that is not a Business Day, Continental shall
cause such payment to be actually received by Hiland on or before the next
Business Day after such date. In the event Hiland’s invoice is disputed,
Continental shall pay the undisputed amounts on or before the Due Date and give
Hiland written notification setting forth the disputed amounts and the basis
therefor by the Due Date. Hiland and Continental shall use reasonable diligence
to resolve any disputed amounts. Any disputed amounts which become undisputed
and due to one Party shall be subject to interest from the other Party as
described in Section 6.2 below from the original Due Date for such amounts.

 

6.2                                 If Continental fails to make timely payment
of all undisputed amounts so billed, simple interest on the unpaid portion of
the invoice shall accrue at the lower of the Prime Rate plus 2% or the maximum
lawful rate. For the purpose of this article, the term “Prime Rate” shall
mean the rate charged by JPMorgan Chase Bank to their most credit worthy
customers for each month in which such payment is outstanding.

 

ARTICLE VII

FORCE MAJEURE

 

7.1                                 In the event that any Party hereto is
rendered unable, wholly or in part, by Force Majeure to carry out its
obligations under this Agreement, other than the obligation to make payment of
amounts due hereunder, the obligations of such Party, so far as they are
affected by the Force Majeure, shall be suspended during the continuance of the
Force Majeure. The Party impacted by a Force Majeure shall, upon such
occurrence of a Force Majeure, (a) give verbal notice to the other Party
followed by written notice within a reasonable period of time of the
particulars of the Force Majeure and (b) take commercially reasonable steps to
remedy the Force Majeure.

 

7.2                                 The term “Force Majeure” means any event outside
the control of the affected Party that cannot, despite the exercise of
commercially reasonable precautions, remediation and mitigation efforts, be
prevented, avoided or removed and that prevents the total or partial
performance of the obligations of the affected Party under this Agreement. The
following events, the list of which is not exhaustive, shall be considered to
be cases of Force Majeure to the extent they present the characteristics
described above: (a) lightning, earthquake, hurricane, storm, cyclone, typhoon,
tsunami, peril of the sea, wind, drought, abnormal weather condition, or other
similar natural calamities or acts of God; (b) fire, explosion, chemical
contamination, or vandalism; (c) epidemic or plague; (d) act of war (declared
or undeclared), invasion, armed

 

7

 

conflict
or act of foreign enemy, blockade, economic sanction or embargo, revolution,
sabotage, riot, insurrection, civil unrest or disturbance, military or guerilla
action, banditry, terrorist activity or a threat of terrorist activity, or
tribal, religious or sectarian unrest; (e) radioactive contamination; (f)
strikes, lockouts and work stoppages; (g) damage to or failure of equipment;
and (h) other acts or omissions of Governmental Authorities.

 

ARTICLE VIII

INDEMNITY AND INSURANCE

 

8.1                                 AS BETWEEN CONTINENTAL AND
HILAND, HILAND SHALL BE DEEMED TO BE IN CONTROL AND POSSESSION OF THE
COMPRESSED AIR AND PRESSURIZED WATER UNTIL SUCH TIME AS SAID PRODUCTS ARE
DELIVERED TO THE DELIVERY POINTS AND AFTER SUCH TIME CONTINENTAL SHALL BE
DEEMED TO BE IN CONTROL AND POSSESSION OF THE COMPRESSED AIR AND PRESSURIZED
WATER.

 

8.2                                 EXCEPT AS EXPRESSLY SET
FORTH IN SECTIONS 4.3, 8.3, 8.4 AND 8.5 BELOW, EACH PARTY (THE “INDEMNIFYING PARTY”) SHALL DEFEND,
INDEMNIFY AND HOLD HARMLESS THE OTHER PARTY (THE “INDEMNIFIED PARTY”) FROM AND AGAINST ANY AND ALL LOSSES,
COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, AND PENALTIES
(INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS’ FEES AND EXPENSES)
SUSTAINED OR INCURRED BY THE INDEMNIFIED PARTY TO THE EXTENT (a) RESULTING FROM
THE NEGLIGENCE, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT OF THE INDEMNIFYING
PARTY OR (b) RELATING TO THE COMPRESSED AIR AND PRESSURIZED WATER DURING THE
PERIOD THAT THE INDEMNIFYING PARTY HAS CONTROL AND POSSESSION OF SUCH IN
ACCORDANCE WITH SECTION 8.1.

