Document:

Exhibit 10.0

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

DATED AS OF JUNE
13, 2005

 

 

AMONG

 

CIMAREX ENERGY
CO.,

AS BORROWER,

 

THE LENDERS,

 

JPMORGAN CHASE
BANK, N.A.,

AS ADMINISTRATIVE
AGENT,

 

U.S. BANK
NATIONAL ASSOCIATION,

AS CO-SYNDICATION
AGENT,

 

BANK OF AMERICA,
N.A.,

AS CO-SYNDICATION
AGENT

 

AND

 

WELLS FARGO BANK,
N.A.,

AS DOCUMENTATION
AGENT

 

 

 

$1,000,000,000

 

 

J.P. MORGAN
SECURITIES INC.,

AS LEAD ARRANGER
AND SOLE BOOK RUNNER

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I DEFINITIONS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE II THE CREDITS

  	
   

  
	
  Section 2.1.

  	
  Commitment

  	
   

  
	
  Section 2.2.

  	
  Required Payments; Termination

  	
   

  
	
  Section 2.3.

  	
  Ratable Loans

  	
   

  
	
  Section 2.4.

  	
  Types of Advances

  	
   

  
	
  Section 2.5.

  	
  Commitment Fee; Initial Aggregate Commitment; Changes in Aggregate
  Commitment

  	
   

  
	
  Section 2.6.

  	
  Borrowing Base and Required Reserve Value

  	
   

  
	
  Section 2.7.

  	
  Minimum Amount of Each Advance

  	
   

  
	
  Section 2.8.

  	
  Principal Payments

  	
   

  
	
  Section 2.9.

  	
  Method of Selecting Types and Interest Periods for new Advances

  	
   

  
	
  Section 2.10.

  	
  Conversion and Continuation of Outstanding Advances

  	
   

  
	
  Section 2.11.

  	
  Changes in Interest Rate, etc

  	
   

  
	
  Section 2.12.

  	
  Rates Applicable After Default

  	
   

  
	
  Section 2.13.

  	
  Method of Payment

  	
   

  
	
  Section 2.14.

  	
  Evidence of Indebtedness

  	
   

  
	
  Section 2.15.

  	
  Telephonic Notices

  	
   

  
	
  Section 2.16.

  	
  Interest Payment Dates; Interest and Fee Basis

  	
   

  
	
  Section 2.17.

  	
  Notification of Advances, Interest Rates, Prepayments and Commitment
  Reductions

  	
   

  
	
  Section 2.18.

  	
  Lending Installations

  	
   

  
	
  Section 2.19.

  	
  Non-Receipt of Funds by the Administrative Agent

  	
   

  
	
  Section 2.20.

  	
  Facility LCs

  	
   

  
	
  Section 2.21.

  	
  Replacement of Lender

  	
   

  
	
  Section 2.22.

  	
  Limitation of Interest

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE III
  YIELD PROTECTION; TAXES

  	
   

  
	
  Section 3.1.

  	
  Yield Protection

  	
   

  
	
  Section 3.2.

  	
  Changes in Capital Adequacy Regulations

  	
   

  
	
  Section 3.3.

  	
  Taxes

  	
   

  
	
  Section 3.4.

  	
  Availability of Types of Advances

  	
   

  
	
  Section 3.5.

  	
  Funding Indemnification

  	
   

  
	
  Section 3.6.

  	
  Lender Statements; Survival of Indemnity

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV CONDITIONS PRECEDENT

  	
   

  
	
  Section 4.1.

  	
  Initial Credit Extension

  	
   

  
	
  Section 4.2.

  	
  Each Credit Extension

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE V REPRESENTATIONS AND
  WARRANTIES

  	
   

  
	
  Section 5.1.

  	
  Existence and Standing

  	
   

  
	
  Section 5.2.

  	
  Authorization and Validity

  	
   

  
	
  Section 5.3.

  	
  No Conflict; Government Consent

  	
   

  
	
  Section 5.4.

  	
  Financial Statements

  	
   

  
				

 

i

 

	
  Section 5.5.

  	
  Material Adverse Change

  	
   

  
	
  Section 5.6.

  	
  Taxes

  	
   

  
	
  Section 5.7.

  	
  Litigation and Contingent Obligations

  	
   

  
	
  Section 5.8.

  	
  Subsidiaries

  	
   

  
	
  Section 5.9.

  	
  ERISA

  	
   

  
	
  Section 5.10.

  	
  Accuracy of Information

  	
   

  
	
  Section 5.11.

  	
  Regulation U

  	
   

  
	
  Section 5.12.

  	
  Material Agreements

  	
   

  
	
  Section 5.13.

  	
  Compliance With Laws

  	
   

  
	
  Section 5.14.

  	
  Ownership of Properties

  	
   

  
	
  Section 5.15.

  	
  Plan Assets; Prohibited Transactions

  	
   

  
	
  Section 5.16.

  	
  Environmental Matters

  	
   

  
	
  Section 5.17.

  	
  Investment Company Act

  	
   

  
	
  Section 5.18.

  	
  Public Utility Holding Company Act

  	
   

  
	
  Section 5.19.

  	
  Insurance

  	
   

  
	
  Section 5.20.

  	
  Solvency

  	
   

  
	
  Section 5.21.

  	
  Closing Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI AFFIRMATIVE COVENANTS

  	
   

  
	
  Section 6.1.

  	
  Financial Report

  	
   

  
	
  Section 6.2.

  	
  Use of Proceeds

  	
   

  
	
  Section 6.3.

  	
  Notice of Default

  	
   

  
	
  Section 6.4.

  	
  Conduct of Business

  	
   

  
	
  Section 6.5.

  	
  Taxes

  	
   

  
	
  Section 6.6.

  	
  Insurance

  	
   

  
	
  Section 6.7.

  	
  Compliance With Laws

  	
   

  
	
  Section 6.8.

  	
  Maintenance of Properties

  	
   

  
	
  Section 6.9.

  	
  Inspection

  	
   

  
	
  Section 6.10.

  	
  Permitted Bond Documents; 9.60% Senior
  Notes Refinancing Documents

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII NEGATIVE COVENANTS

  	
   

  
	
  Section 7.1.

  	
  Restricted Payments

  	
   

  
	
  Section 7.2.

  	
  Indebtedness

  	
   

  
	
  Section 7.3.

  	
  Merger

  	
   

  
	
  Section 7.4.

  	
  Sale of Assets

  	
   

  
	
  Section 7.5.

  	
  Investments

  	
   

  
	
  Section 7.6.

  	
  Liens

  	
   

  
	
  Section 7.7.

  	
  Affiliates

  	
   

  
	
  Section 7.8.

  	
  Sale of Accounts

  	
   

  
	
  Section 7.9.

  	
  Sale and Leaseback Transactions and other
  Off-Balance Sheet Liabilities

  	
   

  
	
  Section 7.10.

  	
  Contingent Obligations

  	
   

  
	
  Section 7.11.

  	
  Financial Contracts

  	
   

  
	
  Section 7.12.

  	
  Letters of Credit

  	
   

  
	
  Section 7.13.

  	
  Prohibited Contracts

  	
   

  
	
  Section 7.14.

  	
  Senior Note Documents; Permitted Bond
  Documents; 9.60% Senior Notes Refinancing Documents

  	
   

  

 

ii

 

	
  ARTICLE VIII FINANCIAL COVENANTS

  	
   

  
	
  Section 8.1.

  	
  Current Ratio

  	
   

  
	
  Section 8.2.

  	
  Leverage Ratio

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX COLLATERAL AND GUARANTEES

  	
   

  
	
  Section 9.1.

  	
  Collateral

  	
   

  
	
  Section 9.2.

  	
  Guarantees

  	
   

  
	
  Section 9.3.

  	
  Further Assurances

  	
   

  
	
  Section 9.4.

  	
  Production Proceeds

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE X DEFAULTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

  	
   

  
	
  Section 11.1.

  	
  Acceleration; Facility LC Collateral
  Account

  	
   

  
	
  Section 11.2.

  	
  Amendments

  	
   

  
	
  Section 11.3.

  	
  Preservation of Rights

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII GENERAL PROVISIONS

  	
   

  
	
  Section 12.1.

  	
  Survival of Representations

  	
   

  
	
  Section 12.2.

  	
  Governmental Regulation

  	
   

  
	
  Section 12.3.

  	
  Headings

  	
   

  
	
  Section 12.4.

  	
  Entire Agreement

  	
   

  
	
  Section 12.5.

  	
  Several Obligations; Benefits of this
  Agreement

  	
   

  
	
  Section 12.6.

  	
  Expenses; Indemnification

  	
   

  
	
  Section 12.7.

  	
  Numbers of Documents

  	
   

  
	
  Section 12.8.

  	
  Accounting

  	
   

  
	
  Section 12.9.

  	
  Severability of Provisions

  	
   

  
	
  Section 12.10.

  	
  Nonliability of Lenders

  	
   

  
	
  Section 12.11.

  	
  Confidentiality

  	
   

  
	
  Section 12.12.

  	
  Nonreliance

  	
   

  
	
  Section 12.13.

  	
  Disclosure

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII THE ADMINISTRATIVE AGENT

  	
   

  
	
  Section 13.1.

  	
  Appointment; Nature of Relationship

  	
   

  
	
  Section 13.2.

  	
  Powers

  	
   

  
	
  Section 13.3.

  	
  General Immunity

  	
   

  
	
  Section 13.4.

  	
  No Responsibility for Loans, Recitals, etc.

  	
   

  
	
  Section 13.5.

  	
  Action on Instructions of Lenders

  	
   

  
	
  Section 13.6.

  	
  Employment of Agents and Counsel

  	
   

  
	
  Section 13.7.

  	
  Reliance on Documents; Counsel

  	
   

  
	
  Section 13.8.

  	
  Administrative Agent’s Reimbursement and
  Indemnification

  	
   

  
	
  Section 13.9.

  	
  Notice of Default

  	
   

  
	
  Section 13.10.

  	
  Rights as a Lender

  	
   

  
	
  Section 13.11.

  	
  Lender Credit Decision

  	
   

  
	
  Section 13.12.

  	
  Successor Administrative Agent

  	
   

  
	
  Section 13.13.

  	
  Administrative Agent and Arranger Fees

  	
   

  
	
  Section 13.14.

  	
  Delegation to Affiliates

  	
   

  
	
  Section 13.15.

  	
  Execution of Collateral Documents

  	
   

  
	
  Section 13.16.

  	
  Collateral Releases

  	
   

  

 

iii

 

	
  Section 13.17.

  	
  Documentation Agent, Syndication Agent,
  etc.

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV SETOFF; RATABLE PAYMENTS

  	
   

  
	
  Section 14.1.

  	
  Setoff

  	
   

  
	
  Section 14.2.

  	
  Ratable Payments

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XV BENEFIT OF AGREEMENT;
  ASSIGNMENTS; PARTICIPATIONS

  	
   

  
	
  Section 15.1.

  	
  Successors and Assigns

  	
   

  
	
  Section 15.2.

  	
  Participations

  	
   

  
	
  Section 15.3.

  	
  Assignments

  	
   

  
	
  Section 15.4.

  	
  Dissemination of Information

  	
   

  
	
  Section 15.5.

  	
  Tax Treatment

  	
   

  
	
  Section 15.6.

  	
  Procedure for Increases and Addition of New
  Lenders

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVI NOTICES

  	
   

  
	
  Section 16.1.

  	
  Notices

  	
   

  
	
  Section 16.2.

  	
  Change of Address

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVII COUNTERPARTS

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XVIII CHOICE OF LAW; CONSENT TO JURISDICTION; WAIVER OF
  JURY TRIAL

  	
   

  
	
  Section 18.1.

  	
  CHOICE OF LAW

  	
   

  
	
  Section 18.2.

  	
  CONSENT TO JURISDICTION

  	
   

  
	
  Section 18.3.

  	
  WAIVER OF JURY TRIAL

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIX USA PATRIOT ACT NOTICE

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE XX AMENDMENT AND RESTATEMENT

  	
   

  

 

iv

 

	
  SCHEDULE 1 PRICING SCHEDULE

  	
   

  
	
  SCHEDULE 2
  LENDERS SCHEDULE

  	
   

  
	
  SCHEDULE 3
  DISCLOSURE SCHEDULE

  	
   

  
	
  SCHEDULE 4
  EXISTING FINANCIAL CONTRACTS

  	
   

  
	
  EXHIBIT A NOTE

  	
   

  
	
  EXHIBIT B COMPLIANCE CERTIFICATE

  	
   

  
	
  EXHIBIT C ASSIGNMENT AND ASSUMPTION AGREEMENT

  	
   

  
	
  EXHIBIT D OPINION

  	
   

  
	
  EXHIBIT E GUARANTY

  	
   

  
	
  EXHIBIT F
  FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT

  	
   

  
	
  EXHIBIT G
  -1 FORM OF PLEDGE AGREEMENT
  (CORPORATION)

  	
   

  
	
  EXHIBIT G-2 FORM OF PLEDGE AGREEMENT (PARTNERSHIP)

  	
   

  
	
  EXHIBIT G-3 FORM OF PLEDGE AGREEMENT (LIMITED LIABILITY
  COMPANY)

  	
   

  
	
  EXHIBIT H
  FORM OF CONFIDENTIALITY AGREEMENT

  	
   

  
	
  EXHIBIT I FORM OF CERTIFICATE OF EFFECTIVENESS

  	
   

  

 

v

 

LIST OF DEFINED TERMS

 

	
  9.60% Senior Notes

  	
   

  
	
  9.60% Senior Notes
  Indenture

  	
   

  
	
  9.60% Senior Notes
  Refinancing

  	
   

  
	
  9.60% Senior Notes
  Refinancing Documents

  	
   

  
	
  9.60% Senior Notes
  Supplemental Indenture

  	
   

  
	
  Acquisition

  	
   

  
	
  Administrative
  Agent

  	
   

  
	
  Advance

  	
   

  
	
  Affected Lender

  	
   

  
	
  Affiliate

  	
   

  
	
  Aggregate
  Commitment

  	
   

  
	
  Aggregate
  Outstanding Credit Exposure

  	
   

  
	
  Agreement

  	
   

  
	
  Agreement
  Accounting Principles

  	
   

  
	
  Alternate Base Rate

  	
   

  
	
  Amendments to
  Existing Cimarex Mortgages

  	
   

  
	
  Annualized
  Consolidated EBITDA

  	
   

  
	
  Applicable Fee Rate

  	
   

  
	
  Applicable Margin

  	
   

  
	
  Arranger

  	
   

  
	
  Article

  	
   

  
	
  Authorized Officer

  	
   

  
	
  Available Aggregate
  Commitment

  	
   

  
	
  Borrower

  	
   

  
	
  Borrower/MHR Merger

  	
   

  
	
  Borrower/MHR Merger
  Agreement

  	
   

  
	
  Borrower/MHR Merger
  Articles

  	
   

  
	
  Borrower/MHR Merger
  Documents

  	
   

  
	
  Borrowing Base

  	
   

  
	
  Borrowing Base
  Properties

  	
   

  
	
  Borrowing Base
  Usage Percentage

  	
   

  
	
  Borrowing Date

  	
   

  
	
  Borrowing Notice

  	
   

  
	
  Business Day

  	
   

  
	
  Calculation Period

  	
   

  
	
  Capitalized Lease

  	
   

  
	
  Capitalized Lease
  Obligations

  	
   

  
	
  Cash Equivalent
  Investments

  	
   

  
	
  Certificate of
  Effectiveness

  	
   

  
	
  Change

  	
   

  
	
  Change in Control

  	
   

  
	
  Closing Date

  	
   

  
	
  Closing Documents

  	
   

  

 

vi

 

	
  Closing
  Transactions

  	
   

  
	
  CNAC

  	
   

  
	
  Code

  	
   

  
	
  Collateral

  	
   

  
	
  Collateral
  Documents

  	
   

  
	
  Collateral
  Shortfall Amount

  	
   

  
	
  Commitment

  	
   

  
	
  Confidential
  Information

  	
   

  
	
  Consolidated EBITDA

  	
   

  
	
  Consolidated Funded
  Indebtedness

  	
   

  
	
  Consolidated
  Indebtedness

  	
   

  
	
  Consolidated
  Interest Expense

  	
   

  
	
  Consolidated Net
  Income

  	
   

  
	
  Contingent
  Obligation

  	
   

  
	
  Controlled Group

  	
   

  
	
  Conversion/Continuation
  Notice

  	
   

  
	
  Convertible Senior
  Notes

  	
   

  
	
  Convertible Senior
  Notes Indenture

  	
   

  
	
  Convertible Senior
  Notes Supplemental Indenture

  	
   

  
	
  Credit Extension

  	
   

  
	
  Credit Extension
  Date

  	
   

  
	
  Default

  	
   

  
	
  Deficiency

  	
   

  
	
  Determination Date

  	
   

  
	
  Disclosure Schedule

  	
   

  
	
  Dividend

  	
   

  
	
  Engineered
  Projected Production

  	
   

  
	
  Engineered Value

  	
   

  
	
  Engineering Report

  	
   

  
	
  Environmental Laws

  	
   

  
	
  Equity

  	
   

  
	
  ERISA

  	
   

  
	
  Eurodollar Advance

  	
   

  
	
  Eurodollar Base
  Rate

  	
   

  
	
  Eurodollar Loan

  	
   

  
	
  Eurodollar Rate

  	
   

  
	
  Excluded Taxes

  	
   

  
	
  Exhibit

  	
   

  
	
  Existing Cimarex
  Credit Agreement

  	
   

  
	
  Existing Cimarex
  Indebtedness

  	
   

  
	
  Existing Cimarex
  Lenders

  	
   

  
	
  Existing Cimarex
  Loan Documents

  	
   

  
	
  Existing Cimarex
  Mortgages

  	
   

  
	
  Existing
  Indebtedness

  	
   

  
	
  Existing Letter of
  Credit

  	
   

  
	
  Existing MHR Credit
  Agreement

  	
   

  

 

vii

 

	
  Existing MHR
  Indebtedness

  	
   

  
	
  Existing MHR
  Lenders

  	
   

  
	
  Existing MHR
  Mortgages

  	
   

  
	
  Facility LC

  	
   

  
	
  Facility LC Application

  	
   

  
	
  Facility LC
  Collateral Account

  	
   

  
	
  Facility
  Termination Date

  	
   

  
	
  Federal Funds
  Effective Rate

  	
   

  
	
  Fifty Percent
  Utilization Period

  	
   

  
	
  Financial Contract

  	
   

  
	
  Fiscal Year

  	
   

  
	
  Floating Rate

  	
   

  
	
  Floating Rate
  Advance

  	
   

  
	
  Floating Rate Loan

  	
   

  
	
  Fund

  	
   

  
	
  Guarantors

  	
   

  
	
  Guaranty

  	
   

  
	
  Highest Lawful Rate

  	
   

  
	
  Increase

  	
   

  
	
  Indebtedness

  	
   

  
	
  Indentures

  	
   

  
	
  Initial Engineering
  Report

  	
   

  
	
  Interest Period

  	
   

  
	
  Investment

  	
   

  
	
  JPMorgan

  	
   

  
	
  JPMSI

  	
   

  
	
  LC Fee

  	
   

  
	
  LC Issuer

  	
   

  
	
  LC Obligations

  	
   

  
	
  LC Payment Date

  	
   

  
	
  Lender Assignments

  	
   

  
	
  Lenders

  	
   

  
	
  Lenders Schedule

  	
   

  
	
  Lending
  Installation

  	
   

  
	
  Letter of Credit

  	
   

  
	
  Level I Status

  	
   

  
	
  Level II
  Status

  	
   

  
	
  Level III
  Status

  	
   

  
	
  Level IV
  Status

  	
   

  
	
  Level V Status

  	
   

  
	
  Lien

  	
   

  
	
  Loan

  	
   

  
	
  Loan Documents

  	
   

  
	
  Material Adverse
  Effect

  	
   

  
	
  Material
  Indebtedness

  	
   

  
	
  Material
  Indebtedness Agreement

  	
   

  

 

viii

 

	
  Material Subsidiary

  	
   

  
	
  Maximum Credit
  Amount

  	
   

  
	
  Merger Documents

  	
   

  
	
  Mergers

  	
   

  
	
  MHR

  	
   

  
	
  MHR/CNAC Merger

  	
   

  
	
  MHR/CNAC Merger
  Agreement

  	
   

  
	
  MHR/CNAC Merger
  Articles

  	
   

  
	
  MHR/CNAC Merger
  Documents

  	
   

  
	
  Minimum Collateral
  Amount

  	
   

  
	
  Modification

  	
   

  
	
  Modify

  	
   

  
	
  Moody’s

  	
   

  
	
  Mortgage

  	
   

  
	
  Multiemployer Plan

  	
   

  
	
  Non-U.S. Lender

  	
   

  
	
  Note

  	
   

  
	
  Notice of
  Assignment

  	
   

  
	
  Obligations

  	
   

  
	
  Off-Balance Sheet
  Liability

  	
   

  
	
  Operating Lease

  	
   

  
	
  Other Taxes

  	
   

  
	
  Outstanding Credit
  Exposure

  	
   

  
	
  Participants

  	
   

  
	
  Payment Date

  	
   

  
	
  PBGC

  	
   

  
	
  PDP Reserves

  	
   

  
	
  Permitted Bond
  Documents

  	
   

  
	
  Permitted Bond
  Indebtedness

  	
   

  
	
  Permitted
  Encumbrances

  	
   

  
	
  Person

  	
   

  
	
  Plan

  	
   

  
	
  Post-Closing
  Effective Date

  	
   

  
	
  Pricing Schedule

  	
   

  
	
  Prime Rate

  	
   

  
	
  Pro Rata Share

  	
   

  
	
  Property

  	
   

  
	
  Proved Reserves

  	
   

  
	
  Purchasers

  	
   

  
	
  Rate Management
  Obligations

  	
   

  
	
  Rate Management
  Transaction

  	
   

  
	
  Redetermination

  	
   

  
	
  Register

  	
   

  
	
  Regulation D

  	
   

  
	
  Regulation U

  	
   

  
	
  Reimbursement
  Obligations

  	
   

  

 

ix

 

	
  Reportable Event

  	
   

  
	
  Required Lenders

  	
   

  
	
  Required Reserve
  Value

  	
   

  
	
  Reserve Requirement

  	
   

  
	
  Restricted Payment

  	
   

  
	
  Risk-Based Capital
  Guidelines

  	
   

  
	
  Rolling Period

  	
   

  
	
  S&P

  	
   

  
	
  Sale and Leaseback
  Transaction

  	
   

  
	
  Schedule

  	
   

  
	
  Scheduled
  Redetermination

  	
   

  
	
  SEC

  	
   

  
	
  Section

  	
   

  
	
  Secured Obligations

  	
   

  
	
  Senior Note
  Documents

  	
   

  
	
  Senior Notes

  	
   

  
	
  Single Employer
  Plan

  	
   

  
	
  SPE Definitions

  	
   

  
	
  Special
  Redetermination

  	
   

  
	
  Status

  	
   

  
	
  Subsidiary

  	
   

  
	
  Substantial Portion

  	
   

  
	
  Supplemental
  Indentures

  	
   

  
	
  Taxes

  	
   

  
	
  Transferee

  	
   

  
	
  Type

  	
   

  
	
  Unfunded
  Liabilities

  	
   

  
	
  Unmatured Default

  	
   

  
	
  Wholly-Owned
  Subsidiary

  	
   

  

 

x

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

This Amended
and Restated Credit Agreement, dated as of June 13, 2005, is among Cimarex
Energy Co., a Delaware corporation, the Lenders, JPMorgan Chase Bank, N.A.,
successor by merger to Bank One, NA (Main Office Chicago), a national banking
association, as an LC Issuer and as Administrative Agent, U.S. Bank National
Association, a national banking association, and Bank of America, N.A., a
national banking association, as Co-Syndication Agents, and Wells Fargo Bank,
N.A., a national banking association, as Documentation Agent.

 

W I T N E S S E T H:

 

WHEREAS,
Borrower, Administrative Agent, and the financial institutions named and
defined therein as Lenders (the “Existing
Cimarex Lenders”) are parties to that certain Credit Agreement
dated as of October 2, 2002 (as amended or supplemented prior to the date
hereof, the “Existing Cimarex Credit
Agreement”), pursuant to which the Existing Cimarex Lenders
provided certain loans and extensions of credit to Borrower (all Indebtedness
arising pursuant to the Existing Cimarex Credit Agreement is herein called the “Existing Cimarex Indebtedness”); and

 

WHEREAS, as of
the date of this Agreement, there is no outstanding Existing Cimarex
Indebtedness; and

 

WHEREAS,
Magnum Hunter Resources, Inc., a Nevada corporation (“MHR”), Deutsche Bank Trust Company
Americas (formerly known as Bankers Trust Company), as administrative agent,
and the financial institutions parties thereto as lenders (the “Existing MHR Lenders”) are parties to
that certain Fourth Amended and Restated Credit Agreement dated as of
March 15, 2002 (as amended or supplemented prior to the date hereof, the “Existing MHR Credit Agreement”),
pursuant to which the Existing MHR Lenders provided certain loans and
extensions of credit to MHR (all Indebtedness arising pursuant to the Existing
MHR Credit Agreement is herein called the “Existing
MHR Indebtedness”); and

 

WHEREAS,
pursuant to the MHR/CNAC Merger Documents, Cimarex Nevada Acquisition Co., a
Nevada corporation (“CNAC”)
and a Wholly-Owned Subsidiary of Borrower, merged with and into MHR, with MHR
being the surviving corporation and a Wholly-Owned Subsidiary of Borrower, and
in connection therewith and upon the effectiveness
thereof (i) Borrower became the owner of all of the outstanding
capital stock of MHR, and (ii) the existence of CNAC ceased; and

 

WHEREAS, after
giving effect to the MHR/CNAC Merger and pursuant to the Borrower/MHR Merger
Documents, MHR merged with and into Borrower, with Borrower being the surviving
corporation, and in connection therewith and upon the effectiveness thereof,
(i) the existence of MHR ceased, and (ii) Borrower became the obligor
under the Indentures and with respect to the Existing MHR Indebtedness; and

 

WHEREAS,
immediately prior to the execution of this Agreement, certain of the Existing
Cimarex Lenders have purchased and assumed certain of the rights and interests
of certain other Existing Cimarex Lenders (the “Lender Assignments”); and

 

1

 

WHEREAS,
following the consummation of the Borrower/MHR Merger, the parties hereto
desire to consolidate, amend, restate and otherwise restructure the Existing
Cimarex Credit Agreement and the Existing MHR Credit Agreement in the form of
this Agreement and to appoint JPMorgan Chase Bank, N.A. as Administrative Agent
hereunder, and Borrower desires to obtain Borrowings (as herein defined)
(i) to refinance and replace the Existing MHR Indebtedness, (ii) to
refinance the Existing Cimarex Indebtedness, and (iii) for other purposes
permitted herein; and

 

WHEREAS, upon
the execution, delivery and effectiveness of this Agreement and the refinancing
and replacement of the Existing MHR Indebtedness with the proceeds of the
initial Borrowing under this Agreement, this Agreement will constitute and be
the “Senior Credit Facility” for purposes of, and as defined in, the 9.60%
Senior Notes Indenture; and

 

WHEREAS, after
giving effect to the Lender Assignments and the consolidation, amendment,
restatement and restructuring of the Existing Cimarex Credit Agreement and the
Existing MHR Credit Agreement pursuant to the terms hereof, the Commitment of
each Lender hereunder will be as set forth on the Lenders Schedule; and

 

WHEREAS,
pursuant to certain separate agreements among JPMorgan Chase Bank, N.A., J.P.
Morgan Securities Inc. (“JPMSI”)
and Borrower, JPMSI has been appointed Lead Arranger and Sole Book Runner for
the credit facility provided herein;

 

NOW,
THEREFORE, in consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, and subject to the satisfaction of each
condition precedent contained in Section 4.1 hereof, the satisfaction of
which shall be evidenced by the execution by Borrower and the Administrative
Agent of the Certificate of Effectiveness, the parties hereto agree that
(i) the Existing MHR Credit Agreement is refinanced and replaced, and
(ii) the Existing Cimarex Credit Agreement is hereby amended, renewed,
extended and restated in its entirety on (and subject to) the terms and
conditions set forth herein.  It is the
intention of the parties hereto that this Agreement supersedes and replaces the
Existing MHR Credit Agreement and the Existing Cimarex Credit Agreement in
their entirety; provided, that, (a) such amendment and
restatement shall operate to renew, amend, modify and extend certain of the
rights and obligations of Borrower under the Existing Cimarex Credit Agreement
and as provided herein, but shall not act as a novation thereof, and
(b) the Liens securing the Obligations under and as defined in the
Existing Cimarex Credit Agreement and the liabilities and obligations of
Borrower and its Subsidiaries under the Existing Cimarex Credit Agreement and
the Loan Documents (as therein defined and referred to herein as the “Existing Cimarex Loan Documents”) shall
not be extinguished but shall be carried forward and shall secure such
obligations and liabilities as amended, renewed, extended and restated
hereby.  The parties hereto ratify and
confirm each of the Existing Cimarex Loan Documents entered into prior to the
Closing Date (but excluding the Existing Cimarex Credit Agreement) and agree
that such Existing Cimarex Loan Documents continue to be legal, valid, binding
and enforceable in accordance with their terms (except to the extent amended,
restated and superseded in their entirety in connection with the transactions
contemplated hereby), however, for all matters arising prior to the Closing
Date (including the accrual and payment of interest and fees, and matters
relating to indemnification and compliance with financial covenants), the terms
of the Existing Cimarex Credit Agreement (as unmodified 

 

2

 

by this Agreement) shall
control and are hereby ratified and confirmed. 
Borrower and each of its Subsidiaries represent and warrant that, as of
the Closing Date, there are no claims or offsets against, or defenses or
counterclaims to, their obligations under the Existing Cimarex Credit Agreement
or any of the other Existing Cimarex Loan Documents.  The parties hereto further agree as follows:

 

ARTICLE I

DEFINITIONS

 

As used in
this Agreement:

 

“9.60% Senior Notes” means,
collectively, the 9.60% Senior Notes due 2012, Series A, and the 9.60%
Senior Notes due 2012, Series B, in each case issued by MHR pursuant to the
9.60% Senior Notes Indenture and in an original aggregate principal amount
of $300,000,000.

 

“9.60% Senior Notes Indenture”
means that certain Indenture, dated as of March 15, 2002, by and among MHR, as
Issuer, the subsidiary guarantors named therein, and Deutsche Bank Trust
Company Americas (formerly known as Bankers Trust Company), as Trustee,
relating to the issuance of the 9.60% Senior Notes, as supplemented and
modified by the 9.60% Senior Notes Supplemental Indenture, and as further
supplemented and modified from time to time to the extent permitted hereunder.

 

“9.60% Senior Notes Refinancing”
means Indebtedness incurred by the Borrower to refinance in full the
9.60% Senior Notes (including accrued interest thereon), provided, that,
such Indebtedness (i) does not exceed the aggregate amount of Indebtedness
evidenced by the 9.60% Senior Notes in existence on the Closing Date (including
accrued interest thereon), (ii) has a coupon or interest rate not in
excess of 9.60% per annum, (iii) is not subject to negative covenants or
events of default (or other provisions which have the same effect as negative
covenants or events of default) which have not been approved by the
Administrative Agent, (iv) shall not mature sooner than the date which is
one year following the Facility Termination Date, (v) is not secured by
any assets of the Borrower or its Subsidiaries, and (vi) otherwise has
terms and conditions satisfactory to the Administrative Agent in its sole
reasonable discretion.

 

“9.60% Senior Notes Refinancing
Documents” means, collectively, the indenture, senior unsecured
notes, senior subordinated notes, all guarantees of any such notes, and all
other agreements, documents or instruments executed and delivered by the
Borrower or any of its Subsidiaries in connection with, or pursuant to, the
issuance of the Indebtedness evidencing the 9.60% Senior Notes
Refinancing.

 

“9.60% Senior Notes Supplemental
Indenture” means that certain First Supplemental Indenture dated
as of June 13, 2005, by and among Borrower, the subsidiary guarantors
party thereto, and Deutsche Bank Trust Company Americas, as Trustee, providing
for, among other things, the assumption by Borrower of the obligations of MHR
under the 9.60% Senior Notes and the 9.60% Senior Notes Indenture.

 

“Acquisition” means any transaction, or
any series of related transactions, consummated on or after the date of this
Agreement (after giving effect to the Closing Transactions), by which

 

3

 

the Borrower or any of its
Subsidiaries (i) acquires any going business or all or substantially all
of the assets of any firm, corporation or limited liability company, or
division thereof, whether through purchase of assets, merger or otherwise or
(ii) directly or indirectly acquires (in one transaction or as the most
recent transaction in a series of transactions) at least a majority (in number
of votes) of the securities of a corporation which have ordinary voting power
for the election of directors (other than securities having such power only by
reason of the happening of a contingency) or a majority (by percentage or
voting power) of the outstanding ownership interests of a partnership or
limited liability company.

 

“Administrative Agent” means JPMorgan,
successor by merger to Bank One, NA (Main Office Chicago), in its capacity as
contractual representative of the Lenders pursuant to Article XIII, and
not in its individual capacity as a Lender, and any successor Administrative
Agent appointed pursuant to Article XIII.

 

“Advance” means a borrowing hereunder,
(i) made by the Lenders on the same Borrowing Date, or (ii) converted
or continued by the Lenders on the same date of conversion or continuation,
consisting, in either case, of the aggregate amount of the several Loans of the
same Type and, in the case of Eurodollar Loans, for the same Interest Period.

 

“Affected Lender” is defined in
Section 2.21.

 

“Affiliate” of any Person means any
other Person directly or indirectly controlling, controlled by or under common
control with such Person.  For purposes
of this definition, a Person shall be deemed to control another Person if the
controlling Person owns 10% or more of any class of voting securities (or other
ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.

 

“Aggregate Commitment” means the
aggregate of the Commitments of all the Lenders, as reduced or increased from
time to time pursuant to the terms hereof; provided that the Aggregate
Commitment shall never exceed the Borrowing Base.

 

“Aggregate Outstanding Credit Exposure”
means, at any time, the aggregate of the Outstanding Credit Exposure of all the
Lenders.

 

“Agreement”
means this Amended and Restated Credit Agreement, as it may be amended or
modified and in effect from time to time.

 

“Agreement Accounting Principles”
means generally accepted accounting principles as in effect from time to time,
applied in a manner consistent with that used in preparing the financial
statements referred to in Section 5.4.

 

“Alternate Base Rate” means, for any
day, a rate of interest per annum equal to the higher of (i) the Prime
Rate for such day and (ii) the sum of the Federal Funds Effective Rate for
such day plus 1/2% per annum.

 

“Amendments to Existing Cimarex
Mortgages” means Amendments to Mortgages to be entered into
among Borrower, certain of its Subsidiaries and Administrative Agent, in form

 

4

 

and substance satisfactory to
the Administrative Agent, pursuant to which the Existing Cimarex Mortgages
shall be amended to reflect the amendment and restatement of the Existing
Cimarex Credit Agreement pursuant hereto.

 

“Annualized Consolidated EBITDA”
means, for purposes of calculating the financial ratio set forth in
Section 8.2 for each Rolling Period ending on or prior to March 31,
2006, the Borrower’s actual Consolidated EBITDA for such Rolling Period
multiplied by the factor determined for such Rolling Period in accordance with
the table below:

 

	
  Rolling
  Period Ending

  	
   

  	
  Factor

  	
   

  
	
  September 30, 2005

  	
   

  	
  4

  	
   

  
	
  December 31, 2005

  	
   

  	
  2

  	
   

  
	
  March 31, 2006

  	
   

  	
  1.333

  	
   

  

 

“Applicable Fee Rate” means, at any
time, the percentage rate per annum at which commitment fees are accruing on
the unused portion of the Aggregate Commitment under Section 2.5.2 at such
time at the rate set forth in the Pricing Schedule.

 

“Applicable Margin” means, with respect
to Advances of any Type at any time, the percentage rate per annum which is
applicable at such time with respect to Advances of such Type as set forth in
the Pricing Schedule.

 

“Arranger” means J.P. Morgan Securities
Inc., a Delaware corporation, and its successors, in its capacity as Lead
Arranger and Sole Book Runner.

 

“Article” means an article of this
Agreement unless another document is specifically referenced.

 

“Authorized Officer” means any of the
president, the chief financial officer, any vice president, the treasurer or
any assistant treasurer of the Borrower, acting singly.

 

“Available Aggregate Commitment”
means, at any time, the Aggregate Commitment then in effect minus the Aggregate
Outstanding Credit Exposure at such time.

 

“Borrower” means Cimarex Energy Co., a
Delaware corporation, and its successors and assigns.

 

“Borrower/MHR Merger” means,
collectively, (i) the merger of MHR with and into Borrower pursuant to, and in
accordance with, the Borrower/MHR Merger Documents, with Borrower being the
surviving corporation, and, upon the effectiveness of which, the existence of
MHR shall cease and Borrower will, accordingly, be obligated on the Existing
MHR Indebtedness, and (ii) the other reorganization transactions contemplated
by the Borrower/MHR Merger Agreement.

 

“Borrower/MHR Merger Agreement” means
the Agreement and Plan of Merger, as the same may be amended, dated as of
June 7, 2005 between Borrower and MHR

 

5

 

“Borrower/MHR Merger Articles” means,
collectively, (i) the Certificate of Ownership and Merger dated as of
June 13, 2005, executed by Borrower and filed on June 13, 2005 with
the Secretary of State of Delaware to effect the Borrower/MHR Merger in
Delaware, and (ii) the Articles of Merger dated as of June 13, 2005,
executed by Borrower and MHR and filed on June 13, 2005 with the Secretary
of State of Nevada to effect the Borrower/MHR Merger in Nevada, and certified
copies of which shall subsequently be filed in such jurisdictions as
Administrative Agent shall require.

 

“Borrower/MHR Merger Documents” means
the Borrower/MHR Merger Agreement, the Borrower/MHR Merger Articles, and all
other material documents, instruments and agreements executed and/or delivered
by Borrower and/or MHR pursuant to the Borrower/MHR Merger Agreement or in
connection with the Borrower/MHR Merger.

 

“Borrowing Base” means, at the
particular time in question, either the amount provided for in
Section 2.6.1 or the amount otherwise determined in accordance with the
provisions of Section 2.6; provided, however, that in no event shall the
Borrowing Base ever exceed the Maximum Credit Amount.

 

“Borrowing Base Properties” means all
oil and gas properties evaluated by Lenders for purposes of establishing the
Borrowing Base.

 

“Borrowing Base Usage Percentage”
means, for any day, the quotient obtained by dividing (i) the Aggregate
Outstanding Credit Exposure on such day, by (ii) the Borrowing Base in
effect on such day, multiplied by 100.

 

“Borrowing Date” means a date on which
an Advance is made hereunder.

 

“Borrowing Notice” is defined in
Section 2.9.

 

“Business Day” means (i) with
respect to any borrowing, payment or rate selection of Eurodollar Advances, a
day (other than a Saturday or Sunday) on which banks generally are open in
Chicago and New York City for the conduct of substantially all of their
commercial lending activities, interbank wire transfers can be made on the
Fedwire system and dealings in United States dollars are carried on in the
London interbank market and (ii) for all other purposes, a day (other than
a Saturday or Sunday) on which banks generally are open in Chicago for the
conduct of substantially all of their commercial lending activities and
interbank wire transfers can be made on the Fedwire system.

 

“Capitalized Lease” of a Person means
any lease of Property by such Person as lessee which would be capitalized on a
balance sheet of such Person prepared in accordance with Agreement Accounting
Principles.

 

“Capitalized Lease Obligations”
of a Person means the amount of the obligations of such Person under
Capitalized Leases which would be shown as a liability on a balance sheet of
such Person prepared in accordance with Agreement Accounting Principles.

 

“Cash Equivalent Investments” means
(i) short-term obligations of, or fully guaranteed by, the United States
of America, (ii) commercial paper rated A-1 or better by S&P or P-1 or

 

6

 

better by Moody’s,
(iii) demand deposit accounts maintained in the ordinary course of
business, and (iv) certificates of deposit issued by and time deposits
with commercial banks (whether domestic or foreign) having capital and surplus
in excess of $100,000,000; provided in each case that the same provides for
payment of both principal and interest (and not principal alone or interest
alone) and is not subject to any contingency regarding the payment of principal
or interest.

 

“Certificate of Effectiveness” means a
Certificate of Effectiveness in the form of Exhibit I hereto to be
executed by Borrower and Administrative Agent upon the satisfaction of each of
the conditions precedent contained in Section 4.1 hereof.

 

“Change in Control” means the acquisition
by any Person, or two or more Persons acting in concert, of beneficial
ownership (within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of 30% or more of the
outstanding shares of voting stock of the Borrower.

 

“Closing Date” means June 13, 2005,
provided that the conditions specified in Section 4.1 are satisfied, and
Borrower and Administrative Agent have executed and delivered the Certificate
of Effectiveness.

 

“Closing Documents” means the Merger
Documents, the Senior Note Documents, and all other material documents,
instruments and agreements executed and/or delivered by Borrower, MHR, CNAC or
any of Borrower’s Subsidiaries in connection with or otherwise pertaining to
the Mergers, the modification of or supplement to the Indentures, or the other
Closing Transactions.

 

“Closing Transactions” means the
transactions to occur on or prior to the Closing Date, including, without
limitation: (a) the completion of the MHR/CNAC Merger pursuant to the
terms of the MHR/CNAC Merger Documents, and, pursuant thereto, the proper
filing of the MHR/CNAC Merger Articles with the Secretary of State of Nevada,
(b) the completion of the Borrower/MHR Merger pursuant to the terms of the
Borrower/MHR Merger Documents, and, pursuant thereto, the proper filing of the
Borrower/MHR Merger Articles with the Secretary of State of Delaware and the
Secretary of State of Nevada, as applicable, (c) the cancellation of all
letters of credit (other than the Existing Letter of Credit which shall, on the
Closing Date, be a Facility LC hereunder pursuant to Section 2.20), if
any, outstanding under the Existing MHR Credit Agreement, (d) the
termination and release of the Existing MHR Mortgages and all other Liens securing
the obligations, Indebtedness (including the Existing MHR Indebtedness) and
liabilities of MHR and its subsidiaries and affiliates under the Existing MHR
Credit Agreement (including, without limitation, the delivery of UCC-3 releases
with respect to all uniform commercial code filings made under or pursuant to
the Existing MHR Credit Agreement), and the delivery to Borrower (or to a
designee acceptable to Administrative Agent) of all original stock (or other
Equity) certificates delivered pursuant to the terms of the Existing MHR Credit
Agreement as security for such Persons’ obligations, Indebtedness and
liabilities thereunder, (e) the release of all guarantees of the
obligations, Indebtedness (including the Existing MHR Indebtedness) and
liabilities of MHR and its subsidiaries and affiliates under the Existing MHR
Credit Agreement, (f) the modification of and supplement to the Indentures
and the Senior Notes and the assumption by Borrower of the obligations of MHR
under the Indentures to reflect the

 

7

 

Mergers, pursuant to terms and
documentation (including, without limitation, the Supplemental Indentures)
acceptable to Lenders in their sole discretion, (g) the termination of all
commitments under the Existing MHR Credit Agreement and, to the extent
available after reasonable effort to procure, the delivery to Borrower (or to a
designee acceptable to Administrative Agent) of each original promissory note
issued under the Existing MHR Credit Agreement marked “Terminated and Paid in
Full,” (h) the refinancing in full, with proceeds of the initial Advance
hereunder, of all Existing Indebtedness, and (i) the payment of all fees
and expenses of Administrative Agent in connection with the credit facility
provided herein.

 

“CNAC”
has the meaning assigned to such term in the recitals hereof.

 

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

 

“Collateral” means all Property of
Borrower and its Subsidiaries in which a Lien has been granted pursuant to the
Collateral Documents.

 

“Collateral Documents” means,
collectively, all deeds of trust, mortgages, amendments to mortgages,
assignments, security agreements, pledge agreements and other security
documents from time to time delivered to Administrative Agent to secure the
Secured Obligations.

 

“Collateral Shortfall Amount” is defined
in Section 11.1.

 

“Commitment” means, for each Lender, the
obligation of such Lender to make Loans to, and participate in Facility LCs
issued upon the application of, the Borrower in an aggregate amount not
exceeding the amount set forth on the Lenders Schedule or as set forth in any
Notice of Assignment relating to any assignment that has become effective
pursuant to Section 15.3.2, as such amount may be modified from time to
time pursuant to the terms hereof; provided that no Lender’s Commitment shall
ever exceed such Lender’s Pro Rata Share of the Aggregate Commitment.

 

“Consolidated EBITDA” means Consolidated
Net Income plus, to the extent deducted from revenues in determining
Consolidated Net Income, (i) Consolidated Interest Expense,
(ii) expense for income and income based taxes paid or accrued,
(iii) depreciation, depletion, amortization and impairment, including
without limitation, impairment of goodwill, and (iv) any non-cash items
associated with (a) mark to market accounting, and/or (b) stock based
compensation arising from the grant of or issuance or replacement of stock,
stock options or other equity-based awards or any amendment, modification,
substitution or change of any such stock, stock options or other equity-based
awards, in each case in connection with employee plans or other compensation
arrangements, less, all non-cash items increasing Consolidated Net
Income, all calculated for the Borrower and its Subsidiaries on a consolidated
basis.

 

“Consolidated Funded Indebtedness”
means at any time the aggregate dollar amount of Consolidated Indebtedness
which has actually been funded and is outstanding at such time, whether or not
such amount is due or payable at such time.

 

8

 

“Consolidated Indebtedness” means at any
time the Indebtedness of the Borrower and its Subsidiaries calculated on a
consolidated basis as of such time.

 

“Consolidated Interest Expense”
means, with reference to any period, the remainder of (a) interest expense
minus (b) interest income of the Borrower and its Subsidiaries calculated
on a consolidated basis for such period, all as determined in conformity with
Agreement Accounting Principles.

 

“Consolidated Net Income” means, with
reference to any period, the net income (or loss) of the Borrower and its
Subsidiaries calculated on a consolidated basis for such period.

 

“Contingent Obligation” of a Person
means any agreement, undertaking or arrangement by which such Person assumes,
guarantees, endorses, contingently agrees to purchase or provide funds for the
payment of, or otherwise becomes or is contingently liable upon, the obligation
or liability of any other Person, or agrees to maintain the net worth or
working capital or other financial condition of any other Person, or otherwise
assures any creditor of such other Person against loss, including, without
limitation, any comfort letter, operating agreement, take-or-pay contract or
the obligations of any such Person as general partner of a partnership with
respect to the liabilities of the partnership.

 

“Controlled Group” means all members of a controlled group
of corporations or other business entities and all trades or businesses
(whether or not incorporated) under common control which, together with the
Borrower or any of its Subsidiaries, are treated as a single employer under
Section 414 of the Code.

 

“Conversion/Continuation Notice”
is defined in Section 2.10.

 

“Convertible Senior Notes” means the
Floating Rate Convertible Senior Notes due 2023 issued by MHR pursuant to the
Convertible Senior Notes Indenture and in an original aggregate principal
amount of $125,000,000.  The Convertible
Senior Notes will not be considered capital stock under this Agreement.

 

“Convertible Senior Notes
Indenture” means that certain Indenture, dated as of
December 17, 2003, by and among MHR, as Issuer, the subsidiary guarantors
party thereto, and Deutsche Bank Trust Company Americas (formerly known as
Bankers Trust Company), as Trustee, relating to the issuance of the Convertible
Senior Notes, as supplemented and modified by the Convertible Senior Notes
Supplemental Indenture, and as further supplemented and modified from time to
time to the extent permitted hereunder.

 

“Convertible Senior Notes
Supplemental Indenture” means, collectively, that certain
(i) First Supplemental Indenture dated as of June 6, 2005, by and
among MHR, the subsidiary guarantors party thereto, and Deutsche Bank Trust
Company Americas, as Trustee, providing for, among other things, certain
changes to conform the Convertible Senior Notes Indenture to the offering
memorandum for the Convertible Senior Notes, (ii) Second Supplemental
Indenture dated as of June 7, 2005, by and among Borrower, MHR, the
subsidiary guarantors party thereto, and Deutsche Bank Trust Company Americas,
as Trustee, providing for, among other things, that the Convertible Senior
Notes can be converted into cash and stock of Borrower, and (iii) Third
Supplemental Indenture, dated as of June 13, 2005, by and among Borrower, the
subsidiary

 

9

 

guarantors party thereto, and
Deutsche Bank Trust Company Americas, as Trustee, providing for, among other
things, the assumption by Borrower of the obligations of MHR under the
Convertible Senior Notes and the Convertible Senior Notes Indenture.

 

“Credit Extension” means the making of
an Advance or the issuance of a Facility LC hereunder.

 

“Credit Extension Date” means the
Borrowing Date for an Advance or the issuance date for a Facility LC.

 

“Default” means an event described in
Article X.

 

“Deficiency” is defined in
Section 2.8(b).

 

“Determination Date” is defined in
Section 2.6.2.

 

“Disclosure Schedule” means Schedule
3 attached hereto.

 

“Dividend” means, as to any Person, any
declaration or payment of any dividend or the making of any distribution, loan,
advance or investment on or with respect to any shares (or other evidence of
ownership) of a Person’s capital stock (other than dividends or distributions
payable solely in shares or other evidence of ownership of such Person’s
capital stock).

 

“Engineered Value” means, at the time of
determination, the future net revenues of the Borrowing Base Properties calculated
by Administrative Agent using the pricing parameters and discount rate
currently being used by Administrative Agent.

 

“Engineering Report” means the Initial
Engineering Report and each engineering report delivered pursuant to
Section 6.1(ix) and Section 6.1(x).

 

“Environmental Laws” means any and all
federal, state, local and foreign statutes, laws, judicial decisions,
regulations, ordinances, rules, judgments, orders, decrees, plans, injunctions,
permits, concessions, grants, franchises, licenses, agreements and other
governmental restrictions relating to (i) the protection of the
environment, (ii) the effect of the environment on human health,
(iii) emissions, discharges or releases of pollutants, contaminants,
hazardous substances or wastes into surface water, ground water or land, or
(iv) the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of pollutants, contaminants, hazardous
substances or wastes or the clean-up or other remediation thereof.

 

“Equity”
means shares of capital stock or a partnership, profits, capital, member or
other equity interest, or options, warrants or any other rights to substitute
for or otherwise acquire the capital stock or a partnership, profits, capital,
member or other equity interest of any Person.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any rule or regulation issued thereunder.

 

“Eurodollar Advance” means an Advance
which, except as otherwise provided in Section 2.12, bears interest at the
applicable Eurodollar Rate.

 

10

 

“Eurodollar Base Rate” means, with
respect to a Eurodollar Advance for the relevant Interest Period, the
applicable British Bankers’ Association LIBOR rate for deposits in U.S. dollars
as reported by any generally recognized financial information service as of
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period, and having a maturity equal to such Interest Period, provided
that, if no such British Bankers’ Association LIBOR rate is available to the
Administrative Agent, the applicable Eurodollar Base Rate for the relevant
Interest Period shall instead be the rate determined by the Administrative
Agent to be the rate at which JPMorgan or one of its Affiliate banks offers to
place deposits in U.S. dollars with first-class banks in the London interbank
market at approximately 11:00 a.m. (London time) two Business Days prior to the
first day of such Interest Period, in the approximate amount of JPMorgan’s
relevant Eurodollar Loan and having a maturity equal to such Interest Period.

 

“Eurodollar Loan” means a Loan which,
except as otherwise provided in Section 2.12, bears interest at the
applicable Eurodollar Rate.

 

“Eurodollar Rate” means, with respect to
a Eurodollar Advance for the relevant Interest Period, an interest rate per
annum equal to the sum of (i) the quotient of (a) the Eurodollar Base
Rate applicable to such Interest Period, divided by (b) one minus the
Reserve Requirement (expressed as a decimal) applicable to such Interest
Period, plus (ii) the Applicable Margin.

 

“Excluded Taxes” means, in the case of
each Lender or applicable Lending Installation and the Administrative Agent,
taxes imposed on its overall net income, and franchise taxes imposed on it, by
(i) the jurisdiction under the laws of which such Lender or the
Administrative Agent is incorporated or organized or (ii) the jurisdiction
in which the Administrative Agent’s or such Lender’s principal executive office
or such Lender’s applicable Lending Installation is located.

 

“Exhibit” refers to
an exhibit to this Agreement, unless another document is specifically
referenced.

 

“Existing Cimarex Credit Agreement”
has the meaning assigned to such term in the recitals hereto.

