8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): August 8, 2008

QUICKSILVER RESOURCES INC.

(Exact Name of Registrant as Specified in Charter)

Delaware
(State or Other Jurisdiction
of Incorporation) 001-14837
(Commission
File Number) 75-2756163
(IRS Employer
Identification No.)

777 West Rosedale Street
Fort Worth, Texas 76104
(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (817) 665-5000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Credit Agreement

Security Agreement

Pledge Agreement

Form of Mortgage, Deed of Trust, Assignment of Production, and Security Agreement, Financing Statement and Fixture Filing

Intercreditor Agreement

Item 1.01 Entry into a Material Definitive Agreement.

     On August 8, 2008, Quicksilver Resources Inc. entered into a credit agreement (the “Term Credit Agreement”), among Quicksilver, JPMorgan Chase Bank, N.A., and Credit Suisse, Cayman Islands Branch (the “Agent”), as administrative agent.

     The Term Credit Agreement provides for a five-year senior secured second lien term loan in an aggregate principal amount of up to $700 million (the “Term Loan Facility”). Net proceeds from the loan after deducting discounts and expenses will be $672,851,623.35. Quicksilver’s interest rate options under the Term Loan Facility are a rate based on (1) the adjusted LIBOR rate (as determined in accordance with the Term Credit Agreement) plus 450 basis points or (2) for base rate loans, 4.25% plus the highest of (a) the Agent’s prime rate, (b) the federal funds effective rate (as determined in accordance with the Term Credit Agreement) plus 50 basis points, and (c) 4.25%. The Term Loan Facility is guaranteed by most domestic subsidiaries of Quicksilver (other than Quicksilver Gas Services Holdings LLC and its subsidiaries) and is secured by a second lien in substantially all of the assets of Quicksilver and such subsidiary guarantors, including the domestic oil and gas properties of Quicksilver. The Term Loan Facility generally prohibits the declaration or payment of cash dividends by Quicksilver and contains certain other restrictive covenants, which, among other things, require the maintenance of a minimum current ratio, a minimum EBITDAX (EBITDAX being defined as earnings before interest, taxes, depreciation, depletion and amortization, non-cash income and expense, and exploration costs) to interest expense ratio, a minimum adjusted proved reserves to secured indebtedness ratio and a minimum adjusted proved reserves to total indebtedness ratio.

     A copy of the Term Credit Agreement is attached hereto as Exhibit 10.1 and is incorporated herein by reference. The description of the Term Loan Facility contained herein is qualified in its entirety by reference to the full text of the Term Credit Agreement.

     Certain of the lenders and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for Quicksilver and Quicksilver’s affiliates in the ordinary course of business for fees and expenses.

Item 2.01 Completion of Acquisition or Disposition of Assets.

     On August 8, 2008, Quicksilver completed the acquisition of certain royalty and related interests in various oil and gas properties relating to the Barnett Shale formation in Texas (the “Royalties”), pursuant to the Purchase and Sale Agreement (the “Royalty PSA”) with Nortex Minerals, L.P., Petrus Investment, L.P., Petrus Development, L.P., and Perot Investment Partners, Ltd., dated as of July 3, 2008. The purchase price for the Royalties consisted of $306,826,638 in cash and 3,065,940 shares of Quicksilver common stock.

     On August 8, 2008, Quicksilver also completed the acquisition of leasehold working interests and other rights in and to various oil and gas properties relating to the Barnett Shale formation in Texas, including certain wells, equipment and other assets associated therewith (collectively, the “Interests”), pursuant to the Purchase and Sale Agreement (the “Working Interest PSA” and, collectively with the Royalty PSA, the “Purchase Agreements”) with Hillwood Oil & Gas, L.P., Burtex Minerals, L.P., Chief Resources, LP, Chief Resources Alliance Pipeline LLC, Chief Oil

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& Gas LLC, Hillwood Alliance Operating Company, L.P., Berry Barnett, L.P., Collins and Young, L.L.C. and Mark Rollins. The purchase price for the Interests consisted of $693,173,362 in cash and 7,334,528 shares of Quicksilver common stock.

     The cash portions were funded by borrowings under the Term Loan Facility and borrowings under Quicksilver’s existing senior secured revolving credit facility.

     The foregoing description of the transaction does not purport to be complete and is qualified in its entirety by reference to the Purchase Agreements, which are filed as Exhibits 10.1 and 10.2 to Quicksilver’s Current Report on Form 8-K filed on July 7, 2008 (SEC File No. 001-14837) and incorporated by reference into this Item 2.01.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Term Loan Facility Obligations

     On August 8, 2008, Quicksilver borrowed $700 million in aggregate principal amount under the Term Loan Facility. Proceeds of the borrowing were used to fund a portion of the purchase price for the acquisition of the Royalties and the Interests.

Senior Secured Revolving Credit Facility Obligations

     On August 8, 2008, Quicksilver borrowed $326,000,000 million in aggregate principal amount under its senior secured revolving credit facility. Proceeds of the borrowing were used to fund a portion of the purchase price for the acquisition of the Royalties and the Interests.

Item 3.02 Unregistered Sales of Equity Securities.

     The information set forth in Item 2.01 hereof is incorporated by reference into this Item 3.02.

Item 3.03 Material Modification to Rights of Security Holders.

     The information set forth under the caption “Term Loan Facility Obligations” in Item 2.03 hereof is incorporated by reference into this Item 3.03.

Item 8.01 Other Events.

Security Agreement

     In connection with the Term Loan Facility, on August 8, 2008, Quicksilver entered into a Security Agreement (the “Security Agreement”) among Quicksilver, certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent. Pursuant to the Security Agreement, Quicksilver’s obligations under the Term Loan Facility, its 8¹/4% Senior Notes due 2015 (the “Senior Notes”) and its domestic subsidiaries’ guaranty obligations with respect to the Term Loan Facility and the Senior Notes will be secured equally and ratably by a second lien on substantially all of the tangible and intangible personal property of Quicksilver and such domestic subsidiaries.

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Pledge Agreement

     In connection with the Term Loan Facility, on August 8, 2008, Quicksilver entered into a Pledge Agreement (the “Pledge Agreement”) among Quicksilver, certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent. Pursuant to the Pledge Agreement, Quicksilver’s obligations under the Term Loan Facility, the Senior Notes and its domestic subsidiaries’ guaranty obligations with respect to the Term Loan Facility and the Senior Notes will be secured equally and ratably by a second lien on substantially all of equity interests in the domestic and Canadian subsidiaries held by Quicksilver and such domestic subsidiaries.

Mortgage Agreements

     In connection with the Term Loan Facility, on August 8, 2008, Quicksilver entered into Mortgage, Deed of Trust, Assignment of Production, and Security Agreement, Financing Statement and Fixture Filings (the “Mortgage Agreements”) between Quicksilver and Credit Suisse, Cayman Islands Branch, as collateral agent. Pursuant to the Mortgage Agreements, Quicksilver’s obligations under the Term Loan Facility and the Senior Notes will be secured equally and ratably by a second lien on substantially all of the domestic oil and gas properties of Quicksilver.

Intercreditor Agreement

     On August 8, 2008, Quicksilver and certain of its domestic subsidiaries entered into an Intercreditor Agreement (the “Intercreditor Agreement”) with JPMorgan Chase Bank, N.A., as the first lien collateral agent, and Credit Suisse, as the second lien collateral agent. The Intercreditor Agreement establishes the relative lien priorities and rights of the lenders with respect to certain collateral which secures Quicksilver’s and certain of its subsidiaries’ obligations under Quicksilver’s senior secured revolving credit facility on a first priority lien basis and which secures Quicksilver’s and certain of its subsidiaries’ obligations under the Term Loan Facility and the Senior Notes on a second priority lien basis. Credit Suisse, Cayman Islands Branch, will act as collateral agent to act on behalf of the lenders under the Term Loan Facility and the holders of the Senior Notes.

     Copies of the Security Agreement, the Pledge Agreement, a form of Mortgage Agreement, and the Intercreditor Agreement are attached hereto as Exhibits 99.1, 99.2, 99.3 and 99.4, respectively, and are incorporated herein by reference. The descriptions of the Security Agreement, the Pledge Agreement, the Mortgage Agreements, and the Intercreditor Agreement contained herein are qualified in their entirety by reference to the full texts of those agreements.

Item 9.01 Financial Statements and Exhibits.

     (a) Financial Statements of Business Acquired.

     Quicksilver intends to file the financial statements of the business acquired on a Form 8-K/A no later than 71 calendar days after the date this Report is required to be filed.

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     (b) Pro Forma Financial Information.

     Quicksilver intends to file pro forma financial information on a Form 8-K/A no later than 71 calendar days after the date this Report is required to be filed.

     (d) Exhibits.

Exhibit
Number		Description
	10.1	Credit Agreement, dated as of August 8, 2008, among Quicksilver Resources Inc., the lenders party thereto and Credit Suisse, Cayman Islands Branch, as administrative agent.
	99.1	Security Agreement, dated as of August 8, 2008, between Quicksilver Resources Inc., certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.2	Pledge Agreement, dated as of August 8, 2008, among Quicksilver, certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.3	Form of Mortgage, Deed of Trust, Assignment of Production, and Security Agreement, Financing Statement and Fixture Filing, between Quicksilver Resources Inc. and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.4	Intercreditor Agreement, dated as of August 8, 2008, among Quicksilver Resources Inc., JPMorgan Chase Bank, N.A., as the first lien collateral agent, and Credit Suisse, Cayman Islands Branch, as the second lien collateral agent.

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SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

QUICKSILVER RESOURCES INC.
By:	/s/ Philip Cook
	Philip Cook
	Senior Vice President – Chief Financial Officer

Date: August 8, 2008

INDEX TO EXHIBITS

Exhibit
Number		Description
	10.1	Credit Agreement, dated as of August 8, 2008, among Quicksilver Resources Inc., the lenders party thereto and Credit Suisse, Cayman Islands Branch, as administrative agent.
	99.1	Security Agreement, dated as of August 8, 2008, between Quicksilver Resources Inc., certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.2	Pledge Agreement, dated as of August 8, 2008, among Quicksilver, certain of its domestic subsidiaries and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.3	Form of Mortgage, Deed of Trust, Assignment of Production, and Security Agreement, Financing Statement and Fixture Filing, between Quicksilver Resources Inc. and Credit Suisse, Cayman Islands Branch, as collateral agent.
	99.4	Intercreditor Agreement, dated as of August 8, 2008, among Quicksilver Resources Inc., JPMorgan Chase Bank, N.A., as the first lien collateral agent, and Credit Suisse, Cayman Islands Branch, as the second lien collateral agent.

EX-10.1

Exhibit 10.1

CREDIT AGREEMENT

dated as of

August 8, 2008,

among

QUICKSILVER RESOURCES INC.,

THE LENDERS PARTY HERETO

and

CREDIT SUISSE,
as Administrative Agent

CREDIT SUISSE SECURITIES (USA) LLC

and

J.P. MORGAN SECURITIES INC.,
as Co-Lead Arrangers and Joint Bookrunners

J.P. MORGAN SECURITIES INC.,
as Syndication Agent

[CS&M Ref. No. 05865-651]

Table of Contents

	Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms		1
SECTION 1.02. Terms Generally		35
SECTION 1.03. Accounting Terms; GAAP		35
SECTION 1.04. Effectuation of Transactions		36
ARTICLE II
The Credits
SECTION 2.01. Commitments		36
SECTION 2.02. Loans and Borrowings		36
SECTION 2.03. Borrowings Procedure		37
SECTION 2.04. Funding of Borrowings		37
SECTION 2.05. Interest Elections		38
SECTION 2.06. Termination of Commitments		39
SECTION 2.07. Repayment of Loans; Evidence of Indebtedness		39
SECTION 2.08. Amortization of Loans		40
SECTION 2.09. Prepayment of Loans		40
SECTION 2.10. Fees		42
SECTION 2.11. Interest		42
SECTION 2.12. Alternate Rate of Interest		43
SECTION 2.13. Illegality		43
SECTION 2.14. Increased Costs		44
SECTION 2.15. Break Funding Payments		45
SECTION 2.16. Taxes		46
SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs		47
SECTION 2.18. Mitigation Obligations; Replacement of Lenders		49
ARTICLE III
Representations and Warranties
SECTION 3.01. Existence and Power		50
SECTION 3.02. Loan Party and Governmental Authorization; Contravention		50
SECTION 3.03. Binding Effect		51
SECTION 3.04. Financial Information; Absence of Material Adverse Effect; Solvency		51
SECTION 3.05. Litigation		51
SECTION 3.06. ERISA		52
SECTION 3.07. Taxes and Filing of Tax Returns		52

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Table of Contents

	Page
SECTION 3.08. Ownership of Properties		53
SECTION 3.09. Mineral Interests		53
SECTION 3.10. Licenses, Permits, Etc		54
SECTION 3.11. Compliance with Law		54
SECTION 3.12. Full Disclosure		54
SECTION 3.13. Nature of Business; Organizational Structure		54
SECTION 3.14. Environmental Matters		54
SECTION 3.15. No Default		55
SECTION 3.16. Government Regulation		55
SECTION 3.17. Gas Balancing Agreements and Advance Payment Contracts		55
SECTION 3.18. Collateral Matters		55
SECTION 3.19. Hedging Agreements		56
SECTION 3.20. Insurance		56
ARTICLE IV
Conditions
ARTICLE V
Affirmative Covenants
SECTION 5.01. Information		61
SECTION 5.02. Delivery of Reserve Reports		64
SECTION 5.03. Nature of Business		65
SECTION 5.04. Maintenance of Existence; Oil and Gas Properties		65
SECTION 5.05. Title Data		66
SECTION 5.06. Books and Records; Right of Inspection		66
SECTION 5.07. Maintenance of Insurance		67
SECTION 5.08. Payment of Taxes and Claims		67
SECTION 5.09. Compliance with Laws and Documents		67
SECTION 5.10. Operation of Properties and Equipment		68
SECTION 5.11. Environmental Law Compliance		68
SECTION 5.12. ERISA Reporting Requirements		68
SECTION 5.13. Environmental Review		69
SECTION 5.14. Casualty and Condemnation		69
SECTION 5.15. Concerning Subsidiaries		69
SECTION 5.16. Information Regarding Collateral		70
SECTION 5.17. Further Assurances		70

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Table of Contents

	Page
ARTICLE VI
Financial Covenants
SECTION 6.01. Current Ratio		71
SECTION 6.02. Interest Coverage Ratio		71
SECTION 6.03. Total Debt Asset Coverage Ratio		71
SECTION 6.04. Total Secured Debt Asset Coverage Ratio		71
ARTICLE VII
Negative Covenants
SECTION 7.01. Indebtedness		72
SECTION 7.02. Restricted Payments		74
SECTION 7.03. Liens		75
SECTION 7.04. Consolidations and Mergers; Fundamental Changes		75
SECTION 7.05. Asset Dispositions; Sale/Leaseback Transactions		75
SECTION 7.06. Amendments to Material Documents		76
SECTION 7.07. Use of Proceeds		77
SECTION 7.08. Investments		77
SECTION 7.09. Transactions with Affiliates		77
SECTION 7.10. ERISA		77
SECTION 7.11. Hedging Transactions		77
SECTION 7.12. Fiscal Year		78
SECTION 7.13. Certain Payments of Indebtedness		78
SECTION 7.14. Restrictive Agreements		79
SECTION 7.15. Gas Balancing Agreements and Advance Payments Contracts		80
ARTICLE VIII
Events of Default
SECTION 8.01. Listing of Events of Default		80
SECTION 8.02. Action if Bankruptcy		82
SECTION 8.03. Action if Other Event of Default		82

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Table of Contents

	Page
ARTICLE IX
Administrative Agent
ARTICLE X
Miscellaneous
SECTION 10.01. Notices		86
SECTION 10.02. Waivers; Amendments		87
SECTION 10.03. Expenses; Indemnity; Damage Waiver		88
SECTION 10.04. Successors and Assigns		90
SECTION 10.05. Survival		93
SECTION 10.06. Counterparts; Integration; Effectiveness		93
SECTION 10.07. Severability		93
SECTION 10.08. Right of Setoff		93
SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS		94
SECTION 10.10. WAIVER OF JURY TRIAL		95
SECTION 10.11. Headings		95
SECTION 10.12. Confidentiality		95
SECTION 10.13. Interest Rate Limitation		96
SECTION 10.14. PATRIOT Act Notice		96
SECTION 10.15. No Fiduciary Relationship		96
SECTION 10.16. Intercreditor Agreement		97
SECTION 10.17. Release of Liens and Guarantees		97
SECTION 10.18. Waiver of Consumer Credit Laws		98
SECTION 10.19. Status of Term Obligations		98
SECTION 10.20. NO ORAL AGREEMENTS		98

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Exhibits and Schedules

Exhibits:
Exhibit A	¾	Form of Assignment and Acceptance
Exhibit B	¾	Form of Indemnity, Contribution and Subrogation Agreement
Exhibit C	¾	Form of Intercreditor Agreement
Exhibit D	¾	Form of Interest Election Request
Exhibit E	¾	Form of Perfection Certificate
Exhibit F	¾	Form of Pledge Agreement
Exhibit G	¾	Form of Security Agreement
Exhibit H	¾	Form of Subsidiary Guarantee Agreement
Exhibit I	¾	Form of Compliance Certificate
Schedules:
Schedule 2.01	¾	Commitments
Schedule 3.09	¾	Initial Designated Real Properties
Schedule 3.13	¾	Organizational Structure
Schedule 3.14	¾	Environmental Matters
Schedule 3.19	¾	Existing Hedging Agreements
Schedule 3.20	¾	Existing Insurance
Schedule 4.01	¾	Certain Existing MLP Subsidiary Indebtedness
Schedule 7.01	¾	Existing Indebtedness
Schedule 7.03	¾	Existing Permitted Encumbrances
Schedule 7.08	¾	Existing Investments
Schedule 7.14	¾	Existing Restrictive Agreements

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     CREDIT AGREEMENT dated as of August 8, 2008, among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Borrower”), the Lenders (as defined in Article I below) and CREDIT SUISSE, Cayman Islands Branch (“Credit Suisse”), as the Administrative Agent.

     WHEREAS, the Borrower intends to acquire (the “Acquisition”) certain producing, leasehold, royalty, midstream and other assets associated with the Barnett Shale formation in Texas pursuant to (a) a purchase and sale agreement dated as of July 3, 2008, among the Borrower, as purchaser, and Nortex Minerals, L.P., Petrus Investment, L.P., Petrus Development, L.P., and Perot Investment Partners, Ltd., as sellers, and (b) a purchase and sale agreement dated as of July 3, 2008, among the Borrower, as purchaser, and Hillwood Oil & Gas, L.P., Burtex Minerals, L.P., Chief Resources, LP, Hillwood Alliance Operating Company, L.P., Chief Resources Alliance Pipeline LLC, Chief Oil & Gas LLC, Berry Barnett, L.P., Collins and Young, L.L.C. and Mark Rollins, as sellers (such purchase and sale agreements, as amended, supplemented or otherwise modified from time to time, being referred to as the “Purchase Agreements”), for an aggregate consideration of $1,000,000,000 in cash and shares of common stock of the Borrower having market value of $307,000,000, in each case as such cash and stock consideration amounts may be adjusted in accordance with the Purchase Agreements (the “Acquisition Consideration”).

     WHEREAS, in connection with the Acquisition, the Borrower has requested the Lenders (such term and each other capitalized term used but not defined in this introductory statement having the meaning given it in Article I) to extend credit in the form of Loans to be made on the date hereof, in an aggregate principal amount not in excess of $700,000,000. The proceeds of the Loans are to be used by the Borrower on the date hereof, together with the proceeds of loans under the First Lien U.S. Credit Agreement, solely (a) to pay the cash portion of the Acquisition Consideration and (b) to pay fees and expenses incurred in connection with the Transactions.

     The Lenders are willing to extend such credit to the Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

Definitions

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

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

     “Acquisition” has the meaning given to such term in the introductory statement hereto.

     “Acquisition Consideration” has the meaning given to such term in the introductory statement hereto.

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     “Adjusted Consolidated Net Tangible Assets” has the meaning given to the term “Adjusted Consolidated Net Tangible Assets” under the Existing Senior Notes Indenture as in effect on the date hereof, with all references therein to the “Restricted Subsidiaries” being deemed to be references to the Subsidiaries that are Credit Parties. For purposes hereof, the amount of Adjusted Consolidated Net Tangible Assets at any time shall be the amount thereof as of such time determined in accordance with this definition.

     “Adjusted Eurodollar Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum equal to (a) the Eurodollar Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

     “Administrative Agent” means Credit Suisse, in its capacity as administrative agent and collateral agent hereunder and under the other Loan Documents, and its successors and assigns in such capacity as provided in Article IX. It is understood that the term “Administrative Agent” refers to such agent acting, among other things, in its capacity as the collateral agent under the Loan Documents, and that references in any Security Document to the term “Collateral Agent” shall be construed to have the same meaning and effect as if such references were to the term “Administrative Agent”.

     “Administrative Agent Fee Letter” means that certain letter agreement dated July 17, 2008, among the Borrower, Credit Suisse and Credit Suisse Securities (USA) LLC.

     “Administrative Questionnaire” means an Administrative Questionnaire to be delivered by the Lenders to the Administrative Agent, in a form supplied by the Administrative Agent.

     “Advance Payment” has the meaning given to such term in the definition of the term “Advance Payment Contract”.

     “Advance Payment Contract” means any contract whereby any Credit Party either (a) receives or becomes entitled to receive (either directly or indirectly) any payment (each, an “Advance Payment”) to be applied toward payment of the purchase price of Hydrocarbons produced or to be produced from any Oil and Gas Property of any Credit Party, and which Advance Payment is, or is to be, paid in advance of actual delivery of such production to or for the account of the purchaser, regardless of such production, and is, or is to be, applied as payment in full or in part for such production when sold and delivered, or (b) grants an option or right of refusal to the purchaser to take delivery of such production in lieu of payment; provided, that the term “Advance Payment Contract” shall not include any Gas Balancing Agreement.

     “Affiliate” of any Person means any Person directly or indirectly Controlled by, Controlling or under common Control with such first Person. For purposes of this definition, any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to “Control” (including, with its correlative meanings, “Controlled by” and “under common Control with”) such corporation or other Person.

     “Agreement” means this Credit Agreement.

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     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1% and (c) 4.25%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, as the case may be. If the Administrative Agent shall have determined (which determination shall be conclusive and binding, absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition of such term, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist.

     “Applicable Lending Office” means, for each Lender and for each Type of Loan, such office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify in writing to the Administrative Agent and the Borrower as the office by which its Loans of such Type are to be made and/or maintained.

     “Applicable Margin” means, for any day, (a) with respect to any Eurodollar Loan, 4.50% per annum, and (b) with respect to any ABR Loan, 3.50% per annum, in each case plus an Incremental Applicable Margin, if any, applicable on such day.

     “Approved Engineer” means (a) Schlumberger Data and Consulting Services, (b) LaRoche Petroleum Consultants Limited and (c) any other reputable firm of independent petroleum engineers or independent petroleum consultants expert in the matters required to be performed in connection with the preparation and delivery or auditing of a Reserve Report, in each case under this clause (c), selected by the Borrower and reasonably satisfactory to the Administrative Agent.

     “Arrangers” means Credit Suisse Securities (USA) LLC and J.P. Morgan Securities Inc., in their capacities as co-lead arrangers and joint bookrunners for the credit facility provided for herein.

     “Assignment and Acceptance” means an assignment and acceptance entered into by a Lender and an assignee (with the consent of any Person whose consent is required by Section 10.04), and accepted by the Administrative Agent, in substantially the form of Exhibit A or any other form approved by the Administrative Agent.

     “Authorized Officer” means, as to any Person, its Chief Executive Officer, its President, its Chief Financial Officer, its Vice President-Treasurer, its Assistant Treasurer, its Vice President-General Counsel, its Vice President-Controller or any other officer specified as such to the Administrative Agent in writing by any of the aforementioned officers of such Person or by resolution from the board of directors or similar governing body of such Person.

     “BBEP” means BreitBurn Energy Partners L.P., a Delaware limited partnership.

     “BBEP Common Units” means Common Units of BBEP, and shall include any securities into or for which such Common Units are reclassified, converted or exchanged in connection with (a) a consolidation, merger, reorganization or other business combination

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transaction to which BBEP is a party and in which BBEP is the continuing or surviving Person or (b) a transfer of all or substantially all of the assets of BBEP.

     “BBEP Fair Market Value”, as of the last day of any Fiscal Quarter, means the product of (a) the average per share closing price of BBEP Common Units, as reported on the NASDAQ Global Select Market (or, if not the NASDAQ Global Select Market, the principal securities exchange or inter-dealer quotation system on which the Common Units are listed or quoted for trading at such time), for each of the trading days during such Fiscal Quarter (provided, that if, on such day, BBEP Common Units are not listed or quoted for trading on any nationally recognized securities exchange or inter-dealer quotation system in the United States, such average per share closing price shall be deemed to be zero); and (b) the number of BBEP Common Units owned by the Borrower or any other Loan Party on such day.

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

     “Borrower” has the meaning given to such term in the preamble hereto.

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

     “Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03, which shall be in a form reasonably acceptable to the Administrative Agent.

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

     “Capital Lease Obligations” means, for any Person, all obligations of such Person to pay rent or other amounts under a lease of (or other agreement conveying the right to use) any property to the extent such obligations are required to be classified and accounted for as a capital lease on a balance sheet of such Person under GAAP. For purposes of this Agreement, the amount of any Capital Lease Obligation shall be the capitalized amount thereof, determined in accordance with GAAP.

     “Casualty Event” means any loss, casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property of the Borrower or any other Credit Party.

     “CERCLA” means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. § 9601, et. seq., as amended from time to time.

     “Change in Law” means (a) the adoption of any law, rule or regulation after the date of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the date of this Agreement, or (c) compliance by any Lender (or, for purposes of Section 2.14(b), by any Applicable Lending

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Office of such Lender or by such Lender’s holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the date of this Agreement.

     “Change of Control” means the occurrence, after the date hereof, of any of the following events: (a) any Person or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act), other than the Darden Group, shall have acquired ownership, directly or indirectly, beneficially or of record, of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in the Borrower; (b) the occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors or the stockholders of the Borrower nor (ii) appointed by directors a majority of whom was so nominated; or (c) the occurrence of a “Change of Control” as defined in any Existing Notes Indenture, for so long as any Existing Notes shall be outstanding under such Existing Notes Indenture, or any “change of control” (or similar event, however denominated) with respect to the Borrower under and as defined in any other indenture or other agreement or instrument evidencing or governing the rights of the holders of any Material Indebtedness of the Borrower or any other Credit Party (other than any First Lien Permitted Indebtedness), where the occurrence of such a “change of control” or similar event constitutes, or upon the giving of notice, the lapse of time or both would constitute, a “default” or an “event of default” thereunder, or shall require, or upon the giving of notice, the lapse of time or both would require, that any payment, purchase, repurchase, redemption or defeasance of such Material Indebtedness be made, or be offered to be made, as a result thereof.

     “Closing Date” means the date on which the conditions specified in Article IV are satisfied (or waived in accordance with Section 10.02).

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

     “Collateral” means any and all assets on which Liens are purported to be granted pursuant to the Security Documents as security for the Term Obligations.

     “Collateral and Guarantee Requirement” means, at any time, the requirement that:

     (a) the Administrative Agent shall have received from the Borrower and each other Designated Credit Party either (i) a counterpart of the Security Agreement, the Pledge Agreement, the Indemnity, Contribution and Subrogation Agreement, the Intercreditor Agreement and, other than in the case of the Borrower, the Subsidiary Guarantee Agreement, in each case duly executed and delivered on behalf of such Person, or (ii) in the case of any Person that becomes a Designated Credit Party after the date hereof, instruments in the form or forms specified in the Security Agreement, the Pledge Agreement, the Indemnity, Contribution and Subrogation Agreement, the Subsidiary Guarantee Agreement and the Intercreditor Agreement under which such Designated Credit Party becomes a party thereto, in each case duly executed and delivered on behalf of such Person;

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     (b) all Equity Interests owned by any Loan Party shall have been pledged pursuant to the Pledge Agreement (provided that the Loan Parties shall not be required to pledge more than 65% of the outstanding voting Equity Interests of any Foreign Subsidiary), and the Administrative Agent (or its agent or bailee) shall, to the extent required by the Pledge Agreement, have received certificates or other instruments representing all such Equity Interests that are Equity Interests in a Subsidiary (other than an Inactive Subsidiary) and all such other Equity Interests as are certificated, in each case, together with undated stock powers or other instruments of transfer with respect thereto endorsed in blank;

     (c) all Indebtedness of the Borrower or any Subsidiary that is owing to any Loan Party (other than any such Indebtedness of any MLP Subsidiary in the form of advances that do not constitute obligations for borrowed money) shall have been evidenced by a promissory note (which shall be in form and substance satisfactory to the Borrower) and shall have been pledged pursuant to the Security Agreement, and the Administrative Agent (or its agent or bailee) shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;

     (d) the Administrative Agent shall have received, with respect to each Designated Real Property, (i) counterparts of a Mortgage duly executed and delivered by the record owner or lessee of such Designated Real Property, (ii) an opinion of counsel, addressed to the Administrative Agent and each Lender and in form and substance reasonably satisfactory to the Administrative Agent, with respect to the enforceability and validity of the Mortgage thereon and any related fixture filings and (iii) all such other items as the Administrative Agent shall reasonably deem necessary to create and evidence a valid and perfected second priority mortgage Lien and provide appropriate notice and filing of such Lien on such Designated Real Property, subject only to Permitted Encumbrances;

     (e) all documents and instruments, including UCC financing statements, required by applicable law or reasonably requested by the Administrative Agent to be filed, registered or recorded to create the Liens intended to be created by the Security Documents and perfect such Liens to the extent required by, and with the priority required by, the Security Documents, shall have been filed, registered or recorded or delivered to the Administrative Agent for filing, registration or recording, and all filing, recording and similar fees and Taxes payable in connection with the foregoing shall have been paid or provided for in a manner reasonably satisfactory to the Administrative Agent; and

     (f) each Designated Credit Party shall have obtained all material consents and approvals required to be obtained by it in connection with the execution and delivery of all Security Documents to which it is or is intended to be a party, the performance of its obligations thereunder and the granting by it of the Liens thereunder (it being understood that the foregoing shall not require any Designated Credit Party to seek consent to assignment under any of its agreements, licenses or permits that contains a restriction on the assignment of, or the creation of a security interest in, its rights thereunder).

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The foregoing definition shall not require the creation or perfection of pledges of or security interests in, or the obtaining of legal opinions or other deliverables with respect to, particular assets of the Designated Credit Parties if, and for so long as the Administrative Agent, in consultation with the Borrower, determines that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such legal opinions or other deliverables in respect of such assets, shall be excessive in view of the benefits to be obtained by the Lenders therefrom. The Administrative Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets (including delivery of certificates representing pledged Equity Interests) or the provision of any Guarantee by any Subsidiary (including extensions beyond the Closing Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Closing Date) where it determines that such action cannot be accomplished without undue effort, expense or other burden by the time or times at which it would otherwise be required to be accomplished by this Agreement or the Security Documents.

     “Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans hereunder, expressed as an amount representing the maximum principal amount of the Loans to be made by such Lender, as such commitment may be reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04. The initial amount of each Lender’s Commitment is set forth on Schedule 2.01. The initial aggregate principal amount of the Commitments of the Lenders is $700,000,000.

     “Confidential Information Memorandum” means the Confidential Information Memorandum dated July 2008, relating to the credit facility provided for herein.

     “Consolidated Current Assets” means, at any time, the sum of (a) the current assets of the Borrower and the Subsidiaries at such time, determined on a consolidated basis in accordance with GAAP, but excluding (i) current assets of any Person that is not a Credit Party, (ii) current assets resulting from the application of SFAS 133 to any Hedging Agreement and (iii) current assets resulting from the application of SFAS 143, plus (b) the First Lien Global Availability at such time.

     “Consolidated Current Liabilities” means, at any time, the sum of the current liabilities of the Borrower and the Subsidiaries at such time, determined on a consolidated basis in accordance with GAAP, but excluding (a) current liabilities of any Person that is not a Credit Party, except to the extent such liabilities constitute liabilities of a Credit Party (including pursuant to a Guarantee), (b) current liabilities resulting from the application of SFAS 133 to any Hedging Agreement, (c) current liabilities resulting from the application of SFAS 143 and (d) the current portion of any Long Term Debt at such time.

     “Consolidated EBITDAX” means, for any period, the Consolidated Net Income for such period, plus, without duplication and to the extent deducted in determining such Consolidated Net Income, the sum of (a) any income, sales or franchise Taxes for such period, (b) the Consolidated Net Interest Expense for such period, (c) depreciation, depletion and amortization expense for such period, (d) any unusual or non-recurring non-cash expenses or losses for such period (including, whether or not set forth as a separate item in the statement of income, non-cash losses on sales of assets outside of the ordinary course of business), (e) other non-cash

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charges for such period and (f) costs and expenses for such period associated with seismic, geological and geophysical services performed in connection with, and attributable to, oil and gas exploration; provided that any cash payment made with respect to any non-cash items added back in computing Consolidated EBITDAX for any prior period pursuant to this definition shall be subtracted in computing Consolidated EBITDAX for the period in which such cash payment is made.

     “Consolidated Net Income” means, for any period, the net income (or loss) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but excluding, without duplication, (a) the income of any Person that is not a Credit Party, except to the extent of the amount of cash dividends or similar cash distributions actually paid by such Person to the Borrower or, subject to clause (b) below, any other Credit Party, (b) the income of, and any amounts referred to in clause (a) above paid to, any Credit Party (other than a Loan Party) if and to the extent the declaration or payment of cash dividends or similar cash distributions by such Credit Party of such income or such other amounts is not, on the date of determination, permitted without any prior approval of any Governmental Authority that has not been obtained or by the operation of the terms of the Organic Documents of such Credit Party, any agreement or other instrument binding upon such Credit Party or any law applicable to such Credit Party (other than any corporate, limited liability company, partnership or similar law limiting dividends and similar distributions that is generally applicable to Persons incorporated or organized under such law), unless such restrictions with respect to the payment of cash dividends and other similar cash distributions has been legally and effectively waived, (c) any after-tax gains attributable to asset dispositions, (d) any non-cash gains, losses or charges resulting from the application of SFAS 133 to any Hedging Agreement, (e) any non-cash gains, losses or charges resulting from the application of SFAS 143 or SFAS 144, (f) any after-tax extraordinary gains (net of extraordinary losses for such period) and (g) non-cash nonrecurring gains.

     “Consolidated Net Interest Expense” means, for any period, (a) the interest expense (including imputed interest expense in respect of Capital Lease Obligations) of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but excluding any interest expense attributable to obligations of any Person that is not a Credit Party except where such obligations constitute obligations of a Credit Party (including pursuant to a Guarantee), minus (b) the interest income of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but excluding the interest income of any Person that is not a Credit Party (except to the extent of the amount of cash dividends or similar cash distributions actually paid by such Person to the Borrower or any other Credit Party).

     “Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise, but not solely by being an officer or director of that Person. “Controlling” and “Controlled” have meanings correlative thereto.

     “Credit Parties” means, collectively, (a) the Borrower, (b) the Subsidiary Guarantors, (c) Quicksilver Canada and each other Subsidiary that is an obligor (including pursuant to a Guarantee) under any First Lien Permitted Facility, (d) each other Subsidiary that is a “Loan

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Party” under, and as defined in, any First Lien Credit Agreement or any successor definitive documentation governing any First Lien Permitted Facility (or a term connoting a meaning substantially similar to that connoted by the term “Loan Party” under any First Lien Credit Agreement as of the date hereof) and (e) each other Subsidiary that is not (i) an MLP Subsidiary or (ii) a Subsidiary that has been designated as, or otherwise constitutes, an “Unrestricted Subsidiary” under each indenture governing any issued and outstanding notes of the Borrower or any Subsidiary that permits designation of Subsidiaries as “Unrestricted Subsidiaries” (including, for so long as the Existing Senior Notes or the Existing Subordinated Notes shall be outstanding, the Existing Senior Notes Indenture and the Existing Subordinated Notes Indenture).

     “Credit Suisse” has the meaning given to such term in the preamble hereto.

     “Darden Group” means, collectively, the estate of Frank Darden, Lucy Darden, Anne Darden Self, Glenn Darden and Thomas Darden, and their respective heirs, beneficiaries, trusts, estates and controlled Affiliates (including, for so long as such Persons constitute such controlled Affiliates, Mercury Exploration, Mercury Production, QELP, The Discovery Fund, Pennsylvania Avenue Limited Partnership and Pennsylvania Management Company).

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

     “Designated Credit Parties” means, collectively, (a) the Borrower, (b) the Subsidiary Guarantors and (c) each other Domestic Subsidiary that is an obligor (including pursuant to a Guarantee), or is required to become an obligor pursuant to a Guarantee, under any First Lien Permitted Facility or any of the Existing Notes (or any Refinancing Indebtedness in respect thereof).

     “Designated Real Properties” means (a) each Real Property of any Designated Credit Party that is located in the United States and subject to a mortgage Lien securing any obligation under any First Lien Permitted Facility and (b) such other Oil and Gas Properties of the Designated Credit Parties that are Real Properties located in the United States as are at any time required to constitute “Designated Real Properties” in order for the Mortgaged Property Requirement to be satisfied as of such time.

     “Domestic Subsidiary” means any Subsidiary other than a Foreign Subsidiary.

     “Engagement Letter” means that certain Engagement Letter dated July 17, 2008, by and among the Borrower, Credit Suisse, Credit Suisse Securities (USA) LLC, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities Inc.

     “Environmental Complaint” means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, proceeding, judgment, letter or other communication from any federal, state or municipal Governmental Authority or any other Person against any Credit Party involving (a) a Hazardous Discharge from, onto or about any real property owned, leased or operated at any time by any Credit Party, (b) a Hazardous Discharge caused, in whole or in part, by any Credit Party, or by any Person acting on behalf of or at the instruction of any Credit Party, or (c) any violation of any Environmental Law by any Credit Party.