 

8.3                                 CONTINENTAL SHALL DEFEND,
INDEMNIFY, AND HOLD HARMLESS HILAND FROM AND AGAINST ALL LOSSES, COSTS,
DAMAGES, INJURIES, LIABILITIES, CLAIMS, DEMANDS, AND PENALTIES (INCLUDING, BUT
NOT LIMITED TO, REASONABLE ATTORNEYS’ FEES AND EXPENSES) SUSTAINED OR INCURRED
BY HILAND RELATING TO THE MANAGEMENT, MAINTENANCE, REPAIR, AND OPERATION OF
EQUIPMENT FOR THE PROVISION OF SERVICES (INCLUDING, BUT NOT LIMITED TO, FAILURE
TO OBTAIN AND COMPLY WITH ALL NECESSARY PERMITS) BY CONTINENTAL OR ANY OTHER
PERSON FOR CONTINENTAL PRIOR TO THE EFFECTIVE DATE.

 

8.4                                 EACH INDEMNIFYING PARTY
SHALL DEFEND, INDEMNIFY, AND HOLD HARMLESS THE INDEMNIFIED PARTY FROM AND
AGAINST ANY AND ALL LOSSES, COSTS, DAMAGES, INJURIES, LIABILITIES, CLAIMS,
DEMANDS, AND PENALTIES (INCLUDING, BUT NOT LIMITED TO, REASONABLE ATTORNEYS’
FEES AND EXPENSES) FOR DAMAGE TO OR LOSS OF THE INDEMNIFYING PARTY’S PROPERTY,
EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNIFIED PARTY.

 

8

 

8.5                                 IN NO EVENT, WHETHER AS A
RESULT OF BREACH OF CONTRACT, TORT LIABILITY (INCLUDING NEGLIGENCE AND GROSS
NEGLIGENCE), STRICT LIABILITY, OR OTHERWISE, SHALL EITHER PARTY BE LIABLE TO
THE OTHER FOR SPECIAL, PUNITIVE, INCIDENTAL, INDIRECT, EXEMPLARY, OR
CONSEQUENTIAL DAMAGES OF ANY NATURE WHATSOEVER, INCLUDING LOSS OF PROFITS. THE
PARTIES ALSO INTEND AND AGREE THAT THE PROVISIONS OF THIS AGREEMENT WITH
RESPECT TO INDEMNITIES AND LIMITATIONS SHALL CONTINUE IN FULL FORCE AND EFFECT
NOTWITHSTANDING THE TERMINATION, SUSPENSION, CANCELLATION, OR EXPIRATION OF
THIS AGREEMENT. THE PROVISIONS OF THIS SECTION 8.5 SHALL NOT PRECLUDE THE
RECOVERY, WHERE APPLICABLE, OF LIQUIDATED DAMAGES.

 

8.6                                 IT IS THE PARTIES’ INTENT
THAT, EXCEPT AS PROVIDED IN SECTION 8.2, THE INDEMNITY OBLIGATIONS IN THIS
ARTICLE VIII ARE WITHOUT REGARD TO THE CAUSES OF THE INDEMNIFIED CLAIMS,
INCLUDING THE NEGLIGENCE (BUT WITH REGARD TO SECTION 8.4, NOT THE GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT) OF THE INDEMNIFIED PARTY, WHETHER SUCH
NEGLIGENCE IS SOLE, JOINT, OR CONCURRENT, OR ACTIVE OR PASSIVE OR THE STRICT
LIABILITY OF THE INDEMNIFIED PARTY.

 

8.7                                 During the term of this Agreement and any
extension, Hiland shall maintain the insurances set forth on Exhibit C.

 

ARTICLE IX

TERM

 

The term of this Agreement shall be for a period of four years
commencing on the Effective Date and ending at midnight Central time on the day
prior to the fourth anniversary of the Effective Date and thereafter this
Agreement shall automatically renew for additional one month terms unless
terminated by either Party by the giving of notice to the other Party of such
termination no less than 15 days prior to the end of the then current term.

 

ARTICLE X

DEFAULT

 

10.1                           If Continental shall fail to pay Hiland any
amounts due under this Agreement within 10 days after notice from Hiland of
such failure, Hiland, in addition to any other rights and remedies it may have,
shall have the right to terminate this Agreement.

 

10.2                           If Hiland fails to provide any Services, for
20 consecutive days, and such failure is not the result of force majeure or of
Continental’s failure to provide the fuel and water as set forth in Section
4.2, Continental may, upon 10 days notice to Hiland, terminate this Agreement.