 

“Existing Cimarex Indebtedness”
has the meaning assigned to such term in the recitals hereto.

 

“Existing Cimarex Lenders” has the
meaning assigned to such term in the recitals hereto.

 

“Existing Cimarex Loan Documents”
has the meaning assigned to such term in the preamble hereto.

 

“Existing Cimarex Mortgages” means the
mortgages, deeds of trust, security agreements, assignments, pledges and other
documents, instruments and agreements, which establish Liens on certain of the
Borrowing Base Properties to secure the obligations, Indebtedness and
liabilities of Borrower under the Existing Cimarex Credit Agreement.

 

11

 

“Existing Indebtedness” means,
collectively, the Existing Cimarex Indebtedness and the Existing MHR
Indebtedness.

 

“Existing Letter of Credit” means that
certain letter of credit, Number S-15235, dated May 19, 2003, in the
original stated amount of $2,500,000, issued by Deutsche Bank Trust Company
Americas (formerly known as Bankers Trust Company) for the account of MHR to
Chevron U.S.A. Inc. as beneficiary.

 

“Existing MHR Credit Agreement” has the
meaning assigned to such term in the recitals hereto.

 

“Existing MHR Indebtedness” has the
meaning assigned to such term in the recitals hereto.

 

“Existing MHR Lenders” has the meaning
assigned to such term in the recitals hereto.

 

“Existing MHR Mortgages” means the
mortgages, deeds of trust, security agreements, assignments, pledges and other
documents, instruments and agreements which establish Liens on MHR’s and its
subsidiaries’ assets and properties to secure the obligations, Indebtedness and
liabilities of such Persons under the Existing MHR Credit Agreement.

 

“Facility LC” is defined in
Section 2.20.1 and shall include, without limitation, the Existing Letter
of Credit.

 

“Facility LC Application” is defined in
Section 2.20.3.

 

“Facility LC Collateral Account”
is defined in Section 2.20.11.

 

“Facility Termination Date” means
July 1, 2010, or any earlier date on which the Aggregate Commitment is
reduced to zero or otherwise terminated pursuant to the terms hereof.

 

“Federal Funds Effective Rate” means,
for any day, an interest rate per annum equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published for
such day (or, if such day is not a Business Day, for the immediately preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
at approximately 10:00 a.m. (Chicago time) on such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by the Administrative Agent in its sole
discretion.

 

“Fifty Percent Utilization Period”
means any period during which the Borrowing Base Usage Percentage on each
consecutive day is and remains greater than or equal to 50%.

 

“Financial Contract” of a Person means
(i) any exchange-traded or over-the-counter futures, forward, swap or
option contract or other financial instrument with similar characteristics, and
(ii) any Rate Management Transaction.

 

“Fiscal Year” means the fiscal year of
the Borrower.

 

12

 

“Floating Rate” means, for any day, a
rate per annum equal to (i) the Alternate Base Rate for such day plus
(ii) the Applicable Margin, in each case changing when and as the
Alternate Base Rate changes.

 

“Floating Rate Advance” means an Advance
which, except as otherwise provided in Section 2.12, bears interest at the
Floating Rate.

 

“Floating Rate Loan” means a Loan which,
except as otherwise provided in Section 2.12, bears interest at the
Floating Rate.

 

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

 

“Guarantors” means each Material Subsidiary
and their successors and assigns.  As of
the date hereof (and after giving effect to the Closing Transactions), “Guarantors” means each of the Material
Subsidiaries listed and identified on the Disclosure Schedule.

 

“Guaranty” means, collectively, that
certain Amended and Restated Subsidiary Guaranty dated of even date herewith
executed by the Guarantors in favor of the Administrative Agent, for the
ratable benefit of the Lenders, as it may be amended or modified and in effect
from time to time, together with any additional Guaranty executed and delivered
pursuant to Section 9.2 hereof.

 

“Highest Lawful Rate” means, on any day
with respect to each Lender to whom Obligations are owed, the maximum
nonusurious rate of interest that such Lender is permitted under applicable law
to contract for, take, charge or receive with respect to such Obligations for
such day.  All determinations herein of
the Highest Lawful Rate, or of any interest rate determined by reference to the
Highest Lawful Rate, shall be made separately for each Lender as appropriate to
assure that the Loan Documents are not construed to obligate any Person to pay
interest to any Lender at a rate in excess of the Highest Lawful Rate
applicable to such Lender.

 

“Increase” is defined in Section 2.5.4.

 

“Indebtedness” of a Person means such
Person’s (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of Property or services (other than
accounts payable arising in the ordinary course of such Person’s business
payable on terms customary in the trade), (iii) obligations, whether or
not assumed, secured by Liens or payable out of the proceeds or production from
Property now or hereafter owned or acquired by such Person (other than
Permitted Encumbrances), (iv) obligations which are evidenced by notes,
acceptances, or other instruments, (v) obligations of such Person to
purchase securities or other Property arising out of or in connection with the
sale of the same or substantially similar securities or Property,
(vi) Capitalized Lease Obligations, (vii) Contingent Obligations,
(viii) obligations to reimburse issuers of Letters of Credit,
(ix) obligations with respect to payments received in consideration of
oil, gas, or other minerals yet to be acquired or produced at the time of
payment (including obligations under “take-or-pay” contracts to deliver gas in
return for payments already received and the undischarged balance of any
production payment created by such Person or for the creation of which such
Person directly or indirectly received

 

13

 

payment), (x) obligations
with respect to other obligations to deliver goods or services in consideration
of advance payments therefor, and (xi) other obligations for borrowed
money or other financial accommodation which in accordance with Agreement
Accounting Principles would be shown as a liability on the consolidated balance
sheet of such Person.

 

“Indentures” means, collectively, the
9.60% Senior Notes Indenture and the Convertible Senior Notes Indenture.

 

“Initial Engineering Report” means,
collectively, the engineering report concerning oil and gas properties of
Borrower and its Subsidiaries prepared by Borrower as of January 1, 2005 and
audited by Ryder Scott Company, and the engineering report concerning oil and
gas properties of MHR prepared by DeGolyer and McNaughton as of January 1,
2005.

 

“Interest Period” means, with respect to
a Eurodollar Advance, a period of one, two, three or six months commencing on a
Business Day selected by the Borrower pursuant to this Agreement.  Such Interest Period shall end on the day
which corresponds numerically to such date one, two, three or six months
thereafter, provided, however, that if there is no such numerically
corresponding day in such next, second, third or sixth succeeding month, such
Interest Period shall end on the last Business Day of such next, second, third
or sixth succeeding month.  If an
Interest Period would otherwise end on a day which is not a Business Day, such
Interest Period shall end on the next succeeding Business Day, provided,
however, that if said next succeeding Business Day falls in a new calendar
month, such Interest Period shall end on the immediately preceding Business
Day.

 

“Investment” of a Person means any loan,
advance (other than commission, travel and similar advances to officers and
employees made in the ordinary course of business), extension of credit (other
than accounts receivable arising in the ordinary course of business on terms
customary in the trade) or contribution of capital by such Person; stocks,
bonds, mutual funds, partnership interests, notes, debentures or other
securities owned by such Person; any deposit accounts and certificate of
deposit owned by such Person; and structured notes, derivative financial
instruments and other similar instruments or contracts (other than Financial
Contracts permitted under Section 7.11) owned by  such Person.

 

“JPMorgan” means JPMorgan Chase Bank,
N.A., successor by merger to Bank One, NA (Main Office Chicago), a national
banking association, in its individual capacity, and its successors.

 

“JPMSI”
has the meaning assigned to such term in the recitals hereto.

 

“LC Fee”
is defined in Section 2.20.4.

 

“LC Issuer” means JPMorgan (or any
subsidiary or affiliate of JPMorgan designated by JPMorgan) in its capacity as
issuer of Facility LCs hereunder, and, with respect to the Existing Letter of
Credit only, Deutsche Bank Trust Company Americas in its capacity as issuer of
the Existing Letter of Credit.

 

14

 

“LC Obligations” means, at any time, the
sum, without duplication, of (i) the aggregate undrawn stated amount under
all Facility LCs outstanding at such time plus (ii) the aggregate unpaid
amount at such time of all Reimbursement Obligations.

 

“LC Payment Date” is defined in
Section 2.20.5.

 

“Lender Assignments” has the meaning
assigned to such term in the recitals hereto.

 

“Lenders” means the lending institutions
listed on the signature pages of this Agreement and their respective successors
and assigns.

 

“Lenders Schedule” means Schedule 2
attached hereto.

 

“Lending Installation” means, with
respect to a Lender or the Administrative Agent, the office, branch, subsidiary
or affiliate of such Lender or the Administrative Agent listed on the signature
pages hereof or on the Lenders Schedule or otherwise selected by such Lender or
the Administrative Agent pursuant to Section 2.18.

 

“Letter of Credit” of a Person means a
letter of credit or similar instrument which is issued upon the application of
such Person or upon which such Person is an account party or for which such
Person is in any way liable.

 

“Lien” means any lien (statutory or
other), mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation,
the interest of a vendor or lessor under any conditional sale, Capitalized
Lease or other title retention agreement).

 

“Loan” means, with respect to a Lender,
such Lender’s loan made pursuant to Article II (or any conversion or
continuation thereof).

 

“Loan Documents” means this Agreement,
the Facility LC Applications, any Notes issued pursuant to Section 2.14,
the Collateral Documents and the Guaranty.

 

“Material Adverse Effect” means a
material adverse effect on (i) the business, Property, condition
(financial or otherwise), results of operations, or prospects of the Borrower
and its Subsidiaries taken as a whole, (ii) the ability of the Borrower to
perform its obligations under the Loan Documents to which it is a party, or
(iii) the validity or enforceability of any of the Loan Documents or the
rights or remedies of the Administrative Agent, the LC Issuer or the Lenders
thereunder.

 

“Material Indebtedness” means
Indebtedness in an outstanding principal amount of $5,000,000 or more in the
aggregate (or the equivalent thereof in any currency other than U.S. dollars).

 

“Material Indebtedness Agreement” means
any agreement under which any Material Indebtedness was created or is governed
or which provides for the incurrence of Indebtedness in

 

15

 

an amount which would
constitute Material Indebtedness (whether or not an amount of Indebtedness
constituting Material Indebtedness is outstanding thereunder).

 

“Material Subsidiary” means a Subsidiary
of Borrower that owns a Substantial Portion of the Property of Borrower and its
Subsidiaries.  As of the date hereof (and
after giving effect to the Closing Transactions), “Material Subsidiary” means each of the
Borrower’s Subsidiaries listed and identified as a Material Subsidiary on the
Disclosure Schedule.

 

“Maximum Credit Amount” means One
Billion Dollars ($1,000,000,000).

 

 “Merger
Documents” means, collectively, the MHR/CNAC Merger Documents
and the Borrower/MHR Merger Documents.

 

“Mergers” means, collectively, the
MHR/CNAC Merger and the Borrower/MHR Merger.

 

“MHR” has the meaning assigned to such
term in the recitals hereto.

 

“MHR/CNAC Merger” means, collectively,
(i) the merger of CNAC with and into MHR pursuant to, and in accordance with,
the MHR/CNAC Merger Documents, with MHR being the surviving corporation as a
Wholly-Owned Subsidiary of Borrower, and, upon the effectiveness of which, the
existence of CNAC shall cease, and (ii) the other reorganization
transactions contemplated by the MHR/CNAC Merger Agreement.

 

“MHR/CNAC Merger Agreement” means the
Agreement and Plan of Merger, as the same may be amended, dated as of
January 25, 2005 among Borrower, CNAC and MHR.

 

“MHR/CNAC Merger Articles” means those
certain Articles of Merger dated as of June 7, 2005, executed by MHR and
CNAC and filed on June 7, 2005 with the Secretary of State of Nevada to
effect the MHR/CNAC Merger in Nevada, and certified copies of which shall
subsequently be filed in such jurisdictions as Administrative Agent shall
require.

 

“MHR/CNAC Merger Documents” means the
MHR/CNAC Merger Agreement, the MHR/CNAC Merger Articles, and all other material
documents, instruments and agreements executed and/or delivered by Borrower,
CNAC and/or MHR pursuant to the MHR/CNAC Merger Agreement or in connection with
the MHR/CNAC Merger.

 

“Minimum Collateral Amount” means with
respect to any Aggregate Commitment, 75% of the Required Reserve Value
established by Administrative Agent to support such Aggregate Commitment.

 

“Modify” and “Modification” are defined in
Section 2.20.1.

 

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

 

“Mortgage” means, collectively, all
deeds of trust and mortgages included in the Collateral Documents.

 

16

 

“Multiemployer Plan” means a Plan
maintained pursuant to a collective bargaining agreement or any other
arrangement to which the Borrower or any member of the Controlled Group is a
party to which more than one employer is obligated to make contributions.

 

“Note” is defined in
Section 2.14(iv).

 

“Notice of Assignment” is defined in
Section 15.3.2.

 

“Obligations” means all unpaid principal
of and accrued and unpaid interest on the Loans, all Reimbursement Obligations,
all accrued and unpaid fees and all expenses, reimbursements, indemnities and
other obligations of the Borrower to the Lenders or to any Lender, the
Administrative Agent, the LC Issuer or any indemnified party arising under the
Loan Documents.

 

“Off-Balance Sheet Liability” of a
Person means (i) any repurchase obligation or liability of such Person
with respect to accounts or notes receivable sold by such Person, (ii) any
liability under any Sale and Leaseback Transaction which is not a Capitalized
Lease, (iii) any liability under any so-called “synthetic lease”
transaction entered into by such Person, or (iv) any obligation arising
with respect to any other transaction which is the functional equivalent of or
takes the place of borrowing but which does not constitute a liability on the
balance sheets of such Person, but excluding from this clause
(iv) Operating Leases.

 

“Operating Lease” of a Person means any
lease of Property (other than a Capitalized Lease) by such Person as lessee
which has an original term (including any required renewals and any renewals
effective at the option of the lessor) of one year or more.

 

“Other Taxes” is defined in
Section 3.3(ii).

 

“Outstanding Credit Exposure” means, as
to any Lender at any time, the sum of (i) the aggregate principal amount
of its Loans outstanding at such time, plus (ii) an amount equal to its
Pro Rata Share of the LC Obligations at such time.

 

“Participants” is defined in
Section 15.2.1.

 

“Payment Date” means the last day of each
fiscal quarter of Borrower.

 

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

 

“PDP Reserves” means Proved Reserves
that are categorized as both “Developed” and “Producing” in the SPE
Definitions.

 

“Permitted Bond Documents” means,
collectively, the indenture, senior unsecured notes, senior subordinated notes,
all guarantees of any such notes, and all other agreements, documents or
instruments executed and delivered by the Borrower or any of its Subsidiaries
in connection with, or pursuant to, the issuance of the Permitted Bond
Indebtedness.

 

“Permitted Bond Indebtedness” means
Indebtedness of the Borrower resulting from a single issue of the Borrower’s
senior unsecured notes or senior unsecured subordinated notes in

 

17

 

an aggregate outstanding
principal amount of not greater than $200,000,000, and which Indebtedness
(a) is not subject to negative covenants or events of default (or other
provisions which have the same effect as negative covenants or events of
default) which have not been approved by the Administrative Agent, (b) has
a coupon or interest rate not in excess of 9.0% per annum, (c) shall not
mature sooner than the date which is one year following the Facility Termination
Date, (d) is not secured by any assets of the Borrower or its
Subsidiaries, and (e) is evidenced and governed by an indenture and
related documentation containing customary terms and conditions for senior
unsecured notes or senior unsecured subordinated notes of like tenor and
amount, each of which shall be satisfactory to the Administrative Agent in its
sole reasonable discretion.

 

“Permitted Encumbrances” means any Lien
permitted by Section 7.6.

 

“Person” means any natural person,
corporation, firm, joint venture, partnership, limited liability company,
association, enterprise, trust or other entity or organization, or any
government or political subdivision or any agency, department or
instrumentality thereof.

 

“Plan” means an employee pension benefit
plan which is covered by Title IV of ERISA or subject to the minimum
funding standards under Section 412 of the Code as to which the Borrower
or any member of the Controlled Group may have any liability.

 

“Pricing Schedule” means Schedule 1
attached hereto.

 

“Prime Rate” means a rate per annum
equal to the prime rate of interest announced from time to time by JPMorgan or
its parent (which is not necessarily the lowest rate charged to any customer),
changing when and as said prime rate changes.

 

“Pro Rata Share” means, with respect to
a  Lender, a portion equal to a fraction
the numerator of which is such Lender’s Commitment and the denominator of which
is the Aggregate Commitment.

 

“Property” of a Person means any and all
property, whether real, personal, tangible, intangible, or mixed, of such
Person, or other assets owned, leased or operated by such Person.

 

“Proved Reserves” means “Proved Reserves”
as defined in the SPE Definitions.

 

“Purchasers” is defined in
Section 15.3.1.

 

“Rate Management Obligations” of a
Person means any and all obligations of such Person, whether absolute or
contingent and howsoever and whensoever created, arising, evidenced or acquired
(including all renewals, extensions and modifications thereof and substitutions
therefor), under (i) any and all Rate Management Transactions, and
(ii) any and all cancellations, buy backs, reversals, terminations or
assignments of any Rate Management Transactions.

 

“Rate Management Transaction” means any
transaction (including an agreement with respect thereto) now existing or
hereafter entered into by the Borrower which is a rate swap, basis swap,
forward rate transaction, commodity swap, commodity option, equity or equity
index 

 

18

 

swap, equity or equity index option,
bond option, interest rate option, foreign exchange transaction, cap
transaction, floor transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency
option or any other similar transaction (including any option with respect to
any of these transactions) or any combination thereof, whether linked to one or
more interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.  Notwithstanding
the foregoing, a “Rate Management Transaction” shall not include any contract
for the purchase and sale of natural gas or oil entered into in the ordinary
course of business and on customary trade terms.

 

“Redetermination” means a Scheduled
Redetermination, a Special Redetermination, or a redetermination of the
Borrowing Base pursuant to Section 2.6.6.

 

“Register” is defined in
Section 15.3.3.

 

“Regulation D” means
Regulation D of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor thereto or other regulation or
official interpretation of said Board of Governors relating to reserve
requirements applicable to member banks of the Federal Reserve System.

 

“Regulation U” means
Regulation U of the Board of Governors of the Federal Reserve System as
from time to time in effect and any successor or other regulation or official
interpretation of said Board of Governors relating to the extension of credit
by banks for the purpose of purchasing or carrying margin stocks applicable to
member banks of the Federal Reserve System.

 

“Reimbursement Obligations” means, at
any time, the aggregate of all obligations of the Borrower then outstanding
under Section 2.20 to reimburse the LC Issuer for amounts paid by the LC
Issuer in respect of any one or more drawings under Facility LCs.

 

“Reportable Event” means a reportable
event as defined in Section 4043 of ERISA and the regulations issued under
such section, with respect to a Plan, excluding, however, such events as to
which the PBGC has by regulation waived the requirement of Section 4043(a)
of ERISA that it be notified within 30 days of the occurrence of such event,
provided, however, that a failure to meet the minimum funding standard of
Section 412 of the Code and of Section 302 of ERISA shall be a
Reportable Event regardless of the issuance of any such waiver of the notice
requirement in accordance with either Section 4043(a) of ERISA or
Section 412(d) of the Code.

 

“Required Lenders” means Lenders in the
aggregate having at least 66 2/3% of the Aggregate Commitment or, if the
Aggregate Commitment has been terminated, Lenders in the aggregate holding at
least 66 2/3% of the Aggregate Outstanding Credit Exposure.

 

“Required Reserve Value” means, with
respect to any Aggregate Commitment, that portion of the Borrowing Base
Properties that Administrative Agent has determined, in its sole discretion, is
necessary to support such Aggregate Commitment.

 

“Reserve Requirement” means, with
respect to an Interest Period, the maximum aggregate reserve requirement
(including all basic, supplemental, marginal and other reserves) which is
imposed under Regulation D on Eurocurrency liabilities.

 

19

 

“Restricted Payment” means (a) any
Dividend and (b) any payment on account of the purchase, redemption or
other acquisition or retirement for value by a Person of any of such Person’s
capital stock (except capital stock acquired on the conversion or exchange
thereof into or for other capital stock of such Person).

 

“Rolling Period” means (a) for the
fiscal quarters ending on September 30, 2005, December 31, 2005 and
March 31, 2006, the period commencing on July 1, 2005 and ending on
the last day of such applicable fiscal quarter, and (b) for the fiscal
quarter ending on June 30, 2006, and for each fiscal quarter thereafter,
any period of four (4) consecutive fiscal quarters ending on the last day of
such applicable fiscal quarter.

 

“S&P” means Standard and Poor’s
Ratings Services, a division of The McGraw Hill Companies, Inc.

 

“Sale and Leaseback Transaction” means
any sale or other transfer of Property by any Person with the intent to lease
such Property as lessee.

 

“Schedule” refers to a specific schedule
to this Agreement, unless another document is specifically referenced.

 

“Scheduled Redetermination” means any
redetermination of the Borrowing Base pursuant to Section 2.6.2.

 

“SEC” means the Securities and Exchange
Commission.

 

“Section” means a numbered Section of
this Agreement, unless another document is specifically referenced.

 

“Secured Obligations” means,
collectively, (i) the Obligations and (ii) all Rate Management
Obligations owing to one or more Lenders or any affiliates of such Lenders.

 

“Senior Note Documents” means,
collectively, the Indentures, the Supplemental Indentures, the Senior Notes,
all guarantees of the Senior Notes, and all other agreements, documents or
instruments executed and delivered by the Borrower, MHR or any of their
Subsidiaries in connection with, or pursuant to, the issuance and/or assumption
of the Senior Notes.

 

“Senior Notes” means, collectively, the
9.60% Senior Notes and the Convertible Senior Notes.

 

“Single Employer Plan” means a Plan
maintained by the Borrower or any member of the Controlled Group for employees
of the Borrower or any member of the Controlled Group.

 

“Special Redetermination” means any
redetermination of the Borrowing Base pursuant to Section 2.6.3 or
Section 2.6.4.

 

20

 

“SPE Definitions” means the Definitions
for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or
any generally recognized successor) as in effect at the time in question.

 

“Subsidiary” of a Person means
(i) any corporation more than 50% of the outstanding securities having
ordinary voting power of which shall at the time be owned or controlled,
directly or indirectly, by such Person or by one or more of its Subsidiaries or
by such Person and one or more of its Subsidiaries, or (ii) any
partnership, limited liability company, association, joint venture or similar
business organization more than 50% of the ownership interests having ordinary
voting power of which shall at the time be so owned or controlled, provided
that associations, joint ventures or other relationships (a) which are
established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of federal income taxation
only, (b) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state applicable law, and (c) whose
businesses are limited to the exploration, development and operation of oil,
gas or mineral properties and interests owned directly by the parties in such
associations, joint ventures or relationships, shall not be deemed to be “Subsidiaries”
of such Person.  Unless otherwise
expressly provided, all references herein to a “Subsidiary” shall mean a
Subsidiary of the Borrower.  For purposes
of this Agreement, Metrix Networks, Inc. shall not be deemed a “Subsidiary” of
Borrower.

 

“Substantial Portion” means, with
respect to the Property of the Borrower and its Subsidiaries, Property which
represents more than 10% of the consolidated assets of the Borrower and its
Subsidiaries or property which is responsible for more than 10% of the
consolidated net sales or of the consolidated net income of the Borrower and
its Subsidiaries, in each case, as would be shown in the consolidated financial
statements of the Borrower and its Subsidiaries as at the beginning of the
twelve-month period ending with the month in which such determination is made
(or if financial statements have not been delivered hereunder for that month
which begins the twelve-month period, then the financial statements delivered
hereunder for the quarter ending immediately prior to that month).

 

“Supplemental Indentures” means,
collectively, the 9.60% Senior Notes Supplemental Indenture and the Convertible
Senior Notes Supplemental Indenture.

 

“Taxes” means any and all present or
future taxes, duties, levies, imposts, deductions, charges or withholdings, and
any and all liabilities with respect to the foregoing, but excluding Excluded
Taxes and Other Taxes.

 

“Transferee” is defined in
Section 15.4.

 

“Type” means, with respect to any
Advance, its nature as a Floating Rate Advance or a Eurodollar Advance and with
respect to any Loan, its nature as a Floating Rate Loan or a Eurodollar Loan.

 

“Unfunded Liabilities” means the amount
(if any) by which the present value of all vested and unvested accrued benefits
under all Single Employer Plans exceeds the fair market value of all such Plan
assets allocable to such benefits, all determined as of the then most recent

 

21

 

valuation date for such Plans
using PBGC actuarial assumptions for single employer plan terminations.

 

“Unmatured Default” means an event which
but for the lapse of time or the giving of notice, or both, would constitute a
Default.

 

“Wholly-Owned Subsidiary” of a Person
means (i) any Subsidiary all of the outstanding voting securities of which
shall at the time be owned or controlled, directly or indirectly, by such
Person or one or more Wholly-Owned Subsidiaries of such Person, or by such
Person and one or more Wholly-Owned Subsidiaries of such Person, or
(ii) any partnership, limited liability company, association, joint
venture or similar business organization 100% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.

 

The foregoing
definitions shall be equally applicable to both the singular and plural forms
of the defined terms.

 

ARTICLE II

THE CREDITS

 

Section 2.1.           Commitment.  From and including the date of this Agreement
and prior to the Facility Termination Date, each Lender severally agrees, on
the terms and conditions set forth in this Agreement, to (i) make Loans to
the Borrower and (ii) participate in Facility LCs issued upon the request
of the Borrower, provided that, after giving effect to the making of each such
Loan and the issuance of each such Facility LC, such Lender’s Outstanding
Credit Exposure shall not exceed its Commitment and the Aggregate Outstanding
Credit Exposure shall not exceed the Aggregate Commitment.  Subject to the terms of this Agreement, the
Borrower may borrow, repay and reborrow at any time prior to the Facility
Termination Date.  The Commitments to
extend credit hereunder shall expire on the Facility Termination Date.  The LC Issuer will issue Facility LCs
hereunder on the terms and conditions set forth in Section 2.20.

 

Section 2.2.           Required
Payments; Termination.  The Aggregate Outstanding Credit Exposure and
all other unpaid Obligations shall be paid in full by the Borrower on the
Facility Termination Date.

 

Section 2.3.           Ratable Loans.  Each Advance hereunder shall consist of Loans
made from the several Lenders ratably according to their Pro Rata Shares.

 

Section 2.4.           Types of Advances.  The Advances may be Floating Rate Advances or
Eurodollar Advances, or a combination thereof, selected by the Borrower in
accordance with Section 2.9 and Section 2.10.

 

Section 2.5.           Commitment Fee; Initial Aggregate
Commitment; Changes in Aggregate Commitment.

 

2.5.1.       The initial Aggregate Commitment is
$500,000,000, and Administrative Agent has notified Borrower of the Required
Reserve Value for such Aggregate Commitment.

 

22

 

2.5.2.       The Borrower agrees to pay to the
Administrative Agent for the account of each Lender according to its Pro Rata
Share a commitment fee at a per annum rate equal to the Applicable Fee Rate on
the average daily Available Aggregate Commitment from the date hereof to and
including the Facility Termination Date, payable on each Payment Date hereafter
and on the Facility Termination Date. 
All accrued commitment fees shall be payable on the effective date of
any termination of the obligations of the Lenders to make Credit Extensions
hereunder.

 

2.5.3.       Once during each period between Scheduled
Redeterminations, the Borrower may 
reduce the Aggregate Commitment in whole, or in part ratably among the
Lenders in integral multiples of $10,000,000, upon at least three Business Days’
written notice to the Administrative Agent, which notice shall specify the
amount of any such reduction, provided, however, that the amount of the
Aggregate Commitment may not be reduced below the aggregate principal amount of
the Aggregate Outstanding Credit Exposure.

 

2.5.4.       So long as no Default or Unmatured
Default has occurred and is continuing, the Borrower shall have the right to
increase the Aggregate Commitment by obtaining additional Commitments (the
amount of such increase is herein called the “Increase”), either from one or more of the Lenders or
another lending institution provided that (a) Borrower shall have notified
Administrative Agent of the amount of the Increase and Administrative Agent
shall have notified Borrower and Lenders of the Required Reserve Value for the
Aggregate Commitment as increased by the Increase, (b) each Lender shall
have had the option to increase its Commitment by its Pro Rata Share of the
Increase, (c) the Administrative Agent shall have approved the identity of
any such new Lender, such approval not to be unreasonably withheld,
(d) any such new Lender shall have assumed all of the rights and
obligations of a “Lender” hereunder, (e) the procedure described in
Section 15.6 shall have been complied with, (f) first Liens (subject
only to Permitted Encumbrances) shall have been created by Mortgages in favor
of Administrative Agent in the Minimum Collateral Amount of the Borrowing Base
Properties (based upon the new Required Reserve Value as described above), and
(g) after giving effect to the Increase, the Aggregate Commitment shall
not exceed the Borrowing Base.

 

Section 2.6.           Borrowing Base and Required
Reserve Value.

 

2.6.1.       During the period from the date hereof to
the first Determination Date the Borrowing Base shall be $825,000,000.

 

2.6.2.       By March 31 and September 30 of
each year beginning September 30, 2005, Borrower shall furnish to each
Lender all information, reports and data that Administrative Agent has then
requested concerning the businesses and properties (including their oil and gas
properties and interests and the reserves and production relating thereto) of
Borrower and its Subsidiaries, together with the Engineering Report.  Within 30 days after receiving such
information, reports and data, or as promptly thereafter as practicable,
Required Lenders shall agree upon an amount for the Borrowing Base (provided
that all Lenders must agree to any increase in the Borrowing Base) and
Administrative Agent shall by notice to Borrower designate such amount as the
new Borrowing Base available to Borrower hereunder and the Required Reserve
Value for the Aggregate Commitment then in effect, which designation shall take
effect immediately on the date such notice is sent (herein called a “Determination Date”) and shall

 

23

 

remain in effect until but not
including the next date as of which the Borrowing Base is redetermined.  If Borrower does not furnish all such
information, reports and data by the date specified in the first sentence of
this Section, Administrative Agent may nonetheless designate the Borrowing Base
and the Required Reserve Value at any amount which Required Lenders determine
and may redesignate the Borrowing Base and the Required Reserve Value from time
to time thereafter until each Lender receives all such information, reports and
data, whereupon Required Lenders shall designate a new Borrowing Base and
Required Reserve Value as described above. 
Required Lenders shall determine the amount of the Borrowing Base based
upon the loan collateral value which they in their discretion assign to the
various oil and gas properties included in the Collateral at the time in
question and based upon such other credit factors (including without limitation
the assets, liabilities, cash flow, hedged and unhedged exposure to price,
foreign exchange rate, and interest rate changes, business, properties,
prospects, management and ownership of Borrower and its Subsidiaries) as they
in their discretion deem significant.  It
is expressly understood that Lenders and Administrative Agent have no
obligation to agree upon or designate the Borrowing Base or the Required
Reserve Value at any particular amount, whether in relation to the Aggregate
Commitment or otherwise.

 

2.6.3.       In addition to Scheduled
Redeterminations, Required Lenders shall be permitted to make a Special
Redetermination of the Borrowing Base once in each calendar year.  Any request by Required Lenders pursuant to
this Section 2.6.3 shall be submitted to Administrative Agent and
Borrower.

 

2.6.4.       In addition to Scheduled
Redeterminations, Borrower shall be permitted to request a Special Redetermination
of the Borrowing Base once in each calendar year.  Such request shall be submitted to
Administrative Agent and Lenders and at the time of such request Borrower shall
(x) deliver to Administrative Agent and each Lender an Engineering Report,
and (y) notify Administrative Agent and each Lender of the Borrowing Base
requested by Borrower in connection with such Special Redetermination.

 

2.6.5.       Any Special Redetermination shall be made
by Lenders in accordance with the procedures and standards set forth in
Section 2.6.2; provided, that, no Engineering Report will be required to
be delivered to Administrative Agent and Lenders in connection with any Special
Redetermination requested by Required Lenders pursuant to Section 2.6.3.

 

2.6.6.       In addition to Scheduled Redeterminations
and Special Redeterminations, Administrative Agent and/or Required Lenders
shall be permitted to initiate and cause a redetermination of the Borrowing
Base simultaneously with (or within five (5) Business Days of) the consummation
of (a) the issuance by the Borrower of any Permitted Bond Indebtedness,
and/or (b) any lease, sale or other disposition of any Property of the Borrower
and its Subsidiaries pursuant to Section 7.4(iv)(A), which lease, sale or
other disposition relates to Property constituting more than 10% of the
Engineered Value of the Borrowing Base Properties as determined by
Administrative Agent in its sole discretion. 
Any redetermination of the Borrowing Base pursuant to this Section 2.6.6
shall be made by Lenders in accordance with the procedures and standards set
forth in Section 2.6.2; provided, that, no Engineering Report will be
required to be delivered to Administrative Agent and Lenders in connection with
any redetermination of the Borrowing Base pursuant to this Section 2.6.6.

 

24

 

Section 2.7.           Minimum Amount of Each Advance.  Each Eurodollar Advance shall be in the
minimum amount of $3,000,000 (and in multiples of $500,000 if in excess
thereof), and each Floating Rate Advance shall be in the minimum amount of
$1,000,000 (and in multiples of $500,000 if in excess thereof), provided,
however, that any Floating Rate Advance may be in the amount of the Available
Aggregate Commitment.

 

Section 2.8.           Principal Payments.

 

(a)           Optional Principal Payments.  The Borrower may from time to time pay,
without penalty or premium, all outstanding Floating Rate Advances, or, in a
minimum aggregate amount of $1,000,000 or any integral multiple of $500,000 in
excess thereof, any portion of the outstanding Floating Rate Advances upon two
Business Days’ prior notice to the Administrative Agent.  The Borrower may from time to time pay,
subject to the payment of any funding indemnification amounts required by
Section 3.5 but without penalty or premium, all outstanding Eurodollar
Advances, or, in a minimum aggregate amount of $3,000,000 or any integral
multiple of $500,000 in excess thereof, any portion of the outstanding
Eurodollar Advances upon three Business Days’ prior notice to the Administrative
Agent.

 

(b)           Mandatory Payments.  If at any time (i) the Aggregate
Outstanding Credit Exposure is in excess of the Aggregate Commitment (in this
Section, such excess is called a “Deficiency”),
Borrower shall, except as otherwise provided below, within 90 days after
Administrative Agent gives notice of such fact to Borrower, prepay the
principal of the Loans in an aggregate amount at least equal to such Deficiency
(or, if the Loans have been paid in full, deposit into the Facility LC
Collateral Account the amount required to eliminate the Deficiency), or
(ii) the Borrower or any of its Subsidiaries become obligated to prepay
all or any portion of the Senior Notes, any Permitted Bond Indebtedness or any
Indebtedness evidenced by a 9.60% Senior Notes Refinancing, as a result of
acceleration (or similar action) after a default or event of default thereunder
or with respect thereto, the Borrower or its Subsidiaries shall, prior to any
such prepayment, and except as otherwise provided and permitted by Section 7.14(c),
prepay the Loans and reduce the Commitments in full.  Notwithstanding anything to the contrary
contained herein, upon any redetermination of the Borrowing Base pursuant to
Section 2.6.6 which results in a Deficiency (or increase in any existing
Deficiency), the Borrower shall promptly, but in all events within two (2)
Business Days after the Administrative Agent gives notice of such Deficiency
(or increase in such Deficiency) to the Borrower, prepay the principal of the
Loan in an aggregate amount at least equal to such Deficiency (or increase in
any previously existing Deficiency) or, if the Loans have been paid in full,
deposit into the Facility LC Collateral Account the amount required to
eliminate the Deficiency (or increase in any previously existing
Deficiency).  Each payment of principal
under this Section shall be accompanied by all interest then accrued and unpaid
on the principal so prepaid.  Any
principal or interest prepaid pursuant to this Section shall be in
addition to, and not in lieu of, all payments otherwise required to be paid
under the Loan Documents at the time of such prepayment.

 

Section 2.9.           Method of Selecting Types and
Interest Periods for new Advances.  The Borrower shall select the Type of Advance
and, in the case of each Eurodollar Advance, the Interest Period applicable
thereto from time to time.  The Borrower
shall give the Administrative Agent irrevocable notice (a “Borrowing Notice”) not later than 11:00
a.m. (Chicago time) on the

 

25

 

same Business Day as the
Borrowing Date of each Floating Rate Advance and three Business Days before the
Borrowing Date for each Eurodollar Advance, specifying:

 

(i)            the
Borrowing Date, which shall be a Business Day, of such Advance,

 

(ii)           the
aggregate amount of such Advance,

 

(iii)          the
Type of Advance selected, and

 

(iv)          in
the case of each Eurodollar Advance, the Interest Period applicable thereto.

 

Not later than
noon (Chicago time) on each Borrowing Date, each Lender shall make available
its Loan or Loans in funds immediately available in Chicago to the
Administrative Agent at its address specified pursuant to
Article XVI.  The Administrative
Agent will make the funds so received from the Lenders available to the
Borrower at the Administrative Agent’s aforesaid address.

 

Section 2.10.        Conversion and Continuation of
Outstanding Advances.  Floating Rate Advances shall continue as
Floating Rate Advances unless and until such Floating Rate Advances are
converted into Eurodollar Advances pursuant to this Section 2.10 or are
repaid in accordance with Section 2.8. 
Each Eurodollar Advance shall continue as a Eurodollar Advance until the
end of the then applicable Interest Period therefor, at which time such
Eurodollar Advance shall be automatically converted into a Floating Rate
Advance unless (x) such Eurodollar Advance is or was repaid in accordance
with Section 2.8 or (y) the Borrower shall have given the
Administrative Agent a Conversion/Continuation Notice (as defined below)
requesting that, at the end of such Interest Period, such Eurodollar Advance
continue as a Eurodollar Advance for the same or another Interest Period.  Subject to the terms of Section 2.7, the
Borrower may elect from time to time to convert all or any part of a Floating
Rate Advance into a Eurodollar Advance. 
The Borrower shall give the Administrative Agent irrevocable notice (a “Conversion/Continuation Notice”) of
each conversion of a Floating Rate Advance into a Eurodollar Advance or
continuation of a Eurodollar Advance not later than 10:00 a.m. (Chicago time)
at least three Business Days prior to the date of the requested conversion or
continuation, specifying:

 

(i)            the
requested date, which shall be a Business Day, of such conversion or
continuation,

 

(ii)           the
aggregate amount and Type of the Advance which is to be converted or continued,
and

 

(iii)          the
amount of such Advance which is to be converted into or continued as a
Eurodollar Advance and the duration of the Interest Period applicable thereto.

 

Section 2.11.        Changes in Interest Rate, etc.  Each Floating Rate Advance shall bear
interest on the outstanding principal amount thereof, for each day from and
including the date such Advance is made or is automatically converted from a
Eurodollar Advance into a

 

26

 

Floating Rate Advance pursuant
to Section 2.10, to but excluding the date it is paid or is converted into
a Eurodollar Advance pursuant to Section 2.10, at a rate per annum equal
to the Floating Rate for such day. 
Changes in the rate of interest on that portion of any Advance
maintained as a Floating Rate Advance will take effect simultaneously with each
change in the Alternate Base Rate.  Each
Eurodollar Advance shall bear interest on the outstanding principal amount
thereof from and including the first day of the Interest Period applicable
thereto to (but not including) the last day of such Interest Period at the
interest rate determined by the Administrative Agent as applicable to such
Eurodollar Advance based upon the Borrower’s selections under Section 2.9
and Section 2.10 and otherwise in accordance with the terms hereof.  No Interest Period may end after the Facility
Termination Date.

 

Section 2.12.        Rates Applicable After Default.  Notwithstanding anything to the contrary
contained in Section 2.9, Section 2.10 or Section 2.11, during
the continuance of a Default or Unmatured Default the Required Lenders may, at
their option, by notice to the Borrower, declare that no Advance may be made
as, converted into or continued as a Eurodollar Advance.  During the continuance of a Default the
Required Lenders may, at their option, by notice to the Borrower, declare that
(i) each Eurodollar Advance shall bear interest for the remainder of the
applicable Interest Period at the rate otherwise applicable to such Interest
Period plus 2% per annum, (ii) each Floating Rate Advance shall bear
interest at a rate per annum equal to the Floating Rate in effect from time to
time plus 2% per annum and (iii) the LC Fee shall be increased by 2% per
annum, provided that, during the continuance of a Default under
Section 10.6 or Section 10.7, the interest rates set forth in clauses
(i) and (ii) above and the increase in the LC Fee set forth in clause (iii)
above shall be applicable to all Credit Extensions without any election or
action on the part of the Administrative Agent or any Lender.

 

Section 2.13.        Method of Payment.

 

2.13.1.     All payments of the Obligations hereunder
shall be made, without setoff, deduction, or counterclaim, in immediately
available funds to the Administrative Agent at the Administrative Agent’s
address specified pursuant to Article XVI, or at any other Lending
Installation of the Administrative Agent specified in writing by the
Administrative Agent to the Borrower, by noon (local time) on the date when due
and shall (except in the case of Reimbursement Obligations for which the LC
Issuer has not been fully indemnified by the Lenders, or as otherwise
specifically required hereunder) be applied ratably by the Administrative Agent
among the Lenders.  Each payment
delivered to the Administrative Agent for the account of any Lender shall be
delivered promptly by the Administrative Agent to such Lender in the same type
of funds that the Administrative Agent received at its address specified
pursuant to Article XVI or at any Lending Installation specified in a
notice received by the Administrative Agent from such Lender.  The Administrative Agent is hereby authorized
to charge the account of the Borrower maintained with JPMorgan for each payment
of principal, interest, Reimbursement Obligations and fees as it becomes due
hereunder.  Each reference to the
Administrative Agent in this Section 2.13 shall also be deemed to refer,
and shall apply equally, to the LC Issuer, in the case of payments required to
be made by the Borrower to the LC Issuer pursuant to Section 2.20.

 

27

 

2.13.2.     When Administrative Agent collects or
receives proceeds of Collateral, Administrative Agent shall distribute all
money so collected or received, and Administrative Agent and each Lender shall
apply all such money so distributed, as follows:

 

(a)           first,
for the payment of all Secured Obligations which are then due and if such money
is insufficient to pay all such Secured Obligations, first to any
reimbursements due Administrative Agent under Section 12.6 and then to the
partial payment of all other Secured Obligations then due in proportion to the
amounts thereof, or as Administrative Agent and Lender shall otherwise agree;

 

(b)           then
for the prepayment of the Secured Obligations; and

 

(c)           last,
for the payment or prepayment of any other indebtedness or obligations secured
by the Collateral.

 

All payments
applied to principal or interest on any Note shall be applied first to any
interest then due and payable, then to principal then due and payable, and last
to any prepayment of principal and interest in compliance with
Section 2.8.  All distributions of
amounts described in any of subsections (b) or (c) above shall be made by
Administrative Agent pro rata to each Lender (or its affiliate, as applicable)
then owed Secured Obligations described in such subsection in proportion to all
amounts owed to Administrative Agent and all Lenders (or their affiliates, as applicable)
which are described in such subsection; provided that if any Lender then owes
payments to LC Issuer for the purchase of a participation under
Section 2.20.5 or to Administrative Agent under Section 13.8, any
amounts otherwise distributable under this Section to such Lender shall be
deemed to belong to LC Issuer, or Administrative Agent, respectively, to the
extent of such unpaid payments, and Administrative Agent shall apply such
amounts to make such unpaid payments rather than distribute such amounts to
such Lender.

 

Section 2.14.        Evidence of Indebtedness.

 

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

 

(ii)           The
Administrative Agent shall also maintain accounts in which it will record
(a) the amount of each Loan made hereunder, the Type thereof and the
Interest Period with respect thereto, (b) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder, (c) the original stated amount of each Facility LC and the
amount of LC Obligations outstanding at any time, and (d) the amount of
any sum received by the Administrative Agent hereunder from the Borrower and
each Lender’s share thereof.

 

(iii)          The
entries maintained in the accounts maintained pursuant to paragraphs
(i) and (ii) above shall be prima facie evidence of the existence and
amounts of the Obligations therein recorded; provided, however, that the
failure of the Administrative Agent or any Lender to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Obligations in accordance with their terms.

 

28

 

(iv)          Each
Lender’s Loans and interest thereon shall at all times be evidenced by a
promissory note in the form of Exhibit A hereto (each a “Note”) payable to the order of such
Lender.

 

Section 2.15.        Telephonic Notices.  The Borrower hereby authorizes the Lenders
and the Administrative Agent to extend, convert or continue Advances, effect
selections of Types of Advances and to transfer funds based on telephonic
notices made by any person or persons the Administrative Agent or any Lender in
good faith believes to be acting on behalf of the Borrower, it being understood
that the foregoing authorization is specifically intended to allow Borrowing
Notices and Conversion/Continuation Notices to be given telephonically.  The Borrower agrees to deliver promptly to
the Administrative Agent a written confirmation, if such confirmation is
requested by the Administrative Agent or any Lender, of each telephonic notice
signed by an Authorized Officer.  If the
written confirmation differs in any material respect from the action taken by
the Administrative Agent and the Lenders, the records of the Administrative
Agent and the Lenders shall govern absent manifest error.

 

Section 2.16.        Interest Payment Dates; Interest and
Fee Basis.  Interest
accrued on each Floating Rate Advance shall be payable on each Payment Date,
commencing with the first such date to occur after the date hereof, on any date
on which the Floating Rate Advance is prepaid, whether due to acceleration or
otherwise, and at maturity.  Interest
accrued on that portion of the outstanding principal amount of any Floating
Rate Advance converted into a Eurodollar Advance on a day other than a Payment
Date shall be payable on the date of conversion.  Interest accrued on each Eurodollar Advance
shall be payable on the last day of its applicable Interest Period, on any date
on which the Eurodollar Advance is prepaid, whether by acceleration or
otherwise, and at maturity.  Interest
accrued on each Eurodollar Advance having an Interest Period longer than three
months shall also be payable on the last day of each three-month interval
during such Interest Period.  Interest,
commitment fees and LC Fees shall be calculated for actual days elapsed on the
basis of a 360-day year.  Interest shall
be payable for the day an Advance is made but not for the day of any payment on
the amount paid if payment is received prior to noon (local time) at the place
of payment.  If any payment of principal
of or interest on an Advance shall become due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and, in the
case of a principal payment, such extension of time shall be included in
computing interest in connection with such payment.

 

Section 2.17.        Notification of Advances, Interest
Rates, Prepayments and Commitment Reductions.  Promptly after receipt thereof, the
Administrative Agent will notify each Lender of the contents of each Aggregate
Commitment reduction notice, Borrowing Notice, Conversion/Continuation Notice,
and repayment notice received by it hereunder. 
Promptly after notice from the LC Issuer, the Administrative Agent will
notify each Lender of the contents of each request for issuance of a Facility
LC hereunder.  The Administrative Agent
will notify each Lender of the interest rate applicable to each Eurodollar
Advance promptly upon determination of such interest rate and will give each
Lender prompt notice of each change in the Alternate Base Rate.

 

Section 2.18.        Lending Installations.  Each Lender may book its Loans and its
participation in any LC Obligations and the LC Issuer may book the Facility LCs
at any Lending Installation selected by such Lender or the LC Issuer, as the case
may be, and may change its

 

29

 

Lending Installation from time
to time.  All terms of this Agreement
shall apply to any such Lending Installation and the Loans, Facility LCs,
participations in LC Obligations and any Notes issued hereunder shall be deemed
held by each Lender or the LC Issuer, as the case may be, for the benefit of
any such Lending Installation.  Each
Lender and the LC Issuer may, by written notice to the Administrative Agent and
the Borrower in accordance with Article XVI, designate replacement or
additional Lending Installations through which Loans will be made by it or
Facility LCs will be issued by it and for whose account Loan payments or
payments with respect to Facility LCs are to be made.

 

Section 2.19.        Non-Receipt of Funds by the
Administrative Agent.  Unless the Borrower or a Lender, as the case
may be, notifies the Administrative Agent prior to the date on which it is
scheduled to make payment to the Administrative Agent of (i) in the case
of a Lender, the proceeds of a Loan or (ii) in the case of the Borrower, a
payment of principal, interest or fees to the Administrative Agent for the
account of the Lenders, that it does not intend to make such payment, the
Administrative Agent may assume that such payment has been made.  The Administrative Agent may, but shall not
be obligated to, make the amount of such payment available to the intended
recipient in reliance upon such assumption. 
If such Lender or the Borrower, as the case may be, has not in fact made
such payment to the Administrative Agent, the recipient of such payment shall,
on demand by the Administrative Agent, repay to the Administrative Agent the
amount so made available together with interest thereon in respect of each day
during the period commencing on the date such amount was so made available by
the Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to (x) in the case of payment by a
Lender, the Federal Funds Effective Rate for such day for the first three days
and, thereafter, the interest rate applicable to the relevant Loan or
(y) in the case of payment by the Borrower, the interest rate applicable to
the relevant Loan.

 

Section 2.20.        Facility LCs.

 

2.20.1.     Issuance.  The LC Issuer hereby agrees, on the terms and
conditions set forth in this Agreement, to issue standby and commercial letters
of credit (each, together with the Existing Letter of Credit, a “Facility LC”) and to renew, extend,
increase, decrease or otherwise modify each Facility LC (“Modify,” and each such action a “Modification”), from time to time from
and including the date of this Agreement and prior to the Facility Termination
Date upon the request of the Borrower; provided that immediately after each
such Facility LC is issued or Modified, (i) the aggregate amount of the
outstanding LC Obligations shall not exceed $50,000,000 and (ii) the
Aggregate Outstanding Credit Exposure shall not exceed the Aggregate
Commitment.  No Facility LC shall have an
expiry date later than one year after the issuance thereof; provided that if
such expiry date is after the fifth Business Day prior to the Facility Termination
Date, Borrower shall deposit in the Facility LC Collateral Account on such
fifth Business Day immediately available funds in an amount equal to or greater
than the undrawn amount of such Facility LC.

 

2.20.2.     Participations.  Upon the issuance or Modification by the LC
Issuer of a Facility LC in accordance with this Section 2.20, and, with
respect to the Existing Letter of Credit, on the Closing Date, the LC Issuer
shall be deemed, without further action by any party hereto, to have
unconditionally and irrevocably sold to each Lender, and each Lender shall be
deemed, without further action by any party hereto, to have unconditionally and
irrevocably

 

30

 

purchased from the LC Issuer, a
participation in such Facility LC (and each Modification thereof) and the
related LC Obligations in proportion to its Pro Rata Share.

 

2.20.3.     Notice.  Subject to Section 2.20.1, the Borrower
shall give the LC Issuer notice prior to 10:00 a.m. (Chicago time) at least
five Business Days prior to the proposed date of issuance or Modification of
each Facility LC, specifying the beneficiary, the proposed date of issuance (or
Modification) and the expiry date of such Facility LC, and describing the
proposed terms of such Facility LC and the nature of the transactions proposed
to be supported thereby.  Upon receipt of
such notice, the LC Issuer shall promptly notify the Administrative Agent, and
the Administrative Agent shall promptly notify each Lender, of the contents
thereof and of the amount of such Lender’s participation in such proposed
Facility LC.  The issuance or
Modification by the LC Issuer of any Facility LC shall, in addition to the
conditions precedent set forth in Article IV (the satisfaction of which
the LC Issuer shall have no duty to ascertain), be subject to the conditions
precedent that such Facility LC shall be satisfactory to the LC Issuer and that
the Borrower shall have executed and delivered such application agreement
and/or such other instruments and agreements relating to such Facility LC as
the LC Issuer shall have reasonably requested (each, a “Facility LC Application”).  In the event of any conflict between the
terms of this Agreement and the terms of any Facility LC Application, the terms
of this Agreement shall control.

 

2.20.4.     LC
Fees.  The Borrower shall
pay to the Administrative Agent, for the account of the Lenders ratably in
accordance with their respective Pro Rata Shares, at the time of issuance of
each Facility LC, a letter of credit fee calculated at an amount equal to the
greater of $500.00 or a per annum rate equal to the Applicable Margin for
Eurodollar Loans on the stated amount of such Facility LC (each such fee
described in this sentence an “LC Fee”).  The Borrower shall also pay to the LC Issuer
for its own account at the time of issuance of each Facility LC, a fronting fee
in an amount equal to 0.125% of the initial stated amount, and documentary and
processing charges in connection with the issuance or Modification of and draws
under Facility LCs in accordance with the LC Issuer’s standard schedule for
such charges as in effect from time to time.