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     “Environmental Laws” means any and all applicable Governmental Rules pertaining to health (with respect to exposure to Hazardous Materials) or the environment in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any time has conducted business, or where any property of the Borrower or any Subsidiary is located, including OPA, the Clean Air Act, as amended, CERCLA, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, the Environmental Protection and Enhancement Act, R.S.A. 2000, c. E-12, as amended, the Canadian Environmental Protection Act, 1999. S.C. 1999. c. 33, as amended, and other environmental conservation or protection laws. The term “oil” shall have the meaning specified in OPA; the term “release” (or “threatened release”) shall have the meaning specified in CERCLA; and the term “disposal” (or “disposed”) shall have the meaning specified in RCRA; provided, however, that (i) in the event any of OPA, CERCLA or RCRA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment, and (ii) to the extent the laws of the state, province or territory in which any property of the Borrower or any Subsidiary is located establish a meaning for “oil”, “release”, or “disposal” which is broader than that specified in either OPA, CERCLA or RCRA, such broader meaning shall apply.

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

     “Equity Interests” means, with respect to any Person, shares of the capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in such Person, or any warrants, options or other rights to acquire any of the foregoing.

     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the rules, regulations and interpretations thereunder, in each case as in effect from time to time.

     “ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Borrower or any other Credit Party, is treated as a single employer under Section 414 (b) or 414 (c) of the Code or Section 4001(b)(1) of ERISA, or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

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

     “Eurodollar Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the applicable British Bankers’ Association LIBOR rate for deposits in U.S. Dollars as reported by any generally recognized financial information service at approximately 11:00 a.m., London time, on the date that is 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 Rate for the relevant Interest Period shall instead be the rate determined by the Administrative Agent to be the average of the rates per annum at which deposits in U.S. Dollars, in the approximate amount of such Borrowing and for a period equal to such Interest Period, are offered to major banks in the London interbank market in London, England by the Administrative Agent at approximately 11:00 a.m., London time, on the date that is two Business Days prior to the first day of such Interest Period; provided further that, if the Eurodollar Rate determined as provided above with respect to any Eurodollar Borrowing for any Interest Period would be less than 3.25% per annum, then the Eurodollar Rate with respect to such Eurodollar Borrowing for such Interest Period shall be deemed to be 3.25% per annum.

     “Event of Default” has the meaning given to such term in Section 8.01.

     “Excess Available Cash” means, at any time, the excess, if any, of (a) the proceeds of borrowings under the First Lien Permitted Facilities made within 45 days prior to such time over (b) the portion of such proceeds that has been used, or is reasonably expected by the Borrower to be used within 46 days after such time, by the Borrower and the other Credit Parties for working capital and other general corporate purposes.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America, or by the jurisdiction under the laws of which such recipient is or was organized or in which its principal office is or was located or, in the case of any Lender, in which its Applicable Lending Office is or was located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the recipient is or was located and (c) in the case of a Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section 2.18(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new Applicable Lending Office) or is attributable to such Foreign Lender’s failure to comply with Section 2.16(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Applicable Lending Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding tax pursuant to Section 2.16.

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     “Existing Convertible Debentures” means the 1.875% Convertible Subordinated Debentures due 2024 of the Borrower and the Indebtedness represented thereby.

     “Existing Convertible Debentures Documents” means the Existing Convertible Debentures, the Existing Convertible Debentures Indenture and all promissory notes, guarantees and other documents, instruments and agreements executed and delivered pursuant to the Existing Convertible Debentures Indenture or otherwise pertaining to the Existing Convertible Debentures.

     “Existing Convertible Debentures Indenture” means that certain Indenture dated as of November 1, 2004, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (as successor in interest), as trustee (or any other successor trustee).

     “Existing Notes” means the Existing Convertible Debentures, the Existing Senior Notes and the Existing Subordinated Notes.

     “Existing Notes Documents” means the Existing Convertible Debentures Documents, the Existing Senior Notes Documents and the Existing Subordinated Notes Documents.

     “Existing Notes Indentures” means the Existing Convertible Debentures Indenture, the Existing Senior Notes Indenture and the Existing Subordinated Notes Indenture.

     “Existing Senior Notes” means the 8¹/4% Senior Notes due 2015 of the Borrower and the Indebtedness represented thereby.

     “Existing Senior Notes Documents” means the Existing Senior Notes, the Existing Senior Notes Indenture and all promissory notes, guarantees and other documents, instruments and agreements executed and delivered pursuant to the Existing Subordinated Notes Indenture evidencing, guaranteeing or otherwise pertaining to the Existing Senior Notes, other than any Security Documents.

     “Existing Senior Notes Indenture” means that certain Indenture dated as of December 22, 2005, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (as successor in interest), as trustee (or any other successor trustee), as supplemented by (a) the Fifth Supplemental Indenture dated as of June 27, 2008, and (b) the Sixth Supplemental Indenture dated as of July 10, 2008.

     “Existing Subordinated Notes” means the 7-1/8% Senior Subordinated Notes due 2016 of the Borrower and the Indebtedness represented thereby.

     “Existing Subordinated Notes Documents” means the Existing Subordinated Notes, the Existing Subordinated Notes Indenture and all promissory notes, guarantees and other documents, instruments and agreements executed and delivered pursuant to the Existing Subordinated Notes Indenture evidencing, guaranteeing or otherwise pertaining to the Existing Subordinated Notes.

     “Existing Subordinated Notes Indenture” means that certain Indenture dated as of December 22, 2005, between the Borrower and The Bank of New York Mellon Trust Company,

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N.A. (as successor in interest), as trustee (or any successor trustee), as supplemented by (a) the First Supplemental Indenture dated as of March 16, 2006, (b) the Second Supplemental Indenture dated as of July 31, 2006, (c) the Third Supplemental Indenture dated as of September 26, 2006, and (d) the Fourth Supplemental Indenture dated as of October 31, 2007.

     “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 for 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 reasonable discretion.

     “Financial Officer” of any Person means its Chief Financial Officer; provided, that if no Person serves in such capacity, the term “Financial Officer” shall mean the highest ranking executive officer of such Person with responsibility for accounting, financial reporting, cash management and similar functions.

     “First Lien Canadian Credit Agreement” means the Amended and Restated Credit Agreement dated as of February 9, 2007, among Quicksilver Canada, as borrower, the lenders party thereto, BNP Paribas and Bank of America, N.A., as co-global syndication agents, Fortis Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust Company Americas, as co-global documentation agents, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent, and JPMorgan Chase Bank, N.A., as global administrative agent, as heretofore amended, including pursuant to the First Lien Fifth Amendment.

     “First Lien Credit Agreements” means the First Lien U.S. Credit Agreement and the First Lien Canadian Credit Agreement.

     “First Lien Event of Default” has the meaning given to such term in Section 8.01(f).

     “First Lien Fifth Amendment” means the amendment, waiver or other modification of the First Lien Credit Agreements or other First Lien Loan Documents entered into in connection with the Acquisition to, among other things, permit under each First Lien Credit Agreement the borrowing of the Loans hereunder.

     “First Lien Global Availability” means, at any time, the amount by which (a) the lower of (i) the aggregate amount of the First Lien Combined Commitments (whether used or unused) in effect at such time and (ii) the amount of the First Lien Global Borrowing Base as in effect at such time exceeds (b) the aggregate First Lien Combined Credit Exposure under the First Lien Permitted Facilities at such time. For purposes of this definition, (A) the term “First Lien Combined Credit Exposure” has the meaning given to the term “Combined Credit Exposure” under the First Lien Credit Agreements (or, in respect of any successor definitive documentation governing any First Lien Permitted Facility, a term connoting a meaning substantially similar to that connoted by the term “Combined Credit Exposure” under the First Lien Credit Agreements as of the date hereof) and (B) the term “First Lien Combined Commitments” has the meaning

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given to the term “Combined Commitments” under the First Lien Credit Agreements (or, in respect of any successor definitive documentation governing any First Lien Permitted Facility, a term connoting a meaning substantially similar to that connoted by the term “Combined Commitments” under the First Lien Credit Agreements as of the date hereof).

     “First Lien Global Borrowing Base” has the meaning given to the term “Global Borrowing Base” in the First Lien Credit Agreements (or, in respect of any successor definitive documentation governing any First Lien Permitted Facility, a term connoting a meaning substantially similar to that connoted by the term “Global Borrowing Base” under the First Lien Credit Agreements as of the date hereof).

     “First Lien Hedging Obligations” means Hedging Obligations that are guaranteed and/or secured pursuant to the First Lien Loan Documents or any successor definitive documentation for the First Lien Permitted Facilities.

     “First Lien Loan Documents” has the meaning given to the term “Combined Loan Documents” under the First Lien Credit Agreements.

     “First Lien Permitted Facility” means any credit facility referred to in Section 7.01(c) pursuant to which any First Lien Permitted Indebtedness is outstanding.

     “First Lien Permitted Indebtedness” has the meaning given to such term in Section 7.01(c).

     “First Lien U.S. Borrowing Base” has the meaning given to the term “U.S. Global Borrowing Base” in the First Lien U.S. Credit Agreement (or, in respect of any successor definitive documentation governing any First Lien Permitted Facility, a term connoting a meaning substantially similar to that connoted by the term “U.S. Global Borrowing Base” under the First Lien U.S. Credit Agreement as of the date hereof).

     “First Lien U.S. Credit Agreement” means the Amended and Restated Credit Agreement dated as of February 9, 2007, among the Borrower, the lenders party thereto, BNP Paribas and Bank of America, N.A., as co-global syndication agents, Fortis Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust Company Americas, as co-global documentation agents, and JPMorgan Chase Bank, N.A., as global administrative agent, as heretofore amended, including pursuant to the First Lien Fifth Amendment.

     “Fiscal Quarter” means a three month period ending on March 31, June 30, September 30 or December 31 of any Fiscal Year. Unless otherwise indicated herein, each reference to the term “Fiscal Quarter” shall mean a Fiscal Quarter of the Borrower.

     “Fiscal Year” means a twelve month period ending on December 31. Unless otherwise indicated herein, each reference to the term “Fiscal Year” shall mean a Fiscal Year of the Borrower.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction other than the United States.

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     “Foreign Subsidiary” means any Subsidiary that is organized under the laws of a jurisdiction other than the United States.

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

     “Gas Balancing Agreement” means any agreement or arrangement whereby any Credit Party, or any other Person having an interest in any Hydrocarbons to be produced from Mineral Interests in which any Credit Party owns an interest, has a right to take more than its proportionate share of production therefrom.

     “Governmental Approval” means (a) any authorization, consent, approval, license, ruling, permit, tariff, rate, certification, waiver, exemption, filing, variance, claim, order, judgment or decree of or with any Governmental Authority, (b) any required notice to any Governmental Authority, (c) any declaration of or with any Governmental Authority or (d) any registration by or with any Governmental Authority.

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

     “Governmental Rule” means any statute, law, regulation, ordinance, rule, judgment, order, decree, permit, concession, grant, franchise, license, agreement, directive or other governmental restriction or binding form of decision of or determination by, or binding interpretation or administration of any of the foregoing by, any Governmental Authority, whether now or hereafter in effect.

     “Guarantee” by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness or other obligation of any other Person, and includes, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions, by “comfort letter” or other similar undertaking of support or otherwise) or (b) entered into for the purpose of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term “Guarantee” shall not include (i) endorsements of instruments for collection or deposit in the ordinary course of business or (ii) indemnities given in connection with asset sales or otherwise provided in the ordinary course of business. The terms “Guarantee” and “Guaranteed” used as a verb shall have correlative meanings.

     “Hazardous Discharge” means any releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, disposing or dumping of any

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Hazardous Material from or onto any real property owned, leased or operated at any time by any Loan Party or any real property owned, leased or operated by any other Person.

     “Hazardous Material” means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law, and any petroleum, petroleum products or petroleum distillates and associated oil or natural gas exploration, production and development wastes that are not exempted or excluded from being defined as “hazardous substances”, “hazardous materials”, “hazardous wastes” and “toxic substances” under such Environmental Laws.

     “Hedging Agreement” means any agreement, instrument, arrangement or schedule or supplement thereto evidencing any Hedging Transaction.

     “Hedging Obligations” means, with respect to any Person, all obligations and liabilities (including obligations and liabilities of such Person arising in connection with or as a result of early or premature termination of a Hedging Agreement or Hedging Transaction, whether or not occurring as a result of a default thereunder) of such Person under a Hedging Agreement or Hedging Transaction.

     “Hedging Transaction” means any financial derivative transaction, including any commodity, interest rate, currency or other derivative, swap, option, collar, futures contract or other contract pursuant to which a Person hedges risks related to commodity prices, interest rates, currency exchange rates, securities prices or financial market conditions.

     “Highest Lawful Rate” has the meaning given to such term in Section 10.13.

     “Hydrocarbons” means, collectively, oil, gas, casinghead gas, drip gasolines, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith, and all products, by-products and all other substances refined, separated, settled or derived therefrom or the processing thereof, and all other minerals and substances, including liquefied petroleum gas, natural gas, kerosene, sulphur, lignite, coal, uranium, thorium, iron, geothermal steam, water, carbon dioxide, helium, and any and all other minerals, ores, or substances of value, and the products and proceeds therefrom, including all gas resulting from the in-situ combustion of coal or lignite.

     “Immaterial Title Deficiencies” means minor defects in title that do not secure the payment of money, have no material adverse effect on the operation of the subject property and do not diminish by more than 2.0% the Proved PV-10 Value of the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties, as set forth in the most recent Reserve Report delivered pursuant hereto.

     “Inactive Subsidiary” means, at any time, any Subsidiary that at such time (a) does not conduct any business operations, (b) has assets with a book value not in excess of $10,000 and (c) does not have any Indebtedness outstanding.

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     “Incremental Applicable Margin” means (a) prior to the Initial Incremental Applicable Margin Date, zero, and (b) on and after the Initial Incremental Applicable Margin Date, (i) 0.25% per annum plus (ii) on each Subsequent Incremental Applicable Margin Date, an additional 0.25% per annum. For purposes of this definition, the term “Initial Incremental Applicable Margin Date” means the day immediately following the second anniversary of the date hereof, and the term “Subsequent Incremental Applicable Margin Date” means (A) the day that is the numerically corresponding day to the Initial Incremental Applicable Margin Date in the calendar month that is three months after the Initial Incremental Applicable Margin Date (or if there is no such numerically corresponding day, the calendar day immediately succeeding the day that would have been a numerically corresponding day) and (B) each other day that is the numerically corresponding day to the day determined pursuant to clause (A) above (or, after the first determination thereof, the most recent day determined pursuant to this clause (B)) in the calendar month that is three months after the day so determined (or if there is no such numerically corresponding day, the calendar day immediately succeeding the day that would have been a numerically corresponding day).

     “Indebtedness” of any Person means (without duplication): (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (c) all other indebtedness of such Person on which interest charges are customarily paid or accrued, (d) all Capital Lease Obligations of such Person (other than oil and gas leases entered into in the ordinary course of business), (e) all Guarantees by such Person of Indebtedness of others, (f) all obligations, contingent or otherwise, of such Person as an account party in respect of letters of credit and letters of guaranty (other than any guarantees of performance of non-payment obligations), (g) all obligations, contingent or otherwise, of such Person under bankers’ acceptances or surety or other bonds issued for the account of such Person, (h) any amount owed by such Person representing the deferred purchase price of property or services (other than (i) accounts payable incurred in the ordinary course of business and which have not been outstanding for more than 90 days past the applicable due date or, if outstanding beyond such date, are being contested in good faith and such Person has established appropriate reserves, if any, as required in conformity with GAAP, (ii) deferred compensation and (iii) any purchase price adjustment, earnout or deferred payment of a similar nature incurred in connection with an acquisition (but only to the extent no payment has at the time accrued pursuant to such purchase price adjustment, earnout or deferred payment obligation)), (i) all Indebtedness of others secured by a Lien on any property owned by such Person, regardless of whether the Indebtedness secured thereby shall have been assumed by such Person, (j) all obligations under operating leases that (i) require such Person or its Affiliate to make payments over the term of such lease, including payments at termination, based on the purchase price or appraisal value of the property subject to such lease plus a marginal interest rate and (ii) are used primarily as a financing vehicle for such property, (k) the undischarged balance of any Production Payment created by such Person or for the creation of which such Person directly or indirectly received payment, to the extent such Production Payment would be reflected as indebtedness on a consolidated balance sheet of such Person prepared in accordance with GAAP, (l) net liabilities of such Person under all Hedging Obligations determined in accordance with GAAP and (m) all liability of such Person as a general partner of a partnership for obligations of such partnership of the nature described in clauses (a) through (l) above.

     “Indemnified Taxes” means Taxes other than Excluded Taxes and Other Taxes.

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     “Indemnitee” has the meaning given to such term in Section 10.03(b).

     “Indemnity, Contribution and Subrogation Agreement” means the Indemnity, Contribution and Subrogation Agreement among the Borrower, the other Loan Parties and the Administrative Agent, substantially in the form of Exhibit B, together with all supplements thereto.

     “Initial Reserve Report” means, collectively, (a) the reserve report prepared by Schlumberger Data and Consulting Services dated January 24, 2008, evaluating as of December 31, 2007, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties located in the United States, (b) the reserve report prepared by LaRoche Petroleum Consultants Limited dated January 24, 2008, evaluating as of December 31, 2007, the Proved Mineral Interests attributable to Oil and Gas Properties of the Credit Parties located in Canada, (c) the reserve report prepared by the Borrower’s internal engineers dated July 29, 2008, evaluating as of June 30, 2008, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties located in the United States, and (d) the reserve report prepared by Schlumberger Data and Consulting Services dated August 7, 2008, evaluating as of July 31, 2008, the Proved Mineral Interests attributable to the Oil and Gas Properties to be acquired by the Credit Parties in the Acquisition.

     “Intercreditor Agreement” means an Intercreditor Agreement among the Borrower, the Subsidiary Guarantors, the First Lien Collateral Agent (as defined therein) and the Administrative Agent, substantially in the form of Exhibit C, with such modifications thereto as are expressly authorized under Section 10.16.

     “Interest Election Request” means a written or telephonic request by an Authorized Officer of the Borrower to convert or continue a Borrowing in accordance with Section 2.05, which if written shall be in substantially the form of Exhibit D or any other form approved by the Administrative Agent.

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

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

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Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Eurodollar Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

     “Investment” means, with respect to any Person, any loan, advance or other extension of credit to, any Guarantee of any Indebtedness or other payment obligation of, any capital contribution to, any investment in or purchase of the Equity Interests or other securities of, or interests in, any other Person.

     “Lenders” means the Persons listed on Schedule 2.01 and any other Person that shall have become a party to this Agreement pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Acceptance.

     “Lien” means (a) any lien, charge or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment, bailment or margin account for security purposes, (b) Production Payments and the like which constitute Indebtedness and are payable out of Oil and Gas Properties or (c) reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting title to property. For the purposes of this Agreement, the Borrower and the other Credit Parties shall be deemed to own subject to a Lien any asset which is acquired or held subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such asset.

     “Liquidity Amount” means, at any time, the sum of (a) the First Lien Global Availability at such time and (b) the Excess Available Cash at such time.

     “Loan Documents” means this Agreement, the Security Documents, the Subsidiary Guarantee Agreement, the Indemnity, Contribution and Subrogation Agreement, the Intercreditor Agreement and any promissory notes delivered pursuant to Section 2.07(e).

     “Loan Parties” means the Borrower and the Subsidiary Guarantors.

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

     “Long Term Debt” means Indebtedness which matures more than one year from the date it is incurred, or which can be extended at the option of the obligor(s) to a date more than one year from the date it is incurred.

     “Material Adverse Effect” means a material and adverse effect on (a) the financial condition, business, operations, properties or assets of (i) the Borrower and the Subsidiaries, taken as a whole, or (ii) the Borrower and the other Credit Parties, taken as a whole, (b) the validity and enforceability of this Agreement or any other Loan Document, (c) the perfection or priority of any material Lien purported to be created by any Security Document or (d) the right or ability of the Loan Parties to fully, completely and timely pay and perform their obligations under the Loan Documents.

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     “Material Agreement” means, as to any Person, any material written or oral agreement or contract to which such Person is a party, by which such Person is bound or to which any material assets of such Person are subject, and which is not cancelable by such Person upon notice of 30 days or less without liability for further payment other than nominal penalty.

     “Material Gas Imbalance” means, with respect to all Gas Balancing Agreements to which any Credit Party is a party or by which any Credit Party is bound, or to which any Oil and Gas Property of any Credit Party is subject, a net negative gas imbalance in the aggregate for the Credit Parties in excess of one half bcf of gas (on an mcf equivalent basis).

     “Material Indebtedness” means Indebtedness (other than the Loans), or Hedging Obligations, of any one or more of the Borrower and the other Credit Parties in a principal amount of $16,500,000 or more individually or $36,000,000 or more in the aggregate. For purposes of determining Material Indebtedness, the “principal amount” of the Hedging Obligations in respect of any Hedging Agreement or Hedging Transaction at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that the Credit Parties would be required to pay if such Hedging Agreement or such Hedging Transaction were terminated at such time.

     “Maturity Date” means the fifth anniversary of the date hereof.

     “Mercury Exploration” means Mercury Exploration Company, a Texas corporation.

     “Mercury Production” means Mercury Production Company, a Texas corporation.

     “Midstream Assets” means oil and gas pipelines, gathering systems, processing and storage facilities and other assets in the midstream portion of the energy commodity supply chain.

     “Mineral Interests” means all rights, estates, titles and interests in and to oil and gas leases and any oil and gas interests, royalty and overriding royalty interests, production payments, net profits interests, oil and gas fee interests and other rights therein, including any reserved, residual, reversionary or carried interests relating to the foregoing, together with rights, titles and interests created by or arising under the terms of any unitization, communization, and pooling agreements or arrangements, and all properties, rights and interests covered thereby, whether arising by contract, order or operation of Governmental Rules, which now or hereafter include all or any part of the foregoing.

     “Minimum Liquidity Amount” means, at any time, the greater of (a) 10.0% of the First Lien Global Borrowing Base at such time and (b) $100,000,000.

     “MLP” means Quicksilver Gas Services LP, a Delaware limited partnership.

     “MLP Gathering and Processing Agreement” means that certain Fifth Amended and Restated Cowtown Gas Facilities Gas Gathering and Processing Agreement, dated as of August 10, 2007, among the Borrower, Cowtown Pipeline Partners L.P., a Texas limited partnership, and Cowtown Gas Processing Partners L.P., a Texas limited partnership.

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     “MLP GP” means Quicksilver Gas Services GP LLC, a Delaware limited liability company.

     “MLP Holdings” means Quicksilver Gas Services Holdings LLC, a Delaware limited liability company.

     “MLP Omnibus Agreement” means that certain Omnibus Agreement, dated as of August 10, 2007, among MLP GP, MLP, Quicksilver Gas Services Operating LLC, a Delaware limited liability company, and the Borrower.

     “MLP Subsidiaries” means, collectively, (a) MLP Holdings, (b) MLP GP, (c) MLP and (d) any Subsidiary of MLP.

     “Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

     “Mortgage” means a mortgage, deed of trust, assignment of production, assignment of leases and rents, leasehold mortgage or other security document granting a Lien on any Real Property to secure the Term Obligations. Each Mortgage shall be in form and substance reasonably satisfactory to the Administrative Agent.

     “Mortgaged Property” means any Designated Real Property with respect to which a Lien has been granted pursuant to a Mortgage.

     “Mortgaged Property Requirement” means, at any time, the requirement that the Designated Real Properties represent not less than 75% of the Proved PV-10 Domestic Value at such time.

     “Net Cash Proceeds” means, with respect to any Prepayment Event, the cash proceeds (including cash equivalents and any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) received in respect of such Prepayment Event, net of, without duplication, (a) all attorneys’ fees, accountants’ fees, investment banking fees and other customary expenses, fees and commissions actually incurred by the Borrower or any of the Subsidiaries in connection with such Prepayment Event, (b) Taxes paid or payable by the Borrower or any of the Subsidiaries that are directly attributable to such Prepayment Event and (c) in the case of any Prepayment Event referred to in clause (a) or (b) of the definition of such term, (i) amounts required to be applied to the repayment of any Indebtedness (other than Loans or any First Lien Permitted Indebtedness) secured by a Lien expressly permitted hereunder on any property that is the subject thereof, (ii) cash payments made by the Borrower or any of the Subsidiaries to satisfy obligations resulting from early termination of Hedging Agreements directly attributable to such Prepayment Event and (iii) any portion of such cash proceeds held as a reserve or placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Prepayment Event, or otherwise, to the extent directly attributable to such Prepayment Event; provided, however, that upon termination of such reserve or escrow, Net Cash Proceeds will be increased by the portion of funds in such reserve or escrow that are released to the Borrower or any of the Subsidiaries.

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     “Non-Recourse Debt” means Indebtedness of any Subsidiary (a) secured solely by the assets acquired with the proceeds of such Indebtedness and (b) with respect to which (i) no Loan Party shall have any liability to any Person for repayment of all or any portion of such Indebtedness beyond the assets so secured and (ii) the holders thereof (A) shall have recourse only to, and shall have the right to require the obligations of such Subsidiary to be performed, satisfied or paid only out of, the assets so secured and (B) shall have no direct or indirect recourse (including by way of indemnity or guaranty) to any Loan Party, whether for principal, interest, fees, expenses or otherwise; provided, however, that any such Indebtedness shall not cease to be “Non-Recourse Debt” solely as a result of the instrument governing such Indebtedness containing terms pursuant to which such Indebtedness becomes recourse upon (i) fraud or misrepresentation by the Person in connection with such Indebtedness, (ii) such Person failing to pay taxes or other charges that result in the creation of Liens on any portion of the specific property securing such Indebtedness or failing to maintain any insurance on such property required under the instruments securing such Indebtedness, (iii) the conversion of any of the collateral for such Indebtedness, (iv) such Person failing to maintain any of the collateral for such Indebtedness in the condition required under the instruments securing the Indebtedness, (v) any income generated by the specific property securing such Indebtedness being applied in a manner not otherwise allowed in the instruments securing such Indebtedness, (vi) the violation of any Environmental Law or otherwise affecting the environmental condition of the specific property securing the Indebtedness or (vii) the rights of the holder of such Indebtedness to the specific property becoming impaired, suspended or reduced by any act, omission or misrepresentation of such Person; provided further, however, that, upon the occurrence of any of the foregoing clauses (i) through (vii) above, any such Indebtedness shall cease to be “Non-Recourse Debt” and shall be deemed to be Indebtedness incurred by such Person at such time.

     “NYMEX” means the New York Mercantile Exchange.

     “Oil and Gas Hedging Transaction” means a Hedging Transaction pursuant to which any Person hedges the price to be received by it for future production of Hydrocarbons.

     “Oil and Gas Properties” means the Mineral Interests; the properties now or hereafter pooled or unitized with the Mineral Interests; all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority having jurisdiction) which may affect all or any portion of the Mineral Interests; all operating agreements, joint venture agreements, contracts and other agreements which relate to any of the Mineral Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Mineral Interests; all Hydrocarbons in and under and which may be produced and saved or attributable to the Mineral Interests, the lands covered thereby and all oil in tanks and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Mineral Interests; all tenements, profits á prendre, hereditaments, appurtenances and properties in any way appertaining, belonging, affixed or incidental to the Mineral Interests and properties, rights, titles, interests and estates described or referred to above, including any and all property now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Mineral Interests or property (excluding drilling rigs, automotive equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any

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and all oil wells, gas wells, water wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes, together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

     “OPA” means the Oil Pollution Act of 1990, as amended from time to time.

     “Organic Documents” means, relative to any Person, its articles of organization, association, formation or incorporation (or comparable document), its by-laws, memorandum of association or operating agreement and all partnership agreements, limited liability company or operating agreements and similar arrangements applicable to ownership of its Equity Interests.

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

     “Participant” has the meaning given to such term in Section 10.04(e).

     “PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, as amended from time to time.

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

     “Perfection Certificate” means a certificate in the form of Exhibit E or any other form reasonably satisfactory to the Administrative Agent.

     “Permitted Encumbrances” means, with respect to any asset:

     (a) Liens created under the Loan Documents;

     (b) Liens created under the First Lien Loan Documents or any successor definitive documentation for the First Lien Permitted Facilities; provided that (A) such Liens secure only (1) First Lien Permitted Indebtedness and (2) obligations not constituting Indebtedness that are secured thereunder; and (B) no such Lien shall apply to any property of the Borrower or any Domestic Subsidiary that is not subject to a Lien created under the Loan Documents;

     (c) minor defects in title which do not secure the payment of money and otherwise have no material adverse effect on the value or the operation of the subject property, including (i) easements, rights-of-way, servitudes, permits, zoning restrictions, surface leases and other similar rights in respect of surface operations, (ii) easements for pipelines, streets, alleys, highways, telephone lines, power lines, railways and other

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easements and rights-of-way, on, over or in respect of any of the properties of any Credit Party and (iii) Immaterial Title Deficiencies;

     (d) inchoate statutory or operators’ Liens securing obligations for labor, services, materials and supplies arising in the ordinary course of business which are not delinquent (except to the extent permitted by Section 5.08);

     (e) mechanic’s, materialmen’s, warehouseman’s, journeyman’s, vendor’s, landlord’s and carrier’s Liens and other similar Liens arising by operation of law in the ordinary course of business which are not delinquent (except to the extent permitted by Section 5.08);

     (f) Liens for Taxes, assessments, fees and other charges of any Governmental Authority not yet due or not yet delinquent, or, if delinquent, that are being contested in good faith in the normal course of business by appropriate action, as permitted by Section 5.08;

     (g) lease burdens payable to third parties which are deducted in the calculation of Proved PV-10 Value as set forth in the most recent Reserve Report delivered pursuant hereto, including any royalty, overriding royalty, net profits interest, production payment, carried interest or reversionary working interest in existence as of the date hereof or as a result of or in accordance with the Credit Party’s acquisition of the property burdened thereby;

     (h) Liens securing Non-Recourse Debt permitted by Section 7.01(h);

     (i) pledges or deposits in connection with workers’ compensation, unemployment compensation and/or other social security legislation, and deposits in the ordinary course of business securing liabilities to insurance carriers under insurance or self-insurance arrangements;

     (j) deposits to secure the performance of bids, trade contracts, leases, statutory obligations, surety and appeal bonds, performance bonds and other similar obligations incurred in the ordinary course of business;

     (k) judgment Liens in respect of judgments that do not constitute an Event of Default under Section 8.01(i);

     (l) any Lien existing on any asset prior to the acquisition thereof by the Borrower or any Subsidiary or existing on any asset of any Person that becomes a Subsidiary after the date hereof prior to the time such Person becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in connection with such acquisition or such Person becoming a Subsidiary, as applicable, (ii) such Lien shall not apply to any other asset of the Borrower or any Subsidiary, (iii) such Lien shall secure only those obligations which it secures on the date of such acquisition or the date such Person becomes a Subsidiary, as applicable, and extensions, renewals and replacements of such obligations that are not in excess of the outstanding principal amount of such obligations as of such acquisition date or the date such Person becomes a Subsidiary and (iv) the

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aggregate principal amount of Indebtedness secured by such Liens, together with the aggregate principal amount of Indebtedness secured by Liens pursuant to clause (o) below, shall at no time exceed $24,000,000 in the aggregate;

     (m) any interest or title of a lessor under any lease entered into by the Borrower or any other Credit Party in the ordinary course of business and in accordance with the Loan Documents and covering only the assets so leased;

     (n) Liens in existence on the date hereof and set forth on Schedule 7.03 that secure only Indebtedness permitted by Section 7.01(e); provided that such Liens shall not apply to any additional property after the date hereof and that the amount of the Indebtedness secured thereby is not increased;

     (o) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or any other Credit Party; provided that (i) such Liens secure only Indebtedness permitted by Section 7.01(j), (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90 days after such acquisition, construction or improvement, (iii) the Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or improving such fixed or capital assets, (iv) such Liens shall not apply to any other property of the Borrower or any of other Credit Party and (v) the aggregate principal amount of Indebtedness secured by such Liens, together with the aggregate principal amount of Indebtedness secured by Liens pursuant to clause (l) above, shall at no time exceed $24,000,000 in the aggregate;

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

     (q) contractual Liens that arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP; provided, that such Liens do not materially impair (i) the use of the property subject thereto for the purposes for which such property is held by any Credit Party or (ii) the value of the property subject thereto; or

     (r) other Liens, so long as neither (i) the aggregate outstanding principal amount of the obligations secured thereby nor (ii) the aggregate fair market value (determined, with respect to each such Lien, as of the date such Lien is incurred) of the assets subject thereto exceeds, in either case, $48,000,000 in the aggregate at any time.

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     “Permitted Investments” means:

     (a) readily marketable direct obligations of, or readily marketable obligations the principal of and interest on which are unconditionally guaranteed by, the United States of America (or any agency thereof to the extent such obligations are backed by the full faith and credit of the United States of America);

     (b) fully insured time deposits and certificates of deposit with maturities of one year or less of any commercial bank operating in the United States having capital and surplus in excess of $100,000,000;

     (c) all Investments held by any Credit Party in the form of cash or cash equivalents;

     (d) investments in commercial paper of an issuer organized in the United States if, at the time of purchase, such paper is rated in one of the two highest ratings categories of S&P or Moody’s;

     (e) money market mutual or similar funds having assets in excess of $100,000,000 and at least 95% of the assets of which are comprised of assets specified in clauses (a) through (d) above;

     (f) all Investments existing on the date hereof and set forth on Schedule 7.08;

     (g) all Investments by the Borrower and the other Credit Parties in Equity Interests of their respective Subsidiaries; provided that (i) the aggregate amount of such Investments by Loan Parties in Subsidiaries that are not Credit Parties, plus (ii) the aggregate principal amount of loans and advances by Loan Parties to Subsidiaries that are not Credit Parties made in reliance on clause (h) below, plus (iii) the aggregate amount of Guarantees by Loan Parties of Indebtedness and other payment obligations of Subsidiaries that are not Loan Parties made in reliance on clause (i) below (excluding all such Guarantees of First Lien Permitted Indebtedness and all such Investments, loans, advances and Guarantees existing on the date hereof and set forth on Schedule 7.08) shall not exceed $7,500,000 at any time outstanding;

     (h) loans or advances made by the Borrower or any other Credit Party to any Subsidiary; provided that (i) any such loan or advance made by a Loan Party to any Subsidiary that is not a Loan Party shall, to the extent and as required by the Collateral and Guarantee Requirement, be evidenced by a promissory note that shall have been pledged to the Administrative Agent (or its agent or bailee) and (ii) the aggregate principal amount of such loans and advances by Loan Parties (excluding all such loans and advances existing on the date hereof and set forth on Schedule 7.08) to Subsidiaries that are not Credit Parties shall be subject to the limitation set forth in clause (g) above;

     (i) Guarantees by the Borrower or any other Credit Party of Indebtedness or other payment obligations of the Borrower or any Subsidiary; provided that (i) a Domestic Subsidiary shall not Guarantee any First Lien Permitted Indebtedness or any Existing Notes, or any Refinancing Indebtedness in respect thereof, unless (A) such Subsidiary has

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Guaranteed the Term Obligations pursuant to a Subsidiary Guarantee Agreement and (B) in the case of any Guarantee of any Existing Subordinated Notes, or any Refinancing Indebtedness in respect thereof, such Guarantee is subordinated to such Guarantee of the Term Obligations on terms no less favorable to the Lenders, taken as a whole, than the subordination provisions of the Existing Subordinated Notes, or such Refinancing Indebtedness, as the case may be, and (ii) the aggregate amount of Indebtedness and other payment obligations of Subsidiaries that are not Loan Parties that is Guaranteed by the Loan Parties (excluding all such Guarantees of First Lien Permitted Indebtedness and all such Guarantees existing on the date hereof and set forth on Schedule 7.08) shall be subject to the limitation set forth in clause (g) above;

     (j) extensions of customer or trade credit in the ordinary course of business;

     (k) all Investments arising from transactions by the Borrower or any other Credit Party with customers or suppliers in the ordinary course of business, including endorsements of negotiable instruments, debt obligations and other Investments received by the Borrower or any other Credit Party in connection with the bankruptcy or reorganization of customers and in settlement of delinquent obligations of, and other disputes with, customers;

     (l) entry into operating agreements, working interests, royalty interests, mineral leases, processing agreements, farm-out agreements, contracts for the sale, transportation or exchange of oil, natural gas or CO_2, unitization agreements, pooling arrangements, area of mutual interest agreements, production sharing agreements or other similar or customary agreements, transactions, properties, interests or arrangements, and Investments and expenditures in connection therewith or pursuant thereto, in each case made in the ordinary course of the oil and gas business;

     (m) Investments made as a result of the receipt of non-cash consideration from a sale, transfer, lease or other disposition of any asset in compliance with Section 7.05; and

     (n) any other Investments by any Credit Party in any Persons; provided that the aggregate amount of all such Investments made in reliance on this clause (n) outstanding at any time shall not exceed $50,000,000 (measured on a cost basis).

For the avoidance of doubt, to the extent any Investment is permitted by more than one clause of this definition, the Borrower may categorize all or any portion of such Investment to any one or more of such clauses as it elects and, except as otherwise expressly provided above, in no event shall the same portion of any Investment be deemed to utilize availability under more than one clause of this definition.

     “Permitted Subordinated Indebtedness” has the meaning given to such term in Section 7.01(q).

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

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     “Plan” means an employee benefit plan within the meaning of Section 3(3) of ERISA, other than a multiemployer plan (as defined in Section 4001(a)(3) of ERISA), sponsored, maintained or contributed to by any Credit Party or an ERISA Affiliate for the benefit of any present or former employee of any Credit Party or any ERISA Affiliate, or such present or former employee’s dependents or beneficiaries..

     “Pledge Agreement” means the Pledge Agreement among the Borrower, the other Loan Parties and the Administrative Agent, substantially in the form of Exhibit F, together with all supplements thereto.

     “Prepayment Date” means (a) in respect of any Prepayment Event described in clause (a) of the definition of such term, the earlier of (i) such date as shall have been determined by the Borrower to be a “Prepayment Date” with respect thereto and (ii) the 30th day following the occurrence of such Prepayment Event, (b) in respect of any Prepayment Event described in clause (b) of the definition of such term, the earlier of (i) such date as shall have been determined by the Borrower to be a “Prepayment Date” with respect thereto and (ii) (A) the first Business Day following the last day of the calendar year in which such Prepayment Event shall have occurred, if the Net Cash Proceeds received by the Credit Parties in respect of such Prepayment Event and all other such Prepayment Events that have occurred during such calendar year do not exceed 5.0% of the First Lien Global Borrowing Base as in effect on such last day, or (B) otherwise, the date of the effectiveness of the first redetermination of the First Lien Global Borrowing Base or the First Lien U.S. Borrowing Base made in the calendar year next following the calendar year in which such Prepayment Event has occurred (or, if no such redetermination has been effected prior to such date, the 120th day of such following calendar year), (c) in respect of any Prepayment Event described in clause (d) of the definition of such term, the day on which any Net Cash Proceeds in respect thereof are received by the Borrower or any other Credit Party and (d) in respect of any other Prepayment Event, the fifth Business Day following the day on which any Net Cash Proceeds in respect thereof are received by the Borrower or any other Credit Party.

