Document:

Exhibit 10.1

 

TERM
LOAN AGREEMENT

Dated as of May 7, 2007

among

VENOCO, INC.,

as the
Borrower,

THE
SEVERAL GUARANTORS PARTIES HERETO,

The
Several Lenders

from Time to Time Parties Hereto,

CREDIT
SUISSE, CAYMAN ISLANDS BRANCH

as Administrative Agent,

UBS SECURITIES LLC,

as
Syndication Agent,

CREDIT
SUISSE SECURITIES (USA) LLC

and

UBS
SECURITIES LLC,

as Joint Lead Arrangers,

LEHMAN
COMMERCIAL PAPER INC.

and

BANK OF MONTREAL,

as
Co-Documentation Agents

and

LEHMAN
BROTHERS INC.

and

BMO
CAPITAL MARKETS CORP.,

as Co-Arrangers

 

TABLE OF CONTENTS

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Certain Defined Terms

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other Interpretive Provisions

  	
   

  	
  37

  
	
  1.3

  	
   

  	
  Accounting Principles

  	
   

  	
  38

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDIT

  	
   

  	
  39

  
	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Amounts and Terms of the Loans

  	
   

  	
  39

  
	
  2.2

  	
   

  	
  Maturity Date

  	
   

  	
  39

  
	
  2.3

  	
   

  	
  Conversion and Continuation Elections

  	
   

  	
  39

  
	
  2.4

  	
   

  	
  Optional Prepayments

  	
   

  	
  40

  
	
  2.5

  	
   

  	
  Mandatory Prepayments

  	
   

  	
  41

  
	
  2.6

  	
   

  	
  Repayment of Principal

  	
   

  	
  42

  
	
  2.7

  	
   

  	
  Interest

  	
   

  	
  43

  
	
  2.8

  	
   

  	
  Fees

  	
   

  	
  43

  
	
  2.9

  	
   

  	
  Computation of Fees and Interest

  	
   

  	
  43

  
	
  2.10

  	
   

  	
  Payments by the Borrower; Loans Pro Rata

  	
   

  	
  44

  
	
  2.11

  	
   

  	
  Sharing of Payments, Etc

  	
   

  	
  46

  
	
  2.12

  	
   

  	
  Incremental Facilities

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY

  	
   

  	
  48

  
	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Taxes

  	
   

  	
  48

  
	
  3.2

  	
   

  	
  Illegality

  	
   

  	
  49

  
	
  3.3

  	
   

  	
  Increased Costs and Reduction of Return

  	
   

  	
  50

  
	
  3.4

  	
   

  	
  Funding Losses

  	
   

  	
  50

  
	
  3.5

  	
   

  	
  Inability to Determine Rates

  	
   

  	
  51

  
	
  3.6

  	
   

  	
  Certificates of Lenders

  	
   

  	
  51

  
	
  3.7

  	
   

  	
  Substitution of Lenders

  	
   

  	
  51

  
	
  3.8

  	
   

  	
  Survival

  	
   

  	
  52

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV SECURITY

  	
   

  	
  52

  
	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  The Security

  	
   

  	
  52

  
	
  4.2

  	
   

  	
  Agreement to Deliver Security Documents

  	
   

  	
  52

  
	
  4.3

  	
   

  	
  Perfection and Protection of Security Interests and
  Liens

  	
   

  	
  52

  
	
  4.4

  	
   

  	
  Offset

  	
   

  	
  53

  
	
  4.5

  	
   

  	
  Guaranty

  	
   

  	
  53

  
	
  4.6

  	
   

  	
  Production Proceeds

  	
   

  	
  54

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V CONDITIONS PRECEDENT

  	
   

  	
  55

  
	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Conditions of the Closing Date

  	
   

  	
  55

  
	
  5.2

  	
   

  	
  Conditions Deemed Fulfilled

  	
   

  	
  58

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI REPRESENTATIONS AND WARRANTIES

  	
   

  	
  58

  
	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Organization, Existence and Power

  	
   

  	
  58

  

 

 i
 

 

	
  6.2

  	
   

  	
  Authorization; No Contravention

  	
   

  	
  59

  
	
  6.3

  	
   

  	
  Governmental Authorization

  	
   

  	
  59

  
	
  6.4

  	
   

  	
  Binding Effect

  	
   

  	
  59

  
	
  6.5

  	
   

  	
  Litigation

  	
   

  	
  59

  
	
  6.6

  	
   

  	
  No Default

  	
   

  	
  59

  
	
  6.7

  	
   

  	
  ERISA Compliance

  	
   

  	
  60

  
	
  6.8

  	
   

  	
  Use of Proceeds; Margin Regulations

  	
   

  	
  60

  
	
  6.9

  	
   

  	
  Title to Properties

  	
   

  	
  60

  
	
  6.10

  	
   

  	
  Oil and Gas Reserves

  	
   

  	
  61

  
	
  6.11

  	
   

  	
  Reserve Report

  	
   

  	
  61

  
	
  6.12

  	
   

  	
  Gas Imbalances

  	
   

  	
  61

  
	
  6.13

  	
   

  	
  Taxes

  	
   

  	
  61

  
	
  6.14

  	
   

  	
  Financial Statements and Condition

  	
   

  	
  62

  
	
  6.15

  	
   

  	
  Environmental Matters

  	
   

  	
  62

  
	
  6.16

  	
   

  	
  Regulated Entities

  	
   

  	
  63

  
	
  6.17

  	
   

  	
  No Burdensome Restrictions

  	
   

  	
  63

  
	
  6.18

  	
   

  	
  Copyrights, Patents, Trademarks and Licenses, etc

  	
   

  	
  63

  
	
  6.19

  	
   

  	
  Subsidiaries

  	
   

  	
  63

  
	
  6.20

  	
   

  	
  Insurance

  	
   

  	
  63

  
	
  6.21

  	
   

  	
  Full Disclosure

  	
   

  	
  63

  
	
  6.22

  	
   

  	
  Solvency

  	
   

  	
  64

  
	
  6.23

  	
   

  	
  Labor Matters

  	
   

  	
  64

  
	
  6.24

  	
   

  	
  Downstream Contracts

  	
   

  	
  64

  
	
  6.25

  	
   

  	
  Derivative Contracts

  	
   

  	
  64

  
	
  6.26

  	
   

  	
  Ellwood Subsidiary

  	
   

  	
  64

  
	
  6.27

  	
   

  	
  Senior Notes Indenture

  	
   

  	
  65

  
	
  6.28

  	
   

  	
  Existing Indebtedness

  	
   

  	
  65

  
	
  6.29

  	
   

  	
  Specified Acquisition Documents

  	
   

  	
  65

  
	
  6.30

  	
   

  	
  Security Documents

  	
   

  	
  65

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII AFFIRMATIVE COVENANTS

  	
   

  	
  66

  
	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Financial Statements

  	
   

  	
  66

  
	
  7.2

  	
   

  	
  Certificates; Other Production and Reserve
  Information

  	
   

  	
  67

  
	
  7.3

  	
   

  	
  Notices

  	
   

  	
  69

  
	
  7.4

  	
   

  	
  Preservation of Company Existence, Etc

  	
   

  	
  69

  
	
  7.5

  	
   

  	
  Maintenance of Property

  	
   

  	
  70

  
	
  7.6

  	
   

  	
  Insurance

  	
   

  	
  70

  
	
  7.7

  	
   

  	
  Payment of Obligations

  	
   

  	
  70

  
	
  7.8

  	
   

  	
  Compliance with Laws

  	
   

  	
  70

  
	
  7.9

  	
   

  	
  Compliance with ERISA

  	
   

  	
  71

  
	
  7.10

  	
   

  	
  Inspection of Property and Books and Records

  	
   

  	
  71

  
	
  7.11

  	
   

  	
  Environmental Laws

  	
   

  	
  71

  
	
  7.12

  	
   

  	
  New Subsidiary Guarantors

  	
   

  	
  71

  
	
  7.13

  	
   

  	
  Use of Proceeds

  	
   

  	
  71

  
	
  7.14

  	
   

  	
  Further Assurances

  	
   

  	
  72

  
	
  7.15

  	
   

  	
  Hedging Program

  	
   

  	
  73

  

 

 ii
 

 

	
  ARTICLE VIII NEGATIVE COVENANTS

  	
   

  	
  73

  
	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Liens

  	
   

  	
  73

  
	
  8.2

  	
   

  	
  Disposition of Assets

  	
   

  	
  75

  
	
  8.3

  	
   

  	
  Consolidations and Mergers

  	
   

  	
  75

  
	
  8.4

  	
   

  	
  Investments

  	
   

  	
  76

  
	
  8.5

  	
   

  	
  Indebtedness

  	
   

  	
  77

  
	
  8.6

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  78

  
	
  8.7

  	
   

  	
  Margin Stock

  	
   

  	
  79

  
	
  8.8

  	
   

  	
  Contingent Obligations

  	
   

  	
  79

  
	
  8.9

  	
   

  	
  Restricted Payments

  	
   

  	
  80

  
	
  8.10

  	
   

  	
  Derivative Contracts

  	
   

  	
  80

  
	
  8.11

  	
   

  	
  Sale Leasebacks

  	
   

  	
  81

  
	
  8.12

  	
   

  	
  Change in Business

  	
   

  	
  82

  
	
  8.13

  	
   

  	
  Accounting Changes

  	
   

  	
  82

  
	
  8.14

  	
   

  	
  Certain Contracts; Amendments; Multiemployer ERISA
  Plans

  	
   

  	
  82

  
	
  8.15

  	
   

  	
  Senior Notes and other Permitted Indebtedness

  	
   

  	
  82

  
	
  8.16

  	
   

  	
  First Lien Credit Documents

  	
   

  	
  83

  
	
  8.17

  	
   

  	
  Forward Sales, Production Payments, Etc

  	
   

  	
  83

  
	
  8.18

  	
   

  	
  Subsidiaries

  	
   

  	
  83

  
	
  8.19

  	
   

  	
  MLP and GP Activities

  	
   

  	
  83

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX EVENTS OF DEFAULT

  	
   

  	
  84

  
	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Event of Default

  	
   

  	
  84

  
	
  9.2

  	
   

  	
  Remedies

  	
   

  	
  87

  
	
  9.3

  	
   

  	
  Rights Not Exclusive

  	
   

  	
  88

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X THE ADMINISTRATIVE AGENT

  	
   

  	
  88

  
	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Appointment and Authorization; Limitation of Agency

  	
   

  	
  88

  
	
  10.2

  	
   

  	
  Delegation of Duties

  	
   

  	
  88

  
	
  10.3

  	
   

  	
  Liability of Administrative Agent

  	
   

  	
  88

  
	
  10.4

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  89

  
	
  10.5

  	
   

  	
  Notice of Default

  	
   

  	
  89

  
	
  10.6

  	
   

  	
  Credit Decision

  	
   

  	
  90

  
	
  10.7

  	
   

  	
  Indemnification

  	
   

  	
  90

  
	
  10.8

  	
   

  	
  Administrative Agent in Individual Capacity

  	
   

  	
  91

  
	
  10.9

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  91

  
	
  10.10

  	
   

  	
  Withholding Tax

  	
   

  	
  91

  
	
  10.11

  	
   

  	
  Arrangers; Syndication Agent and Co-Documentation
  Agents

  	
   

  	
  93

  
	
  10.12

  	
   

  	
  Release of Collateral

  	
   

  	
  93

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI MISCELLANEOUS

  	
   

  	
  93

  
	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Amendments and Waivers

  	
   

  	
  93

  
	
  11.2

  	
   

  	
  Notices

  	
   

  	
  94

  
	
  11.3

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  95

  
	
  11.4

  	
   

  	
  Costs and Expenses

  	
   

  	
  95

  
	
  11.5

  	
   

  	
  Indemnity

  	
   

  	
  96

  

 

 iii
 

 

	
  11.6

  	
   

  	
  Setoff; Payments Set Aside

  	
   

  	
  96

  
	
  11.7

  	
   

  	
  Successors and Assigns

  	
   

  	
  97

  
	
  11.8

  	
   

  	
  Assignments, Participations, etc

  	
   

  	
  97

  
	
  11.9

  	
   

  	
  Interest

  	
   

  	
  102

  
	
  11.10

  	
   

  	
  Indemnity and Subrogation

  	
   

  	
  103

  
	
  11.11

  	
   

  	
  Automatic Debits of Fees

  	
   

  	
  103

  
	
  11.12

  	
   

  	
  Notification of Addresses, Lending Offices, Etc

  	
   

  	
  104

  
	
  11.13

  	
   

  	
  Counterparts

  	
   

  	
  104

  
	
  11.14

  	
   

  	
  Severability

  	
   

  	
  104

  
	
  11.15

  	
   

  	
  No Third Parties Benefited

  	
   

  	
  104

  
	
  11.16

  	
   

  	
  Governing Law, Jurisdiction

  	
   

  	
  104

  
	
  11.17

  	
   

  	
  Submission To Jurisdiction; Waivers

  	
   

  	
  104

  
	
  11.18

  	
   

  	
  Entire Agreement

  	
   

  	
  105

  
	
  11.19

  	
   

  	
  NO ORAL AGREEMENTS

  	
   

  	
  105

  
	
  11.20

  	
   

  	
  Accounting Changes

  	
   

  	
  105

  
	
  11.21

  	
   

  	
  WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC

  	
   

  	
  106

  
	
  11.22

  	
   

  	
  Intercreditor Agreement; Collateral Trust Agreement

  	
   

  	
  106

  
	
  11.23

  	
   

  	
  USA PATRIOT Act

  	
   

  	
  106

  
	
  11.24

  	
   

  	
  Acknowledgments

  	
   

  	
  106

  
	
  11.25

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  107

  
	
  11.26

  	
   

  	
  Release of Collateral and Guarantee Obligations

  	
   

  	
  107

  
	
  11.27

  	
   

  	
  Replacement/Refinancing; Reaffirmation

  	
   

  	
  109

  

 

 iv
 

 

	
  SCHEDULES

  	
   

  
	
   

  	
   

  
	
  Schedule 1.1(a)

  	
  Commitments and Pro Rata Shares

  
	
  Schedule 6.5

  	
  Litigation

  
	
  Schedule 6.12

  	
  Gas Imbalances

  
	
  Schedule 6.14(a)

  	
  Material Indebtedness

  
	
  Schedule 6.15

  	
  Environmental Matters

  
	
  Schedule 6.17

  	
  Burdensome Restrictions

  
	
  Schedule 6.19

  	
  Subsidiaries and Minority Interests

  
	
  Schedule 6.24

  	
  Downstream Contracts

  
	
  Schedule 6.25

  	
  Existing Derivative Contracts

  
	
  Schedule 6.29

  	
  Material Specified Acquisition Documents

  
	
  Schedule 6.30(a)-1

  	
  Security Agreement UCC Filing Jurisdictions

  
	
  Schedule 6.30(a)-2

  	
  UCC Financing Statements to Remain on File

  
	
  Schedule 6.30(b)

  	
  Mortgage Filing Jurisdictions

  
	
  Schedule 8.1

  	
  Permitted Liens

  
	
  Schedule 8.9

  	
  Transactions with Affiliates

  
	
   

  	
   

  
	
  EXHIBITS

  	
   

  
	
   

  	
   

  
	
  Exhibit A

  	
  Form of Collateral Trust Agreement

  
	
  Exhibit B

  	
  Form of Compliance Certificate

  
	
  Exhibit C

  	
  Form of Guaranty Agreement

  
	
  Exhibit D

  	
  Form of Intercreditor Agreement

  
	
  Exhibit E

  	
  Form of Note

  
	
  Exhibit F

  	
  Form of Notice of Borrowing

  
	
  Exhibit G

  	
  Form of Notice of Conversion/Continuation

  
	
  Exhibit H

  	
  Form of Security Agreement

  
	
  Exhibit I

  	
  Form of Exemption Certificate

  
	
  Exhibit J

  	
  Form of Assignment and Acceptance

  
	
  Exhibit K

  	
  Supplement to Schedules to Security Agreement

  

 

 v

TERM
LOAN AGREEMENT

This TERM LOAN AGREEMENT is
entered into as of May 7, 2007 (this “Agreement”),
among VENOCO, INC., a Delaware corporation (the “Borrower”);
each of the Subsidiaries party hereto, as Guarantors; each of the financial
institutions which is or which may from time to time become a party to this
Agreement (including pursuant to an Assignment and Acceptance or a Joinder
Agreement) (individually, a “Lender” and
collectively, the “Lenders”); CREDIT SUISSE,
CAYMAN ISLANDS BRANCH, as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative Agent”); UBS SECURITIES LLC, as
syndication agent (in such capacity, the “Syndication Agent”),
CREDIT SUISSE SECURITIES (USA) LLC, and UBS SECURITIES LLC, as joint lead
arrangers (in such capacities, the “Arrangers”),
LEHMAN COMMERCIAL PAPER INC. and BANK OF MONTREAL, as co-documentation agents
(in such capacities, “Co-Documentation Agents”)
and LEHMAN BROTHERS INC. and BMO CAPITAL MARKETS CORP., as co-arrangers (in
such capacity, the “Co-Arrangers”).

RECITALS

W I T
N E S S E T H:

WHEREAS, the Borrower has
requested that the Lenders make term loans to the Borrower in the aggregate
principal amount of $500,000,000; and

WHEREAS, the Lenders are
willing to make term loans to the Borrower on the terms and conditions of this
Agreement;

NOW, THEREFORE, in
consideration of the premises and the agreements hereinafter set forth, the
parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

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

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

 1
 

consolidation
or any other combination with another Person (other than a Person that is a
Subsidiary) provided that the Borrower or a Subsidiary of the Borrower is the
surviving entity.

“Acquisition
Reserve Reports” means one or more reserve reports with respect
to the Oil and Gas Properties acquired on or prior to the Closing Date pursuant
to each Specified Acquisition.

“Additional
Loans” has the
meaning specified in Section 2.1.

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

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

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

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

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

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

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

“Agents” means, collectively, the
Administrative Agent, the Syndication Agent, the Co-Documentation Agents, the
Joint Lead Arrangers and the Co-Arrangers.

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

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

 2
 

“Agreement” means this Term Loan
Agreement, as such may be further amended, supplemented, modified, replaced or
refinanced from time to time pursuant to the terms hereof and of the
Intercreditor Agreement.

“Applicable
Margin” means, an
annualized rate, computed as of each day during the term hereof equal to (i)
with respect to any Base Rate Loan, 300 basis points, and (ii) with respect to
any LIBO Rate Loan, 400 basis points.

“Approved
Counterparty” means a Qualified Counterparty or any counterparty
to a Qualifying Derivative Contract which, at the time such Qualifying
Derivative Contract was entered into, had (or had such counterparty’s
obligations under such Qualifying Derivative Contract guaranteed by a guarantor
with) long-term obligations rated BBB+ or Baa1 or better, respectively, by
S&P or Moody’s.

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

“Asset Sale” means (a) any Disposition
by the Borrower or any Restricted Subsidiary (other than any Disposition
specified in Sections 8.2(a), 8.2(b), 8.2(c), 8.2(d), 8.2(e) or 8.2(f)),
or (b) any GP Equity Transfer.

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

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

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

“Audited
Financial Statements” means the Borrower’s
consolidated financial statements as of and for the years ended
December 31, 2006, 2005 and 2004, together with the unqualified
independent auditors’ report and opinion of Deloitte & Touche LLP thereon,
all in form and substance satisfactory to the Administrative Agent.

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

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

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

 3
 

“BMC” means BMC, Ltd., a
California Limited Partnership, a California limited partnership comprised of
the Borrower, as the general partner, and Whittier, as the limited partner.

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

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

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

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

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

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

“Cash
Equivalents” means:  (a) securities issued or fully
guaranteed or insured by the United States Government or any agency thereof and
backed by the full faith and credit of the United States having maturities of
not more than 12 months from the date of acquisition; (b) certificates of
deposit, time deposits, eurodollar time deposits, or bankers’ acceptances
having in each case a tenor of not more than 12 months from the date of acquisition
issued by and demand deposits with any U.S. commercial bank or any branch or
agency of a non-U.S. commercial bank licensed to conduct business in the U.S.
having combined capital and surplus of not less than $500,000,000 whose long
term securities are rated at least A (or then equivalent grade) by S&P and
A2 (or then equivalent grade) by Moody’s at the time of acquisition;
(c) commercial paper of an issuer rated at least A-1 by S&P or P-1 by
Moody’s at the time of acquisition, and in either case having a tenor of not
more than 12 months; (d) repurchase agreements with a term of not more
than seven days for underlying securities of the types described in
clauses (a) and (b) above; and (e) money market mutual or similar
funds having assets in excess of $100,000,000.

“Change of
Control” means
(a) a purchase or acquisition, directly or indirectly, by any “person” or “group”
within the meaning of Section 13(d)(3) and 14(d)(2) of the Exchange Act (a

 4
 

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

“Closing
Date” means the date on which all of the conditions precedent
set forth in Section 5.1 have been satisfied or waived.

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

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

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

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

“Commitment” means as to each Lender,
such Lender’s obligation to extend loans under this Agreement to the Borrower
(i) on the Closing Date (by making Original Loans) in an aggregate principal
amount not exceeding the amount set forth under the heading “Commitment”
opposite the name of such Lender on Schedule 1.1(a) hereto or (ii) on an
Increased Amount Date (by making New Term Loans) in an aggregate principal
amount not exceeding such lender’s New Term Loan Commitment as established in a
Joinder Agreement in accordance with Section 2.12, or if such Lender is a party
to an Assignment and Acceptance, the amount set forth on the most recent
Assignment and Acceptance of such Lender, in each case, as that amount has been
reduced or terminated pursuant to this Agreement.

 5
 

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

“Consolidated
EBITDA” means, with
respect to the Borrower and its Restricted Subsidiaries for any period, the
Consolidated Net Income of the Borrower and its Restricted Subsidiaries for
such period plus, without duplication and in
accordance with GAAP 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) Consolidated Interest Expense of the Borrower and its
Restricted Subsidiaries, amortization or write-off of debt discount and debt
issuance costs and commissions, discounts and other fees and charges associated
with Indebtedness, (c) depreciation, depletion and amortization expense,
(d) accretion of abandonment liability, (e) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (f) any
extraordinary, unusual or non-recurring expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business) and (g) any other non-cash charges, and minus, to the
extent included in the statement of such Consolidated Net Income for such
period, the sum of (i) interest income (except to the extent deducted in
determining Consolidated Interest Expense), (ii) any extraordinary,
unusual or non-recurring income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business, in each case in accordance with GAAP) and (iii) any other
non-cash income, all as determined on a consolidated basis.

“Consolidated
Interest Expense” means, with respect to the
Borrower and its Restricted Subsidiaries on a consolidated basis for any fiscal
period, total interest expenses (including that portion attributable to Capitalized
Lease Obligations and capitalized interest) of the Borrower and its Restricted
Subsidiaries in such fiscal period which are classified as interest expense on
the consolidated financial statements of the Borrower and its Restricted
Subsidiaries, all as determined in conformity with GAAP.

“Consolidated
Net Income” means with respect to the
Borrower and the Restricted Subsidiaries, for any period, the aggregate of the
net income (or loss) of the Borrower and the Restricted Subsidiaries after
allowances for taxes for such period determined on a consolidated basis in
accordance with GAAP; provided that there shall be excluded
from such net income (to the extent otherwise included therein) the following:
(a) the net income for such period of any Person that is not a Subsidiary,
or is an Unrestricted Subsidiary, a Permitted MLP or a Permitted GP, or that is
accounted for by the equity method of accounting; provided that Consolidated Net
Income of the Company shall be increased by (i) the amount of dividends,
distributions or other payments from (x) any Person that is not a Subsidiary,
(y) any Unrestricted Subsidiary or (z) any Person that is accounted for by the
equity method of accounting (in each case, other than a Permitted MLP or any
Subsidiary thereof or Permitted GP) and (ii) the amount of any dividends,
distributions or other payments from a Permitted MLP or a Permitted GP, in each
case only to the extent made out of the operating surplus of such Permitted MLP
or such Permitted GP, in each of clauses (i) and (ii) above, that are actually
paid in cash (or to the extent converted into cash upon receipt thereof) to the
Borrower or a Restricted Subsidiary thereof in respect of such period (subject
in the case of dividends, distributions or other payments made to a Restricted
Subsidiary to the limitations contained in clause (b) below); (b) the
net income (but not loss) during such period of any Restricted Subsidiary to
the extent that the declaration or payment of dividends or

 6
 

similar
distributions or transfers or loans by that Restricted Subsidiary is not at the
time permitted by operation of the terms of its charter or any agreement,
instrument or Governmental Requirement applicable to such Restricted Subsidiary
or is otherwise restricted or prohibited, in each case determined in accordance
with GAAP; (c) the net income (or loss) of any Person acquired in a
pooling-of-interests transaction for any period prior to the date of such
transaction; (d) any extraordinary non-cash gains or losses during such
period; (e) non-cash gains or losses under FAS 133 resulting from the net
change in the Borrower’s mark-to-market portfolio of commodity price risk
management activities during that period and (f) any gains or losses
attributable to writeups or writedowns of assets, including ceiling test
writedowns.

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

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

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

 7
 

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

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

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

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

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

“Denbury” means Denbury Resources Inc. or any of its
subsidiaries.

“Denbury Asset
Transfer” means any Disposition of all
or any portion of the Hastings Properties to Denbury in accordance with the
terms and conditions of the Denbury Option Agreement.