 

2.20.5.     Administration;
Reimbursement by Lenders. 
Upon receipt from the beneficiary of any Facility LC of any demand for
payment under such Facility LC, the LC Issuer shall notify the Administrative
Agent and the Administrative Agent shall promptly notify the Borrower and each
Lender as to the amount to be paid by the LC Issuer as a result of such demand
and the proposed payment date (the “LC
Payment Date”).  The
responsibility of the LC Issuer to the Borrower and each Lender shall be only
to determine that the documents (including each demand for payment) delivered
under each Facility LC in connection with such presentment shall be in
conformity in all material respects with such Facility LC.  The LC Issuer shall endeavor to exercise the
same care in the issuance and administration of the Facility LCs as it does
with respect to letters of credit in which no participations are granted, it
being understood that in the absence of any gross negligence or willful
misconduct by the LC Issuer, each Lender shall be unconditionally and
irrevocably liable without regard to the occurrence of any Default or any
condition precedent whatsoever, to reimburse the LC Issuer on demand for
(i) such Lender’s Pro Rata Share of the amount of each payment made by the
LC Issuer under each Facility LC to the extent such amount is not reimbursed by
the Borrower pursuant to Section 2.20.6 below, plus (ii) interest on
the foregoing amount to be reimbursed by such Lender, for each day from the
date

 

31

 

of the LC Issuer’s demand for
such reimbursement (or, if such demand is made after 11:00 a.m. (Chicago time)
on such date, from the next succeeding Business Day) to the date on which such
Lender pays the amount to be reimbursed by it, at a rate of interest per annum
equal to the Federal Funds Effective Rate for the first three days and,
thereafter, at a rate of interest equal to the rate applicable to Floating Rate
Advances.

 

2.20.6.     Reimbursement
by Borrower.  The Borrower
shall be irrevocably and unconditionally obligated to reimburse the LC Issuer
on or before the applicable LC Payment Date for any amounts to be paid by the
LC Issuer upon any drawing under any Facility LC, without presentment, demand,
protest or other formalities of any kind; provided that neither the Borrower
nor any Lender shall hereby be precluded from asserting any claim for direct
(but not consequential) damages suffered by the Borrower or such Lender to the
extent, but only to the extent, caused by (i) the willful misconduct or
gross negligence of the LC Issuer in determining whether a request presented
under any Facility LC issued by it complied with the terms of such Facility LC
or (ii) the LC Issuer’s failure to pay under any Facility LC issued by it
after the presentation to it of a request strictly complying with the terms and
conditions of such Facility LC.  All such
amounts paid by the LC Issuer and remaining unpaid by the Borrower shall bear
interest, payable on demand, for each day until paid at a rate per annum equal
to (x) the rate applicable to Floating Rate Advances for such day if such
day falls on or before the applicable LC Payment Date and (y) the sum of
2% plus the rate applicable to Floating Rate Advances for such day if such day
falls after such LC Payment Date.  The LC
Issuer will pay to each Lender ratably in accordance with its Pro Rata Share
all amounts received by it from the Borrower for application in payment, in
whole or in part, of the Reimbursement Obligation in respect of any Facility LC
issued by the LC Issuer, but only to the extent such Lender has made payment to
the LC Issuer in respect of such Facility LC pursuant to
Section 2.20.5.  Subject to the
terms and conditions of this Agreement (including without limitation the
submission of a Borrowing Notice in compliance with Section 2.9 and the
satisfaction of the applicable conditions precedent set forth in
Article IV), the Borrower may request an Advance hereunder for the purpose
of satisfying any Reimbursement Obligation.

 

2.20.7.     Obligations
Absolute.  The Borrower’s
obligations under this Section 2.20 shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim or
defense to payment which the Borrower may have or have had against the LC
Issuer, any Lender or any beneficiary of a Facility LC.  The Borrower further agrees with the LC
Issuer and the Lenders that the LC Issuer and the Lenders shall not be
responsible for, and the Borrower’s Reimbursement Obligation in respect of any
Facility LC shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even if such documents
should in fact prove to be in any or all respects invalid, fraudulent or
forged, or any dispute between or among the Borrower, any of its Affiliates,
the beneficiary of any Facility LC or any financing institution or other party
to whom any Facility LC may be transferred or any claims or defenses whatsoever
of the Borrower or of any of its Affiliates against the beneficiary of any
Facility LC or any such transferee.  The
LC Issuer shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Facility LC.  The Borrower agrees that any action taken or
omitted by the LC Issuer or any Lender under or in connection with each
Facility LC and the related drafts and documents, if done without gross
negligence or willful misconduct, shall be binding upon the Borrower and shall
not put the LC

 

32

 

Issuer or any Lender under any
liability to the Borrower.  Nothing in
this Section 2.20.7 is intended to limit the right of the Borrower to make
a claim against the LC Issuer for damages as contemplated by the proviso to the
first sentence of Section 2.20.6.

 

2.20.8.     Actions
of LC Issuer.  The LC
Issuer shall be entitled to rely, and shall be fully protected in relying, upon
any Facility LC, draft, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype message,
statement, order or other document 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 LC Issuer.  The
LC Issuer shall be fully justified in failing or refusing to take any action
under this Agreement unless it shall first have received such advice or
concurrence of the Required Lenders as it reasonably deems appropriate or it
shall first be indemnified to its reasonable 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.  Notwithstanding any other provision of this
Section 2.20, the LC Issuer shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement in accordance with a request
of the Required Lenders, and such request and any action taken or failure to
act pursuant thereto shall be binding upon the Lenders and any future holders
of a participation in any Facility LC.

 

2.20.9.     Indemnification.  The Borrower hereby agrees to indemnify and
hold harmless each Lender, the LC Issuer and the Administrative Agent, and
their respective directors, officers, agents and employees from and against any
and all claims and damages, losses, liabilities, costs or expenses which such
Lender, the LC Issuer or the Administrative Agent may incur (or which may be
claimed against such Lender, the LC Issuer or the Administrative Agent by any
Person whatsoever) by reason of or in connection with the issuance, execution
and delivery or transfer of or payment or failure to pay under any Facility LC
or any actual or proposed use of any Facility LC, including, without
limitation, any claims, damages, losses, liabilities, costs or expenses which
the LC Issuer may incur (i) by reason of or in connection with the failure
of any other Lender to fulfill or comply with its obligations to the LC Issuer
hereunder (but nothing herein contained shall affect any rights the Borrower
may have against any defaulting Lender) or (ii) by reason of or on account
of the LC Issuer issuing any Facility LC which specifies that the term “Beneficiary”
included therein includes any successor by operation of law of the named
Beneficiary, but which Facility LC does not require that any drawing by any
such successor Beneficiary be accompanied by a copy of a legal document,
satisfactory to the LC Issuer, evidencing the appointment of such successor
Beneficiary; provided that the Borrower shall not be required to indemnify any
Lender, the LC Issuer or the Administrative Agent for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (x) the willful misconduct or gross negligence of the LC Issuer
in determining whether a request presented under any Facility LC complied with
the terms of such Facility LC or (y) the LC Issuer’s failure to pay under
any Facility LC after the presentation to it of a request strictly complying
with the terms and conditions of such Facility LC.  Nothing in this Section 2.20.9 is
intended to limit the obligations of the Borrower under any other provision of
this Agreement.

 

2.20.10.   Lenders’
Indemnification.  Each
Lender shall, ratably in accordance with its Pro Rata Share, indemnify the LC
Issuer, its affiliates and their respective directors,

 

33

 

officers, agents and employees
(to the extent not reimbursed by the Borrower) against any cost, expense
(including reasonable counsel fees and disbursements), claim, demand, action, loss
or liability (except such as result from such indemnitees’ gross negligence or
willful misconduct or the LC Issuer’s failure to pay under any Facility LC
after the presentation to it of a request strictly complying with the terms and
conditions of the Facility LC) that such indemnitees may suffer or incur in
connection with this Section 2.20 or any action taken or omitted by such
indemnitees hereunder.

 

2.20.11.   Facility
LC Collateral Account. 
The Borrower agrees that it will, upon the request of the Administrative
Agent or the Required Lenders and until the final expiration date of any
Facility LC and thereafter as long as any amount is payable to the LC Issuer or
the Lenders in respect of any Facility LC, maintain a special collateral
account pursuant to arrangements satisfactory to the Administrative Agent (the “Facility LC Collateral Account”) at the
Administrative Agent’s office at the address specified pursuant to
Article XVI, in the name of the Borrower but under the sole dominion and
control of the Administrative Agent, for the benefit of the Lenders and in
which the Borrower shall have no interest other than as set forth in
Section 11.1.  The Borrower hereby
pledges, assigns and grants to the Administrative Agent, on behalf of and for
the ratable benefit of the Lenders and the LC Issuer, a security interest in
all of the Borrower’s right, title and interest in and to all funds which may
from time to time be on deposit in the Facility LC Collateral Account to secure
the prompt and complete payment and performance of the Obligations.  The Administrative Agent will invest any
funds on deposit from time to time in the Facility LC Collateral Account in
certificates of deposit of JPMorgan having a maturity not exceeding 30
days.  Nothing in this Section 2.20.11
shall either obligate the Administrative Agent to require the Borrower to
deposit any funds in the Facility LC Collateral Account or limit the right of
the Administrative Agent to release any funds held in the Facility LC
Collateral Account in each case other than as required by Section 11.1.

 

2.20.12.   Rights
as a Lender.  In its
capacity as a Lender, the LC Issuer shall have the same rights and obligations
as any other Lender.

 

Section 2.21.        Replacement of Lender.  If the Borrower is required pursuant to
Section 3.1, Section 3.2 or Section 3.5 to make any additional
payment to any Lender or if any Lender’s obligation to make or continue, or to
convert Floating Rate Advances into, Eurodollar Advances shall be suspended
pursuant to Section 3.4 (any Lender so affected an “Affected Lender”), the Borrower may
elect, if such amounts continue to be charged or such suspension is still
effective, to replace such Affected Lender as a Lender party to this Agreement,
provided that no Default or Unmatured Default shall have occurred and be
continuing at the time of such replacement, and provided further that,
concurrently with such replacement, (i) another bank or other entity which
is reasonably satisfactory to the Borrower and the Administrative Agent shall
agree, as of such date, to purchase for cash the Advances and other Obligations
due to the Affected Lender pursuant to an assignment substantially in the form
of Exhibit C and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Affected Lender to be terminated
as of such date and to comply with the requirements of Section 15.3
applicable to assignments, and (ii) the Borrower shall pay to such
Affected Lender in same day funds on the day of such replacement (a) all
interest, fees and other amounts then accrued but unpaid to such Affected
Lender by the Borrower hereunder to and including the date of termination,
including without limitation payments due to such Affected Lender under

 

34

 

Section 3.1,
Section 3.2 and Section 3.5, and (b) an amount, if any, equal to
the payment which would have been due to such Lender on the day of such
replacement under Section 3.4 had the Loans of such Affected Lender been
prepaid on such date rather than sold to the replacement Lender.

 

Section 2.22.        Limitation of Interest.  The Borrower, the Administrative Agent and
the Lenders intend to strictly comply with all applicable laws, including
applicable usury laws.  Accordingly, the
provisions of this Section 2.22 shall govern and control over every other
provision of this Agreement or any other Loan Document which conflicts or is
inconsistent with this Section 2.22, even if such provision declares that
it controls.  As used in this
Section 2.22, the term “interest” includes the aggregate of all charges,
fees, benefits or other compensation which constitute interest under applicable
law, provided that, to the maximum extent permitted by applicable law,
(a) any non-principal payment shall be characterized as an expense or as
compensation for something other than the use, forbearance or detention of
money and not as interest, and (b) all interest at any time contracted
for, reserved, charged or received shall be amortized, prorated, allocated and
spread, in equal parts during the full term of the Obligations.  In no event shall the Borrower or any other
Person be obligated to pay, or any Lender have any right or privilege to
reserve, receive or retain, total interest in excess of the amount which such
Lender could lawfully have contracted for, reserved, received, retained or
charged had the interest been calculated for the full term of the Obligations
at the Highest Lawful Rate.  None of the
terms and provisions contained in this Agreement or in any other Loan Document
which directly or indirectly relate to interest shall ever be construed without
reference to this Section 2.22, or be construed to create a contract to
pay for the use, forbearance or detention of money at an interest rate in excess
of the Highest Lawful Rate.

 

ARTICLE III

YIELD PROTECTION; TAXES

 

Section 3.1.           Yield Protection.  If, on or after the date of this Agreement,
the adoption of any law or any governmental or quasi-governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law), or any change in the interpretation or administration thereof by any
governmental or quasi-governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender or applicable Lending Installation or the LC Issuer with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency:

 

(i)            subjects
any Lender or any applicable Lending Installation or the LC Issuer to any
Taxes, or changes the basis of taxation of payments (other than with respect to
Excluded Taxes) to any Lender or the LC Issuer in respect of its Eurodollar
Loans, Facility LCs or participations therein, or

 

(ii)           imposes
or increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender or any applicable Lending

 

35

 

Installation or the LC Issuer
(other than reserves and assessments taken into account in determining the
interest rate applicable to Eurodollar Advances), or

 

(iii)          imposes
any other condition the result of which is to increase the cost to any Lender
or any applicable Lending Installation or the LC Issuer of making, funding or
maintaining its Eurodollar Loans, or of issuing or participating in Facility
LCs, or reduces any amount receivable by any Lender or any applicable Lending
Installation or the LC Issuer in connection with its Eurodollar Loans, Facility
LCs or participations therein, or requires any Lender or any applicable Lending
Installation or the LC Issuer to make any payment calculated by reference to
the amount of Eurodollar Loans, Facility LCs or participations therein held or
interest or LC Fees received by it, by an amount deemed material by such Lender
or the LC Issuer as the case may be,

 

and the result
of any of the foregoing is to increase the cost to such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, of making or
maintaining its Eurodollar Loans or Commitment or of issuing or participating
in Facility LCs or to reduce the return received by such Lender or applicable
Lending Installation or the LC Issuer, as the case may be, in connection with
such Eurodollar Loans, Commitment, Facility LCs or participations therein,
then, within 15 days of demand by such Lender or the LC Issuer, as the case may
be, the Borrower shall pay such Lender or the LC Issuer, as the case may be,
such additional amount or amounts as will compensate such Lender or the LC
Issuer, as the case may be, for such increased cost or reduction in amount
received.

 

Section 3.2.           Changes in Capital Adequacy
Regulations. 
If a Lender or the LC Issuer determines the amount of capital required
or expected to be maintained by such Lender or the LC Issuer, any Lending
Installation of such Lender or the LC Issuer, or any corporation controlling
such Lender or the LC Issuer is increased as a result of a Change, then, within
15 days of demand by such Lender or the LC Issuer, the Borrower shall pay such
Lender or the LC Issuer the amount necessary to compensate for any shortfall in
the rate of return on the portion of such increased capital which such Lender
or the LC Issuer determines is attributable to this Agreement, its Outstanding
Credit Exposure or its Commitment to make Loans and issue or participate in
Facility LCs, as the case may be, hereunder (after taking into account such Lender’s
or the LC Issuer’s policies as to capital adequacy).  “Change”
means (i) any change after the date of this Agreement in the Risk-Based
Capital Guidelines or (ii) any adoption of or change in any other law,
governmental or quasi-governmental rule, regulation, policy, guideline,
interpretation, or directive (whether or not having the force of law) after the
date of this Agreement which affects the amount of capital required or expected
to be maintained by any Lender or the LC Issuer or any Lending Installation or
any corporation controlling any Lender or the LC Issuer.  “Risk-Based
Capital Guidelines” means (i) the risk-based capital
guidelines in effect in the United States on the date of this Agreement,
including transition rules, and (ii) the corresponding capital regulations
promulgated by regulatory authorities outside the United States implementing
the July 1988 report of the Basle Committee on Banking Regulation and
Supervisory Practices Entitled “International Convergence of Capital
Measurements and Capital Standards,” including transition rules, and any
amendments to such regulations adopted prior to the date of this Agreement.

 

36

 

Section 3.3.           Taxes.

 

(i)            All
payments by the Borrower to or for the account of any Lender, the LC Issuer or
the Administrative Agent hereunder or under any Note or Facility LC Application
shall be made free and clear of and without deduction for any and all
Taxes.  If the Borrower shall be required
by law to deduct any Taxes from or in respect of any sum payable hereunder to
any Lender, the LC Issuer or the Administrative Agent, to the extent not
prohibited by applicable law, (a) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 3.3) such Lender,
the LC Issuer or the Administrative Agent (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(b) the Borrower shall make such deductions, (c) the Borrower shall
pay the full amount deducted to the relevant authority in accordance with
applicable law and (d) the Borrower shall furnish to the Administrative
Agent the original copy of a receipt evidencing payment thereof within 30 days
after such payment is made.

 

(ii)           In
addition, the Borrower hereby agrees to pay any present or future stamp or
documentary taxes and any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any Note or
Facility LC Application or from the execution or delivery of, or otherwise with
respect to, this Agreement or any Note or Facility LC Application (“Other Taxes”).

 

(iii)          The
Borrower hereby agrees to indemnify the Administrative Agent, the LC Issuer and
each Lender for the full amount of Taxes or Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed on amounts payable under this
Section 3.3) paid by the Administrative Agent, the LC Issuer or such Lender
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto. 
Payments due under this indemnification shall be made within 30 days of
the date the Administrative Agent, the LC Issuer or such Lender makes demand
therefor pursuant to Section 3.6.

 

(iv)          Each
Lender that is not incorporated under the laws of the United States of America
or a state thereof (each a “Non-U.S.
Lender”) agrees that it will, not more than ten Business Days
after the date of this Agreement, (i) deliver to the Administrative Agent
two duly completed copies of United States Internal Revenue Service Form W-8BEN
or W-8ECI, certifying in either case that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, and (ii) deliver to the Administrative Agent
a United States Internal Revenue Form W-8 or W-9, as the case may be, and
certify that it is entitled to an exemption from United States backup withholding
tax.  Each Non-U.S. Lender further
undertakes to deliver to each of the Borrower and the Administrative Agent
(x) renewals or additional copies of such form (or any successor form) on
or before the date that such form expires or becomes obsolete, and (y) after
the occurrence of any event requiring a change in the most recent forms so
delivered by it, such additional forms or amendments thereto as may be
reasonably requested by the Borrower or the Administrative Agent.  All forms or amendments described in the
preceding sentence shall certify that such Lender is entitled to receive
payments under this Agreement without deduction or withholding of any United
States federal income taxes, unless an event (including without

 

37

 

limitation any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form or amendment with respect to it and such Lender advises the Borrower and
the Administrative Agent that it is not capable of receiving payments without
any deduction or withholding of United States federal income tax.

 

(v)           For
any period during which a Non-U.S. Lender has failed to provide the Borrower
with an appropriate form pursuant to clause (iv) above (unless such failure is
due to a change in treaty, law or regulation, or any change in the
interpretation or administration thereof by any governmental authority,
occurring subsequent to the date on which a form originally was required to be
provided), such Non-U.S. Lender shall not be entitled to indemnification under
this Section 3.3 with respect to Taxes imposed by the United States;
provided that, should a Non-U.S. Lender which is otherwise exempt from or
subject to a reduced rate of withholding tax become subject to Taxes because of
its failure to deliver a form required under clause (iv) above, the Borrower
shall take such steps as such Non-U.S. Lender shall reasonably request to
assist such Non-U.S. Lender to recover such Taxes.

 

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

 

(vii)         If
the U.S. Internal Revenue Service or any other governmental authority of the
United States or any other country or any political subdivision thereof 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 or properly completed, because such Lender failed to notify
the Administrative Agent of a change in circumstances which rendered its
exemption from withholding 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, withholding therefor, or
otherwise, including penalties and interest, and including taxes imposed by any
jurisdiction on amounts payable to the Administrative Agent under this
subsection, together with all costs and expenses related thereto (including
attorneys fees and time charges of attorneys for the Administrative Agent,
which attorneys may be employees of the Administrative Agent).  The obligations of the Lenders under this
Section 3.3(vii) shall survive the payment of the Obligations and
termination of this Agreement.

 

Section 3.4.           Availability of Types of Advances.  If any Lender determines that maintenance of
its Eurodollar Loans at a suitable Lending Installation would violate any
applicable law, rule, regulation, or directive, whether or not having the force
of law, or if the Required Lenders determine that (i) deposits of a type
and maturity appropriate to match fund Eurodollar Advances are not available or
(ii) the interest rate applicable to Eurodollar Advances does not
accurately reflect the cost of making or maintaining Eurodollar Advances, then
the Administrative Agent shall suspend the availability of Eurodollar Advances
and require any

 

38

 

affected Eurodollar Advances to
be repaid or converted to Floating Rate Advances, subject to the payment of any
funding indemnification amounts required by Section 3.5.

 

Section 3.5.           Funding Indemnification.  If any payment of a Eurodollar Advance occurs
on a date which is not the last day of the applicable Interest Period, whether
because of acceleration, prepayment or otherwise, or a Eurodollar Advance is
not made on the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower will indemnify each Lender for any loss or
cost incurred by it resulting therefrom, including, without limitation, any
loss or cost in liquidating or employing deposits acquired to fund or maintain
such Eurodollar Advance.

 

Section 3.6.           Lender Statements; Survival of
Indemnity.  To
the extent reasonably possible, each Lender shall designate an alternate
Lending Installation with respect to its Eurodollar Loans to reduce any
liability of the Borrower to such Lender under Section 3.1,
Section 3.2, and Section 3.3 or to avoid the unavailability of
Eurodollar Advances under Section 3.4, so long as such designation is not,
in the judgment of such Lender, disadvantageous to such Lender.  Each Lender shall deliver a written statement
of such Lender to the Borrower (with a copy to the Administrative Agent) as to
the amount due, if any, under Section 3.1, Section 3.2,
Section 3.3, or Section 3.5. 
Such written statement shall set forth in reasonable detail the
calculations upon which such Lender determined such amount and shall be final,
conclusive and binding on the Borrower in the absence of manifest error.  Determination of amounts payable under such
Sections in connection with a Eurodollar Loan shall be calculated as though
each Lender funded its Eurodollar Loan through the purchase of a deposit of the
type and maturity corresponding to the deposit used as a reference in
determining the Eurodollar Rate applicable to such Loan, whether in fact that
is the case or not.  Unless otherwise
provided herein, the amount specified in the written statement of any Lender
shall be payable on demand after receipt by the Borrower of such written
statement.  The obligations of the
Borrower under Section 3.1, Section 3.2, Section 3.3, and
Section 3.5 shall survive payment of the Obligations and termination of
this Agreement.

 

ARTICLE IV

CONDITIONS PRECEDENT

 

Section 4.1.           Initial Credit Extension.  The Lenders shall not be required to make the
initial Credit Extension hereunder unless:

 

4.1.1.       The Borrower has furnished to the
Administrative Agent the following, with sufficient copies for the Lenders:

 

(i)            Copies
of the certificate or articles of incorporation, certificate or articles of
organization, certificate of partnership or comparable charter documents of the
Borrower and each Material Subsidiary, together with all amendments, and a
certificate of existence, good standing and foreign qualification for the
Borrower and each Material Subsidiary, each certified by the appropriate
governmental officer in the Borrower’s and each such Material Subsidiary’s
applicable jurisdiction of incorporation or organization and, with

 

39

 

respect to foreign qualification certificates, in such jurisdictions as
the Administrative Agent has requested.

 

(ii)           Copies,
certified by the Secretary or Assistant Secretary of the Borrower and each
Material Subsidiary, as applicable, of its by-laws, regulations or comparable
charter documents, and all amendments thereto, and of its Board of Directors’
(or comparable authority) resolutions (or comparable authorizations) and of
resolutions or actions of any other body authorizing the execution of the Loan
Documents to which the Borrower and/or such Material Subsidiaries are a party
and the consummation of the Mergers and the other Closing Transactions.

 

(iii)          An
incumbency certificate, executed by the Secretary or Assistant Secretary of the
Borrower and each Material Subsidiary, as applicable, which shall identify by
name and title and bear the signatures of the Authorized Officers and any other
officers of the Borrower and such Material Subsidiaries authorized to sign the
Loan Documents to which the Borrower and/or such Material Subsidiaries are a
party, upon which certificate the Administrative Agent and the Lenders shall be
entitled to rely until informed of any change in writing by the Borrower.

 

(iv)          A
certificate, signed by the chief financial officer of the Borrower, stating
that on the initial Credit Extension Date no Default or Unmatured Default has
occurred and is continuing.

 

(v)           A written
opinion of counsel to the Borrower and the Guarantors, addressed to the
Administrative Agent and the Lenders in substantially the form of Exhibit D.

 

(vi)          A Note
payable to the order of each Lender.

 

(vii)         If the
initial Credit Extension will be the issuance of a Facility LC, a properly
completed Facility LC Application.

 

(viii)        The Guaranty
and the Collateral Documents to be delivered on the Closing Date pursuant to
Article IX.

 

(ix)           The
insurance certificate described in Section 5.19.

 

(x)            Initial
Engineering Report.

 

(xi)           A copy of
each Closing Document requested by the Administrative Agent, duly executed and
delivered by each party thereto, together with a certificate from an Authorized
Officer of Borrower certifying that such copies are accurate and complete and
represent the complete understanding and agreement of the parties with respect
to the subject matter thereof.

 

(xii)          Such other
documents as any Lender or its counsel may have reasonably requested.

 

40

 

4.1.2.       The following additional conditions shall
have been satisfied:

 

(i)            The Closing
Transactions, including, without limitation, the completion and consummation of
the Mergers, shall have been consummated on the terms set forth in the Closing
Documents.

 

(ii)           All fees and
expenses owing by Borrower or its Subsidiaries to Administrative Agent shall
have been paid, including attorneys fees.

 

All documents
executed or submitted pursuant to this Section 4.1 by and on behalf of
Borrower or any of its Subsidiaries shall be in form and substance satisfactory
to Administrative Agent and its counsel. 
The obligations of the Lenders to make Loans and of the LC Issuer to
issue a Facility LC hereunder shall not become effective unless each of
the foregoing conditions is satisfied at or prior to 2:00 p.m., Chicago,
Illinois time, on June 13, 2005. 
Upon satisfaction of each of the conditions set forth in this
Section 4.1, including, without limitation, the completion and
consummation of the Mergers, Borrower and Administrative Agent shall execute
and deliver the Certificate of Effectiveness. 
Upon the execution and delivery of the Certificate of Effectiveness, the
Existing Cimarex Credit Agreement shall automatically and completely be amended
and restated on the terms set forth herein without necessity of any other
action on the part of any Lender, Administrative Agent or Borrower.  Until the execution and delivery of the
Certificate of Effectiveness, the Existing Cimarex Credit Agreement shall
remain in full force and effect in accordance with its terms.  Each Lender hereby authorizes Administrative
Agent to execute the Certificate of Effectiveness on its behalf and
acknowledges and agrees that the execution of the Certificate of Effectiveness
by Administrative Agent shall be binding on each such Lender.

 

Section 4.2.           Each
Credit Extension.  The Lenders
shall not be required to make any Credit Extension unless on the applicable
Credit Extension Date:

 

(i)            There exists
no Default or Unmatured Default.

 

(ii)           The
representations and warranties contained in Article V are true and correct as
of such Credit Extension Date except to the extent any such representation or
warranty is stated to relate solely to an earlier date, in which case such
representation or warranty shall have been true and correct on and as of such
earlier date.

 

(iii)          All legal
matters incident to the making of such Credit Extension shall be satisfactory
to the Lenders and their counsel.

 

Each Borrowing
Notice or request for issuance of a Facility LC with respect to each such
Credit Extension shall constitute a representation and warranty by the Borrower
that the conditions contained in Section 4.2(i) and Section 4.2(ii)
have been satisfied.  Any Lender may
require a duly completed compliance certificate in substantially the form of Exhibit B
as a condition to making a Credit Extension.

 

41

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

The Borrower
represents and warrants (which representations and warranties are true and
correct on the date hereof (and after giving effect to the Closing
Transactions), and will be true and correct on the occasion of each Credit
Extension, except to the extent that such representations and warranties are
expressly limited to an earlier date) to the Lenders that:

 

Section 5.1.           Existence
and Standing.  Each of the
Borrower and its Subsidiaries is a corporation, partnership (in the case of
Subsidiaries only) or limited liability company duly and properly incorporated
or organized, as the case may be, validly existing and (to the extent such
concept applies to such entity) in good standing under the laws of its
jurisdiction of incorporation or organization and has all requisite authority
to conduct its business in each jurisdiction in which its business is
conducted.

 

Section 5.2.           Authorization
and Validity.  Each of the
Borrower and its Subsidiaries has the power and authority and legal right to
execute and deliver the Loan Documents to which it is a party and to perform
its obligations thereunder.  The
execution and delivery by the Borrower and its Subsidiaries of the Loan
Documents to which it is a party and the performance of its obligations
thereunder have been duly authorized by proper corporate (or other
organizational) proceedings, and the Loan Documents to which the Borrower and
its Subsidiaries are a party constitute legal, valid and binding obligations of
the Borrower and such Subsidiaries enforceable against the Borrower and its
Subsidiaries in accordance with their terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally.

 

Section 5.3.           No
Conflict; Government Consent.  Neither
the execution and delivery by the Borrower or its Subsidiaries of the Loan
Documents to which it is a party, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof, nor the
consummation of the Closing Transactions, will violate (i) any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on the
Borrower or any of its Subsidiaries or (ii) the Borrower’s or any
Subsidiary’s articles or certificate of incorporation, partnership agreement,
certificate of partnership, articles or certificate of organization, by-laws,
or operating or other management agreement, as the case may be, or (iii) the
provisions of any indenture (including, without limitation, the Indentures),
instrument or agreement (including, without limitation, any Permitted Bond
Document or 9.60% Senior Notes Refinancing Document) to which the Borrower
or any of its Subsidiaries is a party or is subject, or by which it, or its
Property, is bound, or conflict with or constitute a default thereunder, or
result in, or require, the creation or imposition of any Lien in, of or on the
Property of the Borrower or a Subsidiary pursuant to the terms of any such
indenture, instrument or agreement (including, without limitation, any
Permitted Bond Document or 9.60% Senior Notes Refinancing Document).  No order, consent, adjudication, approval,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, or other action in respect of any governmental or public
body or authority, or any subdivision thereof, which has not been obtained by
the Borrower or any of its Subsidiaries, is required to be obtained by the Borrower
or any of its Subsidiaries in connection with the execution and delivery of the
Loan Documents, the

 

42

 

borrowings under this
Agreement, the payment and performance by the Borrower of the Obligations, the
legality, validity, binding effect or enforceability of any of the Loan
Documents, or the consummation of the Closing Transactions.

 

Section 5.4.           Financial
Statements.  The audited annual
and unaudited quarterly, consolidated financial statements of Borrower
heretofore delivered to the Lenders were prepared in accordance with generally
accepted accounting principles in effect on the date such statements were
prepared and fairly present the consolidated financial condition and operations
of the Borrower and its Subsidiaries at such date and the consolidated results
of their operations for the period then ended.

 

Section 5.5.           Material
Adverse Change.  Since
December 31, 2004 there has been no change in the business, Property,
prospects, condition (financial or otherwise) or results of operations of the
Borrower and its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.

 

Section 5.6.           Taxes.  The Borrower and its Subsidiaries have filed
all United States federal tax returns and all other tax returns which are
required to be filed and have paid all taxes due pursuant to said returns or
pursuant to any assessment received by the Borrower or any of its Subsidiaries,
except such taxes, if any, as are being contested in good faith and as to which
adequate reserves have been provided in accordance with Agreement Accounting
Principles and as to which no Lien exists. 
No tax liens have been filed and no claims are being asserted with
respect to any such taxes.  The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of any taxes or other governmental charges are adequate.

 

Section 5.7.           Litigation
and Contingent Obligations.  There
is no litigation, arbitration, governmental investigation, proceeding or
inquiry pending or, to the knowledge of any of their officers, threatened
against or affecting the Borrower or any of its Subsidiaries which could
reasonably be expected to have a Material Adverse Effect or which seeks to
prevent, enjoin or delay the making of any Credit Extensions.  Other than any liability incident to any
litigation, arbitration or proceeding which could not reasonably be expected to
have a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries has any material Contingent Obligations not provided for or
disclosed in the financial statements referred to in Section 5.4 or in the
Disclosure Schedule.

 

Section 5.8.           Subsidiaries.  The Disclosure Schedule contains an accurate
list of all Subsidiaries of the Borrower as of the date of this Agreement (and
after giving effect to the Closing Transactions), setting forth (i) their
respective jurisdictions of organization, (ii) the percentage of their
respective capital stock or other ownership interests owned by the Borrower or
other Subsidiaries, and (iii) which of such Subsidiaries are Material
Subsidiaries as of the date hereof.  All
of the issued and outstanding shares of capital stock or other ownership
interests of such Subsidiaries have been (to the extent such concepts are
relevant with respect to such ownership interests) duly authorized and issued
and are fully paid and non-assessable.

 

Section 5.9.           ERISA.  The Unfunded Liabilities of all Single
Employer Plans do not in the aggregate exceed $500,000.  Neither the Borrower nor any other member of
the Controlled Group has incurred, or is reasonably expected to incur, any
withdrawal liability to

 

43

 

Multiemployer Plans.  Each Plan complies in all material respects
with all applicable requirements of law and regulations, no Reportable Event
has occurred with respect to any Plan, neither the Borrower nor any other
member of the Controlled Group has withdrawn from any Plan or initiated steps
to do so, and no steps have been taken to reorganize or terminate any Plan
except as disclosed in the Disclosure Schedule.

 

Section 5.10.        Accuracy
of Information.  No information,
exhibit or report furnished by the Borrower or any of its Subsidiaries to the
Administrative Agent or to any Lender in connection with the Closing
Transactions or in connection with the negotiation of, or compliance with, the
Loan Documents contained any material misstatement of fact or omitted to state
a material fact or any fact necessary to make the statements contained therein
not misleading.

 

Section 5.11.        Regulation U.  Margin stock (as defined in
Regulation U) constitutes less than 25% of the value of those assets of
the Borrower and its Subsidiaries which are subject to any limitation on sale,
pledge, or other restriction hereunder.

 

Section 5.12.        Material
Agreements.  Neither the Borrower
nor any Subsidiary is a party to any agreement or instrument or subject to any
charter or other corporate restriction that could reasonably be expected to
have a Material Adverse Effect.  Neither
the Borrower nor any Subsidiary is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in (i) any
agreement to which it is a party, which default could reasonably be expected to
have a Material Adverse Effect or (ii) any agreement or instrument
evidencing or governing Indebtedness, which default could reasonably be
expected to have a Material Adverse Effect.

 

Section 5.13.        Compliance
With Laws.  The Borrower and its
Subsidiaries have complied with all applicable statutes, rules, regulations,
orders and restrictions of any domestic or foreign government or any
instrumentality or agency thereof having jurisdiction over the conduct of their
respective businesses or the ownership of their respective Property except for
any failure to comply with any of the foregoing which could not reasonably be
expected to have a Material Adverse Effect.

 

Section 5.14.        Ownership
of Properties.  Except for
matters that would not have a Material Adverse Effect, each of Borrower and its
Subsidiaries has (after giving effect to the Closing Transactions) good and
defensible title to all of its material properties and assets purported to be
owned by it, including, without limitation, all properties and assets reflected
on the financial statements referred to in Section 5.4, free and clear of
all Liens, encumbrances, or adverse claims other than Permitted Encumbrances
and of all impediments to the use of such properties and assets in such of Borrower
and its Subsidiaries’ business, except that no representation or warranty is
made with respect to any oil, gas or mineral property or interest to which no
proved oil or gas reserves are properly attributed.  Each of Borrower and its Subsidiaries owns
the net interests in production attributable to the wells and units evaluated
in the Initial Engineering Report and which are included in Engineered Value
subject to Permitted Encumbrances.  The
ownership of such properties does not in the aggregate in any material respect
obligate Borrower or any of its Subsidiaries consolidated financial statements
provided to Administrative Agent as owned by Borrower and its Subsidiaries to
bear the costs and expenses

 

44

 

relating to the maintenance,
development and operations of such properties in an amount materially in excess
of the working interest of such properties set forth in the Initial Engineering
Reports.  Upon delivery of each
Engineering Report furnished to the Lenders pursuant to Section 6.1(ix)
and Section 6.1(x), the statements made in the preceding sentences of this
Section shall be true with respect to such Engineering Report.  Each of Borrower and its Subsidiaries
possesses all licenses, permits, franchises, patents, copyrights, trademarks
and trade names, and other intellectual property (or otherwise possesses the
right to use such intellectual property without violation of the rights of any
other Person) which are necessary to carry out its business as presently
conducted and as presently proposed to be conducted hereafter, and none of
Borrower or its Subsidiaries is in violation in any material respect of the
terms under which it possesses such intellectual property or the right to use
such intellectual property, except with respect to such types of property
having an aggregate value of less than $6,000,000.

 

Section 5.15.        Plan
Assets; Prohibited Transactions. 
The Borrower is not an entity deemed to hold “plan assets” within the
meaning of 29 C.F.R. § 2510.3-101 of an employee benefit plan (as defined in
Section 3(3) of ERISA) which is subject to Title I of ERISA or any
plan (within the meaning of Section 4975 of the Code), and neither the
execution of this Agreement nor the making of Loans hereunder gives rise to a
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code.

 

Section 5.16.        Environmental
Matters.  In the ordinary course
of its business, the officers of the Borrower consider the effect of
Environmental Laws on the business of the Borrower and its Subsidiaries, in the
course of which they identify and evaluate potential risks and liabilities
accruing to the Borrower due to Environmental Laws.  On the basis of this consideration, and after
giving effect to the Closing Transactions, the Borrower has concluded that
Environmental Laws cannot reasonably be expected to have a Material Adverse
Effect.  Neither the Borrower nor any
Subsidiary has received any notice to the effect that its operations are not in
material compliance with any of the requirements of applicable Environmental
Laws or are the subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could reasonably be expected to have a Material Adverse Effect.

 

Section 5.17.        Investment
Company Act.  Neither the
Borrower nor any Subsidiary is an “investment company” or a company “controlled”
by an “investment company”, within the meaning of the Investment Company Act of
1940, as amended.

 

Section 5.18.        Public
Utility Holding Company Act.  Neither
the Borrower nor any Subsidiary is a “holding company” or a “subsidiary company”
of a “holding company”, or an “affiliate” of a “holding company” or of a “subsidiary
company” of a “holding company”, within the meaning of the Public Utility
Holding Company Act of 1935, as amended.

 

Section 5.19.        Insurance.  The certificate signed by the President or
Chief Financial Officer of the Borrower, that attests to the existence and
adequacy of, and summarizes, the property and casualty insurance program
carried by the Borrower with respect to itself and its Subsidiaries and that
has been furnished by the Borrower to the Administrative Agent and the Lenders,
is complete and accurate.  This summary
includes the insurer’s or insurers’ name(s),

 

45

 

policy number(s), expiration
date(s), amount(s) of coverage, type(s) of coverage, exclusion(s), and
deductibles.  This summary also includes
similar information, and describes any reserves, relating to any self-insurance
program that is in effect.

 

Section 5.20.        Solvency.

 

(i)            Immediately
after the consummation of the Closing Transactions and immediately following
the making of each Loan, if any, made on the date hereof and after giving
effect to the application of the proceeds of such Loans, (a) the fair
value of the assets of the Borrower and its Subsidiaries on a consolidated
basis, at a fair valuation, will exceed the debts and liabilities,
subordinated, contingent or otherwise, of the Borrower and its Subsidiaries on
a consolidated basis; (b) the present fair saleable value of the Property
of the Borrower and its Subsidiaries on a consolidated basis will be greater
than the amount that will be required to pay the probable liability of the
Borrower and its Subsidiaries on a consolidated basis on their debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (c) the Borrower and its
Subsidiaries on a consolidated basis will be able to pay their debts and
liabilities, subordinated, contingent or otherwise, as such debts and
liabilities become absolute and matured; and (d) the Borrower and its
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are now conducted and are proposed to be conducted after the date
hereof.

 

(ii)           The Borrower
does not intend to, or to permit any of its Subsidiaries to, and does not
believe that it or any of its Subsidiaries will, incur debts beyond its ability
to pay such debts as they mature, taking into account the timing of and amounts
of cash to be received by it or any such Subsidiary and the timing of the
amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary.

 

Section 5.21.        Closing
Documents.  Borrower has provided
to Administrative Agent a true, correct and complete copy of each Closing
Document requested by the Administrative Agent, including all amendments and
modifications thereto (whether characterized as an amendment, modification,
waiver, consent or similar document).  No
material rights or obligations of any party to any of the Closing Documents
have been waived and no party to any of the Closing Documents is in default of
its obligations or in breach of any representations or warranties made
thereunder.  Each of the Closing
Documents is a valid, binding and enforceable obligation of each party thereto
in accordance with its terms, and is in full force and effect.

 

ARTICLE VI

 

AFFIRMATIVE COVENANTS

 

During the
term of this Agreement, unless the Required Lenders shall otherwise consent in
writing:

 

Section 6.1.           Financial
Report.  The Borrower will
maintain, for itself and each Subsidiary, a system of accounting established
and administered in accordance with generally accepted accounting principles,
and furnish to the Lenders:

 

46

 

(i)            Within 95
days after the close of each of its Fiscal Years or within 5 days after
such earlier day as such financial statements are required to be filed with the
SEC as part of an annual report on Form 10-K or any successor form, an
unqualified audit report certified by KPMG LLP or other independent certified
public accountants acceptable to the Lenders, prepared in accordance with
Agreement Accounting Principles on a consolidated basis for itself and its
Subsidiaries, including balance sheets as of the end of such period and
statements of operations, stockholders equity and cash flows, accompanied by
any management letter prepared by said accountants.

 

(ii)           Within 50
days after the close of the first three quarterly periods of each of its Fiscal
Years, or within 5 days after such earlier day as such financial statements are
required to be filed with the SEC as part of a quarterly report on Form 10Q or
any successor form, for itself and its Subsidiaries, consolidated unaudited
balance sheets as at the close of each such period and statements of
operations, stockholders equity and cash flows for the period from the
beginning of such Fiscal Year to the end of such quarter, all certified by its
chief financial officer.

 

(iii)          Together
with the financial statements required under Section 6.1(i) and Section 6.1(ii),
copies of all certifications made by officers of Borrower to the SEC in
connection with such financial statements and a compliance certificate in
substantially the form of Exhibit B signed by its chief financial
officer showing the calculations necessary to determine compliance with this
Agreement and stating that no Default or Unmatured Default exists, or if any
Default or Unmatured Default exists, stating the nature and status thereof.

 

(iv)          Within 270
days after the close of each Fiscal Year, a statement of the Unfunded
Liabilities of each Single Employer Plan, if any, certified as correct by an
actuary enrolled under ERISA.

 

(v)           As soon as
possible and in any event within 10 days after the Borrower knows that any
Reportable Event has occurred with respect to any Plan, a statement, signed by
the chief financial officer of the Borrower, describing said Reportable Event
and the action which the Borrower proposes to take with respect thereto.

 

(vi)          As soon as
possible and in any event within 10 days after receipt by the Borrower, a copy
of (a) any notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the release by
the Borrower, any of its Subsidiaries, or any other Person of any toxic or
hazardous waste or substance into the environment, and (b) any notice
alleging any violation of any federal, state or local environmental, health or
safety law or regulation by the Borrower or any of its Subsidiaries, which, in
either case, could reasonably be expected to have a Material Adverse Effect.

 

(vii)         Promptly
upon the furnishing thereof to the stockholders of the Borrower, copies of all
financial statements, reports and proxy statements so furnished.

 

(viii)        Promptly
upon the filing thereof, copies of all registration statements and annual,
quarterly, monthly or other regular reports which the Borrower or any of its
Subsidiaries files with the Securities and Exchange Commission.

 

47

 

(ix)           By
March 31 of each year, an Engineering Report prepared as of the preceding
January 1, by petroleum engineers who are employees of Borrower and
audited by Ryder Scott Company, or other independent petroleum engineers chosen
by Borrower and acceptable to Required Lenders, concerning all oil and gas
properties and interests owned by any Borrower and its Subsidiaries which are
located in or offshore of the United States and which have attributable to them
proved oil or gas reserves.  This reserve
audit described above shall encompass a review of the reserves associated with
oil and gas properties comprising at least 80% of the value stated in the
report.  The Engineering Report shall be
satisfactory to Administrative Agent, shall contain sufficient information to
enable Borrower to meet the reporting requirements concerning oil and gas
reserves contained in Regulations S-K and S-X promulgated by the SEC, shall
take into account any “over/under produced” status under gas balancing
arrangements, and shall contain information and analysis comparable in scope to
that contained in the Initial Engineering Report.  This report shall distinguish (or shall be
delivered together with a certificate from an appropriate officer of Borrower
which distinguishes) those properties treated in the report which are
Collateral from those properties treated in the report which are not
Collateral.

 

(x)            By
September 30 of each year, and promptly following notice of an additional
Borrowing Base redetermination under Section 2.6.3, an Engineering Report
prepared as of the preceding June 30 (or the first day of the preceding
calendar month in the case of an additional redetermination) by petroleum
engineers who are employees of Borrower (or by the independent engineers named
above), together with an accompanying report on property sales, property
purchases and changes in categories, both in the same form and scope as the
reports in (x) above.

 

(xi)           By
March 31 and September 30 of each year, beginning September 30, 2005,
a report describing the gross volume of production and sales attributable to
production during the preceding six-month period from the properties described
in the Engineering Report in Section 6.1(ix) or Section 6.1(x) and
describing the related severance taxes, other taxes, and leasehold operating
expenses attributable thereto and incurred during such month.

 

(xii)          Promptly
after such delivery or receipt, copies of any financial or other report or
notice delivered to, or received from, any holder of Senior Notes, Permitted
Bond Indebtedness (or the notes evidencing same) or Indebtedness in respect of
any 9.60% Senior Notes Refinancing (or the notes evidencing same), which
report or notice has not been delivered to the Lenders hereunder.

 

(xiii)         Such other
information (including non-financial information) as the Administrative Agent
or any Lender may from time to time reasonably request.

 

Section 6.2.           Use of
Proceeds.  The Borrower will, and
will cause each Subsidiary to, use the proceeds of the Credit Extensions solely
(a) to partially finance the Mergers, (b) to refinance and replace
Existing MHR Indebtedness, (c) to refinance Existing Cimarex Indebtedness,
(d) to refinance other Indebtedness to the extent permitted hereunder, (e) to
fund amounts requested to be paid in connection with any change in control
offer under the Indentures

 

48

 

or in connection with any
conversion of the Convertible Senior Notes under the Convertible Senior Notes
Indenture, to the extent permitted hereunder, (f) for the exploration,
development and/or acquisition of oil and gas properties, and (g) for
working capital and other general corporate purposes.  The Borrower will not, nor will it permit any
Subsidiary to, use any of the proceeds of the Advances to purchase or carry any
“margin stock” (as defined in Regulation U).

 

Section 6.3.           Notice
of Default.  The Borrower will,
and will cause each Subsidiary to, give prompt notice in writing to the Lenders
of the occurrence of any Default or Unmatured Default and of any other
development, financial or otherwise, which could reasonably be expected to have
a Material Adverse Effect.

 

Section 6.4.           Conduct
of Business.  The Borrower will,
and will cause each Subsidiary to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted and do all things necessary to remain
duly incorporated or organized, validly existing and (to the extent such
concept applies to such entity) in good standing as a domestic corporation,
partnership or limited liability company in its jurisdiction of incorporation
or organization, as the case may be, and maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted,
except where the failure to do so would not have a material adverse effect on
the Borrower’s or any Subsidiary’s ability to conduct its business.

 

Section 6.5.           Taxes.  The Borrower will, and will cause each
Subsidiary to, timely file complete and correct United States federal and
applicable foreign, state and local tax returns required by law and pay when
due all taxes, assessments and governmental charges and levies upon it or its
income, profits or Property, except those which are being contested in good
faith by appropriate proceedings and with respect to which adequate reserves
have been set aside in accordance with Agreement Accounting Principles.

 

Section 6.6.           Insurance.  The Borrower will furnish to any Lender upon
request full information as to the insurance carried by the Borrower and its
Subsidiaries.  Upon demand by
Administrative Agent, any insurance policies covering Collateral shall be
endorsed (a) to provide for payment of losses to Administrative Agent as
its interests may appear, (b) during any Fifty Percent Utilization Period,
to provide that such policies may not be canceled or reduced or affected in any
material manner for any reason without fifteen days prior notice to
Administrative Agent, and (c) to provide for any other matters specified
in any applicable Collateral Document or which Administrative Agent may
reasonably require; provided that the Borrower shall self insure against fire,
casualty, and other hazards normally insured against.  Notwithstanding anything contained in this Section 6.6
or any Collateral Document to the contrary, Borrower may self insure against
all liabilities, risks and hazards to the extent Borrower deems same to be
sound business practice.

 

Section 6.7.           Compliance
With Laws.  The Borrower will,
and will cause each Subsidiary to, comply with all laws, rules, regulations,
orders, writs, judgments, injunctions, decrees or awards to which it may be subject
including, without limitation, all Environmental Laws in all material respects.

 

49

 

Section 6.8.           Maintenance
of Properties.  The Borrower
will, and will cause each Subsidiary to, do all things necessary to maintain,
preserve, protect and keep its Property in good repair, working order and
condition, and make all necessary and proper repairs, renewals and replacements
so that its business carried on in connection therewith may be properly
conducted at all times.

 

Section 6.9.           Inspection.  The Borrower will, and will cause each
Subsidiary to, permit the Administrative Agent and the Lenders, by their
respective representatives and agents, to inspect any of the Property, books
and financial records of the Borrower and each Subsidiary, to examine and make
copies of the books of accounts and other financial records of the Borrower and
each Subsidiary, and to discuss the affairs, finances and accounts of the
Borrower and each Subsidiary with, and to be advised as to the same by, their
respective officers at such reasonable times and intervals as the
Administrative Agent or any Lender may designate.

 

Section 6.10.        Permitted
Bond Documents; 9.60% Senior Notes Refinancing Documents.  The Borrower will, and will cause each
Subsidiary to, (a) no later than five (5) Business Days prior to the
consummation or effectiveness of the issuance of any Permitted Bond
Indebtedness or 9.60% Senior Notes Refinancing, provide to the
Administrative Agent copies of substantially final drafts of each Permitted
Bond Document and 9.60% Senior Notes Refinancing Document, as applicable,
and (b) promptly upon the effectiveness or issuance of any Permitted Bond
Indebtedness or 9.60% Senior Notes Refinancing, provide to the
Administrative Agent a true, correct and complete copy of each Permitted Bond
Document and 9.60% Senior Notes Refinancing Document, as applicable.

 

ARTICLE VII

 

NEGATIVE COVENANTS

 

Section 7.1.           Restricted
Payments.  The Borrower will not,
nor will it permit any Subsidiary to, directly or indirectly, declare or make
any Restricted Payment during any Fifty Percent Utilization Period; provided,
that (a) during any Fifty Percent Utilization Period any Subsidiary may
declare and pay Dividends or make other Restricted Payments to the Borrower or
to a Wholly-Owned Subsidiary, and any Subsidiary may declare and make
distributions to the owners of its Equity on a pro rata basis, and (b) during
any Fifty Percent Utilization Period, the Borrower and its Subsidiaries may
declare or make Restricted Payments so long as (i) no Default, Unmatured
Default or Deficiency (as defined in Section 2.8(b)) exists or would exist
after giving effect thereto, and (ii) all Restricted Payments (other than
Restricted Payments made in accordance with clause (a) above) made by
Borrower and its Subsidiaries at any time during the period from the beginning
of the first Fifty Percent Utilization Period to occur after the Closing Date
until the Facility Termination Date (in this Section called the “Calculation Period“) do not exceed
$150,000,000 during the Calculation Period and do not exceed $35,000,000 during
any Fiscal Year which occurs during the Calculation Period.

 

Section 7.2.           Indebtedness.  The Borrower will not, nor will it permit any
Subsidiary to, create, incur or suffer to exist any Indebtedness, except:

 

(i)            The Loans
and the Reimbursement Obligations.

 

50

 

(ii)           Indebtedness
existing on the date hereof and described in the Disclosure Schedule.

 

(iii)          Indebtedness
arising under Rate Management Transactions permitted by Section 7.11.

 

(iv)          Contingent
Obligations permitted by Section 7.10.

 

(v)           Non-recourse
Indebtedness as to which none of Borrower or its Subsidiaries (i) provides
any guaranty or credit support of any kind (including any undertaking,
guarantee, indemnity, agreement or instrument that would constitute
Indebtedness) or (ii) is directly or indirectly liable (as a guarantor or
otherwise); provided, that after giving effect to such Indebtedness outstanding
from time to time, Borrower is not in violation of Article VIII.