     “Prepayment Event” means:

     (a) any sale, transfer or other disposition (including by way of merger or consolidation, but excluding any disposition resulting from the occurrence of a Casualty Event) of (i) any Equity Interests in MLP Holdings, MLP GP or MLP (other than any sale or issuance by MLP of its Equity Interests or any transfer by MLP GP of Equity Interests in MLP to employees of the MLP Subsidiaries pursuant to any employee stock option or stock purchase plan or other employee benefit plan) or (ii) any asset directly owned by the Borrower or any other Credit Party, including any sale or issuance to a Person other than the Borrower or any other Credit Party of Equity Interests in any Subsidiary that is a Credit Party, other than, in each case, (A) dispositions described in clauses (a), (b) and (d) of Section 7.05 and (B) other dispositions resulting in aggregate Net Cash Proceeds not exceeding $2,500,000 during any Fiscal Year;

     (b) any Casualty Event resulting in aggregate Net Cash Proceeds of $2,500,000 or more;

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     (c) any issuance by the Borrower of any Equity Interests, or the receipt by the Borrower of any capital contribution, other than (i) the issuance of common stock of the Borrower as part of the Acquisition Consideration and (ii) any issuance of Equity Interests of the Borrower under any employee stock option or stock purchase plan or other employee benefit plan;

     (d) the incurrence by the Borrower or any other Credit Party of any Permitted Subordinated Indebtedness; or

     (e) receipt by the Borrower or any other Credit Party of any indemnity or like payment under any Purchase Agreement resulting in aggregate Net Cash Proceeds of $2,500,000 or more.

     “Prime Rate” means the rate of interest per annum determined from time to time by the Administrative Agent as its prime rate in effect at its principal office in New York City and notified to the Borrower. For purposes of this Agreement, any change in the Alternate Base Rate due to a change in the Prime Rate shall be effective on the date such change in the Prime Rate is announced as being effective.

     “Production Payments” means a production payment obligation (whether volumetric or dollar denominated) of the Borrower or any of the Subsidiaries which are payable from a specified share of proceeds received from production from specified Oil and Gas Properties, together with all undertakings and obligations in connection therewith.

     “Proved Mineral Interests” means all Mineral Interests which constitute “proved reserves”, “proved developed producing reserves”, “proved developed nonproducing reserves” and “proved undeveloped reserves”, as such terms are defined from time to time by the Society of Petroleum Engineers of the American Institute of Mining Engineers.

     “Proved Producing Mineral Interests” means all Mineral Interests which constitute “proved developed producing reserves”, as such term is defined from time to time by the Society of Petroleum Engineers of the American Institute of Mining Engineers.

     “Proved PV-10 Domestic Value” means, as of any date, the present value of estimated future net cash flows to be realized from Proved Mineral Interests attributable to Oil and Gas Properties of the Credit Parties located in the United States, as set forth in the Reserve Report most recently delivered pursuant hereto prior to such date, calculated in accordance with the rules and regulations of the SEC in effect from time to time and using the Three-Year Strip Price for crude oil (WTI) and natural gas (Henry Hub), as quoted on the NYMEX as of the date as of which the information set forth in such Reserve Report is provided (as adjusted for basis differentials), and discounted using an annual discount rate of 10%. The amount of Proved PV-10 Domestic Value at any time (a) shall be calculated on a pro forma basis for dispositions and acquisitions of Oil and Gas Properties located in the United States consummated by the Credit Parties since the date of the Reserve Report most recently delivered pursuant hereto prior to such time (provided that, in the case of any such acquisition, the Administrative Agent shall have received a Reserve Report evaluating the Proved Mineral Interests attributable to the Oil and Gas Properties located in the United States subject thereto in form and substance reasonably

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acceptable to the Administrative Agent and accompanied by such certifications as to the matters set forth therein as the Administrative Agent may reasonably request) and (b) shall be adjusted to give effect to the Hedging Agreements in respect of Oil and Gas Hedging Transactions of the Designated Credit Parties then in effect.

     “Proved PV-10 Value” means, as of any date, the present value of estimated future net cash flows to be realized from Proved Mineral Interests attributable to Oil and Gas Properties of the Credit Parties, as set forth in the Reserve Report most recently delivered pursuant hereto prior to such date, calculated in accordance with the rules and regulations of the SEC in effect from time to time and using the Three-Year Strip Price for crude oil (WTI) and natural gas (Henry Hub), as quoted on the NYMEX as of the date as of which the information set forth in such Reserve Report is provided (as adjusted for basis differentials), and discounted using an annual discount rate of 10%. The amount of Proved PV-10 Value at any time (a) shall be calculated on a pro forma basis for dispositions and acquisitions of Oil and Gas Properties consummated by the Credit Parties since the date of the Reserve Report most recently delivered pursuant hereto prior to such time (provided that, in the case of any such acquisition, the Administrative Agent shall have received a Reserve Report evaluating the Proved Mineral Interests attributable to the Oil and Gas Properties subject thereto in form and substance reasonably acceptable to the Administrative Agent and accompanied by such certifications as to the matters set forth therein as the Administrative Agent may reasonably request) and (b) shall be adjusted to give effect to the Hedging Agreements in respect of Oil and Gas Hedging Transactions of the Credit Parties then in effect.

     “Purchase Agreements” has the meaning given to such term in the introductory statement hereto.

     “QELP” means Quicksilver Energy, L.P., a Michigan limited partnership.

     “Quicksilver Canada” means Quicksilver Resources Canada Inc., an Alberta, Canada corporation.

     “Real Property” means, collectively, all right, title and interest of the Borrower or any other Credit Party in, to or under any and all parcels of real property owned, leased or operated by the Borrower or any other Credit Party, together with all improvements and appurtenant fixtures, equipment, personal property, easements and other property and rights incidental to the ownership, lease or operation thereof, including all Oil and Gas Properties that constitute real property.

     “Refinancing Indebtedness” means, in respect of any Indebtedness (the “Original Indebtedness”), any Indebtedness that extends, renews or refinances such Original Indebtedness (or any Refinancing Indebtedness in respect thereof); provided that (a) the principal amount of such Refinancing Indebtedness (other than any Refinancing Indebtedness in respect of Original Indebtedness that is First Lien Permitted Indebtedness) shall not exceed the principal amount of such Original Indebtedness, plus all fees and expenses incurred by the Borrower or any other Credit Party in connection with such extension, renewal or refinancing; (b) the maturity of such Refinancing Indebtedness shall not be earlier, and the weighted average life to maturity of such Refinancing Indebtedness shall not be shorter, than that of such Original Indebtedness; (c) such

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Refinancing Indebtedness shall not be required to be repaid, prepaid, redeemed, repurchased or defeased, whether on one or more fixed dates, upon the occurrence of one or more events or at the option of any holder thereof (except, in each case, (i) upon the occurrence of an event of default or a change in control, (ii) in the case of any Refinancing Indebtedness in respect of Original Indebtedness that is First Lien Permitted Indebtedness, as a result of the credit extensions thereunder exceeding the First Lien Global Borrowing Base or the First Lien U.S. Borrowing Base, as applicable, thereunder or (iii) as and to the extent such repayment, prepayment, redemption, repurchase or defeasance would have been required pursuant to the terms of such Original Indebtedness) prior to the earlier of (i) the maturity of such Original Indebtedness and (ii) the date 180 days after the Maturity Date; (d) such Refinancing Indebtedness shall not constitute an obligation of any Subsidiary that shall not have been (or, in the case of after-acquired Subsidiaries, shall not have been required to become) an obligor in respect of such Original Indebtedness; (e) if such Original Indebtedness shall have been subordinated to the Term Obligations, such Refinancing Indebtedness shall also be subordinated to the Term Obligations on terms not less favorable in any material respect, when taken as a whole, to the Lenders; and (f) such Refinancing Indebtedness shall not be secured by any Lien on any asset other than the assets that secured such Original Indebtedness (or would have been required to secure such Original Indebtedness pursuant to the terms thereof).

     “Register” has the meaning given to such term in Section 10.04(c).

     “Related Fund” means, with respect to any Lender that is a fund or commingled investment vehicle that invests in bank loans, any other fund that invests in bank loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such investment advisor.

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

     “Required Lenders” means, at any time, Lenders having aggregate Loans (or, prior to the borrowing hereunder on the date hereof, Commitments) representing more than 50% of the aggregate outstanding principal amount of the Loans (or, prior to such borrowing, the aggregate Commitments) at such time.

     “Reserve Report” means (a) the Initial Reserve Report and (b) any reserve report delivered pursuant to Section 5.02 or pursuant to the definitions of the terms “Proved PV-10 Value” and “Proved PV-10 Domestic Value”. For purposes hereof, references to the “most recent Reserve Report delivered pursuant hereto” and words of similar import shall be deemed to refer to both (i) the most recent Reserve Report delivered pursuant hereto with respect to the Oil and Gas Properties located in the United States and (ii) the most recent Reserve Report delivered pursuant hereto with respect to the Oil and Gas Properties located in Canada.

     “Restricted Payment” means (a) any payment (whether in cash, securities or other property) on account of the retirement, redemption, purchase or other acquisition for value, or cancellation or termination, of any Equity Interests in the Borrower or any other Credit Party, including any sinking fund or similar deposit, (b) any dividend or other distribution (whether in

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cash, securities or other property) on or with respect to any Equity Interests in the Borrower or any other Credit Party and (c) any other payment on or with respect to any Equity Interests in the Borrower or any other Credit Party; provided, however, that the term “Restricted Payment” shall not include any payment or distribution by the Borrower to any holder of Indebtedness of the Borrower that is convertible into capital stock of the Borrower that is made (or agreed to be made) in satisfaction, in whole or in part, of (i) such Indebtedness or (ii) the obligation of the Borrower to issue capital stock upon any such holder’s conversion of such Indebtedness into capital stock of the Borrower, in either case, whether paid or distributed by the Borrower upon any such holder’s request to convert any such Indebtedness into capital stock of the Borrower or otherwise.

     “Sale/Leaseback Transaction” means an arrangement relating to property owned by the Borrower or any other Credit Party whereby the Borrower or such other Credit Party sells or transfers such property to any Person and, within 180 days thereafter, the Borrower or any other Credit Party leases such property, or other property that it intends to use for substantially the same purpose or purposes as the property sold or transferred, from such Person or its Affiliates.

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

     “SEC” means the Securities and Exchange Commission in the United States and any successor Governmental Authority.

     “Secured Obligations” has the meaning given to such term in the Security Agreement.

     “Secured Parties” has the meaning given to such term in the Security Agreement.

     “Security Agreement” means the Security Agreement among the Borrower, the other Loan Parties and the Administrative Agent, substantially in the form of Exhibit G, together with all supplements thereto.

     “Security Documents” means the Security Agreement, the Pledge Agreement, the Mortgages and each other security agreement or other instrument or document executed and delivered pursuant to this Agreement or pursuant to the Loan Documents to secure any of the Term Obligations.

     “SFAS 133” means the Statement of Financial Accounting Standard Number 133 entitled “Accounting for Derivative Instruments and Hedging Activities” issued by the Financial Accounting Standards Board in June of 1998, as amended and in effect from time to time.

     “SFAS 143” means the Statement of Financial Accounting Standard Number 143 entitled “Accounting for Asset Retirement Obligations” issued by the Financial Accounting Standards Board in June of 2001, as amended and in effect from time to time.

     “SFAS 144” means the Statement of Financial Accounting Standard Number 144 entitled “Accounting for the Impairment or Disposal of Long-Lived Assets” issued by the Financial Accounting Standards Board in August of 2001, as amended and in effect from time to time.

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     “Solvent” means, with respect to any Person at any time, a condition under which (a) the fair saleable value of such Person’s assets is, on the date of determination, greater than the total amount of such Person’s liabilities (including contingent and unliquidated liabilities) at such time, (b) such Person is able to pay all of its liabilities as such liabilities mature, (c) such Person does not intend to, and such Person does not believe it will, incur debts or liabilities beyond its ability to pay as such debts and liabilities mature, and (d) such Person is not engaged in a business or transaction, and such Person is not about to engage in a business or transaction for which such Person’s property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. For purposes of this definition, (i) the amount of a Person’s contingent or unliquidated liabilities at any time shall be that amount which, in light of all the facts and circumstances then existing, represents the amount which can reasonably be expected to become an actual or matured liability, (ii) the “fair saleable value” of an asset shall be the amount which may be realized within a reasonable time either through collection or sale of such asset at its regular market value, and (iii) the “regular market value” of an asset shall be the amount which a capable and diligent business person could obtain for such asset from an interested buyer who is willing to purchase such asset under ordinary selling conditions.

     “Specified MLP Assets” means all the assets that any of the MLP Subsidiaries have an obligation or option to purchase from the Borrower or any other Credit Party pursuant to Section 4.4 of the MLP Gathering and Processing Agreement and Sections 2.2(b) and 2.3 of the MLP Omnibus Agreement.

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

     “Subsidiary” means, with respect to any Person (the “parent”) at any date, any corporation, limited liability company, partnership (limited or general), association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date. Unless otherwise indicated herein, each reference to the term “Subsidiary” means a Subsidiary of the Borrower.

     “Subsidiary Guarantor” means each Subsidiary that is a party to the Subsidiary Guarantee Agreement.

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     “Subsidiary Guarantee Agreement” means the Subsidiary Guarantee Agreement between the Subsidiary Guarantors and the Administrative Agent, substantially in the form of Exhibit H, together with all supplements thereto.

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

     “Term Obligations” means the obligations of the Borrower under this Agreement and of the Borrower and the other Loan Parties under the other Loan Documents, including (a) the due and punctual payment by the Borrower of (i) the principal of and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the Borrower under this Agreement or any other Loan Document, including in respect of fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including any monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or similar proceeding, regardless of whether allowed or allowable in such proceeding), (b) the due and punctual performance of all other obligations of the Borrower under or pursuant to this Agreement and each other Loan Document and (c) the due and punctual payment and performance of all of the obligations of each other Loan Party under or pursuant to each of the other Loan Documents.

     “Three-Year Strip Price” means, as of any date, (a) for the 36-month period commencing with the month immediately following the month in which such date occurs, the monthly futures contract prices for crude oil and natural gas for the 36 succeeding months as quoted on the NYMEX and (b) for periods after such 36-month period, the average of such quoted prices for the period from and including the 25th month in such 36-month period through the 36th month in such period.

     “Total Debt” means, as of any date, the sum, without duplication, of (a) the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP, but excluding Indebtedness of any Person that is not a Credit Party except to the extent such Indebtedness constitutes Indebtedness of a Credit Party (including pursuant to a Guarantee), and (b) the aggregate principal amount of Indebtedness of any Person that is not a Credit Party that is Guaranteed as of such date by the Borrower or any other Credit Party.

     “Total Secured Debt” means, at any time, Total Debt that is secured by or arises in connection with a Lien on any asset of the Borrower or any other Credit Party.

     “Transactions” means (a) the execution, delivery and performance by the Borrower of each Purchase Agreement and the consummation of the Acquisition and the other transactions contemplated thereby, (b) the execution, delivery and performance by each Loan Party of the Loan Documents to which it is to be a party, the borrowing of the Loans and the use of the proceeds thereof, (c) the execution, delivery and performance by the Borrower and the other

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Credit Parties party thereto of the First Lien Fifth Amendment and (d) the payment of fees and expenses incurred in connection with the foregoing.

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

     “UCC” means the Uniform Commercial Code as in effect in any applicable state or jurisdiction, as the same may be amended from time to time.

     “United States” or “U.S.” means the United States of America, its fifty states and the District of Columbia.

     “U.S. Dollars”, “$” or “Dollar” refers to lawful money of the United States of America.

     “Wholly-Owned Subsidiary” means, as to any Person, any Subsidiary of such Person all of the outstanding Equity Interests (other than directors’ qualifying shares) of which, on a fully-diluted basis, are owned, beneficially and of record, by such Person or one or more of its Wholly-Owned Subsidiaries or by such Person and one or more of its Wholly-Owned Subsidiaries. Unless otherwise indicated, each reference to a “Wholly-Owned Subsidiary” means a Wholly-Owned Subsidiary of the Borrower.

     SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all real and personal, tangible and intangible assets and properties, including cash, securities, accounts and contract rights. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, increased, renewed, extended, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, increases, renewals, extensions, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, provided such successors and assigns are permitted by the Loan Documents, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, and (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

     SECTION 1.03. Accounting Terms; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP, as in effect from time to time; provided that, if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date of this Agreement in GAAP or in the application thereof

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

     SECTION 1.04. Effectuation of Transactions. All representations and warranties of the Borrower and the other Loan Parties contained in this Agreement and the other Loan Documents shall be deemed made immediately after giving effect to the Acquisition and the other Transactions to occur on the date hereof, unless the context otherwise requires.

ARTICLE II

The Credits

     SECTION 2.01. Commitments. Subject to the terms and conditions set forth herein, each Lender agrees to make a Loan to the Borrower on the date hereof in a principal amount not exceeding such Lender’s Commitment. Amounts repaid or prepaid in respect of Loans may not be reborrowed.

     SECTION 2.02. Loans and Borrowings. (a) Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments of the Lenders are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required hereunder. Notwithstanding anything to the contrary contained herein (and without affecting any other provision hereof), the funded portion of each Loan to be made on the date hereof (i.e., the amount advanced in cash to the Borrower on the date hereof) shall be equal to 98.0% of the principal amount of such Loan.

     (b) Subject to Section 2.13, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

     (c) At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $1,000,000 and not less than $2,500,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $500,000. Borrowings of more than one Type may be outstanding at the same time; provided that there shall not at any time be more than a total of seven Eurodollar Borrowings outstanding.

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

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     SECTION 2.03. Borrowings Procedure. To request a Borrowing, an Authorized Officer of the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 2:00 p.m., New York City time, on the day (which shall be a Business Day) of the proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or facsimile to the Administrative Agent of a written Borrowing Request executed by an Authorized Officer of the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02:

     (a) the aggregate amount of the requested Borrowing;

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

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

     (d) the wire transfer instructions for one or more accounts (together with the account number of each such account) to which funds are to be disbursed (and, in the event funds are to be disbursed to more than one account, the portion of the proceeds of the requested Borrowing to be disbursed to each such account).

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

     SECTION 2.04. Funding of Borrowings. (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 1:00 p.m., New York City time, to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly wiring the amounts so received, in like funds, in accordance with the wiring instructions set forth in the Borrowing Request.

     (b) Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with paragraph (a) of this Section and may, in reliance upon such assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the

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Administrative Agent, at (i) in the case of such Lender, the greater of (A) the Federal Funds Effective Rate or (B) a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation or (ii) in the case of the Borrower, the interest rate applicable to Loans included in such Borrowing. If such Lender pays such amount to the Administrative Agent, then such amount shall constitute such Lender’s Loan included in such Borrowing.

     SECTION 2.05. Interest Elections. (a) Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request (or an ABR Borrowing if no Type is specified) and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period of one month. Thereafter, the Borrower may elect from time to time to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The Borrower may, subject to the requirements of Section 2.02(c), elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

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

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

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

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

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

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

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

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

     (e) If the Borrower fails to deliver a timely Interest Election Request (or delivers an Interest Election Request that is inconsistent with a telephonic election) with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies the Borrower, then, so long as such Event of Default is continuing, (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

     SECTION 2.06. Termination of Commitments. Unless previously terminated, the Commitments shall terminate at 5:00 p.m., New York City time, on the date hereof.

     SECTION 2.07. Repayment of Loans; Evidence of Indebtedness. (a) The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan of such Lender on the Maturity Date, plus a fee equal to 1.00% of such unpaid principal amount.

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

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

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

     (e) Any Lender may request that Loans made by it be evidenced by one or more promissory notes. In such event, the Borrower shall prepare, execute and deliver to such Lender promissory notes payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) and in a form approved by the Administrative Agent and reasonably acceptable to the Borrower. Thereafter, the Loans evidenced by such promissory notes and interest thereon shall at all times (including after assignment pursuant to

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Section 10.04) be represented by one or more promissory notes in such form payable to the payee named therein (or, if any such promissory note is a registered note, to such payee and its registered assigns).

     SECTION 2.08. Amortization of Loans. (a) Subject to adjustment for prepayments as set forth in paragraph (b) of this Section, the Borrower shall repay to the Administrative Agent, for the ratable account of the Lenders, the Loans on the last Business Day of each December, March, June and September in an aggregate principal amount for each such date equal to 0.25% of the aggregate principal amount of the Loans outstanding on the date hereof.

     (b) Any prepayment of a Borrowing pursuant to Section 2.09 shall be applied pro rata against the remaining scheduled installments of principal due in respect of the Loans under paragraph (a) of this Section.

     (c) Prior to any repayment of Borrowings under this Section, the Borrower shall specify the Borrowing or Borrowings to be repaid and shall notify the Administrative Agent by telephone (confirmed by hand delivery or facsimile) of such election not later than 2:00 p.m., New York City time, three Business Days (or, in the case of a repayment of an ABR Borrowing, one Business Day) before the scheduled date of such repayment. Each repayment of a Borrowing shall be applied ratably to the Loans included in the repaid Borrowing. Repayments of Borrowings shall be accompanied by accrued and unpaid interest on the amount repaid and shall be subject to Section 2.15.

     SECTION 2.09. Prepayment of Loans. (a) The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, without premium or penalty, subject to the requirements of this Section; provided, however, that any prepayment pursuant to this paragraph (i) made after the second anniversary of the date hereof but on or prior to the third anniversary of the date hereof shall be accompanied by a prepayment fee equal to 3.00% of the aggregate principal amount of such prepayment, (ii) made after the third anniversary of the date hereof but on or prior to the fourth anniversary of the date hereof shall be accompanied by a prepayment fee equal to 2.00% of the aggregate principal amount of such prepayment and (iii) made after the fourth anniversary of the date hereof but prior to the Maturity Date shall be accompanied by a prepayment fee equal to 1.00% of the aggregate principal amount of such prepayment.

     (b) In the event and on each occasion that any Net Cash Proceeds are received by or on behalf of the Borrower or any other Credit Party in respect of any Prepayment Event (or, in the case of any Prepayment Event described in clause (a)(i) of the definition of such term, by or on behalf of the Borrower or any Subsidiary), the Borrower shall, on the Prepayment Date in respect of such Prepayment Event, prepay the Loans in an aggregate amount equal to such Net Cash Proceeds; provided, however, that no prepayment shall be required pursuant to this paragraph (i) in the case of any Prepayment Event described in clause (b) of the definition of such term, to the extent such Net Cash Proceeds in respect thereof shall be required to be applied (in the absence of any reinvestment thereof) to reduce Indebtedness outstanding under any First Lien Permitted Facility as a result of a reduction of the First Lien Global Borrowing Base or the First Lien U.S. Borrowing Base arising from the occurrence of such Prepayment Event and (ii) in the case of any Prepayment Event, to the extent that, as of the Prepayment Date in respect of such

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Prepayment Event, the Liquidity Amount (giving effect, in the case of any Prepayment Event referred to in clause (b) of the definition of such term, to any required reduction of Indebtedness outstanding under any First Lien Permitted Facility as described in clause (i) above) is less than the Minimum Liquidity Amount.

     (c) Any Lender may elect, by notice to the Administrative Agent by telephone (confirmed by hand delivery or facsimile) within one Business Day of having received notice from the Administrative Agent of such prepayment, to decline all or any portion of any prepayment of its Loans pursuant to this Section (other than an optional prepayment pursuant to paragraph (a) of this Section, which may not be declined), in which case the aggregate amount of the payment that would have been applied to prepay Loans but was so declined shall be retained by the Borrower (and may be used by the Borrower, in its discretion, to make an optional prepayment of Borrowings under this Section).

     (d) Prior to any optional or mandatory prepayment of Borrowings under this Section, the Borrower shall specify the Borrowing or Borrowings to be prepaid in the notice of such prepayment delivered pursuant to paragraph (e) of this Section; provided, that (i) any optional prepayment pursuant to paragraph (a) of this Section shall be applied first to ABR Borrowings to the full extent thereof and then to Eurodollar Borrowings, in each case in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant to Section 2.15, and (ii) any mandatory prepayment pursuant to paragraph (b) of this Section shall be applied on a pro rata basis to the then outstanding Loans, irrespective of whether such outstanding Loans are ABR Loans or Eurodollar Loans; provided that if no Lender shall have exercised its right under paragraph (c) of this Section, then, with respect to each such mandatory prepayment, the amount of such mandatory prepayment shall be applied first to ABR Borrowings to the full extent thereof and then to Eurodollar Borrowings, in each case in a manner that minimizes the amount of any payments required to be made by the Borrower pursuant to Section 2.15.

     (e) The Borrower shall notify the Administrative Agent by telephone (confirmed by hand delivery or facsimile) of (i) any prepayment under paragraph (a) of this Section, (A) in the case of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, New York City time, three Business Days before the date of prepayment, and (B) in the case of prepayment of an ABR Borrowing, not later than 12:00 noon, New York City time, one Business Day before the date of prepayment and (ii) any prepayment under paragraph (b) of this Section, not later than 12:00 noon, New York City time, four Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment; provided that a notice of any prepayment under paragraph (b) of this Section in respect of any Prepayment Event described in clause (d) of the definition of such term may state that it is conditioned upon the occurrence of such Prepayment Event, and may be revoked (by notice to the Administrative Agent on or prior to the applicable Prepayment Date) if such condition shall not have been satisfied, it being understood that any such revocation shall not affect the obligations of the Borrower under Section 2.15. Promptly following receipt of any such notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as

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provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Subject to paragraphs (c) and (d) of this Section, each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments of Borrowings shall be accompanied by accrued and unpaid interest on the amount prepaid and shall be subject to Section 2.15.

     SECTION 2.10. Fees. The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon in writing between the Borrower and the Administrative Agent, including the fees payable under the Administrative Agent Fee Letter. Such fees shall be paid on the dates due, in immediately available funds, and shall not be refundable under any circumstances absent manifest error (e.g., as a result of a clerical mistake).

     SECTION 2.11. Interest. (a) Subject to Section 10.13, the Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin for ABR Loans.

     (b) Subject to Section 10.13, the Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted Eurodollar Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin for Eurodollar Loans.

     (c) Notwithstanding the foregoing, but subject to Section 10.13, if any principal of or interest on any Loan or any fee or other amount payable by the Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall until paid or waived in writing bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, the lesser of (A) the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section plus 2% or (B) the Highest Lawful Rate or (ii) in the case of any other amount, the lesser of (A) the rate applicable to ABR Loans as provided in paragraph (a) of this Section plus 2% or (B) the Highest Lawful Rate.

     (d) Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to paragraph (c) of this Section shall be payable on demand of the Administrative Agent or the Required Lenders, (ii) in the event of any repayment or prepayment of any Loan (whether due to acceleration or otherwise), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

     (e) All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to (i) the Alternate Base Rate at times when the Alternate Base Rate is based on the Prime Rate or (ii) clause (c) of the definition of the term “Alternate Base Rate” shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). Each determination by the Administrative Agent of an interest rate or

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fee hereunder shall, except in cases of manifest error, be final, conclusive and binding on the parties.

     SECTION 2.12. Alternate Rate of Interest. If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

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

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

     (c) the Administrative Agent determines in good faith (which determination shall be conclusive) that by reason of circumstances affecting the interbank dollar market generally, deposits in U.S. Dollars in the London interbank dollar market are not being offered for the applicable Interest Period and in an amount equal to the amount of the Eurodollar Loan requested by the Borrower;

then the Administrative Agent shall give notice thereof (which may be telephonic) to the Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, which notice the Administrative Agent shall give promptly after becoming aware thereof, any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing for the affected Interest Period shall be ineffective.

     SECTION 2.13. Illegality. (a) Notwithstanding any other provision of this Agreement to the contrary, if (i) by reason of the adoption of any applicable Governmental Rule or any change in any applicable Governmental Rule or in the interpretation or administration thereof by any Governmental Authority or compliance by any Lender with any request or directive (whether or not having the force of law) of any central bank or other Governmental Authority or (ii) circumstances affecting the London interbank dollar market or the position of a Lender therein shall at any time make it unlawful in the sole discretion of a Lender exercised in good faith for such Lender or its Applicable Lending Office to (A) honor its obligation to make Eurodollar Loans either generally or for a particular Interest Period provided for hereunder or (B) maintain Eurodollar Loans either generally or for a particular Interest Period provided for hereunder, then such Lender shall promptly notify the Borrower thereof in writing through the Administrative Agent (who will endeavor to, but not be liable for failing to, provide the Borrower with the basis therefor in reasonable detail) and such Lender’s obligation to make or maintain Eurodollar Loans having an affected Interest Period hereunder shall be suspended until such time as such Lender may again make and maintain Eurodollar Loans having an affected Interest Period (in which case the provisions of paragraph (b) below shall be applicable). Before giving such notice pursuant to this Section, such Lender will designate a different available

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Applicable Lending Office for the affected Eurodollar Loans of such Lender or take such other action as the Borrower may request if such designation or action will avoid the need to suspend such Lender’s obligation to make Eurodollar Loans hereunder and will not, in the sole opinion of such Lender exercised in good faith, be disadvantageous to such Lender (provided that such Lender shall have no obligation so to designate an Applicable Lending Office for Eurodollar Loans located in the United States).

     (b) If the obligation of any Lender to make or maintain any Eurodollar Loans shall be suspended pursuant to paragraph (a) of this Section, all Loans having an affected Interest Period which would otherwise be made by such Lender as Eurodollar Loans shall be made instead as ABR Loans (and, if such Lender so requests by written notice to the Borrower with a copy to the Administrative Agent, each Eurodollar Loan having an affected Interest Period of such Lender then outstanding shall be automatically converted into an ABR Loan on the last day of the Interest Period for such Eurodollar Loans unless earlier conversion is required by applicable law) and, to the extent that Eurodollar Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Eurodollar Loans shall be applied instead to such ABR Loans.

     SECTION 2.14. Increased Costs. (a) If any Change in Law shall:

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

     (ii) impose on any Lender or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender (except any such reserve requirement reflected in the Adjusted Eurodollar Rate);

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) with respect to any Eurodollar Loan, then the Borrower will pay, in accordance with paragraph (c) of this Section, to such Lender such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

     (b) If any Lender determines in good faith that any Change in Law regarding capital requirements has had or would have the effect of reducing the rate of return on such Lender’s capital or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement or the Loans made by such Lender to a level below that which such Lender or such Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s policies and the policies of such Lender’s holding company with respect to capital adequacy), then the Borrower will pay, in accordance with paragraph (c) of this Section, to such Lender such additional amount or amounts as will compensate such Lender or such Lender’s holding company for any such reduction suffered.

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     (c) A certificate of a Lender setting forth the amount or amounts necessary to compensate such Lender or such Lender’s holding company, as the case may be, as specified in paragraph (a) or (b) of this Section delivered to the Borrower shall be conclusive absent manifest error. Except as provided in paragraph (d) of this Section, the Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

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

     SECTION 2.15. Break Funding Payments. In the event of:

     (a) the payment (including prepayment) of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default);

     (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto;

     (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto (whether or not such notice may be revoked in accordance with the provisions hereof); or

     (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 2.18;

then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. Such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted Eurodollar Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the London interbank market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to the Borrower and the Administrative Agent and shall be conclusive absent manifest error. Except as provided in the last sentence of this Section, the Borrower shall pay such

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Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof. Failure or delay on the part of any Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender pursuant to this Section for any such loss, cost or expense described in this Section incurred more than 180 days prior to the date that such Lender notifies the Borrower of the circumstance giving rise to such loss, cost or expense described in this Section and of such Lender’s intention to claim compensation therefor.

     SECTION 2.16. Taxes. (a) Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), the Administrative Agent or each Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law; provided that if a Lender has breached or is in breach of its obligations under paragraph (e) below, then the Borrower shall have no obligations under clause (i) above with respect to payments made or to be made to such Lender where Indemnified Taxes and/or Other Taxes arise in respect of such payments as a consequence of such Lender’s status as a Foreign Lender.

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

     (c) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT AND EACH LENDER, WITHIN 10 BUSINESS DAYS AFTER WRITTEN DEMAND THEREFOR, FOR THE FULL AMOUNT OF ANY INDEMNIFIED TAXES OR OTHER TAXES PAID BY THE ADMINISTRATIVE AGENT OR SUCH LENDER ON OR WITH RESPECT TO ANY PAYMENT BY OR ON ACCOUNT OF ANY OBLIGATION OF THE BORROWER HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT (INCLUDING INDEMNIFIED TAXES OR OTHER TAXES IMPOSED OR ASSERTED ON OR ATTRIBUTABLE TO AMOUNTS PAYABLE UNDER THIS SECTION) AND ANY PENALTIES, INTEREST AND REASONABLE EXPENSES ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH INDEMNIFIED TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY IMPOSED OR ASSERTED BY THE RELEVANT GOVERNMENTAL AUTHORITY; PROVIDED THAT IF SUCH PAYMENTS OR LIABILITIES ARISE FROM THE LENDER HAVING BREACHED OR BEING IN BREACH OF ITS OBLIGATIONS UNDER PARAGRAPH (E) BELOW, THEN THE BORROWER SHALL HAVE NO OBLIGATIONS UNDER THIS PARAGRAPH WITH RESPECT TO SUCH PAYMENTS OR LIABILITIES. A CERTIFICATE AS TO THE AMOUNT OF SUCH PAYMENT OR LIABILITY DELIVERED TO THE BORROWER BY A LENDER OR BY THE ADMINISTRATIVE AGENT ON ITS OWN BEHALF OR ON BEHALF OF A LENDER SHALL BE CONCLUSIVE ABSENT MANIFEST ERROR.

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

     (e) Each Foreign Lender agrees that such Lender will deliver to the Borrower and the Administrative Agent two duly completed copies of United States Internal Revenue Service Form W-8 BEN or W-8 ECI or successor forms (or if such forms are no longer required, a representation by such Foreign Lender) certifying in either case that such Foreign Lender is entitled to receive payments from the Loan Parties under the Loan Documents without deduction or withholding of any United States federal income taxes. Each Foreign Lender that so delivers a Form W-8 BEN or W-8 ECI further undertakes to deliver to the Borrower and the Administrative Agent two additional copies of such form (or a successor form) on or before such form expires or becomes obsolete or after the occurrence of any event requiring a change in the most recent form so delivered by it and such amendments thereto or extensions or renewals thereof as may be reasonably requested by the Borrower or the Administrative Agent, in each case, certifying that such Foreign Lender is entitled to receive payments from the Borrower under the Loan Documents without deduction or withholding of any United States federal income taxes, unless (i) an event (including 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 Foreign Lender from duly completing and delivering any such form with respect to it and (ii) such Foreign Lender advises the Borrower and the Administrative Agent that it is not capable of receiving such payments without any deduction or withholding of United States federal income tax.

     (f) If the Borrower at any time pays an amount under paragraphs (b) or (c) above to any Lender or the Administrative Agent and such payee receives a refund of or credit for any part of any Indemnified Taxes or Other Taxes which such payee determines in its reasonable judgment is made with respect to such amount paid by the Borrower, such Lender or the Administrative Agent shall pay to the Borrower the amount of such refund or credit, net of all out-of-pocket expenses of such Lender or the Administrative Agent and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund or credit), promptly, and in any event within 60 days, following the receipt of such refund or credit by such payee; provided that the Borrower, upon the request of such Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender or the Administrative Agent, as the case may be, if such Lender or the Administrative Agent is required to repay such refund or credit to such Governmental Authority. This paragraph shall not be construed to require the Administrative Agent or any Lender to make available its tax returns (or any other information relating to its taxes that it deems confidential) to the Borrower or any other Person.

     SECTION 2.17. Payments Generally; Pro Rata Treatment; Sharing of Set-offs. (a) The Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or of amounts payable under Section 2.14, 2.15 or 2.16, or otherwise) prior to the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to

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2:00 p.m., New York City time), on the date when due, in immediately available funds, without set-off or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to such account as may be specified in writing by the Administrative Agent to the Borrower for such purpose, except that payments pursuant to Sections 2.14, 2.15, 2.16 and 10.03 shall be made directly to the Persons entitled thereto and payments pursuant to other Loan Documents shall be made to the Persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. Except as otherwise expressly provided herein, if any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in U.S. Dollars.

     (b) If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by the Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee or participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). The Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower in the amount of such participation.

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

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     (d) If any Lender shall fail to make any payment required to be made by it to the Administrative Agent pursuant to this Agreement, then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations to the Administrative Agent until all such unsatisfied obligations are fully paid.

     SECTION 2.18. Mitigation Obligations; Replacement of Lenders. (a) If any Lender requests compensation under Section 2.14, or if the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, then such Lender shall use commercially reasonable efforts to designate a different Applicable Lending Office for funding or booking its Loans hereunder or to assign and delegate its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or assignment and delegation (i) would eliminate or reduce amounts payable pursuant to Section 2.14 or 2.16, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment and delegation.

     (b) If (i) any Lender asserts that events have occurred suspending its obligation to make or maintain Eurodollar Loans under Section 2.13 when substantially all other Lenders have not also done so, (ii) any Lender requests compensation under Section 2.14, (iii) the Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.16, (iv) any Lender defaults in its obligation to fund Loans hereunder or (iv) any Lender has failed to consent to a proposed amendment, waiver, discharge or termination that under Section 10.02 requires the consent of all the Lenders (or all the affected Lenders) and with respect to which the Required Lenders shall have granted their consent, then the Borrower may, at its sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 10.04), all its interests, rights and obligations under this Agreement and the other Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (A) if the assignee is not a Lender or an Affiliate of a Lender, the Borrower shall have received the prior written consent of the Administrative Agent, which consent shall not unreasonably be withheld, conditioned or delayed, (B) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans, accrued interest thereon and all other amounts payable to it hereunder (including, if applicable, the prepayment fee payable pursuant to Section 2.09(a) (with such assignment being deemed to be an optional prepayment under such Section)), from the assignee (to the extent of such outstanding principal and accrued interest) or the Borrower (in the case of all other amounts), (C) in the case of any such assignment resulting from a claim for compensation under Section 2.14 or payments required to be made pursuant to Section 2.16, such assignment will result in a reduction in such compensation or payments and (D) in the case of any such assignment resulting from the failure to provide a consent, the assignee shall have given (or, if not a Lender, shall substantially contemporaneously with becoming a Lender give) such consent and, as a result of such assignment and any substantially contemporaneous assignments and consents, the applicable amendment, waiver, discharge or termination can be effected. A Lender shall not be required to

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make any such assignment and delegation if, prior thereto, as a result of a waiver or consent by such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and delegation have ceased to apply. Each party hereto agrees that an assignment required pursuant to this paragraph may be effected pursuant to an Assignment and Acceptance executed by the Borrower, the Administrative Agent and the assignee and that the Lender required to make such assignment need not be a party thereto.