“Denbury Option
Agreement” means the Option Agreement dated November 1, 2006 between
the Borrower and Denbury Resources Inc., as in effect on the Closing Date.

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

“Dispose”
(including the correlative terms “Disposed”  or “Disposition”)
means any sale, assignment, transfer, lease, conveyance, gift, pledge,
distribution, hypothecation or other encumbrance or any other disposition,
whether voluntary, involuntary or by operation of law, effected directly or
indirectly, in one or a series of transactions (and including by way of merger
or consolidation) and including any issuance or sale of Capital Stock of any
Restricted Subsidiary and any MLP Asset Transfer, MLP Equity Transfer or GP
Equity Transfer.

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

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

 8
 

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

“Ellwood” means Ellwood Pipeline,
Inc., a California corporation and a Wholly Owned Subsidiary of the Borrower.

“Engagement
Letter” means that certain Engagement Letter, dated as of April
12, 2007, among the Borrower and the Agents.

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

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

“Equity
Interests” means Capital Stock and all
warrants, options or other rights to acquire Capital Stock, but excluding any
debt security that is convertible into, or exchangeable for, Capital Stock.

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

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

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

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

 9
 

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

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

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

“Existing
Term Loan Agent”
means Credit Suisse, Cayman Islands Branch, as administrative agent under the
Existing Term Loan Agreement.

“Existing Term
Loan Agreement” means that certain Amended
and Restated Term Loan Agreement dated as of April 28, 2006, among the
Borrower, the subsidiary guarantors party thereto, the lenders party thereto
and the Existing Term Loan Agent.

“Extraordinary
Distribution” means any dividend or
distribution of cash or Property made by a Permitted MLP or Permitted GP, but
excluding (i) any dividend or distribution made out of the operating surplus of
such Permitted MLP or Permitted GP or (ii) with respect to proceeds of a
primary offering of Equity Interests in a Permitted MLP received by a Permitted
MLP GP the amount thereof applied as a Permitted GP Rollover Investment
contemporaneously with (and in no event later than three Business Days after)
such dividend or distribution is received.

“fair market
value” means, with
respect to any asset or group of assets at any date, the value of the
consideration obtainable in a sale of such asset at such date assuming a sale
by a willing seller to a willing purchaser dealing at arm’s length and arranged
in an orderly manner over a reasonable period of time having regard to the
nature and characteristics of such asset. 
For purposes of calculating the fair market value of any assets or
property transferred to any Person, any Person and any Equity Interests in a
Person with respect to any MLP Asset Transfer, MLP Equity Transfer or GP Equity
Transfer, any Indebtedness that is owed by such Person to the Borrower or any
Restricted Subsidiary shall be disregarded and shall not be reflected in such
calculation to reduce the fair market value of such assets or property, Person
or Equity Interests in such Person, as the case may be.

“FAS 133” means Statement of
Financial Accounting Standard No. 133 promulgated by

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

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

 10
 

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

“First
Lien Credit Agreement” means the Second Amended and Restated
Credit Agreement among the Loan Parties, the First Lien Credit Agent, Harris
Nesbitt Corp., as lead arranger, Credit Suisse Securities (USA) LLC and Lehman
Brothers Inc., as co-arrangers, Credit Suisse, Cayman Islands Branch, and
Lehman Commercial Paper Inc., as co-syndication agents and co-documentation
agents, and the other lenders from time to time party thereto dated as of March
30, 2006, as amended, restated, refinanced, supplemented or otherwise modified
in accordance with the terms hereof and the terms of the Intercreditor
Agreement.

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

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

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

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

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

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

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

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

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

“Governmental Requirement” means any
statute, law, regulation, ordinance, rule, judgment, order, decree, permit,
concession, grant, franchise, license, agreement, directive, requirement of, or
other governmental restriction or any similar binding form of decision of or

 11
 

determination by, or any
binding interpretation or administration of any of the foregoing by, any
Government Authority, including all common law, whether now or hereafter in
effect.

“GP”
means the Person that is (i) the sole MLP GP of a MLP or (ii) the sole general
partner of a MLP GP (if such MLP GP is a limited partnership).

“GP
Equity Transfer” means the issuance, sale, conveyance, transfer
or other disposition of any Equity Interest in a MLP GP by the Borrower or any
Guarantor or by such MLP GP, other than to the Borrower or any Wholly Owned
Subsidiary Guarantor.

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

“Guarantor”
means each of the Borrower’s Subsidiaries on the Closing Date (other than
Ellwood), together with any Subsidiary of the Borrower which is required to execute
the Guaranty under Section ‎7.12 upon the execution and delivery by
such entity of the Guaranty.

“Guaranty”
means the Guaranty Agreement, dated March 30, 2006, as supplemented by joinders
thereto, dated as of March 31, 2006, of the Guarantors (other than BMC and
Whittier), substantially in the form of Exhibit C hereto executed by each
Guarantor in favor of the Administrative Agent, for the benefit of the Lender
Parties, as the same may be amended, supplemented or otherwise modified from
time to time pursuant to the terms hereof (including, in the case of any
Subsidiary required to execute the Guaranty pursuant to Section 7.12, by
execution and delivery of a joinder thereto in the form of Annex 1 thereto).

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

“Hastings
Properties” means the Oil and Gas Properties included in the
term “Assets” as defined in the Denbury Option Agreement.

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

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

“Increased
Amount Date” has the meaning specified in Section 2.12.

“Indebtedness”
of any Person means, without duplication, (a) all indebtedness for
borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of Property or services (other than trade payables
entered into in the ordinary course of business on ordinary terms and not past
due for more than 90 days after the due date thereof, other than those trade
payables disputed in good faith); (c) all non-contingent reimbursement or
payment obligations with respect to Surety Instruments; (d) all
obligations evidenced by notes,

 12
 

bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of Property, assets or businesses;
(e) all indebtedness created or arising under any conditional sale or
other title retention agreement, or incurred as financing, in either case with
respect to Property acquired by the Person (even though the rights and remedies
of the seller or bank under such agreement in the event of default are limited
to repossession or sale of such Property) including, without limitation,
production payments, net profit interests and other Hydrocarbon Interests
subject to repayment out of future Oil and Gas production; (f) all
obligations with respect to Capital Leases; (g) all non-contingent net
obligations with respect to Derivative Contracts; (h) gas imbalances or obligations
under take-or-pay or prepayment contracts with respect to any of the Oil and
Gas Properties which would require the Borrower or any of its Subsidiaries to
deliver Oil and Gas from any of the Oil and Gas Properties at some future time
without then or thereafter receiving full payment therefor; (i) all
indebtedness referred to in clauses (a) through (g) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien upon or in Property (including accounts
and contracts rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness; and (j) all
Guaranty Obligations in respect of indebtedness or obligations of others of the
kinds referred to in clauses (a) through (g) above.

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

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

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

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

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

“Independent
Financial Advisor” means an accounting, appraisal, investment
banking firm or consultant to Persons engaged in the oil and gas exploration
and production business of nationally recognized standing that is, in the good
faith judgment of the Borrower, qualified to perform the task for which it has
been engaged and that is independent of the Borrower and its Affiliates.

“Initial
Closing Date” means March 30, 2006.

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

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

 13
 

“Intercreditor
Agreement” means that certain Amended and Restated Intercreditor
Agreement dated as of May 7, 2007 among the Loan Parties, the First Lien Credit
Agent and the Collateral Trustee substantially in the form of Exhibit D hereto,
as amended, restated, supplemented or otherwise modified from time to time
pursuant to the terms hereof and thereof.

“Interest
Coverage Ratio” means the ratio of Consolidated EBITDA for a
four fiscal quarter period to Consolidated Interest Expense for such period.

“Interest
Payment Date” (a) as to any Base Rate Loan, means June 1,
2007 and the first day of each month thereafter prior to the Termination Date
and each date on which such a Base Rate Loan is converted into another Interest
Rate Type of Loan, and (b) as to any LIBO Rate Loan, the last day of the
Interest Period applicable to such Loan; provided, if any Interest Period
for an LIBO Rate Loan exceeds three months, the date that falls three months
after the beginning of such Interest Period is also an Interest Payment Date.

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

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

“Investments”
means, with respect to any Person, all investments by such Person in other
Persons (including Affiliates) in the form of loans (including Guaranty
Obligations), advances or capital contributions (including by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others, but excluding accounts receivable,
trade credit, advances to customers, commission, travel and similar advances to
officers and employees, in each case made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities issued by any other Person and investments that
are required by GAAP to be classified on the balance sheet (excluding the
footnotes) of such Person in the same manner as the other investments included
in this definition to the extent such transactions involve the transfer of cash
or other property. For purposes of the definitions of “Unrestricted Subsidiary,”
“Permitted MLP” and “Permitted GP” and Section 8.5, “Investments” shall
include the portion (proportionate to the Borrower’s equity interest in such
Subsidiary) of the fair market value of the net assets of a Subsidiary of the

 14
 

Borrower
at the time that such Subsidiary is designated an Unrestricted Subsidiary,
Permitted MLP or Permitted GP; provided:

(a)           solely
in the case of a redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the Borrower shall be deemed to continue to have a permanent “Investment”
in such Person pursuant to Section 8.4(m) in an amount (if positive) equal
to:  (i) the Borrower’s “Investment”
in such Subsidiary at the time of such redesignation, less (ii) the portion
(proportionate to the Borrower’s equity interest in such Subsidiary) of the
fair market value of the net assets of such Subsidiary at the time of such
redesignation; and

(b)           in
the case of property transferred to or from an Unrestricted Subsidiary,
Permitted MLP or Permitted GP, such property being transferred shall be valued
at its fair market value at the time of such transfer, in each case as
determined in good faith by the Borrower.

“IPO”
means, with respect to any Person, an initial public offering of Equity
Interests by such Person registered with the SEC under the Securities Act of
1933, as amended.

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

“Joinder
Agreement” has the meaning specified in Section 2.12.

“Lender
Parties” means (a) the Lenders, (b) the Administrative
Agent and (c) the holders from time to time of the Obligations.

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

“Lending
Office” means, as to any Lender, the office or offices of such
Lender specified on the signature pages hereof, or such other office or offices
as such Lender may from time to time notify the Borrower and the Administrative
Agent.

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

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

	
  LIBO Rate =

  	
  LIBOR

  
	
   

  	
  1.00 - Eurodollar Reserve
  Percentage

  
	
   

  	
   

  
	
   where,

  	
  “Eurodollar Reserve Percentage”
  means for any day for any Interest Period the maximum reserve percentage
  (expressed as a decimal, rounded upward to the next 1/100th of 1%) in effect
  on such day (whether or not applicable to any Lender) under regulations
  issued from time to time by the FRB for determining 

  

 

 15
 

 

	
   

  	
  the maximum reserve requirement (including
  any emergency, supplemental or other marginal reserve requirement) with
  respect to Eurocurrency funding (currently referred to as “Eurocurrency
  liabilities”); and

  

 

“LIBOR”
means, with respect to any LIBOR Borrowing for any Interest Period, the rate
per annum determined by the Administrative Agent at approximately
11:00 a.m. (London time) on the date that is two Business Days prior to
the beginning of the relevant Interest Period by reference to the British
Bankers’ Association Interest Settlement Rates for deposits in Dollars (as set
forth by the Bloomberg Information Service or any successor thereto or any
other service selected by the Administrative Agent which has been nominated by
the British Bankers’ Association as an authorized information vendor for the
purpose of displaying such rates) for a period equal to such Interest Period;
provided that, to the extent that an interest rate is not ascertainable
pursuant to the foregoing provisions of this definition, the “LIBOR” shall be
the interest rate per annum determined by the Administrative Agent to be the
average of the rates per annum at which deposits in Dollars are offered for
such relevant Interest Period to major banks in the London interbank market in
London, England by the Administrative Agent at approximately 11:00 a.m.
(London time) on the date that is two Business Days prior to the beginning of
such Interest Period.

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

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

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

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

“Loan
Parties” means the Borrower and each Guarantor.

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

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

 16

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

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

“Maturity
Date” means (i) with respect to Original Loans, September 20,
2011 if (and only if) the Senior Notes are outstanding on September 20, 2011,
and otherwise, the seventh anniversary of the Closing Date or (ii) with respect
to New Term Loans of any Series, the related New Term Loan Maturity Date with
respect to such Series.

“Minimum
Cash Consideration” means, with respect to the Permitted Initial
MLP Asset Transfer, 40%, and with respect to any other Asset Sale (including
any MLP Asset Transfer other than the Permitted Initial MLP Asset Transfer),
75%, of the fair market value of (a) the assets and property transferred,  and (b)  in the case of
any MLP Asset Transfer involving a transfer of any Equity Interests of a
Person, (i) in the case of any Person other than Ellwood, such Person (it being
understood that, in the case of a transfer of less than all of the Equity
Interests of a Person, the fair market value of such Person shall be determined
at the time of the first MLP Asset Transfer in which any Equity Interests of
such Person are transferred as if all the Equity Interests in such Person had
been transferred at the time of such first MLP Asset Transfer and the Minimum
Cash Consideration requirement shall have to be satisfied on that basis in
connection with such first MLP Asset Transfer, and there shall be no Minimum
Cash Consideration required for any subsequent transfer of Equity Interests of
such Person) and (ii) in the case of a transfer of Equity Interests of Ellwood,
the fair market value of the transferred Equity Interests only, without giving
effect to any discount for minority ownership or illiquidity.

“MLP”
means any master limited partnership or master limited liability company.

“MLP
Asset Transfer” means the
direct or indirect sale, conveyance, transfer or other disposition of property
or assets (including any Equity Interests of any Person) by the Borrower or any
Restricted Subsidiary to one or more MLPs, GPs, or MLP Subsidiaries.

“MLP
Equity Transfer” means the sale, conveyance, transfer or other
disposition by the Borrower or any Restricted Subsidiary of any Equity Interest
in a MLP.

“MLP
GP” means the Person that is the sole general partner of a MLP
(if the MLP is a limited partnership) or the sole managing member of a MLP (if
the MLP is a limited liability company).

“MLP
Recourse Debt” means any indebtedness incurred (and any
refinancings thereof) by a Permitted MLP in connection with the consummation of
its IPO for which the holders thereof have recourse to the Permitted MLP GP
that is the sole general partner or sole managing member, as applicable, of
such Permitted MLP.

 17
 

“MLP
Subsidiary” means each Subsidiary of a MLP.

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

“Mortgages”
means the Mortgages, Deeds of Trust, Security Agreements, Assignments of
Production and Financing Statements from the Borrower and each Guarantor in
favor of the Collateral Trustee, for the benefit of the Secured Parties,
covering the Oil and Gas Properties of the Borrower and the Guarantors, as each
is supplemented by the Mortgage Amendments, and all further supplements,
assignments, assumptions, amendments and restatements thereto (or any agreement
in substitution therefor) which have been or are executed and delivered to the
Administrative Agent for benefit of the Lenders pursuant to Article IV of
this Agreement.

“Mortgage
Amendments” means each of the Amendment to Second Lien Mortgage,
Deed Of Trust, Assignment Of Production, Security Agreement And Financing
Statement by and from TexCal Energy South Texas L.P. to the trustee thereunder
in trust for the benefit of the Collateral Trustee dated as of May 7, 2007, the
Amendment to the Second Lien Mortgage, Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement by and from the Borrower to the
trustee thereunder in trust for the benefit of the Collateral Trustee dated as
of May 7, 2007 and the Amendment to the Second Lien Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement by and
from BMC to the trustee thereunder in trust for the benefit of the Collateral
Trustee dated as of May 7, 2007.

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

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

“Net
Cash Proceeds” means:

(a)                                  with respect to any Recovery
Event, the cash proceeds thereof (including cash proceeds subsequently received
(as and when received) in respect of noncash consideration initially received),
net of selling and other expenses (including reasonable broker’s fees or
commissions, legal fees, transfer and similar taxes, Hedging Agreement
termination costs and the Borrower’s good faith estimate of income taxes
actually paid or payable in connection with such sale);

(b)                                 with respect to any issuance
or incurrence of Indebtedness or any “Equity Offering” (as defined in the
Senior Notes Indenture), the cash proceeds thereof (including cash proceeds
subsequently received (as and when received) in respect of noncash
consideration initially received), net of all taxes
and customary fees, commissions, costs and other expenses incurred in
connection therewith;

 18
 

(c)                                  with respect to any
Extraordinary Distribution, the cash proceeds thereof (including cash proceeds
subsequently received (as and when received) in respect of noncash
consideration initially received); and

(d)                                 with respect to any Asset
Sale or other Disposition (including without limitation any MLP Asset Transfer,
any MLP Equity Transfer, any GP Equity Transfer or any Denbury Asset Transfer),
the cash proceeds thereof (including cash proceeds subsequently received (as
and when received) in respect of noncash consideration initially received), net
of (i) selling and other expenses (including reasonable broker’s fees or
commissions, legal fees, transfer and similar taxes, Hedging Agreement
termination costs and the Borrower’s good faith estimate of income taxes
actually paid or payable in connection with such sale), (ii) amounts provided
as a reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations or purchase price adjustment associated with such
Asset Sale or Disposition (provided that, to the extent and at the
time any such amounts are released from such reserve, such amounts shall
constitute Net Cash Proceeds), and (iii) any amount payable in respect of any
Indebtedness for borrowed money (other than the Obligations or the First Lien
Obligations) which is secured by the asset sold or otherwise Disposed of and
which is required to be repaid with such proceeds (excluding any such
Indebtedness assumed by the purchaser of such asset).

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

“New
Term Loan” has the meaning specified in Section 2.12.

“New
Term Loan Commitments” has the meaning specified in
Section 2.12.

“New
Term Loan Lender” has the meaning specified in
Section 2.12.

 “New Term Maturity Date”
shall mean the date upon which New Term Loans of a Series are scheduled to be
paid in full hereunder, as specified in the applicable Joinder Agreement.

“Non-Consenting
Lender” has the meaning specified in Section 11.8(j).

 19
 

“Note”
means a promissory note, whether one or more, specified in Section 2.1(d),
substantially in the same form as Exhibit E, including any amendments,
modifications, renewals or replacements of such promissory notes.

“Notice
of Borrowing” means a notice of borrowing substantially in the
form of Exhibit F hereto

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

“NYMEX”
means the New York Mercantile Exchange.

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

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

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

“Oil
and Gas Properties” means Hydrocarbon Interests now or hereafter
owned by the Borrower and the Guarantors and contracts executed in connection
therewith and all tenements, hereditaments, appurtenances, and properties
belonging, affixed or incidental to such Hydrocarbon Interests, including,
without limitation, any and all Property, now owned by the Borrower and the
Guarantors and situated upon or to be situated upon, and used, built for use,
or useful in connection with the operating, working or developing of such
Hydrocarbon Interests, including, without limitation, any and all petroleum or
natural gas wells, buildings, structures, field separators, liquid extractors,
plant compressors, pumps, pumping units, field gathering 

 20
 

systems,
tank and tank batteries, fixtures, valves, fittings, machinery and parts,
engines, boilers, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, taping, tubing and rods, surface leases, rights of way,
easements and servitudes, and all additions, substitutions, replacements for,
fixtures and attachments to any and all of the foregoing owned directly or
indirectly by the Borrower and the Guarantors.

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

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

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

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

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

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

“Partially
Owned Operating Company” means any Person that (i) is
transferred to a MLP or a MLP Subsidiary in connection with a Permitted MLP
Equity Transfer and (ii) holds operating assets and as to which the
Borrower or any Restricted Subsidiary continues to own Equity Interests.

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

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

“Pension
Plan” means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, which the
Borrower or any of its Subsidiaries sponsors, maintains, or to which it makes,
is making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.

“Permitted
GP” means, as to any Permitted MLP or Permitted MLP GP,  the GP (a)  designated by the Borrower,
as provided below, as the “Permitted GP” and the sole business 

 21
 

of
which is to act as the sole general partner of such Permitted MLP (if such
Permitted MLP is a limited partnership) or the sole managing member of such
Permitted MLP (if such Permitted MLP is a limited liability company) or the
sole general partner of such Permitted MLP GP, as applicable, (b) that is
a Wholly Owned Subsidiary of the Borrower or any Guarantor until (solely if
such GP is the sole general partner of or sole managing member of such
Permitted MLP) such time as a Permitted GP Equity Transfer of Equity Interests
therein is effected; (c) that holds no other assets other than
(i) Equity Interests (including any incentive distribution rights) in such
Permitted MLP or in such Permitted MLP GP (if such Permitted MLP GP is a
limited partnership), (ii) solely if such GP is the sole general partner of
such Permitted MLP or sole managing member of such Permitted MLP, any Permitted
Parent Note, (iii) assets temporarily held for subsequent contribution to
such Permitted MLP GP or such Permitted MLP permitted herein or distribution in
connection with a Permitted MLP Equity Transfer, Permitted GP Equity Transfer,
Extraordinary Distribution or other distribution from a Permitted MLP or a
Permitted MLP GP, as applicable, (iv) current assets sufficient to satisfy
its ordinary course operating expenses, and (v) reserves as established by
management for such GP, which in such management’s determination are
appropriate for the administrative and operating expenses in the ordinary
course of such GP’s business and as are prudent to maintain for the proper
conduct of such GP’s business or to provide for future Extraordinary
Distributions or other distributions; and (d) which, except as otherwise
permitted herein, is required by its partnership agreement, limited liability
company agreement or similar organizational document to distribute all cash
that it receives, from time to time, to its partners or holders of its Equity
Interests on a pro
rata basis, subject to the reserves described in clause (c)(v)
above in accordance with the terms of the organizational documents of such GP, provided that such organizational documents are in a form
that is customary for similar entities whose primary function is to serve as a
general partner or managing member, as applicable, of an entity operating as a
MLP, and in each case, including any successor Person to such GP.

The Borrower may designate
any Person which is a Wholly Owned Subsidiary of the Borrower (including any
existing Subsidiary and any newly acquired or newly formed Subsidiary) to be a
Permitted GP, provided that, at the time of
such designation:

(i)                                     none of such Person or its
Subsidiaries owns any Equity Interests in or Indebtedness of (A) the Borrower
or any Restricted Subsidiary of the Borrower (other than a Permitted Parent
Note), or (B) any Permitted MLP, Permitted GP or Partially Owned Operating
Company;

(ii)                                  none of such Person or its
Subsidiaries owns or holds any Lien on any property of the Borrower or any
Restricted Subsidiary of the Borrower (other than any Subsidiary of the Person
to be so designated);

(iii)                               such Person is an entity of
which shares of the Capital Stock entitled to cast at least a majority of the
votes that may be cast by all shares or equity interests having ordinary voting
power for the election of directors or other governing body are owned, directly
or indirectly, by the Borrower,

(iv)                              such designation complies
with the limitations on Investments set forth in the last paragraph of
Section 8.4,

 22
 

(v)                                 such Person and its
Subsidiaries has not created, incurred, issued, assumed, guaranteed or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the holder of such Indebtedness has recourse to any of the
assets of the Borrower or any Restricted Subsidiary,

(vi)                              no Default or Event of
Default shall have occurred and be continuing immediately before or after such
designation, and

(vii)                           immediately after giving
effect to such designation, the Borrower and the Restricted Subsidiaries shall
be in compliance, on a pro forma
basis, with the covenants set forth in Sections 8.4 and 8.9 (and, as a
condition precedent to the effectiveness of any such designation, the Borrower
shall deliver to the Administrative Agent a certificate setting forth in
reasonable detail the calculations demonstrating such compliance).

The Borrower may not
redesignate any Permitted GP as a Restricted Subsidiary.

Any such designation by the
Borrower shall be notified by the Borrower to the Administrative Agent by
promptly filing with the Administrative Agent a copy of any applicable Board
Resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing provisions.

“Permitted
GP Equity Transfer” means either:

(a)                                  a GP Equity Transfer by the
Borrower or any Guarantor, provided that
(a) the Permitted Transfer Conditions have been satisfied with respect to such
GP Equity Transfer, and (b) the Borrower or such Guarantor receives Net Cash
Proceeds at substantially the same time in an amount at least equal to the fair
market value of the Equity Interests subject to such GP Equity Transfer, and in
the case of a GP Equity Transfer by the Borrower or any Guarantor in connection
with an IPO of the Equity Interests subject to such GP Equity Transfer, the
Borrower or such Guarantor receives Net Cash Proceeds of at least $50,000,000;
or

(b)                                 a GP Equity Transfer by a
MLP GP, provided that (a) the Permitted Transfer
Conditions have been satisfied with respect to such GP Equity Transfer and (b)
the Net Cash Proceeds received by such MLP GP (i) shall be at least equal to
the fair market value of the Equity Interests subject to such GP Equity
Transfer, and (ii) are used to pay a dividend to the holders of Equity
Interests of such MLP GP or to purchase, redeem, defease or otherwise acquire
or retire for value any Equity Interests in such MLP GP and, except for any
portion thereof used to effect a Permitted GP Rollover Investment, the Borrower
or a Guarantor shall receive at least a pro rata
portion of such dividend or at least a pro rata
portion of the payment for such purchase, redemption, defeasance, acquisition
or retirement.

“Permitted
GP Recourse Debt” means Obligations of a Permitted MLP GP with
respect to Indebtedness of a Permitted MLP that is a limited partnership
arising by operation of law due to such Permitted MLP GP’s position as a
general partner of such Permitted MLP (or corresponding Obligations of any
Permitted GP of a Permitted MLP GP with respect to Indebtedness of a Permitted
MLP that is a partnership arising by operation of law due to such 

 23
 

Permitted
GP’s position as a general partner of such Permitted MLP GP), provided, such Obligations or Indebtedness are non-recourse
to the Borrower or any of its Restricted Subsidiaries.