 

(vi)          Indebtedness
of Borrower in respect of guarantee obligations of Cimarex Energy Services,
Inc., an Oklahoma corporation, which do not in the aggregate exceed $75,000,000
at any one time outstanding.

 

(vii)         Indebtedness
evidenced by the Senior Notes, and guarantee obligations of Subsidiaries in
respect thereof; provided, that, such guarantee obligations exist as of the
date hereof, are required by the terms of the Indentures,  or are otherwise on terms and conditions
satisfactory to the Administrative Agent in its sole reasonable discretion.

 

(viii)        Permitted
Bond Indebtedness, and guarantee obligations of Subsidiaries of the Borrower in
respect thereof, provided, that, such guarantee obligations are on terms and
conditions satisfactory to the Administrative Agent, in its sole reasonable
discretion.

 

(ix)           Indebtedness
in respect of any 9.60% Senior Notes Refinancing, and guarantee
obligations of Subsidiaries of the Borrower in respect thereof, provided, that,
such guarantee obligations are on terms and conditions satisfactory to the
Administrative Agent, in its sole reasonable discretion.

 

(x)            Financial
Contracts permitted under Section 7.11.

 

(xi)           Miscellaneous
items of Indebtedness not described in subsections (i) through (x) above which
do not in the aggregate (taking into account all such Indebtedness of Borrower
and its Subsidiaries) exceed $25,000,000 at any one time outstanding.

 

Section 7.3.           Merger.  The Borrower will not, nor will it permit any
Subsidiary to, merge or consolidate with or into any other Person, except that
a Subsidiary may merge into the Borrower or a Wholly-Owned Subsidiary.

 

Section 7.4.           Sale
of Assets.  The Borrower will
not, nor will it permit any Subsidiary to, lease, sell or otherwise dispose of
its Property to any other Person (other than to Borrower or any Guarantor),
except:

 

(i)            Sales of
inventory in the ordinary course of business.

 

51

 

(ii)           Disposition of
equipment and other personal property that is replaced by equivalent property
or consumed in the normal operation of its Property.

 

(iii)          Dispositions
of a portion of its Property in connection with operating agreements, farmouts,
farmins, joint exploration and development agreements and other agreements
customary in the oil and gas industry that are entered into for the purposes of
developing its Property and under which it receives relatively equivalent
consideration; provided that such portion of such property is not included in a
drilling or spacing unit for an oil and/or gas well included in Engineered
Value that is subject to a Lien in favor of Administrative Agent.

 

(iv)          Leases,
sales or other dispositions of its Property that, together with all other
Property of the Borrower and its Subsidiaries previously leased, sold or
disposed of (other than (i), (ii) and (iii) above) as permitted by this Section
during (A) the period commencing on the Closing Date and ending on
December 31, 2006, do not constitute more than $150,000,000 in the
aggregate; and (B) any Fiscal Year thereafter, commencing with the Fiscal
Year ending December 31, 2007, do not constitute more than 10% of the
Engineered Value of the Borrowing Base Properties as determined by Administrative
Agent in its sole discretion.

 

(v)           interests in
oil and gas properties, portions thereof, to which no proved reserves of oil,
gas or other liquid or gaseous hydrocarbons are properly attributed.

 

Upon any
lease, sale or other disposition of Property permitted pursuant to this Section 7.4,
Administrative Agent will, upon the Borrower’s written request and at the
Borrower’s sole expense, promptly (A) release its Lien in such Property,
and (B) execute and deliver to the Borrower or the applicable Subsidiary
of the Borrower, as applicable, such documents as shall be necessary or
appropriate to effect the release of such Lien.

 

Section 7.5.           Investments.  The Borrower will not, nor will it permit any
Subsidiary to, make or suffer to exist any Investments (including without
limitation, loans and advances to, and other Investments in, Subsidiaries), or
commitments therefor, or to create any Subsidiary or to become or remain a
partner in any partnership or joint venture, or to make any Acquisition of any
Person, except:

 

(i)            Cash
Equivalent Investments.

 

(ii)           Investments
in Borrower’s Subsidiaries which are Guarantors and with respect to which 100%
of its Equity has been pledged to Administrative Agent.

 

(iii)          Investments
in existence on the date hereof and described on the Disclosure Schedule.

 

(iv)          Investments
in associations, joint ventures, and other relationships (a) that are
established pursuant to standard form operating agreements or similar
agreements or which are partnerships for purposes of federal income taxation
only, (b) that are not corporations or partnerships (or subject to the
Uniform Partnership Act or other applicable state partnership act) under
applicable state law, or (c) whose businesses are limited to the

 

52

 

exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships in which the ownership interest of Borrower or
its Subsidiary is in direct proportion to the amount of such Investment.

 

(v)           Investments
in Subsidiaries of Borrower that are not Material Subsidiaries which do not
exceed $10,000,000 in the aggregate during any Fiscal Year.

 

(vi)          Miscellaneous
items of Investments not described in clauses (i) through (v) above which do
not (taking into account all such Investments of Borrower and its Subsidiaries)
exceed an aggregate amount of $10,000,000 during any Fiscal Year.

 

Section 7.6.           Liens.  The Borrower will not, nor will it permit any
Subsidiary to, create, incur, or suffer to exist any Lien in, of, or on the
Property of the Borrower or any of its Subsidiaries, except:

 

(i)            Liens for
taxes, assessments or governmental charges or levies on its Property if the
same shall not at the time be delinquent or thereafter can be paid without
penalty, or are being contested in good faith and by appropriate proceedings
and for which adequate reserves in accordance with Agreement Accounting
Principles shall have been set aside on its books.

 

(ii)           Liens
imposed by law, such as carriers’, warehousemen’s and mechanics’ liens and
other similar liens arising in the ordinary course of business which secure
payment of obligations not more than 60 days past due or which are being
contested in good faith by appropriate proceedings and for which adequate
reserves shall have been set aside on its books.

 

(iii)          Liens
arising out of pledges or deposits under worker’s compensation laws,
unemployment insurance, old age pensions, or other social security or retirement
benefits, or similar legislation.

 

(iv)          Utility
easements, building restrictions and such other encumbrances or charges against
real property as are of a nature generally existing with respect to properties
of a similar character and which do not in any material way affect the
marketability of the same or interfere with the use thereof in the business of
the Borrower or its Subsidiaries.

 

(v)           Liens
existing on the date hereof and described on the Disclosure Schedule.

 

(vi)          Liens in
favor of the Administrative Agent, for the benefit of the Lenders, granted
pursuant to any Collateral Document.

 

(vii)         Liens on
Property other than Collateral to secure Indebtedness permitted by Section 7.2(v).

 

(viii)        With respect
to Property subject to any Collateral Document, Liens burdening such Property
that are expressly allowed by such Collateral Document.

 

53

 

(ix)           Liens
arising under operating agreements, unitization, pooling agreements and other
agreements customary in the oil and gas industry securing amounts owed to
operators and joint owners of oil and gas properties that shall not at the time
be delinquent, or thereafter can be paid without penalty, or are being
contested in good faith and by appropriate proceedings and for which adequate
reserves in accordance with Agreement Accounting Principles shall have been set
aside on its books.

 

(x)            Liens on
cash or Cash Equivalent Investments securing Financial Contracts to the extent
permitted under Section 7.11(a)(iii).

 

(xi)           Contracts,
agreements, instruments, obligations, defects and irregularities affecting the
Property that individually or in the aggregate are not such as to interfere
materially with the use, operation or value of the Property.

 

Section 7.7.           Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction (including, without limitation,
the purchase or sale of any Property or service) with, or make any payment or
transfer to, any Affiliate except in the ordinary course of business and
pursuant to the reasonable requirements of the Borrower’s or such Subsidiary’s
business and upon fair and reasonable terms no less favorable to the Borrower
or such Subsidiary than the Borrower or such Subsidiary would obtain in a
comparable arms-length transaction. 
Notwithstanding the foregoing, no transaction, payment or transfer
between, among or to any of the Borrower and any one or more of the Guarantors,
or between, among or to any of the Guarantors, shall be subject to the restrictions
of this Section 7.7.

 

Section 7.8.           Sale
of Accounts.  The Borrower will
not, nor will it permit any Subsidiary to, sell or otherwise dispose of any
notes receivable or accounts receivable, with or without recourse in excess of
$500,000 in the aggregate during any Fiscal Year.

 

Section 7.9.           Sale
and Leaseback Transactions and other Off-Balance Sheet Liabilities.  The Borrower will not, nor will it permit any
Subsidiary to, enter into or suffer to exist any (a) Sale and Leaseback
Transaction or (b) other transaction pursuant to which it incurs or has
incurred Off-Balance Sheet Liabilities, except for (i) the transaction
described in the Disclosure Schedule, and (ii) Rate Management Obligations
permitted to be incurred under the terms of Section 7.11.

 

Section 7.10.        Contingent
Obligations.  The Borrower will
not, nor will it permit any Subsidiary to, make or suffer to exist any
Contingent Obligation (including, without limitation, any Contingent Obligation
with respect to the obligations of a Subsidiary), except (i) by
endorsement of instruments for deposit or collection in the ordinary course of
business, (ii) the Reimbursement Obligations, (iii) the Guaranty, (iv) guarantees
to the extent permitted under clauses (vii), (viii) and (ix) of
Section 7.2, and (v) other Contingent Obligations not to exceed an
outstanding aggregate amount of $25,000,000 at any time.

 

Section 7.11.        Financial
Contracts.  None of Borrower or
its Subsidiaries will be a party to or in any manner be liable on any Financial
Contract except:

 

(a)           contracts
entered into with the purpose and effect of fixing prices on oil or gas
expected to be produced by Borrower and its Subsidiaries, provided that at all

 

54

 

times: (i) no such contract fixes a price for a term of more than
36 months, (ii) the aggregate monthly production covered by all such
contracts (determined, in the case of contracts that are not settled on a
monthly basis, by a monthly proration acceptable to Administrative Agent) for
any single month does not in the aggregate exceed 75% of the aggregate
Engineered Projected Production (as defined below) of Borrower and its
Subsidiaries anticipated to be sold in the ordinary course of their businesses
for such month, (iii) no such contract requires Borrower or any of its
Subsidiaries to put up money, assets, letters of credit or other security
against the event of its nonperformance prior to actual default by such
Borrower or any of its Subsidiaries in performing its obligations thereunder
(other than customary provisions to post cash margin, U.S. Government
securities or letters of credit), and (iv) each such contract is with a
counterparty or has a guarantor of the obligation of the counterparty who
(unless such counterparty is a Lender or one of its Affiliates) either
(A) is listed and identified on the Disclosure Schedule, or (B) at
the time the contract is made has long-term obligations rated BBB+ or Baa1 or
better, respectively, by either Moody’s or S&P.  As used in this subsection, the term “Engineered Projected Production“ means
the Engineered Value of projected production of oil or gas (measured by volume
unit or BTU equivalent, not sales price) for the term of the contracts or a
particular month, as applicable, from properties and interests owned by
Borrower and its Subsidiaries that are located in or offshore of the United
States and are PDP Reserves, as such production is projected in the most recent
report delivered pursuant to Section 6.1(ix) or Section 6.1(x), after
deducting projected production from any properties or interests sold or under
contract for sale that had been included in such report and after adding
projected production from any properties or interests that had not been
reflected in such report but that are reflected in a separate or supplemental
reports meeting the requirements of such Section 6.1(ix) or Section 6.1(x)
above and otherwise are satisfactory to Administrative Agent;

 

(b)           contracts
entered into by Borrower or its Subsidiaries with the purpose and effect of
fixing or exchanging (from one floating rate to another floating rate, from one
fixed rate to another fixed rate, from a fixed rate to variable rate, from a
variable rate to fixed rate or otherwise) interest rates on a principal amount
of indebtedness of such Borrower or its Subsidiaries, provided that no such
contract shall be entered into by Borrower or any of its Subsidiaries for
speculative purposes; and

 

(c)           the
Financial Contracts identified on Schedule 4 attached hereto.

 

Section 7.12.        Letters of
Credit.  The Borrower will not,
nor will it permit any Subsidiary to, apply for or become liable upon or in
respect of any Letter of Credit other than Facility LCs.

 

Section 7.13.        Prohibited
Contracts.  Except as expressly
provided for in the Loan Documents, none of Borrower or its Subsidiaries will,
directly or indirectly, enter into, create, or otherwise allow to exist any
contract or other consensual restriction on the ability of any Subsidiary of
Borrower: (a) to pay dividends or make other distributions to Borrower, (b) to
redeem equity interests held in it by Borrower, (c) to repay loans and
other indebtedness owing by it to Borrower, or (d) to transfer any of its
assets to Borrower, except restrictions arising under farmout agreements and
similar agreements relating to the development of oil and gas properties with
respect to preferential rights to purchase oil and gas properties, required
third party consents to assignments of contracts relating to oil and gas
properties, and similar agreements of general

 

55

 

applicability contained in
operating agreements, farmouts, farmins, joint exploration and development
agreements and other agreements customary in the oil and gas industry.  None of Borrower or its Subsidiaries will
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.  None of Borrower or its Subsidiaries will
amend or permit any amendment to any contract or lease which releases,
qualifies, limits, makes contingent or otherwise detrimentally affects the
rights and benefits of Administrative Agent or any Lender under or acquired pursuant
to any Collateral Documents.  None of
Borrower or its Subsidiaries will incur any obligation to contribute to any “Multiemployer
Plan”.

 

Section 7.14.        Senior
Note Documents; Permitted Bond Documents; 9.60% Senior Notes Refinancing
Documents.  The Borrower will
not, nor will it permit any Subsidiary to:

 

(a)           amend,
modify or waive any covenant contained in any of the Senior Note Documents,
Permitted Bond Documents, or 9.60% Senior Notes Refinancing Documents if
the effect of such amendment, modification or waiver would be to make the terms
of any such Senior Note Document, Permitted Bond Document, or 9.60% Senior
Notes Refinancing Document more onerous to the Borrower or any of its
Subsidiaries;

 

(b)           amend,
modify or waive any provision of the Senior Note Documents, Permitted Bond
Documents, or 9.60% Senior Notes Refinancing Documents if the effect of
such amendment, modification or waiver (i) subjects the Borrower or any of
its Subsidiaries to any additional material obligation, (ii) increases the
principal of or rate of interest on any Senior Note or any note evidencing any
Permitted Bond Indebtedness, or any note evidencing Indebtedness in respect of
a 9.60% Senior Notes Refinancing, (iii) accelerates the date fixed for any
payment of principal or interest on any Senior Note or any note evidencing any
Permitted Bond Indebtedness, or any note evidencing Indebtedness in respect of
a 9.60% Senior Notes Refinancing, or (iv) would change the percentage
of holders of such Senior Notes, notes evidencing any Permitted Bond
Indebtedness, or notes evidencing Indebtedness in respect of any
9.60% Senior Notes Refinancing required for any such amendment,
modification or waiver from the percentage required on the Closing Date or,
with respect to any notes evidencing any Permitted Bond Indebtedness or
9.60% Senior Notes Refinancing, from the percentage required on the date
of issuance of any such notes or 9.60% Senior Notes Refinancing; or

 

(c)           make any
payment of principal of, make any voluntary prepayment of, or optionally
redeem, or make any payment in defeasance of, any part of the Senior Notes, any
Permitted Bond Indebtedness or any Indebtedness in respect of any
9.60% Senior Notes Refinancing; provided, that, so long as
no Default or Deficiency exists on the date of any such payment or redemption,
and no Default or Deficiency would result therefrom, the Borrower and/or its
Subsidiaries may prepay or redeem all or any portion of (i) the
9.60% Senior Notes pursuant to a 9.60% Senior Notes Refinancing or
otherwise, (ii) the Senior Notes pursuant to a change in control offer
under the Indentures, or (iii) the Convertible Senior Notes pursuant to,
and in accordance with, Section 3.08 or Article 10 of the Convertible
Senior Notes Indenture.

 

56

 

ARTICLE VIII

 

FINANCIAL COVENANTS

 

Section 8.1.           Current
Ratio.  The Borrower will not
permit the ratio, determined as of the end of each of its fiscal quarters, of (i) Borrower’s
consolidated current assets plus the Available Aggregate Commitment to (ii) Borrower’s
consolidated current liabilities, to be less than 1.0 to 1.0.

 

Section 8.2.           Leverage
Ratio.  The Borrower will not
permit the ratio, determined as of the end of each of its fiscal quarters,
commencing with its fiscal quarter ending September 30, 2005, of (i) Consolidated
Funded Indebtedness for the fiscal quarter ending on such date to (ii) Consolidated
EBITDA for each Rolling Period ending on such date, or Annualized Consolidated
EBITDA for such Rolling Period in the case of a Rolling Period ending on or
prior to March 31, 2006, to be greater than 3.0 to 1.0.

 

ARTICLE IX

 

COLLATERAL AND GUARANTEES

 

Section 9.1.           Collateral.  Except as otherwise provided below in this
paragraph or in Section 9.1.4, at all times the Secured Obligations shall
be secured by first and prior Liens (subject only to Permitted Encumbrances)
covering and encumbering (x) the Minimum Collateral Amount, and
(y) all of the issued and outstanding Equity of each Guarantor owned by
Borrower and/or owned by each Subsidiary of Borrower.  As soon as practicable, but in any event
within sixty (60) days after the date hereof, the Borrower and its
Subsidiaries shall deliver to Administrative Agent for the ratable benefit of
each Lender, the Amendments to Existing Cimarex Mortgages and the Mortgages,
each in form and substance acceptable to Administrative Agent and duly executed
by Borrower and its Subsidiaries, as applicable, together with (a) such
other assignments, conveyances, amendments, agreements and other writings (each
duly authorized and executed) as Administrative Agent shall deem necessary or
appropriate to grant, evidence and perfect first and prior Liens (subject only
to Permitted Encumbrances) in the Minimum Collateral Amount, and (b) such
opinions of counsel as the Administrative Agent shall deem necessary or
appropriate with respect to the form, sufficiency and other matters regarding
such Amendments to Existing Cimarex Mortgages and such Mortgages as the
Administrative Agent shall reasonably request.

 

9.1.1.       To the extent necessary to comply with
the first sentence of Section 9.1, (i) within 30 days after the
beginning of each Fifty Percent Utilization Period and within 30 days after
each Determination Date that occurs during (or otherwise results in the beginning
of) a Fifty Percent Utilization Period and/or (ii) prior to each increase
in the Aggregate Commitment, Borrower and its Subsidiaries shall execute and
deliver to Administrative Agent, for the ratable benefit of each Lender,
Mortgages in form and substance acceptable to Administrative Agent and duly
executed by Borrower and any such Subsidiary (as applicable) together with
(a) such other assignments, conveyances, amendments, agreements and other
writings (each duly authorized and executed) as Administrative Agent shall deem
necessary or appropriate to grant, evidence and perfect the Liens required by
this Section 9.1, and (b) such

 

57

 

opinions of counsel as the Administrative
Agent shall deem necessary or appropriate with respect to the form, sufficiency
and other matters regarding such Mortgages as the Administrative Agent shall
reasonably request.

 

9.1.2.       Within 90 days after the date hereof and
at any time thereafter that Borrower or any of its Subsidiaries is required to
execute and deliver Mortgages to Administrative Agent pursuant to Section 9.1.1,
Borrower shall also deliver to Administrative Agent, within 90 days of the date
hereof or within 20 days after delivery of such Mortgages to Administrative
Agent, as applicable, evidence of title reasonably satisfactory to
Administrative Agent to verify (i) Borrower’s or such Subsidiary’s title
to 75% of the Minimum Collateral Amount subject to such Mortgages, and (ii) the
validity of the Liens created by such Mortgages.  With respect to Borrower’s and such
Subsidiary’s title to such Property, such evidence may include check stubs,
revenue receipts or other evidence that Borrower or such Subsidiary has been
receiving proceeds of production for a reasonable length of time without
interruption or challenge, as well as joint interest billings or other evidence
of the costs and expenses of operations paid by Borrower or such
Subsidiary.  With respect to the validity
of the Liens created by such Mortgages, such evidence may include opinions from
local counsel in each state in which the Property subject to the Lien is
located, that the form of Mortgage is sufficient in such state to create a Lien
on Borrower’s or such Subsidiary’s interest therein, the validity thereof and,
that when the Mortgage is properly filed and recorded, such Liens will be
perfected on Borrower’s and such Subsidiary’s interests in such Property.

 

9.1.3.       On the date hereof and at the time any
Subsidiary of Borrower becomes a Material Subsidiary and prior to any
Investments being permitted to be made in any Material Subsidiary pursuant to
the terms of Section 7.5(ii), Borrower and any Subsidiaries of Borrower
(as applicable) shall execute and deliver to Administrative Agent for the
ratable benefit of each Lender, a pledge agreement substantially in the form of
Exhibit G-1, Exhibit G-2 or Exhibit G-3, as
applicable, from Borrower and/or its Subsidiaries (as applicable) covering the
Equity in all Material Subsidiaries, together with all certificates (or other
evidence acceptable to Administrative Agent) evidencing the issued and
outstanding Equity of each such Material Subsidiary of every class owned by
Borrower or such Subsidiary (as applicable) which, if certificated, shall be
duly endorsed or accompanied by stock powers executed in blank (as applicable),
as Administrative Agent shall deem necessary or appropriate to grant, evidence
and perfect the Liens required by Section 9.1 in the issued and
outstanding Equity of each such Material Subsidiary.

 

9.1.4.       Notwithstanding anything contained in
this Section 9.1 to the contrary, from and after the date the Borrower
complies with the provisions contained in the second sentence of the first
paragraph of this Section 9.1 (the “Post-Closing
Effective Date“), Borrower shall have no obligation to provide
Mortgages in addition to those Mortgages provided on or prior to the
Post-Closing Effective Date, except as, and only to the extent, provided in
Section 9.1.1

 

Section 9.2.           Guarantees.  On the date hereof and at any time a
Subsidiary of Borrower becomes a Material Subsidiary and prior to any
Investments being permitted to be made in any Material Subsidiary pursuant to
the terms of Section 7.5(ii), payment and performance of the Secured
Obligations shall be fully guaranteed by each Material Subsidiary

 

58

 

pursuant to a Guaranty
substantially in the form of Exhibit E, and Borrower shall cause
any such applicable Material Subsidiary to execute and deliver to Administrative
Agent such Guaranty.  Prior to any
Investments being permitted to be made in any other Subsidiary of Borrower in
excess of the amount permitted by Section 7.5(v), such Subsidiary shall
also execute and deliver such a Guaranty in the form of Exhibit E
to Administrative Agent for the ratable benefit of each Lender, together with
such other documents as Administrative Agent shall deem necessary or
appropriate to confirm such Guaranty.

 

Section 9.3.           Further
Assurances.  Borrower agrees to
deliver and to cause each of its Subsidiaries to deliver, to further secure the
Secured Obligations whenever requested by Administrative Agent in its sole and
absolute discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Collateral Documents in form and
substance satisfactory to Administrative Agent for the purpose of granting,
confirming, and perfecting first and prior liens or security interests in any
real or personal property which is at such time Collateral or which was
intended to be Collateral pursuant to any Collateral Document previously
executed and not then released by Administrative Agent.

 

Section 9.4.           Production
Proceeds.  Notwithstanding that,
by the terms of the various Collateral Documents, Borrower and its Subsidiaries
are and will be assigning to Administrative Agent and Lenders all of the “Production
Proceeds” (as defined therein) accruing to the property covered thereby, so
long as no Unmatured Default has occurred Borrower and its Subsidiaries may
continue to receive from the purchasers of production all such Production
Proceeds, subject, however, to the Liens created under the Collateral
Documents, which Liens are hereby affirmed and ratified.  Upon the occurrence of an Unmatured Default,
Administrative Agent and Lenders may exercise all rights and remedies granted
under the Collateral Documents, including the right to obtain possession of all
Production Proceeds then held by Borrower and its Subsidiaries or to receive
directly from the purchasers of production all other Production Proceeds.  In no case shall any failure, whether
purposed or inadvertent, by Administrative Agent or Lenders to collect directly
any such Production Proceeds constitute in any way a waiver, remission or
release of any of their rights under the Collateral Documents, nor shall any
release of any Production Proceeds by Administrative Agent or Lenders to
Borrower and its Subsidiaries constitute a waiver, remission, or release of any
other Production Proceeds or of any rights of Administrative Agent or Lenders
to collect other Production Proceeds thereafter.

 

ARTICLE X

 

DEFAULTS

 

The occurrence
of any one or more of the following events shall constitute a Default:

 

Section 10.1.        Any
representation or warranty made or deemed made by or on behalf of the Borrower
or any of its Subsidiaries to the Lenders or the Administrative Agent under or
in connection with this Agreement, any Credit Extension, or any certificate or
information delivered in connection with this Agreement or any other Loan
Document shall be materially false on the date as of which made.

 

59

 

Section 10.2.        Nonpayment
of principal of any Loan when due, nonpayment of any amount due under Section 2.8(b)(i)
when due, nonpayment of any Reimbursement Obligation within one Business Day
after the same becomes due, or nonpayment of interest upon any Loan or of any
commitment fee, LC Fee or other obligations under any of the Loan Documents
within five days after the same becomes due.

 

Section 10.3.        The
breach by the Borrower of any of the terms or provisions of Section 6.2, Section 6.3,
Article VII, Article VIII or Article IX.

 

Section 10.4.        The
breach by the Borrower (other than a breach which constitutes a Default under
another Section of this Article X) of any of the terms or provisions of
this Agreement which is not remedied within ten days after written notice from
the Administrative Agent or any Lender.

 

Section 10.5.        Failure
of the Borrower or any of its Subsidiaries to pay when due any Material
Indebtedness; or the default by the Borrower or any of its Subsidiaries in the
performance (beyond the applicable grace period with respect thereto, if any)
of any term, provision or condition contained in any Material Indebtedness Agreement,
or any other event shall occur or condition exist, the effect of which default,
event or condition is to cause, or to permit the holder(s) of such Material
Indebtedness or the lender(s) under any Material Indebtedness Agreement to
cause, such Material Indebtedness to become due prior to its stated maturity or
any commitment to lend under any Material Indebtedness Agreement to be
terminated prior to its stated expiration date; or any Material Indebtedness of
the Borrower or any of its Subsidiaries shall be declared to be due and payable
or required to be prepaid or repurchased (other than by a regularly scheduled
payment) prior to the stated maturity thereof; or the Borrower or any of its
Subsidiaries shall not pay, or admit in writing its inability to pay, its debts
generally as they become due.

 

Section 10.6.        The
Borrower or any of its Subsidiaries shall (i) have an order for relief
entered with respect to it under the Federal bankruptcy laws as now or
hereafter in effect, (ii) make an assignment for the benefit of creditors,
(iii) apply for, seek, consent to, or acquiesce in, the appointment of a
receiver, custodian, trustee, examiner, liquidator or similar official for it
or any Substantial Portion of its Property, (iv) institute any proceeding
seeking an order for relief under the Federal bankruptcy laws as now or
hereafter in effect or seeking to adjudicate it a bankrupt or insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fail to file
an answer or other pleading denying the material allegations of any such
proceeding filed against it, (v) take any corporate, partnership or other
organizational action to authorize or effect any of the foregoing actions set
forth in this Section 10.6 or (vi) fail to contest in good faith any
appointment or proceeding described in Section 10.7.

 

Section 10.7.        Without
the application, approval or consent of the Borrower or any of its
Subsidiaries, a receiver, trustee, examiner, liquidator or similar official
shall be appointed for the Borrower or any of its Subsidiaries or any
Substantial Portion of its Property, or a proceeding described in Section 10.6(iv)
shall be instituted against the Borrower or any of its Subsidiaries

 

60

 

and such
appointment continues undischarged or such proceeding continues undismissed or
unstayed for a period of 60 consecutive days.

 

Section 10.8.        Any
court, government or governmental agency shall condemn, seize or otherwise
appropriate, or take custody or control of, all or any portion of the Property
of the Borrower and its Subsidiaries which, when taken together with all other
Property of the Borrower and its Subsidiaries so condemned, seized,
appropriated, or taken custody or control of, during the twelve-month period
ending with the month in which any such action occurs, constitutes a
Substantial Portion.

 

Section 10.9.        The
Borrower or any of its Subsidiaries shall fail within 30 days to pay, bond or
otherwise discharge one or more (i) judgments or orders for the payment of
money in excess of $1,000,000 (or the equivalent thereof in currencies other
than U.S. Dollars) in the aggregate, or (ii) nonmonetary judgments or
orders which, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, which judgment(s), in any such case, is/are not
stayed on appeal or otherwise being appropriately contested in good faith.

 

Section 10.10.      The Unfunded Liabilities of all Single
Employer Plans shall exceed in the aggregate $500,000 or any Reportable Event
shall occur in connection with any Plan.

 

Section 10.11.      Nonpayment by the Borrower or any
Subsidiary of any Rate Management Obligation when due or the breach by the
Borrower or any Subsidiary of any term, provision or condition contained in any
Rate Management Transaction or any transaction of the type described in the
definition of “Rate Management Transactions,” whether or not any Lender or
Affiliate of a Lender is a party thereto, after taking into account any
applicable grace period.

 

Section 10.12.      Any Change in Control shall occur.

 

Section 10.13.      The Borrower or any of its
Subsidiaries shall (i) be the subject of any proceeding or investigation
pertaining to the release by the Borrower, any of its Subsidiaries or any other
Person of any toxic or hazardous waste or substance into the environment, or (ii) violate
any Environmental Law, which, in the case of an event described in clause (i)
or clause (ii), could reasonably be expected to have a Material Adverse Effect.

 

Section 10.14.      Any Guaranty shall fail to remain in
full force or effect or any action shall be taken to discontinue or to assert the
invalidity or unenforceability of any Guaranty, or any Guarantor shall fail to
comply with any of the terms or provisions of any Guaranty to which it is a
party, or any Guarantor shall deny that it has any further liability under any
Guaranty to which it is a party, or shall give notice to such effect.

 

Section 10.15.      Any Collateral Document shall for any
reason fail to create a valid and perfected first priority security interest in
any collateral purported to be covered thereby, except as permitted by the
terms of any Collateral Document, or any Collateral Document shall fail to
remain in full force or effect; or any action by Borrower or any of its
Subsidiaries shall be taken to discontinue or to assert the invalidity of
unenforceability of any Collateral Document.

 

Section 10.16.      The Borrower shall fail to comply in
any material respect with any of the terms or provisions of any Collateral
Document.

 

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Section 10.17.      The representations and warranties set
forth in Section 5.15 (“Plan Assets; Prohibited Transactions”) shall at
any time not be true and correct.

 

Section 10.18.      The occurrence of a default under any
Senior Note Document, any Permitted Bond Document or any 9.60% Senior
Notes Refinancing Document, which such default shall continue unremedied or is
not waived prior to the expiration of any applicable period of grace or cure
under any such Senior Note Document, any such Permitted Bond Document, or any
such 9.60% Senior Notes Refinancing Document, as applicable.

 

ARTICLE XI

 

ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES

 

Section 11.1.        Acceleration;
Facility LC Collateral Account.

 

(i)            If any
Default described in Section 10.6 or Section 10.7 occurs with respect
to the Borrower, the obligations of the Lenders to make Loans hereunder and the
obligation and power of the LC Issuer to issue Facility LCs shall automatically
terminate and the Obligations shall immediately become due and payable without
any election or action on the part of the Administrative Agent, the LC Issuer
or any Lender and the Borrower will be and become thereby unconditionally
obligated, without any further notice, act or demand, to pay to the
Administrative Agent an amount in immediately available funds, which funds
shall be held in the Facility LC Collateral Account, equal to the difference of
(x) the amount of LC Obligations at such time, less (y) the amount on
deposit in the Facility LC Collateral Account at such time which is free and
clear of all rights and claims of third parties and has not been applied
against the Obligations (such difference, the “Collateral Shortfall Amount“).  If any other Default occurs and is
continuing, the Required Lenders (or the Administrative Agent with the consent
of the Required Lenders) may (a) terminate or suspend the obligations of
the Lenders to make Loans hereunder and the obligation and power of the LC
Issuer to issue Facility LCs, or declare the Obligations to be due and payable,
or both, whereupon the Obligations shall become immediately due and payable,
without presentment, demand, protest or notice of any kind, all of which the
Borrower hereby expressly waives, and (b) upon notice to the Borrower and
in addition to the continuing right to demand payment of all amounts payable
under this Agreement, make demand on the Borrower to pay, and the Borrower
will, forthwith upon such demand and without any further notice or act, pay to
the Administrative Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.

 

(ii)           If at any
time while any Default is continuing, the Administrative Agent determines that
the Collateral Shortfall Amount at such time is greater than zero, the
Administrative Agent may make demand on the Borrower to pay, and the Borrower
will, forthwith upon such demand and without any further notice or act, pay to
the Administrative Agent the Collateral Shortfall Amount, which funds shall be
deposited in the Facility LC Collateral Account.

 

(iii)          The
Administrative Agent may at any time or from time to time after funds are
deposited in the Facility LC Collateral Account, apply such funds to the

 

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payment of the Obligations and any other amounts as shall from time to
time have become due and payable by the Borrower to the Lenders or the LC
Issuer under the Loan Documents.

 

(iv)          At any time
while any Default is continuing, neither the Borrower nor any Person claiming
on behalf of or through the Borrower shall have any right to withdraw any of
the funds held in the Facility LC Collateral Account.  After all of the Obligations have been
indefeasibly paid in full and the Aggregate Commitment has been terminated, any
funds remaining in the Facility LC Collateral Account shall be returned by the Administrative
Agent to the Borrower or paid to whomever may be legally entitled thereto at
such time.

 

(v)           If, within
30 days after acceleration of the maturity of the Obligations or termination of
the obligations of the Lenders to make Loans and the obligation and power of
the LC Issuer to issue Facility LCs hereunder as a result of any Default (other
than any Default as described in Section 10.6 or Section 10.7 with
respect to the Borrower) and before any judgment or decree for the payment of
the Obligations due shall have been obtained or entered, the Required Lenders
(in their sole discretion) shall so direct, the Administrative Agent shall, by
notice to the Borrower, rescind and annul such acceleration and/or termination.

 

Section 11.2.        Amendments.  Subject to the provisions of this Section 11.2,
the Required Lenders (or the Administrative Agent with the consent in writing
of the Required Lenders) and the Borrower may enter into agreements
supplemental hereto for the purpose of adding or modifying any provisions to
the Loan Documents or changing in any manner the rights of the Lenders or the
Borrower hereunder or waiving any Default hereunder; provided, however, that no
such supplemental agreement shall (a) increase the amount of the
Commitment of any Lender hereunder without the consent of such Lender, or (b) without
the consent of all of the Lenders:

 

(i)            Extend the
final maturity of any Loan, or extend the expiry date of any Facility LC to a
date after the Facility Termination Date or postpone any regularly scheduled
payment of principal of any Loan or forgive all or any portion of the principal
amount thereof or any Reimbursement Obligation related thereto, or reduce the
rate or extend the time of payment of interest or fees thereon or Reimbursement
Obligations related thereto.

 

(ii)           Reduce the
percentage specified in the definition of Required Lenders.

 

(iii)          Extend the
Facility Termination Date, or reduce the amount or extend the payment date for,
the mandatory payments required under Section 2.8(b)(i), or increase the
commitment of any Lender to issue Facility LCs, or permit the Borrower to
assign its rights under this Agreement.

 

(iv)          Amend Section 2.6
or this Section 11.2.

 

(v)           Release any
Guarantor of any Advance or, except as provided in this Agreement, release all
or substantially all of the Collateral.

 

63

 

(vi)          Increase any
Borrowing Base above the Borrowing Base then in effect.

 

No amendment
of any provision of this Agreement relating to the Administrative Agent shall
be effective without the written consent of the Administrative Agent, and no
amendment of any provision relating to the LC Issuer shall be effective without
the written consent of the LC Issuer.

 

Section 11.3.        Preservation
of Rights.  No delay or omission
of the Lenders, the LC Issuer or the Administrative Agent to exercise any right
under the Loan Documents shall impair such right or be construed to be a waiver
of any Default or an acquiescence therein, and the making of a Credit Extension
notwithstanding the existence of a Default or the inability of the Borrower to
satisfy the conditions precedent to such Credit Extension shall not constitute
any waiver or acquiescence.  Any single
or partial exercise of any such right shall not preclude other or further
exercise thereof or the exercise of any other right, and no waiver, amendment
or other variation of the terms, conditions or provisions of the Loan Documents
whatsoever shall be valid unless in writing signed by the Lenders required pursuant
to Section 11.2, and then only to the extent in such writing specifically
set forth.  All remedies contained in the
Loan Documents or by law afforded shall be cumulative and all shall be
available to the Administrative Agent, the LC Issuer and the Lenders until the
Obligations have been paid in full.

 

ARTICLE XII

 

GENERAL PROVISIONS

 

Section 12.1.        Survival
of Representations.  All
representations and warranties of the Borrower contained in this Agreement
shall survive the making of the Credit Extensions herein contemplated.

 

Section 12.2.        Governmental
Regulation.  Anything contained
in this Agreement to the contrary notwithstanding, neither the LC Issuer nor
any Lender shall be obligated to extend credit to the Borrower in violation of
any limitation or prohibition provided by any applicable statute or regulation.

 

Section 12.3.        Headings.  Section headings in the Loan Documents are
for convenience of reference only, and shall not govern the interpretation of
any of the provisions of the Loan Documents.

 

Section 12.4.        Entire
Agreement.  The Loan Documents
embody the entire agreement and understanding among the Borrower, the
Administrative Agent, the LC Issuer and the Lenders and supersede all prior
agreements and understandings among the Borrower, the Administrative Agent, the
LC Issuer and the Lenders relating to the subject matter thereof other than the
fee letter described in Section 13.13, all of which shall survive and
remain in full force and effect during the term of this Agreement.

 

Section 12.5.        Several
Obligations; Benefits of this Agreement.  The respective obligations of the Lenders
hereunder are several and not joint and no Lender shall be the partner or agent
of any other (except to the extent to which the Administrative Agent is
authorized to act as such).  The failure
of any Lender to perform any of its obligations hereunder shall not relieve

 

64

 

any other Lender from any of
its obligations hereunder.  This
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement and their respective successors
and assigns, provided, however, that the parties hereto expressly agree that
the Arranger shall enjoy the benefits of the provisions of Section 12.6, Section 12.10
and Section 13.11 to the extent specifically set forth therein and shall
have the right to enforce such provisions on its own behalf and in its own name
to the same extent as if it were a party to this Agreement.

 

Section 12.6.        Expenses;
Indemnification.

 

(i)            The Borrower
shall reimburse the Administrative Agent and the Arranger for any costs,
internal charges and out-of-pocket expenses (including attorneys’ fees and time
charges of attorneys for the Administrative Agent, which attorneys may be
employees of the Administrative Agent) paid or incurred by the Administrative
Agent or the Arranger in connection with the preparation, negotiation,
execution, delivery, syndication, review, amendment, modification, recordation,
filing and administration of the Loan Documents.  The Borrower also agrees to reimburse the
Administrative Agent, the Arranger, the LC Issuer and the Lenders for any
costs, internal charges and out-of-pocket expenses (including attorneys’ fees
and time charges of attorneys for the Administrative Agent, the Arranger, the
LC Issuer and the Lenders, which attorneys may be employees of the
Administrative Agent, the Arranger, the LC Issuer or the Lenders) paid or
incurred by the Administrative Agent, the Arranger, the LC Issuer or any Lender
in connection with the collection and enforcement of the Loan Documents.

 

(ii)           The Borrower
hereby further agrees to indemnify the Administrative Agent, the Arranger, the
LC Issuer and each Lender, its directors, officers and employees against all
losses, claims, damages, penalties, judgments, liabilities and expenses
(including, without limitation, all expenses of litigation or preparation
therefor whether or not the Administrative Agent, the Arranger, the LC Issuer
or any Lender is a party thereto) which any of them may pay or incur arising
out of or relating to this Agreement, the other Loan Documents, the
transactions contemplated hereby or the direct or indirect application or
proposed application of the proceeds of any Credit Extension hereunder except
to the extent that they are determined in a final non-appealable judgment by a
court of competent jurisdiction to have resulted from the gross negligence or
willful misconduct of the party seeking indemnification.  The obligations of the Borrower under this Section 12.6
shall survive the termination of this Agreement.

 

Section 12.7.        Numbers
of Documents.  All statements,
notices, closing documents, and requests hereunder shall be furnished to the
Administrative Agent with sufficient counterparts so that the Administrative
Agent may furnish one to each of the Lenders.

 

Section 12.8.        Accounting.  Except as provided to the contrary herein, all
accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with Agreement Accounting
Principles, except that any calculation or determination which is to be made on
a consolidated basis shall be made for the Borrower and all its Subsidiaries,
including those Subsidiaries, if any, which are unconsolidated on the Borrower’s
audited financial statements.

 

65

 

Section 12.9.        Severability
of Provisions.  Any provision in
any Loan Document that is held to be inoperative, unenforceable, or invalid in
any jurisdiction shall, as to that jurisdiction, be inoperative, unenforceable,
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of all Loan Documents are declared
to be severable.

 

Section 12.10.        Nonliability
of Lenders.  The relationship
between the Borrower on the one hand and the Lenders, the LC Issuer and the
Administrative Agent on the other hand shall be solely that of borrower and
lender.  Neither the Administrative
Agent, the Arranger, the LC Issuer nor any Lender shall have any fiduciary
responsibilities to the Borrower. 
Neither the Administrative Agent, the Arranger, the LC Issuer nor any
Lender undertakes any responsibility to the Borrower to review or inform the
Borrower of any matter in connection with any phase of the Borrower’s business
or operations.  The Borrower agrees that
neither the Administrative Agent, the Arranger, the LC Issuer nor any Lender
shall have liability to the Borrower (whether sounding in tort, contract or
otherwise) for losses suffered by the Borrower in connection with, arising out
of, or in any way related to, the transactions contemplated and the
relationship established by the Loan Documents, or any act, omission or event
occurring in connection therewith, unless it is determined in a final
non-appealable judgment by a court of competent jurisdiction that such losses
resulted from the gross negligence or willful misconduct of the party from
which recovery is sought.  Neither the
Administrative Agent, the Arranger, the LC Issuer nor any Lender shall have any
liability with respect to, and the Borrower hereby waives, releases and agrees
not to sue for, any special, indirect or consequential damages suffered by the
Borrower in connection with, arising out of, or in any way related to the Loan
Documents or the transactions contemplated thereby.

 

Section 12.11.        Confidentiality.  Each Lender agrees to use any confidential
information which it may receive from the Borrower or its Affiliates concerning
the Borrower or its Affiliates or its or their Properties (“Confidential Information“) solely for
the purposes of the Loan Documents and the transactions provided for therein
and not for any other purpose.  Each
Lender agrees to hold Confidential Information in confidence and to not
disclose Confidential Information to any Person other than (a) the other
Lenders, Affiliates of such Lender, and Affiliates of the other Lenders, (b) legal
counsel to such Lender, (c) professional advisors (such as petroleum
engineering, geological and geophysical firms) who are engaged by such Lender or
any potential Transferee to evaluate the properties of Borrower and its
Affiliates in connection with the Loans, provided that prior to
delivering Confidential Information to any such advisor, such advisor shall
have entered into a confidentiality agreement in the form of Exhibit H,
and (d) to any of the following Persons, provided that such Person
is advised of and agrees to be bound by the obligations of confidentiality
contained in this section: (i) the direct or indirect contractual
counterparties of such Lender or such Lender’s Affiliates in swap agreements
relating to the obligations or assets of Borrower or its Subsidiaries, (ii) rating
agencies if required by such agencies in connection with a rating relating to
the Advances hereunder, (iii) any Transferee, and (iv) as permitted
by Section 15.4.  Nothing contained
herein shall be deemed to prevent disclosure of any Confidential Information if
such disclosure (A) is required by law, rule, regulation or regulatory
officials, (B) is required to be made in a judicial, administrative or
governmental proceeding pursuant to a valid subpoena or other applicable order,
or (C) is made to any Person in connection with any legal proceeding to
which such Lender is a party; provided, however, in making any such disclosure,
only that portion of the

 

66

 

Confidential Information
relevant in the circumstances described above shall be disclosed and all
reasonable efforts shall have been taken to preserve the confidentiality
thereof.

 

Section 12.12.        Nonreliance.  Each Lender hereby represents that it is not
relying on or looking to any margin stock (as defined in Regulation U of
the Board of Governors of the Federal Reserve System) for the repayment of the
Credit Extensions provided for herein.

 

Section 12.13.        Disclosure.  The Borrower and each Lender hereby
(i) acknowledge and agree that JPMorgan and/or its Affiliates from time to
time may hold investments in, make other loans to or have other relationships
with the Borrower and/or its Subsidiaries, and (ii) waive any liability of
JPMorgan or such Affiliate to the Borrower or any Lender, respectively, arising
out of or resulting from such investments, loans or relationships other than
liabilities arising out of the gross negligence or willful misconduct of
JPMorgan or its Affiliates.

 

ARTICLE XIII

 

THE ADMINISTRATIVE AGENT

 

Section 13.1.        Appointment;
Nature of Relationship.  JPMorgan
is hereby appointed by each of the Lenders as its contractual representative
(herein referred to as the “Administrative
Agent“) hereunder and under each other Loan Document, and each
of the Lenders irrevocably authorizes the Administrative Agent to act as the
contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Loan Documents.  The Administrative Agent agrees to act as
such contractual representative upon the express conditions contained in this Article XIII.  Notwithstanding the use of the defined term “Administrative
Agent,” it is expressly understood and agreed that the Administrative Agent
shall not have any fiduciary responsibilities to any Lender by reason of this
Agreement or any other Loan Document and that the Administrative Agent is
merely acting as the contractual representative of the Lenders with only those
duties as are expressly set forth in this Agreement and the other Loan
Documents.  In its capacity as the
Lenders’ contractual representative, the Administrative Agent (i) does not
hereby assume any fiduciary duties to any of the Lenders, (ii) is a “representative”
of the Lenders within the meaning of the term “secured party” as defined in the
Colorado Uniform Commercial Code and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents.  Each of the Lenders hereby agrees to assert
no claim against the Administrative Agent on any agency theory or any other
theory of liability for breach of fiduciary duty, all of which claims each
Lender hereby waives.

 

Section 13.2.        Powers.  The Administrative Agent shall have and may
exercise such powers under the Loan Documents as are specifically delegated to
the Administrative Agent by the terms of each thereof, together with such powers
as are reasonably incidental thereto. 
The Administrative Agent shall have no implied duties to the Lenders, or
any obligation to the Lenders to take any action thereunder except any action
specifically provided by the Loan Documents to be taken by the Administrative
Agent.

 

Section 13.3.        General
Immunity.  Neither the
Administrative Agent nor any of its directors, officers, agents, or employees
shall be liable to the Borrower, the Lenders or any

 

67

 

Lender for any action taken or
omitted to be taken by it or them hereunder or under any other Loan Document or
in connection herewith or therewith except to the extent such action or
inaction is determined in a final non-appealable judgment by a court of competent
jurisdiction to have arisen from the gross negligence or willful misconduct of
such Person.

 

Section 13.4.        No
Responsibility for Loans, Recitals, etc.  Neither the Administrative Agent nor any of
its directors, officers, agents, or employees shall be responsible for or have
any duty to ascertain, inquire into, or verify (a) any statement, warranty
or representation made in connection with any Loan Document or any borrowing
hereunder; (b) the performance or observance of any of the covenants or
agreements of any obligor under any Loan Document, including, without
limitation, any agreement by an obligor to furnish information directly to each
Lender; (c) the satisfaction of any condition specified in Article IV,
except receipt of items required to be delivered solely to the Administrative
Agent; (d) the existence or possible existence of any Default or Unmatured
Default; (e) the validity, enforceability, effectiveness, sufficiency or
genuineness of any Loan Document or any other instrument or writing furnished
in connection therewith; (f) the value, sufficiency, creation, perfection
or priority of any Lien in any collateral security; or (g) the financial
condition of the Borrower or any Guarantor of any of the Obligations or of any
of the Borrower’s or any such Guarantor’s respective Subsidiaries.  The Administrative Agent shall have no duty
to disclose to the Lenders information that is not required to be furnished by
the Borrower to the Administrative Agent at such time, but is voluntarily
furnished by the Borrower to the Administrative Agent (either in its capacity
as Administrative Agent or in its individual capacity).

 

Section 13.5.        Action on
Instructions of Lenders.  The
Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder and under any other Loan Document in
accordance with written instructions signed by the Required Lenders, and such
instructions and any action taken or failure to act pursuant thereto shall be
binding on all of the Lenders.  The
Lenders hereby acknowledge that the Administrative Agent shall be under no duty
to take any discretionary action permitted to be taken by it pursuant to the
provisions of this Agreement or any other Loan Document unless it shall be
requested in writing to do so by the Required Lenders.  The Administrative Agent shall be fully
justified in failing or refusing to take any action hereunder and under any
other Loan Document unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liability, cost and expense that it
may incur by reason of taking or continuing to take any such action.

 

Section 13.6.        Employment
of Agents and Counsel.  The
Administrative Agent may execute any of its duties as Administrative Agent
hereunder and under any other Loan Document by or through employees, agents,
and attorneys-in-fact and shall not be answerable to the Lenders, except as to
money or securities received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it with
reasonable care.  The Administrative
Agent shall be entitled to advice of counsel concerning the contractual
arrangement between the Administrative Agent and the Lenders and all matters
pertaining to the Administrative Agent’s duties hereunder and under any other
Loan Document.

 

Section 13.7.        Reliance
on Documents; Counsel.  The
Administrative Agent shall be entitled to rely upon any Note, notice, consent,
certificate, affidavit, letter, telegram, statement, paper or document believed
by it to be genuine and correct and to have been signed or

 

68

 

sent by the proper person or
persons, and, in respect to legal matters, upon the opinion of counsel selected
by the Administrative Agent, which counsel may be employees of the
Administrative Agent.

 

Section 13.8.        Administrative
Agent’s Reimbursement and Indemnification.  The Lenders agree to reimburse and indemnify
the Administrative Agent ratably in proportion to their respective Commitments
(or, if the Commitments have been terminated, in proportion to their
Commitments immediately prior to such termination) (i) for any amounts not
reimbursed by the Borrower for which the Administrative Agent is entitled to
reimbursement by the Borrower under the Loan Documents, (ii) for any other
expenses incurred by the Administrative Agent on behalf of the Lenders, in
connection with the preparation, execution, delivery, administration and
enforcement of the Loan Documents (including, without limitation, for any
expenses incurred by the Administrative Agent in connection with any dispute
between the Administrative Agent and any Lender or between two or more of the
Lenders) and (iii) for any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Administrative Agent in any way relating to or arising out of the Loan
Documents or any other document delivered in connection therewith or the
transactions contemplated thereby (including, without limitation, for any such
amounts incurred by or asserted against the Administrative Agent in connection
with any dispute between the Administrative Agent and any Lender or between two
or more of the Lenders), or the enforcement of any of the terms of the Loan
Documents or of any such other documents, provided that (a) no Lender
shall be liable for any of the foregoing to the extent any of the foregoing is
found in a final non-appealable judgment by a court of competent jurisdiction
to have resulted from the gross negligence or willful misconduct of the
Administrative Agent and (b) any indemnification required pursuant to Section 3.3(vii)
shall, notwithstanding the provisions of this Section 13.8, be paid by the
relevant Lender in accordance with the provisions thereof.  The obligations of the Lenders under this Section 13.8
shall survive payment of the Obligations and termination of this Agreement.

 

Section 13.9.        Notice of
Default.  The Administrative
Agent shall not be deemed to have knowledge or notice of the occurrence of any
Default or Unmatured Default hereunder unless the Administrative Agent has
received written notice from a Lender or the Borrower referring to this
Agreement describing such Default or Unmatured Default and stating that such
notice is a “notice of default.”  In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give prompt notice thereof to the Lenders.

 

Section 13.10.        Rights
as a Lender.  In the event the
Administrative Agent is a Lender, the Administrative Agent shall have the same
rights and powers hereunder and under any other Loan Document with respect to
its Commitment and its Loans as any Lender and may exercise the same as though
it were not the Administrative Agent, and the term “Lender” or “Lenders” shall,
at any time when the Administrative Agent is a Lender, unless the context
otherwise indicates, include the Administrative Agent in its individual
capacity.  The Administrative Agent and
its Affiliates may accept deposits from, lend money to, and generally engage in
any kind of trust, debt, equity or other transaction, in addition to those
contemplated by this Agreement or any other Loan Document, with the Borrower or
any of its Subsidiaries in which the Borrower or such Subsidiary is not
restricted hereby from engaging with any other Person.