ARTICLE III

Representations and Warranties

     In order to induce the Administrative Agent and the Lenders to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Administrative Agent and the Lenders that each of the following statements is true and correct:

     SECTION 3.01. Existence and Power. Each Credit Party (a) is a corporation, partnership or limited liability company duly incorporated or organized (as applicable), validly existing and, if applicable for such Credit Party in the jurisdiction in issue, in good standing under the laws of its jurisdiction of incorporation or organization, (b) has all requisite corporate, partnership or limited liability company power (as applicable) required to carry on its businesses as now conducted and (c) is duly qualified to transact business as a foreign corporation, partnership or limited liability company in each jurisdiction where a failure to be so qualified would reasonably be expected to have a Material Adverse Effect.

     SECTION 3.02. Loan Party and Governmental Authorization; Contravention. The Transactions to be entered into by each Credit Party (a) are within such Credit Party’s corporate, partnership or limited liability company powers, (b) have been duly authorized by all necessary corporate, partnership or limited liability company action, (c) require no action by or in respect of, or filing with, any Governmental Authority (other than (i) actions or filings pursuant to the Exchange Act, (ii) actions or filings necessary to create or perfect the Liens required by any Loan Document or any First Lien Loan Document, (iii) actions or filings that have been taken or made and are in full force and effect, or that are of the type that would be obtained after the date hereof in the ordinary course of business, and (iv) actions or filings which, if not taken or made, would not reasonably be expected to have a Material Adverse Effect), (d) will not violate or contravene any provision of (i) any applicable Governmental Rule (including Regulation T, U or X of the Board), except any violation or contravention that would not reasonably be expected to have a Material Adverse Effect, or (ii) the Organic Documents of the Borrower or any Subsidiary, (e) will not violate or result (alone or with notice or lapse of time or both) in a default under any indenture or other agreement, judgment, injunction, order, decree or other instrument binding upon the Borrower or any Subsidiary or any of their properties, or give rise to a right thereunder to require any prepayment, repurchase or redemption to be made by the Borrower or any Subsidiary, or give rise to a right of, or result in, any termination, cancellation or acceleration of any obligation thereunder, except any of the foregoing that would not reasonably be expected to have a Material Adverse Effect, or (f) will not result in the creation or imposition of any Lien on any property of any Credit Party, other than Liens created under the Loan Documents and the First Lien Loan Documents.

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     SECTION 3.03. Binding Effect. This Agreement constitutes, and each other Loan Document when executed and delivered will constitute, a legal, valid and binding obligation of each Loan Party which is a party hereto or thereto, enforceable against each such Loan Party which executes the same in accordance with its terms, except as the enforceability thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium, or similar Governmental Rules affecting creditors’ rights generally, and (b) equitable principles of general applicability (whether enforcement is sought by proceedings at law or in equity).

     SECTION 3.04. Financial Information; Absence of Material Adverse Effect; Solvency. (a) The most recent annual audited consolidated balance sheet of the Borrower and the Subsidiaries made available to the Lenders, and the related consolidated statements of income and comprehensive income and cash flows for the Fiscal Year then ended, fairly present in all material respects, in conformity with GAAP, the consolidated financial position of the Borrower and the Subsidiaries as of the end of such Fiscal Year and their consolidated results of operations and cash flows for such Fiscal Year.

     (b) The most recent quarterly unaudited consolidated balance sheet of the Borrower and the Subsidiaries made available to the Lenders, and the related unaudited consolidated statements of income and comprehensive income and cash flows for the Fiscal Quarter and the portion of the Fiscal Year then ended, fairly present in all material respects, in conformity with GAAP, the consolidated financial position of the Borrower and the Subsidiaries as of the end of such Fiscal Quarter and their consolidated results of operations and cash flows for such Fiscal Quarter and such portion of such Fiscal Year (except that such balance sheet and other financial statements do not contain all footnote disclosures required in accordance with GAAP and are subject to normal year-end audit adjustments).

     (c) The Borrower has heretofore furnished to the Lenders the pro forma consolidated balance sheet of the Borrower and the Subsidiaries as of June 30, 2008, prepared giving effect to the Transactions as if the Transactions had occurred on such date. Such pro forma consolidated balance sheet (i) has been prepared by the Borrower in good faith, (ii) is based on the information available to the Borrower as of the date of delivery thereof after due inquiry, (iii) accurately reflects in all material respects all adjustments necessary to give effect to the Transactions and (iv) presents fairly, in all material respects, the pro forma consolidated financial position of the Borrower and the Subsidiaries as of such date as if the Transactions had occurred on such date.

     (d) Since December 31, 2007, no event or circumstance which would reasonably be expected to have a Material Adverse Effect has occurred.

     (e) After giving effect to the Transactions, the Borrower and the Subsidiaries, on a consolidated basis, are Solvent.

     SECTION 3.05. Litigation. There is no action, suit or proceeding not fully covered by insurance (except for normal deductibles and provided that the applicable insurance company has acknowledged such coverage and a copy thereof is provided to the Administrative Agent) pending, or to the knowledge of any Credit Party, threatened against or affecting the Borrower or any Subsidiary before any Governmental Authority (a) in which there is a reasonable possibility

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of an adverse decision that, individually or together with any other such action, suit or proceeding, would reasonably be expected to have a Material Adverse Effect or (b) that involves any of the Loan Documents or the Transactions.

     SECTION 3.06. ERISA. No Credit Party or any ERISA Affiliate sponsors, maintains or contributes to, or has ever sponsored, maintained or contributed to, or been obligated to sponsor, maintain or contribute to, any Plan covered by Title IV of ERISA or subject to the funding requirements of Section 412 of the Code or Section 302 of ERISA. Except in such instances where an action, omission or failure would not reasonably be expected to have a Material Adverse Effect, (a) each Plan sponsored, maintained or contributed to by any Credit Party or any ERISA Affiliate is in compliance with all applicable Governmental Rules, (b) all returns, reports and notices required to be filed with any Governmental Authority with respect to any Plan have been filed timely, and (c) no Credit Party or any ERISA Affiliate has failed to make any contribution or pay any amount due or owing as required by the terms of any Plan. There are no pending or, to the knowledge of any Credit Party, threatened claims, lawsuits, investigations or actions (other than routine claims for benefits in the ordinary course) asserted or instituted against the assets of any Plan or its related trust or against any fiduciary of a Plan with respect to the operation of such Plan that are likely to result in liability to any Credit Party or any Affiliate thereof resulting in an event or circumstance which would reasonably be expected to have a Material Adverse Effect. Except in such instances where an action, omission or failure would not reasonably be expected to have a Material Adverse Effect, each Plan that is intended to be “qualified” within the meaning of Section 401(a) of the Code is, and has been during the period from its adoption to date, so qualified, both as to form and operation, and all necessary governmental approvals, including a favorable determination as to the qualification under the Code of such Plan and each amendment thereto, have been or will be timely obtained. No Credit Party or any ERISA Affiliate has engaged in any non-exempt prohibited transactions, within the meaning of Section 406 of ERISA or Section 4975 of the Code, in connection with any Plan which would result in liability to any Credit Party that would reasonably be expected to have a Material Adverse Effect. No Credit Party or any ERISA Affiliate maintains or contributes to any Plan that provides a post-employment health benefit, other than a benefit required under Section 601 of ERISA, or maintains or contributes to a Plan that provides health benefits that is not fully funded except where the failure to fully fund such Plan would not reasonably be expected to have a Material Adverse Effect. As of the date hereof, no Credit Party or any ERISA Affiliate sponsors, maintains or contributes to, or has ever sponsored, maintained or contributed to a multiple employer welfare benefit arrangement within the meaning of Section 3(40)(A) of ERISA or any multiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

     SECTION 3.07. Taxes and Filing of Tax Returns. Except as otherwise permitted by Section 5.08, (a) each Credit Party has filed all tax returns required to have been filed by it and has paid all Taxes shown to be due and payable on such returns, including interest and penalties, and all other Taxes which are payable by such Credit Party, to the extent the same have become due and payable, (b) no Credit Party knows of any proposed material Tax assessment against it, and all Tax liabilities of each Credit Party are adequately provided for, and (c) no income tax liability of any Credit Party has been asserted by the Internal Revenue Service or other Governmental Authority for Taxes in excess of those already paid.

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     SECTION 3.08. Ownership of Properties. Each Credit Party has good and defensible fee simple or leasehold title (subject to Immaterial Title Deficiencies and Permitted Encumbrances) to all properties (including all Mortgaged Properties) purported to be owned by it, including all properties reflected in the balance sheets referred to in Section 3.04 (other than any such properties that have been sold, transferred or otherwise disposed of in accordance with the terms hereof), and none of such properties is subject to any Lien other than Permitted Encumbrances.

     SECTION 3.09. Mineral Interests. Schedule 3.09 sets forth, as of the date hereof, an accurate and complete list and description of all Real Properties that constitute “Designated Real Properties” pursuant to clause (a) of the definition of such term, and such other Real Properties, if any, as are required to be designated as “Designated Real Properties” in order for the Mortgaged Property Requirement to be satisfied as of the date hereof. Subject only to Immaterial Title Deficiencies and Permitted Encumbrances, each Credit Party has good and defensible title to all Oil and Gas Properties described in the most recent Reserve Report delivered pursuant hereto (other than any Oil and Gas Properties that have been sold, transferred or otherwise disposed of in accordance with the terms hereof ). Subject only to Immaterial Title Deficiencies and Permitted Encumbrances, (a) all Oil and Gas Properties described in the most recent Reserve Report delivered pursuant hereto are valid, subsisting and in full force and effect, and (b) all material rentals, royalties and other amounts due and payable in respect thereof have been duly paid when due, except as provided in Section 5.04(b)(i) with respect to delay rentals. Without regard to any consent or non-consent provisions of any joint operating agreement covering any Proved Mineral Interests of any Credit Party, subject to Immaterial Title Deficiencies and Permitted Encumbrances, such Credit Party’s proportionate share of (i) the costs for each Proved Mineral Interest described in the most recent Reserve Report delivered pursuant hereto is not greater than 105% of the decimal fraction set forth in such Reserve Report, before and after payout, as the case may be, and described therein by the respective designations “working interests”, “WI”, “gross working interest”, “GWI” or similar terms (provided that such Credit Party shall have the right to bear costs disproportionate to its working interest with respect to any Mineral Interest for a period of time in order to earn a working interest in such Mineral Interest from a third party as evidenced by a written agreement) and (ii) production from, allocated to or attributed to each such Proved Mineral Interest is not less than the decimal fraction set forth in such Reserve Report, before and after payout, as the case may be, and described therein by the designations “net revenue interest”, “NRI” or similar terms. Each well drilled in respect of each Proved Producing Mineral Interest described in the most recent Reserve Report delivered pursuant hereto (A) is capable of, and is presently, producing Hydrocarbons in commercially profitable quantities (except to the extent shut-in in accordance with the applicable lease for such Proved Producing Mineral Interest), and after giving effect to the transactions contemplated by this Agreement, each Credit Party will be entitled to receive payments on a current basis for its share of production, with no funds in respect of any thereof held in suspense, other than any such funds held in suspense pending delivery of appropriate division orders, and (B) has been drilled, bottomed, completed and operated in compliance in all material respects with all applicable Governmental Rules, and no such well which is currently producing Hydrocarbons is subject to any penalty in production by reason of such well having produced in excess of its allowable production.

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     SECTION 3.10. Licenses, Permits, Etc. Each Credit Party possesses such valid franchises, certificates of convenience and necessity, operating rights, licenses, permits, consents, authorizations, approvals, exemptions and orders of Governmental Authorities as are necessary to carry on its business as now conducted and as proposed to be conducted, except to the extent a failure to obtain any such item would not reasonably be expected to have a Material Adverse Effect.

     SECTION 3.11. Compliance with Law. The Borrower and each Subsidiary is in compliance with all applicable Governmental Rules, other than violations of Governmental Rules which would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

     SECTION 3.12. Full Disclosure. Neither the Confidential Information Memorandum nor any of the other reports, financial statements, certificates or other information furnished by any Credit Party to the Administrative Agent or any Lender for purposes of or in connection with this Agreement or any other Loan Document or any transaction contemplated hereby or thereby (as modified or supplemented by other information so furnished, and when taken as a whole) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading as of the time when made (it being understood that the foregoing representation and warranty, insofar as it relates to the properties acquired in the Acquisition, is made to the knowledge of the Credit Parties); provided that any projections and pro forma financial information contained in the materials referenced above are based upon good faith estimates and assumptions believed by management of the applicable Credit Party to be reasonable at the time made, it being recognized by the Administrative Agent and Lenders that such financial information as it relates to future events is not to be viewed as fact and that actual results during the period covered by such financial information may differ from the projected results as set forth therein by a material amount. The Credit Parties have disclosed or have caused to be disclosed to Lenders in writing any and all facts (other than facts of general public knowledge, including facts contained in the Borrower’s publicly available filings with the SEC) which would reasonably be expected to have a Material Adverse Effect.

     SECTION 3.13. Nature of Business; Organizational Structure. The Credit Parties are engaged only in the business of acquiring, exploring, developing and operating Mineral Interests in the United States and Canada and the production, marketing, processing and transporting of Hydrocarbons therefrom and businesses reasonably related or complementary thereto. Schedule 3.13 sets forth, as of the date hereof, the name and jurisdiction of organization of, and the percentage of each class of Equity Interests owned by the Borrower or any Subsidiary in, (a) each Subsidiary and (b) each joint venture in which the Borrower or any Subsidiary owns any Equity Interests, and identifies each Credit Party and Designated Credit Party as such.

     SECTION 3.14. Environmental Matters. Except for matters disclosed on Schedule 3.14, no operation conducted by any Credit Party and no property now or previously owned or leased by any Credit Party (including Mineral Interests) and no operations conducted thereon, and to any Credit Party’s knowledge, no operations of any applicable prior owner, lessee or operator of any such properties, is or has been in violation of any Environmental Law other than violations which neither individually nor in the aggregate would reasonably be

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expected to have a Material Adverse Effect. Except for matters disclosed on Schedule 3.14, no Credit Party, nor any such property or operation, is the subject of any existing, pending or, to any Credit Party’s knowledge, threatened Environmental Complaint which would reasonably be expected to have a Material Adverse Effect. All notices, permits, licenses and similar authorizations required to be obtained or filed in connection with the ownership of each tract of real property or operations of any Credit Party thereon and each item of personal property owned, leased or operated by any Credit Party, including notices, licenses, permits and authorizations required in connection with any past or present treatment, storage, disposal or release of Hazardous Materials into the environment, have been duly obtained or filed, except to the extent the failure to obtain or file such notices, licenses, permits and authorizations would not reasonably be expected to have a Material Adverse Effect. All Hazardous Materials generated at each tract of real property or by each item of personal property owned, leased or operated by any Credit Party have been transported, treated, and disposed of only by carriers or facilities maintaining valid permits under RCRA and all other applicable Environmental Laws for the conduct of such activities, except in such cases where the failure to obtain such permits would not reasonably be expected to have a Material Adverse Effect. Except for matters disclosed on Schedule 3.14, there have been no Hazardous Discharges which were not in compliance with Environmental Laws, other than Hazardous Discharges which would not reasonably be expected to have a Material Adverse Effect. Except for matters disclosed on Schedule 3.14, neither the Borrower nor any Subsidiary has any contingent liability in connection with any Hazardous Discharge which would reasonably be expected to have a Material Adverse Effect.

     SECTION 3.15. No Default. No Default or Event of Default has occurred and is continuing, or will exist after giving effect to the transactions contemplated by this Agreement or the other Loan Documents. Neither the Borrower nor any Subsidiary is in default under, nor has any event or circumstance occurred which, but for the expiration of any applicable grace period or the giving of notice, or both, would constitute a default under, any Material Agreement to which the Borrower or any Subsidiary is a party or by which the Borrower or any Subsidiary is bound which default would reasonably be expected to have a Material Adverse Effect.

     SECTION 3.16. Government Regulation. No Credit Party is subject to regulation under the Federal Power Act, the Interstate Commerce Act, the Investment Company Act of 1940 (as any of the preceding acts have been amended), or any other Governmental Rule which regulates the incurrence by such Credit Party of Indebtedness, including Governmental Rules relating to common contract carriers or the sale of electricity, gas, steam, water or other public utility services.

     SECTION 3.17. Gas Balancing Agreements and Advance Payment Contracts. On the date hereof, (a) there is no Material Gas Imbalance, and (b) the aggregate amount of all Advance Payments received by the Credit Parties under Advance Payment Contracts which have not been satisfied by delivery of production does not exceed $300,000.

     SECTION 3.18. Collateral Matters. (a) The Security Agreement, upon execution and delivery thereof by the parties thereto, will create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in the Collateral (as defined therein) and, when financing statements in appropriate form are filed in the applicable filing offices, the security interest created under the Security Agreement will constitute a fully

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perfected security interest in all right, title and interest of the Loan Parties in the Collateral (as defined therein) to the extent perfection can be obtained by filing Uniform Commercial Code financing statements, prior and superior to the rights of any other Person, subject to the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law.

     (b) The Pledge Agreement, upon execution and delivery thereof by the parties thereto, will create in favor of the Administrative Agent, for the benefit of the Secured Parties, a valid and enforceable security interest in the Pledged Collateral (as defined therein) and, when the Pledged Collateral (as defined therein) constituting certificated securities (as defined in the Uniform Commercial Code) is delivered to the Administrative Agent (or its agent or bailee), together with instruments of transfer duly endorsed in blank, the Pledge Agreement will constitute a fully perfected security interest in all right, title and interest of the pledgors thereunder in such Pledged Collateral, prior and superior in right to any other Person, subject to the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law.

     (c) Each Mortgage, upon execution and delivery thereof by the parties thereto, will create in favor of the Administrative Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in all the applicable mortgagor’s right, title and interest in and to the Mortgaged Properties subject thereto and the proceeds thereof, and when the Mortgages have been filed in the jurisdictions specified therein, the Mortgages will constitute a fully perfected security interest in all right, title and interest of the mortgagors in the Mortgaged Properties and the proceeds thereof, prior and superior in right to any other Person, subject to the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law.

     (d) Each asset that, at any time, constitutes Collateral, or is otherwise subject to a Lien securing the Term Obligations, is subject, at such time, to a Lien securing the First Lien Obligations (as defined in the Intercreditor Agreement).

     SECTION 3.19. Hedging Agreements. Schedule 3.19 sets forth, as of the date set forth therein, a true and complete list of all Hedging Agreements (including commodity price swap agreements and all forward agreements or contracts of sale which provide for prepayment for deferred shipment or delivery of oil, gas or other commodities) of the Borrower and each other Credit Party, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied, but excluding the First Lien Loan Documents) and the counterparty to each such agreement.

     SECTION 3.20. Insurance. Schedule 3.20 sets forth, as of the date hereof, an accurate and complete description in all material respects of all material policies of fire, liability, workmen’s compensation and other forms of insurance owned or held by the Borrower or any other Credit Party. As of the date hereof, all such policies are in full force and effect, all premiums with respect thereto covering all periods up to and including the date hereof and through the respective dates set forth in Schedule 3.20 have been paid, and no notice of cancellation or termination has been received by the Borrower or any other Credit Party with respect to any such policy. The policies of insurance owned or held by the Credit Parties (a) are sufficient for compliance in all material respects with all requirements of law and of all agreements to which any Credit Party is a party and (b) provide adequate aggregate coverage in

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at least such amounts and against at least such risks (but including in any event public liability) as are usually insured against in the same general area by companies engaged in the same or a similar business as the assets and operations of the Credit Parties.

ARTICLE IV

Conditions

     The obligations of the Lenders to make Loans hereunder shall not become effective until each of the following conditions has been satisfied (or waived in accordance with Section 10.02):

     (a) Credit Agreement. The Administrative Agent (or its counsel) shall have received from each party hereto either a counterpart of this Agreement signed on behalf of such party or written evidence satisfactory to the Administrative Agent (which may include facsimile or other customary electronic transmission acceptable to the Administrative Agent of a signed signature page of this Agreement) that each such party has signed a counterpart of this Agreement.

     (b) Opinions of Counsel. The Administrative Agent shall have received opinions, each dated the date hereof and addressed to the Administrative Agent and the Lenders, of (i) General Counsel of the Borrower and (ii) Jones Day, counsel to the Borrower, in each case in form and substance reasonably satisfactory to the Administrative Agent.

     (c) Organizational Documents. The Administrative Agent shall have received a certificate of an Authorized Officer of each Loan Party dated the date hereof, certifying:

     (i) that attached to such certificate is (A) a true and complete copy of the Organic Documents of such Loan Party, as in effect on the date hereof, (B) a true and complete copy of a certificate from the applicable Governmental Authority of the jurisdiction of such Loan Party’s organization to the effect that such Loan Party is validly existing in such jurisdiction and (C) a true and complete copy of a certificate from the appropriate Governmental Authority of each jurisdiction (without duplication) to the effect that such Loan Party is duly qualified to transact business in such jurisdiction as a foreign entity, if the failure to be so qualified would reasonably be expected to have a Material Adverse Effect;

     (ii) that attached to such certificate is a true and complete copy of resolutions duly adopted by the board of directors, management committee, members or general partner of such Loan Party, as applicable, authorizing the execution, delivery and performance of the Loan Documents to which such Loan Party is or is intended to be a party and, in the case of the Borrower, the borrowing hereunder;

     (iii) that attached thereto is (A) a true and complete copy of a certificate from the applicable Governmental Authority of the jurisdiction of such Loan Party’s organization as to the existence and good standing of, and payment of franchise taxes by, such Loan Party, each dated as of a recent date; and (B) a true and complete copy of a certificate from the appropriate Governmental Authority of each jurisdiction (without duplication) to the effect that such Loan Party is in good standing in such jurisdiction as a foreign

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entity, if the failure to be so qualified would reasonably be expected to have a Material Adverse Effect; and

     (iv) as to the incumbency and specimen signature of each Authorized Officer of such Loan Party executing any of the Loan Documents to which such Loan Party is or is intended to be a party.

     (d) Perfection Certificate; Lien Searches. The Administrative Agent shall have received a completed Perfection Certificate, dated the date hereof and signed by an Authorized Officer of the Borrower, together with all attachments contemplated thereby, including (i) the results of a search of the UCC (or equivalent) filings made with respect to the Designated Credit Parties in the jurisdictions contemplated by the Perfection Certificate and copies of the financing statements (or similar documents) disclosed by such search and (ii) pay-off letters or other evidence reasonably satisfactory to the Administrative Agent that the Liens indicated by such financing statements (or similar documents) are Permitted Encumbrances or shall have been released (or that arrangements for the release thereof reasonably satisfactory to the Administrative Agent shall have been made).

     (e) Title. The Administrative Agent shall have received (or shall have been provided reasonable access to), in respect of each Designated Real Property as of the date hereof, an opinion of counsel as to title for such Designated Real Property, or such other evidence of title as shall be reasonably satisfactory to the Administrative Agent.

     (f) Collateral and Guarantee Requirement. The Collateral and Guarantee Requirement shall have been satisfied, subject to the penultimate sentence of this Article.

     (g) Approvals and Consents. All material Governmental Approvals and all material consents and approvals of any other Person, in each case, necessary or advisable in connection with the Transactions shall have been obtained, other than any such Governmental Approvals or other consents and approvals as are of the type that would be obtained after the date hereof in the ordinary course of business, all applicable appeal periods shall have expired and there shall be no litigation, governmental, administrative or judicial action, actual or threatened, that could reasonably be expected to restrain, prevent or impose burdensome conditions on the Transactions.

     (h) Insurance. The Administrative Agent shall have received endorsements naming the Administrative Agent, for the benefit of the Secured Parties, as loss payee, and naming the Administrative Agent and the Lenders as additional insured, under policies of insurance maintained by the Loan Parties, in each case to the extent required under Section 5.07.

     (i) Initial Reserve Report. The Administrative Agent shall have received a copy of the Initial Reserve Report, the reports comprising which, in each case, shall not be materially inconsistent with the relevant reserve information previously provided by the Borrower to the Administrative Agent and shall otherwise be in form and substance reasonably satisfactory to the Administrative Agent.

     (j) Financial Statements. (i) The Administrative Agent shall have received (A) the consolidated balance sheets of the Borrower and the Subsidiaries as of December 31, 2007 and

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2006, and the related consolidated statements of income and comprehensive income and cash flows for the Fiscal Years ended December 31, 2007 and 2006, audited by and accompanied by the opinion of Deloitte & Touche LLP, together with related unaudited consolidating financial statements to the extent available, and (B) the unaudited consolidated balance sheet of the Borrower and the Subsidiaries as of June 30, 2008 and March 31, 2008, and the related consolidated statements of income and comprehensive income and cash flows for each such Fiscal Quarter and the portions of the Fiscal Year then ended, certified by the Financial Officer of the Borrower as presenting fairly, in all material respects, in conformity with GAAP, the consolidated financial position of the Borrower and the Subsidiaries as of each such date and their consolidated results of operations and cash flows for each such Fiscal Quarter and the corresponding portion of the Fiscal Year (subject to normal year-end audit adjustments and the absence of certain footnotes), together with related unaudited consolidating financial statements to the extent available.

     (ii) The Administrative Agent shall have received the pro forma consolidated balance sheet referred to in Section 3.04(c).

     (k) Environmental Matters. The Administrative Agent shall have received a certificate, dated the date hereof and signed by an Authorized Officer of the Borrower, stating that (i) the Borrower has adopted and implemented such policies and guidelines as the Borrower has determined to be reasonably appropriate to assure compliance in all material respects with applicable Environmental Laws and to identify and evaluate events or conditions which would result in any material Environmental Liability and (ii) on the basis of such policies and guidelines, the Borrower has reasonably concluded that no Environmental Liabilities exist and no violations of Environmental Laws have occurred which would reasonably be expected to have a Material Adverse Effect. The Administrative Agent shall have received such environmental assessment reports as to the properties of the Credit Parties (including properties to be acquired in the Acquisition) as shall be available to the Borrower.

     (l) No Material Adverse Effect; Litigation. The Administrative Agent shall have received a certificate, dated the date hereof and signed by an Authorized Officer of the Borrower, stating that (i) no event or condition has occurred since December 31, 2007, which would reasonably be expected to have a Material Adverse Effect and (ii) no litigation, arbitration, governmental proceeding, claim for Taxes, dispute or administrative or other proceeding is pending or, to the knowledge of the Borrower, threatened against the Borrower or any of the Subsidiaries which would reasonably be expected to have a Material Adverse Effect.

     (m) Representations and Warranties; Absence of Defaults. At the time of and immediately after giving effect to the Transactions to occur on the date hereof, (i) the representations and warranties of each Loan Party set forth in the Loan Documents shall be true and correct in all material respects on and as of the date hereof, except in the case of any such representation and warranty that is made expressly as of an earlier date, in which case such representation and warranty shall be true and correct in all material respects on and as of such earlier date, and (ii) no Default or Event of Default shall have occurred and be continuing.

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     (n) Solvency. The Administrative Agent shall have received a certificate, dated the date hereof and signed by the Financial Officer of the Borrower, stating that, after giving effect to the Transactions, the Borrower and the Subsidiaries, on a consolidated basis, are Solvent.

     (o) First Lien Fifth Amendment. The First Lien Fifth Amendment, and all the amendments to the First Lien Loan Documents set forth therein, shall have become effective. The Administrative Agent shall have received copies thereof and all material documents related thereto, certified by an Authorized Officer of the Borrower as being complete and correct. The terms and conditions of the First Lien Fifth Amendment shall be reasonably satisfactory to the Administrative Agent.

     (p) Consummation of the Acquisition. The Acquisition shall have been, or substantially contemporaneously with the funding of Loans on the date hereof shall be, consummated, in accordance with applicable law and on the terms described in the Purchase Agreements (without giving effect to any amendments of, or waivers under, the Purchase Agreements that are adverse to the Lenders in any material respect and that have not been consented to by the Administrative Agent). The Administrative Agent shall have received copies of the Purchase Agreements and all material documents related thereto, certified by an Authorized Officer of the Borrower as being complete and correct.

     (q) Existing Indebtedness and Preferred Equity Interests. Immediately after giving effect to the Transactions, the Borrower and the Subsidiaries shall have outstanding no Indebtedness or shares of preferred stock or other preferred Equity Interests, other than (i) Indebtedness incurred under the Loan Documents, (ii) Indebtedness incurred under the First Lien Loan Documents, (iii) the Existing Convertible Debentures, (iv) the Existing Senior Notes and any Guarantees in respect thereof, (v) the Existing Subordinated Notes and any Guarantees in respect thereof, (vi) Indebtedness of MLP under that certain Credit Agreement dated as of August 10, 2007, among MLP, as borrower, the lenders party thereto, BNP Paribas, as syndication agent, JPMorgan Chase Bank, N.A., The Royal Bank of Scotland plc and Fortis Capital Corp., as co-documentation agents, and Bank of America, N.A., as administrative agent, (vii) Indebtedness set forth on Schedule 4.01 or 7.01, (viii) shares of Series 1 and Series 2 preferred stock of Quicksilver Resources Horn River Inc., an Alberta, Canada corporation, and (ix) the non-voting limited partner interest in MLP issued to MLP GP pursuant to, and referred to as the “Incentive Distribution Rights” in, that certain First Amended and Restated Agreement of Limited Partnership of MLP dated as of August 10, 2007.

     (r) Intercreditor Agreement. The Administrative Agent (or its counsel) shall have received from the First Lien Collateral Agent (as defined in the Intercreditor Agreement) a counterpart of the Intercreditor Agreement signed on behalf of the First Lien Collateral Agent.

     (s) Hedging Agreements. The Hedging Agreements set forth on Schedule 3.19 shall be in full force and effect and shall have the effect of establishing minimum fixed prices or floors on a notional volume of equivalent production equal to no less than (i) 60% of the aggregate anticipated production from Proved Mineral Interests of the Borrower and the Subsidiaries for the period from August 1, 2008 through December 31, 2008, and (ii) 49% of the aggregate anticipated production from Proved Mineral Interests of the Borrower and the Subsidiaries for the period from January 1, 2009 through December 31, 2009.

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     (t) Closing Date Officer’s Certificate. The Administrative Agent shall have received a certificate, dated the date hereof and signed by the Chief Executive Officer or the Financial Officer of the Borrower, confirming satisfaction of the conditions set forth in each of paragraphs (g), (m), (q) and (s) of this Article and in each of the first sentences of paragraphs (o) and (p) of this Article.

     (u) Fees and Expenses. The Administrative Agent, the Arrangers and the Lenders shall have received all fees and expenses required to be paid in accordance with the Engagement Letter, the Administrative Agent Fee Letter, this Agreement or any other Loan Document on or prior to the date hereof, including reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder or under any other Loan Document.

     (v) PATRIOT Act. The Lenders shall have received, at least five Business Days prior to the date hereof, all documentation and other information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the PATRIOT Act.

Notwithstanding the foregoing, if the Borrower shall have been unable to cause the requirements set forth in clauses (b) and (c) of the definition of the term “Collateral and Guarantee Requirement” to be satisfied on or prior to the Closing Date, then satisfaction of such requirements shall not be a condition precedent to the obligations of the Lenders to make Loans hereunder; provided that the Borrower shall, as promptly as practicable after the Closing Date and in any event within 60 days thereafter, cause such requirements to be satisfied, except to the extent otherwise agreed by the Administrative Agent pursuant to its authority as set forth in the definition of the term “Collateral and Guarantee Requirement”.

The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding.

ARTICLE V

Affirmative Covenants

     Until the Commitments shall have terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Administrative Agent and each Lender that:

     SECTION 5.01. Information. The Borrower shall deliver, or shall cause to be delivered, to the Administrative Agent (which shall make available to each Lender):

     (a) As soon as available and in any event in accordance with then applicable law but not later than 120 days after the end of each Fiscal Year, a consolidated balance sheet of the Borrower and the Subsidiaries as of the end of such Fiscal Year and the related consolidated statements of income and comprehensive income and cash flow for such Fiscal Year, setting forth in each case in comparative form the figures for the previous Fiscal Year, all reported by the Borrower in accordance with GAAP and audited by a firm of independent public accountants of nationally recognized standing and reasonably acceptable to the Administrative Agent

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(without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit).

     (b) As soon as available and in any event in accordance with then applicable law but not later than 60 days after the end of each of the first three Fiscal Quarters of each Fiscal Year, consolidated balance sheets of the Borrower and the Subsidiaries as of the end of such Fiscal Quarter, the related consolidated statement of income and comprehensive income for such Fiscal Quarter and for the portion of such Fiscal Year ended at the end of such Fiscal Quarter and the related consolidated statement of cash flows for the portion of such Fiscal Year ended at the end of such Fiscal Quarter, all reported by the Borrower, in accordance with GAAP subject to the absence of certain footnote disclosures required in accordance with GAAP and normal year-end audit adjustments) setting forth in each case in comparative form the figures for the corresponding period or periods of the previous Fiscal Year.

     (c) Simultaneously with the delivery of each set of financial statements referred to in paragraphs (a) and (b) of this Section, a certificate of a Financial Officer of the Borrower in the form of Exhibit I (i) setting forth in reasonable detail the calculations required to establish whether the Borrower was in compliance with the requirements of Article VI as of the end of the Fiscal Year or Fiscal Quarter with respect to which such financial statements are delivered, (ii) stating whether there exists on the date of such certificate any Default and, if any Default then exists, setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto, (iii) certifying that such financial statements fairly reflect in all material respects the consolidated financial position, results of operations and cash flows of the Borrower and the Subsidiaries as of the date of and for the period or periods covered thereby, (iv) certifying that all notices required to be provided under Sections 5.15 and 5.16 have been provided or are simultaneously therewith being provided and (v) setting forth a summary of the Hedging Transactions to which each Credit Party is a party on such date (which summary shall include with respect to such Hedging Transactions the type of information referred to in Section 3.19).

     (d) Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Borrower or any Subsidiary with the SEC or with any national securities exchange, or distributed by the Borrower to its shareholders generally, as the case may be.

     (e) Promptly following an Authorized Officer of any Credit Party becoming aware of the receipt of same, notice of any notice or other information received by any Credit Party indicating (i) any potential, actual or alleged non-compliance with or violation of the requirements of any Environmental Law which could result in liability to the Credit Parties for fines, clean up or any other remediation obligations or any other liability in excess of $5,000,000 (to the extent not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage in writing thereof and a copy of such acknowledgment has been provided to the Administrative Agent) in the aggregate, (ii) any Hazardous Discharge that imposes on any Credit Party a duty to report to a Governmental Authority or to pay cleanup costs or to take remedial action under any Environmental Law which could result in liability to the Credit Parties for fines, clean up and other remediation obligations or any other liability in excess of $5,000,000 (to the extent not paid or fully covered by insurance as to which the relevant insurance company has

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acknowledged coverage in writing thereof and a copy of such acknowledgment has been provided to the Administrative Agent) in the aggregate, or (iii) the existence of any Lien on any property of the Credit Parties arising under any Environmental Law and securing any obligation to pay fines, clean up or other remediation costs or any other liability in excess of $5,000,000 in the aggregate.

     (f) Promptly upon receipt of same by any Credit Party, copies of all environmental consultants’ or engineers’ reports received by any Credit Party which would render the representations and warranties (or any of them) contained in Section 3.14 untrue or inaccurate in any respect.

     (g) In the event any notification is provided pursuant to paragraph (e) above or the Administrative Agent or any Lender otherwise learns of any event or condition under which any such notice would be required, then, upon written request of the Required Lenders, within 60 days following such request, a report by an environmental consulting firm reasonably acceptable to the Administrative Agent, stating that a review of such event, condition or circumstance has been undertaken (the scope of which shall be reasonably acceptable to the Administrative Agent) and detailing the findings, conclusions and recommendations of such consulting firm; the Borrower shall bear all expenses and costs associated with such review and updates thereof.

     (h) Promptly, but in no event later than five Business Days (if such Default continues to exist as of such fifth Business Day), following any Authorized Officer of any Credit Party becoming aware of the occurrence of any Default, a certificate of an Authorized Officer of the Borrower setting forth the details thereof and the action which the Borrower is taking or proposes to take with respect thereto.

     (i) Promptly, but in no event later than five Business Days (if such event or circumstance continues to exist as of such fifth Business Day) following an Authorized Officer of any Credit Party becoming aware of same, notice to the Administrative Agent of any event or circumstance that since the date hereof has had, or would reasonably be expected to have, a Material Adverse Effect.

     (j) Promptly following an Authorized Officer of any Credit Party becoming aware of same, notice of (i) all actions, suits or proceedings by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Subsidiary, except actions, suits or proceedings which, if adversely determined, would not reasonably be expected to have a Material Adverse Effect, and (ii) the occurrence of any development with respect to any action, suit or proceeding previously disclosed to the Administrative Agent pursuant to this Agreement, where such developments would reasonably be expected to have a Material Adverse Effect.

     (k) Promptly after any request therefor, such additional information regarding the business, operations, assets, liabilities and financial position of the Borrower and the Credit Parties, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender (through the Administrative Agent) may reasonably request.

Reports and other information required to be delivered pursuant to paragraphs (a), (b) and (d) of this Section shall be deemed to have been delivered on the date on which such reports, or reports

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containing such information, shall have been posted by or on behalf of the Borrower on an Intralinks or similar site to which Lenders have been granted access or shall be publicly available on the SEC’s website.