“Permitted
GP Maintenance Investment” means an Investment by the Borrower
or a Guarantor holding Equity Interests in a Permitted MLP GP (or in the GP of
such Permitted MLP GP) of a Permitted MLP that has effected an issuance of
Equity Interests, which issuance has resulted in the Permitted MLP GP’s Equity
Interest in the Permitted MLP falling below 2% (and in which all the proceeds
of such offering, if any, distributed to such Permitted MLP GP have been
applied as a Permitted GP Rollover Investment). 
The amount of such Investment by the Borrower or a Guarantor shall be
limited to the amount necessary to enable such Permitted MLP GP to make a
concurrent contribution to the capital of such Permitted MLP to the extent
necessary to maintain such Permitted MLP GP’s Equity Interest in the Permitted
MLP at 2%.

“Permitted
GP Rollover Investment” means an Investment by the Permitted MLP
GP in the Permitted MLP that has effected an issuance of Equity Interests, which
issuance has resulted in the Permitted MLP GP’s Equity Interest in the
Permitted MLP falling below 2%; provided that
(i) such Investment shall be funded by the portion of the Net Cash Proceeds of
such offering that is distributed to such Permitted MLP GP and (ii) the amount
of such Investment shall be limited to the amount necessary to enable the
Permitted GP to maintain its Equity Interest in the Permitted MLP at 2%.

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

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

“Permitted
Initial MLP Asset Transfer” means the initial MLP Asset Transfer
to a Permitted MLP of property or assets (including any Equity Interests)
together with all other such related transfers completed on or prior to
consummation of an IPO of Equity Interests of such MLP, provided,
(a) such initial MLP Asset Transfer or series of related MLP Asset Transfers
constitutes the first MLP Asset Transfers by any Loan Party after the Closing
Date and is effected substantially concurrently with, and in any event not
prior to, seven Business Days before, the consummation of an IPO of the Equity
Interests of such MLP, (b) the Permitted Transfer Conditions are satisfied with
respect to such MLP Asset Transfer; and (c) the aggregate fair market value
(and in the case of Oil and Gas Properties that constitute Proved Reserves, the
PV 10 Value) of the Oil and Gas Properties being transferred (or, if Equity
Interests of a Person are being transferred, the PV 10 Value of the Oil and Gas
Properties held by such Person) in such transfer or series of related transfers
does not exceed an amount equal to 20% of the aggregate 

 24
 

PV
10 Value of all of the Oil and Gas Properties of the Borrower and its
Restricted Subsidiaries, as based on the Reserve Report most recently delivered
pursuant to Section 6.11 or Section 7.2(c) immediately prior to such MLP
Asset Transfer.

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

“Permitted
MLP” means any MLP (a) formed by the Borrower or any
Guarantor for the purpose of being a publicly traded master limited partnership
or publicly traded master limited liability company and designated by the
Borrower, as provided below, as a Permitted MLP, (b) to which the Borrower
or a Guarantor shall have made, or shall have plans to make, the Permitted
Initial MLP Asset Transfer, either directly to such MLP or indirectly to a
Subsidiary of such MLP, and (c) being obligated on no Indebtedness for
which there is recourse of any type to the Borrower or any Restricted
Subsidiary or their respective assets, including any successor Person to such
MLP.

The Borrower may designate
any Person which is a Wholly Owned Subsidiary of the Borrower (including any
existing Subsidiary and any newly acquired or newly formed Subsidiary) to be a
Permitted MLP, provided that, at the time of such designation:

(i)                                     none of such Person or its
Subsidiaries owns any Equity Interests or Indebtedness of the Borrower or any
Subsidiary of the Borrower (other than any Subsidiary of the Subsidiary to be
so designated) or any Permitted MLP, Permitted GP or Partially Owned Operating
Company;

(ii)                                  none of such Person or its
Subsidiaries owns or holds any Lien on, any property of, the Borrower or any
Subsidiary of the Borrower (other than any Subsidiary of the Person to be so
designated);

(iii)                               such Person is an entity of
which shares of the Capital Stock entitled to cast at least a majority of the
votes that may be cast by all shares or equity interests having ordinary voting
power for the election of directors or other governing body are owned, directly
or indirectly, by the Borrower,

(iv)                              such designation complies
with the limitations on Investments set forth in the last paragraph of
Section 8.4,

(v)                                 such Person and its
Subsidiaries has not created, incurred, issued, assumed, guaranteed or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the holder of such Indebtedness has recourse to any of the
assets of the Borrower or any Restricted Subsidiary,

(vi)                              no Default or Event of
Default shall have occurred and be continuing immediately before or after such
designation, and

 25
 

(vii)                           immediately after giving
effect to such designation, the Borrower and the Restricted Subsidiaries shall
be in compliance, on a pro forma
basis, with the covenants set forth in Sections 8.4 and 8.9 (and, as a
condition precedent to the effectiveness of any such designation, the Borrower
shall deliver to the Administrative Agent a certificate setting forth in
reasonable detail the calculations demonstrating such compliance).

The Borrower may not
redesignate any Permitted MLP as a Restricted Subsidiary.

Any such designation by the
Borrower shall be notified by the Borrower to the Administrative Agent by
promptly filing with the Administrative Agent a copy of any applicable Board
Resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing provisions.

“Permitted
MLP Equity Transfer” means a MLP Equity Transfer with respect to
which the Permitted Transfer Conditions are satisfied.

“Permitted
MLP GP” means a MLP GP that is a Permitted GP.

“Permitted
Parent Note” means one or more promissory notes issued by the
Borrower or a Guarantor in favor of a Permitted MLP GP in connection with the
IPO of the Permitted MLP for which such Permitted MLP GP is the MLP GP, provided:

(a)                                the aggregate principal
amount of all such notes at any time outstanding does not exceed the least of
(i) $100 million, (ii) an amount equal to the minimum capitalization
reasonably necessary in connection with the transaction contemplated hereby and
(iii) the aggregate proceeds of the related MLP Recourse Debt distributed
to the Borrower,

(b)                               such notes are unsecured and
subordinated in all respects to the prior payment in full in cash of all First
Lien Obligations and all Obligations, including a prohibition against enforcing
any rights with respect to such notes prior to the Permitted Date (as defined
below),

(c)                                the terms of such notes do
not require or permit cash interest payments, scheduled repayment of principal,
mandatory prepayment or redemption, payment at the option of the holders of
such notes, in whole or in part, any sinking fund obligation or other cash
payments prior to the date that is at least 180 days after the later of
(i) the Maturity Date of any Loans and (ii) the date the Loans are no
longer outstanding (such date the “Permitted Date”),

(d)                                 the covenants, events of
default, Subsidiary guarantees and other terms of such notes (other than
interest rate and redemption premiums), taken as a whole, are not more
restrictive of the Borrower and the Restricted Subsidiaries than those in this
Agreement,

(e)                                the incurrence of such notes
and the application of the proceeds therefrom shall not result in a Default or
an Event of Default,

 26
 

(f)                                  such notes are payable only
in the event the holder of such notes (the Permitted MLP GP) is required to pay
any MLP Recourse Debt described in such note (or any refinancing thereof)
pursuant to its obligations thereon, and only to the extent of such payment
only once the Permitted Date has occurred, and

(g)                               such notes are not
convertible into, or putable or exchangeable for, any other security other than
a security that would satisfy the requirements of this definition of “Permitted
Parent Note”.

“Permitted
Senior Notes Prepayment” means any prepayment, repurchase,
defeasance or redemption of the Senior Notes made in accordance with the terms
of the Senior Notes Indenture effected with (a) the proceeds of the Permitted
Initial MLP Asset Transfer in accordance with Section 2.5, (b) the Net Cash
Proceeds of an “Equity Offering” (as defined in the Senior Notes Indenture),
(c) up to $35,000,000 in cash; provided such
cash does not constitute, directly or indirectly, proceeds of the borrowings
under any other Indebtedness (other than Permitted Senior Notes Refinancing
Indebtedness or First Lien Loans) and, after giving effect to such cash
payment, the Borrower has at least $20,000,000 in the aggregate of unused and
unavailable commitments with respect to First Lien Loans under the First Lien
Credit Agreement or cash on hand, (d) the proceeds of any New Term Loans or (e)
the proceeds of any Permitted Senior Notes Refinancing Indebtedness.

“Permitted
Senior Notes Refinancing Indebtedness” means any Indebtedness
issued in exchange for, or the net proceeds of which are used to extend,
refinance, renew, replace, defease or refund (collectively, to “Refinance”)
the Indebtedness under or with respect to the Senior Notes (or previous
refinancings thereof constituting Permitted Senior Notes Refinancing
Indebtedness); provided that (a) the principal amount
(or accreted value, if applicable) of such Permitted Senior Notes Refinancing
Indebtedness does not exceed the principal amount (or accreted value, if
applicable) of the Indebtedness so Refinanced (plus unpaid accrued interest and
premium thereon), (b) no Permitted Senior Notes Refinancing Indebtedness shall
have different obligors, or greater guarantees or security, than the
Indebtedness being Refinanced and (c) the incurrence of such Permitted Senior
Notes Refinancing Indebtedness is permitted under Section 8.5(a)(viii) hereof.

“Permitted
Sub Debt” means unsecured Indebtedness which is subordinated in
all respects to the prior payment in full in cash of all First Lien Obligations
and all Obligations, provided,
(a) the terms of which do not require or permit cash interest payments,
scheduled repayment of principal, mandatory prepayment, payment at the option
of the holders of such Indebtedness, any sinking fund obligation or other cash
payments prior to the date that is at least 180 days after the Maturity Date of
any Loans, (b) the covenants, events of default, Subsidiary guarantees and
other terms of which (other than interest rate and redemption premiums), taken
as a whole, are not more restrictive of the Borrower and the Restricted
Subsidiaries than those in this Agreement, (c) no Subsidiary is an obligor
thereon that is not a Loan Party, and (d) immediately prior to the
incurrence or issuance of which, no Default or Event of Default shall have
occurred and be continuing, nor would the incurrence or issuance of which and
the application of the proceeds therefrom result in any Default or an Event of
Default.

 27
 

“Permitted
Transfer Conditions” means, with respect to any MLP Asset
Transfer, any MLP Equity Transfer, any GP Equity Transfer, any Denbury Asset
Transfer or other Disposition:

(a)                                the Property subject to such
Disposition is Disposed of at the fair market value thereof at the time of such
Disposition and, with respect to any Property or Equity Interests of a Person
constituting a Disposition, directly or indirectly, of in excess of 5% of the
PV 10 Value of the Borrower’s Oil and Gas Properties (other than the Permitted
Initial MLP Asset Transfer at the time of such Disposition), the Borrower shall
have delivered to the Administrative Agent a written opinion from an
Independent Financial Advisor to the effect that such Disposition is fair, from
a financial standpoint, to the Borrower and its Restricted Subsidiaries;

(b)                               substantially concurrently
with such Disposition and as a result thereof, (i) the Borrower or applicable
Guarantor shall have received an amount of Net Cash Proceeds from such
Disposition (as a result of the receipt of cash proceeds as all or a portion of
the consideration for such Disposition) at least equal to the Minimum Cash
Consideration and (ii) if such Disposition is a MLP Asset Transfer, the balance
of the consideration received by the Borrower or any Guarantor consists solely
of Equity Interests in the applicable GP or MLP;

(c)                                the Net Cash Proceeds of
such Disposition are applied as specified in Section 2.5; and

(d)                               in the case of any
Disposition of Oil and Gas Properties (other than any Specified Asset Sale, but
including any Denbury Asset Transfer), not later than the date of consummation
thereof, a Responsible Officer of the Borrower shall have delivered an officer’s
certificate to the Administrative Agent describing: (i) the Property subject to
such Asset Sale, (ii) the purchase price and other material terms of the
agreement governing such Asset Sale, and (iii) the fair market value and the PV
10 Value of, and the Oil and Gas production attributable to, both (x) the Oil
and Gas Properties subject to such Disposition and (y) all Oil and Gas
Properties previously Disposed of (including in any Specified Asset Sales)
since the first day of the then current fiscal year of the Borrower.

“Permitted
Unsecured Debt” means unsecured Indebtedness of the Borrower or
any Guarantor for borrowed money consisting of senior or subordinated notes, provided, (a) the terms of which do not provide for any
scheduled repayment, mandatory redemption or sinking fund obligation prior to
the date that is 180 days after the Maturity Date of any Loans, (b) the
covenants, events of default, subsidiary guarantees and other terms of which
(other than interest rate and redemption premiums), taken as a whole, are not
more restrictive of the Borrower and the Restricted Subsidiaries than those in
Loan Documents, (c) no Subsidiary is an obligor thereon that is not a Loan
Party and (d) immediately prior to the incurrence or issuance of which no
Default or Event of Default has occurred and is continuing, nor would the
issuance or incurrence of which and the application of the proceeds therefrom
result in a Default or an Event of Default.

 28
 

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

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

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

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

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

“Pro
Forma Basis” means for any events as described in clauses (a)
and (b) below that occur subsequent to the commencement of a period for which
the financial effect of such events is being calculated, and giving effect to
the events for which such calculation is being made, such calculation as will
give pro forma effect to such events as if
such events occurred on the first day of the four consecutive fiscal quarter
period ended on or before the occurrence of such event (the “Reference Period”).

(a)                                  For
purposes of making any determination of Interest Coverage Ratio, all
Indebtedness (including Indebtedness incurred or assumed and for which the
financial effect is being calculated, whether incurred under this Agreement or
otherwise, but excluding normal fluctuations in revolving Indebtedness incurred
for working capital purposes, in each case, not to finance any acquisition)
incurred or permanently repaid during the Reference Period and the application
of the proceeds from any such Indebtedness, shall be deemed to have been
incurred, repaid or applied at the beginning of such period; and

(b)                                 For
purposes of making any determination of Proved PV Value pursuant to Section
2.12(a)(iii), pro forma effect shall be given
to any Dispositions and to any Acquisitions that occurred during the Reference
Period.

Pro forma calculations made pursuant to this
definition shall be determined in good faith by a Responsible Officer of the
Borrower and in accordance with the requirements with respect to pro forma financial statements set forth in Regulation S-X
promulgated under the Securities Act of 1933, as amended, or any regulation or
policy of the SEC related thereto.

“ Pro
Forma Balance Sheet” has the meaning specified in Section
6.14(b).

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

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

 29
 

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

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

“Proved
Developed Producing Reserves” means those Oil and Gas Properties
designated as proved developed producing (in accordance with the Definitions
for Oil and Gas Reserves approved by the Board of Directors of the Society of
Petroleum Engineers, Inc. from time to time) in the Borrower’s most recent
Reserve Report delivered pursuant to Section 6.11 or 7.2(c).

“Proved
Reserves” means those Oil and Gas Properties designated as “proved”
(in accordance with the Definitions for Oil and Gas Reserves approved by the
Board of Directors of the Society of Petroleum Engineers, Inc. from time to
time) in the Borrower’s most recent Reserve Report delivered pursuant to
Section 6.11 or 7.2(c).

“PV 10
Value” means, on any date, 100% of the present value of future
revenues less severance and ad valorem taxes, operating expenses and capital
expenditures of the Proved Reserves attributable to the Oil and Gas Properties,
as evaluated in the most recently delivered Reserve Report with respect to such
Oil and Gas Properties, discounted at a rate of 10% and utilizing the monthly
crude oil (WTI) and natural gas (Henry Hub) prices, in each case based upon (a)
the actual monthly price quoted on NYMEX on such date for the corresponding
month through the 60th month from such date and (b) the arithmetic monthly
average for months 49 through 60 for each month after the 60th month.  The amount of the PV 10 Value then in effect
shall be (i) calculated on a pro forma basis for dispositions and
acquisitions of Oil and Gas Properties consummated since the date of the most
recently delivered Reserve Report to the extent that a reserve report
reasonably acceptable to the Agent in respect of Proved Reserves attributable
to such disposition or acquisition is available and (ii) adjusted to give
effect to the Borrower’s and the Restricted Subsidiaries’ commodity hedges then
in effect.

“Qualified
Investment” means expenditures incurred (a) to drill for,
acquire or repair similar assets owned (or to be owned) by the Borrower or any
Guarantor of the same type as those subject to such Reinvestment Event
(including, in the case such proceeds used to fund drilling, similarity of the
category of well(s) proposed to be drilled to the well(s) to which the
Reinvestment Event related (i.e., exploration vs. development)) or equipment or Oil and
Gas Properties owned (or to be owned) by and useful in the business of Borrower
or any Guarantor or (b) solely with respect to a Recovery Event, to
reimburse the Borrower or such Guarantor for amounts paid from the operating
cash flow of such Person in advance of the receipt of Net Cash Proceeds with
respect to such Recovery Event in order to repair or replace the assets of any
Loan Party that have been damaged, destroyed or lost as a result of any
casualty event or condemnation; provided, that the Borrower or such Guarantor shall not be
reimbursed in an amount exceeding the Net Cash Proceeds actually received in
connection with such Recovery Event.

“Qualifying
Counterparty” means, with respect to a Qualifying Derivative
Contract, any Person that was a First Lien Secured Party or any agent or
Affiliate thereof at the time such Qualifying Derivative Contract was
originally entered into.

 30
 

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

“Qualified
VPP Agreement” means a volumetric production payment agreement
entered into with Denbury any of its subsidiaries in lieu of a cash payment
from Denbury in connection the Disposition to it of the Hasting Properties,
which agreement shall be on substantially the same terms and conditions as the
description thereof set forth in that certain option agreement with Denbury,
dated November 1, 2006, as in effect on the date hereof.

“Qualifying
Net Cash Proceeds” means (i) with respect to any Reinvestment
Event that is a Recovery Event, Extraordinary Distribution or any Specified
Asset Sale (other than a Denbury Asset Transfer), 100% of the Net Cash Proceeds
thereof, and (ii) with respect to any other Reinvestment Event (including a
Denbury Asset Transfer), 50% of the Net Cash Proceeds thereof.

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

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

“Recovery
Event” means any settlement of or payment in respect of any
Property of the Borrower or any Subsidiary arising from a casualty insurance
claim or any condemnation proceeding (or proceeding in lieu thereof) relating
to any Property of any Loan Party.

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

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

 31

“Reinvestment
Deferred Amount” means the aggregate Qualifying Net Cash
Proceeds received by a Loan Party in connection with a Reinvestment Event that
are duly specified in a Reinvestment Notice as not being required to be
initially applied to prepay the Loans pursuant to Section 2.5(a) as a
result of the delivery of such Reinvestment Notice.

“Reinvestment
Event” means any Specified Asset Sale, Denbury Asset Transfer,
Permitted GP Equity Transfer, Permitted MLP Equity Transfer, Recovery Event or
Extraordinary Distribution in respect of which Borrower has delivered a
Reinvestment Notice.

“Reinvestment
Notice” means a written notice executed by Borrower and
delivered to the Administrative Agent stating that no Default or Event of
Default has occurred and is continuing or would result therefrom and stating
that the Borrower (directly or indirectly through a Guarantor) intends and
expects to use all or a specified portion of the Qualifying Net Cash Proceeds
of a Reinvestment Event specified in such notice to make a Qualified
Investment.

“Reinvestment
Prepayment Amount” means, with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less the portion, if
any, thereof expended prior to the relevant Reinvestment Prepayment Date to
make a Qualified Investment.

“Reinvestment
Prepayment Date”  means,
with respect to any Reinvestment Event, the earlier of (a) the date
occurring 365 days after the occurrence of such Reinvestment Event or, provided
the Borrower or any Guarantor has entered into a definitive binding agreement
with respect to a Qualified Investment prior to such 365th day, such date as is
180 days after the date of such binding agreement and (b) the date on
which the Borrower shall have determined not to make a Qualified Investment
with all or any portion of the relevant Reinvestment Deferred Amount.

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

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

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

“Required
Lenders” means, at any time, subject to Section 11.1, the
Administrative Agent and the Lenders having an Aggregate Exposure equal to at
least 50% of the sum of the Aggregate Exposures of all Lenders.

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

“Reserve
Report” means (a) the Initial Reserve Report, (b) the
Acquisition Reserve Reports, if any, and (c) each subsequent report
delivered pursuant to Section 7.2, each of which, in the case of the
reports delivered under clauses (a), (b) or (c), shall be a report, in form,
scope and content acceptable to the Administrative Agent, covering Proved
Reserves attributable to the 

 32
 

Oil
and Gas Properties of the Borrower and the Guarantors and setting forth with
respect thereto, (i) the total quantity of Proved Reserves (separately
classified as to producing, shut in, behind pipe, and undeveloped),
(ii) the estimated future net revenues and cumulative estimated future net
revenues, (iii) the present discounted value of future net revenues and
(iv) such other information and data with respect to the Mortgaged Properties
as the Administrative Agent may reasonably request.

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

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

“Restricted
Subsidiaries” means, at any time, any direct or indirect
Subsidiary of the Borrower that is not then (a) an Unrestricted
Subsidiary; provided
that upon the occurrence of an Unrestricted Subsidiary ceasing to be an
Unrestricted Subsidiary, such Subsidiary shall be included in the definition of
“Restricted Subsidiary” or (b) a Permitted MLP, Permitted GP or a
Subsidiary of a Permitted MLP (other than a Partially Owned Operating Company
that is a Subsidiary, which shall continue to constitute a Restricted
Subsidiary).

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

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

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

“Security
Agreement” means the Security Agreement, dated as of March 30,
2006, as supplemented by joinders thereto dated as of March 31, 2006, of the
Guarantors (other than BMC and Whittier), substantially in the form of Exhibit
H executed by the Borrower and each Guarantor pledging to the Collateral
Trustee for benefit of the Secured Parties all of the Property of the Borrower
and each Guarantor, as security for the payment of the Sharing Obligations, as
the same may be amended, supplemented or otherwise modified from time to time
pursuant to the terms hereof (including, in the case of any Subsidiary required
to execute the Security Agreement pursuant to Section 7.12, by execution
and delivery of a joinder thereto in the form of Annex 2 thereto).

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

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

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

 33
 

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

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

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

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

“Series”
has the meaning specified in Section 2.12.

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

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

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

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

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

“Specified
Acquisitions” means (i) the acquisition of oil and gas
properties on April 25, 2007 by the Borrower from Pogo Producing Company for aggregate
consideration of approximately $48,000,000 (which acquisition was financed with
drawdowns of the First Lien Loans that will be repaid on the Closing Date with
the proceeds of the Loans) and (ii) the acquisition of oil and gas properties
by the Borrower from Berry Petroleum Company  for
an aggregate consideration of approximately $63,000,000.

“Specified
Asset Sale” means any Disposition of Oil and Gas Properties
(other than the Permitted Initial MLP Asset Transfer or any Denbury Asset
Transfer), the fair market value of which, together with the aggregate fair
market value of all Oil and Gas Properties that have been Disposed of during
the Borrower’s current fiscal year (other than as part of the Permitted Initial
MLP Asset Transfer or any Denbury Asset Transfer), does not exceed an amount
equal to 10% of

 34
 

the
PV 10 Value as of the effective date of the most recent Reserve Report
delivered pursuant to Section 6.11 or 7.2(c) at or prior to the time of
such Disposition.

“Specified
Subsidiary” means any Restricted Subsidiary of the Borrower, now
existing or created, acquired or coming into existence after the Closing Date,
that is, or pursuant to Section 7.12 is required to be, a Guarantor hereunder.

“Subsidiary”
of a Person means any corporation, association, partnership, joint venture or
other business entity of which more than 50% of the voting stock or other
equity interests (in the case of Persons other than corporations), is owned or
controlled directly or indirectly, at the relevant time, by the Person, or one
or more of the Subsidiaries of the Person, or a combination thereof.  Unless the context otherwise clearly
requires, references herein to a “Subsidiary” refer to a Subsidiary of the
Borrower, except that for purposes of Article VI only, the following shall
not be included as a “Subsidiary” of the
Borrower: (i) Ellwood (if and so long as Ellwood constitutes a crude oil common
carrier prohibited from guarantying an affiliate shipper’s debt), (ii) any
Permitted MLP or any of its Subsidiaries (other than a Partially Owned
Operating Company), and (iii) any Permitted GP.

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

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

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

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

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

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

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

 35
 

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

“Unrestricted
Subsidiary” means:

(a)                                  any Subsidiary of the
Borrower that at the time of determination is an Unrestricted Subsidiary (as
designated by the Borrower, as provided below); or

(b)                                 any Subsidiary of an
Unrestricted Subsidiary;

provided, in the case of clause (a) or (b), that no
Permitted MLP, Permitted GP or Subsidiary of a Permitted MLP or a Subsidiary of
a Permitted GP will be, or may be designated as, an “Unrestricted Subsidiary”
for purposes of this Agreement.