 

9

 

ARTICLE XI

ASSIGNMENT

 

This Agreement shall extend to and be binding upon the Parties hereto,
their heirs, administrators, successors, and assigns. Neither Party shall be
entitled to assign in whole or in part any of its rights and obligations under
this Agreement without the prior written consent of the other party.
Notwithstanding such consent, no such transfer of the interest of one Party
hereunder, wholly or partially, shall affect or bind the other Party until it
has been furnished, at the address specified in Article XII below, with (a) a
copy of the original documentation of such transfer or succession and (b) an
acknowledgement and acceptance of the terms of this Agreement in a form
reasonably acceptable to the non-assigning Party by the assignee of such
interest.

 

ARTICLE XII

ADDRESS

 

12.1                           All notices or other communications between
the Parties given under or in relation to this Agreement shall be delivered
physically or by facsimile to the respective parties at the following addresses
or facsimile numbers:

 

	
  Continental Resources, Inc.

  
	
  P.O.
  Box 1032

  
	
  Enid,
  Oklahoma 73702

  
	
  Attn:
  General Counsel

  
	
  Phone:
  (580) 548-5137

  
	
  Facsimile:
  (580) 242-4703

  
	
   

  
	
  Hiland Partners, LP

  
	
  P.O.
  Box 5122

  
	
  Enid,
  Oklahoma 73702

  
	
  Attn:
  Randy Moeder

  
	
  Phone:
  (580) 234-0473

  
	
  Facsimile:
  (580) 548-5188

  

 

12.2                           Any notice or other communication shall be
effective upon actual receipt if received during the recipient’s normal
business hours, or at the beginning of the next Business Day after receipt if
not received during the recipient’s normal business hours.

 

12.3                           Either Party may change its address for
notice purposes by written notice to that effect delivered to the other Party
in accordance with this Article.

 

ARTICLE XIII

NON-WAIVER

 

The failure of either Party at any time to exercise any right or to
require performance by the other Party of any provision hereof shall in no way
affect the right of such Party thereafter to enforce the same, nor shall the
waiver by either Party hereto of any breach of any provision

 

10

 

hereof by the other Party be a waiver of any other
breach of such provision, or as a waiver of the provision itself.

 

ARTICLE XIV

MERGER

 

This Agreement terminates and supersedes any prior agreements
pertaining to equipment or services related to the compression of air or water
between the Parties hereto or their successors-in-interest effective as of the
Effective Date (each a “Prior
Agreement”). This Agreement does not release or discharge any
obligation or debt pertaining to any Prior Agreement (including, but not
limited to, any equipment leases) which arose prior to the Effective Date.

 

ARTICLE XV

GOVERNING LAW, VENUE

 

15.1                           This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Oklahoma, except for
the conflicts of laws provisions thereof which would refer resolution of any
dispute to the laws of another jurisdiction.

 

15.2                           Each Party irrevocably and unconditionally
submits, for itself and its property to the nonexclusive jurisdiction of the
courts of the State of Oklahoma sitting in Garfield County, Enid, Oklahoma, and
of the United States District Court sitting in Western District of Oklahoma,
Oklahoma City, Oklahoma, in any action or proceeding arising out of or relating
to this Agreement or for recognition or enforcement of any judgment, and each
Party hereto irrevocably and unconditionally agrees that all claims in respect
of any such action or proceeding may be heard and determined in such Oklahoma
State Court or, to the fullest extent permitted by applicable law, in such
Federal Court. Each Party 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.

 

15.3                           Each Party irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any objection that
it may now or hereafter have to the laying of venue of any action or proceeding
arising out of or related to this Agreement in any court referred to in Section
15.2 above. Each Party hereby irrevocably waives, to the fullest extent
permitted by applicable law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.

 

ARTICLE XVI

MUTUAL DRAFTSMANSHIP

 

This Agreement was prepared jointly by the Parties hereto, and not by
either to the exclusion of the other.

 

11

 

ARTICLE XVII

MISCELLANEOUS

 

17.1                           Entire Agreement. This Agreement constitutes the entire
agreement between the Parties covering the subject matter hereof, and there are
no other agreements, modifications, conditions, or understanding, written or
oral, expressed or implied, pertaining to the subject matter hereof which are
not contained herein. Provided however, if there is any conflict between a
provision in the body of this Agreement and any Exhibit thereto, the provisions
contained in the body of this Agreement shall govern.

 

17.2                           Headings and Subheadings. The headings and subheadings contained in
this Agreement are used solely for convenience and do not constitute a part of
the Agreement between the Parties hereto nor should they be used to aid in any
manner in construing this Agreement.

 

17.3                           Rights Enforceable. The provisions of this Agreement shall not
impart rights enforceable by any person, entity, or organization not a Party
hereto or not a successor or assignee of a Party to this Agreement.