 

69

 

Section 13.11.        Lender
Credit Decision.  Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent, the Arranger or any other Lender and based on the
financial statements prepared by the Borrower and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Loan Documents.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent, the Arranger
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 and the other Loan Documents.

 

Section 13.12.        Successor
Administrative Agent.  The
Administrative Agent may resign at any time by giving written notice thereof to
the Lenders and the Borrower, such resignation to be effective upon the
appointment of a successor Administrative Agent or, if no successor
Administrative Agent has been appointed, forty-five days after the retiring
Administrative Agent gives notice of its intention to resign.  The Administrative Agent may be removed at
any time with or without cause by written notice received by the Administrative
Agent from the Required Lenders, such removal to be effective on the date
specified by the Required Lenders.  Upon
any such resignation or removal, the Required Lenders shall have the right to
appoint, on behalf of the Borrower and the Lenders, a successor Administrative
Agent.  If no successor Administrative
Agent shall have been so appointed by the Required Lenders within thirty days
after the resigning Administrative Agent’s giving notice of its intention to
resign, then the resigning Administrative Agent may appoint, on behalf of the
Borrower and the Lenders, a successor Administrative Agent.  Notwithstanding the previous sentence, the
Administrative Agent may at any time without the consent of the Borrower or any
Lender, appoint any of its Affiliates which is a commercial bank as a successor
Administrative Agent hereunder.  If the
Administrative Agent has resigned or been removed and no successor
Administrative Agent has been appointed, the Lenders may perform all the duties
of the Administrative Agent hereunder and the Borrower shall make all payments
in respect of the Obligations to the applicable Lender and for all other
purposes shall deal directly with the Lenders. 
No successor Administrative Agent shall be deemed to be appointed
hereunder until such successor Administrative Agent has accepted the
appointment.  Any such successor
Administrative Agent shall be a commercial bank having capital and retained
earnings of at least $100,000,000.  Upon
the acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the resigning or removed Administrative Agent.  Upon the effectiveness of the resignation or
removal of the Administrative Agent, the resigning or removed Administrative
Agent shall be discharged from its duties and obligations hereunder and under
the Loan Documents.  After the
effectiveness of the resignation or removal of an Administrative Agent, the
provisions of this Article XIII shall continue in effect for the benefit
of such Administrative Agent in respect of any actions taken or omitted to be
taken by it while it was acting as the Administrative Agent hereunder and under
the other Loan Documents.  In the event
that there is a successor to the Administrative Agent by merger, or the
Administrative Agent assigns its duties and obligations to an Affiliate
pursuant to this Section 13.12, then the term “Prime Rate” as used in this
Agreement shall mean the prime rate, base rate or other analogous rate of the
new Administrative Agent.

 

70

 

Section 13.13.        Administrative
Agent and Arranger Fees.  The
Borrower agrees to pay to the Administrative Agent and the Arranger, for their
respective accounts, the fees agreed to by the Borrower, the Administrative
Agent and the Arranger pursuant to that certain letter agreement dated
March 14, 2005, or as otherwise agreed from time to time.

 

Section 13.14.        Delegation
to Affiliates.  The Borrower and
the Lenders agree that the Administrative Agent may delegate any of its duties
under this Agreement to any of its Affiliates. 
Any such Affiliate (and such Affiliate’s directors, officers, agents and
employees) which performs duties in connection with this Agreement shall be
entitled to the same benefits of the indemnification, waiver and other
protective provisions to which the Administrative Agent is entitled under Article XII
and Article XIII.

 

Section 13.15.        Execution
of Collateral Documents.  The
Lenders hereby empower and authorize the Administrative Agent to execute and
deliver to the Borrower on their behalf the Certificate of Effectiveness, the
Collateral Documents and all related agreements, documents or instruments as
shall be necessary or appropriate to effect the purposes of the Collateral
Documents.

 

Section 13.16.        Collateral
Releases.  The Lenders hereby
empower and authorize the Administrative Agent to execute and deliver to the
Borrower on their behalf any agreements, documents or instruments as shall be
necessary or appropriate to effect any releases of Collateral which Borrower
and its Subsidiaries are permitted to sell or otherwise transfer pursuant to Section 7.4,
or which shall otherwise be permitted by the terms hereof or of any other Loan
Document or which shall otherwise have been approved by the Required Lenders
(or, if required by the terms of Section 11.2, all of the Lenders) in
writing.

 

Section 13.17.        Documentation
Agent, Syndication Agent, etc. 
None of the Lenders identified in this Agreement as the Documentation
Agent or a Co-Syndication Agent shall have any right, power, obligation,
liability, responsibility or duty under this Agreement other than those
applicable to all Lenders as such. 
Without limiting the foregoing, none of such Lenders shall have or be
deemed to have a fiduciary relationship with any Lender.  Each Lender hereby makes the same acknowledgments
with respect to such Lenders as it makes with respect to the Administrative
Agent in Section 13.11.

 

ARTICLE XIV

 

SETOFF; RATABLE PAYMENTS

 

Section 14.1.        Setoff.  In addition to, and without limitation of,
any rights of the Lenders under applicable law, if the Borrower becomes
insolvent, however evidenced, or any Default occurs, any and all deposits
(including all account balances, whether provisional or final and whether or
not collected or available) and any other Indebtedness at any time held or
owing by any Lender or any Affiliate of any Lender to or for the credit or account
of the Borrower may be offset and applied toward the payment of the Obligations
owing to such Lender, whether or not the Obligations, or any part hereof, shall
then be due.

 

71

 

Section 14.2.        Ratable
Payments.  If any Lender, whether
by setoff or otherwise, has payment made to it upon its Outstanding Credit
Exposure (other than payments received pursuant to Section 3.1, Section 3.2,
Section 3.4, or Section 3.5) in a greater proportion than that
received by any other Lender, such Lender agrees, promptly upon demand, to
purchase a portion of the Aggregate Outstanding Credit Exposure held by the
other Lenders so that after such purchase each Lender will hold its Pro Rata
Share of the Aggregate Outstanding Credit Exposure.  If any Lender, whether in connection with
setoff or amounts which might be subject to setoff or otherwise, receives
collateral or other protection for its Obligations or such amounts which may be
subject to setoff, such Lender agrees, promptly upon demand, to take such
action necessary such that all Lenders share in the benefits of such collateral
ratably in proportion to their respective Pro Rata Shares of the Aggregate
Outstanding Credit Exposure.  In case any
such payment is disturbed by legal process, or otherwise, appropriate further
adjustments shall be made.

 

ARTICLE XV

 

BENEFIT OF AGREEMENT;
ASSIGNMENTS; PARTICIPATIONS

 

Section 15.1.        Successors
and Assigns.  The terms and
provisions of the Loan Documents shall be binding upon and inure to the benefit
of the Borrower and the Lenders and their respective successors and assigns
permitted hereby, except that (i) the Borrower shall not have the right to
assign its rights or obligations under the Loan Documents without the prior
written consent of each Lender, (ii) any assignment by any Lender must be
made in compliance with Section 15.3, and (iii) any transfer by
participation must be made in compliance with Section 15.2.  Any attempted assignment or transfer by any
party not made in compliance with this Section 15.1 shall be null and
void, unless such attempted assignment or transfer is treated as a
participation in accordance with Section 15.3.2.  The parties to this Agreement acknowledge
that clause (ii) of this Section 15.1 relates only to absolute
assignments and this Section 15.1 does not prohibit assignments creating
security interests, including, without limitation, (x) any pledge or
assignment by any Lender of all or any portion of its rights under this
Agreement and any Note to a Federal Reserve Bank or (y) in the case of a
Lender which is a Fund, any pledge or assignment of all or any portion of its
rights under this Agreement and any Note to its trustee in support of its
obligations to its trustee; provided, however, that no such pledge or
assignment creating a security interest shall release the transferor Lender
from its obligations hereunder unless and until the parties thereto have
complied with the provisions of Section 15.3.  The Administrative Agent may treat the Person
which made any Loan or which holds any Note as the owner thereof for all
purposes hereof unless and until such Person complies with Section 15.3;
provided, however, that the Administrative Agent may in its discretion (but
shall not be required to) follow instructions from the Person which made any
Loan or which holds any Note to direct payments relating to such Loan or Note
to another Person.  Any assignee of the
rights to any Loan or any Note agrees by acceptance of such assignment to be
bound by all the terms and provisions of the Loan Documents.  Any request, authority or consent of any
Person, who at the time of making such request or giving such authority or
consent is the owner of the rights to any Loan (whether or not a Note has been
issued in evidence thereof), shall be conclusive and binding on any subsequent
holder or assignee of the rights to such Loan.

 

72

 

Section 15.2.        Participations.

 

15.2.1.     Permitted Participants; Effect.  Any Lender may, in the ordinary course of its
business and in accordance with applicable law, at any time sell to one or more
banks or other entities (“Participants“)
participating interests in any Outstanding Credit Exposure of such Lender, any
Note held by such Lender, any Commitment of such Lender or any other interest
of such Lender under the Loan Documents. 
In the event of any such sale by a Lender of participating interests to
a Participant, such Lender’s obligations under the Loan Documents shall remain
unchanged, such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, such Lender shall remain the
owner of its Outstanding Credit Exposure and the holder of any Note issued to
it in evidence thereof for all purposes under the Loan Documents, all amounts
payable by the Borrower under this Agreement shall be determined as if such
Lender had not sold such participating interests, and the Borrower and the
Administrative Agent shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under the Loan
Documents.

 

15.2.2.     Voting Rights. 
Each Lender shall retain the sole right to approve, without the consent
of any Participant, any amendment, modification or waiver of any provision of
the Loan Documents other than any amendment, modification or waiver with
respect to any Credit Extension or Commitment in which such Participant has an
interest which would require consent of all of the Lenders pursuant to the
terms of Section 11.2 or of any other Loan Document.

 

15.2.3.     Benefit of Certain Provisions.  The Borrower agrees that each Participant
shall be deemed to have the right of setoff provided in Section 14.1 in
respect of its participating interest in amounts owing under the Loan Documents
to the same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each Lender
shall retain the right of setoff provided in Section 14.1 with respect to
the amount of participating interests sold to each Participant.  The Lenders agree to share with each
Participant, and each Participant, by exercising the right of setoff provided
in Section 14.1, agrees to share with each Lender, any amount received
pursuant to the exercise of its right of setoff, such amounts to be shared in
accordance with Section 14.2 as if each Participant were a Lender.  The Borrower further agrees that each
Participant shall be entitled to the benefits of Section 3.1, Section 3.2,
Section 3.4, and Section 3.5 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to Section 15.3,
provided that (i) a Participant shall not be entitled to receive any
greater payment under Section 3.1, Section 3.2, or Section 3.5
than the Lender who sold the participating interest to such Participant would
have received had it retained such interest for its own account, unless the
sale of such interest to such Participant is made with the prior written
consent of the Borrower, and (ii) any Participant not incorporated under
the laws of the United States of America or any State thereof agrees to comply
with the provisions of Section 3.3 to the same extent as if it were a
Lender.

 

Section 15.3.        Assignments.

 

15.3.1.     Permitted Assignments. 
Any Lender may, in the ordinary course of its business and in accordance
with applicable law, at any time assign to one or more banks or other entities
(“Purchasers“) all or any
part of its rights and obligations under the Loan

 

73

 

Documents. 
Such assignment shall be substantially in the form of Exhibit C
or in such other form as may be agreed to by the parties thereto.  The consent of the Borrower, the
Administrative Agent and the LC Issuer shall be required prior to an assignment
becoming effective with respect to a Purchaser which is not a Lender or an
Affiliate thereof; provided, however, that if a Default has occurred and is
continuing, the consent of the Borrower shall not be required.  Such consent shall not be unreasonably
withheld or delayed.  Each such
assignment with respect to a Purchaser which is not a Lender or an Affiliate
thereof shall (unless each of the Borrower and the Administrative Agent
otherwise consents) be in an amount not less than the lesser of
(i) $5,000,000 or (ii) the remaining amount of the assigning Lender’s
Commitment (calculated as at the date of such assignment) or outstanding Loans
(if the applicable Commitment has been terminated).

 

15.3.2.     Effect; Effective Date. 
Upon (i) delivery to the Administrative Agent of a notice of
assignment, substantially in the form attached as Exhibit I to Exhibit C
(a “Notice of Assignment“),
together with any consents required by Section 15.3.1, and
(ii) payment of a $3,500 fee to the Administrative Agent for processing
such assignment, such assignment shall become effective on the effective date
specified in such Notice of Assignment. 
The Notice of Assignment shall contain a representation by the Purchaser
to the effect that none of the consideration used to make the purchase of the
Commitment and Outstanding Credit Exposure under the applicable assignment
agreement are “plan assets” as defined under ERISA and that the rights and
interests of the Purchaser in and under the Loan Documents will not be “plan
assets” under ERISA.  On and after the
effective date of such assignment, such Purchaser shall for all purposes be a
Lender party to this Agreement and any other Loan Document executed by or on
behalf of the Lenders and shall have all the rights and obligations of a Lender
under the Loan Documents, to the same extent as if it were an original party
hereto, and no further consent or action by the Borrower, the Lenders or the
Administrative Agent shall be required to release the transferor Lender with
respect to the percentage of the Aggregate Commitment and Outstanding Credit
Exposure assigned to such Purchaser. 
Upon the consummation of any assignment to a Purchaser pursuant to this
Section 15.3.2, the transferor Lender, the Administrative Agent and the
Borrower shall, if the transferor Lender or the Purchaser desires that its
Loans be evidenced by Notes, make appropriate arrangements so that new Notes
or, as appropriate, replacement Notes are issued to such transferor Lender and
new Notes or, as appropriate, replacement Notes, are issued to such Purchaser,
in each case in principal amounts reflecting their respective Commitments, as
adjusted pursuant to such assignment.

 

15.3.3.     Register. 
The Administrative Agent, acting solely for this purpose as an
Administrative Agent of the Borrower, shall maintain at one of its offices in
Chicago, Illinois, a copy of each Assignment and Assumption delivered to it and
a register for the recordation of the names and addresses of the Lenders, and
the Commitments of, and principal amounts of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the “Register“).  The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

 

74

 

Section 15.4.        Dissemination
of Information.  The Borrower
authorizes each Lender to disclose to any Participant or Purchaser or any other
Person acquiring an interest in the Loan Documents by operation of law (each a “Transferee“) and any prospective
Transferee any and all information in such Lender’s possession concerning the
creditworthiness of the Borrower and its Subsidiaries, including without
limitation any information contained in any reports provided to Administrative
Agent; provided that each Transferee and prospective Transferee agrees to be
bound by Section 12.11 of this Agreement.

 

Section 15.5.        Tax
Treatment.  If any interest in
any Loan Document is transferred to any Transferee which is not incorporated
under the laws of the United States or any State thereof, the transferor Lender
shall cause such Transferee, concurrently with the effectiveness of such
transfer, to comply with the provisions of Section 3.3(iv).

 

Section 15.6.        Procedure
for Increases and Addition of New Lenders.  This Agreement permits certain increases in a
Lender’s Commitment and the admission of new Lenders providing new Commitments,
none of which require any consents or approvals from the other Lenders.  Any amendment hereto for such an increase or
addition shall be in the form attached hereto as Exhibit F and
shall only require the written signatures of the Administrative Agent, the
Borrower and the Lender(s) being added or increasing their Commitment.  In addition, within a reasonable time after
the effective date of any increase, the Administrative Agent shall, and is
hereby authorized and directed to, revise the Lenders Schedule reflecting such
increase and shall distribute such revised Schedule to each of the Lenders and
the Borrower, whereupon such revised Schedule shall replace the old Schedule
and become part of this Agreement.  On
the Business Day following any such increase, all outstanding Floating Rate
Advances shall be reallocated among the Lenders (including any newly added
Lenders) in accordance with the Lenders’ respective revised Pro Rata
Shares.  Eurodollar Advances shall not be
reallocated among the Lenders prior to the expiration of the applicable
Interest Period in effect at the time of any such increase.

 

ARTICLE XVI

 

NOTICES

 

Section 16.1.        Notices.  Except as otherwise permitted by Section 2.9
with respect to Borrowing Notices, all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party: (x) in
the case of the Borrower or the Administrative Agent, at its address or
facsimile number set forth on the signature pages hereof, (y) in the case
of any Lender, at its address or facsimile number set forth on the Lenders
Schedule or (z) in the case of any party, at such other address or
facsimile number as such party may hereafter specify for the purpose by notice
to the Administrative Agent and the Borrower in accordance with the provisions
of this Section 16.1.  Each such
notice, request or other communication shall be effective (i) if given by
facsimile transmission, when transmitted to the facsimile number specified in
this Section and confirmation of receipt is received, (ii) if given
by mail, 72 hours after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid, or (iii) if given by any
other means, when delivered at the address specified in this Section; provided
that notices to the Administrative Agent under Article II shall not be
effective until received.

 

75

 

Section 16.2.        Change of
Address.  The Borrower, the
Administrative Agent and any Lender (i) may each change the address for
service of notice upon it by a notice in writing to the other parties hereto
and (ii) shall give such a notice if its address shall change.

 

ARTICLE XVII

 

COUNTERPARTS

 

This Agreement
may be executed in any number of counterparts, all of which taken together
shall constitute one agreement, and any of the parties hereto may execute this
Agreement by signing any such counterpart. 
This Agreement shall be effective when it has been executed by the
Borrower, the Administrative Agent, the LC Issuer and the Lenders and each
party has notified the Administrative Agent by facsimile transmission or
telephone that it has taken such action.

 

ARTICLE XVIII

 

CHOICE OF LAW; CONSENT TO
JURISDICTION; WAIVER OF JURY TRIAL

 

Section 18.1.        CHOICE OF
LAW.  THE LOAN DOCUMENTS (OTHER
THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF COLORADO, BUT
GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

Section 18.2.        CONSENT
TO JURISDICTION.  THE BORROWER
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL OR COLORADO STATE COURT SITTING IN DENVER, COLORADO IN ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO ANY LOAN DOCUMENTS AND THE
BORROWER HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES
ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.  NOTHING HEREIN SHALL
LIMIT THE RIGHT OF THE ADMINISTRATIVE AGENT, THE LC ISSUER OR ANY LENDER TO
BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.

 

Section 18.3.        WAIVER OF
JURY TRIAL.  THE BORROWER, THE
ADMINISTRATIVE AGENT, THE LC ISSUER AND EACH LENDER HEREBY WAIVE TRIAL BY JURY
IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
(WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF,
RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP ESTABLISHED
THEREUNDER.

 

76

 

ARTICLE XIX

 

USA PATRIOT ACT NOTICE 

 

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

 

ARTICLE XX

 

AMENDMENT AND RESTATEMENT

 

This Agreement
amends and restates in its entirety the Existing Cimarex Credit Agreement, and
from and after the date hereof, and subject to the terms hereof, including,
without limitation, the execution and delivery of the Certificate of
Effectiveness, the terms and provisions of the Existing Cimarex Credit
Agreement shall be superseded by the terms and provisions of this
Agreement.  Borrower hereby agrees that
(i) the Existing Cimarex Indebtedness, all accrued and unpaid interest
thereon, and all accrued and unpaid fees under the Existing Cimarex Credit
Agreement shall be deemed to be Indebtedness of Borrower outstanding under and
governed by this Agreement and (ii) all Liens securing the Existing
Cimarex Indebtedness shall continue in full force and effect to secure the
Secured Obligations.

 

[THE REMAINDER
OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

 

77

 

IN WITNESS
WHEREOF, the Borrower, the Lenders and the Administrative Agent have executed
this Agreement as of the date first above written.

 

	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Paul Korus,

  
	
   

  	
   

  	
  Vice President, Chief Financial Officer

  
	
   

  	
   

  	
  and Treasurer

  
	
   

  	
   

  
	
   

  	
  1700 Lincoln Street, Suite 1800

  
	
   

  	
  Denver, Colorado 80203

  
	
   

  	
  Attention: Paul Korus

  
	
   

  	
  Telephone: (303) 295-3995

  
	
   

  	
  FAX: (303) 285-9299

  

 

 

[Signature Page]

 

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  successor by merger to Bank One, NA (Main Office

  Chicago), Individually as a Lender, as LC Issuer

  and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  J. Scott Fowler,

  
	
   

  	
   

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
  1717 Main Street

  
	
   

  	
  MC TX1-2448

  
	
   

  	
  Dallas, Texas 75201

  
	
   

  	
  Attention: J. Scott Fowler

  
	
   

  	
  Telephone: (214) 290-2162

  
	
   

  	
  FAX: (214) 290-2332

  

 

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,

  
	
   

  	
  Individually as a Lender and as Co-Syndication

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Kathryn A. Gaiter, Vice President

  

 

 

	
   

  	
  BANK OF AMERICA, N.A.,

  
	
   

  	
  Individually as a Lender and as Co-Syndication

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  WELLS FARGO BANK, N.A.,

  
	
   

  	
  Individually as a Lender and as Documentation

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  COMERICA BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  BANK OF OKLAHOMA, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  NATEXIS BANQUES POPULAIRES,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  COMPASS BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  BNP PARIBAS,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  BANK OF SCOTLAND,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title: 

  	
   

  	
   

  
						

 

 

	
   

  	
  FORTIS CAPITAL CORP.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

 

	
   

  	
  HARRIS NESBITT FINANCING, INC.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  CALYON NEW YORK BRANCH,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  STERLING BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  SOCIETE GENERALE,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  KEYBANK, N.A.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

	
   

  	
  CITICORP NORTH AMERICA, INC.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE 1

PRICING SCHEDULE

 

	
  Applicable Margin

  	
   

  	
  Level I

  Status

  	
   

  	
  Level II

  Status

  	
   

  	
  Level III

  Status

  	
   

  	
  Level IV

  Status

  	
   

  	
  Level V

  Status

  	
   

  
	
  Eurodollar Rate

  	
   

  	
  1.00

  	
  %

  	
  1.00

  	
  %

  	
  1.25

  	
  %

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  
	
  Floating Rate

  	
   

  	
  0.00

  	
  %

  	
  0.00

  	
  %

  	
  0.00

  	
  %

  	
  0.250

  	
  %

  	
  0.500

  	
  %

  

 

	
  Applicable Fee Rate

  	
   

  	
  Level I

  Status

  	
   

  	
  Level II

  Status

  	
   

  	
  Level III

  Status

  	
   

  	
  Level IV

  Status

  	
   

  	
  Level V

  Status

  	
   

  
	
  Commitment Fee

  	
   

  	
  0.225

  	
  %

  	
  0.250

  	
  %

  	
  0.300

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  

 

For the
purposes of this Schedule, the following terms have the following meanings,
subject to the final paragraph of this Schedule:

 

“Level I Status“ exists at any date
if the Borrowing Base Usage Percentage on such date is less than 25%.

 

“Level II Status“ exists at any
date if the Borrowing Base Usage Percentage on such date is greater than or
equal to 25% and less than 50%.

 

“Level III Status“ exists at any
date if the Borrowing Base Usage Percentage on such date is greater than or
equal to 50% and less than 75%.

 

“Level IV Status“ exists at any
date if the Borrowing Base Usage Percentage on such date is greater than or
equal to 75% and less than 90%.

 

“Level V Status“ exists at any date
if the Borrowing Base Usage Percentage on such date is greater than or equal to
90%.

 

“Status“ means either Level I
Status, Level II Status, Level III Status, Level IV Status or
Level V Status.

 

The Applicable
Margin and Applicable Fee Rate shall be determined on a daily basis in
accordance with the foregoing table based on the Borrowing Base Usage
Percentage on such day.

 

S1-1

 

SCHEDULE 2

LENDERS SCHEDULE

 

JPMORGAN CHASE BANK, N.A.

 

Pro Rata Share: 6%

 

	
  Lending Installation:

  	
   

  	
  1 Bank One Plaza

  
	
   

  	
   

  	
  Mail Code IL1-0634

  
	
   

  	
   

  	
  Chicago, Illinois 60670-0634

  
	
   

  	
   

  	
  Attention: Jim Moore

  
	
   

  	
   

  	
  312-385-7057 – phone

  
	
   

  	
   

  	
  312-732-4840 – fax

  
	
   

  	
   

  	
  jim_t_moore@chase.com

  
	
   

  	
   

  	
   

  

 

	
  Address for Notices:

  	
   

  	
  1717 Main Street

  
	
   

  	
   

  	
  MC TX1-2448

  
	
   

  	
   

  	
  Dallas, Texas 75201

  
	
   

  	
   

  	
  Attention: J. Scott Fowler

  
	
   

  	
   

  	
  214-290-2162 – phone

  
	
   

  	
   

  	
  214-290-2332 – fax

  
	
   

  	
   

  	
  scott.fowler@chase.com

  

 

 

	
  Commitment as of June 13, 2005:

  	
   

  	
  $30,000,000

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $60,000,000

  

 

S2-1

 

U.S.
BANK NATIONAL ASSOCIATION

 

Pro Rata
Share: 6%

 

	
  Lending Installation:

  	
   

  	
  555 S.W. Oak PDORP7LS

  
	
   

  	
   

  	
  Portland, Oregon 97208

  
	
   

  	
   

  	
  Attn: Raquel Savang

  
	
   

  	
   

  	
  503-275-7861 – phone

  
	
   

  	
   

  	
  503-275-8181 - fax

  
	
   

  	
   

  	
   

  

 

	
  Address for Notices:

  	
   

  	
  918 17th Street

  
	
   

  	
   

  	
  DN-CO-BB3E

  
	
   

  	
   

  	
  Denver, Colorado 80202

  
	
   

  	
   

  	
  Attention: Kathryn A. Gaiter

  
	
   

  	
   

  	
  303-585-4210 – phone

  
	
   

  	
   

  	
  303-585-4362 – fax

  
	
   

  	
   

  	
  kathryn.gaiter@usbank.com

  

 

 

	
  Commitment as of June 13, 2005:

  	
   

  	
  $30,000,000

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $60,000,000

  

 

S2-2

 

 

BANK
OF AMERICA, N.A.

 

Pro Rata
Share: 6%

 

	
  Lending Installation:

  	
   

  	
  1201 Main Street

  
	
   

  	
   

  	
  4th Floor

  
	
   

  	
   

  	
  Dallas, Texas 75202

  

 

 

	
  Address for Notices:

  	
   

  	
  100 Federal Street

  
	
   

  	
   

  	
  MA5-100-09-08

  
	
   

  	
   

  	
  Boston, Massachusetts 02110

  
	
   

  	
   

  	
  Attention: Gregory B. Hanson

  
	
   

  	
   

  	
  617-434-6613 – phone

  
	
   

  	
   

  	
  617-434-3652 – fax

  
	
   

  	
   

  	
  gregory.b.hanson@bankofamerica.com

  

 

 

	
  Commitment as of June 13, 2005:

  	
   

  	
  $30,000,000

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $60,000,000

  

 

S2-3

 

WELLS
FARGO BANK, N.A.

 

Pro Rata
Share: 6%

 

	
  Lending Installation:

  	
   

  	
  1740 Broadway

  
	
   

  	
   

  	
  Denver, Colorado 80274

  
	
   

  	
   

  	
  Attention: Marlene Rieb

  
	
   

  	
   

  	
  303-863-5163 – phone

  
	
   

  	
   

  	
  303-863-2729 – fax

  
	
   

  	
   

  	
  marlene.rieb@wellsfargo.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1740 Broadway

  
	
   

  	
   

  	
  Denver, Colorado 80209

  
	
   

  	
   

  	
  Attention: Laura Bumgarner

  
	
   

  	
   

  	
  303-863-5799 – phone

  
	
   

  	
   

  	
  303-863-5196 – fax

  
	
   

  	
   

  	
  laura.l.bumgarner@wellsfargo.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $30,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $60,000,000

  

 

S2-4

 

UNION
BANK OF CALIFORNIA, N.A.

 

Pro Rata
Share: 5.5%

 

	
  Lending Installation:

  	
   

  	
  1980 Saturn Street

  
	
   

  	
   

  	
  V03-251

  
	
   

  	
   

  	
  Monterey Park, California 91755

  
	
   

  	
   

  	
  Attention: Maria Suncin

  
	
   

  	
   

  	
  323-720-2870 – phone

  
	
   

  	
   

  	
  323-720-2252 – fax

  
	
   

  	
   

  	
  maria.suncin@uboc.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  500 North Akard

  
	
   

  	
   

  	
  Suite 4200

  
	
   

  	
   

  	
  Dallas, Texas 75201

  
	
   

  	
   

  	
  Attention: Kimberly Coil

  
	
   

  	
   

  	
  214-922-4200 – phone

  
	
   

  	
   

  	
  214.922-4209 – fax

  
	
   

  	
   

  	
  kimberly.coil@uboc.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $27,500,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $55,000,000

  

 

S2-5

 

COMERICA
BANK

 

Pro Rata
Share: 5.5%

 

	
  Lending Installation:

  	
   

  	
  P.O. Box 7500

  
	
   

  	
   

  	
  Detroit, Michigan 48275-7576

  
	
   

  	
   

  	
  Attention: Jeff Zelenka

  
	
   

  	
   

  	
  734-632-3052 – phone

  
	
   

  	
   

  	
  734-632-2999 – fax

  
	
   

  	
   

  	
  jeffrey_l_zelenka@comerica.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1601 Elm Street

  
	
   

  	
   

  	
  2nd Floor

  
	
   

  	
   

  	
  Dallas, Texas 75201

  
	
   

  	
   

  	
  Attention: Peter L. Sefzik

  
	
   

  	
   

  	
  214-969-6538 – phone

  
	
   

  	
   

  	
  214-969-6561 – fax

  
	
   

  	
   

  	
  peter_l_sefzik@comerica.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $27,500,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $55,000,000

  

 

S2-6

 

DEUTSCHE
BANK TRUST COMPANY AMERICAS

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  90 Hudson Street

  
	
   

  	
   

  	
  Jersey City, New Jersey 07302

  
	
   

  	
   

  	
  Attention: Joe Cusmai

  
	
   

  	
   

  	
  201-593-2202 – phone

  
	
   

  	
   

  	
  201-593-2311 – fax

  
	
   

  	
   

  	
  joe.cusmai@db.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  700 Louisiana Street, Suite 1500

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Mike Janak

  
	
   

  	
   

  	
  832-239-4649 – phone

  
	
   

  	
   

  	
  832-239-4693 – fax

  
	
   

  	
   

  	
  mike.janak@db.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-7

 

SOCIÉTÉ
GÉNÉRALE

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  560 Lexington, 4th Floor

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attention: Nancy Kui

  
	
   

  	
   

  	
  212-278-6164 – phone

  
	
   

  	
   

  	
  212-278-7490 – fax

  
	
   

  	
   

  	
  nancy.kui@sbcib.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1111 Bagby, Suite 2020

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Elena Robciuc

  
	
   

  	
   

  	
  713-759-6316 – phone

  
	
   

  	
   

  	
  713-650-0824 – fax

  
	
   

  	
   

  	
  elena.robciuc@sgcib.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-8

 

BNP
PARIBAS

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  919 Third Avenue

  
	
   

  	
   

  	
  New York, New York 10022

  
	
   

  	
   

  	
  Attention: Gabriel Candamo

  
	
   

  	
   

  	
  212-471-6626 – phone

  
	
   

  	
   

  	
  212-841-2683 – fax

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1200 Smith Street, Suite 3100

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Russell Otts

  
	
   

  	
   

  	
  713-982-1100 – phone

  
	
   

  	
   

  	
  713-659-6915 - fax

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-9

 

BANK
OF SCOTLAND

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  565 Fifth Avenue, 5th Floor

  
	
   

  	
   

  	
  New York, New York 10017

  
	
   

  	
   

  	
  Attention: Karen Weich

  
	
   

  	
   

  	
  212-450-0877 – phone

  
	
   

  	
   

  	
  212-479-2806 – fax

  
	
   

  	
   

  	
  karen_weich@bankofscotland.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  One City Centre

  
	
   

  	
   

  	
  1021 Main Street, Suite 1370

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Richard Butler

  
	
   

  	
   

  	
  713-650-0036 – phone

  
	
   

  	
   

  	
  713-651-9714 – fax

  
	
   

  	
   

  	
  richard_butler@bankofscotland.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-10

 

FORTIS
CAPITAL CORP.

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  3 Stamford Plaza

  
	
   

  	
   

  	
  301 Tresser Blvd.

  
	
   

  	
   

  	
  Stamford, Connecticut 06901-3239

  
	
   

  	
   

  	
  Attention: Frank Campanelli

  
	
   

  	
   

  	
  203-705-5755 – phone

  
	
   

  	
   

  	
  203-705-5888 – fax

  
	
   

  	
   

  	
  robert.Melendez@fortiscapitalusa.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  15455 North Dallas Parkway, Suite 1400

  
	
   

  	
   

  	
  Addison, Texas 75001

  
	
   

  	
   

  	
  Attention: David Montgomery

  
	
   

  	
   

  	
  214-953-9311 – phone

  
	
   

  	
   

  	
  214-754-5982 – fax

  
	
   

  	
   

  	
  david.montgomery@fortiscapitalusa.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-11

 

CALYON
NEW YORK BRANCH

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  1301 Avenue of the Americas

  
	
   

  	
   

  	
  New York, New York 10019

  
	
   

  	
   

  	
  Attention: Gener David

  
	
   

  	
   

  	
  212-261-7633 – phone

  
	
   

  	
   

  	
  917-849-5440 – fax

  
	
   

  	
   

  	
  gener.david@us.calyon.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1301 Travis, Suite 2100

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Lucia Martinez

  
	
   

  	
   

  	
  713-890-8634 – phone

  
	
   

  	
   

  	
  713-890-8668 – fax

  
	
   

  	
   

  	
  lucia.martinez@us.calyon.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-12

 

KEYBANK
NATIONAL ASSOCIATION

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  127 Public Square, 8th Floor

  
	
   

  	
   

  	
  Cleveland, Ohio 44114

  
	
   

  	
   

  	
  Attention: Yvette M. Dyson-Owens

  
	
   

  	
   

  	
  216-689-4358 – phone

  
	
   

  	
   

  	
  216-689-5962 – fax

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  8117 Preston Road, Suite 440

  
	
   

  	
   

  	
  Dallas, Texas 75225

  
	
   

  	
   

  	
  Attention: Thomas Rajan

  
	
   

  	
   

  	
  214-414-2580 – phone

  
	
   

  	
   

  	
  214-414-2621 – fax

  
	
   

  	
   

  	
  thomas_rajan@keybank.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-13

 

STERLING
BANK

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  2250 North Loop West, Suite 100

  
	
   

  	
   

  	
  Houston, Texas 77092

  
	
   

  	
   

  	
  Attention: Cheri Allen

  
	
   

  	
   

  	
  713-507-7714 – phone

  
	
   

  	
   

  	
  713-507-7908 – fax

  
	
   

  	
   

  	
  cheri_allen@banksterling.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  2250 North Loop West, Suite 100

  
	
   

  	
   

  	
  Houston, Texas 77092

  
	
   

  	
   

  	
  Attention: Melissa Bauman

  
	
   

  	
   

  	
  713-507-7377 – phone

  
	
   

  	
   

  	
  713-507-7948 – fax

  
	
   

  	
   

  	
  melissa.bauman@banksterling.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-14

 

BANK
OF OKLAHOMA, N.A.

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  1550 S. Midwest Blvd – L

  
	
   

  	
   

  	
  Midwest City, Oklahoma 73110

  
	
   

  	
   

  	
  Attention: Sherry Curry

  
	
   

  	
   

  	
  405-736-8927 – phone

  
	
   

  	
   

  	
  405-319-1078 – fax

  
	
   

  	
   

  	
  scurry@kokf.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  1625 Broadway

  
	
   

  	
   

  	
  Suite 1570

  
	
   

  	
   

  	
  Denver, Colorado 80202

  
	
   

  	
   

  	
  Attention: Michael M. Logan

  
	
   

  	
   

  	
  303-534-9462 – phone

  
	
   

  	
   

  	
  303-534-9499 – fax

  
	
   

  	
   

  	
  mlogan@bokf.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-15

 

HARRIS
NESBITT FINANCING, INC.

 

Pro Rata
Share: 5%

 

	
  Lending Installation:

  	
   

  	
  115 S. Lasalle St.

  
	
   

  	
   

  	
  Chicago, Illinois 60603

  
	
   

  	
   

  	
  Attention: LaTanya Topps

  
	
   

  	
   

  	
  312-461-6901 – phone

  
	
   

  	
   

  	
  312-293-8348 – fax

  
	
   

  	
   

  	
  latanya.topps@harrisbank.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  700 Louisiana Street

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Mary Lou Allen

  
	
   

  	
   

  	
  713-546-9761 – phone

  
	
   

  	
   

  	
  713-223-4007 – fax

  
	
   

  	
   

  	
  marylou.allen@harrisnesbitt.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-16

 

NATEXIS BANQUE POPULAIRES

 

Pro Rata Share: 5%

 

 

	
  Lending Installation:

  	
   

  	
  333 Clay Street

  
	
   

  	
   

  	
  Suite 4340

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  333 Clay Street

  
	
   

  	
   

  	
  Suite 4340

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: Tanya McAllister

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  cc:

  	
   

  	
  1251 Avenue of the Americas

  
	
   

  	
   

  	
  34th Floor

  
	
   

  	
   

  	
  New York, New York 10020

  
	
   

  	
   

  	
  Attention: Samantha Tang

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  
				

 

S2-17

 

COMPASS BANK

 

Pro Rata Share: 5%

 

 

	
  Lending Installation:

  	
   

  	
  24 Greenway Plaza

  
	
   

  	
   

  	
  Suite 1400A

  
	
   

  	
   

  	
  Houston, Texas 77046

  
	
   

  	
   

  	
  Attention: Stacey R. Box

  
	
   

  	
   

  	
  713-993-8580 – phone

  
	
   

  	
   

  	
  713-968-8292 – fax

  
	
   

  	
   

  	
  stacey.box@compassbnk.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  999 18th Street, Suite 2800

  
	
   

  	
   

  	
  Denver, Colorado 80202

  
	
   

  	
   

  	
  Attention: John Falbo

  
	
   

  	
   

  	
  303-217-2227 – phone

  
	
   

  	
   

  	
  303-217-2280 – fax

  
	
   

  	
   

  	
  john.falbo@compassbnk.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-18

 

CITICORP NORTH AMERICA, INC.

 

Pro Rata Share: 5%

 

 

	
  Lending Installation:

  	
   

  	
  One Penn’s Way

  
	
   

  	
   

  	
  New Castle, Delaware 19720

  
	
   

  	
   

  	
  Attention: Dennis Banfield

  
	
   

  	
   

  	
  302-894-6109 – phone

  
	
   

  	
   

  	
  212-994-0847 – fax

  
	
   

  	
   

  	
  dennisl.banfield@citigroup.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Address for Notices:

  	
   

  	
  333 Clay Street, Suite 3700

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attention: John Miller

  
	
   

  	
   

  	
  713-654-2911 – phone

  
	
   

  	
   

  	
  713-654-2849 – fax

  
	
   

  	
   

  	
  john.miller@citigroup.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Commitment as of June 13, 2005:

  	
   

  	
  $25,000,000

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Face Amount of Note:

  	
   

  	
  $50,000,000

  

 

S2-19

 

SCHEDULE 3

DISCLOSURE SCHEDULE

 

Section 5.7
Litigation and Contingent Obligations

 

No legal proceedings are
pending the outcome of which management believes will have a material adverse
effect.

 

Section 5.8
Subsidiaries

 

Jurisdiction of organization,
percentage owned by Borrower or other subsidiary, and indication of Material
Subsidiaries:

 

Cimarex Energy Co. Subsidiaries:

 

	
   

  	
   

  	
  % Owned

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Directly or

  	
   

  	
  Jurisdiction of

  	
   

  	
  Material

  	
   

  
	
   

  	
   

  	
  Indirectly

  	
   

  	
  Organization

  	
   

  	
  Subsidiary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brock Gas
  Systems & Equipment, Inc.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  Energy Services, Inc.

  	
   

  	
  100

  	
  %

  	
  Oklahoma

  	
   

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  California Pipeline LLC

  	
   

  	
  100

  	
  %

  	
  Colorado

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  Texas LLC

  	
   

  	
  100

  	
  %

  	
  Colorado

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Cimarex
  Texas L.P.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Columbus
  Energy Corp.

  	
   

  	
  100

  	
  %

  	
  Colorado

  	
   

  	
   

  	
  No

  	
   

  
	
  Columbus
  Energy L.P.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
  Columbus Gas
  Services, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  No

  	
   

  
	
  Columbus
  Texas, Inc.

  	
   

  	
  100

  	
  %

  	
  Nevada

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key
  Production Company, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Key Texas
  LLC

  	
   

  	
  100

  	
  %

  	
  Colorado

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Key
  Production Texas L.P.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  Yes

  	
   

  

 

S3-1

 

 

	
   

  	
   

  	
  % Owned

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Directly or

  	
   

  	
  Jurisdiction of

  	
   

  	
  Material

  	
   

  
	
   

  	
   

  	
  Indirectly

  	
   

  	
  Organization

  	
   

  	
  Subsidiary

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canvasback
  Energy, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  No

  	
   

  
	
  Redhead
  Energy, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  No

  	
   

  
	
  Metrix
  Networks, Inc.

  	
   

  	
  80

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Gruy
  Petroleum Management Co.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Magnum
  Hunter Production, Inc.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  Yes

  	
   

  
	
  ConMag
  Energy Corporation

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
  Trapmar
  Properties, Inc.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hunter Gas
  Gathering, Inc.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Hunter
  Resources, Inc.

  	
   

  	
  100

  	
  %

  	
  Deleware

  	
   

  	
   

  	
  No

  	
   

  
	
  Midland
  Hunter Petroleum LLC

  	
   

  	
  100

  	
  %

  	
  Wyoming

  	
   

  	
   

  	
  No

  	
   

  
	
  Inesco
  Corporation

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Pintail
  Energy, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Oklahoma Gas
  Processing, Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  No

  	
   

  
	
  Prize
  Operating Co.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  Yes

  	
   

  
	
  Prize Energy
  Resources, LP.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  Yes

  	
   

  
	
  PEC
  (Deleware), Inc.

  	
   

  	
  100

  	
  %

  	
  Delaware

  	
   

  	
   

  	
  Yes

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SPL Gas
  Marketing, Inc.

  	
   

  	
  100

  	
  %

  	
  Texas

  	
   

  	
   

  	
  No

  	
   

  

 

S3-2

 

Section 5.9 ERISA

 

None

 

Section 7.2
Indebtedness

 

Guarantees
from Magnum Hunter Resources, Inc.:

 

Magnum Hunter Resources, Inc.
guarantee dated February 18, 2005 in favor of Societe Generale in the
amount of $20,600,000 or replacement guarantee from Cimarex Energy Co. Securing
the $20,600,000 Construction Loan between Apple Tree Holdings, LLC and Societe
Generale

 

Magnum Hunter Resource, Inc.
unlimited guarantee dated December 20, 2004 or replacement guarantee from
Cimarex Energy Co. in favor of Compass Bank. Securing the $500,000 Loan
Agreement between Metrix Networks, Inc. and Compass Bank.

 

Magnum Hunter Resources, Inc.
guarantee dated December 28, 2001 or replacement guarantee from Cimarex Energy
Co. in favor of General Electric Capital Corporation. Guaranteeing performance
under the Capital Lease dated January 3, 2002

 

Capital Lease
- Dated January 3, 2002

Lessor:
General Electric Capital Corporation

Lessee: Magnum
Hunter Production, Inc. guaranteed by Magnum Hunter Resources, Inc.

Equipment:
Platform A, South Timbalier Block 266, Platform A, Main Pass Block 164

Principal/payoff
balance as of June 2005:   $3,622,400

 

S3-3

 

Section 7.5
Investments and Acquisitions

 

	
   

  	
   

  	
  % Owned

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Directly or

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Indirectly

  	
   

  	
  Net Investment

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  (in millions)

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Canvasback
  Energy, Inc.

  	
   

  	
  100

  	
  %

  	
  $

  	
  11.6

  	
   

  
	
  Mallard
  Hunter, LP

  	
   

  	
  1

  	
  %

  	
  0.2

  	
   

  
	
  Teal Hunter,
  LP

  	
   

  	
  5

  	
  %

  	
  1.9

  	
   

  
	
  Appletree
  Holdings, LLC (a)

  	
   

  	
  40

  	
  %

  	
  5.4

  	
   

  
	
  Magnum
  Hunter Resources, Inc. Guarantee

  	
   

  	
   

  	
   

  	
  20.6

  	
   

  
	
  Metrix
  Networks

  	
   

  	
  80

  	
  %

  	
  1.6

  	
   

  
	
  Old River
  Gas Pipeline, LLC

  	
   

  	
  50

  	
  %

  	
  2.1

  	
   

  
							

 

(a) Magnum Hunter
Production on November 12, 1994 purchased an aggregate undivided 40%
interest in an oil and gas exploration and development project operated by
Manzano, LLC known as the La Veta Project, in Huerfano County, Colorado.  The participants in the Project exchanged
their Project assets for units of ownership of Apple Tree Holdings, LLC. Additionally,
as described on as part of section 7.2
Indebtedness Magnum Hunter Resources, Inc. guaranteed a
$20,600,000 Construction Loan between Apple Tree Holdings, LLC and Societe
Generale.

 

S3-4

 

SCHEDULE 4

EXISTING FINANCIAL CONTRACTS

 

SUMMARY
OF HEDGES:

 

	
  Counter

  	
   

  	
  Contract

  	
   

  	
  Contract

  	
   

  	
  Daily

  	
   

  	
  Hedge

  	
   

  	
   

  	
   

  
	
  Party

  	
   

  	
  Date

  	
   

  	
  Term

  	
   

  	
  Volume

  	
   

  	
  Price

  	
   

  	
  Type

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Natural Gas

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Mmbtu

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
  Deutsche
  Bank AG

  	
   

  	
  10/9/2003

  	
   

  	
  1/05-12/05

  	
   

  	
  40,000

  	
   

  	
  4.00 / 6.25

  	
   

  	
  Collar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Barclays
  Bank PLC

  	
   

  	
  1/6/2004

  	
   

  	
  1/05-12/05

  	
   

  	
  10,000

  	
   

  	
  4.25 / 6.60

  	
   

  	
  Collar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  Montreal

  	
   

  	
  6/17/2004

  	
   

  	
  1/06-12/06

  	
   

  	
  20,000

  	
   

  	
  5.25 / 6.30

  	
   

  	
  Collar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Bank of
  Montreal

  	
   

  	
  6/17/2004

  	
   

  	
  1/05-12/05

  	
   

  	
  20,000

  	
   

  	
  6.2525

  	
   

  	
  Swap

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP Paribas

  	
   

  	
  9/22/2004

  	
   

  	
  1/05-12/05

  	
   

  	
  10,000

  	
   

  	
  5.00 / 9.50

  	
   

  	
  Collar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Crude Oil

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  (Bbl

  	
  )

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP Paribas

  	
   

  	
  6/17/2004

  	
   

  	
  1/06-12/06

  	
   

  	
  1,000

  	
   

  	
  30.00 /
  35.85

  	
   

  	
  Collar

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BNP Paribas

  	
   

  	
  6/17/2004

  	
   

  	
  1/05-12/05

  	
   

  	
  1,000

  	
   

  	
  34.90

  	
   

  	
  Swap

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Societe
  Generale

  	
   

  	
  8/19/2004

  	
   

  	
  1/05-12/05

  	
   

  	
  1,000

  	
   

  	
  35.00 /
  55.00

  	
   

  	
  Collar

  	
   

  

 

S4-1

 

EXHIBIT A

NOTE

 

	
  $                    

  	
   

  	
                 ,
  20   

  

 

Cimarex Energy Co., a Delaware corporation
(the “Borrower”), promises
to pay to the order of
                                                          (the “Lender”)
the principal sum of                                                 
Dollars ($                   )
or, if greater or less, the aggregate unpaid principal amount of all Loans made
by the Lender to the Borrower pursuant to Article II of the Agreement (as
hereinafter defined), in immediately available funds at the main office of
JPMorgan Chase Bank, N.A. in Chicago, Illinois, as Administrative Agent,
together with interest on the unpaid principal amount hereof at the rates and
on the dates set forth in the Agreement. The Borrower shall pay the principal
of and accrued and unpaid interest on the Loans in full on the Facility
Termination Date.

 

The Lender shall, and is hereby authorized
to, record on the schedule attached hereto, or to otherwise record in
accordance with its usual practice, the date and amount of each Loan and the
date and amount of each principal payment hereunder.

 

This Note is one of the Notes issued pursuant
to, and is entitled to the benefits of, the Amended and Restated Credit
Agreement dated as of June 13, 2005 (which, as it may be amended or
modified and in effect from time to time, is herein called the “Agreement”), among the Borrower, the
lenders party thereto, including the Lender, the LC Issuer and JPMorgan Chase
Bank, N.A., as Administrative Agent, to which Agreement reference is hereby
made for a statement of the terms and conditions governing this Note, including
the terms and conditions under which this Note may be prepaid or its maturity
date accelerated. This Note is secured pursuant to the Collateral Documents and
guaranteed pursuant to the Guaranty, all as more specifically described in the
Agreement, and reference is made thereto for a statement of the terms and
provisions thereof. Capitalized terms used herein and not otherwise defined
herein are used with the meanings attributed to them in the Agreement. [This Note is given in partial renewal, extension and
restatement of (but not in extinguishment or novation of) the Existing
Indebtedness, as defined and described in the Agreement.]

 

 

	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

A-1

 

SCHEDULE OF
LOANS AND PAYMENTS OF PRINCIPAL

TO

NOTE
OF CIMAREX ENERGY CO.,

DATED
JUNE 13, 2005

 

	
  Date

  	
   

  	
  Principal

  Amount of

  Loan

  	
   

  	
  Maturity

  of Interest

  Period

  	
   

  	
  Principal

  Amount

  Paid

  	
   

  	
  Unpaid

  Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-2

 

EXHIBIT B

COMPLIANCE CERTIFICATE

 

To:                              The
Lenders parties to the

 

Credit Agreement Described Below

 

This Compliance Certificate is furnished
pursuant to that certain Amended and Restated Credit Agreement dated as of June 13,
2005 (as amended, modified, renewed or extended from time to time, the “Credit Agreement”) among Cimarex Energy
Co., a Delaware corporation (the “Borrower”),
the lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative
Agent for the Lenders and as LC Issuer. Unless otherwise defined herein,
capitalized terms used in this Compliance Certificate have the meanings
ascribed thereto in the Credit Agreement.

 

THE UNDERSIGNED HEREBY CERTIFIES THAT:

 

1. I am the duly elected                                        
of the Borrower;

 

2. I have reviewed the terms of the Credit
Agreement and I have made, or have caused to be made under my supervision, a
detailed review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached financial
statements.

 

3. The examinations described in paragraph 2
did not disclose, and I have no knowledge of, the existence of any condition or
event which constitutes a Default or Unmatured Default during or at the end of
the accounting period covered by the attached financial statements or as of the
date of this Certificate, except as set forth below.

 

4. Schedule I attached hereto sets forth
financial data and computations evidencing the Borrower’s compliance with
certain covenants of the Credit Agreement, all of which data and computations
are true, complete and correct.

 

**[5.    Schedule II
attached hereto sets forth the various reports and deliveries which are
required at this time under the Credit Agreement, the Security Agreement and
the other Loan Documents and the status of compliance.]**

 

Described below are the exceptions, if any,
to paragraph 3 by listing, in detail, the nature of the condition or event, the
period during which it has existed and the action which the Borrower has taken,
is taking, or proposes to take with respect to each such condition or event:

 

B-1

 

 

 

The foregoing certifications, together with
the computations set forth in Schedule I **[and Schedule II]** hereto
and the financial statements delivered with this Certificate in support hereof,
are made and delivered this              
day of                                              ,           .

 

	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

B-2

 

SCHEDULE I
TO COMPLIANCE CERTIFICATE

Compliance as of                 ,
       with

Provisions of Section 8.1
and 8.2 of

the Credit Agreement

 

B-3

 

SCHEDULE II
TO COMPLIANCE CERTIFICATE

Reports and Deliveries
Currently Due

 

B-4

 

EXHIBIT C

ASSIGNMENT AND ASSUMPTION AGREEMENT

 

This Assignment and Assumption (the “Assignment and Assumption”) is dated as
of the Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used but
not defined herein shall have the meanings given to them in the Amended and
Restated Credit Agreement identified below (as amended, the “Credit Agreement”), receipt of a copy
of which is hereby acknowledged by the Assignee. The Terms and Conditions set
forth in Annex 1 attached hereto are hereby agreed to and incorporated
herein by reference and made a part of this Assignment and Assumption as if set
forth herein in full.