The Borrower may designate
any Subsidiary of the Borrower (including any existing Subsidiary and any newly
acquired or newly formed Subsidiary but excluding any of the entities referred
to in the proviso of the immediately following paragraph) to be an Unrestricted
Subsidiary provided that, at the time of such designation:

(i)                                     none of such Person or its
Subsidiaries owns any Equity Interests or Indebtedness of (A) the Borrower or
any Subsidiary of the Borrower (other than any Subsidiary of such Person), or
(B) any Permitted MLP, any Permitted GP or any Partially Owned Operating
Company;

(ii)                                  none of such Person or its
Subsidiaries owns or holds any Lien on any property of the Borrower or any
Subsidiary of the Borrower (other than any Subsidiary of the Subsidiary to be
so designated);

(iii)                               such Person must be an
entity of which shares of the Capital Stock entitled to cast at least a
majority of the votes that may be cast by all shares or equity interests having
ordinary voting power for the election of directors or other governing body are
owned, directly or indirectly, by the Borrower;

(iv)                              such designation complies
with the limitations on Investments set forth in the last paragraph of
Section 8.4;

(v)                                 such Person and its
Subsidiaries has not created, incurred, issued, assumed, guaranteed or
otherwise become directly or indirectly liable with respect to any Indebtedness
pursuant to which the holder of such Indebtedness has recourse to any of the
assets of the Borrower or any Restricted Subsidiary;

(vi)                              no Default or Event of
Default shall have occurred and be continuing immediately before or after such
designation;

(vii)                           immediately after giving
effect to such designation, the Borrower and the Restricted Subsidiaries shall
be in compliance, on a pro forma basis, with the covenants set forth in
Sections 8.4 and 8.9 (and, as a condition precedent to the effectiveness of any
such designation, the Borrower shall deliver to the Administrative Agent a
certificate setting forth in reasonable detail the calculations demonstrating
such compliance);

 36
 

(viii)                        such Person is not a “Restricted
Subsidiary” for the purpose of the Senior Notes; and

(ix)                                such Person is not a primary
operating Subsidiary of the Borrower.

The Borrower may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (i) the permanent “Investment”
deemed to continue pursuant to clause (a) of the proviso to the definition of “Investments”
is permitted pursuant to Section 8.4(m) at such time, (ii), immediately after
giving effect to such designation, no Default shall have occurred and be
continuing and (iii) either: (A) the Borrower could incur at least $1.00 of
additional Indebtedness pursuant to the Section 8.7(a) or (B) the Interest
Coverage Ratio for the Borrower’s most recently ended four full fiscal quarters
for which internal financial statements are available immediately preceding
such date of determination would be greater than such ratio determined on a Pro Forma Basis. The designation of
any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the
incurrence at the time of designation of any Indebtedness or Liens of such
Subsidiary existing at such time.

Any such designation by the
Borrower of any Person as an Unrestricted Subsidiary or a Restricted Subsidiary
hereunder shall be notified by the Borrower to the Administrative Agent by
promptly filing with the Administrative Agent a copy of any applicable Board
Resolution giving effect to such designation and an Officers’ Certificate
certifying that such designation complied with the foregoing provisions.

“VPP
Net Revenue” means the aggregate revenue produced in any fiscal
year from sales by or on behalf of Borrower or any Guarantor of the Oil and Gas
delivered to Loan Party pursuant to a Qualified VPP Agreement, net of customary
fees and expenses actually paid in connection with the sale of such Oil and
Gas.

“VPP Net
Revenue Application Date” means the date on which the Borrower
delivers year-end financial information pursuant to Section 7.1(a) and in any
event not later than March 31st of each year
(or if such day is not a Business Day, the first Business Day immediately
following such date).

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

“Wholly
Owned Subsidiary” of a Person means any corporation,
association, partnership, joint venture or other business entity of which all
(except for directors’ qualifying shares required by law) of the voting stock
or other equity interests (in the case of Persons other than corporations) is
owned or controlled directly or indirectly, at the relevant time, by the
Person, or one or more of the Wholly Owned Subsidiaries of the Person, or a
combination thereof.  Unless the context
otherwise clearly requires, references herein to a “Wholly Owned Subsidiary”
refer to a Wholly Owned Subsidiary of the Borrower.

“Wholly
Owned Subsidiary Guarantor” means any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of the Borrower.

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

 37
 

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

1.3                                 Accounting
Principles.

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

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

 38
 

ARTICLE II

THE CREDIT

2.1                                 Amounts and
Terms of the Loans.

(a)                                  Subject
to the terms and conditions set forth in this Agreement, each Lender severally
agrees to make term loans (the “Original
Loans”; and together with any New Term Loans, if any, “Loans”) to the Borrower on the Closing Date in an amount
equal to the lesser of (i) such Lender’s Commitment or (ii) such Lender’s Pro
Rata Share of an amount equal to $500,000,000. 
Principal amounts paid on account of the Loans may not be reborrowed.

(b)                                 Upon
the making of the Original Loans on the Closing Date or New Term Loans on any
Increased Amount Date, the Commitment of each Lender with respect thereto shall
permanently reduce to zero.

(c)                                  Each
Lender with a Commitment to make Original Loans or New Term Loans shall make
the amount of its Loans available to the Administrative Agent for the account
of the Borrower at the Agent’s Payment Office by 4:00 p.m. (New York, New York
time) on the Closing Date or Increased Amount Date, respectively, in funds
immediately available to the Administrative Agent.  The proceeds of all Loans shall be made
available to the Borrower by the Administrative Agent by wire or intrabank
transfer of funds for the uses set forth in Section 7.13.

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

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

2.3                                 Conversion and
Continuation Elections.

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

(b)                                 (i) The
Borrower shall deliver a Notice of Conversion/Continuation to be received by
the Administrative Agent not later than 12:00 p.m. (New York, New York time) at
least three Business Days in advance of the Conversion/Continuation Date, if
the

 39
 

Loans are to
be converted into or continued as LIBO Rate Loans; and (ii) on the
Conversion/Continuation Date, if the Loans are to be converted into Base Rate
Loans, specifying: (A) the proposed Conversion/Continuation Date;
(B)  the aggregate amount of Loans to be converted or continued;
(C) the Interest Rate Type of Loans resulting from the proposed conversion
or continuation; and (D) other than in the case of conversions into Base
Rate Loans, the duration of the requested Interest Period.

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

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

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

2.4                                 Optional
Prepayments.

(a)                                  Subject
to Section 3.4, the Borrower may, at any time or from time to time while
there are no amounts outstanding under the First Lien Credit Agreement and all
letters of credit under the First Lien Credit Agreement have been cash
collateralized, subject to the concurrent payment of the Premium:

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

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

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

The
Administrative Agent will promptly notify each Lender of its receipt of any
such notice, and of such Lender’s Pro Rata Share of such prepayment.  The payment amount specified in such notice
shall be due and payable on the date specified therein, 

 40
 

together with accrued interest to each such date on the amount prepaid,
the applicable Premium, and any amounts required pursuant to Section 3.4.

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

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

  	
   

  	
  2.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  1.0

  	
  %

  
	
   

  	
   

  	
   

  	
   

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

  	
   

  	
  0.0

  	
  %

  

 

2.5                                 Mandatory
Prepayments.

(a)                                  Unless
the Required Lenders and the Borrower shall otherwise agree, if (i) the
Borrower or any Guarantor or other Restricted Subsidiary shall receive Net Cash
Proceeds from any incurrence of Indebtedness (other than Permitted
Indebtedness), Asset Sale, Recovery Event or Extraordinary Distribution or (ii)
any MLP GP shall receive Net Cash Proceeds (net, in the case of clause (ii), of
any portion thereof that has been distributed to the Permitted GP or Loan Party
that is the sole general partner thereof and that has been applied as a
Permitted GP Rollover Investment contemporaneously with (and in no event later
than three Business Days after) the receipt of such dividend or distribution)
from any GP Equity Transfer, then, unless a Reinvestment Notice shall have been
delivered by the Borrower to the Administrative Agent in respect hereof, the
Borrower shall apply an amount equal to such Net Cash Proceeds as set forth in
Section 2.5(d) no later than three Business Days after the date of such
receipt.

(b)                                 Unless
the Required Lenders and the Borrower shall otherwise agree, if the Borrower
has previously delivered a Reinvestment Notice, the Borrower shall apply an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event as set forth in Section 2.5(d) on the applicable
Reinvestment Prepayment Date.

(c)                                  Unless
the Required Lenders and the Borrower shall otherwise agree, on the relevant
VPP Net Revenue Application Date, the Borrower shall apply 50% of the VPP Net
Revenue for such period as set forth in Section 2.5(d); provided,
that no such prepayment shall be required until the amount equal to VPP Net
Revenue otherwise subject to application under this Section 2.5(c) for any fiscal
year exceeds $2,500,000 (provided that
for any fiscal year in which no VPP Net Revenues are applied, the amount of
such revenue for such fiscal year shall be applied to the VPP Net Revenue for
the next fiscal year).

(d)                                 With
respect to any amounts subject to Section 2.5(a), (b) or (c), the Borrower
shall:

 41
 

(i)                                     first, apply (or offer to apply), to the extent required by
the provisions set forth in the First Lien Credit Agreement (as in effect on
the Closing Date hereof) such amount to prepay obligations thereunder;

(ii)                                  second, apply such portion of such amount to the repayment
of the Loans under the First Lien Credit Agreement as shall be necessary to
cause the percentage obtained by dividing (A) the aggregate outstanding
principal amount of all First Lien Loans, after giving effect to any
prepayments or repayments occurring on such date plus the principal amount of
contingent and non-contingent obligations in respect of letters of credit or
other forms of credit provided under the First Lien Loan Agreement, by (B) the
sum of the amount in clause (A) plus the aggregate amount of credit with
respect to First Lien Loans then available under the First Lien Credit
Agreement, to be no greater than 75%; and

(iii)                               third, to the extent otherwise permitted by the provisions
of Section 8.9 of the First Lien Credit Agreement (as in effect on the Closing
Date) prepay (subject to Section 2.10(e)) the Loans in an amount equal to such
amount, provided, that until such time as all
Senior Notes have been defeased or prepaid, redeemed or repurchased in full,
the Net Cash Proceeds resulting from the Permitted Initial MLP Asset Transfer
may be applied to the prepayment, redemption, repurchase or defeasance of
Senior Notes.

(e)                                  The
Borrower shall deliver to the Administrative Agent with respect to each
required prepayment under this Section the certificate and notice required by
Section 2.10(f).

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

2.6                                 Repayment of
Principal.

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

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

(c)                                  The
Administrative Agent, on behalf of the Borrower, shall maintain the Register,
and a subaccount therein for each Lender, in which shall be recorded
(i) the amount and Series of each Loan made hereunder and, if applicable,
the Interest Period

 42
 

applicable
thereto, (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) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender’s share thereof.  The Register shall be available for
inspection by each Loan Party, the Administrative Agent and any Lender at any
reasonable time and from time to time upon reasonable prior notice.

(d)                                 The
entries made in the Register and the accounts of each Lender maintained
pursuant to Section 2.6(b) shall, to the extent permitted by applicable
law, be prima facie evidence of the existence and amounts of the obligations of
the Borrower therein recorded; provided, that the failure of any Lender or the
Administrative Agent to maintain the Register or any such account, or any error
therein, shall not in any manner affect the obligation of the Borrower to repay
(with applicable interest) the Loans made to the Borrower by such Lender in
accordance with the terms of this Agreement or the Borrower’s entitlement to
credit for any payment of principal or interest on the Loans.

2.7                                 Interest.

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

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

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

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

2.9                                 Computation of
Fees and Interest.

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

 43
 

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

2.10                           Payments by the
Borrower; Loans Pro Rata.

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

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

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

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

(e)                                  Notwithstanding
anything to the contrary in Sections 2.5(a), (b) or (c) or elsewhere in
this Section 2.10, with respect to the amount of any mandatory prepayment
described in Sections 2.5(a), (b) or (c) that is allocated to the Loans (such
amount, the 

 44
 

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

(f)                                    With
respect to each prepayment required under Sections 2.5(a),(b) or (c), the
Borrower shall deliver to the Administrative Agent (i) no later than the time
of such prepayment, a certificate signed by a Responsible Officer setting forth
in reasonable detail the calculation of the applicable Mandatory Prepayment
Amount and (ii) to the extent practicable, at least 15 Business Days’
prior written notice of such prepayment. 
Each notice of prepayment shall specify the prepayment date, the type of
each Loan being prepaid (i.e.,
specifying Base Rate Loans or LIBO Rate Loans) and the principal amount of each
Loan (or portion thereof) to be prepaid; provided, that, if at the time of
any prepayment pursuant to Sections 2.5(a), (b) or (c), there shall be Loans of
different types or LIBO Rate Loans with different Interest Periods, and if some
but not all Lenders shall have accepted such mandatory prepayment, then the
aggregate amount of such mandatory prepayment shall be allocated ratably to
each outstanding Loan of the accepting Lenders.

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

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

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

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

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

 45
 

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

2.11                           Sharing of
Payments, Etc.  If any Lender
shall obtain on account of the Obligations held by it any payment (whether
voluntary, involuntary, through the exercise of any right of set off, or
otherwise) or receive any collateral in respect thereof in excess of the amount
such Lender was entitled to receive pursuant to the terms hereof (after giving
effect to Section 2.10(e) hereof), such Lender shall immediately
(a) notify the Administrative Agent of such fact, and (b) purchase
from the other Lenders such participations in the Loans made by them as shall
be necessary to cause such purchasing Lender to share the excess payment
according to the terms hereof; provided, that if all or any portion of such excess payment
is thereafter recovered from the purchasing Lender, such purchase shall to that
extent be rescinded and each other Lender shall repay to the purchasing Lender
the purchase price paid therefor, together with an amount equal to such paying
Lender’s ratable share (according to the proportion of (i) the amount of
such paying Lender’s required repayment to (ii) the total amount so
recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so
recovered.  The Borrower agrees that any
Lender so purchasing a participation from another Lender may, to the fullest
extent permitted by law, exercise all its rights of payment (including the
right of set off, but subject to Section 11.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation. 
The Administrative Agent will keep records (which shall be conclusive
and binding in the absence of manifest error) of participations purchased under
this Section 2.11 and will in each case notify the Lenders following any
such purchases or repayments.

2.12                           Incremental
Facilities

(a)                                  The
Borrower may by written notice to the Administrative Agent elect to request the
establishment of one or more series of new term loan commitments (the “New Term Loan Commitments”),
in an aggregate amount not in excess of $150,000,000. Each such notice shall
specify the date (each, an “Increased
Amount Date”) on which the Borrower proposes that the New Term
Loan Commitments shall be effective, which shall be a date not less than 10
Business Days after the date on which such notice is delivered to the
Administrative Agent and the identity of each Lender or Affiliate or Related
Fund of an Lender or other Person that is consented to by the Administrative
Agent (each, a “New Term
Loan Lender”) to whom the Borrower proposes any portion of such
New Term Loan Commitments be allocated and the amounts of such allocations;
provided that any Lender approached to provide all or a portion of the New Term
Loan Commitments may elect or decline, in its sole discretion, to provide a New
Term Loan Commitment. Such New Term Loan Commitments shall become effective as
of, and the New Term Loans funded on, such Increased Amount Date; provided:

 46

(i)                                     no
Default or Event of Default shall have occurred and be continuing on such
Increased Amount Date before or would result from the effectiveness or funding
of such New Term Loan Commitments;

(ii)                                  the
making of any Series of New Term Loans shall be conditioned on satisfaction of
each of the conditions set forth in Section 5.1 (with the exception of Section
5.1(b) (with any reference thereon to “Closing Date” being deemed to refer
instead to the Increased Amount Date)); provided that,
with respect to any financial statements required to be delivered thereunder,
such financial statements shall be of the most recent Fiscal Quarter ended
prior to the Increased Amount Date for such New Term Loan;

(iii)                               at
the time such New Term Loan is made, the Borrower’s ratio of PV 10 Value to
Consolidated Total Debt shall be at least 2.0 to 1.0, determined on a Pro Forma
Basis;

(iv)                              at
the time such New Term Loan is made, the Interest Coverage Ratio for the four
fiscal quarters for which financial statements have been delivered pursuant to
Section 7.1 would have been at least 2.5 to 1.0, determined on a Pro Forma
Basis;

(v)                                 the
New Term Loan Commitments shall be established pursuant to one or more
agreements in form and substance satisfactory to the Administrative Agent (each
such agreement, a “Joinder
Agreement”) and executed and delivered by the Borrower and the
Administrative Agent, each of which shall be recorded in the Register and shall
be subject to the requirements set forth in Section 2.6(c) and (d); and

(vi)                              the
Borrower shall deliver or cause to be delivered any legal opinions or other
documents reasonably requested by the Administrative Agent in connection with
any such transaction.

Any
New Term Loans made pursuant to a New Term Loan Commitment on an Increased Amount
Date shall be designated a separate series (any such series of New Term Loans,
together with the Original Loans, each, a “Series”) of
Loans for all purposes of this Agreement. 
All Loans (including any Original Loans and any New Term Loans) shall
rank pari passu in right of payment and as to benefits of
Collateral.

(b)                                 On
any Increased Amount Date on which any New Term Loan Commitments of any Series
are effective, subject to the satisfaction of the foregoing terms and
conditions, (i) each New Term Loan Lender of any Series shall make a Loan to
the Borrower (a “New Term
Loan”) in an amount equal to its New Term Loan Commitment of
such Series, and (ii) each New Term Loan Lender of any Series shall become a
Lender hereunder with respect to the New Term Loan Commitment of such Series
and the New Term Loans of such Series made pursuant thereto. The Administrative
Agent shall notify Lenders promptly upon receipt of the Borrower’s notice of
each Increased Amount Date and in respect thereof the Series of New Term Loan
Commitments and the New Term Loan Lenders of such Series. The terms and
provisions 

 47
 

of the New
Term Loans and New Term Loan Commitments of any Series shall be, except as
otherwise set forth herein or in the Joinder Agreement, identical to the Loans.
In any event (A) the weighted average life to maturity of all New Term Loans of
any Series shall be no shorter than the weighted average life to maturity of
the Loans, (B) the applicable New Term Loan Maturity Date of each Series shall
be no earlier than the Maturity Date of the Original Loans, and (C) the rate of
interest applicable to the New Term Loans of each Series shall be determined by
the Borrower and the applicable new Lenders and shall be set forth in each
applicable Joinder Agreement; provided, however
that the interest rate applicable to the New Term Loans shall not be greater
than the highest interest rate that may, under any circumstances, be payable
with respect to Loans plus 0.25% per annum unless the interest rate with
respect to the Loans is increased so as to equal the interest rate applicable
to the New Term Loans. Each Joinder Agreement may, without the consent of any
other Lenders (other than the new Lenders providing a New Term Loan Commitment
pursuant thereto), effect such amendments to this Agreement and the other Loan
Documents as may be necessary or appropriate, in the opinion of the
Administrative Agent, to establish, or to effect the relevant increase in, the
New Term Loan Commitments contemplated by the provisions of this Section 2.12.

ARTICLE III

TAXES, YIELD
PROTECTION AND ILLEGALITY

3.1                                 Taxes.

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

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

(c)                                  If
the Borrower shall be required by law to deduct or withhold any Taxes or Other
Taxes from or in respect of any sum payable hereunder to any Lender or the
Administrative Agent, then: (i) the sum payable shall be increased as
necessary so that after making all required deductions and withholdings
(including deductions and withholdings applicable to additional sums payable
under this Section 3.1), such Lender or the Administrative Agent, as the
case may be, receives an amount equal to the sum it would have received had no
such deductions or withholdings been made; (ii) the Borrower shall make
such deductions and withholdings; (iii) the Borrower shall pay the

 48
 

full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and (iv) the Borrower shall also pay to
each affected Lender or the Administrative Agent for the account of such
Lender, at the time interest is paid, all additional amounts which such Lender
specifies as necessary to preserve the after-tax yield such Lender would have
received if such Taxes or Other Taxes had not been imposed.

(d)                                 Within
30 days after the date of any payment by the Borrower of Taxes or Other Taxes
under Section 3.1(c)
above, the Borrower shall furnish the Administrative Agent the original or a
certified copy of a receipt evidencing payment thereof, or other evidence of
payment satisfactory to the Administrative Agent.  If the Borrower fails to pay any Taxes or Other
Taxes when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Arranger, the Agents and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Arranger, any Agent or any Lender as a result of any such failure.  The agreements in this Section shall survive
the termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.

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

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

3.2                                 Illegality.

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

(b)                                 If
a Lender determines that it is unlawful to maintain any LIBO Rate Loan, the
Borrower shall, upon its receipt of notice of such fact and demand from such
Lender (with a copy to the Administrative Agent), prepay in full such LIBO Rate
Loans of that Lender then outstanding, together with interest accrued thereon
and amounts required under Section 3.4, either on the last day of the
Interest Period thereof, if the

 49
 

Lender may
lawfully continue to maintain such LIBO Rate Loans to such day, or immediately,
if the Lender may not lawfully continue to maintain such LIBO Rate Loan.  If the Borrower is required to so prepay any
LIBO Rate Loan, then concurrently with such prepayment, the Borrower shall
borrow from the affected Lender, in the amount of such repayment, a Base Rate
Loan.

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

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

3.3                                 Increased Costs
and Reduction of Return.

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

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

3.4                                 Funding Losses.  The Borrower shall reimburse each Lender and
hold each Lender harmless from any loss or expense which the Lender may sustain
or incur as a 

 50
 

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

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

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

3.7                                 Substitution of
Lenders.  Upon the receipt by the
Borrower from any Lender of a claim for compensation under this
‎Article III and, as a result, the Borrower elects by written notice
to the Administrative Agent to replace such dissenting Lender pursuant to this
Section 3.7 (such Lender, an “Affected Lender”),
the Borrower may:  (a) obtain a
replacement bank or financial institution satisfactory to the Administrative
Agent to acquire and assume all or a ratable part of all of such Affected
Lender’s Loans (a “Replacement Lender”); or
(b) request one more of the other Lenders to acquire and assume all or
part of such Affected Lender’s Loans but 

 51
 

none of the Lenders shall
have any obligation to do so.  Any such
designation of a Replacement Lender under clause (a) shall be subject to
the prior written consent of the Administrative Agent, which consent shall not
be unreasonably withheld.

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

ARTICLE IV

SECURITY

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

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

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

 52
 

protecting any Liens or
other rights in Collateral securing any Sharing Obligations, for the benefit of
the Secured Parties.

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

4.5                                 Guaranty.

(a)                                  Each
Guarantor has executed and delivered to the Administrative Agent, and each
Specified Subsidiary shall, promptly upon request by the Administrative Agent,
execute and deliver to the Administrative Agent, a Guaranty (or a joinder
thereto).  The Borrower will cause each
such Specified Subsidiary to deliver to the Administrative Agent,
simultaneously with its delivery of such a Guaranty, written evidence
satisfactory to the Administrative Agent and its counsel that such Specified
Subsidiary has taken all corporate, limited liability company or partnership
action necessary to duly approve and authorize its execution, delivery and
performance of such Guaranty and any Security Documents and other documents
which it is required to execute.

(b)                                 To
induce the Lenders and the Administrative Agent to enter into this Agreement,
the Borrower and each Guarantor represents and warrants to each such
Person as of the Closing Date and after giving effect to the making of the
Loans on the Closing Date:

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

 53
 

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

(iii)                               Neither
the Borrower nor any Guarantor is “insolvent” (that is, the sum of such Person’s
absolute and contingent liabilities, including the Obligations, does not exceed
the fair market value of such Person’s assets, including any rights of
contribution, reimbursement or indemnity). 
Each of the Borrower and each Guarantor has capital which is adequate
for the businesses in which such Person is engaged and intends to be engaged.  None of the Borrower nor any Guarantor has
incurred (whether hereby or otherwise), nor does the Borrower or Guarantor
intend to incur or believe that it will incur, liabilities which will be beyond
its ability to pay as such liabilities mature.

4.6                                 Production
Proceeds. 
Notwithstanding that, by the terms of the various Security Documents,
the Borrower and the Specified Subsidiaries are and will be assigning to the
Collateral Trustee all of the Net Proceeds of Production accruing to the
Mortgaged Properties covered thereby, so long as no Event of Default has
occurred and is continuing, pursuant to Section 7.03 of the Collateral
Trust Agreement, the Collateral Trustee, on behalf of the Secured Parties, has
granted each of the Borrower and the Specified Subsidiaries a revocable license
to continue to receive from the purchasers of production all such Net Proceeds
of Production, subject, however, to the Liens created under the Security
Documents, which Liens are hereby affirmed and ratified.  During the continuance of an Event of Default
described under Sections 9.1(g) or 9.1(h), pursuant to Section 7.03
of the Collateral Trust Agreement, this license shall be automatically revoked,
and during the continuance of any other Event of Default, this license shall be
revocable by the Collateral Trustee, subject to Section 3.04(b) of the
Collateral Trust Agreement, upon the written direction of the Administrative
Agent in the sole discretion of the Administrative Agent, by notice to the
Borrower, and the Collateral Trustee may exercise all rights and remedies
granted under the Security Documents, including the right to obtain possession
of all Net Proceeds of Production then held by the Borrower and its Specified
Subsidiaries or to receive directly from the purchasers of production all other
Net Proceeds of Production.  In no case
shall any failure, whether purposeful or inadvertent, by the Collateral Trustee
to collect directly any such Net Proceeds of Production constitute in any way a
waiver, remission or release of any of its rights under the Security Documents,
nor shall any release of any Net Proceeds of Production by the Collateral
Trustee to the Borrower and the Specified Subsidiaries constitute a waiver,
remission, or release of any other Net Proceeds of Production or of any rights
of the Collateral Trustee to collect other Net Proceeds of Production
thereafter.