     SECTION 5.02. Delivery of Reserve Reports. (a) On or prior to April 1 of each year, the Borrower shall furnish to the Administrative Agent (i) a Reserve Report evaluating, as of December 31 of the immediately preceding year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in the United States and (ii) a Reserve Report evaluating, as of December 31 of the immediately preceding year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in Canada, in each case prepared by an Approved Engineer and setting forth volumes, projections of the future rate of production, Hydrocarbon prices, escalation rates, discount rate assumptions, net proceeds of production, present value of the net proceeds of production, operating expenses and capital expenditures with respect thereto as of such date, in each case based upon reasonable economic assumptions, and certified by such Approved Engineer as having been prepared in accordance with the normal and customary methods and procedures used by such Approved Engineer for evaluating oil and gas reserves and in accordance in all material respects with the procedures used to prepare the corresponding prior Reserve Report most recently delivered pursuant hereto (or, prior to the first such delivery, the corresponding reserve report that is part of the Initial Reserve Report).

     (b) On or prior to September 1 of each year, commencing with September 1, 2009, the Borrower shall furnish to the Administrative Agent (i) a Reserve Report evaluating, as of June 30 of such year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in the United States and (ii) a Reserve Report evaluating, as of June 30 of such year, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in Canada, in each case prepared by or under supervision of a reserve engineer employed by the Borrower of seniority reasonably acceptable to the Administrative Agent and setting forth volumes, projections of the future rate of production, Hydrocarbon prices, escalation rates, discount rate assumptions, net proceeds of production, present value of the net proceeds of production, operating expenses and capital expenditures with respect thereto as of such date, in each case based upon reasonable economic assumptions, and certified by such reserve engineer as having been prepared in accordance with the normal and customary methods and procedures used by such reserve engineer for evaluating oil and gas reserves and in accordance in all material respects with the procedures used to prepare the corresponding prior Reserve Report most recently delivered pursuant hereto (or, prior to the first such delivery, the corresponding reserve report that is part of the Initial Reserve Report).

     (c) If requested by the Required Lenders (which request may not be made more than once during any 12-month period), the Borrower shall furnish to the Administrative Agent and the Lenders, as soon as reasonably practicable after such request, (i) a Reserve Report evaluating, as of the date specified in such request, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in the United States and (ii) a Reserve Report evaluating, as of the date specified in such request, the Proved Mineral Interests attributable to the Oil and Gas Properties of the Credit Parties that are located in Canada, in each case prepared by or under supervision of a reserve engineer employed by the Borrower of seniority reasonably acceptable to the Administrative Agent and setting forth volumes,

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projections of the future rate of production, Hydrocarbon prices, escalation rates, discount rate assumptions, net proceeds of production, present value of the net proceeds of production, operating expenses and capital expenditures with respect thereto as of such date, in each case based upon reasonable economic assumptions, and certified by such reserve engineer as having been prepared in accordance with the normal and customary methods and procedures used by such reserve engineer for evaluating oil and gas reserves and in accordance in all material respects with the procedures used to prepare the Reserve Report most recently delivered prior thereto pursuant to paragraph (a) or (b) of this Section.

     (d) Concurrently with the delivery of any Reserve Reports pursuant to paragraph (a), (b) or (c) of this Section, the Borrower shall deliver to the Administrative Agent a certificate of an Authorized Officer of the Borrower, in form and substance reasonably acceptable to the Administrative Agent, certifying that (i) there are no statements or conclusions in any such Reserve Report that are based upon or include materially misleading information or fail to take into account material information regarding the matters reported thereon, (ii) subject to Immaterial Title Deficiencies and Permitted Encumbrances, the Credit Parties own good and defensible title to the Oil and Gas Properties evaluated in each such Reserve Report and such Oil and Gas Properties are free and clear of all Liens and (iii) the Oil and Gas Properties evaluated by such Reserve Reports that are Mortgaged Properties represent not less 75% of the Proved PV-10 Domestic Value as set forth in such Reserve Reports (together with reasonable detail in support thereof).

     SECTION 5.03. Nature of Business. The sole business of the Borrower and the Credit Parties shall be the acquisition, exploration, development and operation of Mineral Interests in the United States and Canada and the production, marketing, processing and transportation of Hydrocarbons therefrom and businesses reasonably related or complementary thereto (or to act as a holding company for any such Credit Party).

     SECTION 5.04. Maintenance of Existence; Oil and Gas Properties. (a) The Borrower shall, and shall cause each other Credit Party to, at all times (i) maintain its corporate, partnership or limited liability company existence in its state of incorporation or organization and (ii) maintain its good standing (if and when applicable in the jurisdiction in issue) and qualification to transact business in all jurisdictions where the failure to maintain good standing or qualification to transact business would reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any action permitted under Section 7.04 or 7.05.

     (b) The Borrower will, and will cause each other Credit Party to, in all material respects, promptly, (i) pay and discharge, or make commercially reasonable efforts to cause to be paid and discharged, when due all delay rentals, royalties and expenses accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties, provided that, in the case of delay rentals, a Credit Party shall only be required to pay and discharge, or make commercially reasonable efforts to pay and discharge, delay rentals as and to the extent such Credit Party determines in good faith that payment and discharge thereof is in its best interest, (ii) perform, or make reasonable and customary efforts to cause to be performed, the obligations of the Borrower or any other Credit Party required by each and all of the assignments, deeds, leases, subleases, contracts and agreements affecting its interests in its material Oil and Gas Properties and other

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material properties, and (iii) do all other things necessary to keep unimpaired, except for Permitted Encumbrances, its rights with respect to its material Oil and Gas Properties and other material properties and prevent any forfeiture thereof or a default thereunder, except to the extent a portion of such properties is no longer capable of producing Hydrocarbons in economically reasonable amounts, except for dispositions permitted by this Agreement or any other Loan Document and except when the failure to do so would not reasonably be expected to have a Material Adverse Effect.

     SECTION 5.05. Title Data. (a) On or prior to each delivery to the Administrative Agent of the Reserve Reports required to be delivered under any paragraph of Section 5.02, the Borrower shall deliver to the Administrative Agent (or shall provide to the Administrative Agent reasonable access to) opinions of counsel as to title to Oil and Gas Properties, or such other evidence of title for Oil and Gas Properties as shall be reasonably satisfactory to the Administrative Agent, that, together with such opinions and other evidence of title theretofore delivered or made available to the Administrative Agent, constitutes title information with respect to Oil and Gas Properties representing at least 75% of the Proved PV-10 Domestic Value, as set forth in such Reserve Reports.

     (b) Upon notice from the Administrative Agent to the Borrower that any material title defect or exception (other than Permitted Encumbrances and Immaterial Title Deficiencies) exists with respect to any Oil and Gas Properties for which title information was provided pursuant paragraph (a) of this Section, the Borrower shall use its commercially reasonable efforts to cure, as promptly as practicable, such title defect or exception. If such title defect or exception shall not have been cured within 90 days after the date of such notice (or such longer period thereafter as shall have been agreed to in writing by the Administrative Agent), and the Administrative Agent shall not have been provided with evidence reasonably satisfactory to it of such cure, then, (i) solely for purposes of Section 5.17(c), such Oil and Gas Property shall not be deemed to be an Oil and Gas Property of the Credit Parties and (ii) solely for purposes of Sections 6.03 and 6.04, the Proved PV-10 Value shall be deemed to exclude all amounts on account of Proved Mineral Interests attributable to such Oil and Gas Property, in each case until and unless such title defect or exception shall have been cured, and the Administrative Agent shall have been provided with evidence thereof reasonably satisfactory to it.

     SECTION 5.06. Books and Records; Right of Inspection. The Borrower will, and will cause each other Credit Party to, keep proper books of record and account in which full, true and correct entries in conformity with GAAP and Governmental Rules are made of all dealings and transactions in relation to its business and activities. The Borrower will permit, and will cause each other Credit Party to permit, any officer, employee or agent of the Administrative Agent or of any Lender to visit and inspect any of the assets of any Credit Party, examine each Credit Party’s books of record and accounts, take copies and extracts thereof and therefrom, and discuss the affairs, finances and accounts of each Credit Party with such Credit Party’s officers, accountants and auditors, all upon prior written notice to the Borrower at such reasonable times during the Borrower’s or such Credit Party’s normal business hours (and in a manner so as, to the extent practicable, not to interfere with the normal business operations of the Borrower or such Credit Party) as the Administrative Agent or any Lender may reasonably request, and, subject to the immediately following sentence, at the expense of the Borrower; provided that, so long as no Event of Default shall have occurred and be continuing, the rights of the

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Administrative Agent and the Lenders under this Section may only be exercised by the Administrative Agent. Except in the case of any visit, inspection or examination commenced after the occurrence and during the continuance of an Event of Default (or at a time when the Administrative Agent or any Lender requesting such visit, inspection or examination has a reasonable basis for believing that an Event of Default has occurred and is continuing), only one inspection in any calendar year shall be at the expense of the Borrower.

     SECTION 5.07. Maintenance of Insurance. The Borrower will, and will cause each other Credit Party to, at all times maintain or cause to be maintained insurance in such amounts (with no greater risk retention, other than self-insurance in respect of health and dental insurance) and against such risks as are customarily maintained by companies of established repute engaged in the same or similar businesses operating in the same or similar locations, including (a) workmen’s compensation insurance, (b) employer’s liability insurance, (c) comprehensive general public liability, (d) property damage, including insurance against losses customarily insured against as a result of damage by fire, lightning, hail, tornado, explosion and other similar risk, and (e) comprehensive automobile liability insurance. All loss payable clauses or provisions in all such policies of property damage maintained by the Loan Parties shall be endorsed in favor of the Administrative Agent, for the benefit of the Secured Parties, and the Administrative Agent, on behalf of the Secured Parties, shall have been named as a loss payee thereunder. All such liability policies maintained by the Loan Parties shall name the Administrative Agent and the Lenders as additional insureds thereunder. The Borrower hereby irrevocably makes, constitutes and appoints the Administrative Agent (and all officers, employees or agents designated by the Administrative Agent) as the Borrower’s true and lawful agent (and attorney-in-fact) for the purpose, after the occurrence and during the continuance of an Event of Default, of making, settling and adjusting claims in respect of Collateral under policies of insurance, endorsing the name of the Borrower on any check, draft, instrument or other item of payment for the proceeds of such policies and for making all determinations and decisions with respect thereto. It is understood that nothing in this Section shall affect the agreements of the Administrative Agent set forth in the Intercreditor Agreement.

     SECTION 5.08. Payment of Taxes and Claims. The Borrower will, and will cause each other Credit Party to, pay (a) all Taxes imposed upon it or any of its assets or with respect to any of its franchises, business, income or profits before any material penalty or interest accrues thereon and (b) all material claims (including claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or might become a Lien (other than a Permitted Encumbrance) on any of its assets; provided, however, that no payment of such Taxes or claims shall be required to the extent that (i) (A) the amount, applicability or validity thereof is currently being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and no material property of any Credit Party is subject to any pending levy or execution and (B) the Credit Parties, as and to the extent required in accordance with GAAP, shall have set aside on their books reserves (segregated to the extent required by GAAP) deemed by them to be adequate with respect thereto, or (ii) the failure to make payment pending such contest would not reasonably be expected to have a Material Adverse Effect or result in the seizure or levy of any material property of any Credit Party.

     SECTION 5.09. Compliance with Laws and Documents. The Borrower will, and will cause each other Credit Party to, comply with all Governmental Rules, their respective Organic

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Documents and all Material Agreements to which any Credit Party is a party if a violation, alone or when combined with all other such violations, would reasonably be expected to have a Material Adverse Effect.

     SECTION 5.10. Operation of Properties and Equipment. (a) The Borrower will, and will cause each other Credit Party to, maintain, develop and operate (or use its commercially reasonable efforts to cause the operator to maintain and operate to the extent the operator is not a Credit Party) its Oil and Gas Properties in a good and workmanlike manner as and to the extent the Borrower or such Credit Party elects in its commercially reasonable discretion to maintain, develop and operate any such Oil and Gas Property, except to the extent the failure to do so would not reasonably be expected to have a Material Adverse Effect.

     (b) Subject Section 7.05 and to exceptions as in the aggregate would not reasonably be expected to have a Material Adverse Effect, the Borrower will, and will cause each other Credit Party to, at all times maintain, preserve and keep all operating equipment used with respect to its Mineral Interests in proper repair, working order and condition (subject to ordinary wear and tear), and make all necessary or appropriate repairs, renewals, replacements, additions and improvements thereto so that, in the Borrower’s commercially reasonable judgment, the efficiency of such operating equipment shall at all times be properly preserved and maintained; provided that no item of operating equipment need be so repaired, renewed, replaced, added to or improved if the Borrower shall have in good faith determined that such action is not necessary or desirable for the continued efficient and profitable operation of the business of the Credit Parties.

     SECTION 5.11. Environmental Law Compliance. The Borrower will, and will cause each other Credit Party to, comply in all respects with all Environmental Laws, including, (a) all licensing, permitting, notification and similar requirements of Environmental Laws, and (b) all provisions of all Environmental Laws regarding storage, discharge, release, transportation, treatment and disposal of Hazardous Materials, if a violation, alone or when combined with all other such violations, would reasonably be expected to have a Material Adverse Effect. The Borrower will, and will cause each other Credit Party to, promptly pay and discharge when due all legal debts, claims, liabilities and obligations with respect to any clean-up or remediation measures necessary to comply with Environmental Laws; provided that such payment or discharge shall not be required to the extent that (i) (A) the amount, applicability or validity thereof is currently being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and no material property of any Credit Party is subject to any pending levy or execution and (B) the Credit Parties, as and to the extent required in accordance with GAAP, shall have set aside on their books reserves (segregated to the extent required by GAAP) deemed by them to be adequate with respect thereto, or (ii) the failure to make such payment or discharge would not reasonably be expected to have a Material Adverse Effect.

     SECTION 5.12. ERISA Reporting Requirements. The Borrower shall furnish, or cause to be furnished, to the Administrative Agent:

     (a) promptly, and in any event (i) within 30 days after an Authorized Officer of the Borrower or any ERISA Affiliate receives notice from any Governmental Authority of the commencement of an audit, investigation or similar proceeding with respect to a Plan and (ii) within 10 days after the Borrower or any ERISA Affiliate contacts the

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Internal Revenue Service for the purpose of participation in a closing agreement or any voluntary resolution program with respect to a Plan, in each case, if the result of any such audit, investigation or similar proceeding or any such closing agreement or voluntary resolution would reasonably be expected to have a Material Adverse Effect, a written notice describing such event and describing what action is being taken or is proposed to be taken with respect thereto;

     (b) promptly and in any event within 30 days after the receipt by the Borrower of a written request therefor by a Lender, copies of any annual and other report with respect to a Plan filed by the Borrower or any ERISA Affiliate with the United States Department of Labor, the Internal Revenue Service or the PBGC;

     (c) notification within 30 days of the effective date thereof of any material increases in the benefits, or material change in the funding method, of any existing Plan, or the establishment of any material new Plans, or the commencement of material contributions to any Plan or a multiemployer plan (as defined in Section 4001(a)(3) of ERISA) to which the Borrower or any ERISA Affiliate was not previously contributing; and

     (d) promptly after receipt of written notice of commencement thereof, notice of all (i) claims (other than routine claims for benefits) made by participants or beneficiaries with respect to any Plan and (ii) actions, suits and proceedings before any court or governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, affecting the Borrower or any ERISA Affiliate with respect to any Plan, except those which, in the aggregate, if adversely determined could not reasonably be expected to have a Material Adverse Effect.

     SECTION 5.13. Environmental Review. In connection with any acquisition by any Credit Party of Mineral Interests, other than an acquisition of additional interests in Mineral Interests in which a Credit Party previously held an interest, to the extent a Credit Party obtains or is provided the same, the Borrower shall, promptly following such Credit Party’s obtaining or being provided with the same, deliver to the Administrative Agent all environmental reports and results of environmental reviews (including Phase I environmental reports) of such Mineral Interests.

     SECTION 5.14. Casualty and Condemnation. The Borrower (a) will furnish to the Administrative Agent promptly, and in any event within 15 Business Days after an Authorized Officer of the Borrower becomes aware of the occurrence thereof, written notice of any Casualty Event and (b) will ensure that the Net Cash Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied as and to the extent required by Section 2.09(b).

     SECTION 5.15. Concerning Subsidiaries. If any Subsidiary is formed or acquired after the date hereof, or any Subsidiary becomes a Designated Credit Party or ceases to be an Inactive Subsidiary, the Borrower will, as promptly as practicable, and in any event within 30 days, notify the Administrative Agent thereof and, within such period (or such longer period thereafter as shall have been agreed to in writing by the Administrative Agent), cause the Collateral and

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Guarantee Requirement to be satisfied with respect to such Subsidiary (if it is a Designated Credit Party) and with respect to any Equity Interests in or Indebtedness of such Subsidiary owned by any Loan Party. The Borrower will, as promptly as practicable, and in any event within 30 days, notify the Administrative Agent of any Subsidiary ceasing to be a Credit Party as a result of clause (e) of the definition of such term.

     SECTION 5.16. Information Regarding Collateral. The Borrower will furnish to the Administrative Agent promptly, and in any event within 30 days upon an Authorized Officer of the Borrower becoming aware of same, written notice of any change (a) in any Loan Party’s legal name or jurisdiction of organization, (b) in the location of any Loan Party’s chief executive office or its principal place of business, (c) in any Loan Party’s identity or corporate structure and (d) in any Loan Party’s organizational number issued to it in its jurisdiction of organization or, with respect to any Loan Party organized under the laws of a jurisdiction that requires such information to be set forth on the face of a UCC financing statement, the Federal Taxpayer Identification Number of such Loan Party.

     SECTION 5.17. Further Assurances. (a) The Borrower will, and will cause each other Loan Party to, at the Borrower’s expense, cure promptly any defects in the execution and delivery of this Agreement and any other Loan Document to which any of them is a party. The Borrower, at its expense, will and will cause each other Loan Party to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent to cause the Collateral and Guarantee Requirement to be and remain satisfied at all times and otherwise to comply with or accomplish the covenants and agreements of the Borrower or any other Loan Party, in this Agreement and any other Loan Document, or to file any notices or obtain any consents, all as may be reasonably necessary or appropriate in connection therewith.

     (b) The Borrower agrees that it will, and will cause each Loan Party to, at the Borrower’s expense, execute any and all further documents, financing statements, agreements and instruments and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents) that may be required under any applicable law or which the Administrative Agent may reasonably request, to effect the transactions contemplated by the Security Documents, or to grant, preserve, protect or perfect the Liens created or intended to be created thereby or the validity or priority (subject only, with respect to priority, to Permitted Encumbrances) of any such Liens, all at the expense of the Loan Parties.

     (c) The Borrower shall at all times cause the requirement set forth in clause (d) of the definition of the term “Collateral and Guarantee Requirement” to be satisfied with respect to Oil and Gas Properties of the Credit Parties representing not less than 75% of the Proved PV-10 Domestic Value, as set forth in the most recent Reserve Report delivered pursuant hereto.

     (d) The Borrower agrees to provide to the Administrative Agent, from time to time upon reasonable request of the Administrative Agent, information that is in the possession of the Borrower or the Subsidiaries or otherwise reasonably obtainable by any of them, reasonably satisfactory to the Administrative Agent as to the perfection and priority (subject only, with respect to priority, to Permitted Encumbrances) of the Liens created or intended to be created by

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the Security Documents. The Security Documents shall remain in effect at all times unless otherwise released pursuant to the terms of this Agreement or any other Loan Document.

     (e) In connection with the foregoing, the Borrower hereby authorizes the Administrative Agent to file one or more financing statements or continuation statements, and amendments thereto, in such jurisdictions as are necessary or as the Administrative Agent, in its reasonable discretion, deems advisable to perfect, prepare, protect and maintain the Liens, and the priority thereof, created pursuant to the Security Documents relative to all or any part of the Collateral without the signature of the Borrower or any other Loan Party where permitted by law and describing the collateral using words such as “all personal property”, “all assets” or other words of similar import.

ARTICLE VI

Financial Covenants

     Until the Commitments shall have terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Administrative Agent and each Lender that:

     SECTION 6.01. Current Ratio. The Borrower will not permit, as of the end of any Fiscal Quarter, commencing with the Fiscal Quarter ending on September 30, 2008, the ratio of Consolidated Current Assets to Consolidated Current Liabilities to be less than 1.00 to 1.00.

     SECTION 6.02. Interest Coverage Ratio. The Borrower will not permit, as of the end of any Fiscal Quarter, commencing with the Fiscal Quarter ending on September 30, 2008, the ratio of Consolidated EBITDAX (for the period of four Fiscal Quarters ending on such date) to Consolidated Net Interest Expense (for the period of four Fiscal Quarters ending on such date) to be less than 2.25 to 1.00.

     SECTION 6.03. Total Debt Asset Coverage Ratio. The Borrower will not permit, as of the last day of any Fiscal Quarter, the ratio of (a) the sum of (i) the Proved PV-10 Value as of such day plus (ii) 50% of the BBEP Fair Market Value as of such day to (b) the Total Debt as of such day to be less than 1.50 to 1.00.

     SECTION 6.04. Total Secured Debt Asset Coverage Ratio. The Borrower will not permit, as of the last day of any Fiscal Quarter, the ratio of (a) the sum of (i) the Proved PV-10 Value as of such day plus (ii) 50% of the BBEP Fair Market Value as of such day to (b) the Total Secured Debt as of such day to be less than the ratio set forth below opposite the period that includes such day:

Period	Ratio
September 30, 2008 to September 30, 2010		2.00 to 1.00
December 31, 2010 and thereafter		2.25 to 1.00

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ARTICLE VII

Negative Covenants

     Until the Commitments shall have terminated and the principal of and interest on each Loan and all fees payable hereunder shall have been paid in full, the Borrower covenants and agrees with the Administrative Agent and each Lender that:

     SECTION 7.01. Indebtedness. The Borrower will not, nor will the Borrower permit any other Credit Party to, incur, assume or become or remain liable for any Indebtedness, other than:

     (a) the Term Obligations;

     (b) Guarantees incurred in compliance with Section 7.08;

     (c) Indebtedness created under any First Lien Credit Agreement, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount at any time outstanding not to exceed the greater of (i) $1,200,000,000 or (ii) 30% of Adjusted Consolidated Net Tangible Assets at such time; provided that (i) such Indebtedness shall be created under a single credit facility or a U.S. credit facility and a Canadian credit facility (whether documented under a single credit agreement or separate credit agreements), (ii) each such credit facility shall be revolving in nature and the availability of credit extensions thereunder shall be determined by reference to a “borrowing base”, which shall be determined in a manner substantially similar to the manner of the determination of the First Lien Global Borrowing Base and First Lien U.S. Borrowing Base as set forth in the First Lien Credit Agreements as of the date hereof or shall otherwise be a “borrowing base” that is based on Proved Mineral Interests and generally conforms to the market standard for borrowing base credit facilities of this type in the oil and gas industry provided by commercial banks or commercial finance companies and (iii) the aggregate principal amount of Indebtedness of the Credit Parties that are Foreign Subsidiaries permitted under this clause (c) shall not exceed $450,000,000 at any time outstanding (Indebtedness permitted under this clause (c), together with any First Lien Hedging Obligations, is referred to herein as “First Lien Permitted Indebtedness”);

     (d) Indebtedness of the Borrower or any other Credit Party to the Borrower or any other Credit Party; provided that (i) such Indebtedness shall not have been transferred (other than to a Credit Party), (ii) any such Indebtedness owing to any Loan Party shall, to the extent and as required by the Collateral and Guarantee Requirement, be evidenced by a promissory note that shall have been pledged to the Administrative Agent (or its agent or bailee) and (iii) any such Indebtedness of any Subsidiary that is not a Credit Party to any Loan Party shall be incurred in compliance with Section 7.08;

     (e) Indebtedness outstanding on the date hereof and set forth on Schedule 7.01, and any Refinancing Indebtedness in respect thereof;

     (f) Indebtedness of a Person which becomes a Credit Party after the date hereof; provided that (i) such Indebtedness existed at the time such Person became a Credit Party and was not created in anticipation thereof and (ii) immediately after giving effect to the

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acquisition of such Person by the Borrower or any other Credit Party, no Default or Event of Default shall have occurred and be continuing; and provided further that the aggregate principal amount of Indebtedness permitted by this clause (f), together with the aggregate principal amount of Indebtedness permitted by clause (j) below, shall not exceed $24,000,000 in the aggregate at any time outstanding;

     (g) Indebtedness consisting of performance bonds or surety or appeal bonds provided by the Borrower or any Credit Party in the ordinary course of business;

     (h) Non-Recourse Debt in an aggregate amount outstanding at any time not to exceed $5,000,000;

     (i) Hedging Obligations that are incurred in respect of Hedging Transactions permitted under Section 7.11;

     (j) Indebtedness incurred to finance the acquisition, construction or improvement of fixed or capital assets (including Capital Lease Obligations) secured by Liens permitted by clause (o) of the definition of the term “Permitted Encumbrances”; provided that the aggregate principal amount of Indebtedness permitted by this clause (j), together with the aggregate principal amount of Indebtedness permitted by clause (f) above, shall not exceed $24,000,000 in the aggregate at any time outstanding;

     (k) Indebtedness in an aggregate principal amount outstanding at any time not to exceed $48,000,000;

     (l) the Existing Convertible Debentures, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed $150,000,000 at any time outstanding;

     (m) the Existing Senior Notes, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed $475,000,000 at any time outstanding;

     (n) the Existing Subordinate Notes, and Refinancing Indebtedness in respect thereof, in an aggregate principal amount not to exceed $350,000,000 at any time outstanding;

     (o) Indebtedness associated with worker’s compensation claims, unemployment insurance laws or similar legislation incurred in the ordinary course of business;

     (p) Taxes, assessments or other governmental charges which are not yet due or are being contested in good faith in accordance with Section 5.08; and

     (q) other Indebtedness of the Borrower (provided that such Indebtedness (i) does not mature, and is not subject to mandatory repayment, prepayment, redemption, repurchase, defeasance or amortization (other than pursuant to customary asset sale or change in control provisions requiring redemption or repurchase only if and to the extent then permitted by this Agreement), in each case, prior to the date that is 180 days after the Maturity Date, (ii) is not secured, directly or indirectly, by any assets of the Borrower

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or any other Credit Party, (iii) is not exchangeable or convertible into Indebtedness of the Borrower or any other Credit Party (other than Indebtedness that would constitute Permitted Subordinated Indebtedness) and (iv) all the Net Cash Proceeds thereof are applied on the date of the incurrence thereof to prepay Loans as and to the extent required by Section 2.09(b); and provided further that such Indebtedness, and any Guarantees thereof, are subordinated to the Term Obligations pursuant to subordination provisions that are no less favorable in any material respect, when taken as a whole, to the Lenders than the subordination provisions of the Existing Senior Subordinated Notes (such Indebtedness permitted under this clause (q) is referred to as the “Permitted Subordinated Indebtedness”)) and any Refinancing Indebtedness in respect thereof.

For the avoidance of doubt, to the extent any Indebtedness is permitted by more than one clause of this Section, the Borrower may categorize all or any portion of such Indebtedness to any one or more of such clauses as it elects and, except as otherwise expressly provided above, in no event shall the same portion of any Indebtedness be deemed to utilize availability under more than one clause of this Section.

     SECTION 7.02. Restricted Payments. The Borrower will not, nor will the Borrower permit any other Credit Party to, directly or indirectly, declare or pay, or incur any obligation (contingent or otherwise) to declare or pay, any Restricted Payment; provided that:

     (a) any Person in which the Borrower directly or indirectly owns Equity Interests may make Restricted Payments to the Borrower and/or other Persons owning Equity Interests in such Person, so long as any such Restricted Payment is, in each case, made to the Borrower and/or such other Persons ratably in accordance with their Equity Interests of the same class or series therein;

     (b) so long as no Default or Event of Default has occurred and is continuing, the Borrower may repurchase shares of its common stock, par value $0.01 per share, for an aggregate consideration of not more than $24,000,000;

     (c) the Borrower may declare and pay dividends and make other distributions and payments with respect to its Equity Interests, in each case, payable solely in its Equity Interests;

     (d) the Borrower may purchase or otherwise acquire Equity Interests in any Subsidiary using additional shares of its Equity Interests;

     (e) the Borrower may (i) make repurchases or redemptions of its Equity Interests (A) in connection with the exercise of stock options or restricted stock awards if such Equity Interests represent all or a portion of the exercise price thereof or (B) deemed to occur upon the withholding of a portion of such Equity Interests issued to directors, officers or employees of the Borrower or any Subsidiary under any stock option plan or other benefit plan or agreement for directors, officers and employees of the Borrower and the Subsidiaries to cover withholding tax obligations of such Persons in respect of such issuance and (ii) make other Restricted Payments, not exceeding $2,500,000 in the aggregate for any Fiscal Year, pursuant to and in accordance with stock option plans or

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other benefit plans or agreements for directors, officers and employees of the Borrower and the Subsidiaries; and

     (f) the Borrower may redeem any share purchase rights issued pursuant to that certain Rights Agreement, dated as of March 11, 2003, between the Borrower and Mellon Investor Services LLC, as Rights Agent, or any share purchase rights issued pursuant to any successor rights agreement, in each case, in accordance with the terms of such Rights Agreement or such successor rights agreement and for consideration not to exceed $0.01 per any such right.

     SECTION 7.03. Liens. The Borrower will not, nor will the Borrower permit any other Credit Party to, create, assume or permit to exist any Lien on any of their respective properties, other than Permitted Encumbrances.

     SECTION 7.04. Consolidations and Mergers; Fundamental Changes. (a)   The Borrower will not, nor will the Borrower permit any other Credit Party to, consolidate or merge with or into any other Person; provided that, so long as at the time thereof no Default or Event of Default has occurred and is continuing or will result therefrom, (i) the Borrower may merge with any other Person so long as the Borrower is the surviving corporation in such merger, and (ii) any Credit Party (other than the Borrower) may merge or consolidate with any other Person so long as the surviving entity in such transaction is a Credit Party (and, if any party to such merger or consolidation is a Loan Party, such surviving entity is a Loan Party) or the Borrower.

     (b) The Borrower will cause each Subsidiary that is a Credit Party to be a Wholly-Owned Subsidiary and a direct Subsidiary of the Borrower or any other Credit Party (provided that, in the case of any such Subsidiary that is a Domestic Subsidiary, such other Credit Party shall also be a Domestic Subsidiary).

     (c) The Borrower will cause all Oil and Gas Properties located in the United States and owned, directly or indirectly, by the Borrower (other than any such Oil and Gas Properties owned directly by any MLP Subsidiary) to be owned directly by the Borrower or any other Loan Party.

     SECTION 7.05. Asset Dispositions; Sale/Leaseback Transactions. The Borrower will not, nor will the Borrower permit any other Credit Party to, sell, lease, transfer, abandon or otherwise dispose of any property, including any Equity Interest owned by it, other than:

     (a) transfers and other dispositions of cash and cash equivalents in the ordinary course of business;

     (b) sales, leases, transfers and other dispositions to the Borrower or any other Credit Party; provided that any such sales, lease, transfer or other disposition involving a Credit Party that is not a Loan Party shall be made in compliance with Sections 7.08 and 7.09; and

     (c) farmouts of undeveloped acreage and assignments in connection with such farmouts or the abandonment, farm-out, exchange, lease or sublease of Oil and Gas Properties not containing Proved Mineral Interests capable of being produced in material

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economic quantities and which are not included in the most recently delivered Reserve Report;

     (d) sales in the ordinary course of business of Hydrocarbons produced from the Mineral Interests of the Credit Parties;

     (e) sales, transfers and other dispositions of assets obtained as a result of mergers, consolidations or acquisitions permitted under this Agreement that are unrelated to the business of the Credit Parties;

     (f) sales, transfers and other dispositions of machinery or equipment that are obsolete, worn out or otherwise not necessary in the operation of the business of the Credit Parties or that, substantially concurrently, are replaced by machinery or equipment of comparable value and use;

     (g) sales, transfers and other dispositions to any MLP Subsidiary of (i) the Specified MLP Assets, on the terms set forth in the MLP Gathering and Processing Agreement and the MLP Omnibus Agreement, in each case as in effect on the date hereof, (ii) Midstream Assets acquired in the Acquisition and (iii) other Midstream Assets; provided that all sales, transfers and other dispositions made in reliance on this clause (g) shall be made for 100% cash consideration and, in the case of sales, transfers and other dispositions referred to in clause (ii) or (iii) above, shall be made in compliance with Section 7.09;

     (h) so long as no Event of Default shall have occurred and is continuing, sales, transfers, leases and other dispositions of assets that are not permitted by any other clause of this Section; provided that all sales, transfers, leases and other dispositions made in reliance on this clause (h) shall be made for fair value and at least 85% cash consideration; and

     (i) any Subsidiary (other than any Loan Party) may liquidate, dissolve or cease operations if the Borrower determines in good faith that such liquidation or cessation is in the best interests of the Borrower and is not materially disadvantageous to the Lenders;

provided, however, without limiting the foregoing, the Borrower will not, nor will the Borrower permit any other Credit Party to, (A) sell any Hydrocarbons under Advance Payment Contracts, except to the extent permitted under Section 7.15, (B) sell or securitize any of their accounts receivable (other than (1) sales of accounts receivable deemed in good faith by the Borrower to be doubtful or uncollectible, (2) discounts of accounts receivable granted to settle collection thereof and (3) sales of defaulted accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof and not in connection with any financing transaction), (C) sell any Production Payment or other term royalty or (D) enter into any Sale/Leaseback Transaction (other than with respect to equipment).

     SECTION 7.06. Amendments to Material Documents. The Borrower will not, nor will the Borrower permit any other Credit Party to, enter into or permit any amendment or other modification of, or waive any of its rights under, (a) its Organic Documents, (b) the definitive documentation for any First Lien Permitted Facility (including the First Lien Loan Documents),

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(c) the Existing Notes Documents or (d) any other agreement or instrument governing or evidencing any Material Indebtedness, in each case, to the extent such amendment, modification or waiver could reasonably be expected (i) to materially impair the rights of or benefits available to the Lenders under any Loan Document in respect of any payment obligation of any Loan Party thereunder, or the ability of any Loan Party to perform any of its obligations under any Loan Document, or (ii) to otherwise be adverse in any material respect to the Lenders, giving effect to the rights of the Credit Parties hereunder (including the right to incur any Indebtedness permitted under Section 7.01 and any Liens permitted under Section 7.02).

     SECTION 7.07. Use of Proceeds. The proceeds of the Loans will not be used for any purposes other than for the purpose described in the introductory statement to this Agreement. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the regulations of the Board, including Regulation T, U or X.

     SECTION 7.08. Investments. The Borrower will not, nor will the Borrower permit any other Credit Party to, directly or indirectly, make or have outstanding any Investment in any other Person, other than Permitted Investments.

     SECTION 7.09. Transactions with Affiliates. The Borrower will not, nor will the Borrower permit any other Credit Party to, engage in any transaction with any Affiliate, except for (a) any Permitted Investments, (b) any Restricted Payment permitted by Section 7.02, (c) transactions between or among the Loan Parties, in each case not involving any other Person, (d) transactions between or among Credit Parties that are not Loan Parties, in each case not involving any other Person, and (e) transactions that are at prices and other material terms and conditions not materially less favorable to the Borrower or such Credit Party than those that could be obtained in a comparable arm’s length transaction with a Person that is not an Affiliate.

     SECTION 7.10. ERISA. Except in such instances where an action, omission or failure would not reasonably be expected to have a Material Adverse Effect, the Borrower will not, nor will the Borrower permit any other Credit Party to, (a) take any action or fail to take any action which would result in a violation of ERISA, the Code or other Governmental Rules applicable to the Plans sponsored, maintained or contributed to by the Borrower or any ERISA Affiliate, or (b) modify the term of, or the funding obligations or contribution requirements under any existing Plan, establish a new Plan, or become obligated or incur any liability under a Plan that is not sponsored, maintained or contributed to by the Borrower or any ERISA Affiliate as of the date hereof.

     SECTION 7.11. Hedging Transactions. (a) The Borrower will not, nor will the Borrower permit any other Credit Party to, enter into any Hedging Transactions, except (i) Hedging Transactions entered into to hedge or mitigate risks to which the Borrower or any other Credit Party has actual exposure (other than in respect of Equity Interests or Indebtedness of the Borrower or any other Credit Party), (ii) Hedging Transactions entered into in order to effectively cap, collar or exchange interest rates (from fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect to any Indebtedness or any other interest-bearing liability of the Borrower or any other Credit Party, (iii) Hedging Transactions entered into, other than for speculative reasons, in respect of one or more currencies and (iv) Oil and Gas Hedging Transactions.

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     (b) The Borrower will not, nor will the Borrower permit any other Credit Party to, enter into any new Oil and Gas Hedging Transactions which would cause the volume of Hydrocarbons with respect to which a settlement payment is calculated under all Oil and Gas Hedging Transactions (including such new transactions) to which the Borrower and/or any other Credit Party is a party as of the date such Oil and Gas Hedging Transaction is entered into to exceed (i)(A) for the calendar year in which such new Oil and Gas Hedging Transaction is entered into (the “Initial Measurement Period”), 85% of the aggregate of the Borrower’s and the Subsidiaries’ anticipated production from Proved Mineral Interests for each of oil and gas (including natural gas liquids), calculated separately, (B) for the calendar year immediately following the end of the Initial Measurement Period (the “Second Measurement Period”), 80% of the aggregate of the Borrower’s and the Subsidiaries’ anticipated production from Proved Mineral Interests for each of oil and gas (including natural gas liquids), calculated separately, and (C) for the calendar year immediately following the end of the Second Measurement Period (the “Third Measurement Period”), 75% of the aggregate of the Borrower’s and the Subsidiaries’ anticipated production from Proved Mineral Interests for each of oil and gas (including natural gas liquids), calculated separately, plus, in each case, (ii) an amount not to exceed 100% of associated royalty owners’ oil, gas and/or natural gas liquids produced from the same wells, and which oil, gas and/or natural gas liquids the Borrower has the authority to market and sell, during the applicable measurement period; provided that the Borrower will not, nor will the Borrower permit any other Credit Party to, permit its production from Proved Producing Mineral Interests (whether or not included or reflected in the most recent Reserve Report delivered pursuant hereto) during the then current month to be less than the aggregate amount of production from Proved Producing Mineral Interests which are subject to Oil and Gas Hedging Transactions during such month; provided further that the Borrower will not, nor will the Borrower permit any other Credit Party to, enter into any Oil and Gas Hedging Transaction (A) except in the ordinary course of business (and not for speculative purposes) and (B) with a counterparty with a rating of its senior, unsecured, long-term indebtedness for borrowed money that is not guaranteed by any other Person or subject to any other credit enhancement of lower than “BBB-” or “Baa3” by S&P and Moody’s, respectively.