 

The Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the Assignor, an
interest in and to the Assignor’s rights and obligations under the Credit
Agreement and the other Loan Documents, such that after giving effect to such
assignment the Assignee shall have purchased pursuant to this Assignment
Agreement the percentage interest specified in Item 3 of Schedule 1
of all outstanding rights and obligations under the Credit Agreement and the
other Loan Documents relating to the facilities listed in Item 3 of Schedule 1
(the “Assigned Interest”). The
aggregate Commitment (or Outstanding Credit Exposure, if the applicable
Commitment has been terminated) purchased by the Assignee hereunder is set
forth in Item 4 of Schedule 1.

 

In consideration for the sale and assignment
of Outstanding Credit Exposure hereunder, the Assignee shall pay the Assignor,
on the Effective Date, the amount agreed to by the Assignor and the Assignee. On
and after the Effective Date, the Assignee shall be entitled to receive all
payments of principal, interest, Reimbursement Obligations and fees with
respect to the interest assigned hereby. The Assignee will promptly remit to
the Assignor any interest on Loans and fees received from the Administrative
Agent which relate to the portion of the Commitment or Outstanding Credit Exposure
assigned to the Assignee hereunder and not previously paid by the Assignee to
the Assignor. In the event that either party hereto receives any payment to
which the other party hereto is entitled under this Assignment Agreement, then
the party receiving such amount shall promptly remit it to the other party
hereto.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
                                            [and
  is an Affiliate/Approved Fund of [identify
  Lender](1)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower:

  	
   

  	
  Cimarex
  Energy Co.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative
  Agent:

  	
   

  	
  JPMorgan
  Chase Bank, N.A., as the administrative agent under the Credit Agreement.

  

 

(1)                                  Select
as applicable.

 

C-1

 

	
  5.

  	
   

  	
  Credit
  Agreement:

  	
   

  	
  The
  $1,000,000,000 Amended and Restated Credit Agreement dated as of June 13,
  2005, among Cimarex Energy Co., the Lenders party thereto, JPMorgan Chase
  Bank, N.A., as Administrative Agent, and the other agents party thereto.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Assigned
  Interest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  a.

  	
  Assignee’s percentage interest of credit
  facility purchased under the Assignment Agreement

  	
   

  	
   

  	
         %

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  b.

  	
  Amount of credit facility purchased under
  the Assignment Agreement

  	
   

  	
   

  	
  $      

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  c.

  	
  Assignee’s Commitment (or Outstanding
  Credit Exposure with respect to terminated Commitments) purchased hereunder:

  	
   

  	
   

  	
  $    

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Trade Date:

  	
   

  	
   

  	
                                 (2)

  
							

 

 

Effective Date:                           ,
20    [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE
THE EFFECTIVE DATE OF RECORDATION OF TRANSFER BY THE ADMINISTRATIVE AGENT.]

 

[Signature Page Follows]

 

(2)          Insert if satisfaction of minimum amounts is
to be determined as of the Trade Date.

 

C-2

 

The terms set forth in this Assignment and
Assumption are hereby agreed to:

 

	
   

  	
  ASSIGNOR

  
	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  ASSIGNEE

  
	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
					

 

[Consented to and](3) Accepted:

JPMORGAN CHASE BANK, N.A., as Administrative Agent

 

	
  By:

  	
   

  	
   

  
	
  Title:(4)

  
	
  [Consented to:]

  

 

 

	
  [NAME OF RELEVANT PARTY]

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Title:

  

 

(3)          To be added only if the consent of the Agent
is required by the terms of the Credit Agreement

 

(4)          To be added only if the consent of the
Borrower and/or other parties (e.g. L/C Issuer) is required by the terms of the
Credit Agreement.

 

C-3

 

ANNEX
1

TERMS
AND CONDITIONS FOR

ASSIGNMENT
AND ASSUMPTION

 

1.                                       Representations
and Warranties.

 

1.1                                 Assignor. The
Assignor represents and warrants that (i) it is the legal and beneficial
owner of the Assigned Interest, (ii) the Assigned Interest is free and
clear of any lien, encumbrance or other adverse claim and (iii) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby. Neither the Assignor nor any of its officers, directors,
employees, agents or attorneys shall be responsible for (i) any
statements, warranties or representations made in or in connection with the
Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency, perfection, priority,
collectibility, or value of the Loan Documents or any collateral thereunder, (iii) the
financial condition of the Borrower, any of its Subsidiaries or Affiliates or
any other Person obligated in respect of any Loan Document, (iv) the
performance or observance by the Borrower, any of its Subsidiaries or
Affiliates or any other Person of any of their respective obligations under any
Loan Document, (v) inspecting any of the property, books or records of the
Borrower, or any guarantor, or (vi) any mistake, error of judgment, or
action taken or omitted to be taken in connection with the Loans or the Loan
Documents.

 

1.2                                 Assignee. The
Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this
Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Credit Agreement, (ii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest,
shall have the obligations of a Lender thereunder, (iii) agrees that its
payment instructions and notice instructions are as set forth in Schedule 1
to this Assignment and Assumption, (iv) confirms that none of the funds,
monies, assets or other consideration being used to make the purchase and
assumption hereunder are “plan assets” as defined under ERISA and that its
rights, benefits and interests in and under the Loan Documents will not be “plan
assets” under ERISA, (v) agrees to indemnify and hold the Assignor
harmless against all losses, costs and expenses (including, without limitation,
reasonable attorneys’ fees) and liabilities incurred by the Assignor in
connection with or arising in any manner from the Assignee’s non-performance of
the obligations assumed under this Assignment and Assumption, (vi) it has
received a copy of the Credit Agreement, together with copies of financial
statements and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this Assignment
and Assumption and to purchase the Assigned Interest on the basis of which it
has made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (vii) attached as Schedule 1
to this Assignment and Assumption is any documentation required to be delivered
by the Assignee with respect to its tax status pursuant to the terms of the
Credit Agreement, duly completed and executed by the Assignee and (b) agrees
that (i) it will, independently and without reliance on the Administrative
Agent, the Assignor or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with

 

C-4

 

their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Lender.

 

2.                                       Payments.
The Assignee shall pay the Assignor, on the Effective Date, the amount agreed
to by the Assignor and the Assignee. From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.                                       General
Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart
of this Assignment and Assumption. This Assignment and Assumption shall be
governed by, and construed in accordance with, the law of the State of
Colorado.

 

C-5

 

ADMINISTRATIVE
QUESTIONNAIRE

 

(Schedule to be supplied
by Closing Unit or Trading Documentation Unit)

 

(For Forms for Primary
Syndication call [to be
provided])

(For Forms after Primary
Syndication call [to be
provided])

 

C-6

 

US
AND NON-US TAX INFORMATION REPORTING REQUIREMENTS

 

(Schedule to be supplied
by Closing Unit or Trading Documentation Unit)

 

(For Forms for Primary
Syndication call [to be
provided])

(For Forms after Primary
Syndication call [to be
provided])

 

C-7

 

EXHIBIT D

OPINION

 

(to be
attached)

 

D-1

 

EXHIBIT E

GUARANTY

 

THIS GUARANTY (this “Guaranty”)
is made as of                                  ,
20    , by                                               ,
a                             
(the “Subsidiary Guarantor”)
in favor of the Administrative Agent, for the benefit of the Lenders, under the
Credit Agreement referred to below;

 

WITNESSETH:

 

WHEREAS, Cimarex Energy Co., a Delaware corporation (the “Principal”) and JPMorgan Chase Bank,
N.A., successor by merger to Bank One, NA (Main Office Chicago), a national
banking association, as Administrative Agent (the “Administrative Agent”), and certain
other Lenders and agents from time to time party thereto have entered into a
certain Amended and Restated Credit Agreement dated as of June 13, 2005
(as same may be amended or modified from time to time, the “Credit Agreement”), providing, subject
to the terms and conditions thereof, for extensions of credit to be made by the
Lenders to the Principal; and

 

WHEREAS, it is a condition precedent to the making of Credit Extensions
under the Credit Agreement that the Subsidiary Guarantor execute and deliver
this Guaranty whereby the Subsidiary Guarantor shall guarantee the payment when
due, subject to Section 9 hereof, of all Guaranteed Obligations, as defined
below; and

 

WHEREAS, in consideration of the financial and other support that the
Principal has provided, and such financial and other support as the Principal
may in the future provide, to the Subsidiary Guarantor, and in order to induce
the Lenders and the Administrative Agent to extend credit under the Credit
Agreement, and the Lenders and their Affiliates to enter into one or more Rate
Management Transactions with the Principal, and because the Subsidiary
Guarantor has determined that executing this Guaranty is in its interest and to
its financial benefit, the Subsidiary Guarantor is willing to guarantee the
obligations of the Principal under the Credit Agreement, any Note, any Rate
Management Transaction, and the other Loan Documents;

 

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION 1. Selected Terms
Used Herein.

 

“Guaranteed Obligations”
is defined in Section 3 below.

 

1.1                                 Terms in Credit Agreement. Other
capitalized terms used herein but not defined herein shall have the meaning set
forth in the Credit Agreement.

 

SECTION 2. Representations
and Warranties. The Subsidiary Guarantor represents and warrants
(which representations and warranties shall be deemed to have been renewed upon
each Borrowing Date under the Credit Agreement) that:

 

E-1

 

(a)                                  It
is a corporation, partnership or limited liability company duly and properly
incorporated or organized, as the case may be, validly existing and (to the
extent such concept applies to such entity) in good standing under the laws of
its jurisdiction of incorporation or organization and has all requisite authority
to conduct its business in each jurisdiction in which its business is
conducted.

 

(b)                                 It
has the power and authority and legal right to execute and deliver this
Guaranty and to perform its obligations hereunder. The execution and delivery
by it of this Guaranty and the performance of its obligations hereunder have
been duly authorized by proper corporate proceedings, and this Guaranty
constitutes a legal, valid and binding obligation of such Subsidiary Guarantor
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency or similar laws affecting the
enforcement of creditors’ rights generally.

 

(c)                                  Neither
the execution and delivery by it of this Guaranty, nor the consummation of the
transactions herein contemplated, nor compliance with the provisions hereof
will violate (i) any law, rule, regulation, order, writ, judgment,
injunction, decree or award binding on it or any of its subsidiaries or (ii) its
articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by laws, or operating or
other management agreement, as the case may be, or (iii) the provisions of
any indenture, instrument or agreement to which it or any of its subsidiaries
is a party or is subject, or by which it, or its Property, is bound, or
conflict with or constitute a default thereunder, or result in, or require, the
creation or imposition of any Lien in, of or on the Property of such Subsidiary
Guarantor or a subsidiary thereof pursuant to the terms of any such indenture,
instrument or agreement. No order, consent, adjudication, approval, license,
authorization, or validation of, or filing, recording or registration with, or
exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by it or any
of its subsidiaries, is required to be obtained by it or any of its
subsidiaries in connection with the execution and delivery of this Guaranty or
the performance by it of its obligations hereunder or the legality, validity,
binding effect or enforceability of this Guaranty.

 

2.2                                 Covenants. The Subsidiary Guarantor
covenants that, so long as (b) any Lender has any Commitment outstanding
under the Credit Agreement, (c) any Rate Management Transaction with one
or more Lenders or any affiliates of such Lenders remains in effect, or (d) any
of the Guaranteed Obligations shall remain unpaid, it will, and, if necessary,
will enable the Principal to, fully comply with those covenants and agreements
set forth in the Credit Agreement.

 

SECTION 3. The Guaranty.
Subject to Section 9 hereof, the Subsidiary Guarantor hereby absolutely
and unconditionally guarantees, as primary obligor and not as surety, the full
and punctual payment (whether at stated maturity, upon acceleration or early
termination or otherwise, and at all times thereafter) and performance of the
Secured Obligations, including without limitation any such Secured Obligations
incurred or accrued during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, whether or not allowed or allowable
in such proceeding (collectively, subject to the provisions of Section 9
hereof, being referred to collectively as the “Guaranteed Obligations”). Upon failure by the Principal to
pay punctually any such amount, the Subsidiary Guarantor agrees that it shall
forthwith on demand

 

E-2

 

pay to the Administrative Agent for the
benefit of the Lenders and, if applicable, their Affiliates, the amount not so
paid at the place and in the manner specified in the Credit Agreement, any
Note, any Rate Management Transaction or the relevant Loan Document, as the
case may be. This Guaranty is a guaranty of payment and not of collection. The
Subsidiary Guarantor waives any right to require the Lender to sue the
Principal, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations, or otherwise to enforce its payment against
any collateral securing all or any part of the Guaranteed Obligations.

 

SECTION 4. Guaranty
Unconditional. Subject to Section 9 hereof, the obligations
of the Subsidiary Guarantor hereunder shall be unconditional and absolute and,
without limiting the generality of the foregoing, shall not be released,
discharged or otherwise affected by:

 

(i)                                     any
extension, renewal, settlement, compromise, waiver or release in respect of any
of the Guaranteed Obligations, by operation of law or otherwise, or any
obligation of any other guarantor of any of the Guaranteed Obligations, or any
default, failure or delay, willful or otherwise, in the payment or performance
of the Guaranteed Obligations;

 

(ii)                                  any
modification or amendment of or supplement to the Credit Agreement, any Note,
any Rate Management Transaction or any other Loan Document;

 

(iii)                               any
release, non-perfection or invalidity of any direct or indirect security for
any obligation of the Principal under the Credit Agreement, any Note, any
Collateral Document, any Rate Management Transaction, any other Loan Document,
or any obligations of any other guarantor of any of the Guaranteed Obligations,
or any action or failure to act by the Administrative Agent, any Lender or any
Affiliate of any Lender with respect to any collateral securing all or any part
of the Guaranteed Obligations;

 

(iv)                              any
change in the corporate existence, structure or ownership of the Principal or
any other guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Principal,
or any other guarantor of the Guaranteed Obligations, or its assets or any
resulting release or discharge of any obligation of the Principal, or any other
guarantor of any of the Guaranteed Obligations;

 

(v)                                 the
existence of any claim, setoff or other rights which the Subsidiary Guarantor
may have at any time against the Principal, any other guarantor of any of the
Guaranteed Obligations, the Administrative Agent, any Lender or any other
Person, whether in connection herewith or any unrelated transactions;

 

(vi)                              any
invalidity or unenforceability relating to or against the Principal, or any
other guarantor of any of the Guaranteed Obligations, for any reason related to
the Credit Agreement, any Rate Management Transaction, any other Loan Document,
or any provision of applicable law or regulation purporting to prohibit the
payment by the Principal, or any other guarantor of the Guaranteed

 

E-3

 

Obligations, of the principal of or interest on any Note or any other
amount payable by the Principal under the Credit Agreement, any Note, any Rate
Management Transaction or any other Loan Document; or

 

(vii)                           any
other act or omission to act or delay of any kind by the Principal, any other
guarantor of the Guaranteed Obligations, the Administrative Agent, any Lender
or any other Person or any other circumstance whatsoever which might, but for
the provisions of this paragraph, constitute a legal or equitable discharge of
any Subsidiary Guarantor’s obligations hereunder.

 

SECTION 5. Discharge Only
Upon Payment In Full: Reinstatement In Certain Circumstances.  The Subsidiary Guarantor’s obligations
hereunder shall remain in full force and effect until all Guaranteed
Obligations shall have been indefeasibly paid in full, the Commitments under
the Credit Agreement shall have terminated or expired and all Rate Management
Transactions have terminated or expired. 
If at any time any payment of the principal of or interest on any Note
or any other amount payable by the Principal or any other party under the
Credit Agreement, any Rate Management Transaction or any other Loan Document is
rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Principal or otherwise, the Subsidiary
Guarantor’s obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.

 

SECTION 6. Waivers.  The Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and, to the fullest extent
permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any Person against the
Principal, any other guarantor of any of the Guaranteed Obligations, or any
other Person.

 

SECTION 7. Subrogation.  The Subsidiary Guarantor hereby agrees not to
assert any right, claim or cause of action, including, without limitation, a
claim for subrogation, reimbursement, indemnification or otherwise, against the
Principal arising out of or by reason of this Guaranty or the obligations
hereunder, including, without limitation, the payment or securing or purchasing
of any of the Guaranteed Obligations by the Subsidiary Guarantor unless and
until the Guaranteed Obligations are indefeasibly paid in full, any commitment
to lend under the Credit Agreement and any other Loan Documents is terminated
and all Rate Management Transactions have terminated or expired.

 

SECTION 8. Stay of
Acceleration.  If
acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of the Principal, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement, any Note, any Rate Management Transaction or any other Loan Document
shall nonetheless be payable by the Subsidiary Guarantor hereunder forthwith on
demand by the Administrative Agent made at the request of the Required Lenders.

 

SECTION 9. Limitation on
Obligations.

 

(a)                                  The
provisions of this Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any state, federal or foreign bankruptcy,
insolvency,

 

E-4

 

reorganization or other law affecting the
rights of creditors generally, if the obligations of the Subsidiary Guarantor
under this Guaranty would otherwise be held or determined to be avoidable,
invalid or unenforceable on account of the amount of the Subsidiary Guarantor’s
liability under this Guaranty, then, notwithstanding any other provision of
this Guaranty to the contrary, the amount of such liability shall, without any
further action by the Subsidiary Guarantor, the Administrative Agent or any Lender,
be automatically limited and reduced to the highest amount that is valid and
enforceable as determined in such action or proceeding (such highest amount
determined hereunder being the Subsidiary Guarantor’s “Maximum Liability”). This Section 9(a) with
respect to the Maximum Liability of the Subsidiary Guarantor is intended solely
to preserve the rights of the Administrative Agent hereunder to the maximum
extent not subject to avoidance under applicable law, and neither the
Subsidiary Guarantor nor any other person or entity shall have any right or
claim under this Section 9(a) with respect to the Maximum Liability,
except to the extent necessary so that the obligations of the Subsidiary
Guarantor hereunder shall not be rendered voidable under applicable law.

 

(b)                                 The
Subsidiary Guarantor agrees that the Guaranteed Obligations may at any time and
from time to time exceed the Maximum Liability of the Subsidiary Guarantor
without impairing this Guaranty or affecting the rights and remedies of the
Administrative Agent hereunder. Nothing in this Section 9(b) shall be
construed to increase the Subsidiary Guarantor’s obligations hereunder beyond
its Maximum Liability.

 

(c)                                  In
the event the Subsidiary Guarantor (a “Paying
Subsidiary Guarantor”) shall make any payment or payments under
this Guaranty or shall suffer any loss as a result of any realization upon any
collateral granted by it to secure its obligations under this Guaranty, each
other Guarantor, as applicable (each a “Non-Paying
Subsidiary Guarantor”), shall contribute to such Paying
Subsidiary Guarantor an amount equal to such Non-Paying Subsidiary Guarantor’s “Pro
Rata Share” of such payment or payments made, or losses suffered, by such
Paying Subsidiary Guarantor.  For the
purposes hereof, each Non-Paying Subsidiary Guarantor’s “Pro Rata Share” with respect to any
such payment or loss by a Paying Subsidiary Guarantor shall be determined as of
the date on which such payment or loss was made by reference to the ratio of (i) such
Non-Paying Subsidiary Guarantor’s Maximum Liability as of such date (without
giving effect to any right to receive, or obligation to make, any contribution
hereunder) or, if such Non-Paying Subsidiary Guarantor’s Maximum Liability has
not been determined, the aggregate amount of all monies received by such
Non-Paying Subsidiary Guarantor from the Principal after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the
aggregate Maximum Liability of the Subsidiary Guarantor hereunder as of such
date (without giving effect to any right to receive, or obligation to make, any
contribution hereunder), or to the extent that a Maximum Liability has not been
determined for the Subsidiary Guarantor, the aggregate amount of all monies
received by such Subsidiary Guarantor from the Principal after the date hereof
(whether by loan, capital infusion or by other means).  Nothing in this Section 9(c) shall
affect the Subsidiary Guarantor’s liability for the entire amount of the
Guaranteed Obligations (up to such Subsidiary Guarantor’s Maximum
Liability).  The Subsidiary Guarantor
covenants and agrees that its right to receive any contribution under this
Guaranty from a Non-Paying Subsidiary Guarantor shall be subordinate and junior
in right of payment to all the Guaranteed Obligations.  The provisions of this Section 9(c) are
for the benefit of both the Administrative Agent and the Subsidiary Guarantor
and may be enforced by any one, or more, or all of them in accordance with the
terms hereof.

 

E-5

 

SECTION 10. Application of
Payments.  All payments
received by the Administrative Agent hereunder shall be applied by the
Administrative Agent to payment of the Guaranteed Obligations in the following
order unless a court of competent jurisdiction shall otherwise direct:

 

(a)                                  FIRST,
to payment of all costs and expenses of the Administrative Agent incurred in
connection with the collection and enforcement of the Guaranteed Obligations or
of any security interest granted to the Administrative Agent in connection with
any collateral securing the Guaranteed Obligations;

 

(b)                                 SECOND,
to payment of that portion of the Guaranteed Obligations constituting accrued
and unpaid interest and fees, pro rata among the Lenders and their Affiliates
in accordance with the amount of such accrued and unpaid interest and fees
owing to each of them;

 

(c)                                  THIRD,
to payment of the principal of the Guaranteed Obligations and the net early
termination payments and any other Rate Management Obligations then due and unpaid
from the Borrower to any of the Lenders or their Affiliates, pro rata among the
Lenders and their Affiliates in accordance with the amount of such principal
and such net early termination payments and other Rate Management Obligations
then due and unpaid owing to each of them; and

 

(d)                                 FOURTH,
to payment of any Guaranteed Obligations (other than those listed above) pro
rata among those parties to whom such Guaranteed Obligations are due in
accordance with the amounts owing to each of them.

 

SECTION 11. Notices.  All notices, requests and other
communications to any party hereunder shall be given or made by telecopier or
other writing and telecopied, or mailed or delivered to the intended recipient
at its address or telecopier number set forth on the signature pages hereof
or such other address or telecopy number as such party may hereafter specify
for such purpose by notice to the Administrative Agent in accordance with the
provisions of Article XVI of the Credit Agreement.  Except as otherwise provided in this
Guaranty, all such communications shall be deemed to have been duly given when
transmitted by telecopier, or personally delivered or, in the case of a mailed
notice sent by certified mail return-receipt requested, on the date set forth
on the receipt (provided, that any refusal to accept any such notice shall be
deemed to be notice thereof as of the time of any such refusal), in each case
given or addressed as aforesaid.

 

SECTION 12. No Waivers.  No failure or delay by the Administrative
Agent or any Lenders in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The
rights and remedies provided in this Guaranty, the Credit Agreement, any Note,
any Rate Management Transaction and the other Loan Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.

 

SECTION 13. No Duty to Advise.  The Subsidiary Guarantor assumes all
responsibility for being and keeping itself informed of the Principal’s
financial condition and assets, and of all other circumstances bearing upon the
risk of nonpayment of the Guaranteed Obligations and the

 

E-6

 

nature, scope and extent of the risks that
the Subsidiary Guarantor assumes and incurs under this Guaranty, and agrees
that neither the Administrative Agent nor any Lender has any duty to advise the
Subsidiary Guarantor of information known to it regarding those circumstances
or risks.

 

SECTION 14. Successors and
Assigns.  This Guaranty is
for the benefit of the Administrative Agent and the Lenders and their
respective successors and permitted assigns and in the event of an assignment
of any amounts payable under the Credit Agreement, any Note, any Rate
Management Transaction, or the other Loan Documents, the rights hereunder, to
the extent applicable to the indebtedness so assigned, shall be transferred
with such indebtedness. This Guaranty shall be binding upon the Subsidiary
Guarantor and its respective successors and permitted assigns.

 

SECTION 15. Changes in
Writing.  Neither this
Guaranty nor any provision hereof may be changed, waived, discharged or
terminated orally, but only in writing signed by the Subsidiary Guarantor and
the Administrative Agent.  In addition,
all such amendments and waivers shall be effective only if given with the
necessary approvals of Lenders as required in the Credit Agreement.

 

SECTION 16. Costs of
Enforcement.  The
Subsidiary Guarantor agrees to pay all costs and expenses including, without
limitation, all court costs and attorneys’ fees and expenses paid or incurred
by the Administrative Agent or any Lender or any Affiliate of any Lender in
endeavoring to collect all or any part of the Guaranteed Obligations from, or
in prosecuting any action against, the Principal, the Subsidiary Guarantor or
any other guarantor of all or any part of the Guaranteed Obligations.

 

SECTION 17. GOVERNING LAW;
SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.  THIS GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF COLORADO.  THE SUBSIDIARY GUARANTOR HEREBY SUBMITS TO
THE NONEXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR COLORADO STATE
COURT SITTING IN DENVER, COLORADO AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS GUARANTY (INCLUDING, WITHOUT LIMITATION, ANY
OF THE OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THE SUBSIDIARY GUARANTOR IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM MAY NOW
OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN
SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. 
THE SUBSIDIARY GUARANTOR, AND THE ADMINISTRATIVE AGENT AND THE LENDERS
ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

 

SECTION 18. Taxes. etc.  All payments required to be made by the
Subsidiary Guarantor hereunder shall be made without setoff or counterclaim and
free and clear of and

 

E-7

 

without deduction or withholding for or on
account of, any present or future taxes, levies, imposts, duties or other
charges of whatsoever nature imposed by any government or any political or
taxing authority thereof except to the extent prohibited by applicable law (but
excluding Excluded Taxes), provided, however, that if the Subsidiary Guarantor
is required by law to make such deduction or withholding, the Subsidiary
Guarantor shall forthwith (a) pay to the Administrative Agent or any
Lender, as applicable, such additional amount as results in the net amount
received by the Administrative Agent or any Lender, as applicable, equaling the
full amount which would have been received by the Administrative Agent or any Lender,
as applicable, had no such deduction or withholding been made, (b) pay the
full amount deducted to the relevant authority in accordance with applicable
law, and (c) furnish to the Administrative Agent or any Lender, as
applicable, certified copies of official receipts evidencing payment of such
withholding taxes within 30 days after such payment is made.

 

SECTION 19. Setoff.  Without limiting the rights of the
Administrative Agent or the Lenders under applicable law, if all or any part of
the Guaranteed Obligations is then due, whether pursuant to the occurrence of a
Default or otherwise, then the Guarantor authorizes the Administrative Agent
and the Lenders to apply any sums standing to the credit of the Guarantor with
the Administrative Agent or any Lender or any Lending Installation of the
Administrative Agent or any Lender toward the payment of the Guaranteed
Obligations.

 

[THE REMAINDER
OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

E-8

 

IN WITNESS WHEREOF, the Subsidiary Guarantor has caused this Guaranty
to be duly executed by its authorized officer as of the day and year first
above written.

 

	
  Address for Subsidiary Guarantor:

  	
                                                            ,
  a

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Attention:

  	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
  Telephone:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  
	
  Fax: 

  	
   

  	
   

  	
   

  	
   

  
								

 

 

ACKNOWLEDGED AND AGREED to

As of the date first written above:

JPMORGAN CHASE BANK, N.A.,
Administrative Agent

	
  By:

  	
   

  	
   

  
	
   

  	
  J. Scott
  Fowler,

  
	
   

  	
  Vice
  President

  

 

E-9

 

EXHIBIT F

FORM OF AMENDMENT FOR AN INCREASED OR NEW COMMITMENT

 

This AMENDMENT is made as of the           
day of                     ,
200   by and among Cimarex Energy Co., a Delaware corporation (the “Borrower”), JPMorgan Chase Bank, N.A.,
as administrative agent under the “Credit
Agreement” (as defined below) (the “Administrative Agent”), and                                                   
(the “Supplemental Lender”).

 

The Borrower, the Administrative Agent and
certain other Lenders, as described therein, are parties to an Amended and
Restated Credit Agreement dated as of June 13, 2005 (as amended,
supplemented, or restated, the “Credit
Agreement”).  All terms
used herein and not otherwise defined shall have the same meaning given to them
in the Credit Agreement.

 

Pursuant to Section 15.6 of the Credit
Agreement, the Borrower has the right to increase the Aggregate Commitment by
obtaining additional Commitments upon satisfaction of certain conditions.  This Amendment requires only the signature of
the Borrower, the Administrative Agent and the Supplemental Lender so long as
the Aggregate Commitment is not increased above the amount permitted by the
Credit Agreement.

 

The Supplemental Lender is either (a) an
existing Lender which is increasing its Commitment or (b) a new Lender
which is a lending institution whose identity the Administrative Agent will
approve by its signature below.

 

In consideration of the foregoing, such
Supplemental Lender, from and after the date hereof shall have a  **[Commitment of $                              
and if it is a new Lender, the Supplemental Lender hereby assumes all of
the rights and obligations of a Lender under the Credit Agreement.]**

 

The Borrower has executed and delivered to
the Supplemental Lender as of the date hereof, if requested by the Supplemental
Lender, a new or amended and restated Note in the form attached to the Credit
Agreement as Exhibit A to evidence the new or increased Commitment of the
Supplemental Lender.

 

[Signature Page Follows]

 

F-1

 

IN WITNESS WHEREOF, the Administrative Agent,
the Borrower and the Supplemental Lender have executed this Amendment as of the
date shown above.

 

	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [SUPPLEMENTAL LENDER]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  JPMORGAN CHASE BANK, N.A., as

  Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
									

 

F-2

 

EXHIBIT G-1

FORM OF
PLEDGE AGREEMENT (CORPORATION)

 

THIS PLEDGE AGREEMENT (CORPORATION) (this “Agreement”) is made as of                                           ,
20      , by                                                           ,
a                                                                 
(herein called “Debtor”),
in favor of JPMorgan Chase Bank, N.A., a national banking association, in its
capacity as Administrative Agent for the lenders party to the Credit Agreement
referred to below (herein called “Secured
Party”).

 

RECITALS:

 

1.                                       Cimarex
Energy Co., a Delaware corporation (“Borrower”),
has executed in favor of Lenders (as such term is defined below) those certain
promissory notes dated June 13, 2005, payable to the order of Lenders in
the aggregate original principal amount of $1,000,000,000 (such promissory
notes, as from time to time amended, and all promissory notes given in
substitution, renewal or extension therefor or thereof, in whole or in part,
being herein collectively called the “Note”).

 

2.                                       The
Note was executed pursuant to an Amended and Restated Credit Agreement dated as
of June 13, 2005 (herein, as from time to time amended, supplemented or
restated, called the “Credit Agreement”),
by and between Borrower, Secured Party, and Lenders, pursuant to which Lenders
have agreed to advance funds to Debtor under the Note.

 

3.                                       Pursuant
to the Credit Agreement, Debtor is providing a guaranty of all of the
indebtedness of Borrower under the Credit Agreement and the Note pursuant to a
Subsidiary Guaranty of even date herewith (herein, as from time to time
amended, supplemented or restated, called the “Guaranty”), by Debtor and certain other Subsidiary
Guarantors party thereto in favor of Secured Party for the benefit of the
Lenders.

 

4.                                       It
is a condition precedent to Lenders obligation to advance funds pursuant to the
Credit Agreement that Debtor shall execute and deliver this Agreement to
Secured Party.

 

5.                                       Borrower
owns directly one hundred percent (100%) of the issued and outstanding shares
of common stock of Debtor.

 

6.                                       Borrower,
Debtor, and the other direct and indirect subsidiaries of Borrower are mutually
dependent on each other in the conduct of their respective businesses under a
holding company structure, 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 others for their mutual benefit and the
ability of each to obtain such financing being dependent on the successful
operations of the others.

 

7.                                       The
board of directors of Debtor has determined that Debtor’s execution, delivery
and performance of this Agreement may reasonably be expected to benefit Debtor,
directly or indirectly, and are in the best interests of Debtor.

 

G-1-1

 

NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor from Lenders’ extensions of credit under the Credit
Agreement, and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order
to induce Lenders to extend credit under the Credit Agreement, Debtor hereby
agrees with Secured Party for the benefit of each Lender as follows:

 

AGREEMENTS

 

ARTICLE I
- Definitions and References

 

Section 1.1.                                   General Definitions.  As used herein, the terms “Agreement”, “Debtor”, “Secured Party”, “Note”,
“Guaranty”, “Borrower”, and “Credit Agreement” shall have the
meanings indicated above, and the following terms shall have the following
meanings:

 

“Collateral” means
all property, of whatever type, which is described in Section 2.1 as being
at any time subject to a security interest granted hereunder to Secured Party.

 

“Commitment” means
the agreement or commitment by Lenders to make loans or otherwise extend credit
to Borrower under the Credit Agreement, and any other agreement, commitment,
statement of terms or other document contemplating the making of loans or
advances or other extension of credit by Lenders to or for the account of
Borrower which is now or at any time hereafter intended to be secured by the
Collateral under this Agreement.

 

“Control” shall
have the meaning set forth in Article 8 or, if applicable, in Section 9-104,
9-105, 9-106 or 9-107 of Article 9 of the UCC.

 

“Issuer” means any
issuer of Pledged Shares and any successor of such Issuer.

 

“Lenders” means the
lenders party to the Credit Agreement and their successors and assigns.

 

“Obligation Documents”
means the Credit Agreement, the Guaranty, all other Loan Documents, all documents
evidencing Rate Management Transactions with one or more Lenders or any
affiliates of such Lenders, and all other documents and instruments under, by
reason of which, or pursuant to which any or all of the Secured Obligations are
evidenced, governed, secured, guarantied, or otherwise dealt with, and all
other agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

 

“Other Liable Party”
means any Person, other than Debtor, but including Borrower, who may now or may
at any time hereafter be primarily or secondarily liable for any of the Secured
Obligations or who may now or may at any time hereafter have granted to Secured
Party or Lenders a Lien upon any property as security for the Secured
Obligations.

 

“Pledged Shares”
has the meaning given it in Section 2.1(a).

 

“UCC” means the
Colorado Uniform Commercial Code as in effect from time to time.

 

G-1-2

 

Section 1.2.                                   Incorporation of Other Definitions.  Reference is hereby made to the Credit
Agreement for a statement of the terms thereof. 
All capitalized terms used in this Agreement which are defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
herein as set forth therein.  All terms
used in this Agreement which are defined in the UCC and not otherwise defined
herein or in the Credit Agreement shall have the same meanings herein as set
forth therein, except where the context otherwise requires.  The parties intend that the terms used herein
which are defined in the UCC have, at all times, the broadest and most
inclusive meanings possible. 
Accordingly, if the UCC shall in the future be amended or held by a
court to define any term used herein more broadly or inclusively than the UCC
in effect on the date hereof, then such term, as used herein, shall be given
such broadened meaning.  If the UCC shall
in the future be amended or held by a court to define any term used herein more
narrowly, or less inclusively, than the UCC in effect on the date hereof, such
amendment or holding shall be disregarded in defining terms used herein.

 

Section 1.3.                                   Attachments.  All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.

 

Section 1.4.                                   Amendment of Defined Instruments.  Unless the context otherwise requires or
unless otherwise provided herein, references in this Agreement to a particular
agreement, instrument or document (including, but not limited to, references in
Section 2.1) also refer to and include all renewals, extensions,
amendments, modifications, supplements or restatements of any such agreement,
instrument or document, provided that nothing contained in this Section shall
be construed to authorize any Person to execute or enter into any such renewal,
extension, amendment, modification, supplement or restatement.

 

Section 1.5.                                   References and Titles.  All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise.  Titles
appearing at the beginning of any subdivision are for convenience only and do
not constitute any part of any such subdivision and shall be disregarded in
construing the language contained in this Agreement.  The words “this Agreement”, “herein”,
“hereof”, “hereby”, “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.  The phrases “this Section” and “this subsection” and
similar phrases refer only to the Sections or subsections hereof in which the
phrase occurs.  The word “or” is not exclusive, and the word “including” (in all of its forms) means “including without limitation”.  Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.

 

ARTICLE II
- Security Interest

 

Section 2.1.                                   Grant of Security Interest.  As collateral security for all of the Secured
Obligations, Debtor hereby pledges and assigns to Secured Party and grants to
Secured Party a continuing security interest, for the benefit of each Lender,
in and to all right, title and interest of the following:

 

G-1-3

 

(a)                                  Pledged Shares.  All of the following, whether now or
hereafter existing, which are owned by Debtor or in which Debtor otherwise has
any rights: all shares of stock of each Subsidiary of Debtor described on Exhibit A
hereto, all certificates representing any such shares, all options and other
rights, contractual or otherwise, at any time existing with respect to such
shares, and all dividends, cash, instruments and other property now or
hereafter received, receivable or otherwise distributed in respect of or in
exchange for any or all of such shares (any and all such shares, certificates,
options, rights, dividends, cash, instruments and other property being herein
called the “Pledged Shares”).

 

(b)                                 Proceeds.  All proceeds of any and all of the foregoing
Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether
Debtor’s ownership or other rights therein are presently held or hereafter
acquired and however Debtor’s interests therein may arise or appear (whether by
ownership, security interest, claim or otherwise).

 

Section 2.2.                                   Secured Obligations Secured.  The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred or arising:

 

(a)                                  Secured Obligations.  The payment by Borrower, as and when due and
payable, of the Secured Obligations, the due performance by Borrower of all of
its other obligations under or in respect of the various Obligation Documents,
the payment by Debtor, as and when due and payable, of all amounts from time to
time owing by Debtor under or in respect of the Guaranty, and the due
performance by Debtor of all of its other obligations under or in respect of
the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions, amendments,
modifications, supplements, or restatements of or substitutions for any of the
foregoing.

 

As used herein, the term “Secured
Obligations” refers to all present and future indebtedness,
obligations and liabilities of whatever type which are described above in this
section, including any interest which accrues after the commencement of any
case, proceeding, or other action relating to the bankruptcy, insolvency, or
reorganization of Debtor.  Debtor hereby
acknowledges that the Secured Obligations are owed to the various Lenders and
that each Lender is entitled to the benefits of the Liens given under this
Agreement.  It is the intention of the
Debtor and Secured Party that this Agreement not constitute a fraudulent
transfer or fraudulent conveyance under any state or federal law that may be
applied hereto.  Debtor and, by its
acceptance hereof, Secured Party hereby acknowledges and agrees that,
notwithstanding any other provision of this Agreement: (a) the
indebtedness secured hereby shall be limited to the maximum amount of
indebtedness that can be incurred or secured by Debtor without rendering this
Agreement subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provisions of any applicable state or federal
law, and (b) the Collateral pledged by Debtor hereunder shall be limited
to the maximum amount of Collateral that can be pledged by Debtor without
rendering this Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable state
or federal law.

 

G-1-4

 

ARTICLE III
- Representations, Warranties and Covenants

 

Section 3.1.                                   Representations and Warranties.  Each of the representations and warranties in
the Credit Agreement applicable to Debtor is true and correct.  In addition, Debtor hereby represents and
warrants to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim, or
encumbrance.  This Agreement creates a
valid and binding first priority security interest in favor of Secured Party in
the Collateral, which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection.  The taking possession by Secured Party of all
certificates, instruments and cash constituting Collateral from time to time
will perfect, and establish the first priority of, Secured Party’s security interest
hereunder in the Collateral securing the Secured Obligations.  No further action is necessary or desirable
to perfect or otherwise continue, preserve or protect such security interest.

 

(c)                                  Pledged Shares.  Debtor has delivered to Secured Party all
certificates evidencing Pledged Shares. 
All such certificates are valid and genuine and have not been
altered.  All shares and other securities
constituting the Pledged Shares which are certificated securities have been
duly authorized and validly issued, are fully paid and non-assessable, and were
not issued in violation of the preemptive rights of any Person or of any
agreement by which Debtor or the Issuer thereof is bound.  All documentary, stamp or other taxes or fees
owing in connection with the issuance, transfer or pledge of Pledged Shares (or
rights in respect thereof) have been paid. 
No restrictions or conditions exist with respect to the transfer, voting
or capital of any Pledged Shares.  The
Pledged Shares constitute the percentage of the class of issued shares of
capital stock which is indicated on Exhibit A.  No Issuer of any Pledged Shares has any
outstanding stock rights, rights to subscribe, options, warrants or convertible
securities outstanding or any other rights outstanding whereby any Person would
be entitled to have issued to him capital stock of such Issuer.

 

Section 3.2.                                   Covenants.  Unless Secured Party shall otherwise consent
in writing, Debtor will at all times (i) comply with the covenants
contained in the Credit Agreement which are applicable to Debtor and (ii) comply
with the covenants contained in this Section 3.2 so long as any part of
the Secured Obligations or the Commitment is outstanding.

 

(a)                                  Delivery of Pledged Shares.  All instruments, certificates, and writings
evidencing the Pledged Shares shall be delivered to Secured Party on or prior
to the execution and delivery of this Agreement, together with a true and
correct copy of the articles of incorporation and bylaws of each Issuer and all
amendments and supplements thereto.  All
other certificates, instruments, or writings hereafter evidencing or
constituting Pledged Shares, and all amendments or supplements to the articles
of incorporation or bylaws of any Issuer (whether or not authorized hereunder),
shall be delivered to Secured Party promptly upon the receipt thereof by or on
behalf of Debtor.  All such Pledged
Shares shall be held by or on behalf of Secured Party pursuant hereto and shall
be delivered in suitable form for transfer by delivery with any

 

G-1-5

 

necessary endorsement or shall be accompanied
by fully executed instruments of transfer or assignment in blank, all in form
and substance satisfactory to Secured Party.

 

(b)                                 Proceeds of Pledged Shares.  If Debtor shall receive, by virtue of its
being or having been an owner of any Pledged Shares, any (i) stock
certificate (including any certificate representing a stock dividend or
distribution in connection with any increase or reduction of capital,
reorganization, reclassification, merger, consolidation, sale of assets,
combination of shares, stock split, spinoff or split-off), promissory note or
other instrument or writing; (ii) option or right, whether as an addition
to, substitution for, or in exchange for, any Pledged Shares, or otherwise; (iii) dividends
payable in cash (except such dividends permitted to be retained by Debtor
pursuant to Section 4.8 hereof) or in securities or other property, or (iv) dividends
or other distributions in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in surplus, Debtor shall receive the same in trust for the benefit of
Secured Party, shall segregate it from Debtor’s other property, and shall
promptly deliver it to Secured Party in the exact form received, with any
necessary endorsement or appropriate stock powers duly executed in blank, to be
held by Secured Party as Collateral.

 

(c)                                  Status of Pledged Shares.  The certificates evidencing the Pledged
Shares shall at all times be valid and genuine and shall not be altered.  The Pledged Shares at all times shall be duly
authorized, validly issued, fully paid, and non-assessable, and shall not be
issued in violation of the pre-emptive rights of any Person or of any agreement
by which Debtor or the Issuer thereof is bound and shall not be subject to any
restrictions with respect to transfer, voting or capital of such Pledged
Shares.

 

(d)                                 Dilution of Shareholdings.  Debtor will not permit the issuance of (i) any
additional shares of any class of capital stock of any Issuer (unless
immediately upon issuance the same are pledged and delivered to Secured Party
pursuant to the terms hereof to the extent necessary to give Secured Party a
first priority security interest after such issue in at least the same
percentage of such Issuer’s outstanding shares as Debtor had before such
issue), (ii) any securities convertible voluntarily by the holder thereof
or automatically upon the occurrence or non-occurrence of any event or
condition into, or exchangeable for, any such shares of capital stock, or (iii) any
warrants, options, contracts or other commitments entitling any Person to
purchase or otherwise acquire any such shares of capital stock not outstanding
as of the date of this Agreement.

 

(e)                                  Restrictions on Pledged Shares.  Debtor will not enter into any agreement
creating, or otherwise permit to exist, any restriction or condition upon the
transfer, voting or Control of any Pledged Shares.

 

ARTICLE IV
- Remedies, Powers and Authorizations

 

Section 4.1.                                   Provisions Concerning the Collateral.

 

(a)                                  Financing Statements and Other Actions; Defense of
Title.  Debtor hereby
authorizes Secured Party to file, and if requested will execute and deliver to
Secured Party, all financing or continuation statements (and amendments
thereto) and other documents

 

G-1-6

 

and take such other actions as may from time
to time be requested by Secured Party in order to maintain a first perfected
security interest in and, if applicable, control of, the Collateral.  Debtor will take any and all actions
necessary to defend title to the Collateral against all persons and to defend
the security interest of Secured Party in the Collateral and the priority
thereof against any Lien not expressly permitted hereunder.

 

(b)                                 Power of Attorney.  Debtor hereby irrevocably appoints Secured
Party as Debtor’s attorney-in-fact and proxy, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, upon the occurrence
and during the continuance of a Default, from time to time in Secured Party’s
discretion, to take any action, and to execute or indorse any instrument,
certificate or notice, which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement including any action or instrument: (i) to
request or instruct each Issuer (and each registrar, transfer agent, or similar
Person acting on behalf of each Issuer) to register the pledge or transfer of
the Collateral to Secured Party; (ii) to otherwise give notification to
any Issuer, registrar, transfer agent, financial intermediary, or other Person
of Secured Party’s security interests hereunder; (iii) to ask, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral; (iv) to
receive, indorse and collect any drafts or other instruments or documents; (v) to
enforce any obligations included among the Collateral; and (vi) to file
any claims or take any action or institute any proceedings which Secured Party
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce, perfect, or establish the priority of the rights of
Secured Party with respect to any of the Collateral.  Debtor hereby acknowledges that such power of
attorney and proxy are coupled with an interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor fails to perform any agreement or
obligation contained herein, Secured Party may itself perform, or cause
performance of, such agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be payable by Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have the right at any
time, upon the occurrence and during the continuance of a Default, to notify
(or require Debtor to notify) any or all Persons (including any Issuer)
obligated to make payments which are included among the Collateral (whether
accounts, general intangibles, dividends, or otherwise) of the assignment
thereof to Secured Party under this Agreement and to direct such obligors to
make payment of all amounts due or to become due to Debtor thereunder directly
to Secured Party and, upon such notification and at the expense of Debtor and
to the extent permitted by law, to enforce collection thereof and to adjust,
settle or compromise the amount or payment thereof, in the same manner and to
the same extent as Debtor could have done. 
After Debtor receives notice that Secured Party has given (and after
Secured Party has required Debtor to give) any notice referred to above in this
subsection:

 

(i)                                     all
amounts and proceeds (including instruments and writings) received by Debtor in
respect of such rights to payments, accounts, or general intangibles shall be
received in trust for the benefit of Secured Party hereunder, shall be
segregated from other funds of Debtor and shall be forthwith paid over to
Secured Party in the same

 

G-1-7

 

form as so received (with any necessary
indorsement) to be applied as specified in Section 4.3, and

 

(ii)                                  Debtor
will not adjust, settle or compromise the amount or payment of any such account
or general intangible or release wholly or partly any account debtor or obligor
thereof (including any Issuer) or allow any credit or discount thereon.

 

Section 4.2.                                   Default Remedies.  If a Default shall have occurred and be
continuing, Secured Party may from time to time in its discretion, without
limitation and without notice except as expressly provided below:

 

(a)                                  exercise
in respect of the Collateral, in addition to any other rights and remedies
provided for herein, under the other Obligation Documents or otherwise available
to it, all the rights and remedies of a secured party on default under the UCC
(whether or not the UCC applies to the affected Collateral);

 

(b)                                 require
Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Secured Party, promptly assemble all books, records and information
of Debtor relating to the Collateral at a place to be designated by Secured
Party which is reasonably convenient to both parties;

 

(c)                                  reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest created hereby by any available judicial procedure;

 

(d)                                 dispose
of, at its office, on the premises of Debtor or elsewhere, all or any part of
the Collateral, as a unit or in parcels, by public or private proceedings, and
by way of one or more contracts (it being agreed that the sale of any part of
the Collateral shall not exhaust Secured Party’s power of sale, but sales may
be made from time to time, and at any time, until all of the Collateral has
been sold or until the Secured Obligations have been paid and performed in
full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

 

(e)                                  buy
(or allow one or more of the Lenders to buy) the Collateral, or any part
thereof, at any public sale;

 

(f)                                    buy
(or allow one or more of the Lenders to buy) the Collateral, or any part
thereof, at any private sale if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations;

 

(g)                                 apply
by appropriate judicial proceedings for appointment of a receiver for the
Collateral, or any part thereof, and Debtor hereby consents to any such
appointment; and

 

(h)                                 at
its discretion, retain the Collateral in satisfaction of the Secured
Obligations whenever the circumstances are such that Secured Party is entitled
to do so under the UCC or otherwise (provided that Secured Party shall in no
circumstances be deemed to have retained the Collateral in satisfaction of the
Secured Obligations in the absence of an express notice by Secured Party to
Debtor that Secured Party has either done so or intends to do so).

 

G-1-8

 

Debtor agrees that, to the extent notice of sale shall be required by law,
at least ten (10) days’ notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. 
Secured Party shall not be obligated to make any sale of Collateral regardless
of notice of sale having been given. 
Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any Default shall have occurred and be
continuing, Secured Party may in its discretion apply any cash held by Secured
Party as Collateral, and any cash proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral, to any or all of the following in such order as Secured Party
may (subject to the rights of Lenders under the Credit Agreement) elect:

 

(a)                                  To
the repayment of all costs and expenses, including reasonable attorneys’ fees
and legal expenses, incurred by Secured Party in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure of Debtor to perform or
observe any of the provisions hereof;

 

(b)                                 To
the payment or other satisfaction of any Liens, encumbrances, or adverse claims
upon or against any of the Collateral;

 

(c)                                  To
the reimbursement of Secured Party for the amount of any obligations of Debtor
or any Other Liable Party paid or discharged by Secured Party pursuant to the
provisions of this Agreement or the other Obligation Documents, and of any
expenses of Secured Party payable by Debtor hereunder or under the other
Obligation Documents;

 

(d)                                 To
the satisfaction of any other Secured Obligations;

 

(e)                                  By
holding the same as Collateral;

 

(f)                                    To
the payment of any other amounts required by applicable law (including any
provision of the UCC); and

 

(g)                                 By
delivery to Debtor or to whomever shall be lawfully entitled to receive the
same or as a court of competent jurisdiction shall direct.

 

Section 4.4.                                   Deficiency.  In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation
Documents or (if no interest is so provided) at such other rate as shall be
fixed by applicable law, together with the costs of collection and the reasonable
fees of any attorneys employed by Secured Party or Lenders to collect such
deficiency.

 

G-1-9

 

Section 4.5.                                   Indemnity and Expenses.  In addition to, but not in qualification or
limitation of, any similar obligations under other Obligation Documents:

 

(a)                                  Debtor
will indemnify Secured Party and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), WHETHER OR NOT SUCH CLAIMS, LOSSES
IN AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART,
UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED BY OR ARISING OUT
OF SUCH INDEMNIFIED PARTY’S OWN NEGLIGENCE, except to the extent such claims,
losses or liabilities are proximately caused by such indemnified party’s
individual gross negligence or willful misconduct.

 

(b)                                 Debtor
will upon demand pay to Secured Party the amount of any and all reasonable
costs and expenses, including the reasonable fees and disbursements of Secured
Party’s counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the transactions which give rise to this Agreement, (ii) the
preparation of this Agreement and the perfection and preservation of this
security interest created under this Agreement, (iii) the administration
of this Agreement; (iv) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any Collateral; (v) the
exercise or enforcement of any of the rights of Secured Party hereunder; or (vi) the
failure by Debtor to perform or observe any of the provisions hereof, except
expenses resulting from Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non-Judicial Remedies.  In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to enforce its rights
by judicial process.  In so providing for
non-judicial remedies, Debtor recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity, and
are the result of a bargain at arm’s length. 
Nothing herein is intended, however, to prevent Secured Party from
resorting to judicial process at its option.