 54
 

ARTICLE V

CONDITIONS
PRECEDENT

5.1                                 Conditions of
the Closing Date.  The
agreement of each Lender to the making of the Loans to be made by it hereunder
is subject to the satisfaction, prior to or concurrently with the making of
such extension of credit on the Closing Date, of the following conditions
precedent:

(a)                                  Credit Agreement and Related Documents.  The Administrative Agent shall have received,
in each case executed and delivered by a Responsible Officer of each of the
applicable Loan Parties, this Agreement, the Notes (if any) and the Mortgage
Amendments;

(b)                                 First Lien Credit Agreement Amendment.  The Administrative Agent shall have received
a true, correct and complete copy, certified as to such by a Responsible
Officer of the Borrower of (i) an amendment to the First Lien Credit Agreement
and (ii) the Intercreditor Agreement, each of which shall have been duly
executed and delivered by each of the parties thereto and shall be in form and
substance acceptable to the Administrative Agent;

(c)                                  Resolutions; Incumbency; Organization
Documents.  The Administrative
Agent shall have received (i) a true, correct and complete copy, certified
as to such by a Responsible Officer of the applicable Loan Party, of
resolutions of the board of directors of the Borrower and members or the board
of directors of each Guarantor or its general partner, as applicable,
authorizing the transactions contemplated hereby, certified as of the Closing
Date by the Secretary or an Assistant Secretary of such Person;
(ii) certificates of the secretary of the Borrower and the secretary of
each Guarantor certifying the names and true signatures of the officers of such
Person authorized to execute, deliver and perform, as applicable, this
Agreement, the Security Documents, the Guaranty, and all other Loan Documents
to be delivered by it hereunder; and (iii) the Organization Documents of
the Borrower and of each Guarantor as in effect on the Closing Date, certified
by the secretary or assistant secretary of the such Person as of the Closing
Date;

(d)                                 Good Standing.  The Administrative Agent shall have received
a good standing certificate for the Borrower and each Guarantor from its state
of incorporation or formation, and evidencing its qualification to do business
in (i) California for the Borrower and each Guarantor (other than TexCal
Energy South Texas L.P. and TexCal Energy (LP) LLC), (ii) Texas for the
Borrower, and (iii) in each other jurisdiction where its ownership, lease
or operation of properties or the conduct of its business requires such
qualification, in each case as of a recent date;

(e)                                  Payment of Fees.  The Agents and the Lenders shall have
received all fees required to be paid, and all expenses for which invoices have
been presented (including reasonable fees, disbursements and other charges of
counsel to the Agents), on or before 

 55
 

the Closing Date.  All such
amounts will be paid with proceeds of Loans made on the Closing Date and will
be reflected in the funding instructions given by the Borrower to the
Administrative Agent on or before the Closing Date.

(f)                                    Certificate.  The Administrative Agent shall have received
a certificate signed by a Responsible Officer of each Loan Party, dated as of
the Closing Date, stating that (i) the representations and warranties
contained herein are true and correct on and as of the Closing Date, as though
made on and as of such date; (ii) no litigation is pending or threatened
against the Borrower or any Subsidiary in which there is a reasonable
probability of an adverse decision which would result in a Material Adverse
Effect; and (iii) there has occurred no event or circumstance that has
resulted or would reasonably be expected to result in a Material Adverse Effect
since December 31, 2006;

(g)                                 Title.  The Administrative Agent shall have received
evidence that the Borrower and its Subsidiaries have, and upon the consummation
of any Specified Acquisition will have, good and marketable title on at least
85% of the PV 10 Value of the Loan Parties’ Oil and Gas Properties subject to
no other Liens, other than Permitted Liens, evidenced by title information
satisfactory to the Administrative Agent and the Lenders;

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

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

(j)                                     Other Documents.  The Administrative Agent shall have received
such other approvals, opinions, documents or materials as the Administrative
Agent or any Lender may request, including those in connection with the
Specified Acquisitions;

(k)                                  Opinions of Counsel.  The Administrative Agent shall have received
the executed legal opinion of (i)  Bracewell & Giuliani LLP,
(ii) Davis Graham & Stubbs LLP and (iii) Downey Brand LLP, in each
case as the Administrative Agent may require in form and substance satisfactory
to the Administrative Agent.

(l)                                     Initial Reserve Report and
Financial Statements.  The
Administrative Agent shall have received the Initial Reserve Report, the
Audited Financial Statements and the Pro Forma Balance Sheet, each in form and
substance satisfactory to the Administrative Agent;

 56
 

(m)                               Lien Searches.  The Administrative Agent shall have received
the results of a recent lien search in each of the jurisdictions in which UCC
financing statements or other filings or recordations should be made to
evidence or perfect security interests in any assets of the Borrower or any
Guarantor, and such search shall reveal no Liens on any of the Property of the
Borrower or any Guarantor, except for Permitted Liens;

(n)                                 MMS Operational Matters.  The Administrative Agent shall have received
evidence that the Borrower is qualified by the Minerals Management Service of the
United States Department of Interior to operate its Hydrocarbon Interests
comprised of leases covering submerged lands on the federal Outer Continental
Shelf;

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

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

(q)                                 Solvency.  A certificate from a Responsible Officer of
the Borrower certifying that, on a consolidated basis, as of the Closing Date,
and after giving effect to the transactions contemplated hereby, including the
consummation of the Specified Acquisitions, the Borrower and its Subsidiaries
are and will be Solvent;

(r)                                    Pledged Stock; Stock
Powers; Acknowledgment and Consent; Pledged Notes.  The First Lien Credit Agent, on behalf of
itself, for the benefit of the First Lien Secured Parties, and as agent and
bailee for the Collateral Trustee, for the benefit of the Secured Parties,
shall have received (i) the certificates representing the shares of
Capital Stock of the Borrower’s Subsidiaries pledged pursuant to the Security
Agreement, together with an undated stock power for each such certificate
executed in blank by a duly authorized officer of the pledgor thereof, and
(ii) each promissory note pledged by the Borrower and the Guarantors
pursuant to the Security Agreement endorsed (without recourse) in blank (or
accompanied by an executed transfer form in blank satisfactory to the First
Lien Credit Agent) by the pledgor thereof;

 57
 

(s)                                  Notice of Borrowing.  The Administrative Agent shall have received
a Notice of Borrowing with respect to the Credit Extensions hereunder
contemplated by Section 2.1;

(t)                                    No Existing Default.  No Default or Event of Default shall exist
under the Existing Term Loan Agreement;

(u)                                 No Event or Condition of
Material Adverse Effect.  No
event or condition having a Material Adverse Effect shall have occurred since
December 31, 2006; and

(v)                                 Mortgaged Properties.  The Administrative Agent shall be satisfied
that the Loan Parties have granted to the Collateral Trustee, for the benefit
of the Secured Parties, at such time, fully perfected Liens on Oil and Gas
Properties that are Mortgaged Properties, subject only to Permitted Liens,
sufficient to cause the Mortgaged Properties to include 85% of the PV 10 Value
of the Loan Parties’ Oil and Gas Properties.

5.2                                 Conditions
Deemed Fulfilled.  The Loan
Parties shall be deemed to have made a representation and warranty as of the
Closing Date that the conditions specified in Section 5.1 have been fulfilled
(provided that the Loan Parties shall be entitled to assume, as to any
condition which indicates it must be completed on terms satisfactory to the
Administrative Agent (or similar terms), that such condition has been fulfilled
upon the Additional Loans being made available to the Borrower as contemplated
by Section 2.1(c)).  Additionally, each
notice pursuant to Section 2.12 submitted by the borrower hereunder shall
constitute a representation and warranty by the Borrower, as of the date of
each such notice and as of the Increased Amount Date that the conditions in
Section 5.1 will have been satisfied as of the Interest Amount Date (with any
reference to “Closing Date” being deemed to refer instead to the Increased
Amount Date).

ARTICLE VI

REPRESENTATIONS
AND WARRANTIES

To induce the Lenders and
the Administrative Agent to enter into this Agreement, the Borrower and each
Guarantor represents and warrants to each such Person, on and as of the date
hereof and the Closing Date:

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

 58
 

6.2                                 Authorization;
No Contravention.  The
execution, delivery and performance by the Loan Parties of the Loan Documents
to which they are a party and the borrowing of Loans hereunder (a) have
been duly authorized by all requisite corporate and, if required, member action
and (b) will not (i) violate in any material respect (A) any
provision of any material law, statute, rule or regulation, or of the
certificate or articles of incorporation or other constitutive documents or
by-laws of the Borrower or any Subsidiary, (B)  any material order of any
Governmental Authority or (C) any provision of any material indenture,
agreement or other instrument to which the Borrower or any Subsidiary is a
party or by which any of them or any of their property is or may be bound,
(ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under, or give rise to any
right to accelerate or to require the prepayment, repurchase or redemption of
any obligation under, any such indenture, agreement or other instrument or
(iii) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by the
Borrower or any Subsidiary (other than any Lien permitted by Section 8.1).

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

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

6.5                                 Litigation.  Unless specifically disclosed in Schedule 6.5
attached hereto, there are no actions, suits, proceedings, claims or disputes
pending, or to the best knowledge of any Loan Party, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, against the Borrower or any of its Subsidiaries or any of their
respective Properties which (i) purport to affect or pertain to this
Agreement, or any of the transactions contemplated hereby; or (ii) if
determined adversely to the Borrower or any of its Subsidiaries, would
reasonably be expected to have a Material Adverse Effect.  No injunction, writ, temporary restraining
order or any order of any nature has been issued by any court or other
Governmental Authority purporting to enjoin or restrain the execution, delivery
or performance of this Agreement or any other Loan Document, or directing that
the transactions provided for herein or therein not be consummated as herein or
therein provided.

6.6                                 No Default.  No Default or Event of Default exists or
would be reasonably expected to result from the incurring of any Obligations by
the Borrower.  No “Default” or “Event of
Default” (as those terms are defined in the First Lien Credit Agreement, the
Existing Term Loan Agreement or the Senior Notes Indenture) exists under the
First Lien Credit Agreement, the Existing Term Loan Agreement or the Senior
Notes Indenture, respectively.  

 59
 

Neither the Borrower nor any
Subsidiary is in default under or with respect to any other Contractual
Obligation in any respect which, individually or together with all such
defaults, would reasonably be expected to have a Material Adverse Effect.

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

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

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

(c)                                  (i) No
ERISA Event has occurred or is reasonably expected to occur; (ii) no
Pension Plan has any Unfunded Pension Liability; (iii) neither the
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) none of the Borrower, any of its Subsidiaries
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.

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

6.9                                 Title to
Properties.  The
Borrower and each Subsidiary have good and marketable title to the Mortgaged
Properties subject only to Permitted Liens, and, except for such defects in
title as would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect, have good and marketable title to, or valid
leasehold interests in, all other 

 60
 

Property necessary or used
in the ordinary conduct of their respective businesses.  The Mortgaged Properties of the Borrower and
its Subsidiaries are subject to no Liens, other than Permitted Liens.

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

6.11                           Reserve Report.  The Borrower has heretofore delivered to the
Administrative Agent a true and complete copy of a report, dated effective as
of January 1, 2007, prepared by Netherland Sewell & Associates, Inc. (the “Initial Reserve Report”) covering certain of the
Borrower’s Oil and Gas Properties located in or offshore California relating to
an evaluation of the Oil and Gas attributable to certain of the Mortgaged
Properties described therein.  To the
best knowledge of the Loan Parties, (i) the assumptions stated or used in
the preparation of any Reserve Report are reasonable, (ii) all information
furnished by the Loan Parties to the Independent Engineer for use in the
preparation of any Reserve Report was accurate in all material respects,
(iii) there has been no material adverse change in the amount of the
estimated Oil and Gas reserves shown in any Reserve Report since the date
thereof, except for changes which have occurred as a result of production in
the ordinary course of business, and (iv) each Reserve Report does not, in
any case, omit any material statement or information necessary to cause the
same not to be misleading to the Lenders.

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

6.13                           Taxes.  The Borrower
and its Subsidiaries have filed all federal Tax returns and reports required to
be filed, and have paid all federal Taxes, assessments, fees and other

 61

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

6.14                           Financial
Statements and Condition.

(a)                                  The
Audited Financial Statements and the Borrower’s audited consolidated financial
statements as of and for the year ended December 31, 2006 (i) were
prepared in accordance with GAAP consistently applied throughout the periods
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present in all material respects the consolidated financial condition of the
Borrower and its Restricted Subsidiaries, as of the dates thereof and results
of operations for the periods covered thereby; and (iii) except as specifically
disclosed therein or on Schedule 6.14(a), neither the Borrower nor its
Restricted Subsidiaries have any material Indebtedness or other material
liabilities direct or contingent, as of the Closing Date, including liabilities
for Taxes, material commitments or Contingent Obligations.

(b)                                 The
unaudited pro forma consolidated balance sheet of the Borrower and its
Restricted Subsidiaries as of December 31, 2006 (the “Pro
Forma Balance Sheet”), copies of which have heretofore been
furnished to each Lender, has been prepared giving effect (as if such events
had occurred on such date or the beginning of such period) to (i)  the
extensions of credit to be made under this Agreement and (ii) the payment
of fees and expenses in connection with the foregoing.  The Pro Forma Balance Sheet has been prepared
based on assumptions that the Loan Parties believe are reasonable as of the
date hereof and as of the Closing Date, and present fairly on a pro forma basis
the estimated financial position and results of operations of the Borrower and
its Restricted Subsidiaries on a consolidated basis as at December 31, 2006 and
for the year then ended, assuming that the events specified in the preceding
sentence had actually occurred at such date or at the beginning of such period.

(c)                                  During
the period from December 31, 2006 to and including the Closing Date there has
been no Disposition by the Borrower or any Subsidiaries of any material part of
its business or Property, other than Dispositions permitted by Sections 8.2(a),
(b), (c), (d), (e) and (f).

(d)                                 Since
December 31, 2006 through the Closing Date, there has been no Material Adverse
Effect.

6.15                           Environmental
Matters.  Each of the Borrower and its
Subsidiaries conducts in the ordinary course of business a review of the effect
of existing Environmental Laws and existing

 62
 

Environmental Claims on its
business, operations and Properties, and such Properties which it is acquiring
or planning to acquire and as a result thereof the Loan Parties have reasonably
concluded that, unless specifically disclosed in Schedule
6.15, such Environmental Laws and Environmental Claims would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

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

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

6.18                           Copyrights,
Patents, Trademarks and Licenses, etc.  The Borrower and each Subsidiary own or are
licensed or otherwise have the right to use all of the material patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
authorizations and other rights that are reasonably necessary for the operation
of their respective businesses, without material conflict with the rights of
any other Person.  To the best knowledge
of the Loan Parties, no slogan or other advertising device, product, process,
method, substance, part or other material now employed, or now contemplated to
be employed, by the Borrower or any Subsidiary infringes upon any rights held
by any other Person.  Except as
specifically disclosed in Schedule 6.5, no
claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Loan Parties, threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending or, to the knowledge of the Loan Parties, proposed, which, in either
case, would reasonably be expected to have a Material Adverse Effect.

6.19                           Subsidiaries.  As of the date hereof and as of the Closing
Date, the Borrower has no Subsidiary other than those specifically disclosed in
part (a) of Schedule 6.19 hereto
and has no material equity investments in any other Person other than those
specifically disclosed in part (b) of Schedule 6.19.

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

6.21                           Full Disclosure.  None of the representations or warranties
made by the any Loan Party in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, written statement or

 63
 

certificate furnished by or
on behalf of any Loan Party in connection with the Loan Documents, taken as
whole, contains any untrue statement of a material fact known to any Loan Party
or omits any material fact known to any Loan Party required to be stated
therein or necessary to make the statements made therein, in light of the circumstances
under which they are made, not misleading as of the time when made or
delivered.  Each of the representations
and warranties in the Security Agreement (as supplemented by the Schedules set
forth in Exhibit K hereto), the Mortgages, the Guaranty or the Collateral Trust
Agreement is true and correct on and as of the Closing Date as though made on
and as of the Closing Date.

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

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

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

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

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

 64
 

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

6.28                           Existing
Indebtedness.  Other than
Permitted Indebtedness, after giving effect to the transactions contemplated
hereby, including the Specified Acquisitions (if any), no Loan Party has any
Indebtedness or Disqualified Stock outstanding.

6.29                           Specified
Acquisition Documents.  The
documents listed on Schedule 6.29
constitute all of the material agreements, instruments and undertakings with
respect to the Specified Acquisitions to which the Borrower or any of its
Subsidiaries is bound or by which such Person or any of its property or assets
is bound or affected.

6.30                           Security
Documents.

(a)                                  The
Security Agreement is effective to create in favor of the Collateral Trustee,
for the benefit of the Secured Parties, a legal, valid, binding and enforceable
security interest in the Collateral described therein and proceeds and products
thereof, to secure the Sharing Obligations (including the Obligations).  In the case of the Pledged Stock described in
the Security Agreement, when any stock certificates representing such Pledged
Stock are delivered to the First Lien Credit Agent, as agent and bailee for the
Collateral Trustee, and in the case of the other Collateral described in the
Security Agreement, when financing statements in appropriate form are filed in
the offices specified on Schedule 6.30(a)-1 (which financing statements
may be filed by the Collateral Trustee) at any time and such other filings as
are specified on Schedule 3 to the Security Agreement have been completed (all
of which filings may be filed by the Collateral Trustee) at any time, the
Security Agreement shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in such
Collateral and the proceeds and products thereof, as security for the Sharing
Obligations, in each case prior and superior in right to any other Person
(except Permitted Liens).  Schedule
6.30(a)-2 lists each UCC financing statement that (i) names any Loan
Party as debtor and (ii) remains on file on the Closing Date.

(b)                                 Each
of the Mortgages is effective to create in favor of the Collateral Trustee, for
the benefit of the Secured Parties, a legal, valid, binding and enforceable
Lien on the Mortgaged Properties described therein and proceeds and products
thereof, to secure the Sharing Obligations (including the Obligations); and
when the Mortgage Amendments are filed in the offices specified on Schedule
6.30(b) (in the case of Mortgage Amendments to be executed and delivered on
the Closing Date or on the closing date of any Specified Acquisition (as
applicable)) or in the recording office designated by the Borrower (in the case
of any Mortgage to be executed and delivered pursuant to Section 7.14(b)),
each Mortgage shall constitute a fully perfected Lien on, 

 65
 

and security
interest in, all right, title and interest of the Loan Parties in the Mortgaged
Properties described therein and the proceeds and products thereof, as security
for the Sharing Obligations, in each case prior and superior in right to any
other Person (other than Persons holding Liens or other encumbrances or rights
permitted by the relevant Mortgage);

(c)                                  Notwithstanding
that the aggregate principal amount of the Loans hereunder exceeds the
aggregate principal amount of “Loans” under the Existing Term Loan Agreement
and any other changes from the Existing Term Loan Agreement reflected herein,
from and after the Effective Date:

(i)                                     this
Agreement replaces or refinances the Existing Term Loan Agreement and
constitutes the “Credit Agreement” (as defined in each of the Security
Agreement, the Mortgages and the Guaranty) and the “Secured Lien Term Loan
Agreement” (as defined in the Collateral Trust Agreement);

(ii)                                  the
Obligations constitute the “Secured Lien Term Loan Obligations” (as defined in
the Collateral Trust Agreement); and

(iii)                               the
Administrative Agent constitutes the “Second Lien Term Loan Agent” (as defined
in the Collateral Trust Agreement) and the “Administrative Agent” (as defined
in the Security Agreement and the Guaranty) and the “Collateral Trustee” (as defined
in the Mortgages).

ARTICLE VII

AFFIRMATIVE
COVENANTS

Each Loan Party covenants
and agrees with each Lender that so long as any Lender shall have any
Commitment hereunder, or any Loan or other Obligation shall remain unpaid or
unsatisfied unless the Required Lenders consent in writing, each Loan Party
shall, and shall cause each of its Restricted Subsidiaries to:

7.1                                 Financial
Statements.  Maintain
for itself and the Restricted Subsidiaries, on a consolidated basis, a system
of accounting established and administered in accordance with GAAP and deliver
to the Administrative Agent who will make available to each Lender:

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

 66
 

“Independent Auditor”), which report shall state that
such consolidated financial statements present fairly in all material respects
the consolidated financial position of the Borrower and the Restricted
Subsidiaries at the end of such periods and the results of their operations and
their cash flows for the periods indicated in conformity with GAAP; and

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

7.2                                 Certificates;
Other Production and Reserve Information.  In the case of the Borrower, furnish to the
Administrative Agent, who will make available to each Lender:

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

(b)                                 concurrently with the
delivery of the financial statements referred to in Sections 7.1(a) and
(b), a Compliance Certificate of a Responsible Officer of the Borrower (i)
certifying that no Event of Default or Default has occurred or, if an Event of
Default or Default has occurred, specifying the nature and extent thereof and
any corrective action taken or proposed to be taken with respect thereto, (ii)
setting forth a true and complete list as of the last day of the most recently
completed fiscal quarter of all Hedging Agreements of the Borrower and the
Restricted Subsidiaries, the material terms thereof (including the type, term,
effective date, termination date, notional amounts or volumes and the
percentage of the Projected Oil and Gas Production subject to such Hedging
Agreements), the net mark-to-market value thereof, any new credit support
agreements relating thereto not previously disclosed in writing to the
Administrative Agent, any margin required or supplied under any credit support
agreement and the counterparty to each such Hedging Agreement and (iii) in the
case of a certificate delivered with the financial statements required by
Section 7.1(a) above, setting forth the Borrower’s calculation of VPP Net Revenue;

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

 67
 

Reserve Report and certified by a Responsible Officer as true and
correct in all material respects; and (iii) the day that is 90 days after the
Required Lenders request a Reserve Report, effective as of the date on which
the Administrative Agent requests such report, a Reserve Report prepared by the
Borrower in substantially the same form as the January 1 Reserve Report and
certified by a Responsible Officer as true and correct in all material
respects, in each case in form and substance reasonably acceptable to the
Administrative Agent;

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

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

(f)                                    promptly upon its
completion in each fiscal year of the Borrower commencing with the 2008 fiscal
year through and including the 2013 fiscal year, and not later than the date on
which year-end financial information is delivered to the Administrative Agent
pursuant to Section 7.1(a), a copy of the annual budget of the Borrower and its
Subsidiaries on a consolidated basis for such fiscal year, projecting total Oil
and Gas revenue, total revenue, total operating costs and expenses,
Consolidated Net Income, Consolidated Interest Expense, Consolidated EBITDA and
total capital expenditures, by fiscal quarter;

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

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

 68
 

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

7.3                                 Notices.  Promptly notify the Administrative Agent and
each Lender in writing:

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

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

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

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

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

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

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

7.4                                 Preservation of
Company Existence, Etc.

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

(b)                                 Preserve
and maintain in full force and effect all governmental rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable in the

 69
 

normal conduct
of its business except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect;

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

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

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

7.6                                 Insurance.  Maintain, with financially sound and
reputable independent insurers, insurance with respect to its Properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business, of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons except where the failure to do so would not reasonably be expected to
have a Material Adverse Effect.  Such
insurance will be primary and not contributing.

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

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

 70
 

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

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

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

7.12                           New Subsidiary
Guarantors. 
(a) Cause each Restricted Subsidiary with total assets with a book
value or fair market value of $100,000 or more (other than a Partially Owned
Operating Company and Ellwood (if and so long as Ellwood constitutes a crude
oil common carrier prohibited from guarantying an affiliate shipper’s debt)) to
execute and deliver the Guaranty (or a joinder thereto) to the Administrative
Agent and the Security Agreement to the Collateral Trustee on the date such
Restricted Subsidiary is acquired or formed or first has assets of at least
such amount or otherwise first is so obligated to execute and deliver the
Guaranty, (b) pledge to the Collateral Trustee for the benefit of the
Secured Parties all of the outstanding Capital Stock thereof pursuant to a
Security Document satisfactory to the Administrative Agent, to be held by the
First Lien Credit Agent on behalf of itself, for the benefit of the First Lien
Secured Parties, and the Collateral Trustee, for the benefit of the Secured
Parties, and (c) cause such Restricted Subsidiary to execute and deliver
such Security Documents as may be required pursuant to Sections 4.2,
4.5(a) or 7.14(b).  Upon the execution
and delivery by any Restricted Subsidiary of a Guaranty, Restricted Subsidiary
shall automatically and immediately, and without any further action on the part
of any Person, (i) become a Guarantor for all purposes of this Agreement
and (ii) be deemed to have made the representations and warranties, as
applied to and including such new Restricted Subsidiary from and after such
time, set forth in this Agreement.

7.13                           Use of Proceeds.  Use, or cause to be used, the proceeds of the
Loans only for the following purposes: (i) to repay the loans outstanding
under the Existing Term Loan Agreement; (ii) to repay First Lien
Obligations; (iii) to the extent that a Specified Acquisition has not been
consummated prior to the Closing Date, to pay the purchase price for such
Specified Acquisition

 71
 

(not to exceed $115,000,000 in the aggregate for both Specified
Acquisitions); (iv) to pay the fees and expenses incurred in connection
with the transactions contemplated hereunder and in connection with
consummation of the Specified Acquisitions (not to exceed $10,000,000 in the
aggregate); and (v)  for working capital and other general corporate
purposes.