     SECTION 7.12. Fiscal Year. The Borrower will not, and the Borrower will not permit any other Credit Party to, change its fiscal year to end on a date other than December 31.

     SECTION 7.13. Certain Payments of Indebtedness. The Borrower will not, nor will the Borrower permit any other Credit Party to, directly or indirectly, (a) make any payment or other distribution (whether in cash, securities or other property) of or in respect of principal of any Existing Notes, any Permitted Subordinated Indebtedness or any Refinancing Indebtedness in respect of any thereof, or any payment or other distribution (whether in cash, securities or other property) in respect of the purchase, repurchase, redemption or defeasance of principal of any Existing Notes, any Permitted Subordinated Indebtedness or any Refinancing Indebtedness in respect of any thereof, in each case, at any time prior to the scheduled maturity thereof, or (b) make any prepayment of interest on any Indebtedness prior to the time that such interest is due; provided, however, that (i) so long as no Default or Event of Default has occurred and is continuing or would result therefrom, the Borrower or any other Credit Party may, in connection with any refinancing of any Existing Notes or any Permitted Subordinated Indebtedness, or of any Refinancing Indebtedness in respect of any thereof, permitted by Section 7.01, prepay all or any portion of the principal of, and accrued interest and premiums, if any, on, any Existing

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Notes, any Permitted Subordinated Indebtedness or any such Refinancing Indebtedness prior to the scheduled maturity thereof; (ii) the Borrower may repurchase any Existing Convertible Debentures with respect to which the holder thereof shall have exercised its right to require the Borrower to make such repurchase pursuant to Section 3.06 of the Existing Convertible Debentures Indenture, as in effect on the date hereof; and (iii) any Existing Notes, any Permitted Subordinated Indebtedness and any Refinancing Indebtedness in respect of any thereof may, prior to the scheduled maturity thereof, be paid, purchased, redeemed or otherwise acquired, in each case, in exchange for shares of common stock of the Borrower (and cash in lieu of fractional shares), and accrued interest and premiums, if any, thereon may be prepaid in connection therewith. Notwithstanding the foregoing, the provisions of this Section shall in no event or circumstance apply to or restrict any payment (whether in respect of a purchase, repurchase, redemption, defeasance, prepayment or otherwise) that the Borrower is obligated to make in respect of any Existing Senior Notes; provided, however, that, except for any actions permitted under clause (i) or (iii) above, the Borrower will not, nor will the Borrower permit any other Credit Party to, take any action, or omit to take any action, if, as the direct result of such action or omission, any Existing Senior Notes shall become due and payable prior to the scheduled maturity thereof.

     SECTION 7.14. Restrictive Agreements. The Borrower will not, nor will the Borrower permit any other Credit Party to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement that prohibits, restricts or imposes any condition upon (a) the ability of the Borrower or any other Loan Party to create, incur or permit to exist any Lien upon any of its assets to secure any Term Obligations or (b) the ability of any Credit Party to pay dividends or other distributions with respect to its Equity Interests or to make or repay loans or advances to the Borrower or any other Credit Party or to Guarantee Indebtedness of the Borrower or any other Credit Party; provided that (i) the foregoing shall not apply to (A) restrictions and conditions imposed by law or by any Loan Document, (B) restrictions and conditions imposed by any First Lien Loan Documents as in effect on the date hereof (or any successor definitive documentation for any First Lien Permitted Indebtedness, provided that the restrictions and conditions contained in any such successor definitive documentation are not materially less favorable to the Lenders, taken as a whole, than the restrictions and conditions imposed by the First Lien Loan Documents as in effect on the date hereof), (C) restrictions and conditions imposed by any definitive agreements governing or evidencing any of the Existing Notes as in effect on the date hereof (or any definitive agreement governing or evidencing any Refinancing Indebtedness in respect of any of the Existing Notes, provided that the restrictions and conditions contained in any such definitive agreements are not materially less favorable to the Lenders, taken as a whole, than the restrictions and conditions imposed by the definitive agreements governing or evidencing such Existing Notes as in effect on the date hereof) and (D) restrictions and conditions existing on the date hereof and identified on Schedule 7.14 (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), (ii) clause (a) of the foregoing shall not apply to customary provisions in leases and other agreements restricting the assignment thereof and (iii) clause (b) of the foregoing shall not apply to (A) customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, or (B) restrictions and conditions imposed by agreements governing Indebtedness of any Subsidiary in existence at the time such Subsidiary became a Subsidiary and otherwise

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permitted under Section 7.01(f) (but shall apply to any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition), provided that such restrictions and conditions apply only to such Subsidiary.

     SECTION 7.15. Gas Balancing Agreements and Advance Payments Contracts. The Borrower will not (a) permit to exist any Material Gas Imbalance or (b) permit the aggregate amount of the Advance Payments received by the Credit Parties under the Advance Payment Contracts which have not been satisfied by delivery of production at any time to exceed $300,000.

ARTICLE VIII

Events of Default

     SECTION 8.01. Listing of Events of Default. Each of the following events or occurrences described in this Section shall constitute an “Event of Default”:

     (a) the Borrower shall fail to pay when due any principal of any Loan;

     (b) the Borrower shall fail to pay when due accrued interest on any Loan or any fees or any other amount payable hereunder, and such failure shall continue for a period of five days following the due date thereof;

     (c) the Borrower shall fail to observe or perform any covenant or agreement contained in Section 5.01(h), 5.01(i), 5.01(j) or 5.04(a) (with respect to the existence of the Borrower) or in Article VI or VII;

     (d) any Loan Party shall fail to observe or perform any covenant or agreement contained in this Agreement or any other Loan Document (other than those referenced in clause (a), (b) or (c) above) and such failure continues for a period of 30 days after the earlier of (i)  the date any Authorized Officer of any Loan Party acquires knowledge of such failure or (ii)  written notice of such failure has been given to any Loan Party by Administrative Agent or any Lender;

     (e) any representation, warranty, certification or statement made or deemed to have been made by any Loan Party in this Agreement or any other Loan Document, or any certificate, financial statement or other document delivered pursuant to this Agreement or any other Loan Document, shall prove to have been incorrect in any material respect when made or deemed made;

     (f) (i) any Credit Party shall fail to make one or more payments when due on any Material Indebtedness of such Person, which failure continues uncured or unwaived; (ii) any event or condition shall occur and be continuing that results in any Material Indebtedness (other than any First Lien Permitted Indebtedness) becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any such Material Indebtedness or any trustee or agent on its or their behalf, or, in the case of any Hedging Agreement, the applicable counterparty, to cause such Material Indebtedness to become due, or to require

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the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity or, in the case of any Hedging Agreement, to cause the termination thereof; or (iii) any event or condition shall occur and be continuing that (A) results in any First Lien Permitted Indebtedness becoming due prior to its scheduled maturity or (B) enables or permits the holder or holders of any such First Lien Permitted Indebtedness or any agent on its or their behalf, to cause First Lien Permitted Indebtedness to become due, or to require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided, however, that, in the case of this clause (iii)(B), the occurrence of any “Event of Default” (however denominated) under and as defined in any First Lien Credit Agreement or any other definitive agreement governing or evidencing any First Lien Permitted Indebtedness (a “First Lien Event of Default”) shall constitute an Event of Default under this clause (f) only after a period 45 days has elapsed since the earlier of (1) notice of such First Lien Event of Default from the administrative agent or any lender under such First Lien Credit Agreement or other definitive agreement to the Borrower or any other Credit Party and (2) the date an Authorized Officer of the Borrower or any other Credit Party acquires knowledge of such First Lien Event of Default; provided further that clauses (ii) and (iii) above shall not apply to (x) secured Indebtedness becoming due as a result of the voluntary sale or transfer of the assets securing such Indebtedness, or the occurrence of any other event or condition (other than an “event of default”, however denominated) that requires a prepayment or a redemption of, or the making of an offer to prepay or redeem, any Indebtedness pursuant to the terms of the definitive documentation governing or evidencing such Indebtedness as in effect prior to the occurrence of such event or condition, or (y) any Indebtedness becoming due as a result of a refinancing thereof permitted under Section 7.01;

     (g) any Credit Party shall commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency or other similar Governmental Rule now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or shall consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or shall make a general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due or shall admit in writing its inability to pay its debts as they become due or shall admit to any of the circumstances, facts or events in this clause (g) or clause (h) below, or shall take any corporate, partnership or limited liability company action to authorize any of the foregoing;

     (h) an involuntary case or other proceeding shall be commenced against any Credit Party seeking liquidation, reorganization, dissolution, winding up, or other similar relief (including re-composition or readjustment) with respect to it or its debts under any bankruptcy, insolvency or other similar Governmental Rule now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed for a period of 60 consecutive days; or an order for relief shall be entered against any Credit Party under the Federal Bankruptcy Code as now or hereafter in effect;

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     (i) one or more final judgments or orders (not paid or fully covered by insurance as to which the relevant insurance company has acknowledged coverage and a copy of such acknowledgement has been delivered to the Administrative Agent) for the payment of money aggregating in excess of $16,500,000 shall be rendered against any Credit Party and such judgment or order shall continue unsatisfied or unstayed for a period of 60 consecutive days, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Credit Party to enforce any such judgment;

     (j) any event occurs with respect to any Plan or Plans pursuant to which (i) any Credit Party and/or any ERISA Affiliate incur a liability due and owing at the time of such event, without existing funding therefor, for benefit payments under such Plan or Plans in excess of $16,500,000; or (ii) any Credit Party, any ERISA Affiliate, or any other “party-in-interest” or “disqualified person,” as such terms are defined in section 3(14) of ERISA and section 4975(e)(2) of the Code, shall engage in transactions which in the aggregate would reasonably be likely to result in a direct or indirect liability to any Credit Party or any ERISA Affiliate in excess of $16,500,000 under section 409 or 502 of ERISA or section 4975 of the Code;

     (k) this Agreement or any other Loan Document shall cease to be in full force and effect or shall be declared null and void or the validity or enforceability thereof shall be contested or challenged by any Loan Party, or any Loan Party shall deny that it has any further liability or obligation under any of the Loan Documents to which it is a party, or any Lien created by the Loan Documents shall for any reason (other than the release thereof in accordance with the Loan Documents) cease to be, or shall be asserted by any Loan Party not to be, a valid and perfected Lien upon any of the Collateral purported to be covered thereby;

     (l) a Change of Control shall occur; or

     (m) any Guarantee under the Subsidiary Guarantee Agreement is for any reason (other than a release in accordance with the Loan Documents) partially or wholly revoked or invalidated, or otherwise ceases to be in full force and effect in any material respect, or any Subsidiary Guarantor or any other Loan Party contests in any manner the validity or enforceability thereof or denies that such Subsidiary Guarantor has any further liability or obligation thereunder.

     SECTION 8.02. Action if Bankruptcy. If any of the Events of Default specified in Section 8.01(g) or 8.01(h) shall occur, then without any notice to any Loan Party or any other act by the Administrative Agent or Lenders, the principal amount of all outstanding Loans and all other Term Obligations hereunder shall automatically be and become immediately due and payable, without demand, protest or presentment or notice of any kind, all of which are hereby expressly waived by the Borrower and the Subsidiaries. Without limiting the foregoing, the Administrative Agent and the Lenders shall be entitled to exercise any and all other remedies available to them under the Loan Documents and applicable law.

     SECTION 8.03. Action if Other Event of Default. If any of the Events of Default (other than any Event of Default specified in Section 8.01(g) or 8.01(h)) shall occur for any reason,

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whether voluntary or involuntary, and be continuing, the Required Lenders may, by notice to the Borrower, declare all of the outstanding principal amount of the Loans and all other Term Obligations hereunder to be due and payable, whereupon the full unpaid amount of such Loans and other obligations shall be and become immediately due and payable, without demand, protest or presentment or notice of any kind, all of which are hereby waived by the Borrower and the Subsidiaries. Without limiting the foregoing, the Administrative Agent and the Lenders shall be entitled to exercise any and all other remedies available to them under the Loan Documents and applicable law.

ARTICLE IX

Administrative Agent

     Each of the Lenders hereby irrevocably appoints Credit Suisse to serve as administrative agent and collateral agent under the Loan Documents, and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms of the Loan Documents, together with such actions and powers as are reasonably incidental thereto. The provisions of this Article are solely for the benefit of the Administrative Agent and the Lenders, and, except as expressly set forth in this Article, none of the Borrower or any other Loan Party shall have any rights as a third party beneficiary of any such provisions.

     The Person serving as the Administrative Agent shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Administrative Agent, and such Person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrower or any Subsidiary or other Affiliate thereof as if such Person were not an Administrative Agent hereunder and without any duty to account therefor to the Lenders.

     The Administrative Agent shall not have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (b) the Administrative Agent shall not have any duty to take any discretionary action or to exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Administrative Agent is required to exercise following its receipt of written instructions from the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02); provided that the Administrative Agent shall not be required to take any action that, in its opinion, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and (c) except as expressly set forth in the Loan Documents, the Administrative Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to the Borrower or any of the Subsidiaries that is communicated to or obtained by the Person serving as Administrative Agent or any of its Related Parties in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith to be necessary, under the circumstances as

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provided in Section 10.02) or in the absence of its own gross negligence or willful misconduct (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT THE ADMINISTRATIVE AGENT BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL). The Administrative Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Administrative Agent by the Borrower or a Lender, and the Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document or the occurrence of any Default, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document, or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent or satisfaction of any condition that expressly refers to the matters described therein being acceptable or satisfactory to the Administrative Agent.

     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person or otherwise authenticated by the proper Person (including, if applicable, an Authorized Officer or a Financial Officer of such Person). The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person (including, if applicable, an Authorized Officer or a Financial Officer of such Person), and shall not incur any liability for relying thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the Borrower), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts.

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

     Subject to the appointment and acceptance of a successor Administrative Agent as provided in this paragraph, the Administrative Agent may resign at any time by notifying the Lenders and the Borrower. Upon any such resignation, the Required Lenders shall have the right, with the consent of the Borrower (unless an Event of Default has occurred and is continuing), not to be unreasonably withheld, delayed or conditioned, to appoint a successor. If no successor shall have been so appointed by the Required Lenders, with such consent of the

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Borrower if so required, and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, with the consent of the Borrower (unless an Event of Default has occurred and is continuing), not to be unreasonably withheld, delayed or conditioned, on behalf of the Lenders, appoint a successor Administrative Agent which shall be a commercial bank organized under the laws of the United States having combined capital and surplus of at least $100,000,000, or an Affiliate of any such bank. Upon the acceptance of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder (other than under Section 10.12) and under the other Loan Documents. The fees payable by the Borrower to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the Administrative Agent’s resignation hereunder, the provisions of this Article and Section 10.03 shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while it was acting as Administrative Agent.

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

     Each Lender, by delivering its signature page to this Agreement and funding its Loans on the date hereof, or delivering its signature page to an Assignment and Acceptance pursuant to which it shall become a Lender hereunder, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be delivered to, or be approved by or satisfactory to, the Administrative Agent or the Lenders on the date hereof.

     No Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee of the Term Obligations, it being understood and agreed that all powers, rights and remedies under the Loan Documents may be exercised solely by the Administrative Agent on behalf of the Secured Parties in accordance with the terms thereof. In the event of a foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Administrative Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and the Administrative Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Required Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment

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of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Term Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent on behalf of the Secured Parties at such sale or other disposition. Each Secured Party, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Term Obligations provided under the Loan Documents, to have agreed to the foregoing provisions.

     Notwithstanding anything herein to the contrary, neither the Arranger nor any Person named on the cover page of this Agreement as a Syndication Agent shall have any duties or obligations under this Agreement or any other Loan Document (except in its capacity, as applicable, as a Lender), but all such Persons shall have the benefit of the indemnities provided for hereunder.

ARTICLE X

Miscellaneous

     SECTION 10.01. Notices. (a) Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile, as follows:

(i) if to the Borrower, to:
Quicksilver Resources Inc.
777 West Rosedale Street, Suite 300
Fort Worth, Texas 76104
Attention: MarLu Hiller
Telephone: (817) 665-4860
Facsimile: (817) 665-5016
Email: mhiller@qrinc.com

(ii) if to the Administrative Agent, to:
Credit Suisse
Eleven Madison Avenue
New York, NY 10010
Attention: Agency Group
Facsimile: (212) 322-2291
Email: agency.loanops@credit-suisse.com

(iii) if to any Lender, to it at its address (or facsimile number) provided to the Administrative Agent and the Borrower or as set forth in its Administrative Questionnaire.

     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by electronic communications (including email and Internet and intranet websites)

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pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices under Article II to any Lender if such Lender has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided further that approval of such procedures may be limited to particular notices or communications.

     (c) Any party hereto may change its address or facsimile number for notices and other communications hereunder by written notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by facsimile or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section or in accordance with the latest unrevoked direction from such party given in accordance with this Section.

     SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the Administrative Agent or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Administrative Agent and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent or any Lender may have had notice or knowledge of such Default at the time.

     (b) None of this Agreement, any other Loan Document or any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders or by the Borrower and the Administrative Agent with the consent of the Required Lenders, or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the relevant Loan Parties thereto and the Required Lenders or by the relevant Loan Parties thereto and the Administrative Agent with the consent of the Required Lenders; provided that (i) any provision of this Agreement or any other Loan Document may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent to cure any ambiguity, omission, defect or inconsistency so long as, in each case, the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Required Lenders stating that the Required Lenders object to such amendment; and (ii) no such agreement may (A) increase the Commitment of any Lender without the written consent of such Lender, (B) reduce, or otherwise release the Borrower from

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its obligation to pay, the principal amount of any Loan or reduce the rate of interest thereon, or reduce any prepayment fees payable hereunder, without the written consent of each Lender affected thereby, (C) postpone the scheduled maturity date of any Loan, or the date of any scheduled payment of the principal amount of any Loan under Section 2.08, or the scheduled date of payment of any interest thereon or of any fees payable under Section 2.07(a) or any prepayment fees payable under Section 2.09(a), or reduce the amount of, waive or excuse any such payment, without the written consent of each Lender affected thereby, (D) change Section 2.17(a) or 2.17(b) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender, (E) change any of the provisions of this Section or the percentage set forth in the definition of the term “Required Lenders” or any other provision of any Loan Document specifying the number or percentage of Lenders required to waive, amend or modify any rights of the Lenders thereunder or make any determination or grant any consent thereunder, without the written consent of each Lender, (F) except as expressly provided in Section 10.17 or the Intercreditor Agreement, release all or substantially all the value of the Guarantees under the Subsidiary Guarantee Agreement, or limit liability in respect of such Guarantees in a manner that foregoes all or substantially all the value of such Guarantees, without the written consent of each Lender, or (G) except as expressly provided in Section 10.17 or the Intercreditor Agreement, release all or substantially all of the Collateral from the Liens of the Security Documents, without the written consent of each Lender; provided further that no such agreement shall amend, waive, modify or otherwise affect the rights or duties of the Administrative Agent without the prior written consent of the Administrative Agent.

     SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall pay (i) all legal, printing, recording, syndication, travel, advertising and other reasonable and substantiated out-of-pocket expenses incurred by the Administrative Agent and the Arrangers, including the reasonable and substantiated fees, charges and disbursements of one outside counsel and of local and special counsel for the Administrative Agent and the Arrangers, in connection with the syndication of the credit facility provided for herein, the preparation, execution, delivery and administration of this Agreement, the other Loan Documents and each other document or instrument relevant to this Agreement or any other Loan Document and any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) the filing, recording, refiling or rerecording of the Mortgages and any other Security Documents and/or any Uniform Commercial Code financing statements relating thereto and all amendments, supplements and modifications to, and all releases and terminations of, any thereof and any and all other documents or instruments of further assurance required to be filed or recorded or refiled or rerecorded by the terms hereof or of any Mortgage or any other Security Document, and (iii) all reasonable and substantiated out-of-pocket expenses incurred by the Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel for the Administrative Agent or any Lender, reasonably incurred in connection with the enforcement or protection of its rights in connection with the Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including all such reasonable and substantiated out-of-pocket expenses reasonably incurred during any workout, restructuring or negotiations in respect of such Loans.

     (b) EXCEPT TO THE EXTENT REIMBURSEMENT OF EXPENSES IS LIMITED BY SECTION 10.03(A) TO REIMBURSEMENT OF EXPENSES OF ONLY

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CERTAIN PARTIES, THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH ARRANGER AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF ANY LOAN DOCUMENT OR ANY OTHER AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY, THE PERFORMANCE BY THE PARTIES TO THE LOAN DOCUMENTS OF THEIR RESPECTIVE OBLIGATIONS THEREUNDER OR THE CONSUMMATION OF THE FINANCING TRANSACTIONS OR ANY OTHER TRANSACTIONS CONTEMPLATED HEREBY, (II) ANY LOAN OR THE USE OF THE PROCEEDS THEREFROM, (III) ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE BORROWER OR ANY OF THE SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF THE SUBSIDIARIES, OR (IV) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND WHETHER INITIATED AGAINST OR BY ANY PARTY TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, ANY AFFILIATE OF ANY OF THE FOREGOING OR ANY THIRD PARTY (AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO); PROVIDED THAT SUCH INDEMNITY AND RELEASE SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES (A) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL), (B) EXCEPT WHERE SUCH INDEMNITEE IS THE ADMINISTRATIVE AGENT (OR ANY SUB-AGENT THEREOF) OR A RELATED PARTY THEREOF, RELATE TO CLAIMS BETWEEN OR AMONG THE LENDERS OR ANY OF THEIR AFFILIATES, SHAREHOLDERS, PARTNERS OR MEMBERS (OTHER THAN ANY SUCH CLAIMS ARISING FROM A BREACH BY ANY LOAN PARTY OF ITS OBLIGATIONS UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT) OR (C) EXCEPT WHERE SUCH INDEMNITEE IS THE ADMINISTRATIVE AGENT (OR ANY SUB-AGENT THEREOF) OR A RELATED PARTY THEREOF, ARE IN RESPECT OF ANY PROPERTY FOR ANY OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF ANY LENDER

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DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR OTHERWISE).

     (c) To the extent that the Borrower fails to pay any amount required to be paid by the Borrower to the Administrative Agent (or any sub-agent thereof) or any Related Party of any of the foregoing under paragraph (a) or (b) of this Section (and without limiting its obligation to do so), each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent) such Lender’s pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or such sub-agent) in its capacity as such, or against any Related party of any of the foregoing in connection with such capacity. For purposes hereof, a Lender’s “pro rata share” shall be determined based upon its share of the sum (without duplication) of the total Loans at the time.

     (d) To the extent permitted by applicable law, no party hereto shall assert, or permit any of its Related Parties to assert, and each party hereby waives, any claim against any other party (i) for any damages arising from the use by others of information or other materials obtained through electronic telecommunications or other information transmission systems (including the internet) or (ii) on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or the use of the proceeds thereof.

     (e) All amounts due under this Section shall be payable not later than 30 days after written demand is received by Borrower therefor.

     SECTION 10.04. Successors and Assigns. (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants (to the extent provided in this Section), the Arrangers and, to the extent expressly contemplated hereby, the Related Parties of any of the Administrative Agent, the Arrangers and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

     (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it), with notice to the Borrower (failure to provide or delay in providing such notice shall not invalidate such assignment) and the prior written consent of the Administrative Agent (not to be unreasonably withheld, delayed or conditioned); provided,

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however, that no consent of the Administrative Agent shall be required in the case of an assignment of a Lender to any other Lender, an Affiliate of a Lender or a Related Fund of a Lender; and provided further that (i) the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall be in an integral multiple of, and not less than, $1,000,000 (or, if less, the entire remaining amount of such Lender’s Commitment or Loans); provided that simultaneous assignments by two or more Related Funds shall be combined for purposes of determining whether the minimum assignment requirement is met; (ii) the parties to each assignment shall (A) execute and deliver to the Administrative Agent an Assignment and Acceptance via an electronic settlement system acceptable to the Administrative Agent or (B) if previously agreed with the Administrative Agent, manually execute and deliver to the Administrative Agent an Assignment and Acceptance, and, in each case, shall pay to the Administrative Agent a processing and recordation fee of $3,500 (which fee may be waived or reduced in the sole discretion of the Administrative Agent), and (iii) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire (in which the assignee shall designate one or more credit contacts to whom all syndicate-level information (which may contain material non-public information about the Loan Parties and their Related Parties or their respective securities) will be made available and who may receive such information in accordance with the assignee’s compliance procedures and applicable laws, including Federal and state securities laws) and all applicable tax forms. Upon acceptance and recording pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance, (1) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and (2) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.14, 2.15, 2.16 and 10.03, as well as to any fees accrued for its account and not yet paid, and be subject to the terms of Section 10.12). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

     (c) The Administrative Agent shall maintain at one of its offices in New York a copy of each Assignment and Acceptance delivered to it and records of the names and addresses of the Lenders, and the Commitment of, and principal amount 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 absent manifest error, 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 and the other Loan Documents, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower and, as to entries pertaining to it, any Lender, at any reasonable time and from time to time upon reasonable prior notice.

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

     (e) Any Lender may, without the consent of the Borrower or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, and (iii) the Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in the proviso to Section 10.02(b) that affects such Participant or requires the approval of all the Lenders. Subject to paragraph (f) of this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections 2.14, 2.15 and 2.16 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Sections 10.08 and 10.12 as though it were a Lender; provided such Participant agrees to be subject to Section 2.16(b) as though it were a Lender.

     (f) A Participant shall not be entitled to receive any greater payment under Sections 2.14, 2.15 or 2.16 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant. A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.16 unless the Borrower is notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrower, to comply with Section 2.16(e) as though it were a Lender.

     (g) Any Lender may, without consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest on all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or, in the case of a Lender organized in a jurisdiction outside of the United States, a comparable Governmental Authority, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

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     SECTION 10.05. Survival. All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any Arranger or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitments have not expired or terminated. The provisions of Section 2.14, 2.15, 2.16, 10.03 and 10.12 and Article IX shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitments or the termination of this Agreement or any provision hereof.

     SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof (but do not supersede any provisions of the Engagement Letter or any separate letter agreements with respect to fees payable to the Administrative Agent that do not by the terms of such documents terminate upon the effectiveness of this Agreement, all of which provisions shall remain in full force and effect). Except as provided in Article IV, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile (or other customary electronic transmission acceptable to the Administrative Agent) shall be effective as delivery of a manually executed counterpart of this Agreement.

     SECTION 10.07. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

     SECTION 10.08. Right of Setoff. If an Event of Default shall have occurred and be continuing, each of the Administrative Agent, the Lenders and their Affiliates is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held, and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of, the Borrower or any other Loan Party against any and all the obligations of the Borrower now or hereafter existing under this Agreement held by such Lender, irrespective of

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whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured; provided, however, that any such set-off and application shall be subject to the provisions of Section 2.17 and the Intercreditor Agreement. As security for such obligations, the Borrower hereby grants to the Administrative Agent and each Lender a continuing security interest in any and all balances, credits, deposits, accounts or moneys of the Borrower and the other Loan Parties then or thereafter maintained with the Administrative Agent and such Lenders. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

     SECTION 10.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (OTHER THAN THOSE CONTAINING A CONTRARY EXPRESS CHOICE OF LAW PROVISION) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

     (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

     (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

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     (d) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.01. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY OF THE PARTIES HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; PROVIDED THAT NOTICE OF THE USE OF ANY SUCH ALTERNATIVE MEANS OF SERVICE SHALL BE PROVIDED TO EACH AFFECTED PARTY IN THE MANNER PROVIDED IN SECTION 10.01.

     SECTION 10.10. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

     SECTION 10.11. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

     SECTION 10.12. Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its Related Parties, including accountants, legal counsel, petroleum engineers or consultants and other agents and advisors, it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential, (b) to the extent requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the extent required by applicable law or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies under this Agreement or any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing confidentiality undertakings substantially similar to those of this Section, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its Related Parties) to any swap or derivative transaction relating to the Borrower or any other Subsidiary and its obligations, (g) with the consent of the Borrower or (h) to the extent such Information (i) becomes publicly available other than as a result of a breach of this Section or (ii) becomes available to the Administrative Agent, any Lender or any Affiliate of any of the foregoing on a nonconfidential basis from a source other than the Borrower or any Subsidiary. For purposes of

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this Section, “Information” means all information received from the Borrower or any Subsidiary relating to the Borrower or any Subsidiary or its businesses, other than any such information that is available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure by the Borrower or any Subsidiary. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information.

     SECTION 10.13. Interest Rate Limitation. (a) Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts that are treated as interest on such Loan under applicable law (collectively the “Charges”), shall exceed the maximum lawful rate (the “Highest Lawful Rate”) that may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Highest Lawful Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Highest Lawful Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

     (b) For purposes of Chapter 303 of the Texas Finance Code, as amended, to the extent applicable, the Borrower agrees that the Highest Lawful Rate shall be the “indicated (weekly) rate ceiling” as defined in such Chapter; provided that each Lender and the Administrative Agent may also rely, to the extent permitted by applicable law, on alternative maximum rates of interest under other laws applicable to such Lender or the Administrative Agent, if greater.

     SECTION 10.14. PATRIOT Act Notice. Each Lender that is subject to the PATRIOT Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower and each other Loan Party that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies the Borrower and each other Loan Party, which information includes the name and address of the Borrower and each other Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify the Borrower and each other Loan Party in accordance with the PATRIOT Act.

     SECTION 10.15. No Fiduciary Relationship. The Borrower, on behalf of itself and the Subsidiaries, agrees that in connection with all aspects of the transactions contemplated hereby and any communications in connection therewith, the Borrower, the Subsidiaries and their Affiliates, on the one hand, and the Administrative Agent, the Lenders and their Affiliates, on the other hand, will have a business relationship that does not create, by implication or otherwise, any fiduciary duty on the part of the Administrative Agent, the Lenders or their Affiliates, and no such duty will be deemed to have arisen in connection with any such transactions or communications.

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     SECTION 10.16. Intercreditor Agreement. The Lenders acknowledge that obligations of the Borrower and the Subsidiaries under the First Lien Permitted Indebtedness and the Existing Senior Notes Documents, and certain obligations related thereto, will be secured by Liens on assets of the Borrower and the Subsidiaries that constitute Collateral. At the request of the Borrower, the Administrative Agent shall enter into the Intercreditor Agreement establishing the relative rights of the Secured Parties and of the secured parties under the First Lien Permitted Facilities with respect to the Collateral. Each Lender hereby irrevocably (a) consents to the subordination of Liens provided for under the Intercreditor Agreement, (b) authorizes and directs the Administrative Agent to execute and deliver the Intercreditor Agreement and any documents relating thereto, in each case, on behalf of such Lender and without any further consent, authorization or other action by such Lender, (c) agrees that, upon the execution and delivery thereof, such Lender will be bound by the provisions of the Intercreditor Agreement as if it were a signatory thereto and will take no actions contrary to the provisions of the Intercreditor Agreement and (d) agrees that no Lender shall have any right of action whatsoever against the Administrative Agent as a result of any action taken by the Administrative Agent pursuant to this Section or in accordance with the terms of the Intercreditor Agreement. Each Lender hereby further irrevocably authorizes and directs the Administrative Agent to enter into such amendments, supplements or other modifications to the Intercreditor Agreement as are contemplated by Section 7.02 thereof in connection with any extension, renewal, refinancing or replacement of any First Lien Credit Agreement or any refinancing, in part but not in whole, of the Term Obligations, in each case, on behalf of such Lender and without any further consent, authorization or other action by such Lender. The Administrative Agent shall have the benefit of the provisions of Article IX with respect to all actions taken by it pursuant to this Section or in accordance with the terms of the Intercreditor Agreement to the full extent thereof.

     SECTION 10.17. Release of Liens and Guarantees. Upon any sale or other transfer by any Loan Party (other than to the Borrower or any other Loan Party) of any Collateral in a transaction permitted under this Agreement, or upon the effectiveness of any written consent to the release of the security interests created under any Security Document in any Collateral pursuant to Section 10.02, the security interests in such Collateral created by the Security Documents shall be automatically released; provided, in each case, that the security interests in such Collateral created by the First Lien Loan Documents or any successor definitive documentation for the First Lien Permitted Facilities shall have been, or shall concurrently therewith, be released. A Subsidiary that is a Loan Party shall automatically be released from its obligations under the Loan Documents, and all security interests created by the Security Documents in Collateral owned by such Subsidiary shall be automatically released, upon the consummation of any transaction permitted by this Agreement as a result of which such Subsidiary ceases to be a Subsidiary; provided that, (a) if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise; and (b) such Subsidiary shall have been, or shall concurrently therewith, be released from its obligations under the First Lien Loan Documents and any successor definitive documentation for the First Lien Permitted Facilities, and all security interests created by the First Lien Loan Documents and such other definitive documentation in Collateral owned by such Subsidiary shall have been, or shall concurrently therewith, be released. In connection with any termination or release pursuant to this Section, the Administrative Agent shall execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or

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release. Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.

     SECTION 10.18. Waiver of Consumer Credit Laws. Pursuant to Chapter 346 of the Texas Finance Code, as amended, the Borrower agrees that such Chapter 346 shall not govern or in any manner apply to the Loans.

     SECTION 10.19. Status of Term Obligations. (a) The Borrower represents, warrants and agrees that, so long as the Lenders are at all times banks or other institutional lenders, the Term Obligations will at all times constitute “Bank Indebtedness” under, and as defined in, each of the Existing Senior Notes Indenture and the Existing Subordinated Notes Indenture.

     (b) The Loans and other Term Obligations are hereby designated as “Senior Indebtedness” for purposes of each Existing Notes Indenture and as “Designated Senior Indebtedness” for purposes of the Existing Convertible Debentures Indenture and the Existing Subordinated Notes Indenture. In the event that the Borrower or any other Loan Party shall at any time issue or have outstanding any other Indebtedness that, by its terms, is subordinated in right of payment to any other Indebtedness, the Borrower shall take or cause such other Loan Party to take all such actions as shall be necessary to cause the Term Obligations to constitute senior indebtedness (however denominated) in respect of such subordinated Indebtedness and to enable the Lenders to have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such Subordinated Indebtedness. Without limiting the foregoing, the Term Obligations are hereby designated as “senior indebtedness” and as “designated senior indebtedness” for purposes of each indenture or other agreement or instrument under which such other subordinated Indebtedness is outstanding and are further given all such other designations as shall be required under the terms of any such subordinated Indebtedness in order that the Lenders may have and exercise any payment blockage or other remedies available or potentially available to holders of senior indebtedness under the terms of such subordinated Indebtedness.

     SECTION 10.20. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

[Signatures begin on the following page]

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

QUICKSILVER RESOURCES INC.,
	by
		/s/ Philip Cook
		Name:	Philip W. Cook
		Title:	Senior Vice President–Chief Financial Officer

CREDIT SUISSE, Cayman Islands Branch, individually and as Administrative Agent,
	by
		/s/ Vanessa Gomez
		Name:	Vanessa Gomez
		Title:	Director
	by
		/s/ Nupur Kumar
		Name:	Nupur Kumar
		Title:	Associate

SIGNATURE PAGE TO THE CREDIT AGREEMENT

DATED AS OF AUGUST 8, 2008 OF
QUICKSILVER RESOURCES INC.

JPMORGAN CHASE BANK, N.A.,
	by
		/s/ Wm. Mark Cranmer
		Name:	Wm. Mark Cranmer
		Title:	Senior Vice President

EX-99.1

Exhibit 99.1

     SECURITY AGREEMENT dated as of August 8, 2008 (this “Agreement”), among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Borrower”), the SUBSIDIARIES of the Borrower whose signatures appear below or who in the future become parties hereto as provided in Section 7.11 (collectively, and together with the Borrower, the “Grantors”), and CREDIT SUISSE, Cayman Islands Branch (“Credit Suisse”), in its capacity as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Article I below.

W I T N E S S E T H:

     WHEREAS, the Borrower intends to acquire (the “Acquisition”) certain producing, leasehold, royalty, midstream and other assets associated with the Barnett Shale formation in Texas.

     WHEREAS, in connection with the Acquisition, the Borrower, the Lenders and Credit Suisse, as Administrative Agent, are entering into the Credit Agreement, under which the Borrower may obtain Loans in an aggregate principal amount not in excess of $700,000,000.

     WHEREAS, it is a condition precedent to the obligations of the Lenders to make Loans pursuant to the Credit Agreement that the Grantors create, in favor of the Collateral Agent, for the benefit of the Term Secured Parties, Liens on the Collateral as security for the indefeasible payment in full in cash and performance of the Term Obligations.

     WHEREAS, the Existing Senior Notes Indenture provides that the Grantors may not create, incur or suffer to exist Liens on the Collateral created under the Security Documents unless such Liens are “Permitted Liens” under and as defined in the Existing Senior Notes Indenture or, contemporaneously with the incurrence of such Liens, effective provision is made to secure the Existing Senior Notes Obligations equally and ratably with the indebtedness secured by such Liens for so long as such indebtedness is so secured.

     WHEREAS, each Grantor has duly authorized the execution, delivery and performance of this Agreement.

     WHEREAS, it is in the best interests of each Grantor to execute this Agreement inasmuch as such Grantor will derive substantial direct and indirect benefits from the making of Loans to the Borrower by the Lenders pursuant to the Credit Agreement.

     NOW THEREFORE, in consideration of the foregoing and the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and in order to induce the Lenders to make Loans pursuant to the Credit Agreement, the parties hereto agree as follows:

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ARTICLE I
Definitions

     SECTION 1.01. Certain Terms. The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

     “Acquisition” has the meaning given to such term in the recitals.

     “Agreement” has the meaning given to such term in the preamble.

     “Borrower” has the meaning given to such term in the preamble.

     “Collateral” has the meaning given to such term in Section 2.01; provided, that, for purposes of Articles V and VI and Sections 4.07, and 7.13, the term “Collateral” shall have the meaning given thereto in the Credit Agreement.

     “Collateral Account” has the meaning given to such term in Section 4.01(b).

     “Collateral Agent” has the meaning given to such term in the preamble.

     “Combined Loan Documents” means the Loan Documents and the Existing Senior Notes Documents.

     “Contingent Obligations” means contingent obligations for indemnification, expense reimbursement, tax gross-up or yield protection as to which no claim has been made.

     “Credit Agreement” means the Credit Agreement dated as of August 8, 2008, among the Borrower, the Lenders and Credit Suisse, as Administrative Agent.

     “Credit Suisse” has the meaning given to such term in the preamble.