 

Section 4.7.                                   Other Recourse.  Debtor waives any right to require Secured
Party or any Lender to proceed against any other Person, to exhaust any
Collateral or other security for the Secured Obligations, or to have any Other
Liable Party joined with Debtor in any suit arising out of the Secured
Obligations or this Agreement, or pursue any other remedy in Secured Party’s power.  Debtor further waives any and all notice of
acceptance of this Agreement and of the creation, modification, rearrangement,
renewal or extension for any period of any of the Secured Obligations of any
Other Liable Party from time to time. 
Debtor further waives any defense arising by reason of any disability or
other defense of any Other Liable Party or by reason of the cessation from any
cause whatsoever of the liability of any Other Liable Party.  This Agreement shall continue irrespective of
the fact that the liability of any Other Liable Party may have ceased and
irrespective of the validity or enforceability of any other Obligation Document
to which Debtor or any Other Liable Party may be a party, and notwithstanding
any death, incapacity, reorganization, or bankruptcy of any Other Liable Party
or any other event or proceeding affecting any Other Liable Party.  Until all of the Secured Obligations shall
have been paid in full, Debtor shall have no right to subrogation and Debtor
waives the right to enforce any remedy

 

G-1-10

 

which Secured Party or any Lender has or may
hereafter have against any Other Liable Party, and waives any benefit of and
any right to participate in any other security whatsoever now or hereafter held
by Secured Party.  Debtor authorizes
Secured Party and each Lender, without notice or demand, without any
reservation of rights against Debtor, and without in any way affecting Debtor’s
liability hereunder or on the Secured Obligations, from time to time to (a) take
or hold any other property of any type from any other Person as security for
the Secured Obligations, and exchange, enforce, waive and release any or all of
such other property, (b) apply the Collateral or such other property and
direct the order or manner of sale thereof as Secured Party may in its
discretion determine, (c) renew, extend for any period, accelerate,
modify, compromise, settle or release any of the obligations of any Other
Liable Party in respect to any or all of the Secured Obligations or other
security for the Secured Obligations, (d) waive, enforce, modify, amend,
restate or supplement any of the provisions of any Obligation Document with any
Person other than Debtor, and (e) release or substitute any Other Liable
Party.

 

Section 4.8.                                   Voting Rights, Dividends, Etc. in Respect of Pledged
Shares.

 

(a)                                  So
long as no Default shall have occurred and be continuing Debtor may receive and
retain any and all dividends or interest paid in respect of the Pledged Shares;
provided, however, that any and all

 

(i)                                     dividends
and interest paid or payable other than in cash in respect of, and instruments
and other property received, receivable or otherwise distributed in respect of
or in exchange for, any Pledged Shares,

 

(ii)                                  dividends
and other distributions paid or payable in cash in respect of any Pledged
Shares in connection with a partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or paid-in surplus, and

 

(iii)                               cash
paid, payable or otherwise distributed in redemption of, or in exchange for,
any Pledged Shares,

 

shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Shares and shall, if received by Debtor, be received in trust for the
benefit of Secured Party, be segregated from the other property or funds of
Debtor, and be forthwith delivered to Secured Party in the exact form received
with any necessary indorsement or appropriate stock powers duly executed in
blank, to be held by Secured Party as Collateral.

 

(b)                                 Upon
the occurrence and during the continuance of a Default:

 

(i)                                     all
rights of Debtor to receive and retain the dividends and interest payments
which it would otherwise be authorized to receive and retain pursuant to subsection (a) of
this section shall automatically cease, and all such rights shall
thereupon become vested in Secured Party which shall thereupon have the sole
right to receive and hold as Pledged Shares such dividends and interest
payments;

 

(ii)                                  without
limiting the generality of the foregoing, Secured Party may at its option
exercise any and all rights of conversion, exchange, subscription or any other
rights, privileges or options pertaining to any of the Pledged Shares as if it
were the

 

G-1-11

 

absolute owner thereof, including, without
limitation, the right to exchange, in its discretion, any and all of the
Pledged Shares upon the merger, consolidation, reorganization, recapitalization
or other adjustment of any Issuer, or upon the exercise by any Issuer of any
right, privilege or option pertaining to any Pledged Shares, and, in connection
therewith, to deposit and deliver any and all of the Pledged Shares with any
committee, depository, transfer, agent, registrar or other designated agent
upon such terms and conditions as it may determine; and

 

(iii)                               all
dividends and interest payments which are received by Debtor contrary to the
provisions of subsection (b)(i) of this section shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of Debtor, and shall be forthwith paid over to Secured Party as
Pledged Shares in the exact form received, to be held by Secured Party as
Collateral.

 

Anything herein to the contrary notwithstanding, Debtor may at all
times exercise any and all voting rights pertaining to the Pledged Shares or
any part thereof for any purpose not inconsistent with the terms of this
Agreement or any other Obligation Document.

 

Section 4.9.                                   Private Sale of Pledged Shares.  Debtor recognizes that Secured Party may deem
it impracticable to effect a public sale of all or any part of the Pledged
Shares and that Secured Party may, therefore, determine to make one or more
private sales of any such securities to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire such securities for
their own account, for investment and not with a view to the distribution or
resale thereof.  Debtor acknowledges that
any such private sale may be at prices and on terms less favorable to the
seller than the prices and other terms which might have been obtained at a
public sale and, notwithstanding the foregoing, agrees that such private sales
shall be deemed to have been made in a commercially reasonable manner and that
Secured Party shall have no obligation to delay sale of any such securities for
the period of time necessary to permit the Issuer of such securities to
register such securities for public sale under the Securities Act of 1933, as
amended (the “Securities Act”).  Debtor further acknowledges and agrees that
any offer to sell such securities which has been (a) publicly advertised
on a bona fide basis in a newspaper or other publication of general circulation
in the financial community of Denver, Colorado (to the extent that such an
offer may be so advertised without prior registration under the Securities
Act), or (b) made privately in the manner described above to not less than
fifteen (15) bona fide offerees shall be deemed to involve a “public disposition”
for the purposes of Section 9-610(c) of the UCC (or any successor or
similar, applicable statutory provision), notwithstanding that such sale may
not constitute a “public offering” under the Securities Act, and that Secured
Party may, in such event, bid for the purchase of such securities.  Any sale of the Collateral shall be conducted
in accordance with all applicable securities and other laws then in effect.

 

Article V
- Miscellaneous

 

Section 5.1.                                   Notices.  Any notice or communication required or
permitted hereunder shall be given in accordance with the provisions of Article XVI
of the Credit Agreement, and for Debtor’s address for such purposes shall be as
set forth on the signature page hereto.

 

G-1-12

 

Section 5.2.                                   Amendments.  No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in
writing and signed by Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given and to the extent specified in such writing.  In addition, all such amendments and waivers
shall be effective only if given with the necessary approvals of Lenders as
required in the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No failure on the part of Secured Party or
any Lender to exercise, and no delay in exercising, any right hereunder or
under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.  Neither the execution nor the delivery of
this Agreement shall in any manner impair or affect any other security for the
Secured Obligations.  The rights and
remedies of Secured Party provided herein and in the other Obligation Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law.  The rights of
Secured Party under any Obligation Document against any party thereto are not
conditional or contingent on any attempt by Secured Party to exercise any of
its rights under any other Obligation Document against such party or against
any other Person.

 

Section 5.4.                                   Unenforceability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All representations and warranties of Debtor
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other Obligation
Documents and the creation of the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this Agreement nor the exercise by
Secured Party or the failure of Secured Party to exercise any right, power or
remedy conferred herein or by law shall be construed as relieving any Other
Liable Party from liability on the Secured Obligations or any deficiency
thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding the reorganization, death, incapacity or bankruptcy of any
Other Liable Party, and notwithstanding the reorganization or bankruptcy or
other event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment.  This Agreement creates a continuing security
interest in the Collateral and (a) shall be binding on Debtor and its
successors and permitted assigns and (b) shall inure, together with all
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and Lenders and their respective successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in
the Credit Agreement) pledge, assign or otherwise

 

G-1-13

 

transfer any or all of its rights under any
or all of the Obligation Documents to any other Person, and such other Person
shall thereupon become vested with all of the benefits in respect thereof
granted to Secured Party, herein or otherwise. 
None of the rights or duties of Debtor hereunder may be assigned or
otherwise transferred without the prior written consent of Secured Party.

 

Section 5.8.                                   Termination.  It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall
be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in
full of the Secured Obligations and the termination or expiration of the Credit
Agreement and any other commitment of Lenders to extend credit to Debtor, then
upon written request for the termination hereof delivered by Debtor to Secured
Party this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Debtor.  Secured Party will, upon Debtor’s request and
at Debtor’s expense, (a) return to Debtor such of the Collateral as shall
not have been sold or otherwise disposed of or applied pursuant to the terms
hereof; and (b) execute and deliver to Debtor such documents as Debtor
shall reasonably request to evidence such termination.

 

Section 5.9.Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado applicable to
contracts made and to be performed entirely within such State, except as
required by mandatory provisions of law and except to the extent that the
perfection and the effect of perfection or non-perfection of the security
interest created hereunder, in respect of any particular Collateral, are
governed by the laws of a jurisdiction other than such State, but giving effect
to federal laws applicable to national banks.

 

Section 5.10.                             Final Agreement.  This written Agreement and the other Loan
Documents represent the final agreement between the parties hereto and may not
be contradicted by evidence of prior, contemporaneous, or subsequent oral
agreements of the parties hereto.  There
are no unwritten oral agreements between the parties hereto.

 

Section 5.11.                             Counterparts.  This Agreement may be separately executed in
any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document”.  This Agreement is a “Loan Document”, as
defined in the Credit Agreement, and, except as expressly provided herein to
the contrary, this Agreement is subject to all provisions of the Credit
Agreement governing such Loan Documents.

 

Section 5.13.                             Agent. 
JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA (Main
Office Chicago), has been appointed Administrative Agent for the Lenders
hereunder pursuant to Article XIII of the Credit Agreement.  It is expressly understood and agreed by the
parties to this Agreement that any authority conferred upon Secured Party
hereunder is subject to the terms of the delegation of authority made by the
Lenders to Secured Party pursuant to the Credit Agreement, and that Secured
Party has agreed to act (and any successor Administrative Agent shall act) as
such hereunder only on the express conditions contained in such Article XIII.  Any successor Administrative Agent appointed
pursuant to Article XIII of the Credit Agreement shall be entitled to all
the rights, interests and benefits of Secured Party hereunder.

 

G-1-14

 

IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  

 

707 Seventeenth Street, Suite 3300

Denver, Colorado 80202

Attention: Paul Korus

Telephone: (303) 295-3995

Fax: (303) 295-3494

 

G-1-15

 

EXHIBIT A

DESCRIPTION OF INTERESTS IN ISSUERS

 

	
  Name of Issuer

  	
   

  	
  Certificate

  No.

  	
   

  	
  No. of Shares

  	
   

  	
  Percentage of

  Class

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

G-1-16

 

EXHIBIT G-2

FORM OF PLEDGE AGREEMENT (PARTNERSHIP)

 

THIS PLEDGE AGREEMENT (PARTNERSHIP) (this “Agreement”) is made as of                                               ,
20        , by                                                       ,
a                                                         
(“Debtor”), in favor of
JPMorgan Chase Bank, N.A., a national banking association, as Administrative
Agent for the benefit of the Lenders under the Credit Agreement (herein called “Secured Party”).

 

RECITALS:

 

1.                                       Borrower
has executed in favor of Lenders (as such term is defined below) those certain
promissory notes dated June 13, ,2005, payable to the order of Lenders in
the aggregate original principal amount of $1,000,000,000 (such promissory
notes, as from time to time amended, and all promissory notes given in
substitution, renewal or extension therefor or thereof, in whole or in part,
being herein collectively called the “Note”).

 

2.                                       The
Note was executed pursuant to a Amended and Restated Credit Agreement dated June 13,
2005, (herein, as from time to time amended, supplemented or restated, called
the “Credit Agreement”), by
and between Borrower, Secured Party, as Administrative Agent, and Lenders,
pursuant to which Lenders have agreed to advance funds to Borrower under the
Note.

 

3.                                       Pursuant
to the Credit Agreement, Debtor is concurrently herewith giving to Secured
Party a guaranty for the benefit of each Lender (herein, as from time to time
amended, supplemented or restated, collectively called the “Guaranty”) of all of the indebtedness
of Borrower under the Credit Agreement and the Note.

 

4.                                       The
boards of directors and managers, as the case may be, of the parties
constituting Debtor has determined that Debtor’s execution, delivery and
performance of this Agreement may reasonably be expected to benefit Debtor,
directly or indirectly, and are in the best interests of Debtor.

 

NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor from Lenders’ extensions of credit under the Credit
Agreement, and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order
to induce Lenders to extend credit under the Credit Agreement, Debtor hereby
agrees with Secured Party, for the benefit of each Lender, as follows:

 

AGREEMENTS

 

ARTICLE I
- DEFINITIONS AND REFERENCES

 

Section 1.1.                                   General Definitions.  As used herein, the terms “Agreement,” “Debtor,” “Secured Party,” “Note,”
“Borrower,” “Guaranty,” and “Credit Agreement” shall have the
meanings indicated above, and the following terms shall have the following
meanings:

 

G-2-1

 

“Collateral” means
all property, of whatever type, which is described in Section 2.1 as being
at any time subject to a security interest granted hereunder to Secured Party.

 

“Commitment” means
the agreement or commitment by Lenders to make loans or otherwise extend credit
to Borrower under the Credit Agreement, and any other agreement, commitment,
statement of terms or other document contemplating the making of loans or
advances or other extension of credit by Lenders to or for the account of
Borrower which is now or at any time hereafter intended to be secured by the
Collateral under this Agreement.

 

“Lenders” means the
Persons who are from time to time “Lenders” as defined in the Credit Agreement.

 

“Partnership” means
any partnership which is included within the term “Partnerships” pursuant to Section 2.1(a),
and any successor of any such partnership.

 

“Obligation Documents”
means the Credit Agreement, all other Loan Documents, all documents evidencing
Rate Management Transactions with one or more Lenders or any affiliates of such
Lenders, and all other documents and instruments under, by reason of which, or
pursuant to which any or all of the Secured Obligations are evidenced,
governed, secured, guarantied, or otherwise dealt with, and all other
agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

 

“Other Liable Party”
means any Person, other than Debtor, who may now or may at any time hereafter
be primarily or secondarily liable for any of the Secured Obligations or who
may now or may at any time hereafter have granted to or Lenders a Lien upon any
property as security for the Secured Obligations.

 

“Other Partnership Rights”
has the meaning given it in Section 2.1(a).

 

“Partnership Agreements”,
“Partnership Rights”, and “Partnership Rights to Payments” have the meanings
given them in Section 2.1(a).

 

“UCC” means the
Colorado Uniform Commercial Code in effect from time to time.

 

Section 1.2.                                   Incorporation of Other Definitions.  Reference is hereby made to the Credit
Agreement for a statement of the terms thereof. 
All capitalized terms used in this Agreement which are defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
herein as set forth therein.  All terms
used in this Agreement which are defined in the UCC and not otherwise defined
herein or in the Credit Agreement shall have the same meanings herein as set
forth therein, except where the context otherwise requires.

 

Section 1.3.                                   Attachments.  All exhibits or schedules which may be attached
to this Agreement are a part hereof for all purposes.

 

Section 1.4.                                   Amendment of Defined Instruments.  Unless the context otherwise requires or
unless otherwise provided herein, references in this Agreement to a particular
agreement, instrument or document (including, but not limited to, references in
Section 2.1) also refer to and include all renewals, extensions,
amendments, modifications, supplements or

 

G-2-2

 

restatements of any such agreement, instrument
or document, provided that nothing contained in this Section shall be
construed to authorize any Person to execute or enter into any such renewal,
extension, amendment, modification, supplement or restatement.

 

Section 1.5.                                   References and Titles.  All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise.  Titles
appearing at the beginning of any subdivision are for convenience only and do
not constitute any part of any such subdivision and shall be disregarded in
construing the language contained in this Agreement.  The words “this Agreement”, “herein”,
“hereof”, “hereby”, “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.  The phrases “this Section” and “this subsection” and similar phrases
refer only to the Sections or subsections hereof in which the phrase
occurs.  The word “or” is not exclusive, and the word “including” (in all of its forms) means “including without limitation”.  Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.

 

ARTICLE II
- SECURITY INTEREST

 

Section 2.1.                                   Grant of Security Interest.  As collateral security for all of the Secured
Obligations, Debtor hereby pledges and assigns to Secured Party and grants to
Secured Party a continuing security interest, for the benefit of each Lender,
in and to all right, title and interest of the following:

 

(a)                                  Partnership Rights.  All of the following (herein collectively
called the “Partnership Rights”),
whether now or hereafter existing, which are owned by Debtor or in which Debtor
otherwise has any rights:

 

(i)                                     all
proceeds, interest, profits, and other payments or rights to payment
attributable to Debtor’s interests in the partnership or partnerships (whether
one or more, herein called the “Partnerships”)
described on Exhibit A, and all distributions, cash, instruments
and other property now or hereafter received, receivable or otherwise made with
respect to or in exchange for any interest of Debtor in any Partnership,
including interim distributions, returns of capital, loan repayments, and
payments made in liquidation of any Partnership, and whether or not the same
arise or are payable under any partnership agreement or certificate forming any
Partnership or any other agreement governing any Partnership or the relations
among the partners in any Partnership (any and all such proceeds, interest,
profits, payments, rights to payment, distributions, cash, instruments, other
property, interim distributions, returns of capital, loan repayments, and
payments made in liquidation being herein called the “Partnership Rights to Payments”, and
any and all such partnership agreements, certificates, and other agreements
being herein called the “Partnership
Agreements”); and

 

(ii)                                  all
other interests and rights of Debtor in any of the Partnerships, whether under
the Partnership Agreements or otherwise, including without limitation any right
to cause the dissolution of any Partnership or to appoint or nominate a
successor to

 

G-2-3

 

Debtor as a partner in any Partnership (all
such other interests and rights being herein called the “Other Partnership Rights”).

 

(b)                                 Proceeds.  All proceeds of any and all of the foregoing
Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether
Debtor’s ownership or other rights therein are presently held or hereafter
acquired and however Debtor’s interests therein may arise or appear (whether by
ownership, security interest, claim or otherwise).

 

The granting of the foregoing security interest does not make Secured
Party a successor to Debtor as a partner in any Partnership, and neither
Secured Party nor any of its successors or assigns hereunder shall be deemed to
have become a partner in any Partnership by accepting this Agreement or
exercising any right granted herein unless and until such time, if any, when
Secured Party or any such successor or assign expressly becomes a partner in
any Partnership after a foreclosure upon Other Partnership Rights.  Anything herein to the contrary
notwithstanding (except to the extent, if any, that Secured Party or any of its
successors or assigns hereafter expressly becomes a partner in any Partnership),
neither Secured Party nor any of its successors or assigns shall be deemed to
have assumed or otherwise become liable for any debts or obligations of any
Partnership or of Debtor to or under any Partnership, and the above definition
of “Other Partnership Rights” shall be deemed modified, if necessary, to
prevent any such assumption or other liability.

 

Section 2.2.                                   Secured Obligations Secured.  The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred or arising:

 

(a)                                  Secured Obligations.  The payment by Borrower, as and when due and
payable, of the Secured Obligations, the due performance by Borrower of all of
its other obligations under or in respect of the various Obligation Documents,
the payment by Debtor, as and when due and payable, of all amounts from time to
time owing by Debtor under or in respect of the Guaranty, and the due
performance by Debtor of all of its other obligations under or in respect of
the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions, amendments,
modifications, supplements, or restatements of or substitutions for any of the
foregoing.

 

As used herein, the term “Secured
Obligations” refers to all present and future indebtedness,
obligations and liabilities of whatever type which are described above in this
section, including any interest which accrues after the commencement of any
case, proceeding, or other action relating to the bankruptcy, insolvency, or
reorganization of Debtor.  Debtor hereby
acknowledges that the Secured Obligations are owed to the various Lenders and
that each Lender is entitled to the benefits of the Liens given under this
Agreement. It is the intention of the Debtor and Secured Party that this
Agreement not constitute a fraudulent transfer or fraudulent conveyance under
any state or federal law that may be applied hereto.  Debtor and, by its acceptance hereof, Secured
Party hereby acknowledges and agrees that, notwithstanding any other provision
of this Agreement: (a) the indebtedness secured hereby shall be limited to
the maximum amount of indebtedness that can be incurred or secured by Debtor
without rendering

 

G-2-4

 

this Agreement subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable
state or federal law, and (b) the Collateral pledged by Debtor hereunder
shall be limited to the maximum amount of Collateral that can be pledged by
Debtor without rendering this Agreement subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any
applicable state or federal law.

 

ARTICLE III
- REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 3.1.                                   Representations and Warranties.  Each of the representations and warranties in
the Credit Agreement made by Debtor is true and correct.  In addition, Debtor hereby represents and
warrants to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim, or
encumbrance.  This Agreement creates a
valid and binding first priority security interest in favor of Secured Party in
the Collateral, which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection.  The filing of financing statements with the
Secretary of State (or equivalent governmental official) of the State in which
Debtor is organized will perfect, and establish the first priority of, Secured
Party’s security interest hereunder in the Collateral securing the Secured
Obligations.  No further or subsequent
filing, recording, registration, other public notice or other action is
necessary or desirable to perfect or otherwise continue, preserve or protect
such security interest except (i) for continuation statements described in
Section 9.515(d) of the UCC, (ii) for filings required to be
filed in the event of a change in the name, identity, state of formation, or
entity structure of Debtor, or (iii) in the event any financing statement
filed by Secured Party relating hereto otherwise becomes inaccurate or
incomplete.

 

(c)                                  Partnership Rights.  Debtor has taken or concurrently herewith is
taking all actions necessary to perfect Secured Party’s security interest in
the Partnership Rights.   No other Person
has any such registration in effect. 
Debtor owns the interests in each Partnership which are described on Exhibit A.  No Partnership has made any calls for capital
which have not been fully paid by Debtor and by each other partner in such
Partnership.  Debtor is not in default
under any of the Partnership Agreements, nor is any other partner in any
Partnership.  Neither the making of this
Agreement nor the exercise of any rights or remedies of Secured Party hereunder
will cause a default under any of the Partnership Agreements or otherwise
adversely affect or diminish any of the Partnership Rights.  Debtor’s rights under the Partnership
Agreements are enforceable in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights.  The Partnership Rights are not evidenced by
any certificates.  The Partnership Rights
(i) are not dealt in or traded on securities exchanges or in securities
markets, (ii) do not expressly provided that they are a security governed
by Article 8 of the UCC, and (iii) are not held in a securities
account.

 

Section 3.2.                                   Covenants.  Unless Secured Party shall otherwise consent
in writing, Debtor will at all times (i) comply with the covenants contained
in the Credit Agreement which

 

G-2-5

 

are applicable to Debtor and (ii) comply
with the covenants contained in this Section 3.2 so long as any part of
the Secured Obligations or the Commitment is outstanding.

 

(a)                                  Partnership Rights.  Debtor will maintain its ownership of the
interests in each Partnership already defined as those partnerships listed on Exhibit A.  Debtor will timely honor all calls under any
Partnership Agreement to provide capital to any Partnership, and Debtor will
not otherwise default in performing any of Debtor’s obligations under any
Partnership Agreement or allow any Partnership Rights to be adversely affected
or diminished.  Debtor will promptly
inform Secured Party of any such failure to honor a capital call, default,
adverse effect, or diminution.  Debtor
will promptly inform Secured Party of any such failure to honor a capital call
or default by another partner in any Partnership.  The Partnership Rights shall at all times be
duly authorized and validly issued and shall not be issued in violation of the
pre emptive rights of any Person or of any agreement by which Debtor or the
Partnership thereof is bound.  Debtor
will not allow the Partnership Rights (i) to be evidenced by certificates,
(ii) to be dealt in or traded on securities exchanges or in securities
markets, (iii) to be governed by Article 8 of the UCC, or (iv) to
be placed in a securities account.

 

(b)                                 Delivery of Certificates.  A true and correct copy of each Partnership
Agreement and all amendments and supplements thereto have been delivered to
Secured Party.  All amendments or
supplements to any Partnership Agreement (whether or not authorized hereunder),
shall be delivered to Secured Party promptly upon the receipt thereof by or on
behalf of Debtor.

 

(c)                                  Proceeds of Partnership Rights.  If Debtor shall receive, by virtue of its
being or having been an owner of any Partnership Rights, any (i) certificate,
instrument, deed, bill of sale, promissory note, or other instrument or writing
(including any given in connection with any increase or reduction of capital,
reorganization, reclassification, merger, consolidation, sale of assets,
liquidation, or partial liquidation); (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any Partnership Rights, or
otherwise; or (iii) distributions payable in cash (except distributions
permitted to be retained by Debtor pursuant to Section 4.8 hereof) or in
securities or other property, Debtor shall receive the same in trust for the
benefit of Secured Party, shall segregate it from Debtor’s other property, and
shall promptly deliver it to Secured Party in the exact form received, with any
necessary endorsement or instruments of transfer duly executed in blank, to be
held by Secured Party as Collateral.

 

(d)                                 Diminution of Partnership Rights.  Debtor will not adjust, settle, compromise,
amend or modify any of the Partnership Rights or the Partnership
Agreements.  Debtor will not permit the
creation of any additional interests in any Partnership (unless immediately
upon creation the same are pledged to Secured Party pursuant to the terms
hereof to the extent necessary to give Secured Party a first priority security
interest in total Partnership Rights after such creation which are in the
aggregate at least the same percentage of the outstanding rights of the same
kind in any Partnership as were subject hereto before such issue), whether such
additional interests are presently vested or will vest upon the payment of
money or the occurrence or nonoccurrence of any other condition.  Debtor will not enter into any agreement
(other than the Obligation Documents) creating, or otherwise permit to exist,
any restriction or condition upon the transfer or exercise of any Partnership
Rights.

 

G-2-6

 

 

ARTICLE IV
- REMEDIES, POWERS AND AUTHORIZATIONS

 

Section 4.1.                                   Provisions Concerning the Collateral.

 

(a)                                  Additional Filings.  Debtor hereby authorizes Secured Party to
file, without the signature of Debtor where permitted by law, one or more
financing or continuation statements, and amendments thereto, covering or
otherwise relating to the Collateral.

 

(b)                                 Power of Attorney.  Debtor hereby irrevocably appoints Secured
Party as Debtor’s attorney in fact and proxy, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, upon the occurrence
and during the continuance of a Default, from time to time in Secured Party’s
discretion, to take any action, and to execute or indorse any instrument,
certificate or notice, which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement including any action or instrument: (i) to
request or instruct each Partnership (and each registrar, transfer agent, or
similar Person acting on behalf of each Partnership) to register the pledge or
transfer of the Collateral to Secured Party; (ii) to otherwise give
notification to any Partnership, registrar, transfer agent, financial
intermediary, or other Person of Secured Party’s security interests hereunder; (iii) to
ask, demand, collect, sue for, recover, compound, receive and give acquittance
and receipts for moneys due and to become due under or in respect of any of the
Collateral; (iv) to receive, indorse and collect any drafts or other
instruments or documents; (v) to enforce any obligations included among
the Collateral; and (vi) to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce, perfect,
or establish the priority of the rights of Secured Party with respect to any of
the Collateral.  Debtor hereby
acknowledges that such power of attorney and proxy are coupled with an
interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor fails to perform any agreement or
obligation contained herein, Secured Party may itself perform, or cause
performance of, such agreement or obligation, and the expenses of Secured Party
incurred in connection therewith shall be payable by Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have the right at any
time, upon the occurrence and during the continuance of a Default, to notify
(or require Debtor to notify) any or all Persons (including any Partnership)
obligated to make payments which are included among the Collateral (whether
accounts, general intangibles, distributions, Partnership Rights to Payment, or
otherwise) of the assignment thereof to Secured Party under this Agreement and
to direct such obligors to make payment of all amounts due or to become due to
Debtor thereunder directly to Secured Party and, upon such notification and at
the expense of Debtor and to the extent permitted by law, to enforce collection
thereof and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as Debtor could have done.  After Debtor receives notice that Secured
Party has given (and after Secured Party has required Debtor to give) any
notice referred to above in this subsection:

 

(i)                                     all
amounts and proceeds (including instruments and writings) received by Debtor in
respect of such distributions, accounts, or general intangibles or Partnership
Rights to Payments shall be received in trust for the benefit of Secured Party

 

G-2-7

 

hereunder, shall be segregated from other
funds of Debtor and shall be forthwith paid over to Secured Party in the same
form as so received (with any necessary indorsement) to be applied as specified
in Section 4.3, and

 

(ii)                                  Debtor
will not adjust, settle or compromise the amount or payment of any such account
or general intangible or Partnership Right to Payments or release wholly or
partly any account debtor or obligor thereof (including any Partnership) or
allow any credit or discount thereon.

 

Section 4.2.                                   Default Remedies.  If a Default shall have occurred and be
continuing, Secured Party may from time to time in its discretion, without
limitation and without notice except as expressly provided below:

 

(a)                                  exercise
in respect of the Collateral, in addition to any other rights and remedies
provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral);

 

(b)                                 require
Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Secured Party, promptly assemble all books, records and information
of Debtor relating to the Collateral at a place to be designated by Secured
Party which is reasonably convenient to both parties;

 

(c)                                  reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest created hereby by any available judicial procedure;

 

(d)                                 dispose
of, at its office, on the premises of Debtor or elsewhere, all or any part of
the Collateral, as a unit or in parcels, by public or private proceedings, and
by way of one or more contracts (it being agreed that the sale of any part of
the Collateral shall not exhaust Secured Party’s power of sale, but sales may
be made from time to time, and at any time, until all of the Collateral has
been sold or until the Secured Obligations have been paid and performed in
full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

 

(e)                                  buy
(or allow one or more of the Lenders to buy) the Collateral, or any part
thereof, at any public sale;

 

(f)                                    buy
(or allow one or more of the Lenders to buy) the Collateral, or any part
thereof, at any private sale if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations;

 

(g)                                 apply
by appropriate judicial proceedings for appointment of a receiver for the
Collateral, or any part thereof, and Debtor hereby consents to any such
appointment; and

 

(h)                                 at
its discretion, retain the Collateral in satisfaction of the Secured
Obligations whenever the circumstances are such that Secured Party is entitled
to do so under the UCC or otherwise (provided that Secured Party shall in no
circumstances be deemed to have retained the Collateral in satisfaction of the
Secured Obligations in the absence of an express notice by Secured Party to
Debtor that Secured Party has either done so or intends to do so).

 

G-2-8

 

Debtor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days’ notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. 
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. 
Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any Default shall have occurred and be
continuing, Secured Party may in its discretion apply any cash held by Secured
Party as Collateral, and any cash proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral, to any or all of the following in such order as Secured Party
may (subject to the rights of Lenders under the Credit Agreement) elect:

 

(a)                                  To
the repayment of all costs and expenses, including reasonable attorneys’ fees
and legal expenses, incurred by Secured Party in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure of Debtor to perform or
observe any of the provisions hereof;

 

(b)                                 To
the payment or other satisfaction of any Liens, encumbrances, or adverse claims
upon or against any of the Collateral;

 

(c)                                  To
the reimbursement of Secured Party for the amount of any obligations of Debtor
or any Other Liable Party paid or discharged by Secured Party pursuant to the
provisions of this Agreement or the other Obligation Documents, and of any
expenses of Secured Party payable by Debtor hereunder or under the other
Obligation Documents;

 

(d)                                 To
the satisfaction of any other Secured Obligations;

 

(e)                                  By
holding the same as Collateral;

 

(f)                                    To
the payment of any other amounts required by applicable law (including any
provision of the UCC); and

 

(g)                                 By
delivery to Debtor or to whomever shall be lawfully entitled to receive the
same or as a court of competent jurisdiction shall direct.

 

Section 4.4.                                   Deficiency.  In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation
Documents or (if no interest is so provided) at such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party or Lenders to
collect such deficiency.

 

G-2-9

 

Section 4.5.                                   Indemnity and Expenses.  In addition to, but not in qualification or
limitation of, any similar obligations under other Obligation Documents:

 

(a)                                  Debtor
will indemnify Secured Party and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), WHETHER
OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT
OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR ARE
CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY’S OWN NEGLIGENCE,
except to the extent such claims, losses or liabilities are proximately caused
by such indemnified party’s individual gross negligence or willful misconduct.

 

(b)                                 Debtor
will upon demand pay to Secured Party the amount of any and all reasonable
costs and expenses, including the reasonable fees and disbursements of Secured
Party’s counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the transactions which give rise to this Agreement, (ii) the
preparation of this Agreement and the perfection and preservation of this
security interest created under this Agreement, (iii) the administration of
this Agreement; (iv) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any Collateral; (v) the
exercise or enforcement of any of the rights of Secured Party hereunder; or (vi) the
failure by Debtor to perform or observe any of the provisions hereof, except
expenses resulting from Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non Judicial Remedies.  In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly waives, renounces and knowingly relinquishes any
legal right which might otherwise require Secured Party to enforce its rights
by judicial process.  In so providing for
non judicial remedies, Debtor recognizes and concedes that such remedies are
consistent with the usage of trade, are responsive to commercial necessity, and
are the result of a bargain at arm’s length. 
Nothing herein is intended, however, to prevent Secured Party from
resorting to judicial process at its option.

 

Section 4.7.                                   Other Recourse.  Debtor waives any right to require Secured
Party or any Lender to proceed against any other Person, to exhaust any
Collateral or other security for the Secured Obligations, or to have any Other
Liable Party joined with Debtor in any suit arising out of the Secured
Obligations or this Agreement, or pursue any other remedy in Secured Party’s
power.  Debtor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time.  Debtor further waives any defense arising by
reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party.  This Agreement shall
continue irrespective of the fact that the liability of any Other Liable Party
may have ceased and irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding any death, incapacity, reorganization, or bankruptcy of any
Other Liable Party or any other event or proceeding affecting any Other Liable
Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy

 

G-2-10

 

which Secured Party or any Lender has or may
hereafter have against any Other Liable Party, and waives any benefit of and
any right to participate in any other security whatsoever now or hereafter held
by Secured Party.  Debtor authorizes Secured
Party and each Lender, without notice or demand, without any reservation of
rights against Debtor, and without in any way affecting Debtor’s liability
hereunder or on the Secured Obligations, from time to time to (a) take or
hold any other property of any type from any other Person as security for the
Secured Obligations, and exchange, enforce, waive and release any or all of
such other property, (b) apply the Collateral or such other property and
direct the order or manner of sale thereof as Secured Party may in its
discretion determine, (c) renew, extend for any period, accelerate,
modify, compromise, settle or release any of the obligations of any Other
Liable Party in respect to any or all of the Secured Obligations or other
security for the Secured Obligations, (d) waive, enforce, modify, amend,
restate, or supplement any of the provisions of any Obligation Document with
any Person other than Debtor, and (e) release or substitute any Other
Liable Party.

 

Section 4.8.                                   Exercise of Partnership Rights.

 

(a)                                  So
long as no Default or Event of Default shall have occurred and be continuing,
Debtor may receive and retain any and all distributions of profits paid in cash
in respect of the Partnership Rights to Payments; provided, however, that any
and all other payments in respect of the Partnership Rights to Payments shall
be, and shall forthwith be delivered to Secured Party to hold as, Collateral
and shall, if received by Debtor, be received in trust for the benefit of
Secured Party, be segregated from the other property or funds of Debtor, and be
forthwith delivered to Secured Party in the exact form received with any
necessary indorsement or instruments of transfer duly executed in blank, to be
held by Secured Party as Collateral.

 

(b)                                 Upon
the occurrence and during the continuance of a Default or an Event of Default,
all rights of Debtor to receive and retain any distributions of profits or
other payments of any kind in respect of Partnership Rights to Payments which
Debtor would otherwise be authorized to receive and retain pursuant to subsection (a) of
this section shall automatically cease, and all such rights shall
thereupon become vested in Secured Party which shall thereupon have the sole
right to receive and hold as Collateral all such distributions and payments,
and all distributions of profits and other payments of any kind in respect of
Partnership Rights to Payments which are nonetheless received by Debtor shall
be received in trust for the benefit of Secured Party, shall be segregated from
other funds of Debtor, and shall be forthwith paid over to Secured Party in the
exact form received, to be held by Secured Party as Collateral.  Notwithstanding anything contained herein to
the contrary, Debtor may at all times exercise any and all voting rights
pertaining to the Partnership Rights or any part thereof for any purpose not
inconsistent with the terms of this Agreement or any other Obligation Document.

 

Section 4.9.                                   Private Sale of Partnership Rights.  Debtor recognizes that Secured Party may deem
it impracticable to effect a public sale of all or any part of the Partnership
Rights and that Secured Party may, therefore, determine to make one or more
private sales of Partnership Rights to a restricted group of purchasers who
will be obligated to agree, among other things, to acquire the same for their
own account, for investment and not with a view to the distribution or resale
thereof.  Debtor acknowledges that any
such private sale may be at prices

 

G-2-11

 

and on terms less favorable to the seller
than the prices and other terms which might have been obtained at a public sale
and, notwithstanding the foregoing, agrees that such private sales shall be
deemed to have been made in a commercially reasonable manner and that Secured
Party shall have no obligation to delay sale of any Partnership Rights for the
period of time necessary to permit their registration for public sale under the
Securities Act of 1933, as amended (the “Securities
Act”), to the extent, if any, that it is applicable thereto.  Debtor further acknowledges and agrees that
any offer to sell any Partnership Rights which has been (a) publicly
advertised on a bona fide basis in a newspaper or other publication of general
circulation in the financial community of Denver, Colorado (to the extent that
such an offer may be so advertised without prior registration under the
Securities Act), or (b) made privately in the manner described above to
not less than fifteen (15) bona fide offerees shall be deemed to involve a “public
disposition” for the purposes of Section 9.610(c) of the UCC (or any
successor or similar, applicable statutory provision), notwithstanding that
such sale may not constitute a “public offering” under the Securities Act, and
that Secured Party may, in such event, bid for the purchase of such Partnership
Rights.  Any sale of the Collateral shall
be conducted in accordance with all applicable securities and other laws then
in effect.

 

Section 4.10.                             Limitation on Rights and Waivers.  All rights, powers and remedies herein conferred
shall be exercisable by Secured Party only to the extent not prohibited by
applicable law; and all waivers and relinquishments of rights and similar
matters shall only be effecting to the extent such waivers or relinquishments
are not prohibited by applicable law.

 

ARTICLE V
- MISCELLANEOUS

 

Section 5.1.                                   Notices.  Any notice or communication required or
permitted hereunder shall be given as provided in the Credit Agreement.

 

Section 5.2.                                   Amendments.  No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in
writing and signed by Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given and to the extent specified in such writing.  In addition all such amendments and waivers
shall be effective only if given with any approvals of Lenders as required in
the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No failure on the part of Secured Party or
any Lender to exercise, and no delay in exercising, any right hereunder or
under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.  Neither the execution nor the delivery of
this Agreement shall in any manner impair or affect any other security for the
Secured Obligations.  The rights and
remedies of Secured Party provided herein and in the other Obligation Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law.  The rights of
Secured Party under any Obligation Document against any party thereto are not
conditional or contingent on any attempt by Secured Party to exercise any of
its rights under any other Obligation Document against such party or against
any other Person.

 

G-2-12

 

Section 5.4.                                   Unenforceability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without
invalidating the remaining portions hereof or thereof or affecting the validity
or enforceability of such provision in any other jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All representations and warranties of Debtor
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other Obligation
Documents and the creation of the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this Agreement nor the exercise by
Secured Party or the failure of Secured Party to exercise any right, power or
remedy conferred herein or by law shall be construed as relieving any Other
Liable Party from liability on the Secured Obligations or any deficiency
thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding the reorganization, death, incapacity or bankruptcy of any
Other Liable Party, and notwithstanding the reorganization or bankruptcy or
other event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment.  This Agreement creates a continuing security
interest in the Collateral and (a) shall be binding on Debtor and its
successors and permitted assigns and (b) shall inure, together with all
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and Lenders and their respective successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in
the Credit Agreement) pledge, assign or otherwise transfer any or all of its
rights under any or all of the Obligation Documents to any other Person, and
such other Person shall thereupon become vested with all of the benefits in
respect thereof granted to Secured Party, herein or otherwise.  None of the rights or duties of Debtor
hereunder may be assigned or otherwise transferred without the prior written
consent of Secured Party.

 

Section 5.8.                                   Termination.  It is contemplated by the parties hereto that
there may be times when no Secured Obligations are outstanding, but
notwithstanding such occurrences, this Agreement shall remain valid and shall
be in full force and effect as to subsequent outstanding Secured
Obligations.  Upon the satisfaction in
full of the Secured Obligations and the termination or expiration of the Credit
Agreement and any other commitment of Lenders to extend credit to Debtor, then
upon written request for the termination hereof delivered by Debtor to Secured
Party this Agreement and the security interest created hereby shall terminate
and all rights to the Collateral shall revert to Debtor.  Secured Party will, upon Debtor’s request and
at Debtor’s expense, Exhibit H return to Debtor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof; and Exhibit I execute and deliver to
Debtor such documents as Debtor shall reasonably request to evidence such
termination.

 

Section 5.9.                                   GOVERNING LAW.  THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF COLORADO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE, EXCEPT AS REQUIRED BY

 

G-2-13

 

MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE
EXTENT THAT THE PERFECTION AND THE EFFECT OF PERFECTION OR NON PERFECTION OF
THE SECURITY INTEREST CREATED HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL, ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE,
BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

Section 5.10.                             FINAL AGREEMENT.  THIS
WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES HERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES
HERETO.  THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES HERETO.

 

Section 5.11.                             Counterparts.  This Agreement may be separately executed in
any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document”.  This Agreement is a “Loan Document”, as defined in the
Credit Agreement, and, except as expressly provided herein to the contrary,
this Agreement is subject to all provisions of the Credit Agreement governing
such Loan Documents.

 

[Remainder of
this page intentionally left blank. 
Signature Page to follow.]

 

G-2-14

 

IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
							

 

G-2-15

 

EXHIBIT A

 

DESCRIPTION
OF INTERESTS IN PARTNERSHIPS

 

	
  Debtor

  	
   

  	
  Partnership

  	
   

  	
  Interest

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

G-2-16

 

EXHIBIT G-3

FORM OF PLEDGE AGREEMENT (LIMITED LIABILITY
COMPANY)

 

THIS AMENDED AND RESTATED PLEDGE AGREEMENT (LIMITED LIABILITY COMPANY)
(this “Agreement”) is made as
of                                               ,
20        , by                                                           ,
a                                                           
(“Debtor”), in favor of
JPMorgan Chase Bank, N.A., successor by merger to Bank One, NA (Main Office
Chicago), a national banking association, as Administrative Agent for the
benefit of the Lenders under the Credit Agreement (herein called “Secured Party”).

 

RECITALS:

 

1.                                       Cimarex
Energy Co., a Delaware corporation (“Borrower”),
has executed in favor of Lenders (as such term is defined below) those certain
promissory notes dated June 13, 2005, payable to the order of Lenders in
the aggregate original principal amount of $1,000,000,000 (such promissory
notes, as from time to time amended, and all promissory notes given in
substitution, renewal or extension therefor or thereof, in whole or in part,
being herein collectively called the “Note”).

 

2.                                       The
Note was executed pursuant to an Amended and Restated Credit Agreement dated June 13,
2005, (herein, as from time to time amended, supplemented or restated, called
the “Credit Agreement”), by
and between Borrower, Secured Party, and Lenders, pursuant to which Lenders
have agreed to advance funds to Borrower under the Note.

 

3.                                       Pursuant
to the Credit Agreement, Debtor has previously given to Secured Party a
guaranty, for the benefit of each Lender, (herein, as from time to time
amended, supplemented or restated, called the “Guaranty”) of all of the indebtedness of Borrower under
the Credit Agreement and the Note.

 

4.                                       Borrower
owns directly, or indirectly through one or more subsidiaries, one hundred
percent (100%) of the issued and outstanding stock of Debtor.

 

5.                                       The
board of directors of Debtor has determined that Debtor’s execution, delivery
and performance of this Agreement may reasonably be expected to benefit Debtor,
directly or indirectly, and are in the best interests of Debtor.

 

NOW, THEREFORE, in consideration of the premises, of the benefits which
will inure to Debtor from Lenders’ extensions of credit under the Credit
Agreement, and of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of all of which are hereby acknowledged, and in order
to induce Lenders to extend credit under the Credit Agreement, Debtor hereby
agrees with Secured Party for the benefit of each Lender as follows:

 

G-3-1

 

AGREEMENTS

 

ARTICLE I
- DEFINITIONS AND REFERENCES

 

Section 1.1.                                   General Definitions.  As used herein, the terms “Agreement,” “Debtor,” “Secured Party,” “Note,”
“Borrower,” “Guaranty,” and “Credit Agreement” shall have the
meanings indicated above, and the following terms shall have the following
meanings:

 

“Collateral” means
all property, of whatever type, which is described in Section 2.1 as being
at any time subject to a security interest granted hereunder to Secured Party.

 

“Commitment” means
the agreement or commitment by Lenders to make loans or otherwise extend credit
to Debtor under the Credit Agreement, and any other agreement, commitment,
statement of terms or other document contemplating the making of loans or
advances or other extension of credit by Lenders to or for the account of
Debtor which is now or at any time hereafter intended to be secured by the
Collateral under this Agreement.

 

“Lenders” means the
Persons who are from time to time “Lenders” as defined in the Credit Agreement.

 

“LLC” means any
limited liability company which is included within the term “Limited Liability
Company” pursuant to Section 2.1(a), and any successor of any such limited
liability company.

 

“LLC Agreements”, “LLC Rights”, and “LLC Rights to Payments” have the
meanings given them in Section 2.1(a).

 

“Obligation Documents”
means the Credit Agreement, all other Loan Documents, all documents evidencing
Rate Management Transactions with one or more Lenders or any affiliates of such
Lenders, and all other documents and instruments under, by reason of which, or
pursuant to which any or all of the Secured Obligations are evidenced,
governed, secured, guarantied, or otherwise dealt with, and all other
agreements, certificates, and other documents, instruments and writings
heretofore or hereafter delivered in connection herewith or therewith.

 

“Other Liable Party”
means any Person, other than Debtor, who may now or may at any time hereafter
be primarily or secondarily liable for any of the Secured Obligations or who
may now or may at any time hereafter have granted to Secured Party or Lenders a
Lien upon any property as security for the Secured Obligations.

 

“Other LLC Rights”
has the meaning given it in Section 2.1(a).

 

“UCC” means the
Colorado Uniform Commercial Code in effect from time to time.

 

Section 1.2.                                   Incorporation of Other Definitions.  Reference is hereby made to the Credit
Agreement for a statement of the terms thereof. 
All capitalized terms used in this Agreement which are defined in the
Credit Agreement and not otherwise defined herein shall have the same meanings
herein as set forth therein.  All terms
used in this Agreement which are

 

G-3-2

 

defined in the UCC and not otherwise defined
herein or in the Credit Agreement shall have the same meanings herein as set
forth therein, except where the context otherwise requires.

 

Section 1.3.                                   Attachments.  All exhibits or schedules which may be
attached to this Agreement are a part hereof for all purposes.

 

Section 1.4.                                   Amendment of Defined Instruments.  Unless the context otherwise requires or
unless otherwise provided herein, references in this Agreement to a particular
agreement, instrument or document (including, but not limited to, references in
Section 2.1) also refer to and include all renewals, extensions,
amendments, modifications, supplements or restatements of any such agreement,
instrument or document, provided that nothing contained in this Section shall
be construed to authorize any Person to execute or enter into any such renewal,
extension, amendment, modification, supplement or restatement.

 

Section 1.5.                                   References and Titles.  All references in this Agreement to Exhibits,
Articles, Sections, subsections, and other subdivisions refer to the Exhibits,
Articles, Sections, subsections and other subdivisions of this Agreement unless
expressly provided otherwise.  Titles
appearing at the beginning of any subdivision are for convenience only and do
not constitute any part of any such subdivision and shall be disregarded in
construing the language contained in this Agreement.  The words “this Agreement”, “herein”,
“hereof”, “hereby”, “hereunder” and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.  The phrases “this Section” and “this subsection” and similar phrases
refer only to the Sections or subsections hereof in which the phrase
occurs.  The word “or” is not exclusive, and the word “including” (in all of its forms) means “including without limitation”.  Pronouns in masculine, feminine and neuter
gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless
the context otherwise requires.

 

ARTICLE II
- SECURITY INTEREST

 

Section 2.1.                                   Grant of Security Interest.  As collateral security for all of the Secured
Obligations, Debtor hereby pledges and assigns to Secured Party and grants to
Secured Party a continuing security interest for the benefit of each Lender in
and to all right, title and interest of the following:

 

(a)                                  LLC Rights.  All of the following (herein collectively
called the “LLC Rights”),
whether now or hereafter existing, which are owned by Debtor or in which Debtor
otherwise has any rights:

 

(i)                                     all
units of limited liability company ownership interests and all proceeds,
interest, profits, and other payments or rights to payment attributable to
Debtor’s interests in each limited liability company (whether one or more,
herein called the “LLCs”)
described on Exhibit A hereto, and all distributions, cash,
instruments and other property now or hereafter received, receivable or
otherwise made with respect to or in exchange for any interest of Debtor in any
LLC, including interim distributions, returns of capital, loan repayments, and
payments made in liquidation of any LLC, and whether or not the same arise or
are payable under any LLC agreement or certificate

 

G-3-3

 

forming any LLC or any other agreement
governing any LLC or the relations among the members of any LLC (any and all
such proceeds, interest, profits, payments, rights to payment, distributions,
cash, instruments, other property, interim distributions, returns of capital,
loan repayments, and payments made in liquidation being herein called the “LLC
Rights to Payments”, and any and all such LLC agreements, certificates, and
other agreements being herein called the “LLC
Agreements”); and

 

(ii)                                  all
other interests and rights of Debtor in any of the LLCs, whether under the LLC
Agreements or otherwise, including without limitation any right to cause the dissolution
of any LLC or to appoint or nominate a successor to Debtor as a member in any
LLC (all such other interests and rights being herein called the “Other LLC Rights”).

 

(b)                                 Proceeds.  All proceeds of any and all of the foregoing
Collateral.

 

In each case, the foregoing shall be covered by this Agreement, whether
Debtor’s ownership or other rights therein are presently held or hereafter
acquired and however Debtor’s interests therein may arise or appear (whether by
ownership, security interest, claim or otherwise).

 

The granting of the foregoing security interest does not make Secured
Party a successor to Debtor as a member of any LLC, and neither Secured Party
nor any of its successors or assigns hereunder shall be deemed to have become a
member of any LLC by accepting this Agreement or exercising any right granted
herein unless and until such time, if any, when Secured Party or any such
successor or assign expressly becomes a member of any LLC after a foreclosure
upon Other LLC Rights.  Anything herein
to the contrary notwithstanding (except to the extent, if any, that Secured
Party or any of its successors or assigns hereafter expressly becomes a member
of any LLC), neither Secured Party nor any of its successors or assigns shall
be deemed to have assumed or otherwise become liable for any debts or
obligations of any LLC or of Debtor to or under any LLC, and the above
definition of “Other LLC Rights” shall be deemed modified, if necessary, to
prevent any such assumption or other liability.

 

Section 2.2.                                   Secured Obligations Secured.  The security interest created hereby in the
Collateral constitutes continuing collateral security for all of the following
obligations, indebtedness and liabilities, whether now existing or hereafter
incurred or arising:

 

(a)                                  Secured Obligations.  The payment by Borrower, as and when due and
payable, of the Secured Obligations, the due performance by Borrower of all of
its other obligations under or in respect of the various Obligation Documents,
the payment by Debtor, as and when due and payable, of all amounts from time to
time owing by Debtor under or in respect of the Guaranty, and the due
performance by Debtor of all of its other obligations under or in respect of
the various Obligation Documents.

 

(b)                                 Renewals.  All renewals, extensions, amendments,
modifications, supplements, or restatements of or substitutions for any of the
foregoing.

 

As used herein, the term “Secured
Obligations” refers to all present and future indebtedness,
obligations, and liabilities of whatever type which are described above in this
section, including any interest which accrues after the commencement of any
case, proceeding, or other action

 

G-3-4

 

relating to the bankruptcy, insolvency, or reorganization of
Debtor.  It is the intention of the
Debtor and Secured Party that this Agreement not constitute a fraudulent
transfer or fraudulent conveyance under any state or federal law that may be
applied hereto.  Debtor and, by its
acceptance hereof, Secured Party hereby acknowledges and agrees that,
notwithstanding any other provision of this Agreement:  (a) the indebtedness secured hereby
shall be limited to the maximum amount of indebtedness that can be incurred or
secured by Debtor without rendering this Agreement subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any
applicable state or federal law, and (b) the Collateral pledged by Debtor
hereunder shall be limited to the maximum amount of Collateral that can be
pledged by Debtor without rendering this Agreement subject to avoidance under Section 548
of the United States Bankruptcy Code or any comparable provisions of any
applicable state or federal law.

 

ARTICLE III
- REPRESENTATIONS, WARRANTIES AND COVENANTS

 

Section 3.1.                                   Representations and Warranties.  Each of the representations and warranties in
the Credit Agreement made by Debtor is true and correct.  In addition, Debtor hereby represents and
warrants to Secured Party and Lenders as follows:

 

(a)                                  Security Interest.  Debtor has and will have at all times full
right, power and authority to grant a security interest in the Collateral to
Secured Party as provided herein, free and clear of any Lien, adverse claim, or
encumbrance.  This Agreement creates a
valid and binding first priority security interest in favor of Secured Party in
the Collateral, which security interest secures all of the Secured Obligations.