7.14                           Further
Assurances.

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

(b)                                 (i) Promptly (and
in no event later than 10 Business Days after the need arises) execute and
cause each Restricted Subsidiary to execute such additional Security Documents
in form and substance satisfactory to Administrative Agent, granting to the
Collateral Trustee, for the benefit of the Secured Parties, fully perfected
Liens on Oil and Gas Properties that are not then part of the Mortgaged
Properties, subject only to the Liens securing the Collateral in respect of the
First Lien Credit Documents (the “First Liens”) and
other Permitted Liens, sufficient to cause the Mortgaged Properties to include
at all times 85% of the PV 10 Value of the Loan Parties’ Oil and Gas Properties,
in each case as set forth in the most recent Reserve Report; (ii) furnish
to the Administrative Agent title due diligence in form and substance
satisfactory to the Administrative Agent and will furnish all other documents
and information relating to such Mortgaged Properties as the Administrative
Agent may reasonably request; (iii) pay the costs and expenses of all
filings and recordings and all searches deemed necessary by the Administrative
Agent to establish and determine the validity and the priority of the Liens
created or intended to be created by the Security Documents; and
(iv) satisfy all other claims and charges which in the reasonable opinion
of the Administrative Agent might prejudice, impair or otherwise affect any of
the Mortgaged Properties or the Lien thereon of the Collateral Trustee, for the
benefit of the Secured Parties.

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

 72
 

7.15                           Hedging Program.  Enter into and maintain at all times after
the Closing Date during the relevant period, Derivative Contracts for the
purpose of hedging prices on the Oil and Gas thereafter expected to be produced
by the Borrower or any of its Restricted Subsidiaries, which contracts shall
(a) at all times through the third anniversary of the Closing Date cover
not less than 70% of the Borrower’s and its Subsidiaries’ aggregate Projected
Oil and Gas Production anticipated to be sold in the ordinary course of such
Persons’ business during such three-year period, (b) thereafter, roll
forward on a annual basis in order to cover not less than 50% of the Borrower’s
and its Subsidiaries’ aggregated Projected Oil and Gas Production anticipated
to be sold in the ordinary course of such Person’s business during the ensuing
four fiscal quarters and (c) otherwise be in form and substance reasonably
acceptable to the Administrative Agent. 
As used in this Agreement, the term “Projected
Oil and Gas Production” means the projected production of oil or
gas (measured by volume unit or BTU equivalent, not sales price) for the term
of the contracts from Oil and Gas Properties and interests owned by the
Borrower and its Subsidiaries which have attributable to them Proved Developed
Producing Reserves, as such production is projected in the most recent Reserve
Report delivered pursuant to Section 7.2(c), after deducting projected
production from any Oil and Gas Properties sold or under contract for sale that
had been included in such report and after adding projected production from any
Oil and Gas Properties or Hydrocarbon Interests that had not been reflected in
such report but that are reflected in a separate or supplemental reports
prepared on the same basis as the reports delivered pursuant to
Section 7.2(c) above and otherwise are satisfactory to the Administrative
Agent.

ARTICLE
VIII

NEGATIVE
COVENANTS

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

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

(a)                                  (i)
any Lien existing on Property of the Borrower or any Restricted Subsidiary as
of the Closing Date as set forth in Schedule 8.1 securing Indebtedness (other
than the First Lien Obligations and the Senior Notes) outstanding on the
Closing Date (and any refinancings thereof permitted under Section 8.5);

(b)                                 any
Lien created under any Loan Document;

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

 73
 

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

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

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

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

(h)                                 Liens
arising solely by virtue of any statutory or common law provision relating to
banker’s liens, rights of set-off or similar rights and remedies as to deposit
accounts or other funds maintained with a creditor depository institution or
under any deposit account agreement entered into in the ordinary course of
business; provided,
that (i) such deposit account is not a dedicated cash collateral account
and is not subject to restrictions against access by the Borrower,
(ii) the Borrower (or applicable Restricted Subsidiary) maintains (subject
to such right of set off) dominion and control over such account(s), and
(iii) such deposit account is not intended by the Borrower, any Guarantor
or any Restricted Subsidiary to provide cash collateral to the depository
institution;

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

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

(k)                                  Liens
arising out of judgments or awards that do not constitute an Event of Default
under clause (i) of Article IX;

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

 74
 

(m)                               Liens
on the Hastings Properties to secure the Borrower’s obligations under the
Denbury Option Agreement.

8.2                                 Disposition of
Assets.  The Borrower and each
Guarantor shall not, and shall not permit any of the Restricted Subsidiaries
to, directly or indirectly, Dispose of any Property (including accounts and
notes receivable, with or without recourse) or permit any GP to effect any GP Equity
Transfer or enter into any agreement to do any of the foregoing, except:

(a)                                  the
sale of inventory (including Oil and Gas sold as produced) which is sold in the
ordinary course of business on ordinary trade terms; provided that no contract
for the sale of Oil and Gas shall obligate the Borrower or any of its
Restricted Subsidiaries to deliver Oil and Gas at a future date without
receiving full payment therefor within 90 days after delivery;

(b)                                 the
sale or issuance of any Restricted Subsidiary’s Property or Capital Stock to
Borrower or any other Wholly Owned Subsidiary that is a Guarantor;

(c)                                  Dispositions
of claims against customers, working interest owners, other industry partners
or any other Person in connection with workouts or bankruptcy, insolvency or
other similar proceedings with respect thereto;

(d)                                 Dispositions
of funds collected for the beneficial interest of, or of the interests owned
by, royalty, overriding royalty or working interest owners;

(e)                                  Dispositions
of obsolete, worn out or surplus equipment in the ordinary course of business;

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

(g)                                 the
Permitted Initial MLP Asset Transfer, any Permitted MLP Equity Transfer or any
Permitted GP Equity Transfer; and

(h)                                 any
Disposition of interests in Oil and Gas Properties, or of any Equity Interests
in any Person holding Oil and Gas Properties (including without limitation, (i)
any MLP Asset Transfer other than the Permitted Initial MLP Asset Transfer and
(ii) any Denbury Asset Transfer, but excluding the Permitted Initial MLP Asset
Transfer, any MLP Equity Transfer and any GP Equity Transfer) with respect to
which the Permitted Transfer Conditions are satisfied.

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

 75
 

(a)                                  any
Guarantor may merge with the Borrower or any Wholly Owned Subsidiary that is a
Guarantor; provided, that the Borrower shall be the
continuing or surviving corporation in the case of a merger involving the
Borrower;

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

(c)                                  any
Guarantor or other Restricted Subsidiary may make Dispositions to the Borrower
or another Wholly Owned Subsidiary that is a Guarantor and any Restricted
Subsidiary that is not a Specified Subsidiary may make Dispositions to any
other Restricted Subsidiary that is a Wholly Owned Subsidiary; and

(d)                                 any
merger, consolidation or other Disposition of a Restricted Subsidiary the
purpose and effect of which is to consummate a Disposition permitted under
Section 8.2 that does not involve a merger, consolidation or Disposition of all
or substantially all the assets of the Borrower,

so long as, in each case,
immediately before and after giving effect to such merger,  consolidation, or other Disposition, no
Default or Event of Default has occurred or is continuing or would result
therefrom.

8.4                                 Investments.  The Borrower and each Guarantor shall not,
and shall not permit any of the Restricted Subsidiaries to, directly or
indirectly, make or commit to make any Investment, except for:

(a)                                  Investments
in Cash Equivalents;

(b)                                 extensions
of credit in the nature of accounts receivable or notes receivable arising from
the sale or lease of goods or services (other than to any Unrestricted
Subsidiary, Permitted MLP or Permitted GP) in the ordinary course of business;

(c)                                  Investments
in any Restricted Subsidiary that is a Wholly Owned Subsidiary and a Guarantor;

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

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

(f)                                    Investments
with third parties (other than with any Unrestricted Subsidiary, Permitted MLP
or Permitted GP) that are (i) customary in the oil and gas business,
(ii) made in the ordinary course of the Borrower’s business, and
(iii) made in the form of or pursuant to operating agreements, processing
agreements, farm-in agreements, farm-out agreements, joint venture agreements,
development agreements, unitization agreements, pooling agreements, joint
bidding agreements, service contracts

 76

and other
similar agreements that do not, in any case, (x) constitute an investment
in any state law partnership or other Person or (y) involve the
Disposition of any Mortgaged Property covering Proved Reserves;

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

(h)                                 acquisitions
of Hydrocarbon Interests consisting of Proved Reserves and related assets;

(i)                                     provided
that there shall not have occurred and be continuing a Default hereunder, nor
would any Default or Event of Default result therefrom, Investments in Ellwood
not to exceed an aggregate amount of $2,000,000 in any fiscal year;

(j)                                     the
Specified Acquisitions;

(k)                                  solely
to the extent resulting from the Permitted Initial MLP Asset Transfer, a
Permitted GP Equity Transfer or a MLP Asset Transfer permitted under Section
8.2(h), Investments in any Permitted MLP, Permitted GP or Subsidiary of a
Permitted MLP;

(l)                                     Permitted
GP Maintenance Investments; and

(m)                               in
addition to Investments otherwise expressly permitted by this Section 8.4,
provided that there shall not have occurred and be continuing a Default or
Event of Default, nor would any Default of Event of Default result therefrom,
other Investments of the Loan Parties not to exceed $10,000,000 in the
aggregate at any time outstanding.

For purposes of designating
any Restricted Subsidiary as an Unrestricted Subsidiary, Permitted MLP or Permitted
GP, all outstanding Investments by the Borrower and the Restricted Subsidiaries
(except to the extent repaid) in the Subsidiary so designated will be deemed to
be Investments in an amount determined as set forth in the last sentence of the
definition of “Investments”.  The
Borrower shall not make any such designation unless (i) an Investment in
such amount would be permitted at such time, whether pursuant to
clauses (k) and (m) hereof or otherwise pursuant to this Section 8.4,
and (ii) such Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary, Permitted MLP or Permitted GP, as applicable.

8.5                                 Indebtedness.

(a)                                  The
Borrower and each Guarantor shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, create, incur, assume,
suffer to exist, or otherwise become or remain liable with respect to, any
Indebtedness, except (collectively, “Permitted
Indebtedness”):

(i)                                     Indebtedness
incurred pursuant to this Agreement (including as New Term Loans);

 77
 

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

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

(iv)                              Permitted
Sub Debt;

(v)                                 Indebtedness
represented by the Senior Notes and the Senior Notes Indenture, including any
Permitted Senior Notes Refinancing Indebtedness, in an aggregate principal
amount not to exceed $150,000,000;

(vi)                              Indebtedness
represented by a Permitted Parent Note;

(vii)                           Indebtedness
not to exceed at any time outstanding $5,000,000 in aggregate principal amount;
and

(viii)                        in
addition to the Indebtedness otherwise permitted under this
Section 8.5(a), Permitted Unsecured Debt, provided
the Interest Coverage Ratio for the four fiscal quarters for which financial
statements have been delivered pursuant to Section 7.1 would have been at least
2.5 to 1.0, determined on a Pro Forma Basis.

(b)                                 The
Borrower and each Guarantor shall not permit any MLP GP or general partner of a
MLP GP to, directly or indirectly, create, incur, assume, suffer to exist, or
otherwise become or remain liable with respect to, any Indebtedness other than
Permitted GP Recourse Debt.

8.6                                 Transactions
with Affiliates.  The
Borrower and each Guarantor shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, make any payment to, or
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate of any Loan Party, except in the
ordinary course of business and upon fair and reasonable terms no less
favorable to the Borrower or such Restricted Subsidiary than would be obtained
in a comparable arm’s length transaction with a Person not an Affiliate of the
Borrower or such Restricted Subsidiary. 
The foregoing notwithstanding, Section 8.6 shall not apply to:

(a)                                  any
MLP Asset Transfer, Permitted MLP Equity Transfer or Permitted GP Equity
Transfer Permitted pursuant to Section 8.2;

(b)                                 any
services agreement, operating agreement, omnibus agreement or similar agreement
entered into with any Permitted MLP or Permitted GP for the purpose of
providing routine services to such Permitted MLP or Permitted GP; provided any such agreement (i) is of a type and in a form
customarily entered into by MLPs and (ii) is upon fair and reasonable terms no
less favorable to the Borrower or such Restricted Subsidiary than would be
obtained by a MLP in a comparable transaction with an Affiliate;

 78
 

(c)                                  transactions
between or among Loan Parties not involving any other Affiliate;

(d)                                 payments
by the Borrower and the Restricted Subsidiaries to each other pursuant to any
tax sharing agreements among the Borrower and the Restricted Subsidiaries on
customary terms to the extent attributable to the ownership or operation of the
Borrower and the Restricted Subsidiaries; and

(e)                                  the
payment of reasonable and customary fees paid to, and indemnities provided on
behalf of, officers, directors, managers, employees or consultants of the
Borrower or any Restricted Subsidiary.

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

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

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

(b)                                 Derivative
Contracts permitted under Section 8.10 hereof;

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

(d)                                 this
Agreement and each Guaranty;

(e)                                  the
Real Estate Contingent Obligations;

(f)                                    Guaranty
Obligations of the Guarantors in respect of (i) the First Lien Obligations,
(ii) the Obligations, (iii) the Senior Note Debt Documents and (iv) any
Permitted Indebtedness incurred pursuant to clauses (d), (f) or (g) thereof;

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

 79
 

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

8.9                                 Restricted
Payments.

(a)                                  Except
as provided in Section 8.9(b), the Borrower and each Guarantor shall not, and
shall not permit any of the Restricted Subsidiaries to, directly or indirectly,
(i) purchase, redeem or otherwise acquire for value any of its Capital
Stock, now or hereafter outstanding from the holders thereof (other than from
such holders that are Loan Parties); (ii) declare or pay any distribution,
dividend or return capital to its members, partners or stockholders or holders
of warrants, rights or options to acquire its membership interests, partnership
interests or shares (other than to such Persons that are Loan Parties), or make
any distribution of assets in cash or in kind to its members, partners,
stockholders or holders of warrants, rights or options to acquire its
membership interests, partnership interests or shares (other than to such
Persons that are Loan Parties); or (iii) make any payment or prepayment of
principal of, premium, if any, or interest on, or redemption, purchase,
retirement, defeasance (including in-substance or legal defeasance), sinking
fund or similar payment with respect to, any Indebtedness (collectively “Restricted Payments”).

(b)                                 The
foregoing Section 8.9(a) notwithstanding, the Borrower may:

(i)                                     make
regularly scheduled payments of interest in respect of Permitted Unsecured
Debt;

(ii)                                  make
regularly scheduled payments of interest or optional or, subject to Section
2.5(d), mandatory prepayments in respect of Indebtedness under the First Lien
Credit Documents;

(iii)                               make
regularly scheduled payments of interest, make optional or mandatory
prepayments in respect of, or repurchase, redeem or defease the Senior Notes; provided, (A) such payments are made in accordance with the
terms of the Senior Notes Indenture and the Intercreditor Agreement, (B) in the
case of any mandatory prepayment, such payment is made only to the extent
required by the Senior Notes Indenture and (C) in the case of any optional
prepayment, repurchase, redemption or defeasance, such prepayment, repurchase,
redemption or defeasance constitutes a Permitted Senior Notes Prepayment;

provided, that in each case, no Default
or Event of Default has occurred and is continuing nor would any Default or
Event of Default result therefrom.

8.10                           Derivative
Contracts.  The
Borrower and each Guarantor shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly, enter into or in any manner
be liable on any Derivative Contract except:

 80
 

(a)                                  (i)                                     Derivative
Contracts entered into with the purpose and effect of fixing prices on oil or
gas expected to be produced by such Person; provided, that at all times
(A) no such contract shall be for speculative purposes; (B) as of any
date (the “Calculation Date”) no such
contract, when aggregated with all Derivative Contracts permitted under this
Section (a)(i), shall cover a notional volume in excess of 80% of the
total Projected Oil and Gas Production to be produced in any month;
(C) each such contract (excluding Derivative Contracts offered by national
commodity exchange) shall be with an Approved Counterparty; and (D) no
such contract requires the Borrower to put up money, assets, letters of credit
or other security against the event of its non-performance prior to actual
default by the Borrower in performing its obligations thereunder, except Liens
in favor of the Collateral Trustee for the benefit of the Secured Parties under
the Security Documents or the First Liens.

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

(iii)                               Derivative
Contracts entered into with the purpose and effect of fixing interest rates on
a principal amount of Indebtedness of the Borrower that is accruing interest at
a variable rate; provided,
(A) no such contract shall be for speculative purposes; (B) the
floating rate index of each such contract generally matches the index used to
determine the floating rates of interest on the corresponding Indebtedness of
the Borrower to be hedged by such contract, (C) no such contract requires
the Borrower to put up money, assets, letters of credit, or other security
against the event of its non-performance prior to actual default by the
Borrower in performing its obligations thereunder, and (D) each such
contract shall be with an Approved Counterparty.

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

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

 81
 

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

8.13                           Accounting
Changes.  The Borrower and each
Guarantor shall not, and shall not permit any of the Restricted Subsidiaries
to, directly or indirectly, (a) make any significant change in accounting
treatment or reporting practices, except as required by GAAP and except for the
Borrower’s anticipated discontinuance of hedge accounting under FAS 133 for its
commodity hedges, or (b) or change the fiscal year of the Borrower or of any
Subsidiary.

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

8.15                           Senior Notes
and other Permitted Indebtedness.  The Borrower and each Guarantor shall not,
and shall not permit any of the Restricted Subsidiaries to, directly or
indirectly:

(a)                                  amend
or modify any of the terms or provisions of the Senior Notes Indenture, the
Senior Notes, Permitted Unsecured Indebtedness or Permitted Sub Debt if such
amendment or modification would have the effect of (i) accelerating the
maturity date of the principal amount thereof, or any scheduled interest
payment thereon; (ii) increasing the principal amount thereof or interest
rate thereon; (iii) causing, or purporting to cause, in the case of the
Senior Notes, the Liens securing the Obligations to cease to be permitted under
the Senior Notes Indenture, (iv) causing, or purporting to cause, the
Senior Notes and the Senior Note Subsidiary Guarantees to be secured
(x) at any time prior to the Senior Note Lien Termination Time, other than
on an “equal and ratable” basis with the Liens securing the Obligations, or
(y) thereafter other than as (and only to the extent) required under
Section 3.5 of the Senior Note Indenture as in effect on the Closing Date;
or (v) requiring the Borrower to grant any Lien for the benefit of the 

 82
 

holders
thereof, other than as (and only to the extent) required under Section 3.5
of the Senior Note Indenture as in effect on the Closing Date (it being
understood in all events that no Lien which would cause the Borrower to be
required to grant any such Lien may be granted if prohibited by any term of
this Agreement);

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

(c)                                  prepay,
redeem, purchase or defease any Senior Notes (except as contemplated by, and
subject to compliance with, Sections 8.9 and 2.5 hereof).

8.16                           First Lien
Credit Documents.  The
Borrower and each Guarantor shall not, and shall not permit any of the Restricted
Subsidiaries to, materially amend, waive or modify any term or provision of any
First Lien Credit Document unless such amendment or modification is permitted
by Section 5.3(a) of the Intercreditor Agreement without the prior written
consent of the Required Lenders or the Administrative Agent and the Trustee
under the Indenture (unless such amendment, waiver or modification would not
adversely affect the Lenders).

8.17                           Forward Sales,
Production Payments, Etc.  The
Borrower and each Guarantor shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly:

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

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

8.18                           Subsidiaries.  The Borrower and each Guarantor shall not,
and shall not permit any of the Restricted Subsidiaries to, directly or
indirectly, permit (a) any Restricted Subsidiary not to be a Wholly Owned
Subsidiary, except (i) any Partially Owned Operating Company that is a result
of a MLP Asset Transfer permitted under Section 8.2, (ii) as a result of any
Permitted MLP Equity Transfer or Permitted GP Equity Transfer or (iii) any
Subsidiary resulting from an Investment permitted under Section 8.4(m), (b) any
Subsidiary Guarantor to issue Equity Interests to any Person other than a Loan
Party or (c) any Restricted Subsidiary that is not a Loan Party to issue Equity
Interests to any Person other than the Borrower or a Restricted Subsidiary.

8.19                           MLP and GP
Activities.  The
Borrower and each Guarantor shall not, and shall not permit any of the
Restricted Subsidiaries to, directly or indirectly:

(a)                                  cause
or permit any MLP Asset Transfer, MLP Equity Transfer or GP Equity Transfer to
result in the related GP, MLP or any MLP Subsidiary being required to assume
the obligations of the Borrower or such Guarantor under the terms of any
Indebtedness of the Borrower or any Guarantor;

 83
 

(b)                                 cause
or permit any Equity Interest in a MLP or a GP received by the Borrower or any
Guarantor as a result of any MLP Asset Transfer to be beneficially owned or
held of record by any Person other than the Borrower or a Guarantor at any time
prior to such time as any such Equity Interest is Disposed of in compliance
with Section 8.2;

(c)                                  cause
or permit any Oil and Gas Properties that are transferred to a Permitted GP not
to be promptly, but in any event by the close of business on such date of such
transfer to such Permitted GP, transferred to the corresponding Permitted MLP
or a Subsidiary thereof;

(d)                                 cause
or permit any Permitted GP, Permitted MLP or Unrestricted Subsidiary or any
Subsidiary of any thereof to create, incur, issue, assume, guarantee or
otherwise become or be directly or indirectly liable with respect to any
Indebtedness pursuant to which the holder of such Indebtedness has recourse to
any of the assets of the Borrower or any Restricted Subsidiary (excluding, for
avoidance of doubt, any Permitted Parent Note); and

(e)                                  cause
or permit any Permitted GP to hold any assets other than those specified in
clauses (i) through (v) of the definition of “Permitted GP” or to fail have
organizational documents satisfying clause (d) of the definition of “Permitted
GP” or not to comply with the provisions of such documents in respect of
distributions.

ARTICLE IX

EVENTS OF DEFAULT

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

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

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

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

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

 84
 

(e)                                  Other Defaults.  Any Loan Party fails to perform or observe
any other term or covenant contained in this Agreement or any other Loan
Document (including without limitation the Engagement Letter), and such default
shall continue unremedied for a period of 30 days after the earlier of
(x) the date upon which a Responsible Officer knew or reasonably should
have known of such default or (y) the date upon which written notice
thereof is given to the Borrower by the Administrative Agent or any Lender;

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

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

 85
 

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

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

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

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

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

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

(n)                                 Enforceability or Perfection of Loan Documents.  (i) Any Loan Document shall, at any time
after its execution and delivery and for any reason, cease to be in full force
and effect or shall be declared to be null and void, the validity or
enforceability

 86
 

thereof shall be contested by any Person
party thereto (other than the Administrative Agent or any Lender) or any such
Person party thereto (other than the Administrative Agent or any Lender) shall
deny that it has any or further liability or obligation thereunder, or the
Obligations shall be subordinated for any reason (other than by the consent of
the Lenders); or (ii) any Lien created under any Loan Document shall fail
to constitute a fully perfected Lien in a material portion of the Collateral,
subject only to Permitted Liens, and such failure shall continue for at least
30 days after the earlier of (A) the date upon which a Responsible Officer
knew or reasonably should have known of such default or (B) the date upon
which written notice thereof is given to the Borrower by the Administrative
Agent;

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

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

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

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

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

 87
 

(c)                                  exercise
on behalf of itself and the Lenders all rights and remedies available to it and
the Lenders under the Loan Documents or applicable law;

provided,
that upon the occurrence of any event specified in Section 9.1(g)  or
9.1(h) with respect to the Borrower (in the case of clause (i) of
Section 9.1(h) upon the expiration of the 60-day period mentioned therein), the
obligation of each Lender to make Loans shall automatically terminate and the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable without further
act of the Administrative Agent, or any Lender and without presentment, demand,
protest, notice of intention to accelerate, notice of acceleration or any other
notice of any kind, all of which are hereby expressly waived by the Borrower
and each Guarantor.

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

ARTICLE X

THE ADMINISTRATIVE
AGENT

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

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

10.3                           Liability of
Administrative Agent.  None of the
Administrative Agent-Related Persons shall (i) be liable for any action
taken or omitted to be taken by any of them under or in connection with this
Agreement or any other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by the

 88
 

Borrower, any Guarantor or
any Subsidiary or Affiliate of the Borrower, or any officer thereof, contained
in this Agreement or in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other
Loan Document, or the validity, effectiveness (other than such Administrative
Agent-Related Person’s own due execution and delivery), genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document, or
for any failure of the Borrower, any Guarantor or any other party to any Loan
Document to perform its obligations hereunder or thereunder.  No Administrative Agent-Related Person shall
be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the Properties,
books or records of the Borrower or any of the Borrower’s Subsidiaries or
Affiliates.

10.4                           Reliance by
Administrative Agent.

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

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

10.5                           Notice of
Default.  The Administrative Agent shall
not be deemed to have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to Defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written notice from a Lender or the Borrower referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a “notice
of default.”  The Administrative Agent
will notify the Lenders of its receipt of any such notice.  Subject to 

 89
 

Section 10.4(a), the
Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Lenders in accordance with
Article IX; provided,
that unless and until the Administrative Agent has received any such request,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Lenders.

10.6                           Credit Decision.  Each Lender acknowledges that no
Administrative Agent-Related Person has made any representation or warranty to
it, and that no act by any Administrative Agent-Related Person hereafter taken,
including any review of the affairs of the Borrower, any Guarantor or their
respective Subsidiaries, shall be deemed to constitute any representation or
warranty by any Administrative Agent-Related Person to any Lender.  Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon any Administrative
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, Property, financial and other condition and
creditworthiness of the Borrower, and all applicable bank regulatory laws
relating to the transactions contemplated hereby, and made its own decision to
enter into this Agreement and to extend credit to the Borrower hereunder.  Each Lender also represents that it will,
independently and without reliance upon any Administrative Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to
the business, prospects, operations, Property, financial and other condition
and creditworthiness of the Borrower. 
Except for notices, reports and other documents expressly herein
required to be furnished to the Lenders by the Administrative Agent, the Administrative
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, prospects, operations,
Property, financial and other condition or creditworthiness of the Borrower
which may come into the possession of any of the Administrative Agent-Related
Persons.