     “Equipment” has the meaning given to such term in Section 2.01(a).

     “Excluded Collateral” means the collective reference to:

     (a) any vehicles, or any equipment the ownership of which is evidenced by certificate(s) of title, now or hereafter owned by any Grantor;

     (b) any Hedging Agreements to which any Grantor is now or hereafter party, or any computer and software licenses now or hereafter held by any Grantor, that is, in each case, nonassignable by its terms without the consent of the other party or parties thereto or the licensor or sublicensor thereof, as applicable (other than to the extent that such terms would be rendered ineffective pursuant to the U.C.C., including Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. of any relevant jurisdiction, and other than to the extent all necessary consents to grant and perfection of the Collateral Agent’s Liens thereon have been obtained, and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such Hedging Agreements or licenses shall cease to constitute Excluded Collateral);

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     (c) any “Pledged Collateral” as defined in the Pledge Agreement;

     (d) any voting Equity Interests in a Foreign Subsidiary to the extent such Equity Interests represent more than 65% of the total combined voting power of all classes of voting Equity Interests of such Foreign Subsidiary; and

     (e) (i) property subject to Liens permitted by clause (o) of the definition of the term “Permitted Encumbrances” in the Credit Agreement solely in the event and to the extent that a grant or perfection of a Lien in favor of the Collateral Agent on any such property is prohibited by or results in a breach or termination of, or constitutes a default under, the documentation governing such Liens or the obligations secured by such Liens (other than to the extent that such terms would be rendered ineffective pursuant to the U.C.C., including Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. of any relevant jurisdiction, and other than to the extent all necessary consents to the grant and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such property shall cease to constitute Excluded Collateral, (ii) any personal property lease, contract, permit, license, franchise or letter of credit right solely (A) with respect to contracts and other agreements to the extent entered into prior to the date hereof and (B) in the event and to the extent that a grant or perfection of a Lien in favor of the Collateral Agent on such personal property lease, contract, permit, license, franchise or letter of credit right is prohibited by law or results in a breach or termination of, or constitutes a default under, any such personal property lease, contract, permit, license, franchise or letter of credit right (other than to the extent that such law or terms would be rendered ineffective pursuant to the U.C.C., including Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. of any relevant jurisdiction, and other than to the extent all necessary consents to the grant and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such law or terms or the obtainment of such consents, such personal property lease, contract, permit, license, franchise or letter of credit right shall cease to constitute Excluded Collateral and (iii) any fee interest in real property.

     “Existing Senior Notes Obligations” means Indebtedness (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) due with respect to (a) the Existing Senior Notes and (b) the Subsidiary Guarantee (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) of any Grantor.

     “Existing Senior Notes Secured Parties” has the meaning given to the term “Holders”, as defined in the Existing Senior Notes Indenture as in effect on the date hereof.

     “First Lien Obligations” has the meaning given to such term in the Intercreditor Agreement.

     “Grantors” has the meaning given to such term in the preamble.

     “Indemnitees” has the meaning given to such term in Section 7.02(a).

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     “Intercreditor Agreement” means the Intercreditor Agreement dated as of August 8, 2008, among the Borrower, the other Grantors, JPMorgan Chase Bank, N.A., as the First Lien Collateral Agent (as defined therein), and Credit Suisse, as the Second Lien Collateral Agent (as defined therein).

     “Inventory” has the meaning given to such term in Section 2.01(b).

     “Perfection Certificate” means the Perfection Certificate delivered by the Borrower on the date hereof pursuant to Article IV of the Credit Agreement, together with all schedules and attachments thereto.

     “Receivables” has the meaning given to such term in Section 2.01(c).

     “Related Contracts” has the meaning given to such term in Section 2.01(c).

     “Secured Obligations” means, collectively, the Term Obligations and the Existing Senior Notes Obligations.

     “Secured Parties” means, collectively, the Term Secured Parties and the Existing Senior Notes Secured Parties.

     “Term Secured Parties” means, collectively, (a) the Lenders, (b) the Administrative Agent (including in its capacity as the Collateral Agent hereunder), (c) each other Person to whom any of the Term Obligations (including indemnification obligations) is owed and (d) the successors and assigns of each of the foregoing.

     “U.C.C.” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in the State of Texas or in any other applicable jurisdiction.

     SECTION 1.02. Terms Generally. Unless otherwise defined herein, capitalized terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.

     SECTION 1.03. U.C.C. Definitions. Unless otherwise defined herein, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings.

     SECTION 1.04. Rules of Construction. The rules of construction set forth in Section 1.02 of the Credit Agreement shall also apply to this Agreement, mutatis mutandis.

ARTICLE II
Security Interest

     SECTION 2.01. Grant of Security Interest. Each Grantor hereby pledges, hypothecates, assigns, charges, mortgages, delivers and transfers to the Collateral Agent, for the benefit of the Secured Parties, and hereby grants to the Collateral Agent, for the benefit of the Secured Parties, a continuing security interest in all of such Grantor’s right, title and interest, whether now

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existing or hereafter arising or acquired, in and to the following property (any and all of the following being the “Collateral”):

     (a) all equipment in all of its forms of any Grantor, including all machinery, apparatus, installation facilities and other tangible personal property, and all parts thereof and all accessions, additions, attachments, improvements, substitutions, replacements and proceeds thereto and therefor (any and all of the foregoing being the “Equipment”);

     (b) all inventory in all of its forms of any Grantor, wherever located, including (i) all oil, gas or other hydrocarbons and all products and substances derived therefrom, all raw materials and work in process therefor, finished goods thereof, and materials used or consumed in the manufacture or production thereof, (ii) all goods in which such Grantor has an interest in mass or a joint or other interest or right of any kind (including goods in which such Grantor has an interest or right as consignee) and (iii) all goods which are returned to or repossessed by such Grantor, and all accessions thereto, products thereof and documents therefor (any and all such inventory, materials, goods, accessions, products and documents being the “Inventory”);

     (c) all accounts, money, payment intangibles, deposit accounts (including the Collateral Accounts and all amounts on deposit therein and all cash equivalent investments carried therein and all proceeds thereof), contracts, contract rights, all rights constituting a right to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and general intangibles of any Grantor, whether or not earned by performance or arising out of or in connection with the sale or lease of goods or the rendering of services, including all moneys due or to become due in repayment of any loans or advances, and all rights of any Grantor now or hereafter existing in and to all security agreements, guaranties, leases, agreements and other contracts securing or otherwise relating to any such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and general intangibles (any and all such accounts, money, payment intangibles, deposit accounts, contracts, contract rights, rights to the payment of money, chattel paper, documents, documents of title, instruments, letters of credit, letter-of-credit rights and general intangibles being the “Receivables”, and any and all such security agreements, guaranties, leases, agreements and other contracts being the “Related Contracts”);

     (d) all books, correspondence, credit files, records, invoices, tapes, cards, computer runs, writings, data bases, information, paper and documents and other property relating to, used or useful in connection with, evidencing, embodying, incorporating or referring to, any of the foregoing in this Section 2.01;

     (e) all Governmental Approvals, including any permits, to the extent a security interest may be granted therein; provided that any Governmental Approval that by its terms or by operation of law would be void, voidable, terminable or revocable if mortgaged, pledged or assigned hereunder is expressly excepted and excluded from the Liens and terms of this Security Agreement, including the grant of security interest in this Section 2.01 (other than to the extent that such terms or law would be rendered

6

ineffective pursuant to the U.C.C., including Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. of any relevant jurisdiction, and other than to the extent all necessary consents to grant and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or law or the obtainment of such consents, such Governmental Approval shall cease to be so excepted and excluded;

     (f) all interest rate swap agreements, interest rate cap agreements and interest rate collar agreements, and all other agreements or arrangements designed to protect any Grantor against fluctuations in interest rates or currency exchange rates and all commodity hedge, commodity swap, exchange, forward, future, floor, collar or cap agreements, fixed price agreements and all other agreements or arrangements designed to protect such Grantor against fluctuations in commodity prices (including Hedging Agreements);

     (g) to the extent not included in the foregoing, all bank accounts, investment property, fixtures and supporting obligations;

     (h) all of any Grantor’s other assets, property and rights of every kind and description and interests therein to the extent not included in the foregoing, including all “Accounts”, “Certificated Securities”, “Chattel Paper”, “Commercial Tort Claims” set forth on Schedule I (as such Schedule may be supplemented from time to time pursuant to Section 4.03), “Commodity Accounts”, “Commodity Contracts”, “Deposit Accounts”, “Documents”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letters of Credit”, “Letter-of-Credit Rights”, “Money”, “Proceeds”, “Securities”, “Securities Account”, “Security Entitlements”, “Supporting Obligations” and “Uncertificated Securities” as such terms are defined in the U.C.C., but excluding copyrights, patents, trademarks and other intellectual property; and

     (i) all accessions, substitutions, replacements, products, offspring, rents, issues, profits, returns, income and proceeds of and from any and all of the foregoing Collateral (including proceeds which constitute property of the types described in any of the foregoing clauses and proceeds deposited from time to time in any lockbox of any Grantor and, to the extent not included in the foregoing, all payments under insurance (whether or not the Collateral Agent is the loss payee thereof), or any condemnation award, indemnity, warranty or guaranty, payable by reason of loss or damage to or otherwise with respect to any of the foregoing Collateral);

provided, however, that, notwithstanding anything to the contrary contained herein, the Collateral shall not include, and the Collateral Agent and the Secured Parties shall not by virtue of this Agreement have a Lien on, any Excluded Collateral.

     SECTION 2.02. Security for Secured Obligations. The Collateral secures the indefeasible payment in full in cash and performance of all the Secured Obligations now or hereafter existing, whether for principal, interest, costs, fees, expenses or otherwise.

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     SECTION 2.03. Continuing Security Interest. (a) This Agreement shall create a continuing security interest in the Collateral, and (i) shall remain in full force and effect until the payment in full in cash of all the Term Obligations (other than Contingent Obligations), (ii) shall be binding upon each Grantor and its successors, transferees and assigns and (iii) shall inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Secured Parties.

          (b) Upon the payment in full in cash of all the Term Obligations (other than Contingent Obligations), the security interest granted herein (including the security interest granted herein to secure the Existing Senior Notes Obligations) shall terminate with respect to all Collateral and all rights to the Collateral shall revert to the applicable Grantors.

          (c) The security interests in any Collateral created hereby shall automatically be released, and any Subsidiary that is a Grantor shall automatically be released from its obligations hereunder, in each case at the time or times and in the manner and to the extent set forth in Section 10.17 of the Credit Agreement or in the Intercreditor Agreement.

          (d) In connection with any termination or release pursuant to this Section 2.03, the Collateral Agent shall execute and deliver to any Grantor, at such Grantor’s expense, all documents that such Grantor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this paragraph shall be without recourse to or warranty by the Collateral Agent.

     SECTION 2.04. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each Grantor shall remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and shall perform all of its duties and obligations under such contracts and agreements, to the same extent as if this Agreement had not been executed; (b) the exercise by the Collateral Agent of any of its rights hereunder shall not release any Grantor from any of its duties or obligations under any contracts and agreements included in the Collateral; and (c) neither the Collateral Agent nor any other Secured Party shall have any obligation or liability under any such contracts or agreements included in the Collateral by reason of this Agreement, nor shall the Collateral Agent or any other Secured Party be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder, unless the Collateral Agent shall have agreed to assume the obligations of such Grantor thereunder.

     SECTION 2.05. Security Interest Absolute. All rights of the Collateral Agent hereunder, the security interests granted to the Collateral Agent, for the benefit of the Secured Parties, hereunder and all obligations of the Grantors hereunder shall be absolute and unconditional, irrespective of (a) any lack of validity, legality or enforceability of any Combined Loan Document; (b) the failure of any Secured Party (i) to assert any claim or demand or to enforce any right or remedy against any Grantor or any other Person (including any other guarantor) under the provisions of any Combined Loan Document or otherwise or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, any Secured Obligations or any other extension, compromise or renewal of any Secured Obligations; (d) any reduction, limitation, impairment or termination of any Secured Obligations

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for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Grantor hereby waives, to the extent permitted by applicable law, any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, unenforceability of, or any other event or occurrence affecting, any Secured Obligations; (e) any amendment to, rescission, waiver or other modification of, or any consent to departure from, any of the terms of any Combined Loan Document; (f) any addition, exchange, release, surrender, or non-perfection of any collateral (including the Collateral), or any amendment to or waiver or release of or addition to or consent to departure from any guaranty, for any Secured Obligations; or (g) any other circumstances which would otherwise constitute a defense available to, or a legal or equitable discharge of, any Grantor or any surety or guarantor in respect of any Secured Obligations or this Agreement.

     SECTION 2.06. Election of Remedies. If any Secured Party may, under applicable law, proceed to realize its benefits under this Agreement, any other Security Document or otherwise, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies for its benefit under this Agreement (it being understood and agreed that nothing in this Section 2.06 shall limit the provisions of Section 5.02). If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of the rights or remedies for its benefit, including its right to enter a deficiency judgment against any Grantor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Grantor hereby consents to such action by such Secured Party and waives any claim based upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Grantor might otherwise have had but for such action by such Secured Party.

ARTICLE III
Representations and Warranties

     Each Grantor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, as set forth in this Article III.

     SECTION 3.01. Perfection Certificate. The information set forth in the Perfection Certificate, including the exact legal name of each Grantor, is correct and complete as of the date hereof.

     SECTION 3.02. Ownership, No Liens, Validity, etc. Each Grantor owns the Collateral with respect to which it has purported to grant a security interest hereunder free and clear of Liens, except for Permitted Encumbrances. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording office, except such as may have been filed in favor of the Collateral Agent relating to this Agreement and except for any filings in respect of Permitted Encumbrances. This Agreement creates a valid security interest in the Collateral, securing the payment of the Secured Obligations, and, upon the proper filing of a U.C.C. financing statement with the Secretary of State of the jurisdiction of each Grantor’s organization, formation or incorporation, all filings necessary to perfect such security interest, to the extent such security interest can be perfected by the filing of a U.C.C.

9

financing statement, shall have been taken and such security interest shall be a first priority security interest (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law).

     SECTION 3.03. Possession and Control. Each Grantor, or one or more of its Subsidiaries, has exclusive possession and control of the Equipment and Inventory.

ARTICLE IV
Covenants

     Each Grantor covenants and agrees that, so long as any Term Obligations (other than Contingent Obligations) shall remain unpaid, such Grantor will, unless the Required Lenders shall otherwise consent in writing and subject to the Intercreditor Agreement, perform the obligations set forth in this Article IV.

     SECTION 4.01. As to Receivables. (a) Each Grantor shall (i) keep its principal place of business and chief executive office and the office(s) where it keeps its records concerning the Receivables at the addresses set forth with respect to such Grantor in Sections 2(a) and 2(b) of the Perfection Certificate or in the notice, if any, most recently delivered with respect to such Grantor under Section 4.06 and (ii) hold and preserve such records in accordance with its normal business practices.

          (b) Upon written notice by the Collateral Agent to any Grantor to such effect after the occurrence and during the continuance of an Event of Default, all proceeds of Collateral received by such Grantor during the continuance of such Event of Default shall be delivered in kind to the Collateral Agent for deposit into a deposit account of such Grantor maintained with, or subject to the control of, the Collateral Agent (any such deposit account of any Grantor being referred to herein as a “Collateral Account”). With respect to any such proceeds, until such Event of Default is no longer continuing, unless the Collateral Agent directs otherwise, (i) each Grantor shall not commingle any such proceeds, and shall hold separate and apart from all other property all such proceeds in express trust for the Collateral Agent, for the benefit of the Secured Parties, until delivery thereof is made to the Collateral Agent and (ii) no funds, other than proceeds of Collateral, will be deposited in any Collateral Account designated for the purpose of holding such proceeds. The Collateral Agent agrees that it shall not give the notice referred to in this paragraph unless it believes, acting reasonably, that an Event of Default shall have occurred and is continuing.

          (c) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right to apply any amount in any Collateral Account to the payment of any Secured Obligations which are due and payable in the manner set forth in Section 6.03.

          (d) Subject to the rights of the Collateral Agent granted pursuant to the Loan Documents, each Grantor shall have the right, with respect to and to the extent of its collected funds in the Collateral Account, as long as no Event of Default has occurred and is continuing, to require the Collateral Agent, without any liability of the Collateral Agent except for its own

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gross negligence or willful misconduct (IT BEING UNDERSTOOD THAT THE COLLATERAL AGENT SHALL NOT BE LIABLE TO ANY SECURED PARTY FOR ANY NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE)), (i) to invest the amounts on deposit thereon in cash equivalent investments, provided that, in the case of certificated securities, the Collateral Agent (or its agent or bailee) shall retain possession thereof as Collateral and, in the case of uncertificated securities, the Collateral Agent may take such actions, including registration of such securities in its name, as it shall determine is necessary to perfect its security interest therein, and (ii) to close such Collateral Account and return all funds, together with interest and profits (if any) thereon, on deposit therein to such Grantor.

     SECTION 4.02. As to Collateral. (a) Unless otherwise restricted by the Combined Loan Documents, each Grantor (i) may in the ordinary course of its business or as otherwise permitted under the Loan Documents, at its own expense, sell, transfer, lease or furnish under the contracts of service any of the Collateral of such Grantor, and sell, transfer, use and consume, in the ordinary course of its business or as otherwise permitted under the Loan Documents, any raw materials, work in process or materials held by such Grantor, (ii) will, at its own expense, endeavor to collect, as and when due, all amounts due with respect to any of the Collateral held by such Grantor in accordance with its customary business practices or as otherwise permitted by the Loan Documents, and, upon the occurrence and during the continuance of an Event of Default, will take such action with respect to such collection as the Collateral Agent may request or, in the absence of such request, as such Grantor may deem advisable, and (iii) may grant, in the ordinary course of business and in accordance with its customary business practices, to any Person obligated on any of the Collateral, any rebate, refund or allowance to which such Person may be lawfully entitled, and may accept, in connection therewith, the return of goods the sale or lease of which shall have given rise to such Collateral. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may, upon prior or concurrent written notice to any Grantor, notify any Person obligated on any of the Collateral of such Grantor to make payment to the Collateral Agent for deposit to the Collateral Account of any amounts due or to become due thereunder and enforce collection of any of the Collateral of such Grantor by suit or otherwise and surrender, release, or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidenced thereby. Each Grantor will, at its own expense, upon the occurrence and during the continuance of an Event of Default and the written request of the Collateral Agent, notify any Person obligated on any of the Collateral of such Grantor to make payment to the Collateral Agent for deposit to the Collateral Account of any amounts due or to become due thereunder.

          (b) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent is authorized to endorse, in the name of any Grantor, any item, howsoever received by the Collateral Agent, representing any payment on or other proceeds of any of the Collateral.

          (c) Each Grantor will cause all Indebtedness of the Borrower or any Subsidiary that is owing to such Grantor (other than any such Indebtedness of any MLP Subsidiary in the form of advances that do not constitute obligations for borrowed money) to be evidenced by a promissory note (which shall be in form and substance satisfactory to the Borrower) that is

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pledged and delivered to the Collateral Agent (or its agent or bailer), together with undated instruments of transfer with respect thereto endorsed in blank.

     SECTION 4.03. As to Commercial Tort Claims. If at any time an Authorized Officer of any Grantor shall have knowledge that such Grantor has acquired or otherwise obtained rights with respect to a Commercial Tort Claim which such Grantor reasonably believes, based upon then-current information, is likely to result in a judgment in favor of such Grantor in excess of $5,000,000, it shall promptly notify the Collateral Agent thereof in a writing containing brief details thereof (which writing shall be deemed to be attached to Schedule I hereto and made a part thereof) and take such other actions as are necessary or desirable to grant and perfect a security interest in such Commercial Tort Claim in favor of the Collateral Agent.

     SECTION 4.04. Further Assurances, etc. Each Grantor agrees that it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary or that the Collateral Agent may reasonably request in order to perfect, preserve and protect any security interest granted or purported to be granted hereby by such Grantor or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral of such Grantor. Without limiting the generality of the foregoing, each Grantor will, with respect to any Collateral of such Grantor, following the occurrence and during the continuance of a Default: (a) at the written request of the Collateral Agent, mark conspicuously each chattel paper included in the Receivables and each Related Contract with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such chattel paper or Related Contract is subject to the security interest granted hereby; (b) if any material Receivable shall be evidenced by a promissory note or other instrument, negotiable document or chattel paper, deliver and pledge to the Collateral Agent hereunder such promissory note, instrument, negotiable document or chattel paper duly endorsed or accompanied by duly executed instruments of transfer or assignment, all in form and substance reasonably satisfactory to the Collateral Agent; (c) file such financing or continuation statements, or amendments thereto, and such other instruments or notices (including any assignment of claim form under or pursuant to the federal assignment of claims statute, 31 U.S.C. § 3726, any successor or amended version thereof or any regulation promulgated under or pursuant to any version thereof), as may be necessary or as the Collateral Agent may reasonably request in order to perfect and preserve the security interests granted or purported to be granted hereby; (d) furnish to the Collateral Agent, from time to time at the Collateral Agent’s reasonable request, statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Collateral Agent may reasonably request, all in reasonable detail; (e) warrant and defend the right and title herein granted to the Collateral Agent in and to the Collateral (and all right, title and interest represented by the Collateral) against the claims and demands of all Persons whomsoever, subject to Permitted Encumbrances; and (f) upon the acquisition after the date hereof by such Grantor of any Collateral with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition under the U.C.C. or pursuant to previously filed U.C.C. financing statements, promptly give notice thereof to the Collateral Agent and take such actions with respect to such Collateral or any part thereof as are reasonably required by the Collateral Agent to perfect its security interest in such Collateral. Notwithstanding anything to the contrary contained herein (but subject to Section 4.02(c)), no Grantor shall be required to take, at any time when no Event of Default has occurred and is continuing, any actions to perfect the Collateral Agent’s Liens in any Collateral to the extent

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such perfection requires more than the authorization, preparation, delivery and the filing of U.C.C. financing statements (and any necessary amendments, assignments or continuation statements with respect thereto) with the applicable Government Authority; provided that the Collateral Agent may independently take any such actions to perfect such Liens in the Collateral as it reasonably deems appropriate (without being able to require any Grantor to cooperate in such action unless an Event of Default has occurred and is continuing), which actions shall be, in accordance with Section 7.02(b), at the expense of each applicable Grantor.

     SECTION 4.05. Performance of Covenants in Loan Documents. Each Grantor will perform, comply with, observe and fulfill, and will cause each of its Subsidiaries to perform, comply with, observe and fulfill, each of the covenants, agreements and obligations contained in any Loan Document pertaining to or otherwise applicable to such Grantor or any of its Subsidiaries.

     SECTION 4.06. State of Incorporation, Formation or Organization, etc. Each Grantor will furnish to the Collateral Agent promptly, and in any event within 30 days upon an Authorized Officer of such Grantor becoming aware of same, written notice of any change (a) in such Grantor’s legal name or jurisdiction of organization, (b) in the location of such Grantor’s principal place of business or chief executive office or any office where such Grantor keeps its records concerning the Receivables, (c) in such Grantor’s identity or corporate structure and (d) in such Grantor’s organizational number issued to it in its jurisdiction of organization or, with respect to any Grantor organized under the laws of a jurisdiction that requires such information to be set forth on the face of a UCC financing statement, such Grantor’s Federal Taxpayer Identification Number. Each Grantor shall take all actions necessary or reasonably requested by the Collateral Agent to ensure that, notwithstanding any such change, the Liens on the Collateral granted in favor of the Collateral Agent, for the benefit of the Secured Parties, remain perfected, first priority Liens (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law).

     SECTION 4.07. Filings. Each Grantor hereby authorizes the Collateral Agent to file U.C.C. financing statements with respect to the Collateral describing the Collateral as “all personal property”, “all assets” or words of similar import, and to file U.C.C. financing statements, and continuations and amendments thereto, and other similar documents with respect to the Collateral without its signature (to the extent permitted by applicable law).

ARTICLE V
The Collateral Agent

     SECTION 5.01. Appointment of Collateral Agent. By acceptance of the benefits of, or claiming any rights under, this Agreement or any other Security Document, each Secured Party shall be deemed to have irrevocably appointed Credit Suisse (or any successor or assignee Collateral Agent) to serve as the Collateral Agent under this Agreement and the other Loan Documents, and to authorize the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto. Without limiting the generality of the foregoing, the Collateral Agent is hereby

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expressly authorized to execute any and all documents (including releases) with respect to the Collateral, and the rights of the Secured Parties with respect thereto, as contemplated by and in accordance with the provisions of this Agreement and the other Loan Documents.

     SECTION 5.02. Enforcement of Security Documents; Restrictions on Actions. (a) By acceptance of the benefits of, or claiming any rights under, this Agreement or any other Security Document, each Secured Party shall be deemed irrevocably to have agreed and consented that (i) the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for enforcement of any provisions of this Agreement against any Grantor and of any other Security Document against any “grantor”, “guarantor”, “mortgagor”, “pledgor” or “loan party” thereunder and the exercise of remedies hereunder or under any other Security Document and (ii) such Secured Party shall not take any action to enforce any provisions of this Agreement against any Grantor or any of the other Security Documents against any “grantor”, “guarantor”, “mortgagor”, “pledgor” or “loan party” thereunder or to exercise any remedy hereunder or under any other Security Document.

          (b) Without limiting the generality of paragraph (a) of this Section, by acceptance of the benefits of, or claiming any rights under, this Agreement or any other Security Documents, each Secured Party shall be deemed irrevocably to have agreed and consented that it shall not, and shall not be entitled to, (i) direct the actions of the Collateral Agent hereunder or under any other Security Document, (ii) take any action, or commence any legal proceeding seeking, to require, compel or cause the Collateral Agent to enforce any provisions of this Agreement against any Grantor or of any other Security Document against any “grantor”, “guarantee”, “mortgagor”, “pledgor” or “loan party” thereunder or to exercise any remedy hereunder or under any other Security Document, (iii) take any action, or commence any legal proceeding seeking, to prevent or enjoin the Collateral Agent from taking any action (including the enforcement of any provisions of this Agreement against any Grantor or of any other Security Document against any “grantor”, “guarantee”, “mortgagor”, “pledgor” or “loan party” thereunder, the exercise of any remedy hereunder or under any other Security Document, the release of any Collateral hereunder or under any other Security Document, the consent to any amendment or modification hereof or of any other Security Document or the grant of any waiver hereunder or under any other Security Document), or refraining from taking any such action, in accordance with this Agreement or any other Security Document, or (iv) take any action, or commence any legal proceeding seeking, to delay, hinder or otherwise impair the Collateral Agent in taking any such action in accordance with this Agreement or any other Security Document. WITHOUT LIMITING THE FOREGOING, EACH EXISTING SENIOR NOTES SECURED PARTY, BY ACCEPTANCE OF THE BENEFITS OF, OR CLAIMING ANY RIGHTS UNDER, THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT, SHALL BE DEEMED TO HAVE UNDERSTOOD AND AGREED (AND THE AVAILABILITY OF THE BENEFITS OF THIS AGREEMENT TO THE EXISTING SENIOR NOTES SECURED PARTIES SHALL BE EXPRESSLY UNDERSTOOD TO BEING CONDITIONED UPON SUCH UNDERSTANDING AND AGREEMENT), THAT THE SOLE RIGHT OF THE EXISTING SENIOR NOTES SECURED PARTIES HEREUNDER AND UNDER THE OTHER SECURITY DOCUMENTS SHALL BE TO RECEIVE THEIR RATABLE SHARE OF ANY PROCEEDS OF THE COLLATERAL IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS AGREEMENT, THE OTHER SECURITY DOCUMENTS AND THE INTERCREDITOR AGREEMENT.

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          (c) EACH EXISTING SENIOR NOTES SECURED PARTY, BY ITS ACCEPTANCE OF THE BENEFITS OF THIS AGREEMENT AND THE OTHER SECURITY DOCUMENTS, SHALL BE DEEMED TO HAVE ACKNOWLEDGED THAT THE PROVISIONS OF THIS SECTION ARE BEING RELIED UPON BY THE COLLATERAL AGENT AND THE TERM SECURED PARTIES.

     SECTION 5.03. LIMITATIONS ON RESPONSIBILITY OF COLLATERAL AGENT. (a) THE COLLATERAL AGENT HAS CONSENTED TO SERVE AS COLLATERAL AGENT HEREUNDER AND UNDER THE OTHER SECURITY DOCUMENTS ON THE EXPRESS UNDERSTANDING, AND EACH SECURED PARTY, BY ACCEPTING THE BENEFITS OF THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT, SHALL BE DEEMED TO HAVE AGREED, THAT THE COLLATERAL AGENT SHALL NOT HAVE ANY DUTIES, OBLIGATIONS OR RESPONSIBILITIES (FIDUCIARY OR OTHERWISE) TO ANY SECURED PARTY, EXCEPT THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE OTHER SECURITY DOCUMENTS, SUBJECT IN ALL EVENTS TO THE PROVISIONS OF ARTICLE IX OF THE CREDIT AGREEMENT, THE PROVISIONS OF THIS ARTICLE V AND ALL OTHER PROVISIONS OF ANY SECURITY DOCUMENT LIMITING THE DUTIES, OBLIGATIONS, RESPONSIBILITIES OR LIABILITY OF THE COLLATERAL AGENT.

          (b) Without limiting the foregoing, (i) the Collateral Agent shall not be subject to any fiduciary or other implied duties, regardless of whether a Default has occurred and is continuing; (ii) the Collateral Agent shall not have any duty to take any discretionary action or to exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Security Documents that the Collateral Agent is required to exercise following its receipt of written instructions from the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 10.02 of the Credit Agreement); provided that the Collateral Agent shall not be required to take any action that, in its opinion, may expose the Collateral Agent to liability or that is contrary to any Combined Loan Document or applicable law; and (iii) except as expressly set forth herein or in the other Security Documents, the Collateral Agent shall not have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Grantor that is communicated to or obtained by the Person serving as Collateral Agent or any of its Related Parties in any capacity. The Collateral Agent shall not be responsible for insuring the Collateral, for the payment of Taxes, charges, assessments or Liens upon the Collateral or otherwise for the maintenance of the Collateral. The Collateral Agent shall not be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Collateral Agent shall believe in good faith to be necessary, under the circumstances as provided in Section 10.02 of the Credit Agreement) or in the absence of its own gross negligence or willful misconduct. The Collateral Agent shall be deemed not to have knowledge of any Default unless and until written notice thereof is given to the Collateral Agent by the Borrower or a Lender, and the Collateral Agent shall not be responsible for or have any duty to ascertain or inquire into, or be deemed to have made any representation as to, (A) any statement, warranty or representation made in or in connection with any Security Document, (B) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (C) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Security Document

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(other than express covenants and agreements of the Collateral Agent) or the occurrence of any Default, (D) the value or condition of the Collateral or any part thereof, the title of any Grantor thereto or the sufficiency of the security afforded to the Secured Parties by this Agreement or any other Security Document or (E) the validity, enforceability, effectiveness or genuineness of any Security Document or any other agreement, instrument or document.

     SECTION 5.04. Reliance by Collateral Agent; Sub-Agents. (a) The Collateral Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed or sent by the proper Person or otherwise authenticated by the proper Person. The Collateral Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by the proper Person, and shall not incur any liability for relying thereon. The Collateral Agent may consult with legal counsel (who may be counsel for the Borrower or any other Grantor), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. The Collateral Agent shall have the right but not the obligation at any time to seek instructions concerning the administration of this Agreement or any other Security Document, the duties created hereunder or thereunder or the Collateral from any court of competent jurisdiction.

          (b) The Collateral Agent may perform any and all its duties and exercise its rights and powers hereunder or under any other Security Document by or through any one or more sub-agents appointed by the Collateral Agent. The Collateral Agent and any such sub-agent may perform any and all its duties and exercise its rights and powers through their respective Related Parties. The exculpatory provisions of this Article V shall apply to any such sub-agent and to the Related Parties of the Collateral Agent and any such sub-agent, and shall apply to their respective activities in connection with their activities as a Collateral Agent.

     SECTION 5.05. Resignation of the Collateral Agent. The Collateral Agent may resign at any time in accordance with, and subject to, the provisions of Article IX of the Credit Agreement. Upon the acceptance of its appointment as the Collateral Agent by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Collateral Agent, and the retiring Collateral Agent shall be discharged from its duties and obligations hereunder and under the other Security Documents. Such appointment and designation shall be full evidence of the right and authority of such successor Collateral Agent to act as Collateral Agent hereunder and under the other Security Documents, and all Collateral, power, trusts, duties, documents, rights and authority of the retiring Collateral Agent shall rest in the successor Collateral Agent, without any further deed or conveyance. The Grantors shall execute and deliver any and all documents, conveyances or instruments requested by the Required Lenders or the retiring Collateral Agent to reflect such transfer to the successor Collateral Agent. After the Collateral Agent’s resignation hereunder, the provisions of this Article V and Section 7.02 shall continue in effect for the benefit of such retiring Collateral Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while acting as Collateral Agent.

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     SECTION 5.06. Determination of Amounts of Existing Senior Notes Obligations. Whenever the Collateral Agent is required to determine the amount of the Existing Senior Notes Obligations for any purpose of this Agreement or any other Security Document, it shall request written certification of such amount from the trustee under the Existing Senior Notes Indenture and shall be entitled to make such determination on the basis of such certification; provided, however, that if, notwithstanding the request of the Collateral Agent, such trustee shall fail or refuse reasonably promptly to certify as to the amount of the Existing Senior Notes Obligations, the Collateral Agent shall be entitled to determine such existence or amount by such method as the Collateral Agent may, in the exercise of its good faith judgment, determine, including by reliance upon a certificate of an Authorized Officer of the Borrower. The Collateral Agent may rely conclusively, and shall be fully protected in so relying, on any determination made by it in accordance with the provisions of the preceding sentence (or as otherwise directed by a court of competent jurisdiction) and shall have no liability to the Grantors, the Existing Senior Notes Secured Parties or any other Person as a result of such determination or any action taken pursuant thereto.

     SECTION 5.07. Certain Powers Relating to Collateral. Notwithstanding any other provision set forth herein or in any other Security Document, nothing in this Agreement or any other Security Document shall require the creation or perfection of pledges of or security interests in, or the obtaining of legal opinions or other deliverables with respect to, particular assets of any Grantor if, and for so long as the Collateral Agent, in consultation with the Borrower, determines that the cost of creating or perfecting such pledges or security interests in such assets, or obtaining such legal opinions or other deliverables in respect of such assets, shall be excessive in view of the benefits to be obtained by the Lenders therefrom. The Collateral Agent may grant extensions of time for the creation and perfection of security interests in or the obtaining of legal opinions or other deliverables with respect to particular assets (including delivery of certificates representing pledged Equity Interests) (including extensions beyond the Closing Date or in connection with assets acquired, or Subsidiaries formed or acquired, after the Closing Date) where it determines that such action cannot be accomplished without undue effort, expense or other burden by the time or times at which it would otherwise be required to be accomplished by this Agreement or the other Loan Documents.

     SECTION 5.08. Other Security Documents. By acceptance of the benefits of, or claiming any rights under, this Agreement or any other Security Document, each Secured Party shall be deemed to have agreed that the provisions of this Article V shall apply to each other Security Document, in each case as if set forth and incorporated therein in full.

     SECTION 5.09. No Rights of Grantors. The provisions of this Article V are solely for the benefit of the Collateral Agent and the Secured Parties, and none of the Grantors shall have any rights as a third party beneficiary of any such provisions.

ARTICLE VI
Remedies

     SECTION 6.01. Certain Remedies. Subject to the terms of the Intercreditor Agreement, if an Event of Default shall have occurred and be continuing:

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     (a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party on default under the U.C.C., and also may (i) require each Grantor to, and each Grantor hereby agrees that it will, at its expense and upon request of the Collateral Agent forthwith, assemble all or part of the Collateral of such Grantor as directed by the Collateral Agent and make it available to the Collateral Agent at a place to be designated by the Collateral Agent which is reasonably convenient to such Grantor and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least 10 days’ prior written notice to such Grantor 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. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent 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.

     (b) All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as additional collateral security for, or then or at any time thereafter be applied in whole or in part in accordance with Section 6.03.

     SECTION 6.02. Warranties. The Collateral Agent may sell the Collateral without giving any warranties or representations as to the Collateral. The Collateral Agent may disclaim any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Collateral.

     SECTION 6.03. Application of Proceeds. The Collateral Agent shall apply all proceeds that it shall receive from any collection or sale of Collateral, as well as any Collateral consisting of cash, as follows (but subject to the provisions of the Intercreditor Agreement):

     FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Grantor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, in each case, payable by the Borrower or any other Grantor pursuant to this Agreement or any other Loan Document;

     SECOND, to the payment of all such other Term Obligations as shall be owed to the Administrative Agent (in its capacity as such);

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     THIRD, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata (as determined by the Collateral Agent) in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution); and

     FOURTH, to the Grantors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds or Collateral in accordance with this Agreement and the other Loan Documents. Upon any sale of Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

ARTICLE VII
Miscellaneous Provisions

     SECTION 7.01. “Loan Document”; “Security Document”. This Agreement is a “Loan Document” and a “Security Document” (each as defined in the Credit Agreement) executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof.

     SECTION 7.02. Indemnity and Expenses. (a) Without limiting the generality of the provisions of Section 10.03 of the Credit Agreement, and except to the extent reimbursement of expenses is limited by Section 10.03(a) of the Credit Agreement to reimbursement of expenses of only certain parties, each Grantor agrees to indemnify the Administrative Agent (including in its capacity as the Collateral Agent, and any sub-agent thereof), each Arranger and each Lender, and each Related Party of any of the foregoing Persons (each such Person being referred to as an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee, arising out of, in connection with or as a result of this Agreement or any other Loan Document (including enforcement of this Agreement or any other Security Document), whether based on contract, tort or any other theory and whether initiated against or by any party to this Agreement or any other Loan Document, any Affiliate of any of the foregoing or any third party (and regardless of whether any Indemnitee is a party thereto); provided, that such indemnity and release shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (i) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee (it being understood that it is the intention of the parties hereto that each of the Indemnitees be indemnified in the case of its own negligence (other than gross negligence), regardless of whether such negligence is sole or contributory, active or passive, imputed, joint or technical), (ii) except where such Indemnitee is the Administrative Agent or the Collateral Agent (or any sub-agent thereof) or a Related Party thereof, relate to claims between or among the Lenders or any of their Affiliates,

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shareholders, partners or members (other than any such claims arising from a breach by any Grantor of its obligations under this Agreement or any other Loan Document) or (iii) except where such Indemnitee is the Administrative Agent or the Collateral Agent (or any sub-agent thereof) or a Related Party thereof, are in respect of any property for any occurrence arising from the acts or omissions of any Lender during the period after which such Person, its successors or assigns shall have obtained possession of such property (whether by foreclosure or deed in lieu of foreclosure, as mortgagee-in-possession or otherwise). If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Grantor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable law.