 

(b)                                 Perfection. The filing of financing
statements with the Secretary of State (or equivalent governmental official) of
the State in which Debtor is organized will perfect, and establish the first
priority of, Secured Party’s security interest hereunder in the Collateral
securing the Secured Obligations.  No
further or subsequent filing, recording, registration, other public notice or
other action is necessary or desirable to perfect or otherwise continue,
preserve or protect such security interest except (i) for continuation
statements described in UCC Section 9.515(d), (ii) for filings required
to be filed in the event of a change in the name, identity, state of formation,
or entity structure of Debtor, or (iii) in the event any financing
statement filed by Secured Party relating hereto otherwise becomes inaccurate
or incomplete.

 

(c)                                  LLC Rights.  All units and other securities constituting
the LLC Rights have been duly authorized and validly issued, are fully paid and
non assessable, and were not issued in violation of the preemptive rights of
any person or of any agreement by which Debtor or any LLC is bound. All
documentary, stamp or other taxes or fees owing in connection with the
issuance, transfer or pledge of the LLC Rights (or rights in respect thereof)
have been paid. No restrictions or conditions exist with respect to the transfer,
voting or capital of any LLC Rights. Except as disclosed to Secured Party in
writing on or prior to the date hereof, no LLC has any outstanding rights to
subscribe, options, warrants or convertible securities outstanding or any other
rights outstanding whereby any person would be entitled to have issued to it
units of ownership interest in any LLC. 
Debtor has taken or concurrently herewith is taking all actions
necessary to perfect Secured Party’s security interest in the LLC Rights.   No other Person has any such registration in
effect.  Debtor owns the interests in
each LLC which are described on

 

G-3-5

 

Exhibit A.  No LLC has made any calls for capital which
have not been fully paid by Debtor and by each other member of such LLC.  Debtor is not in default under any of the LLC
Agreements, nor is any other member of any LLC. 
Neither the making of this Agreement nor the exercise of any rights or
remedies of Secured Party hereunder will cause a default under any of the LLC
Agreements or otherwise adversely affect or diminish any of the LLC
Rights.  Debtor’s rights under the LLC
Agreements are enforceable in accordance with their terms, except as such
enforcement may be limited by bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors’ rights.  The LLC Rights are not evidenced by any
certificates.  The LLC Rights (i) are
not dealt in or traded on securities exchanges or in securities markets, (ii) do
not expressly provide that they are a security governed by Article 8 of
the UCC, and (iii) are not held in a securities account.

 

Section 3.2.                                   Covenants.  Unless Secured Party shall otherwise consent
in writing, Debtor will at all times (i) comply with the covenants contained
in the Credit Agreement which are applicable to Debtor and (ii) comply
with the covenants contained in this Section 3.2 so long as any part of
the Secured Obligations or the Commitment is outstanding.

 

(a)                                  LLC Rights.  Debtor will maintain its ownership of the
interests in each LLC listed on Exhibit A.  Debtor will timely honor all calls under any
LLC Agreement to provide capital to any LLC, and Debtor will not otherwise
default in performing any of Debtor’s obligations under any LLC Agreement or
allow any LLC Rights to be adversely affected or diminished.  Debtor will promptly inform Secured Party of
any such failure to honor a capital call, default, adverse effect, or
diminution.  Debtor will promptly inform
Secured Party of any such failure to honor a capital call or default by another
member of any LLC.  The LLC Rights shall
at all times be duly authorized and validly issued and shall not be issued in
violation of the pre emptive rights of any Person or of any agreement by which
Debtor or the LLC thereof is bound. 
Debtor will not allow the LLC Rights (i) to be evidenced by
certificates, (ii) to be dealt in or traded on securities exchanges or in
securities markets, (iii) to be governed by Article 8 of the UCC, or (iv) to
be placed in a securities account.

 

(b)                                 Delivery.  A true and correct copy of each LLC Agreement
and all amendments and supplements thereto have been delivered to Secured
Party.  All amendments or supplements to
any LLC Agreement (whether or not authorized hereunder), shall be delivered to
Secured Party promptly upon the receipt thereof by or on behalf of Debtor.

 

(c)                                  Proceeds of LLC Rights.  If Debtor shall receive, by virtue of its
being or having been an owner of any LLC Rights, any (i) certificate,
instrument, deed, bill of sale, promissory note, or other instrument or writing
(including any given in connection with any increase or reduction of capital,
reorganization, reclassification, merger, consolidation, sale of assets,
liquidation, or partial liquidation); (ii) option or right, whether as an
addition to, substitution for, or in exchange for, any LLC Rights, or
otherwise; or (iii) distributions payable in cash (except distributions
permitted to be retained by Debtor pursuant to Section 4.8 hereof) or in
securities or other property, Debtor shall receive the same in trust for the
benefit of Secured Party, shall segregate it from Debtor’s other property, and
shall promptly deliver it to Secured Party in the exact form received, with any
necessary endorsement or instruments of transfer duly executed in blank, to be
held by Secured Party as Collateral.

 

G-3-6

 

(d)                                 Diminution of LLC Rights.  Debtor will not adjust, settle, compromise,
amend or modify any of the LLC Rights or the LLC Agreements.  Debtor will not permit the creation of any
additional interests in any LLC (unless immediately upon creation the same are
pledged to Secured Party pursuant to the terms hereof to the extent necessary
to give Secured Party a first priority security interest in total LLC Rights
after such creation which are in the aggregate at least the same percentage of
the outstanding rights of the same kind in any LLC as were subject hereto
before such issue), whether such additional interests are presently vested or
will vest upon the payment of money or the occurrence or nonoccurrence of any
other condition.  Debtor will not enter
into any agreement (other than the Obligation Documents) creating, or otherwise
permit to exist, any restriction or condition upon the transfer or exercise of
any LLC Rights.

 

(e)                                  Status of LLC Rights. The LLC Rights at
all times shall be duly authorized, validly issued, fully paid, and non
assessable, and shall not be issued in violation of the preemptive rights of
any person or of any agreement by which Debtor or any LLC is bound and shall
not be subject to any restrictions with respect to transfer, voting or capital
of such LLC Rights.

 

(f)                                    Restrictions on LLC Rights.  Debtor will not enter into any agreement
creating, or otherwise permit to exist, any restriction or condition upon the
transfer, voting or control of any LLC Rights.

 

ARTICLE IV
- REMEDIES, POWERS AND AUTHORIZATIONS

 

Section 4.1.                                   Provisions Concerning the Collateral.

 

(a)                                  Additional Filings.  Debtor hereby authorizes Secured Party to
file, without the signature of Debtor where permitted by law, one or more
financing or continuation statements, and amendments thereto, covering or
otherwise relating to the Collateral.

 

(b)                                 Power of Attorney.  Debtor hereby irrevocably appoints Secured
Party as Debtor’s attorney in fact and proxy, with full authority in the place
and stead of Debtor and in the name of Debtor or otherwise, upon the occurrence
and during the continuance of a Default, from time to time in Secured Party’s
discretion, to take any action, and to execute or indorse any instrument,
certificate or notice, which Secured Party may deem necessary or advisable to
accomplish the purposes of this Agreement including any action or instrument: (i) to
request or instruct each LLC (and each registrar, transfer agent, or similar
Person acting on behalf of each LLC) to register the pledge or transfer of the
Collateral to Secured Party; (ii) to otherwise give notification to any
LLC, registrar, transfer agent, financial intermediary, or other Person of
Secured Party’s security interests hereunder; (iii) to ask, demand,
collect, sue for, recover, compound, receive and give acquittance and receipts
for moneys due and to become due under or in respect of any of the Collateral; (iv) to
receive, indorse and collect any drafts or other instruments or documents; (v) to
enforce any obligations included among the Collateral; and (vi) to file
any claims or take any action or institute any proceedings which Secured Party
may deem necessary or desirable for the collection of any of the Collateral or
otherwise to enforce, perfect, or establish the priority of the rights of
Secured Party with respect to any of the

 

G-3-7

 

Collateral. 
Debtor hereby acknowledges that such power of attorney and proxy are
coupled with an interest, and are irrevocable.

 

(c)                                  Performance by Secured Party.  If Debtor fails to perform any agreement or
obligation contained herein, Secured Party may itself perform, or cause performance
of, such agreement or obligation, and the expenses of Secured Party incurred in
connection therewith shall be payable by Debtor under Section 4.5.

 

(d)                                 Collection Rights.  Secured Party shall have the right at any
time, upon the occurrence and during the continuance of a Default, to notify
(or require Debtor to notify) any or all Persons (including any LLC) obligated
to make payments which are included among the Collateral (whether accounts,
general intangibles, dividends, distribution rights, LLC Rights to Payment, or
otherwise) of the assignment thereof to Secured Party under this Agreement and
to direct such obligors to make payment of all amounts due or to become due to
Debtor thereunder directly to Secured Party and, upon such notification and at
the expense of Debtor and to the extent permitted by law, to enforce collection
thereof and to adjust, settle or compromise the amount or payment thereof, in
the same manner and to the same extent as Debtor could have done.  After Debtor receives notice that Secured
Party has given (and after Secured Party has required Debtor to give) any
notice referred to above in this subsection:

 

(i)                                     all
amounts and proceeds (including instruments and writings) received by Debtor in
respect of such accounts, general intangibles, dividends, distribution rights,
or LLC Rights to Payments shall be received in trust for the benefit of Secured
Party hereunder, shall be segregated from other funds of Debtor and shall be
forthwith paid over to Secured Party in the same form as so received (with any
necessary indorsement) to be applied as specified in Section 4.3, and

 

(ii)                                  Debtor
will not adjust, settle or compromise the amount or payment of any such account
or general intangible or LLC Right to Payments or release wholly or partly any
account debtor or obligor thereof (including any LLC) or allow any credit or
discount thereon.

 

Section 4.2.                                   Default Remedies.  If a Default shall have occurred and be
continuing, Secured Party may from time to time in its discretion, without limitation
and without notice except as expressly provided below:

 

(a)                                  exercise
in respect of the Collateral, in addition to any other rights and remedies
provided for herein, under the other Obligation Documents or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral);

 

(b)                                 require
Debtor to, and Debtor hereby agrees that it will at its expense and upon
request of Secured Party, promptly assemble all books, records and information
of Debtor relating to the Collateral at a place to be designated by Secured
Party which is reasonably convenient to both parties;

 

(c)                                  reduce
its claim to judgment or foreclose or otherwise enforce, in whole or in part,
the security interest created hereby by any available judicial procedure;

 

G-3-8

 

(d)                                 dispose
of, at its office, on the premises of Debtor or elsewhere, all or any part of
the Collateral, as a unit or in parcels, by public or private proceedings, and
by way of one or more contracts (it being agreed that the sale of any part of
the Collateral shall not exhaust Secured Party’s power of sale, but sales may
be made from time to time, and at any time, until all of the Collateral has
been sold or until the Secured Obligations have been paid and performed in
full), and at any such sale it shall not be necessary to exhibit any of the
Collateral;

 

(e)                                  buy
(or allow one or more of the Lenders to buy) the Collateral, or any part thereof,
at any public sale;

 

(f)                                    buy
(or allow one or more of the Lenders to buy) the Collateral, or any part
thereof, at any private sale if the Collateral is of a type customarily sold in
a recognized market or is of a type which is the subject of widely distributed
standard price quotations;

 

(g)                                 apply
by appropriate judicial proceedings for appointment of a receiver for the
Collateral, or any part thereof, and Debtor hereby consents to any such
appointment; and

 

(h)                                 at
its discretion, retain the Collateral in satisfaction of the Secured
Obligations whenever the circumstances are such that Secured Party is entitled
to do so under the UCC or otherwise (provided that Secured Party shall in no
circumstances be deemed to have retained the Collateral in satisfaction of the
Secured Obligations in the absence of an express notice by Secured Party to
Debtor that Secured Party has either done so or intends to do so).

 

Debtor agrees that, to the extent notice of sale shall be required by
law, at least ten (10) days’ notice to Debtor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification. 
Secured Party shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. 
Secured Party may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

 

Section 4.3.                                   Application of Proceeds.  If any Default shall have occurred and be
continuing, Secured Party may in its discretion apply any cash held by Secured
Party as Collateral, and any cash proceeds received by Secured Party in respect
of any sale of, collection from, or other realization upon all or any part of
the Collateral, to any or all of the following in such order as Secured Party
may (subject to the rights of Lenders under the Credit Agreement) elect:

 

(a)                                  To
the repayment of all costs and expenses, including reasonable attorneys’ fees
and legal expenses, incurred by Secured Party in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any Collateral,
(iii) the exercise or enforcement of any of the rights of Secured Party
hereunder, or (iv) the failure of Debtor to perform or observe any of the
provisions hereof;

 

(b)                                 To
the payment or other satisfaction of any Liens, encumbrances, or adverse claims
upon or against any of the Collateral;

 

G-3-9

 

(c)                                  To
the reimbursement of Secured Party for the amount of any obligations of Debtor
or any Other Liable Party paid or discharged by Secured Party pursuant to the
provisions of this Agreement or the other Obligation Documents, and of any
expenses of Secured Party payable by Debtor hereunder or under the other
Obligation Documents;

 

(d)                                 To
the satisfaction of any other Secured Obligations;

 

(e)                                  By
holding the same as Collateral;

 

(f)                                    To
the payment of any other amounts required by applicable law (including any
provision of the UCC); and

 

(g)                                 By
delivery to Debtor or to whomever shall be lawfully entitled to receive the
same or as a court of competent jurisdiction shall direct.

 

Section 4.4.                                   Deficiency.  In the event that the proceeds of any sale,
collection or realization of or upon Collateral by Secured Party are
insufficient to pay all Secured Obligations and any other amounts to which
Secured Party is legally entitled, Debtor shall be liable for the deficiency,
together with interest thereon as provided in the governing Obligation
Documents or (if no interest is so provided) at such other rate as shall be
fixed by applicable law, together with the costs of collection and the
reasonable fees of any attorneys employed by Secured Party or Lenders to
collect such deficiency.

 

Section 4.5.                                   Indemnity and Expenses.  In addition to, but not in qualification or
limitation of, any similar obligations under other Obligation Documents:

 

(a)                                  Debtor
will indemnify Secured Party and each Lender from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including enforcement of this Agreement), WHETHER
OR NOT SUCH CLAIMS, LOSSES AND LIABILITIES ARE IN ANY WAY OR TO ANY EXTENT
OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY OR ARE
CAUSED BY OR ARISE OUT OF SUCH INDEMNIFIED PARTY’S OWN NEGLIGENCE,
except to the extent such claims, losses or liabilities are proximately caused
by such indemnified party’s individual gross negligence or willful misconduct.

 

(b)                                 Debtor
will upon demand pay to Secured Party the amount of any and all reasonable
costs and expenses, including the reasonable fees and disbursements of Secured
Party’s counsel and of any experts and agents, which Secured Party may incur in
connection with (i) the transactions which give rise to this Agreement, (ii) the
preparation of this Agreement and the perfection and preservation of this
security interest created under this Agreement, (iii) the administration
of this Agreement; (iv) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any Collateral; (v) the
exercise or enforcement of any of the rights of Secured Party hereunder; or (vi) the
failure by Debtor to perform or observe any of the provisions hereof, except
expenses resulting from Secured Party’s gross negligence or willful misconduct.

 

Section 4.6.                                   Non Judicial Remedies.  In granting to Secured Party the power to
enforce its rights hereunder without prior judicial process or judicial
hearing, Debtor expressly

 

G-3-10

 

waives, renounces and knowingly relinquishes
any legal right which might otherwise require Secured Party to enforce its
rights by judicial process.  In so
providing for non judicial remedies, Debtor recognizes and concedes that such
remedies are consistent with the usage of trade, are responsive to commercial
necessity, and are the result of a bargain at arm’s length.  Nothing herein is intended, however, to
prevent Secured Party from resorting to judicial process at its option.

 

Section 4.7.                                   Other Recourse.  Debtor waives any right to require Secured
Party *[or any Lender] to proceed against any other Person, to exhaust any
Collateral or other security for the Secured Obligations, or to have any Other
Liable Party joined with Debtor in any suit arising out of the Secured
Obligations or this Agreement, or pursue any other remedy in Secured Party’s
power.  Debtor further waives any and all
notice of acceptance of this Agreement and of the creation, modification,
rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time.  Debtor further waives any defense arising by
reason of any disability or other defense of any Other Liable Party or by
reason of the cessation from any cause whatsoever of the liability of any Other
Liable Party.  This Agreement shall
continue irrespective of the fact that the liability of any Other Liable Party
may have ceased and irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding any death, incapacity, reorganization, or bankruptcy of any
Other Liable Party or any other event or proceeding affecting any Other Liable
Party.  Until all of the Secured
Obligations shall have been paid in full, Debtor shall have no right to
subrogation and Debtor waives the right to enforce any remedy which Secured
Party or any Lender has or may hereafter have against any Other Liable Party,
and waives any benefit of and any right to participate in any other security
whatsoever now or hereafter held by Secured Party and each Lender.  Debtor authorizes Secured Party, without
notice or demand, without any reservation of rights against Debtor, and without
in any way affecting Debtor’s liability hereunder or on the Secured
Obligations, from time to time to (a) take or hold any other property of
any type from any other Person as security for the Secured Obligations, and
exchange, enforce, waive and release any or all of such other property, (b) apply
the Collateral or such other property and direct the order or manner of sale
thereof as Secured Party may in its discretion determine, (c) renew,
extend for any period, accelerate, modify, compromise, settle or release any of
the obligations of any Other Liable Party in respect to any or all of the
Secured Obligations or other security for the Secured Obligations, (d) waive,
enforce, modify, amend, restate, or supplement any of the provisions of any
Obligation Document with any Person other than Debtor, and (e) release or
substitute any Other Liable Party.

 

Section 4.8.                                   Exercise of LLC Rights.

 

(a)                                  So
long as no Default or Event of Default shall have occurred and be continuing,
Debtor may receive and retain any and all distributions of profits paid in cash
in respect of the LLC Rights to Payments; provided, however, that any and all
other payments in respect of the LLC Rights to Payments shall be, and shall
forthwith be delivered to Secured Party to hold as, Collateral and shall, if
received by Debtor, be received in trust for the benefit of Secured Party, be
segregated from the other property or funds of Debtor, and be forthwith
delivered to Secured Party in the exact form received with any necessary
indorsement or instruments of transfer duly executed in blank, to be held by
Secured Party as Collateral.

 

G-3-11

 

(b)                                 Upon
the occurrence and during the continuance of a Default or an Event of Default,
all rights of Debtor to receive and retain any distributions of profits or
other payments of any kind in respect of LLC Rights to Payments which Debtor
would otherwise be authorized to receive and retain pursuant to subsection (a) of
this section shall automatically cease, and all such rights shall
thereupon become vested in Secured Party which shall thereupon have the sole
right to receive and hold as Collateral all such distributions and payments,
and all distributions of profits and other payments of any kind in respect of
LLC Rights to Payments which are nonetheless received by Debtor shall be
received in trust for the benefit of Secured Party, shall be segregated from
other funds of Debtor, and shall be forthwith paid over to Secured Party in the
exact form received, to be held by Secured Party as Collateral.  Notwithstanding anything herein to the
contrary, Debtor may at all time exercise any and all voting rights pertaining
to the LLC Rights or any part thereof for any purpose not inconsistent with the
terms of this Agreement or any other Obligation Document.

 

Section 4.9.                                   Private Sale of LLC Rights.  Debtor recognizes that Secured Party may deem
it impracticable to effect a public sale of all or any part of the LLC Rights
and that Secured Party may, therefore, determine to make one or more private
sales of LLC Rights to a restricted group of purchasers who will be obligated
to agree, among other things, to acquire the same for their own account, for
investment and not with a view to the distribution or resale thereof.  Debtor acknowledges that any such private
sale may be at prices and on terms less favorable to the seller than the prices
and other terms which might have been obtained at a public sale and,
notwithstanding the foregoing, agrees that such private sales shall be deemed
to have been made in a commercially reasonable manner and that Secured Party
shall have no obligation to delay sale of any LLC Rights for the period of time
necessary to permit their registration for public sale under the Securities Act
of 1933, as amended (the “Securities Act”),
to the extent, if any, that it is applicable thereto.  Debtor further acknowledges and agrees that
any offer to sell any LLC Rights which has been (a) publicly advertised on
a bona fide basis in a newspaper or other publication of general circulation in
the financial community of Denver, Colorado (to the extent that such an offer may
be so advertised without prior registration under the Securities Act), or (b) made
privately in the manner described above to not less than fifteen (15) bona fide
offerees shall be deemed to involve a “public disposition” for the purposes of Section 9.610(c) of
the UCC (or any successor or similar, applicable statutory provision),
notwithstanding that such sale may not constitute a “public offering” under the
Securities Act and that Secured Party may, in such event, bid for the purchase
of such LLC Rights.  Any sale of the
Collateral shall be conducted in accordance with all applicable securities and
other laws then in effect.

 

Section 4.10.                             Limitation on Rights and Waivers.  All rights, powers and remedies herein
conferred shall be exercisable by Secured Party only to the extent not
prohibited by applicable law; and all waivers and relinquishments of rights and
similar matter shall only be effective to the extent such waivers or
relinquishments are not prohibited by applicable law.

 

ARTICLE V
- MISCELLANEOUS

 

Section 5.1.                                   Notices.  Any notice or communication required or
permitted hereunder shall be given as provided in the Credit Agreement.

 

G-3-12

 

Section 5.2.                                   Amendments.  No amendment of any provision of this
Agreement shall be effective unless it is in writing and signed by Debtor and
Secured Party, and no waiver of any provision of this Agreement, and no consent
to any departure by Debtor therefrom, shall be effective unless it is in
writing and signed by Secured Party, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given and to the extent specified in such writing.  In addition all such amendments and waivers
shall be effective only if given with any approvals of Lenders as required in
the Credit Agreement.

 

Section 5.3.                                   Preservation of Rights.  No failure on the part of Secured Party or
any Lender to exercise, and no delay in exercising, any right hereunder or
under any other Obligation Document shall operate as a waiver thereof; nor
shall any single or partial exercise of any such right preclude any other or
further exercise thereof or the exercise of any other right.  Neither the execution nor the delivery of
this Agreement shall in any manner impair or affect any other security for the
Secured Obligations.  The rights and
remedies of Secured Party provided herein and in the other Obligation Documents
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law.  The rights of
Secured Party under any Obligation Document against any party thereto are not
conditional or contingent on any attempt by Secured Party to exercise any of
its rights under any other Obligation Document against such party or against
any other Person.

 

Section 5.4.                                   Unenforceability.  Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or invalidity without invalidating
the remaining portions hereof or thereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

 

Section 5.5.                                   Survival of Agreements.  All representations and warranties of Debtor
herein, and all covenants and agreements herein shall survive the execution and
delivery of this Agreement, the execution and delivery of any other Obligation
Documents and the creation of the Secured Obligations.

 

Section 5.6.                                   Other Liable Party.  Neither this Agreement nor the exercise by
Secured Party or the failure of Secured Party to exercise any right, power or
remedy conferred herein or by law shall be construed as relieving any Other
Liable Party from liability on the Secured Obligations or any deficiency
thereon.  This Agreement shall continue
irrespective of the fact that the liability of any Other Liable Party may have
ceased or irrespective of the validity or enforceability of any other
Obligation Document to which Debtor or any Other Liable Party may be a party,
and notwithstanding the reorganization, death, incapacity or bankruptcy of any
Other Liable Party, and notwithstanding the reorganization or bankruptcy or
other event or proceeding affecting any Other Liable Party.

 

Section 5.7.                                   Binding Effect and Assignment.  This Agreement creates a continuing security
interest in the Collateral and (a) shall be binding on Debtor and its
successors and permitted assigns and (b) shall inure, together with all
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and Lenders and their respective successors, transferees and assigns.  Without limiting the generality of the
foregoing, Secured Party and any Lender may (except as otherwise provided in
the Credit Agreement) pledge, assign or otherwise transfer any or all of its
rights under any or all of the Obligation Documents to any other Person,

 

G-3-13

 

and such other Person shall thereupon become
vested with all of the benefits in respect thereof granted to Secured Party,
herein or otherwise.  None of the rights
or duties of Debtor hereunder may be assigned or otherwise transferred without
the prior written consent of Secured Party.

 

Section 5.8.                                   Termination. It is contemplated by the
parties hereto that there may be times when no Secured Obligations are
outstanding, but notwithstanding such occurrences, this Agreement shall remain
valid and shall be in full force and effect as to subsequent outstanding
Secured Obligations.  Upon the
satisfaction in full of the Secured Obligations and the termination or
expiration of the Credit Agreement and any other commitment of Lenders to
extend credit to Debtor, then upon written request for the termination hereof
delivered by Debtor to Secured Party this Agreement and the security interest
created hereby shall terminate and all rights to the Collateral shall revert to
Debtor.  Secured Party will, upon Debtor’s
request and at Debtor’s expense, (a) return to Debtor such of the
Collateral as shall not have been sold or otherwise disposed of or applied
pursuant to the terms hereof; and (b) execute and deliver to Debtor such
documents as Debtor shall reasonably request to evidence such termination.

 

Section 5.9.                                   GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF COLORADO APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS
REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE
PERFECTION AND THE EFFECT OF PERFECTION OR NON PERFECTION OF THE SECURITY
INTEREST CREATED HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL, ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE.

 

Section 5.10.                             FINAL AGREEMENT.  THIS WRITTEN AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO.  THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO, BUT GIVING EFFECT
TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

 

Section 5.11.                             Counterparts.  This Agreement may be separately executed in
any number of counterparts, all of which when so executed shall be deemed to
constitute one and the same Agreement.

 

Section 5.12.                             “Loan Document.”  This Agreement is a “Loan Document”, as
defined in the Credit Agreement, and, except as expressly provided herein to
the contrary, this Agreement is subject to all provisions of the Credit
Agreement governing such Loan Documents.

 

Section 5.13.                             Restatement.  That certain LLC Pledge Agreement dated October 1,
2004, executed by Debtor in connection with the Existing Credit Agreement (the “Existing Pledge Agreement”) shall be
amended and restated as of the Closing Date in the form of this Agreement.  It is the intention of the Debtor that this
Agreement amends and restates the Existing Pledge Agreement in its entirety;
provided, that such amendment and restatement shall

 

G-3-14

 

not extinguish or constitute a novation of
the indebtedness evidenced by the Existing Pledge Agreement.

 

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

 

G-3-15

 

IN WITNESS WHEREOF, Debtor has caused this Agreement to be executed and
delivered this Agreement by its officer thereunto duly authorized, as of the
date first above written.

 

	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Paul Korus,

  
	
   

  	
   

  	
  Vice President, Chief Financial Officer

  
	
   

  	
   

  	
  and Treasurer

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

G-3-16

 

EXHIBIT A

 

DESCRIPTION
OF INTERESTS IN LIMITED LIABILITY COMPANIES

 

	
  Debtor

  	
   

  	
  Limited
  Liability Company

  	
   

  	
  Interest

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

G-3-17

 

EXHIBIT H

FORM OF CONFIDENTIALITY AGREEMENT

 

[Insert Date]

 

 

 

 

Re:                               Amended
and Restated Credit Agreement,
dated as of June 13, 2005, as amended (the “Credit Agreement”), among Cimarex Energy Co. (“Cimarex”), JPMorgan Chase Bank, N.A.,
as Administrative Agent and certain other agents and Lenders party thereto

 

Ladies and Gentlemen:

 

                                
(“Lender”) has requested
that you assist it in evaluating oil and gas properties (and the related
reserves and production) of Cimarex and its subsidiaries (collectively, the “Company”) for purposes of determining
the Borrowing Base under the Credit Agreement, which Borrowing Base is to be
determined semiannually by April 30 and October 30 of each year and
pursuant to certain Special Redeterminations (“Determination Date”). 
Lender has made and/or will make available to you certain information
concerning the Company’s oil and gas properties and related operations (all of
which information so provided to you, whether prior or subsequent to your
execution of this agreement, shall be known as the “Evaluation Material”).  The term “Evaluation Material” does not include information which is
or becomes generally available to you on a non-confidential basis, provided
that the source of such information was not known by you after due inquiry to
be bound by a confidentiality agreement or other obligation of confidentiality
with respect to such information.

 

You agree that you will use the Evaluation
Material solely for the purposes described above and that the Evaluation
Material will not be used for any other purpose.  You agree to keep the Evaluation Material
confidential and not to disclose the Evaluation Material to any person or
entity other than such of your officers, directors and employees who have a
bona fide need to have access to the Evaluation Material in order for you to
carry out the purposes described above and who have agreed in writing to be
bound by the obligations of confidentiality contained herein.  You shall be responsible and liable for any
use or disclosure of the Evaluation Material by such parties in violation of
this agreement.  Nothing contained herein
shall be deemed to prevent disclosure of any of the Evaluation Material if, in
the opinion of your legal counsel, such disclosure is legally required to be
made in a judicial, administrative or governmental proceeding pursuant to a
valid subpoena or other applicable order; provided, however, you shall give the
Company at least 10 days prior written notice (unless less time is permitted by
the applicable proceeding) before disclosing any of the Evaluation Material in
a proceeding and, in making such disclosure, you will disclose only that
portion thereof required to be disclosed and shall take all reasonable efforts
to preserve the confidentiality thereof, including obtaining protective orders
and supporting the Company in intervention.

 

H-1

 

The Company specifically disclaims and makes
no representation or warranty, express or implied, to you with respect to the
Evaluation Material.  You agree not to
make or reproduce any copies of any document (or any portion thereof) or other
materials which is part of the Evaluation Material.  Within twenty business days after the
applicable Determination Date for which the Evaluation Material was made
available to you, you will return to the Company all documents (including all
copies thereof) and other materials which have been delivered or disclosed to
you or which you have obtained, as part of the Evaluation Material.

 

You agree that if this agreement is breached,
or if a breach hereof is threatened, the remedy at law may be inadequate, and
therefore, without limiting any other remedy at law or in equity, an
injunction, restraining order, specific performance and other forms of
equitable relief or money damages or any combination thereof shall be available
to the Company.  The successful party in
any action or proceeding brought to enforce this agreement shall be entitled to
recover the costs, expenses and fees incurred in any such action or proceeding,
including, without limitation, attorney’s fees and expenses.

 

This agreement is personal unto you, and you
may not assign, pledge or otherwise transfer your rights or delegate your
duties or obligations under this agreement without the prior written consent of
the Company.

 

This agreement constitutes the entire
understanding between us with respect to the subject matter thereof and
supersedes all negotiations, prior discussions, or prior agreements and
understandings relating to such subject matter. 
All duties, obligations, rights, powers and remedies provided herein are
in addition to the duties, obligations and rights, powers and remedies existing
at law or in equity, including, without limitation, the Uniform Trade Secrets
Act and similar statutes and rules of law pertaining to trade secrets and
confidential and proprietary information.

 

This agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without giving
effect to its conflicts of laws, principles or rules.  The parties consent to jurisdiction and venue
in any court of competent jurisdiction in such state and in and to the federal
courts sitting in such state.

 

Please confirm your agreement with the
foregoing by signing and returning one copy of this letter to the Company.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

ACCEPTED AND AGREED:

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				

 

H-2

 

EXHIBIT I

 

FORM OF
CERTIFICATE OF EFFECTIVENESS

 

This Certificate of Effectiveness (this “Certificate”) is executed the 13th day of June, 2005 (the “Effective Date”) by and among Cimarex
Energy Co., a Delaware corporation (“Borrower”)
and JPMorgan Chase Bank, N.A., as Administrative Agent (“Administrative Agent”) for the Lenders
under and as defined in that certain Amended and Restated Credit Agreement (the
“Agreement”) dated as of June 13,
2005, by and among Borrower, Administrative Agent, and the Lenders and agents
named therein.  This Certificate is
executed pursuant to Section 4.1 of the Agreement and is the “Certificate
of Effectiveness” therein referenced. 
Unless otherwise defined herein, all terms used herein with their
initial letter capitalized shall have the meaning given such terms in the
Agreement.  Borrower and Administrative
Agent (on behalf of itself and the Lenders) hereby acknowledge and agree as
follows:

 

1.                                       Borrower
has satisfied each condition precedent to the effectiveness of the Agreement
contained in Section 4.1 of the Agreement.

 

2.                                       The
Agreement is effective as of the Effective Date.

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,

  
	
   

  	
  as Administrative Agent for the Lenders

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  J. Scott
  Fowler,

  
	
   

  	
   

  	
  Vice
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Paul Korus,

  
	
   

  	
   

  	
  Chief
  Financial Officer

  

 

I-1Exhibit 10.1

 

GENAISSANCE
PHARMACEUTICALS, INC.

 

Restricted
Stock Agreement

Granted Under 2000 Amended and Restated Equity Incentive Plan

 

AGREEMENT made as of this 7th day of January, 2005,
between Genaissance Pharmaceuticals, Inc., a Delaware corporation
(the “Company”), and                                     
(the “Participant”).

 

For valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:

 

1.                                       Purchase of Shares.

 

The Company shall issue and sell to the Participant,
and the Participant shall purchase from the Company, subject to the terms and
conditions set forth in this Agreement and in the Company’s 2000 Amended and
Restated Equity Incentive Plan, as amended (the “Plan”),             
shares (the “Shares”) of common stock, $0.001 par value, of the Company (“Common
Stock”), at a purchase price of $0.001 per
share.  The aggregate purchase price for
the Shares shall be paid by the Participant by check payable to the order of
the Company or such other method as may be acceptable to the Company.  Upon receipt by the Company of payment for
the Shares, the Company shall issue to the Participant one or more certificates
in the name of the Participant for that number of Shares purchased by the
Participant.  The Participant agrees that
the Shares shall be subject to the purchase option set forth in Section 2
of this Agreement and the restrictions on transfer set forth in Section 4
of this Agreement.

 

2.                                       Purchase Option.

 

(a)                                  In
the event that the Participant ceases to be employed as an employee, officer or
director of, or consultant or advisor to, the Company for any reason or no
reason, with or without cause, including, without limitation, upon the death,
disability, termination or retirement of the Participant, prior to February 17,
2006, the Company shall, upon the date of such termination (the “Termination
Date”), have the right and option (the “Purchase Option”) for a period of 60
days from such date to purchase from the Participant, for a sum of $0.001 per
share (the “Option Price”), some or all of the Unvested Shares (as defined
below).

 

“Unvested Shares” means the total number of Shares
multiplied by the Applicable Percentage at the time the Purchase Option becomes
exercisable by the Company.  The “Applicable
Percentage” shall be (i) 100% during the period ending February 16,
2006 and (ii) 0% after February 16, 2006. For purposes of this
Agreement, employment with the Company shall include employment with a parent
or subsidiary of the Company, if any.

 

 

3.                                       Exercise of Purchase Option and Closing.

 

(a)                                  Unless
the Company notifies the Participant within 60 days from the Termination Date
that it does not intend to exercise its Purchase Option with respect to some or
all of the Unvested Shares, the Purchase Option shall be deemed automatically
exercised by the Company as of the 60th day following such
termination, provided that the Company may exercise the Purchase Option by
delivering or mailing to the Participant (or his estate), within 60 days after
the Termination Date, a written notice of exercise of the Purchase Option.  Such notice shall specify the number of
Shares to be purchased.  Unless the
Participant is otherwise notified by the Company pursuant to the preceding
sentences that the Company does not intend to exercise its Purchase Option as
to some or all of the Unvested Shares to which it applies at the time of
termination, execution of this Agreement by the Participant constitutes written
notice to the Participant of the Company’s intention to exercise its Purchase Option
with respect to all Unvested Shares to which such Purchase Option applies.

 

(b)                                 Within
10 days after (i) delivery to the Participant of the Company’s notice of
the exercise of the Purchase Option, which supplements the notice provided
herein, or (ii) the deemed exercise of the Purchase Option, each pursuant
to subsection (a) above, the Participant (or his estate) shall,
pursuant to the provisions of the Joint Escrow Instructions referred to in Section 6
below, tender to the Company at its principal offices the certificate or
certificates representing the Shares which the Company has elected to purchase
in accordance with the terms of this Agreement, duly endorsed in blank or with
duly endorsed stock powers attached thereto, all in form suitable for the
transfer of such Shares to the Company. 
Promptly following its receipt of such certificate or certificates, the
Company shall pay to the Participant the aggregate Option Price for such Shares
(provided that any delay in making such payment shall not invalidate the
Company’s exercise of the Purchase Option with respect to such Shares).

 

(c)                                  After
the time at which any Shares are required to be delivered to the Company for
transfer to the Company pursuant to subsection (b) above, the Company
shall not pay any dividend to the Participant on account of such Shares or
permit the Participant to exercise any of the privileges or rights of a
stockholder with respect to such Shares, but shall, in so far as permitted by
law, treat the Company as the owner of such Shares.

 

(d)                                 The
Option Price may be payable, at the option of the Company, in cancellation of
all or a portion of any outstanding indebtedness of the Participant to the
Company or in cash (by check) or both.

 

(e)                                  The
Company shall not purchase any fraction of a Share upon exercise of the
Purchase Option, and any fraction of a Share resulting from a computation made
pursuant to Section 2 of this Agreement shall be rounded to the nearest
whole Share (with any one-half Share being rounded upward).

 

(f)                                    The
Company may assign its Purchase Option to one or more persons or entities.

 

4.                                       Restrictions on Transfer.

 

(a)                                  The
Participant shall not sell, assign, transfer, pledge, hypothecate or otherwise
dispose of or encumber, by operation of law or otherwise (collectively “transfer”)
any

 

2

 

Shares, or any interest
therein, that are subject to the Purchase Option, except that the Participant
may transfer such Shares (i) to or for the benefit of any spouse,
children, parents, uncles, aunts, siblings, grandchildren and any other
relatives approved by the Board of Directors or a committee thereof
(collectively, “Approved Relatives”) or to a trust established solely for the
benefit of the Participant and/or Approved Relatives, provided that such
Shares shall remain subject to this Agreement (including without limitation the
restrictions on transfer set forth in this Section 4 and the Purchase
Option) and such permitted transferee shall, as a condition to such transfer,
deliver to the Company a written instrument confirming that such transferee
shall be bound by all of the terms and conditions of this Agreement or (ii) as
part of the sale of all or substantially all of the shares of capital stock of
the Company (including pursuant to a merger or consolidation), provided
that, in accordance with the Plan, the securities or other property received by
the Participant in connection with such transaction shall remain subject to
this Agreement.

 

5.                                       Agreement in Connection with Public Offering.

 

The Participant agrees, in connection with an
underwritten public offering of the Company’s securities pursuant to a
registration statement under the Securities Act, (i) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock held by the Participant (other than those
shares included in the offering) without the prior written consent of the
Company or the underwriters managing such underwritten public offering of the
Company’s securities for a period of 180 days from the effective date of such
registration statement, and (ii) to execute any agreement reflecting
clause (i) above as may be requested by the Company or the managing
underwriters at the time of such offering.

 

6.                                       Escrow.

 

The Participant shall, upon the execution of this
Agreement, execute Joint Escrow Instructions in the form attached to this
Agreement as Exhibit A.  The
Joint Escrow Instructions shall be delivered to the Secretary of the Company,
as escrow agent thereunder.  The
Participant shall deliver to such escrow agent a stock assignment duly endorsed
in blank, in the form attached to this Agreement as Exhibit B, and
hereby instructs the Company to deliver to such escrow agent, on behalf of the
Participant, the certificate(s) evidencing the Shares issued hereunder.  Such materials shall be held by such escrow
agent pursuant to the terms of such Joint Escrow Instructions.

 

7.                                       Restrictive Legends.

 

All certificates representing Shares shall have
affixed thereto legends in substantially the following form, in addition to any
other legends that may be required under federal or state securities laws:

 

“The
shares of stock represented by this certificate are subject to the restrictions
on transfer and an option to purchase set forth in a certain Restricted Stock
Agreement between the corporation and the registered owner of these shares (or
his or her successor in

 

3

 

interest),
and such Agreement is available for inspection without charge at the office of
the Secretary of the corporation.”

 

8.                                       Provisions of the Plan.

 

This Agreement is subject to the provisions of the
Plan, a copy of which is furnished to the Participant with this Agreement.

 

9.                                       Withholding Taxes; Section 83(b) Election.

 

(a)                                  The
Participant acknowledges and agrees that the Company has the right to deduct
from payments of any kind otherwise due to the Participant any federal, state
or local taxes of any kind required by law to be withheld with respect to the
purchase of the Shares by the Participant or the lapse of the Purchase Option.

 

(b)                                 The
Participant acknowledges and agrees that the Company has the right in its sole
discretion, in addition to the right granted to the Company pursuant to Section 9(a) hereof
and the other rights of the Company herein, to cause certain of the Shares
otherwise due to the Participant to be surrendered by the Participant to the
Company in order to satisfy any federal, state or local taxes of any kind
required by law to be withheld by the Company with respect to the purchase of
the Shares by the Participant or the lapse of the Purchase Option.

 

(c)                                  The
Participant has reviewed with the Participant’s own tax advisors the federal,
state, local and foreign tax consequences of this investment and the
transactions contemplated by this Agreement. 
The Participant is relying solely on such advisors and not on any
statements or representations of the Company or any of its agents.  The Participant understands that the
Participant (and not the Company) shall be responsible for the Participant’s
own tax liability that may arise as a result of this investment or the
transactions contemplated by this Agreement. 
The Participant understands that it may be beneficial in many
circumstances to elect to be taxed at the time the Shares are purchased rather
than when and as the Company’s Purchase Option expires by filing an election
under Section 83(b) of the Code with the I.R.S. within 30 days from
the date of purchase.

 

THE PARTICIPANT
ACKNOWLEDGES THAT IT IS THE PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE
COMPANY’S TO FILE TIMELY THE ELECTION UNDER SECTION 83(b), EVEN IF THE
PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON
THE PARTICIPANT’S BEHALF.

 

10.                                 Miscellaneous.

 

(a)                                  No
Rights to Employment.  The
Participant acknowledges and agrees that the vesting of the Shares pursuant to Section 2
hereof is earned only by continuing service as an employee at the will of the
Company (not through the act of being hired or purchasing Shares
hereunder).  The Participant further
acknowledges and agrees that the transactions contemplated hereunder and the
vesting schedule set forth herein do not constitute an express or implied
promise of continued engagement as an employee or consultant for the vesting
period, for any period, or at all.

 

4

 

(b)                                 Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, and each other
provision of this Agreement shall be severable and enforceable to the extent
permitted by law.

 

(c)                                  Waiver.  Any provision for the benefit of the Company
contained in this Agreement may be waived, either generally or in any
particular instance, by the Board of Directors of the Company or a committee
thereof.

 

(d)                                 Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the Company and the Participant and
their respective heirs, executors, administrators, legal representatives,
successors and assigns, subject to the restrictions on transfer set forth in Section 4
of this Agreement.

 

(e)                                  Notice.   All notices required or permitted hereunder
shall be in writing and deemed effectively given upon personal delivery or five
days after deposit in the United States Post Office, by registered or certified
mail, postage prepaid, addressed to the other party hereto at the address shown
beneath his or its respective signature to this Agreement, or at such other
address or addresses as either party shall designate to the other in accordance
with this Section 10(e).

 

(f)                                    Pronouns.  Whenever the context may require, any
pronouns used in this Agreement shall include the corresponding masculine,
feminine or neuter forms, and the singular form of nouns and pronouns shall
include the plural, and vice versa.

 

(g)                                 Entire
Agreement.  This Agreement and the
Plan constitute the entire agreement between the parties, and supersedes all
prior agreements and understandings, relating to the subject matter of this
Agreement.

 

(h)                                 Amendment.  This Agreement may be amended or modified
only by a written instrument executed by both the Company and the Participant.

 

(i)                                     Governing
Law.  This Agreement shall be
construed, interpreted and enforced in accordance with the internal laws of the
State of Delaware without regard to any applicable conflicts of laws.

 

(j)                                     Participant’s
Acknowledgments.  The Participant
acknowledges that he or she: (i) has read this Agreement; (ii) has been
represented in the preparation, negotiation, and execution of this Agreement by
legal counsel of the Participant’s own choice or has voluntarily declined to
seek such counsel; (iii) understands the terms and consequences of this
Agreement; (iv) is fully aware of the legal and binding effect of this
Agreement; and (v) understands that the law firm of Wilmer Cutler
Pickering Hale and Dorr LLP, is acting as counsel to the Company in connection
with the transactions contemplated by the Agreement, and is not acting as
counsel for the Participant.

 

5

 

IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.

 

	
   

  	
  GENAISSANCE
  PHARMACEUTICALS, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ben
  D. Kaplan

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Participant

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

6

 

Exhibit A

 

Genaissance
Pharmaceuticals, Inc.

 

Joint Escrow Instructions

 

January 7,
2005

 

Secretary

Genaissance Pharmaceuticals, Inc.

Five Science Park

New Haven, CT  06511

 

Dear Sir:

 

As Escrow Agent for Genaissance Pharmaceuticals, Inc.,
a Delaware corporation, and its successors in interest under the Restricted
Stock Agreement (the “Agreement”) of even date herewith, to which a copy of
these Joint Escrow Instructions is attached (the “Company”), and the
undersigned person (“Holder”), you are hereby authorized and directed to hold
the documents delivered to you pursuant to the terms of the Agreement in
accordance with the following instructions:

 

1.                                       Appointment.  Holder irrevocably authorizes the Company to
deposit with you any certificates evidencing Shares (as defined in the
Agreement) to be held by you hereunder and any additions and substitutions to
said Shares.  For purposes of these Joint
Escrow Instructions, “Shares” shall be deemed to include any additional or
substitute property.  Holder does hereby
irrevocably constitute and appoint you as his attorney-in-fact and agent for
the term of this escrow to execute with respect to such Shares all documents
necessary or appropriate to make such Shares negotiable and to complete any
transaction herein contemplated.  Subject
to the provisions of this paragraph 1 and the terms of the Agreement,
Holder shall exercise all rights and privileges of a stockholder of the Company
while the Shares are held by you.

 

2.                                       Closing
of Purchase.

 

(a)                                  Upon
any purchase by the Company of the Shares in connection with (i) the
Company’s notice of the exercise of the Purchase Option or (ii) the deemed
exercise of the Purchase Option, each in accordance with the terms of the
Agreement, the Company shall give to Holder and you a written notice specifying
the purchase price for the Shares, as determined pursuant to the Agreement, and
the time for a closing hereunder (the “Closing”) at the principal office of the
Company.  Holder and the Company hereby
irrevocably authorize and direct you to close the transaction contemplated by
such notice in accordance with the terms of said notice.

 

(b)                                 At
the Closing, you are directed (i) to date the stock assignment form or
forms necessary for the transfer of the Shares, (ii) to fill in on such
form or forms the number of Shares being transferred, and (iii) to deliver
same, together with the certificate or certificates

 

7

 

evidencing
the Shares to be transferred, to the Company against the simultaneous delivery
to you of the purchase price for the Shares being purchased pursuant to the
Agreement.

 

3.                                       Withdrawal.  The Holder shall have the right to withdraw
from this escrow any Shares as to which the Purchase Option (as defined in the
Agreement) has terminated or expired.

 

4.                                       Duties
of Escrow Agent.

 

(a)                                  Your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.

 

(b)                                 You
shall be obligated only for the performance of such duties as are specifically
set forth herein and may rely and shall be protected in relying or refraining
from acting on any instrument reasonably believed by you to be genuine and to
have been signed or presented by the proper party or parties.  You shall not be personally liable for any
act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact
of Holder while acting in good faith and in the exercise of your own good
judgment, and any act done or omitted by you pursuant to the advice of your own
attorneys shall be conclusive evidence of such good faith.

 

(c)                                  You
are hereby expressly authorized to disregard any and all warnings given by any
of the parties hereto or by any other person or Company, excepting only orders
or process of courts of law, and are hereby expressly authorized to comply with
and obey orders, judgments or decrees of any court.  In case you obey or comply with any such
order, judgment or decree of any court, you shall not be liable to any of the
parties hereto or to any other person, firm or Company by reason of such
compliance, notwithstanding any such order, judgment or decree being
subsequently reversed, modified, annulled, set aside, vacated or found to have
been entered without jurisdiction.

 

(d)                                 You
shall not be liable in any respect on account of the identity, authority or
rights of the parties executing or delivering or purporting to execute or
deliver the Agreement or any documents or papers deposited or called for
hereunder.

 

(e)                                  You
shall be entitled to employ such legal counsel and other experts as you may
deem necessary properly to advise you in connection with your obligations
hereunder and may rely upon the advice of such counsel.

 

(f)                                    Your
rights and responsibilities as Escrow Agent hereunder shall terminate if (i) you
cease to be Secretary of the Company or (ii) you resign by written notice
to each party.  In the event of a
termination under clause (i), your successor as Secretary shall become
Escrow Agent hereunder; in the event of a termination under clause (ii),
the Company shall appoint a successor Escrow Agent hereunder.

 

(g)                                 If
you reasonably require other or further instruments in connection with these
Joint Escrow Instructions or obligations in respect hereto, the necessary
parties hereto shall join in furnishing such instruments.

 

(h)                                 It
is understood and agreed that should any dispute arise with respect to the
delivery and/or ownership or right of possession of the securities held by you
hereunder, you

 

8

 

are authorized and
directed to retain in your possession without liability to anyone all or any
part of said securities until such dispute shall have been settled either by
mutual written agreement of the parties concerned or by a final order, decree
or judgment of a court of competent jurisdiction after the time for appeal has
expired and no appeal has been perfected, but you shall be under no duty
whatsoever to institute or defend any such proceedings.

 

(i)                                     These
Joint Escrow Instructions set forth your sole duties with respect to any and
all matters pertinent hereto and no implied duties or obligations shall be read
into these Joint Escrow Instructions against you.

 

(j)                                     The
Company shall indemnify you and hold you harmless against any and all damages,
losses, liabilities, costs, and expenses, including attorneys’ fees and
disbursements, for anything done or omitted to be done by you as Escrow Agent
in connection with this Agreement or the performance of your duties hereunder,
except such as shall result from your gross negligence or willful misconduct.

 

5.                                       Notice.  Any notice required or permitted hereunder
shall be given in writing and shall be deemed effectively given upon personal
delivery or upon deposit in the United States Post Office, by registered or
certified mail with postage and fees prepaid, addressed to each of the other
parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days’ advance written notice to each
of the other parties hereto.

 

	
  COMPANY:

  	
   

  	
  Notices to the
  Company shall be sent to the address set forth in the salutation hereto,
  Attn: President

  
	
   

  	
   

  	
   

  
	
  HOLDER:

  	
   

  	
  Notices to
  Holder shall be sent to the address set forth below Holder’s signature below.

  
	
   

  	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  	
  Notices to the
  Escrow Agent shall be sent to the address set forth in the salutation hereto.

  

 

6.                                       Miscellaneous.

 

(a)                                  By
signing these Joint Escrow Instructions, you become a party hereto only for the
purpose of said Joint Escrow Instructions, and you do not become a party to the
Agreement.

 

(b)                                 This
instrument shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

 

9

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
  Genaissance
  Pharmaceuticals, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Ben
  D. Kaplan

  
	
   

  	
  Title:

  	
  Senior
  Vice President and Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HOLDER:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Print Name

  	
   

  
	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Date Signed:

  	
   

  	
   

  
	
  ESCROW AGENT:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  Ben D. Kaplan

  	
   

  	
   

  
	
  Title:

  	
  Secretary

  	
   

  	
   

  
												

 

10

 

Exhibit B

 

(STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE)

 

FOR VALUE RECEIVED, I hereby sell, assign and transfer unto                                     
(                  )
shares of Common Stock, $0.001 par value per share, of Genaissance
Pharmaceuticals, Inc. (the “Corporation”) standing in my name on the books
of the Corporation represented by Certificate(s) Number                     
herewith, and do hereby irrevocably constitute and appoint                                             
attorney to transfer the said stock on the books of the Corporation with full
power of substitution in the premises.

 

	
   

  	
  Dated:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  IN PRESENCE OF

  	
   

  
	
   

  	
   

  
	
   

  	
   

  

 

NOTICE: The signature(s) to this assignment must
correspond with the name as written upon the face of the certificate, in every
particular, without alteration, enlargement, or any change whatever and must be
guaranteed by a commercial bank, trust company or member firm of the Boston,
New York or Midwest Stock Exchange.

 

11

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