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

 90
 

Agreement, any other
Transaction Document or any document contemplated by or referred to herein, to
the extent that the Administrative Agent is not reimbursed for such expenses by
or on behalf of the Borrower.  The undertaking
in this Section 10.7 shall survive the payment of all Obligations
hereunder and the resignation or replacement of the Administrative Agent.

10.8                           Administrative
Agent in Individual Capacity.  Credit Suisse, Cayman Islands Branch, and its
Affiliates may make loans to, accept deposits from, acquire or underwrite
equity or debt securities of and generally engage in any kind of banking,
investment banking, trust, financial advisory, underwriting or other business
with the Borrower and its Affiliates as though Credit Suisse, Cayman Islands
Branch, was not the Administrative Agent hereunder and without notice to or
consent of the Lenders.  The Lenders
acknowledge that, pursuant to such activities, Credit Suisse, Cayman Islands
Branch, or its Affiliates may receive information regarding the Borrower or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Affiliate) and acknowledge that
the Administrative Agent-Related Persons shall be under no obligation to
provide such information to them.  With
respect to Obligations held by it, Credit Suisse, Cayman Islands Branch, shall
have the same rights and powers under this Agreement as any other Lender and
may exercise the same as though it were not the Administrative Agent.

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

10.10                     Withholding Tax.

(a)                                  Each
Lender (or Assignee or Participant) that is not a citizen or resident of the
United States of America, a corporation, partnership or other entity created or
organized in or under the laws of the United States of America (or any
jurisdiction thereof), or any estate or trust that is subject to federal income
taxation regardless of the source of its income (a “Non U.S. Lender”) shall deliver to the Borrower and the
Administrative Agent (or, in the case of a Participant, to the Lender from
which the

 91

related
participation shall have been purchased) two copies of either U.S. Internal
Revenue Service Form W-8BEN or Form W-8ECI, or, in the case of a Non U.S.
Lender claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of “portfolio interest” a
statement substantially in the form of Exhibit I to the effect that such Lender
is eligible for a complete exemption from withholding of U.S. taxes under
Section 871(h) or 881(c) of the Code and a Form W-8BEN, or any subsequent
versions thereof or successors thereto properly completed and duly executed by
such Non U.S. Lender claiming complete exemption from, or a reduced rate of,
U.S. federal withholding tax on all payments by the Borrower under this Agreement
and the other Loan Documents.  Such forms
shall be delivered by each Non U.S. Lender on or before the date it becomes a
party to this Agreement (and in the case of any Participant, on or before the
date such Participant purchases the related participation).  In addition, each Non U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non U.S. Lender. 
Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose).  Notwithstanding any other provision of this
paragraph, a Non U.S. Lender shall not be required to deliver any form pursuant
to this paragraph that such Non U.S. Lender is not legally able to deliver.

(b)                                 A
Lender that is entitled to an exemption from or reduction of non-U.S.
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 or
reasonably requested by the Borrower, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate, provided that such Lender is
legally entitled to complete, execute and deliver such documentation and in
such Lender’s reasonable judgment such completion, execution or submission
would not materially prejudice the legal position of such Lender.

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

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

 92
 

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

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

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

ARTICLE XI

MISCELLANEOUS

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

(a)                                  increase
or extend the Commitment of any Lender, without the signed written consent of
such Lender;

(b)                                 postpone
the final maturity date of any Loan, postpone or delay any other date fixed by
this Agreement or any other Loan Document for any payment of principal,
interest, fees or other amounts due to any Lender hereunder or under any other
Loan Document (other than any mandatory prepayment provision (and the dates and
amounts thereof, including interest and any related costs)), without the signed
written consent of such Lender;

 93
 

(c)                                  reduce
the principal of, or the rate of interest specified herein on any Loan, or
(subject to clause (ii) below) any fees or other amounts payable hereunder
to any Lender or under any other Loan Document, without the signed written
consent of such Lender;

(d)                                 change
the Pro Rata Shares or change in any manner the definition of “Required Lenders”
or the Lenders required to rescind or annul an acceleration, without the signed
written consent of all Lenders;

(e)                                  amend
this Section 11.1 or Section 9.1, or any provision of this Agreement
which, by its terms, expressly requires the approval or concurrence of all
Lenders, without the signed written consent of all Lenders;

(f)                                    release
all, substantially all, or any material portion of the Collateral (except for
releases in connection with any Disposition or any Restricted Subsidiary
ceasing to be such in any designation or other transaction which is permitted
hereunder or under any Loan Document) without the signed written consent of all
Lenders;

(g)                                 release
any Guarantor from any Guaranty (except for releases in connection with any
Disposition or any Restricted Subsidiary ceasing to be such in any designation
or other transaction which is permitted hereunder or under any Loan Document),
without the signed written consent of all Lenders;

(h)                                 modify
the protections afforded to any SPC pursuant to the provisions of Section
11.8(d) without the written consent of such SPC; or

(i)                                     change
the provisions of any Loan Document in a manner that by its terms adversely
affects the rights in respect of payments due to, or Collateral pledged for the
benefit of, Lenders holding Loans of a Series differently from the rights of
Lenders holding Loans of any other Series without the prior written consent of
Lenders having an Aggregate Exposure equal to at least 50% of the sum of the
Aggregate Exposures of all Lender holding Loans of the Series adversely
affected.

provided further, however, that (i) any
amendment, modification, termination or waiver of any of the provisions contained
in Article V shall be effective only if evidenced by a writing signed by
or on behalf of the Administrative Agent and the Required Lenders, (ii) no
amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Required Lenders or all the Lenders or
each Lender directly adversely affected thereby, as the case may be, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document and (iii) notwithstanding anything in this Section 11.1 to the
contrary, any amendment to this Agreement or any other Loan Document may be
effected in accordance with the last sentence of Section 2.12(b).

11.2                           Notices.

(a)                                  All
notices, requests and other communications shall be in writing and mailed,
faxed or delivered, to the address or facsimile number specified for notices on
the signature pages hereof; or, as directed to the Borrower or the
Administrative Agent, to 

 94
 

such other
address as shall be designated by such party in a written notice to the other
parties, and as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Borrower and the
Administrative Agent.

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

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

11.3                           No Waiver;
Cumulative Remedies.  No failure
to exercise and no delay in exercising, on the part of the Administrative Agent
or any Lender, any right, remedy, power or privilege hereunder, shall operate
as a waiver thereof;  nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.  The
rights and remedies of the Administrative Agent and the Lenders hereunder and
under the other Loan Documents are cumulative and are not exclusive of any rights
and remedies than they would have otherwise have.

11.4                           Costs and
Expenses.  The
Borrower shall:

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

 95
 

expenses as
may be incurred by the assignor Lenders or Assignee under Section 11.8(a);
and

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

11.5                           Indemnity.  Whether or not the transactions contemplated
hereby are consummated, the Borrower shall indemnify and hold each Agent-Related
Person and each Lender and each of their respective Affiliates, successors and
assignors and its and their respective officers, directors, employees, counsel,
agents, advisors, controlling Persons, members and attorneys in fact (each, an “Indemnified Person”) harmless from and against any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses and disbursements (including Attorney Costs) of
any kind or nature whatsoever which may at any time (including at any time
following repayment of the Loans, and the termination, resignation or
replacement of the Administrative Agent or replacement of any Lender) be
imposed on, incurred by or asserted against any such Person in any way relating
to or arising out of this Agreement or any document contemplated by or referred
to herein, including any of the Transaction Documents, or the transactions
contemplated hereby, including the Specified Acquisitions, or any action taken
or omitted by any such Person under or in connection with any of the foregoing,
including with respect to any investigation, litigation or proceeding
(including any Insolvency Proceeding or appellate proceeding) related to or
arising out of this Agreement, any Transaction Document, the Loans or the use
of the proceeds thereof, whether or not any Indemnified Person is a party
thereto (all the foregoing, collectively, the “Indemnified
Liabilities”), WHETHER OR NOT SUCH INDEMNIFIED LIABILITIES ARISE
OUT OF OR AS A RESULT OF ANY INDEMNIFIED PARTY’S NEGLIGENCE IN WHOLE OR IN
PART, INCLUDING, WITHOUT LIMITATION, THOSE CLAIMS WHICH RESULT FROM THE SOLE,
JOINT, CONCURRENT OR COMPARATIVE NEGLIGENCE OF THE INDEMNIFIED PARTY, OR ANY
ONE OR MORE OF THEM; provided,
that the Borrower shall have no obligation hereunder to any Indemnified Person
with respect to Indemnified Liabilities (including without limitation under
Section 3.1(d)) to the extent same arise from the gross negligence or willful
misconduct of any Indemnified Person.  No
Indemnified Person shall be liable for any damages arising from the use by
unauthorized Persons of information or other materials sent through electronic,
telecommunications or other information transmission systems that are
intercepted by such Persons or for any special, indirect, consequential or
punitive damages in connection with this Agreement.  All amounts due under this Section 11.5 shall
be payable not later than thirty (30) days after written demand therefor.  The agreements in Sections 11.4 and 11.5
shall survive payment of all other Obligations.

11.6                           Setoff;
Payments Set Aside.

(a)                                  If
an Event of Default shall have occurred and be continuing, and (i) if the Loans
have been accelerated or otherwise become due and payable or (ii) with the 

 96
 

consent of the
Administrative Agent, each Lender is hereby authorized at any time and from
time to time, except to the extent prohibited by law, to set off and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held and other indebtedness at any time owing by such Lender to or for
the credit or the account of the Borrower or any Guarantor against any of and
all the Obligations held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement or such other Loan
Document 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.

(b)                                 To
the extent that the Borrower makes a payment to the Administrative Agent or the
Lenders, or the Administrative Agent or the Lenders exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by the
Administrative Agent or such Lender in its discretion) to be repaid to a
trustee, debtor-in-possession, receiver or any other Person, in connection with
any Insolvency Proceeding or otherwise, then (a) to the extent of such
recovery the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such set-off had not occurred, and (b) each Lender
severally agrees to pay to the Administrative Agent or such Lender upon demand
its Pro Rata Share of any amount so recovered from or repaid by the
Administrative Agent or such Lender.

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

11.8                           Assignments,
Participations, etc.

(a)                                  Each
Lender may assign to one or more assignees (each, an “Assignee”)
all or a portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it) with the prior written consent of the Administrative Agent (not to be
unreasonably withheld or delayed); provided, that (i) the amount of the Commitment or
Loans of the assigning Lender subject to each such assignment (determined as of
the date the Assignment and Acceptance substantially in the form of
Exhibit J (the “Assignment and Acceptance”)
with respect to such assignment is delivered to the Administrative Agent and
determined on an aggregate basis in the event of concurrent assignments to
Related Funds (as defined below)) shall not, unless consented to by the
Administrative Agent, be less than $1,000,000 (or, if less, the entire
remaining amount of such Lender’s Commitment or Loans), (ii) the parties
to each such assignment shall execute and deliver to the Administrative Agent
an Assignment and Acceptance via an electronic settlement system acceptable to
the Administrative Agent (or, if previously agreed with the Administrative

 97
 

Agent,
manually) and shall pay to the Administrative Agent a processing and
recordation fee in the amount of $3,500.00 (which fee may be waived or reduced
in the sole discretion of the Administrative Agent), provided, that only one such fee
shall be payable in the case of concurrent assignments to Persons that, after
giving effect to such assignments, will be Related Funds and (iii) the
Assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an administrative questionnaire in such form as supplied from time to
time by the Administrative Agent (an “Administrative
Questionnaire”) and all applicable tax forms.  Upon acceptance and recording pursuant to
Section (c), from and after the effective date specified in each
Assignment and Acceptance, (A) the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement
and (B) the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of Article III
and Section 11.5, as well as to any fees accrued for its account prior to
the effective date specified in such Assignment and Acceptance and not yet
paid).  The term “Related
Funds” shall mean with respect to any Lender that is a fund or
combined investment vehicle that invests in bank loans, any other fund that
invests in bank loans and is managed or advised by the same investment advisor
as such Lender or by an Affiliate of such investment advisor.

(b)                                 By
executing and delivering an Assignment and Acceptance, the assigning Lender
thereunder and the Assignee thereunder shall be deemed to confirm to and agree
with each other and the other parties hereto as follows:  (i) such assigning Lender warrants that
it is the legal and beneficial owner of the interest being assigned thereby
free and clear of any adverse claim and that its Commitment, and the
outstanding balances of its Loans, in each case without giving effect to
assignments thereof which have not become effective, are as set forth in such Assignment
and Acceptance, (ii) except as set forth in (i) above, such assigning
Lender makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto, or
the financial condition of the Borrower or any Subsidiary or the performance or
observance by the Borrower or any Subsidiary of any of its obligations under
this Agreement, any other Loan Document or any other instrument or document
furnished pursuant hereto; (iii) such Assignee represents and warrants
that it is legally authorized to enter into such Assignment and Acceptance;
(iv) such Assignee confirms that it has received a copy of this Agreement,
together with copies of the most recent financial statements referred to in
Section 5.1 or delivered pursuant to Section 7.1, the Intercreditor
Agreement, the Collateral Trust Agreement and such other documents and
information as it has deemed appropriate to make its 

 98
 

own credit
analysis and decision to enter into such Assignment and Acceptance;
(v) such Assignee will independently and without reliance upon the
Administrative Agent, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement; (vi) such Assignee appoints and authorizes the
Administrative Agent and the Collateral Trustee to take such action as agent on
its behalf and to exercise such powers under this Agreement and the Collateral
Trust Agreement, respectively, as are delegated to the Administrative Agent and
the Collateral Trustee, respectively, by the terms hereof and thereof, together
with such powers as are reasonably incidental thereto; and (vii) such
Assignee agrees that it will perform in accordance with their terms all the
obligations which by the terms of this Agreement are required to be performed
by it as a Lender and will be bound by and will take no actions contrary to the
provisions of the Intercreditor Agreement or the Collateral Trust
Agreement.  The Administrative Agent
shall be entitled to rely, without any independent investigation, on the
representations and warranties and other statements deemed to be made by the
assigning Lender and the Assignee pursuant to this Section 11.8(b) and
shall not incur any liability for relying thereon.

(c)                                  The
Administrative Agent, acting for this purpose as an agent of the Borrower,
shall maintain at one of its offices in The City of New York a copy of each
Assignment and Acceptance delivered to it. 
Upon its receipt of, and consent to, a duly completed Assignment and
Acceptance executed by an assigning Lender and an Assignee, an Administrative
Questionnaire completed in respect of the Assignee (unless the Assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section (b) above, if applicable, and the written consent of the
Administrative Agent to such assignment and any applicable tax forms, the
Administrative Agent shall (i) accept such Assignment and Acceptance and
(ii) record the information contained therein in the Register.  No assignment shall be effective unless it
has been recorded in the Register as provided in Section (c).  The Register shall be available for
inspection by the Borrower or any Lender (with respect to any entry relating to
such Lender’s Loans) at any reasonable time and from time to time upon
reasonable prior notice.

(d)                                 Notwithstanding
anything to the contrary contained herein, any Lender (a “Granting Lender”) may grant to a special purpose funding
vehicle (an “SPC”), identified as such in
writing from time to time by the Granting Lender to the Administrative Agent
and the Borrower, the option to provide to the Borrower all or any part of any
Loan that such Granting Lender would otherwise be obligated to make to the
Borrower on the Closing Date pursuant to this Agreement; provided, that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof. 
The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender).  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior Indebtedness of any SPC, it will not institute against, or join any
other person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, 

 99
 

insolvency or
liquidation proceedings under the laws of the United States or any State
thereof.  In addition, notwithstanding
anything to the contrary contained in this Section 11.8, any SPC may
(i) with notice to, but without the prior written consent of, the Borrower
and the Administrative Agent and without paying any processing fee therefor, assign
all or a portion of its interests in any Loans to the Granting Lender or to any
financial institutions (consented to by the Administrative Agent) providing
liquidity and/or credit support to or for the account of such SPC to support
the funding or maintenance of Loans and (ii) disclose on a confidential
basis any non-public information relating to its Loans to any rating agency,
commercial paper dealer or provider of any surety, guarantee or credit or
liquidity enhancement to such SPC.

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

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

 100
 

interest in
amounts owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.

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

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

(i)                                     Notwithstanding
anything to the contrary in Section 11.8(g) or any other provision of this
Agreement or any other Loan Document, any party hereto or thereto (and each
employee, representative, or other agent of such party) may disclose to any and
all Persons, without limitation of any kind, the Tax treatment and Tax
structure of the transactions contemplated herein and therein and all materials
of any kind in each case within the meaning of United States Treasury
Regulation Section 1.6011-4 (including 

 101
 

opinions or
other Tax analyses) that are provided to such party relating to such Tax
treatment and Tax structure; provided, that with respect to any document or similar item
that in either case contains information concerning Tax treatment or Tax
structure of the transactions contemplated by this Agreement as well as other
information, this Section 11.8(i) shall only apply to such portions of the
document or similar item that relate to such Tax treatment or Tax structure.

(j)                                     If any Lender (such Lender, a “Non-Consenting Lender”) has
failed to consent to a proposed amendment, modification, termination, waiver,
or departure from any provision, which pursuant to the terms of Section 11.1
the consent of such Lender is required, with respect to which the Required
Lenders shall have granted their consent and which will become effective if the
Borrower is able to take the actions referred to in this paragraph (j), then
provided no Event of Default then exists, the Borrower shall have the right
(unless such Non-Consenting Lender grants such consent) to replace such
Non-Consenting Lender by requiring such Non-Consenting Lender to assign its
Loans and its Commitments to one or more assignees reasonably acceptable to the
Administrative Agent, provided that: (a) all Obligations of the Borrower (other
than principal and interest on the Loans) owing to such Non-Consenting Lender
being replaced, including all Premiums (if any) and other amounts
accrued for the account of such Non-Consenting Lender hereunder, shall be paid in full by the Borrower to such
Non-Consenting Lender concurrently with such assignment and (b) the replacement
Lender shall purchase the foregoing by paying to such Non-Consenting Lender a
price equal to the sum of the principal of and interest accrued to the
date of such payment on the outstanding Loans of such Non-Consenting Lender.  Any
such payment made to a Non-Consenting Lender shall be deemed to be a prepayment
by the Borrower for the purposes of Section 2.4 hereto.  In connection with any such assignment the
Borrower, the Administrative Agent, such Non-Consenting Lender and the
replacement Lender shall otherwise comply with the other provisions of this
Section 11.8.  In connection with
any such replacement, if the replaced Lender does not execute and deliver to
the Administrative Agent a duly completed Assignment and Acceptance reflecting
such replacement within five Business Days of the date on which the replacement
Lender executes and delivers such Assignment and Acceptance to the replaced
Lender, then such replaced Lender shall be deemed to have executed and
delivered such Assignment and Acceptance.

11.9                           Interest.  It is the intention of the parties hereto to
comply with applicable usury laws, if any; accordingly, notwithstanding any
provision to the contrary in this Agreement, the Notes or in any of the other
Loan Documents securing the payment hereof or otherwise relating hereto, in no
event shall this Agreement, the Notes or such other Loan Documents require or
permit the payment, taking, reserving, receiving, collection, or charging of
any sums constituting interest under applicable laws which exceed the Highest
Lawful Rate.  If any such excess interest
is called for, contracted for, charged, taken, reserved, or received in
connection with the Loans evidenced by the Notes or in any of the Loan
Documents securing the payment thereof or otherwise relating thereto, or in any
communication by the Administrative Agent or the Lenders or any other Person to
the Borrower or any other Person, or in the event all or part of the principal
or interest thereof shall be prepaid or accelerated, so that under any of such
circumstances or under any other circumstance whatsoever the amount of interest
contracted for, charged, taken, reserved, or received on the amount of
principal actually outstanding from time

 102
 

to time under the Notes or
any other Loan Document shall exceed the Highest Lawful Rate, then in any such
event it is agreed as follows: 
(i) the provisions of this Section 11.9 shall govern and
control, (ii) neither any Company nor any other Person now or hereafter
liable for the payment of the Notes shall be obligated to pay the amount of
such interest to the extent such interest is in excess of the Highest Lawful
Rate, (iii) any such excess which is or has been received notwithstanding
this Section 11.9 shall be credited against the then unpaid principal
balance of the Notes or, if the Notes have been or would be paid in full,
refunded to the Borrower, and (iv) the provisions of this Agreement, the
Notes and the other Loan Documents securing the payment thereof and otherwise
relating thereto, and any communication to the Borrower, shall immediately be
deemed reformed and such excess interest reduced, without the necessity of
executing any other document, to the Highest Lawful Rate as now or hereafter
construed by courts having jurisdiction hereof or thereof.  Without limiting the foregoing, all
calculations of the rate of the interest contracted for, charged, collected,
taken, reserved, or received in connection with the Notes, this Agreement or
any other Loan Document which are made for the purpose of determining whether
such rate exceeds the Highest Lawful Rate shall be made to the extent permitted
by applicable laws by amortizing, prorating, allocating and spreading during
the period of the full term of the Loans, including all prior and subsequent
renewals and extensions, all interest at any time contracted for, charged, taken,
collected, reserved, or received.  The
terms of this Section 11.9 shall be deemed to be incorporated in every
document and communication relating to the Notes, the Loans or any other Loan
Document.

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

11.11                     Automatic
Debits of Fees.  With
respect to any fee or any other cost or expense (including Attorney Costs) due
and payable to the Administrative Agent under the Loan Documents, the Borrower
hereby irrevocably authorizes the Administrative Agent, after giving reasonable
prior notice to the Borrower, to debit any deposit account of the Borrower with
the Administrative Agent in an amount such that the aggregate amount debited
from all such deposit accounts does not exceed such fee or other cost or
expense.  If there are insufficient funds
in such deposit accounts to cover the amount of the fee or other cost or
expense then due, such debits will be reversed (in whole or in part, in the Administrative
Agent’s sole discretion) and such 

 103
 

amount not debited shall be
deemed to be unpaid.  No such debit under
this Section 11.11 shall be deemed a set-off.

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

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

11.14                     Severability.  The invalidity, illegality or
unenforceability of any provision of this Agreement or any instrument or
agreement required hereunder shall not in any way affect or impair the legality
or enforceability of the remaining provisions of this Agreement or any
instrument or agreement required hereunder. 
The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.

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

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

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

(a)                                  submit,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to
this Agreement, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State or, to the extent

 104
 

permitted by
law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that the
Administrative Agent may otherwise have to bring any action or proceeding
relating to this Agreement against the Borrower and each Guarantor or its
properties in the courts of any jurisdiction.

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

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

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

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

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

 105
 

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

11.22                     Intercreditor
Agreement; Collateral Trust Agreement.  Each Lender (a) acknowledges that it has
received a copy of the Intercreditor Agreement, (b) acknowledges and agrees to
Credit Suisse acting as the Administrative Agent and the First Lien Credit
Agent, (c) consents to the subordination of Liens provided for in the
Intercreditor Agreement, (d) hereby agrees that it will be bound by and take no
actions contrary to the Intercreditor Agreement or the Collateral Trust
Agreement and (e) hereby irrevocably authorizes and instructs the
Administrative Agent to enter into and perform the Intercreditor Agreement and
to be party to and perform the Collateral Trust Agreement on its behalf.

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

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

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

 106
 

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

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

11.25                     Survival of
Representations and Warranties.  All covenants, agreements, representations
and warranties made by the Borrower and each Guarantor herein, in the other
Loan Documents and in any document, certificate or statement delivered pursuant
hereto or in connection herewith shall be considered to have been relied upon
by the Lenders and shall survive the execution and delivery of this Agreement,
the consummation of the Specified Acquisitions and the making of the Loans and
other extensions of credit hereunder by the Lenders, regardless of any
investigation made by the Lenders or on their behalf 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 other amount payable under this Agreement or any other Loan
Document is outstanding and unpaid and so long as the Commitments have not been
terminated.  The provisions of Sections 11.5
and 11.10 and, until the first anniversary of the final Maturity Date of all
Loans, 11.8(g) shall remain operative and in full force and effect regardless
of the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or enforceability of any term or
provision of this Agreement or any other Loan Document or any investigation
made by or on behalf of the Administrative Agent or any Lender.

11.26                     Release of
Collateral and Guarantee Obligations.

(a)                                  Notwithstanding
anything to the contrary contained herein or in any other Loan Document (other
than the Intercreditor Agreement and the Collateral Trust Agreement), upon
request of the Borrower in connection with any Disposition of Property that is
permitted by Section 8.2 (other than a Disposition to the Borrower or a
Restricted Subsidiary) and otherwise made in compliance with the Loan Documents
(but subject to the provisions to the Intercreditor Agreement and the Collateral
Trust Agreement), unless a Triggering Event has occurred and is continuing at
the time of such Disposition, the Administrative Agent shall (without notice
to, or vote or consent of, any Lender or any Qualifying Counterparty):

(i)                                     issue
written directions to the Collateral Trustee in accordance with
Section 7.02 of the Collateral Trust Agreement authorizing the Collateral
Trustee to release its security interest in any Collateral being Disposed of in
such Disposition; and

 107
 

(ii)                                  take
such actions as shall be required to release any Guarantee Obligations under
any Loan Document of any Person that is no longer a Restricted Subsidiary
following in such Disposition, to the extent necessary to permit consummation
of such Disposition in accordance with the Loan Documents;

provided, that the Borrower shall have delivered to
the Administrative Agent and the Collateral Trustee, at least ten Business Days
prior to the date of the proposed release (or such shorter period agreed to by
the Administrative Agent and the Collateral Trustee), a written request for
release identifying the relevant Collateral being Disposed of in such
Disposition and the terms of such Disposition in reasonable detail, including
the date thereof, the price thereof and any expenses in connection therewith,
together with a certification by the Borrower stating that such transaction is
in compliance with this Agreement and the other Loan Documents and that the
proceeds of such Disposition will be applied in accordance with this Agreement
and the other Loan Documents.