 

17.4                           Amendments. All amendments and modifications to this
Agreement shall be in writing and shall be executed by duly authorized
representatives of both Parties.

 

17.5                           Disputes. If any dispute or difference shall arise
between the Parties out of or relating to this Agreement or a breach hereof,
including any dispute or difference arising in connection with the existence or
termination of this Agreement (each a “Dispute”), the Parties shall attempt to
resolve the same through referral to senior management of each Party. In the
event such Dispute is not resolved within 30 days after referral to the senior
management of each Party, the Parties may agree to mediation of the Dispute in
a mutually acceptable manner, including, but not limited to selection of a
third party mediator and establishment of the period of time for such
mediation. If the Dispute is not resolved by such mediation, either Party may
seek to resolve the Dispute in any lawful manner.

 

12

 

IN WITNESS WHEREOF, this Agreement may be executed in any number of
counterparts, each of which shall be considered an original.

 

 

	
   

  	
  CONTINENTAL RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ G. B. SMITH

  	
   

  
	
   

  	
   

  	
  G. B. Smith

  
	
   

  	
   

  	
  Sr. Vice President Drilling and Production

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HILAND PARTNERS, LP

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Hiland Partners, GP, LLC,

  
	
   

  	
   

  	
  its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ RANDY MOEDER

  	
   

  
	
   

  	
   

  	
  Randy Moeder

  
	
   

  	
   

  	
  Chief Executive Officer and President

  

 

[Signature Page to the Compression Services Agreement]

 

 

EXHIBIT A

DELIVERY POINTS

 

	
   

  	
   

  	
  Location

  
	
  Cedar Hills Air
  Injection (“Cedar Air”)

  	
   

  	
  The five-4” main
  discharge block valves immediately downstream of the compressors, located
  inside the Hadley Compression Station Building

  
	
   

  	
   

  	
   

  
	
  Cedar Hills Water
  Injection (“Cedar
  Water”)

  	
   

  	
  The 8” “2500 series”
  flange located on the discharge line immediately downstream of the pumps
  inside the Bradac Water Station Building

  
	
   

  	
   

  	
   

  
	
  Horse Creek Compressor
  Station (“HC Air”)

  	
   

  	
  The 4” high pressure
  valve located on the North side of the Horse Creek Compression Station
  Building

  

 

 

EXHIBIT B

OPERATING FEE

 

	
  Commodity

  	
   

  	
  Fee per Month

  	
   

  
	
  Cedar Air — Cedar Hills North

  	
   

  	
  $

  	
  293,162.36

  	
   

  
	
  Cedar Water — Cedar Hills North

  	
   

  	
  $

  	
  45,376.43

  	
   

  
	
  HC Air — SMPHU

  	
   

  	
  $

  	
  63,085.42

  	
   

  

 

 

EXHIBIT C

INSURANCE

 

	
  Location

  	
   

  	
  Occupancy

  	
   

  	
  Description of

  Property

  	
   

  	
  Limit

  	
   

  	
  Insured Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cedar
  Air—Cedar Hills North

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  13,820,500

  	
   

  
	
   

  	
   

  	
  Five
  Compressors—Ariel JGC/4 with Cooler

  	
   

  	
  Compressor

  	
   

  	
  $

  	
  5,453,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Five
  Compressors—Joy/Cooper TAE 100MR2

  	
   

  	
  Compressor

  	
   

  	
  $

  	
  4,487,500

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Motor
  Control Center

  	
   

  	
   

  	
   

  	
  $

  	
  1,989,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  115 KV/7.2
  KV Substation

  	
   

  	
  Substation

  	
   

  	
  $

  	
  1,891,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cedar
  Water—Cedar Hills North

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  979,000

  	
   

  
	
   

  	
   

  	
  Compressor
  Building

  	
   

  	
  Building

  	
   

  	
  $

  	
  274,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Injection
  Pumps

  	
   

  	
  Pumps

  	
   

  	
  $

  	
  525,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Water
  Injection Building

  	
   

  	
  Building

  	
   

  	
  $

  	
  180,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HC Air—SMPHU

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  2,000,000

  	
   

  
	
   

  	
   

  	
  Superior
  Clean Burn II Model 16SGTB, 2650 HP

  	
   

  	
  Compressor

  	
   

  	
  $

  	
  950,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Superior
  Clean Burn II Model 16SGTB, 2650 HP

  	
   

  	
  Compressor

  	
   

  	
  $

  	
  950,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compressor
  Building

  	
   

  	
  Building

  	
   

  	
  $

  	
  100,000

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Compression Assets

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
  16,799,500

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00081-of-00352.parquet"}]]