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

(c)                                  Notwithstanding
anything to the contrary contained herein or in any other Loan Document (other
than the Intercreditor Agreement and the Collateral Trust Agreement), upon
request of the Borrower in connection with any Restricted Subsidiary becoming a
Partially Owned Operating Company or the designation by the Company of any
Restricted Subsidiary as an Unrestricted Subsidiary, Permitted MLP or Permitted
GP in accordance with Section 8.4 and the definition of “Unrestricted
Subsidiary”, “Permitted MLP” or “Permitted GP”, as applicable, in each case as
permitted by and in compliance with the Loan Documents, but subject to the
provisions of the Intercreditor Agreement and the Collateral Trust Agreement,
unless a Triggering Event has occurred and is continuing, the Administrative
Agent shall (without notice to, or vote or consent of, any Lender or any
Qualifying Counterparty) if such Restricted Subsidiary is a Guarantor:

 108
 

(i)                                     issue
written directions to the Collateral Trustee in accordance with
Section 7.02 of the Collateral Trust Agreement authorizing the Collateral
Trustee to release its security interest in any Collateral owned by such
Restricted Subsidiary; and

(ii)                                  take
such actions as shall be required to release any Guarantee Obligations of such
Restricted Subsidiary under any Loan Document;

provided,
that the Borrower shall have delivered to the Administrative Agent and the
Collateral Trustee, at least ten Business Days prior to the date of the
proposed release (or such shorter period agreed to by the Administrative Agent
and the Collateral Trustee), a written request for release identifying the
Restricted Subsidiary ceasing to be a Restricted Subsidiary and the terms of
the relevant transaction in reasonable detail, including the date thereof and
any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with this Agreement and
the other Loan Documents.

11.27                     Replacement/Refinancing;
Reaffirmation.

(a)                                  From
and after the Closing Date, this Agreement replaces and refinances in its
entirety the Existing Term Loan Agreement; and the Existing Term Loan Agreement
shall thereafter be of no further force and effect except the provisions of
Sections 11.4 and 11.5 and 11.10 and, until the first anniversary of the
Maturity Date of all Loans, Section 11.8(g) shall remain operative and in full
force and effect.  Notwithstanding the
payment of all “Loans” under the Existing Term Loan Agreement and any provision
of Section 11.26(b) of the Existing Term Loan Agreement to the contrary, the
Existing Term Loan Agent shall have no obligation to, and shall not, take any
actions to release any security interest or guarantee (including issuing any
directions to the Collateral Trustee to release any Lien) under any “Loan
Document” (as defined in the Existing Term Loan Agreement).

(b)                                 Neither
this Agreement nor the repayment of any “Loans” under the Existing Term Loan
Agreement with the proceeds of Loans hereunder shall discharge or release, or
change the priority of, any Security Document or any security interest granted
pursuant hereto, it being the intention of the parties hereto that the Liens
granted to the Collateral Trustee under the Security Documents continue in full
force and effect without impairment of the validity, enforceability, priority
or perfection or otherwise in any manner, to secure the Sharing Obligations
(including from and after the Closing Date, the Obligations) from time to time
outstanding.

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

(d)                                 Each
of the Guarantors reaffirms the guaranties made pursuant to the Guaranty (or a
joinder thereto) in favor of the Administrative Agent for the benefit of the 

 109
 

Lender
Parties, which guaranties shall continue in full force and effect during the
term of this Agreement and any renewals or extensions thereof as guaranties of
the Obligations.

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

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

(g)                                 Each
Loan Party hereby consents to this Agreement and the transactions contemplated
hereby and confirms its respective guarantees, pledges and grants of security
interests, as applicable, under and subject to the terms of each of the Loan
Documents to which it is a party, and agrees that, notwithstanding the
effectiveness of this Agreement, such guarantees, pledges and grants of
security interests, and the terms of each of the Security Documents to which it
is a party, shall continue to be in full force and effect.

(h)                                 Each
Loan Party, the Administrative Agent, the Existing Term Loan Agent and the
Collateral Trustee acknowledges and agreed to each of the matters set forth in
Section 6.30(c).

[THE REMAINDER OF THIS
PAGE IS LEFT BLANK]

 110

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

	
  

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  VENOCO,
  INC.

  
	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  

 

	
  

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  WHITTIER
  PIPELINE CORPORATION

  
	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   President

  

 

	
  

  	
  BMC, LTD., A CALIFORNIA LIMITED

  PARTNERSHIP

  
	
   

  	
   

  
	
   

  	
  By:  Venoco,
  Inc., General Partner

  
	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  
				

 

	
  

  	
  TEXCAL
  ENERGY (LP) LLC

  
	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  

 

	
  

  	
  TEXCAL
  ENERGY (GP) LLC

  
	
   

  	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  

 

[Term
Loan Agreement Signature Page]

 

	
  

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  TEXCAL
  ENERGY NORTH CAL L.P.

  
	
   

  	
   

  
	
   

  	
  By:  TEXCAL
  ENERGY (GP) LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  
					

 

	
  

  	
  TEXCAL
  ENERGY SOUTH CAL L.P.

  
	
   

  	
   

  
	
   

  	
  By:  TEXCAL
  ENERGY (GP) LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  
					

 

	
  

  	
  TEXCAL
  ENERGY SOUTH TEXAS L.P.

  
	
   

  	
   

  
	
   

  	
  By:  TEXCAL
  ENERGY (GP) LLC,

  
	
   

  	
   

  	
  as general partner

  
	
   

  
	
  

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   Timothy M. Marquez

  
	
   

  	
   Chief Executive Officer

  
	
   

  
	
   

  	
  Address for Notice to the Borrower and the

  Guarantors:

  Principal Place of Business

  and Chief Executive Office:

   

  370 17th Street, Suite
  2950

  Denver, Colorado
  80202-1370

  Attention:  Chief Financial Officer

  Facsimile No.:  (303) 626-8315

  
					

 

[Term
Loan Agreement Signature Page]

 

	
  

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS

  
	
   

  	
  BRANCH,
  as Administrative Agent and as a

  Lender (and, solely for purposes of Section 11.27,

  as Existing Term Loan Agent and as Collateral

  Trustee)

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  	
   

  
	
   

  	
   

  	
  Name: Vanessa Gomez

  
	
   

  	
   

  	
  Title:   Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Nupur Kumar

  	
   

  
	
   

  	
   

  	
  Name: Nupur Kumar

  
	
   

  	
   

  	
  Title:   Associate

  

 

	
  

  	
  Address:

  	
  Eleven Madison Avenue

  
	
   

  	
   

  	
  New York, NY 
  10010

  
	
   

  	
  Facsimile No.1:

  	
  (212) 448-3755

  
	
   

  	
  Facsimile No.2:

  	
  (212) 322-0419

  
	
   

  	
  Attention:

  	
  Vanessa Gomez

  
	
   

  	
   

  	
   

  
	
   

  	
  with copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  Credit Suisse

  
	
   

  	
   

  	
  Transaction Management Group

  
	
   

  	
   

  	
  Eleven Madison Avenue

  
	
   

  	
   

  	
  New York, NY 
  10010

  
	
   

  	
  Facsimile No.:

  	
  (212) 743-2375

  
	
   

  	
  Attention:

  	
  Lillian Cortes

  
	
   

  	
   

  	
   

  
	
   

  	
  Applicable Lending Office

  
	
   

  	
  for Base Rate Loans and

  
	
   

  	
  LIBO Rate Loans:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  One Madison Avenue

  
	
   

  	
   

  	
  New York, NY 
  10010

  
	
   

  	
  Facsimile No.1:

  	
  (212) 538-6851

  
	
   

  	
  Facsimile No.2:

  	
  (212) 325-8317

  
	
   

  	
  Attention:

  	
  Ed Markowski

  

 

[Term
Loan Agreement Signature Page]

 

	
  

  	
  UBS SECURITIES LLC, as
  Syndication Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary E. Evans

  	
   

  
	
   

  	
   

  	
  Name: Mary E. Evans

  
	
   

  	
   

  	
  Title:  
  Associate Director

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
   

  	
  Name: Irja R. Otsa

  
	
   

  	
   

  	
  Title:  Associate
  Director

  

 

	
  

  	
  Address:

  	
  677 Washington Blvd.

  
	
   

  	
   

  	
  Stamford, CT 06901

  
	
   

  	
  Facsimile No.:

  	
  203-719-3888

  
	
   

  	
  Attention:

  	
  Robert Arscott

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  677 Washington Blvd.

  
	
   

  	
   

  	
  Stamford, CT 06901

  
	
   

  	
  Facsimile No.:

  	
  203-719-3888

  
	
   

  	
  Attention:

  	
  Marie Haddad

  

 

	
  

  	
  BANK
  OF MONTREAL, acting through its U.S.

  branches and agencies, including its Chicago, 

  Illinois branch, as Co-Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Joseph A. Bliss

  
	
   

  	
   

  	
  Joseph A. Bliss

  
	
   

  	
   

  	
  Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  Bank of Montreal

  
	
   

  	
   

  	
  Houston Agency

  
	
   

  	
   

  	
  700 Louisiana Street

  
	
   

  	
   

  	
  4400 Bank of America Center

  
	
   

  	
   

  	
  Houston, Texas 
  77002

  
	
   

  	
   

  	
   

  
	
   

  	
  Facsimile No.:

  	
  (713) 223-4007

  
	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
  Joseph A. Bliss

  
					

 

[Term
Loan Agreement Signature Page]

 

	
  

  	
  LEHMAN COMMERCIAL PAPER INC.,
  as Co-

  Documentation Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Frank Turner

  
	
   

  	
  Name: Frank
  Turner

  
	
   

  	
  Title: Sr. Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile No.:

  	
  646-758-1986

  
	
   

  	
  Attention:

  	
  Frank Turner

  
	
   

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
  745 7th Avenue, 5th Floor

  
	
   

  	
   

  	
  New York, NY 10019

  
	
   

  	
  Facsimile No.:

  	
  212-520-0450

  
	
   

  	
  Attention:

  	
  Cindy Eng

  
				

 

[Term
Loan Agreement Signature Page]Exhibit 10.2

FIFTH AMENDMENT TO
THE

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

THIS FIFTH AMENDMENT TO THE SECOND AMENDED AND
RESTATED CREDIT AGREEMENT (this “Amendment”), dated
as of May 7, 2007 and effective as of the date in which all of the conditions
set forth Section 5 have been satisfied or waived by the Administrative Agent,
the
“Amendment Effective Date”, which
amends that certain Second Amended and Restated Credit Agreement dated as of
March 30, 2006, as amended by the First Amendment to the Second Amended and
Restated Credit Agreement dated as of May 2, 2006, the Second Amendment to
Second Amended and Restated Credit Agreement dated as of October 25, 2006, the
Third Amendment to Second Amended and Restated Credit Agreement dated as of
November 29, 2006, and the Fourth Amendment to Second Amended and Restated
Credit Agreement dated as of March 1, 2007, by and among VENOCO, INC., a
Delaware corporation (the “Company”),
the Guarantors, each of the Lenders party thereto, BANK OF MONTREAL, a Canadian
chartered bank acting through certain of its U.S. branches or agencies, as
Administrative Agent (in such capacity, the “Administrative
Agent”), CREDIT SUISSE, CAYMAN ISLANDS BRANCH, and LEHMAN
COMMERCIAL PAPER INC., as Co-Syndication Agents and FORTIS CAPITAL CORP., as
Documentation Agent (as in effect immediately prior to the Amendment Effective
Date, the “Credit Agreement”), is by and
among the Company, the Guarantors, each of the Lenders party hereto and the
Administrative Agent.

WHEREAS, the Company has
advised the Administrative Agent and the Lenders that the Company proposes to
refinance all of its existing Indebtedness under the Second Lien Term Loan
Agreement with proceeds of term loans under a new Term Loan Agreement, substantially in the form of Exhibit “A” attached hereto,
subject to effectiveness of this Amendment and the other conditions
precedent provided for in such agreement (the “Second
Lien Term Loans Refinancing”);

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

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

NOW, THEREFORE, in
consideration of the mutual agreements, provisions and covenants contained
herein and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

Section 1.               Defined Terms; Interpretation.

(a)           Capitalized
terms used but not otherwise defined herein shall have the meanings assigned
such terms in the Credit Agreement.

(b)           The
rules of interpretation set forth in Section 1.2 of the Credit Agreement are
incorporated in this Amendment as if set forth herein.

 1
 

Section 2.               Borrowing Base.  The Lenders hereby approve a Borrowing Base
of $125.0 million as of the Amendment Effective Date.  Such determination shall constitute the
annual Borrowing Base determination for purposes of Section 2.6(b) of the
Credit Agreement.

Section 3.               Amendments.  The Credit Agreement is hereby amended as
follows:

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

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

(b)           The
definition of “Intercreditor Agreement”
is amended and restated to read in its entirety as follows:

“Intercreditor Agreement” means that certain Amended and Restated Intercreditor
Agreement dated as of May 7, 2007 among the Administrative Agent, as first lien
collateral agent, and Credit Suisse, Cayman Islands Branch, as second lien
collateral trustee in substantially the form of “Exhibit H” hereto, as amended,
restated, supplemented or otherwise modified from time to time pursuant to the
terms hereof and thereof

(c)           The
definition of “Non-Hastings Texas Oil and
Gas Properties” is deleted in its entirety.

 2
 

(d)           The
definition of “Pricing Grid”
is amended and restated to read in its entirety as follows:

 “Pricing Grid”
means the annualized rates (stated in terms of basis points (“bps”)) set forth
below which shall be computed as of each day during the term hereof for the
Applicable Margin (and Letter of Credit Rate) and Commitment Fee based upon the
Utilization Percentage on such day as follows:

	
  

  	
   

  	
   

  	
   

  	
  Applicable Margin

  	
   

  	
   

  	
   

  
	
  Pricing
 Level

  	
   

  	
  Utilization

  Percentage

  	
   

  	
  Base Rate Loan
 (bps)

  	
   

  	
  LIBO Rate

  Loan/Letter of

  Credit Rate
 (bps)

  	
   

  	
  Commitment Fee
 (bps)

  	
   

  
	
  Level IV

  	
   

  	
  90% or more

  	
   

  	
  75.0

  	
   

  	
  225.0

  	
   

  	
  50.0

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level III

  	
   

  	
  60% or more but

  less than 90%

  	
   

  	
  50.0

  	
   

  	
  200.0

  	
   

  	
  37.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level II

  	
   

  	
  30% or more but
 less than 60%

  	
   

  	
  25.0

  	
   

  	
  175.0

  	
   

  	
  37.5

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Level
  I

  	
   

  	
  less than 30%

  	
   

  	
  0.0

  	
   

  	
  150.0

  	
   

  	
  37.5

  	
   

  

 

(e)           The
definition of “Qualifying IPO”
is deleted in its entirety.

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

“Second
Lien Term Loan Agreement” means that certain Term Loan Agreement
dated as of May 7, 2007, among the Company, the Guarantors party thereto, the
several lenders from time to time party thereto, Credit Suisse, Cayman Islands
Branch, as Administrative Agent, Credit Suisse Securities (USA) LLC and UBS
Securities LLC, as Joint Lead Arrangers, and Lehman Brothers Inc. and BMO
Capital Markets Corp., as Co-Arrangers, which amends and restates that certain
Amended and Restated Term Loan Agreement dated as of March 30, 2006, among the
Borrower, the subsidiary guarantors parties thereto, the lenders parties
thereto, and the Administrative Agent, among others, as such may be further
amended, restated, supplemented or otherwise modified in accordance with the
terms hereof.

(g)           Section
8.2(f) is hereby amended to delete the phrase “other than the Non-Hastings
Texas Oil and Gas Properties” following “in Oil and Gas Properties” in the
first and second lines thereof.

 3
 

(h)           Section
8.2(i) is hereby amended by deleting the entirety of Section 8.2(i) and
replacing the text thereof with “[Intentionally
omitted]; or”.

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

“(b)
Indebtedness incurred pursuant to the Second Lien Term Loan Agreement in an
aggregate principal amount not to exceed $500,000,000.”

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

“Section 8.9           Restricted Payments.  The Company and each Guarantor shall not, and
shall not permit any of its respective Subsidiaries to, directly or indirectly,
(i) purchase, redeem or otherwise acquire for value any membership interests,
partnership interests, capital accounts, shares of its capital stock or any
warrants, rights or options to acquire such membership interests, partnership
interests or shares, now or hereafter outstanding from its members, partners or
stockholders (other than from its members, partners or stockholders that are
Loan Parties); (ii) declare or pay any distribution, dividend or return capital
to its members, partners or stockholders (other than to its members, partners
or stockholders that are Loan Parties), or make any distribution of assets in
cash or in kind to its members, partners or stockholders (other than members,
partners or stockholders that are Loan Parties); or (iii) make any payment or
prepayment of principal of, premium, if any, or interest on, or redemption,
purchase, retirement, defeasance (including in-substance or legal defeasance),
sinking fund or similar payment with respect to, any Indebtedness outstanding
under or in respect of any Second Lien Debt Instrument  (collectively “Restricted Payments”);
provided,
however,
that the Company may (x) following delivery to the Administrative Agent of the
Company’s audited consolidated financial statements pursuant to Section 7.2(a),
declare and pay in any fiscal year commencing with the 2007 fiscal year regular
Cash Dividends that do not exceed the greater of (A) $500,000 and (B) an
aggregate amount equal to 25% of Consolidated Net Income for the prior fiscal
year; (y) make regularly scheduled payments of interest or mandatory
prepayments in respect of Indebtedness under or in respect of any Second Lien Debt
Instrument in accordance with the terms of the
applicable Second Lien Debt Instrument and the Intercreditor Agreement, but only to the extent required by the applicable Second Lien Debt
Instrument; and (z) make optional prepayments in
respect of any Second Lien Debt Instrument using the Net Cash
Proceeds of an “Equity Offering” (as defined in the Senior Notes Indenture) or
the issuance of debt securities or instruments or the incurrence of loans; provided, further, however,
that (A) no Default has occurred and is continuing, (B) no such Restricted
Payment shall cause a Default, and (C) at the time any such Restricted Payment
is made by the Company, and giving pro forma effect to such payment, the ratio
of the Effective Amount to the Borrowing Base does not exceed .75 to 1.00.

(k)           Exhibit
H.               Exhibit H is hereby
replaced in its entirety with Exhibit H attached to this Amendment.

 4
 

Section 4.               Amendment and Ratification.  Upon the effectiveness hereof as provided in
Section 5 of this Amendment, (i) this Amendment shall be deemed to be an
amendment to the Credit Agreement, and the Credit Agreement, as modified
hereby, is hereby ratified, approved and confirmed to be in full force and
effect in each and every respect and (ii) the consent of the Lenders, and the
Lenders’ authorization of, the Second Lien Term Loans Refinancing and the  execution and delivery of the Intercreditor
Agreement by the Administrative Agent, in its capacity as First Lien Collateral
Agent under the Intercreditor Agreement, shall be deemed given and
obtained.  Except as expressly provided
by the amendments set forth in Section 3 of this Amendment, the execution,
delivery and effectiveness of this Amendment shall neither operate as a waiver
of any right, power or remedy of any Lender or any Agent, nor constitute a
waiver of any provision of any of the Loan Documents.  All references to the Credit Agreement in any
other document, instrument, agreement or writing shall hereafter be deemed to
refer to the Credit Agreement as amended hereby.

Section 5.               Conditions to Effectiveness.  The effectiveness of this Amendment is
subject to the condition that, the Administrative Agent shall have received all
of the following, in form and substance satisfactory to the Administrative
Agent and each Lender, and in sufficient copies for each Lender:

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

(b)           Second Lien Loan Documents.
(i) Evidence that concurrently with the execution and delivery of this
Amendment by the Company, the Guarantors and all the Lenders, (x) each of the
Second Lien Loan Documents has been duly executed and delivered by each of the
parties thereto and (y) the Intercreditor Agreement has been duly executed and
delivered by each of the parties thereto other than the Administrative Agent;
and (ii) true and correct copies, certified as to authenticity by the
Company, of the Second Lien Loan Documents;

(c)           Second Lien Term Loans Refinancing.             The Company has received gross
proceeds from the borrowings under the Second Lien Term Loan Agreement in an
aggregate amount sufficient to effect the Second Lien Term Loans Refinancing
and, if applicable, to cure any Deficiency after giving effect to Section 2 of
this Amendment;

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

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

 5
 

Effect since December 31, 2006; and

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

Section 6.               Representations and Warranties.  The Company and each Guarantor each hereby
represent and warrant that, as of the date hereof and the Amendment Effective
Date, after giving effect to this Amendment:

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

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

(c)           No Material Adverse Effect.  There has occurred no event or circumstance
that has resulted or would reasonably be expected to result in a Material
Adverse Effect since December 31, 2006.

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

Section 7.               Governing Law.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

Section 8.               Costs and Expenses.  The Company shall pay all reasonable costs
and expenses incurred by the Administrative Agent or any other Agent, the
Lenders or any of their Affiliates in connection with the development,
preparation, administration and execution of this Amendment, including Attorney
Costs incurred by any such Person with respect thereto.

Section 9.               Counterparts.  This Amendment may be executed in any number
of separate counterparts, no one of which need be signed by all parties; each
of which, when so executed, shall be deemed an original, and all of such
counterparts taken together shall be deemed to constitute but one and the same
instrument.  A fully executed counterpart
of this Amendment by facsimile signatures shall be binding upon the parties
hereto.

[Signature
Pages Follow]

 6
 

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

	
  

  	
  COMPANY:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  VENOCO, INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WHITTIER PIPELINE CORPORATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BMC, LTD., A
  CALIFORNIA LIMITED PARTNERSHIP

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Venoco, Inc., General Partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (LP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY (GP) LLC

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
  Chief Executive Officer

  

 

 7
 

 

	
  

  	
  GUARANTORS:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY NORTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH CAL L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TEXCAL ENERGY SOUTH TEXAS L.P.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  TEXCAL ENERGY (GP) LLC, as general partner

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Timothy M. Marquez

  
	
   

  	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address for Notice to the Company and the
  Guarantors:

  Principal Place of Business 

  and Chief Executive Office:

  
	
   

  	
   

  
	
   

  	
   

  	
  370 17th Street, Suite 2950 

  Denver, Colorado 80202-1370 

  Attention: Chief Financial Officer 

  Facsimile No.: (303) 626-8315

  

 

 8
 

 

	
  

  	
  ADMINISTRATIVE
  AGENT AND A LENDER:

  
	
   

  	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James V. Ducote

  
	
   

  	
   

  	
  James V. Ducote

  
	
   

  	
   

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CO-SYNDICATION AGENT AND A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CREDIT
  SUISSE, CAYMAN ISLANDS BRANCH

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa Gomez

  
	
   

  	
   

  	
  Name:  

  	
  Vanessa Gomez

  
	
   

  	
   

  	
  Title:

  	
  Vice Prsident

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James Neira

  
	
   

  	
   

  	
  Name:  

  	
  James Neira

  
	
   

  	
   

  	
  Title:

  	
  Associate

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CO-SYNDICATION AGENT AND A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN
  COMMERCIAL PAPER INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maria M. Lund

  
	
   

  	
   

  	
  Name:  

  	
  Maria M. Lund

  
	
   

  	
   

  	
  Title:

  	
  Authorized signatory

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  DOCUMENTATION AGENT AND A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  FORTIS CAPITAL CORP.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Casey Lowary

  
	
   

  	
   

  	
  Name:  

  	
  Casey Lowary

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Darrell Holley

  
	
   

  	
   

  	
  Name:  

  	
  Darrell Holley

  
	
   

  	
   

  	
  Title:

  	
  Managing Director

  

 

 9
 

 

	
  

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  ALLIED IRISH BANKS P.L.C.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert F. Moyle

  
	
   

  	
   

  	
  Name:  

  	
  Robert F. Moyle

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vaughn Buck

  
	
   

  	
   

  	
  Name:  

  	
  Vaughn Buck

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  AMEGY BANK NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Allen Rheem

  
	
   

  	
   

  	
  Name:  

  	
  Allen Rheem

  
	
   

  	
   

  	
  Title:

  	
  Senior Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  CITIBANK, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas Benavides

  
	
   

  	
   

  	
  Name:  

  	
  Thomas Benavides

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  THE BANK OF NOVA SCOTIA

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Hawthorne

  
	
   

  	
   

  	
  Name:  

  	
  Richard Hawthorne

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  UNION BANK OF CALIFORNIA, N.A.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Whitney Randolph

  
	
   

  	
   

  	
  Name:  

  	
  Whitney Randolph

  
	
   

  	
   

  	
  Title:

  	
  Investment Banking Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A LENDER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  BANK OF OKLAHOMA,

  
	
   

  	
  NATIONAL ASSOCIATION

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Monica M. Morton

  
	
   

  	
   

  	
  Name:  

  	
  Monica M. Morton

  
	
   

  	
   

  	
  Title:

  	
  Banking Officer

  

 

 10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00123-of-00352.parquet"}]]