          (b) Each Grantor will upon demand therefor pay to the Collateral Agent the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel, which the Collateral Agent incurs in connection with (i) the administration of this Agreement and any other Security Document to which such Grantor is a party, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral (as defined in the Credit Agreement), (iii) the exercise or enforcement of any of the rights of the Collateral Agent or (iv) the failure by the Grantor to perform or observe any of the provisions hereof.

          (c) To the extent permitted by applicable law, no party hereto shall assert, or permit any of its Related Parties to assert, and each party hereby waives, any claim against the Collateral Agent, the Administrative Agent, any Arranger or any Lender, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby or any transaction or act contemplated hereby or thereby.

          (d) Any amounts payable as provided in paragraphs (a) or (b) of this Section shall be additional Term Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.02 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby and thereby, the invalidity or unenforceability of any term or provision of this Agreement or any other Security Document, or any investigation made by or on behalf of the Collateral Agent, the Administrative Agent, any Arranger or any Lender. All amounts due under this Section 7.02 shall be payable not later than 30 days after written demand is received by the applicable Grantor therefor.

     SECTION 7.03. Waivers; Amendments. (a) No failure or delay by the Collateral Agent in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder are cumulative and are not exclusive of any rights or remedies that the Secured Parties would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Grantor therefrom shall in any event be effective unless the same shall be permitted by

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paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except (i) pursuant to an agreement or agreements in writing entered into between the Collateral Agent and the Grantor or Grantors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.02 of the Credit Agreement and (ii) as provided in the Intercreditor Agreement.

     SECTION 7.04. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 10.01 of the Credit Agreement. All communications and notices hereunder to any Grantor (other than the Borrower) shall be given to it in care of the Borrower as provided in Section 10.01 of the Credit Agreement.

     SECTION 7.05. Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

     SECTION 7.06. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

     SECTION 7.07. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective as to any Grantor when a counterpart hereof executed on behalf of such Grantor shall have been delivered to the Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Grantor, as applicable, and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Grantor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Grantor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by the Credit Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall be construed as a separate agreement with respect to each Grantor and may be waived, amended, modified or released with respect to any Grantor without the approval of any other Grantor and without affecting the obligations of any other Grantor hereunder.

     SECTION 7.08. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OR PRIORITY OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY

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PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

          (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT, THE ADMINISTRATIVE AGENT, ANY ARRANGER OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY GRANTOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

          (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN PARAGRAPH (b) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

          (d) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.04. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; PROVIDED THAT NOTICE OF THE USE OF ANY SUCH ALTERNATIVE MEANS OF SERVICE SHALL BE PROVIDED TO EACH AFFECTED PARTY IN THE MANNER PROVIDED IN SECTION 7.04.

     SECTION 7.09. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,

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ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH OF THE PARTIES HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.

     SECTION 7.10. NO ORAL AGREEMENTS. THIS WRITTEN SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

     SECTION 7.11. Additional Grantors. Pursuant to Section 5.15 of the Credit Agreement, each Subsidiary that becomes a Designated Credit Party after the Closing Date is required to enter into this Agreement as a Grantor. Upon execution and delivery by the Collateral Agent and a Subsidiary of an instrument in the form of Exhibit I hereto, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any such instrument shall not require the consent of any other Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor as a party to this Agreement.

     SECTION 7.12. Intercreditor Agreement. (a) Notwithstanding anything herein to the contrary, this Agreement and the security interests and other Liens granted to the Collateral Agent, for the benefit of the Secured Parties, hereunder and the exercise of any right or remedy by the Collateral Agent and the other Secured Parties hereunder are subject to the provisions of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the Intercreditor Agreement and this Agreement, the provisions of the Intercreditor Agreement shall control. No Secured Party shall have any right individually to enforce or realize upon any Liens granted under this Agreement, it being understood and agreed that such rights may be exercised solely by the Collateral Agent on behalf of the Secured Parties.

          (b) BY ACCEPTANCE OF THE BENEFITS OF, OR CLAIMING ANY RIGHTS UNDER, THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT, EACH EXISTING SENIOR NOTES SECURED PARTY WILL BE DEEMED IRREVOCABLY (I) TO HAVE ACKNOWLEDGED AND AGREED TO THE PROVISIONS OF THIS SECTION 7.12, (II) TO HAVE ACCEPTED AND CONSENTED TO THE INTERCREDITOR AGREEMENT AND TO EACH ACKNOWLEDGEMENT, AGREEMENT, CONSENT AND WAIVER MADE THEREIN BY THE COLLATERAL AGENT ON BEHALF OF THE EXISTING SENIOR NOTES SECURED PARTIES AND (III) TO HAVE ACKNOWLEDGED AND AGREED THAT ITS ENTITLEMENT TO THE BENEFITS OF THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT AND THE SECURITY INTERESTS AND

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           OTHER LIENS CREATED HEREBY OR THEREBY IS EXPRESSLY CONDITIONED UPON ITS OBSERVANCE OF THE TERMS OF THE INTERCREDITOR AGREEMENT.

     SECTION 7.13. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby appoints the Collateral Agent the attorney-in-fact of such Grantor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Collateral Agent may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable prior to termination of this Agreement in accordance with its terms and coupled with an interest. Without limiting the generality of the foregoing, the Collateral Agent shall have the right, upon the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Collateral Agent’s name or in the name of such Grantor (a) to receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts, money orders or other evidences of payment relating to the Collateral or any part thereof; (b) to demand, collect, receive payment of, give receipt for and give discharges and releases of all or any of the Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading relating to any of the Collateral; (d) to send verifications of Receivables to any account debtor in respect thereof; (e) to commence and prosecute any and all suits, actions or proceedings at law or in equity in any court of competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to enforce any rights in respect of any Collateral; (f) to settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to all or any of the Collateral; (g) to notify, or to require any Grantor to notify, account debtors in respect of any Receivables to make payment directly to the Collateral Agent; and (h) to use, sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with all or any of the Collateral, and to do all other acts and things necessary to carry out the purposes of this Agreement, as fully and completely as though the Collateral Agent were the absolute owner of the Collateral for all purposes; provided, that nothing herein contained shall be construed as requiring or obligating the Collateral Agent to make any commitment or to make any inquiry as to the nature or sufficiency of any payment received by the Collateral Agent, or to present or file any claim or notice, or to take any action with respect to the Collateral or any part thereof or the moneys due or to become due in respect thereof or any property covered thereby. The Collateral Agent shall be accountable only for amounts actually received as a result of the exercise of the powers granted to it herein, and neither it nor any of their Related Parties shall be responsible to any Grantor for any act or failure to act hereunder, except for their own gross negligence or wilful misconduct. It is understood and agreed that the appointment of the Collateral Agent as the agent and attorney-in-fact of the Grantors for the purposes set forth above is coupled with an interest and is irrevocable prior to termination of this Agreement in accordance with its terms.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

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

QUICKSILVER RESOURCES INC.,
	by
		/s/ MarLu Hiller
		Name:	MarLu Hiller
		Title:	Vice President–Treasurer

 

COWTOWN PIPELINE FUNDING, INC.,
	by
		/s/ MarLu Hiller
		Name:	MarLu Hiller
		Title:	Vice President–Treasurer

COWTOWN PIPELINE MANAGEMENT, INC.,
	by
		/s/ MarLu Hiller
		Name:	MarLu Hiller
		Title:	Vice President–Treasurer

COWTOWN PIPELINE L.P.,
By:	Cowtown Pipeline Management,
	Inc., its general partner

by
	/s/ MarLu Hiller
	Name:	MarLu Hiller
	Title:	Vice President–Treasurer

COWTOWN GAS PROCESSING L.P.,
By:	Cowtown Pipeline Management,
	Inc., its general partner

by
	/s/ MarLu Hiller
	Name:	MarLu Hiller
	Title:	Vice President–Treasurer

 

CREDIT SUISSE, Cayman Islands Branch, as the Collateral Agent,
by
	/s/ Vanessa Gomez
	Name:	Vanessa Gomez
	Title:	Director

by
	/s/ Nupur Kumar
	Name:	Nupur Kumar
	Title:	Associate

EX-99.2

Exhibit 99.2

     PLEDGE AGREEMENT dated as of August 8, 2008 (this “Agreement”), among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Borrower”), the SUBSIDIARIES of the Borrower whose signatures appear below or who become parties hereto after the date hereof as provided in Section 7.11 (collectively, together with the Borrower, the “Pledgors”) and CREDIT SUISSE, Cayman Islands Branch (“Credit Suisse”), in its capacity as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Article I below.

W I T N E S S E T H:

     WHEREAS, the Borrower intends to acquire (the “Acquisition”) certain producing, leasehold, royalty, midstream and other assets associated with the Barnett Shale formation in Texas.

     WHEREAS, in connection with the Acquisition, the Borrower, the Lenders and Credit Suisse, as Administrative Agent, are entering into the Credit Agreement, under which the Borrower may obtain Loans in an aggregate principal amount not in excess of $700,000,000.

     WHEREAS, it is a condition precedent to the obligations of the Lenders to make Loans pursuant to the Credit Agreement that the Pledgors create, in favor of the Collateral Agent, for the benefit of the Term Secured Parties, Liens on the Pledged Collateral as security for the indefeasible payment in full in cash and performance of the Term Obligations.

     WHEREAS, the Existing Senior Notes Indenture provides that the Pledgors may not create, incur or suffer to exist Liens on the Collateral created under the Security Documents unless such Liens are “Permitted Liens” under and as defined in the Existing Senior Notes Indenture or, contemporaneously with the incurrence of such Liens, effective provision is made to secure the Existing Senior Notes Obligations equally and ratably with the indebtedness secured by such Liens for so long as such indebtedness is so secured.

     WHEREAS, each Pledgor has duly authorized the execution, delivery and performance of this Agreement.

     WHEREAS, it is in the best interests of each Pledgor to execute this Agreement inasmuch as such Pledgor will derive substantial direct and indirect benefits from the making of Loans to the Borrower by the Lenders pursuant to the Credit Agreement.

               NOW THEREFORE, in consideration of the foregoing and the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and in order to induce the Lenders to make Loans pursuant to the Credit Agreement, the parties hereto agree as follows:

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ARTICLE I

Definitions

          SECTION 1.01. Certain Terms. The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings:

          “Acquisition” has the meaning given to such term in the recitals.

          “Agreement” has the meaning given to such term in the preamble.

          “Borrower” has the meaning given to such term in the preamble.

          “Collateral Agent” has the meaning given to such term in the preamble.

          “Combined Loan Documents” means the Loan Documents and the Existing Senior Notes Documents.

          “Contingent Obligations” means contingent obligations for indemnification, expense reimbursement, tax gross-up or yield protection as to which no claim has been made.

          “Contribution Agreement” means that certain Contribution Agreement dated as of September 11, 2007, between the Borrower and BreitBurn Operating L.P., a Delaware limited partnership, as the same may be amended, modified or supplemented from time to time.

          “Credit Agreement” means the Credit Agreement dated as of August 8, 2008, among the Borrower, the Lenders and Credit Suisse, as Administrative Agent.

          “Credit Suisse” has the meaning given to such term in the preamble.

          “Discharge of First Lien Obligations” has the meaning given to such term in the Intercreditor Agreement.

          “Distributions” means all cash dividends, stock dividends, liquidating dividends, shares of stock resulting from (or in connection with the exercise of) stock splits, reclassifications, warrants, options, non-cash dividends, mergers and consolidations, and all cash distributions or other distributions made in respect of the Pledged Interests, whether or not income, return of capital or otherwise, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Pledged Interests or other rights or interests constituting Pledged Collateral.

          “Existing Senior Notes Obligations” means Indebtedness (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) due with respect to (a) the Existing Senior Notes and (b) the Subsidiary Guarantee (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) of any Pledgor.

          “Existing Senior Notes Secured Parties” has the meaning given to the term “Holders”, as defined in the Existing Senior Notes Indenture as in effect on the date hereof.

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          “First Lien Collateral Agent” has the meaning given to such term in the Intercreditor Agreement.

          “First Lien Obligations” has the meaning given to such term in the Intercreditor Agreement.

          “Indemnitee” has the meaning given to such term in Section 7.02.

          “Intercreditor Agreement” means the Intercreditor Agreement dated as of August 8, 2008, among the Borrower, the other Pledgors, JPMorgan Chase Bank, N.A., as the First Lien Collateral Agent (as defined therein), and Credit Suisse, as the Second Lien Collateral Agent (as defined therein).

          “Perfection Certificate” means the Perfection Certificate delivered by the Borrower on the date hereof pursuant to Article IV of the Credit Agreement, together with all schedules and attachments thereto.

          “Pledged Collateral” has the meaning given to such term in Section 2.01.

          “Pledged Interest Issuer” means each Person that is the issuer of any of the Pledged Interests.

          “Pledged Interests” means, collectively, the Equity Interests now owned or at any time hereafter acquired by any Pledgor that are pledged pursuant to Section 2.01, together with all registrations, certificates, articles or agreements governing or representing any such Equity Interests, all options and other rights, contractual or otherwise, at any time existing with respect to any such Equity Interests and all distributions, cash, instruments and other property now or hereafter received, receivable or otherwise distributed in respect of or in exchange for any such Equity Interests.

          “Pledged Property” means all Pledged Interests and all other pledged stock, partnership or membership interests and other securities which are now being delivered by any Pledgor to the Collateral Agent or may from time to time hereafter be delivered by any Pledgor to the Collateral Agent for the purpose of pledge under this Agreement, together with all proceeds of any of the foregoing.

          “Pledgors” has the meaning given to such term in the preamble.

          “Public Pledged Interest Issuer” means, at any time, any Pledged Interest Issuer any class of the Equity Interests in which, at such time, is listed or quoted for trading on any nationally recognized securities exchange or inter-dealer quotation system in the United States.

          “Quicksilver Canada Class C Shares” means Class C shares of common stock of Quicksilver Canada.

          “Secured Obligations” means, collectively, the Term Obligations and the Existing Senior Notes Obligations.

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          “Secured Parties” means, collectively, the Term Secured Parties and the Existing Senior Notes Secured Parties.

          “Securities Act” has the meaning given to such term in Section 6.02(a).

          “Term Secured Parties” means, collectively, (a) the Lenders, (b) the Administrative Agent (including in its capacity as the Collateral Agent hereunder), (c) each other Person to whom any of the Term Obligations (including indemnification obligations) is owed and (d) the successors and assigns of each of the foregoing.

          “U.C.C.” means the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in the State of Texas or in any other applicable jurisdiction.

          SECTION 1.02. Terms Generally. Unless otherwise defined herein, capitalized terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.

          SECTION 1.03. U.C.C. Definitions. Unless otherwise defined herein, terms for which meanings are provided in the U.C.C. are used in this Agreement, including its preamble and recitals, with such meanings.

          SECTION 1.04. Rules of Construction. The rules of construction specified in Section 1.02 of the Credit Agreement shall also apply to this Agreement, mutatis mutandis.

ARTICLE II

Pledge

          SECTION 2.01. Grant of Security Interest. Each Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers and transfers to the Collateral Agent, for the benefit of each of the Secured Parties, and hereby grants to the Collateral Agent, for the benefit of each of the Secured Parties, a continuing security interest in all of such Pledgor’s right, title and interest, whether now existing or hereafter arising or acquired, in and to the following property (any and all of the following being the “Pledged Collateral”): (a) all Equity Interests now owned or at any time hereafter acquired by such Pledgor, including the Equity Interests set forth opposite the name of such Pledgor on Schedule I; (b) all other Pledged Property, whether now or hereafter delivered to the Collateral Agent in connection with this Agreement; (c) all Distributions with respect to any Pledged Property; and (d) all proceeds of any of the foregoing. Notwithstanding anything herein to the contrary, the Pledged Collateral shall not include, and the Collateral Agent and the Secured Parties shall not have a Lien to secure the Secured Obligations, any Equity Interests of a Foreign Subsidiary in excess of 65% of the total combined voting power of all classes of voting Equity Interests of such Foreign Subsidiary and 100% of all non-voting Equity Interests of such Foreign Subsidiary.

          SECTION 2.02. Security for Secured Obligations. The Pledged Collateral secures the indefeasible payment in full in cash and performance of all the Secured Obligations now or hereafter existing, whether for principal, interest, costs, fees, expenses or otherwise.

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          SECTION 2.03. Delivery of Pledged Property. (a) All certificates or instruments representing or evidencing any Pledged Property (other than any Equity Interests in an Inactive Subsidiary or any Quicksilver Canada Class C Shares) shall be delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent) promptly following the acquisition thereof by any Pledgor, shall be in suitable form for transfer by delivery and shall be accompanied by all necessary endorsements or instruments of transfer or assignment, undated and duly executed in blank.

          (a) To the extent any of the Pledged Collateral constitutes a “certificated security” (as defined in Section 8-102(a)(4) of the U.C.C.), an “uncertificated security” (as defined in Section 8-102(a)(18) of the U.C.C.) or a “security entitlement” (as defined in Section 8-102(a)(17) of the U.C.C.), the applicable Pledgor shall cause the issuer thereof or the securities intermediary thereof to take all actions necessary or as reasonably requested by the Collateral Agent to grant “control” (as defined in Section 8-106 of the U.C.C.) of such Pledged Collateral to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent).

          SECTION 2.04. Continuing Security Interest. (a) This Agreement shall create a continuing security interest in the Pledged Collateral, and (i) shall remain in full force and effect until the payment in full in cash of all the Term Obligations (other than Contingent Obligations), (ii) shall be binding upon each Pledgor and its successors, transferees and assigns and (iii) shall inure, together with the rights and remedies of the Collateral Agent hereunder, to the benefit of the Collateral Agent and the other Secured Parties.

          (a) Upon the payment in full in cash of all the Term Obligations (other than Contingent Obligations), the security interest granted herein (including the security interest granted herein to secure the Existing Senior Notes Obligations) shall terminate and all rights to the Pledged Collateral shall revert to the applicable Pledgors.

          (b) The security interests in any Pledged Collateral created hereby shall automatically be released, and any Subsidiary that is a Pledgor shall automatically be released from its obligations hereunder, in each case at the time or times and in the manner and to the extent set forth in Section 10.17 of the Credit Agreement or in the Intercreditor Agreement.

          (c) In connection with any termination or release pursuant to this Section 2.04, the Collateral Agent shall execute and deliver to any Pledgor, at such Pledgor’s expense, all certificates and instruments representing or evidencing all Pledged Interests, together with all other Pledged Collateral, held by the Collateral Agent hereunder, and shall execute and deliver to any Pledgor, at such Pledgor’s expense, documents that such Pledgor shall reasonably request to evidence such termination or release. Any execution and delivery of documents pursuant to this paragraph shall be without recourse to or warranty by the Collateral Agent.

          SECTION 2.05. Security Interest Absolute. All rights of the Collateral Agent hereunder and the security interests granted to the Collateral Agent, for the benefit of the Secured Parties, hereunder and all obligations of the Pledgors hereunder shall be absolute and unconditional, irrespective of (a) any lack of validity, legality or enforceability of the Credit Agreement or any other Combined Loan Document; (b) the failure of any Secured Party (i) to

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assert any claim or demand or to enforce any right or remedy against the Borrower, any other Pledgor or any other Person under the provisions of the Credit Agreement, any Combined Loan Document or otherwise or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Secured Obligations; (c) any change in the time, manner or place of payment of, or in any other term of, any Secured Obligations or any other extension, compromise or renewal of any Secured Obligations; (d) any reduction, limitation, impairment or termination of any Secured Obligations for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and each Pledgor hereby waives, to the extent permitted by applicable law, any right to or claim of) any defense or setoff, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality, nongenuineness, irregularity, compromise, or unenforceability of, or any other event or occurrence affecting, any Secured Obligations; (e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Credit Agreement or any other Combined Loan Document; (f) any addition, exchange, release, surrender, or non-perfection of any collateral (including the Pledged Collateral), or any amendment to or waiver or release of or addition to or consent to departure from any guarantee, for any of the Secured Obligations; or (g) any other circumstances which would otherwise constitute a defense available to, or a legal or equitable discharge of, the Borrower, any other Pledgor, any surety or any guarantor in respect of any Secured Obligations or this Agreement.

          SECTION 2.06. Election of Remedies. If any Secured Party may, under applicable law, proceed to realize its benefits under this Agreement, any other Security Document or otherwise, either by judicial foreclosure or by non-judicial sale or enforcement, such Secured Party may, at its sole option, determine which of its remedies or rights it may pursue without affecting any of the rights and remedies for its benefit under this Agreement (it being understood and agreed that nothing in this Section 2.06 shall limit the provisions of Section 5.02 of the Security Agreement). If, in the exercise of any of its rights and remedies, any Secured Party shall forfeit any of the rights or remedies for its benefit, including its right to enter a deficiency judgment against any Pledgor or any other Person, whether because of any applicable laws pertaining to “election of remedies” or the like, each Pledgor hereby consents to such action by such Secured Party and waives any claim based upon such action, even if such action by such Secured Party shall result in a full or partial loss of any rights of subrogation that such Pledgor might otherwise have had but for such action by such Secured Party.

ARTICLE III

Representations and Warranties

          Each Pledgor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, as at the date of each pledge and delivery hereunder (including each pledge and delivery of Pledged Interests) by such Pledgor to the Collateral Agent of any Pledged Collateral, as set forth in this Article III.

          SECTION 3.01. Perfection Certificate. The information set forth in the Perfection Certificate, including the exact legal name of each Pledgor, is correct and complete as of the date hereof.

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          SECTION 3.02. Valid Security Interest. The security interests granted pursuant to Section 2.01, upon completion of the filings and other actions specified on Schedule II to this Agreement (which, in the case of all filings and other documents referred to on said Schedule, have been delivered to the Collateral Agent in completed and, if applicable, duly executed form), will constitute valid, perfected, first priority security interests (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law) in all of the Pledged Collateral in favor of the Collateral Agent, for the benefit of the Secured Parties, as collateral security for the Secured Obligations.

          SECTION 3.03. As to Pledged Interests. The Pledged Interests are duly recorded in the records of the applicable Pledged Interest Issuer (if a Subsidiary) and clearly show the Collateral Agent’s security interest, for the benefit of the Secured Parties, and such registration is maintained in the principal office of such Pledged Interest Issuer and remains valid and in effect. All Pledged Interests constituting Equity Interests have been duly authorized and validly issued, are fully paid and non-assessable, and no Pledged Interests were issued in violation of the preemptive rights, if any, of any Person or of any agreement by which any Pledgor is bound. All documentary, stamp or other taxes or fees owing in connection with the registration, issuance, transfer or pledge of any Pledged Collateral (if any) have been paid. No restrictions or conditions exist with respect to the registration, transfer, voting or control of any Pledged Interests, except restrictions or conditions imposed by (a) applicable law or pursuant to the Loan Documents, (b) any First Lien Loan Documents as in effect on the date hereof (or any successor definitive documentation for any First Lien Permitted Indebtedness, provided that the restrictions and conditions contained in any such successor definitive documentation are not materially less favorable to the Lenders, taken as a whole, than the restrictions and conditions imposed by the First Lien Loan Documents as in effect on the date hereof), (c) restrictions and conditions imposed by any definitive agreements governing or evidencing any of the Existing Notes as in effect on the date hereof (or any definitive agreement governing or evidencing any Refinancing Indebtedness in respect of any of the Existing Notes, provided that the restrictions and conditions contained in any such definitive agreements are not materially less favorable to the Lenders, taken as a whole, than the restrictions and conditions imposed by the definitive agreements governing or evidencing such Existing Notes as in effect on the date hereof), (d) in respect of Equity Interests in any Subsidiary, customary restrictions and conditions contained in agreements relating to the sale of a Subsidiary pending such sale, provided that such restrictions and conditions apply only to the Subsidiary that is to be sold and such sale is permitted hereunder, and (e) restrictions and conditions existing on the date hereof and identified on Schedule 7.14 to the Credit Agreement (but not any extension or renewal of, or any amendment or modification expanding the scope of, any such restriction or condition). All requisite formalities for the granting of a security interest in the Pledged Interests required pursuant to the Organic Documents of any Pledgor or any Pledged Interest Issuer have been complied with on or prior to the execution and delivery of this Agreement.

          SECTION 3.04. Certificated Nature of Equity Interests. All Pledged Interests that are Equity Interests represented by certificates or instruments (other than any Equity Interests in an Inactive Subsidiary or any Quicksilver Canada Class C Shares) have been delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent), together with transfer documents as required in this Agreement (and each

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Pledgor covenants and agrees that any certificates or instruments evidencing any such Equity Interests received by such Pledgor hereafter (other than any Equity Interests in an Inactive Subsidiary or any Quicksilver Canada Class C Shares) will be held in trust for the Collateral Agent and promptly delivered to the Collateral Agent (or, prior to the Discharge of First Lien Obligations, the First Lien Collateral Agent)).

          SECTION 3.05. Reaffirmation of Representations and Warranties. All of the representations and warranties made by the Borrower regarding any Pledgor or Subsidiaries of any Pledgor in the Credit Agreement or in any other Loan Document are true and correct in all respects as if such representations and warranties were incorporated herein in their entirety and made by such Pledgor (except with respect to such representations and warranties which expressly relate to an earlier date, in which case such representations and warranties are true and correct in all respects as of such earlier date).

ARTICLE IV

Covenants

          Each Pledgor covenants and agrees that, so long as any Term Obligations (other than Contingent Obligations) shall remain unpaid, such Pledgor will, unless the Required Lenders shall otherwise consent in writing and subject to the Intercreditor Agreement, perform the obligations set forth in this Article IV.

          SECTION 4.01. Protect Collateral; Further Assurances, etc. Except as permitted by the Combined Loan Documents, the Pledgors will not sell, assign (by operation of law or otherwise), transfer, pledge, encumber in any other manner or otherwise dispose of the Pledged Collateral. Each Pledgor will warrant and defend the right and title (subject to Permitted Encumbrances) herein granted unto the Collateral Agent in and to the Pledged Collateral against the claims and demands of all Persons whomsoever. Each Pledgor agrees that at any time, and from time to time, at the reasonable expense of such Pledgor, such Pledgor will promptly execute and/or deliver all further instruments, and take all further action that may be reasonably necessary or desirable, or that the Collateral Agent may reasonably request, in order to perfect, preserve or protect any security interest granted or purported to be granted hereby by such Pledgor, or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral of such Pledgor. Each Pledgor agrees that, upon the acquisition after the date hereof by such Pledgor of any Pledged Collateral with respect to which the security interest granted hereunder is not perfected automatically upon such acquisition, to take such actions with respect to such Pledged Collateral or any part thereof as required by the Loan Documents.

          SECTION 4.02. Certificates; Certification of Limited Partnership Interests, etc. (a) Each Pledgor agrees that all certificates and instruments evidencing Pledged Interests delivered by such Pledgor pursuant to this Agreement will be accompanied by duly executed undated blank transfer powers, in substantially the form attached hereto as Exhibit I, or other equivalent instruments of transfer reasonably acceptable to the Collateral Agent. Each Pledgor will, from time to time upon the reasonable request of the Collateral Agent, promptly deliver to the Collateral Agent duly executed undated blank transfer powers in substantially the form

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attached hereto as Exhibit I or such other form acceptable to the Collateral Agent, and similar documents, reasonably satisfactory in form and substance to the Collateral Agent, with respect to the Pledged Property as the Collateral Agent may request and will, from time to time upon the request of the Collateral Agent after the occurrence and during the continuance of any Event of Default, promptly transfer any Pledged Interests into the name of any nominee designated by the Collateral Agent.

          (b) Each Pledgor acknowledges and agrees that (i) each limited partnership or limited liability company Equity Interest that is a Pledged Interest and not represented by a certificate shall not be a “security” within the meaning of Article 8 of the U.C.C. of the applicable jurisdiction and shall not be governed by Article 8 of the U.C.C. of the applicable jurisdiction and (ii) the Pledgors shall at no time elect to treat any such Equity Interest as a “security” within the meaning of Article 8 of the U.C.C. of the applicable jurisdiction or issue any certificate representing such Equity Interest (except that the Pledgors may elect to so treat any such Equity Interest as a “security” and issue any certificate representing such Equity Interest if promptly thereafter the applicable Pledgor delivers such certificate to the Collateral Agent in accordance with Section 3.04).

          (c) Each Pledgor agrees that (i) the Collateral Agent may notify any Pledged Interest Issuer (other than a Public Pledged Interest Issuer) of the existence of this Agreement by having such Pledged Interest Issuer acknowledge the Notice of Agreement attached hereto as Exhibit II and (ii) it will keep all of its material records concerning the Pledged Collateral, which records will be of such character as will enable the Collateral Agent or its designees to determine at any time the status thereof.

     SECTION 4.03. Continuous Pledge. Each Pledgor will, at all times, keep pledged to the Collateral Agent pursuant hereto all Pledged Interests, all Distributions with respect thereto and all other Pledged Collateral free and clear of all Liens, except for Permitted Encumbrances.

          SECTION 4.04. Voting Rights; Distributions, etc. Each Pledgor agrees:

          (a) after any Event of Default shall have occurred and be continuing and the Collateral Agent has delivered written notice to such Pledgor pursuant to clause (b) below, to deliver (properly endorsed where required hereby or requested by the Collateral Agent), promptly upon receipt thereof by such Pledgor, to the Collateral Agent all Distributions and all proceeds of the Pledged Collateral, all of which may be applied by the Collateral Agent in accordance with Section 6.04; and

          (b) after any Event of Default shall have occurred and be continuing and the Collateral Agent has delivered written notice to such Pledgor of the Collateral Agent’s intention to exercise its voting power under this clause (b), (i) the Collateral Agent may exercise (to the exclusion of the Pledgors) the voting power and all other incidental rights of ownership with respect to any Pledged Interests or other shares of capital stock constituting Pledged Collateral (AND EACH PLEDGOR HEREBY GRANTS TO THE COLLATERAL AGENT AN IRREVOCABLE PROXY (WHICH IRREVOCABLE PROXY IS COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL SUCH TIME THAT ALL TERM

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OBLIGATIONS (OTHER THAN CONTINGENT OBLIGATIONS) ARE REPAID IN FULL IN CASH), EXERCISABLE UNDER SUCH CIRCUMSTANCES, TO VOTE THE PLEDGED INTERESTS AND SUCH OTHER PLEDGED COLLATERAL), and (ii) promptly to deliver to the Collateral Agent such additional proxies and other documents as may be necessary or reasonably be requested by the Collateral Agent to allow the Collateral Agent to exercise such voting power.

          All Distributions and proceeds of Pledged Collateral which may at any time and from time to time be held by a Pledgor but which such Pledgor is then obligated to deliver to the Collateral Agent pursuant to this Agreement shall, until delivery to the Collateral Agent, be held by such Pledgor separate and apart from its other property in trust for the Collateral Agent. Notwithstanding the foregoing, the Collateral Agent agrees that, unless an Event of Default shall have occurred and be continuing and the Collateral Agent shall have given the written notice referred to in clause (b) above, the Pledgors shall (A) be entitled to receive and retain all Distributions on account of any Pledged Interests and (B) have the exclusive voting power with respect to any of the Pledged Interests constituting Pledged Collateral, and exercise all other organizational, contractual and other incidental rights and powers under and with respect to the Pledged Collateral, and the Collateral Agent shall, upon the written request of a Pledgor and/or upon the cure or waiver of all then existing Events of Default, promptly deliver such proxies and other documents, if any, as shall be reasonably requested by such Pledgor which are necessary to allow such Pledgor to exercise such voting power and such other organizational, contractual and incidental rights and powers; provided, however, that no vote shall be cast, or consent, waiver, or ratification given, or any other action taken, by any Pledgor that would cause the occurrence of an Event of Default or would impair the value of the Pledged Collateral or be inconsistent with the terms of the Loan Documents.

          SECTION 4.05. Status of Pledged Interests. The recording of the Pledged Interests on the records of the Pledged Interest Issuers that are Subsidiaries shall at all times be valid and genuine and shall not be altered. The Pledged Interests constituting Equity Interests at all times shall be duly authorized, validly registered, fully paid and non-assessable, and shall not be registered in violation of the Organic Documents of any Pledged Interest Issuer or the preemptive rights of any Person, if any, or of any agreement by which any Pledgor or any Pledged Interest Issuer is bound.

          SECTION 4.06. Additional Undertakings. Each Pledgor agrees that it 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 Interests, except any such restrictions or conditions as would be permitted under Section 3.03.

          SECTION 4.07. State of Incorporation, Formation or Organization, etc. Each Pledgor will furnish to the Collateral Agent promptly, and in any event within 30 days upon an Authorized Officer of such Pledgor becoming aware of same, written notice of any change (a) in such Pledgor’s legal name or jurisdiction of organization, (b) in the location of such Pledgor’s principal place of business or chief executive office, (c) in such Pledgor’s identity or corporate structure and (d) in such Pledgor’s organizational number issued to it in its jurisdiction of organization or, with respect to any Pledgor organized under the laws of a jurisdiction that requires such information to be set forth on the face of a U.C.C. financing statement, such

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Pledgor’s Federal Taxpayer Identification Number. Each Pledgor shall take all actions necessary or reasonably requested by the Collateral Agent to ensure that, notwithstanding any such change, the Liens on the Pledged Collateral granted in favor of the Collateral Agent, for the benefit of the Secured Parties, remain perfected, first priority Liens (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law).

          SECTION 4.08. Filings. Each Pledgor hereby authorizes the Collateral Agent to file U.C.C. financing statements with respect to the Pledged Collateral describing the Collateral (including the Pledged Collateral) as “all assets” or words of similar import, and to file U.C.C. financing statements, and continuations and amendments thereto, and other similar documents with respect to the Pledged Collateral without its signature (to the extent permitted by applicable law).

          SECTION 4.09. Performance of Covenants in Loan Documents. Each Pledgor will perform, comply with, observe and fulfill, and will cause each of its Subsidiaries to perform, comply with, observe and fulfill, each of the covenants, agreements and obligations contained in the Credit Agreement and the other Loan Documents pertaining to or otherwise applicable to such Pledgor or any of its Subsidiaries.

ARTICLE V

The Collateral Agent

          SECTION 5.01. Appointment of Collateral Agent, etc. The provisions of Article V of the Security Agreement are hereby incorporated by reference, mutatis mutandis, with the same force and effect as if set forth in full herein, and by acceptance of the benefits of, or claiming any rights under, this Agreement, each Secured Party shall be deemed to have agreed to be bound by the terms thereof. Without limiting the generality of the foregoing, by acceptance of the benefits of, or claiming any rights under, this Agreement, each Secured Party shall be deemed to have (a) irrevocably appointed Credit Suisse (or any successor or assignee Collateral Agent) to serve as the Collateral Agent under this Agreement, and authorized the Collateral Agent to take such actions on its behalf and to exercise such powers as are delegated to the Collateral Agent by the terms of this Agreement, together with such actions and powers as are reasonably incidental thereto, (b) irrevocably agreed and consented that (i) the Collateral Agent shall have the authority to act as the exclusive agent of such Secured Party for enforcement of any provisions of this Agreement against any Pledgor or the exercise of remedies hereunder and (ii) such Secured Party shall not take any action to enforce any provisions of this Agreement against any Pledgor or to exercise any remedy hereunder and (c) irrevocably have agreed and consented to the limitations on duties, obligations, responsibilities and liabilities of the Collateral Agent set forth in such provisions.

          SECTION 5.02. Collateral Agent Appointed Attorney-in-Fact. Each Pledgor hereby irrevocably appoints the Collateral Agent as such Pledgor’s attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, from time to time in the Collateral Agent’s discretion, to take any action and to execute any instrument which the Collateral Agent may deem necessary or prudent to accomplish the

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purposes of this Agreement, including without limitation: (a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in respect of any of the Pledged Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above; and (c) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or advisable for the collection of any of the Pledged Collateral or otherwise to enforce the rights of the Collateral Agent with respect to any of the Pledged Collateral; provided that the Collateral Agent shall not take any of the foregoing actions in the place, stead or name of any Pledgor unless an Event of Default has occurred and is continuing. EACH PLEDGOR HEREBY ACKNOWLEDGES, CONSENTS AND AGREES THAT THE POWER OF ATTORNEY GRANTED PURSUANT TO THIS SECTION 5.02 IS IRREVOCABLE AND COUPLED WITH AN INTEREST AND SHALL BE EFFECTIVE UNTIL SUCH TIME THAT ALL TERM OBLIGATIONS (OTHER THAN CONTINGENT OBLIGATIONS) ARE REPAID IN FULL IN CASH.

          SECTION 5.03. Collateral Agent May Perform. If any Pledgor fails to perform any agreement contained herein, then the Collateral Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of the Collateral Agent incurred in connection therewith shall be payable by such Pledgor pursuant to Section 7.02, and the Collateral Agent may from time to time take any other action which the Collateral Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Pledged Collateral or of its security interest therein.

          SECTION 5.04. Collateral Agent Has No Duty. The powers conferred on the Collateral Agent hereunder are solely to protect its interest (on behalf of the Secured Parties) in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for the exercise of reasonable care over any Pledged Collateral in its possession and the accounting for moneys actually received by it hereunder, the Collateral Agent shall have no duty as to any Pledged Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Property, whether or not the Collateral Agent has or is deemed to have knowledge of such matters, or (b) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Pledged Collateral.

          SECTION 5.05. Reasonable Care. The Collateral Agent is required to exercise reasonable care in the custody and preservation of any of the Pledged Collateral in its possession; provided, however, the Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Pledged Collateral if it takes such action for that purpose as a Pledgor reasonably requests in writing at times other than upon the occurrence and during the continuance of any Event of Default, but failure of the Collateral Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care.

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ARTICLE VI

Remedies

          SECTION 6.01. Certain Remedies. Subject to the terms of the Intercreditor Agreement, if an Event of Default shall have occurred and be continuing:

          (a) The Collateral Agent may exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party on default under the Uniform Commercial Code and also may, without notice except as specified below, sell the Pledged Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least 10 days’ prior written notice to such Pledgor 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. The Collateral Agent shall not be obligated to make any sale of Pledged Collateral regardless of notice of sale having been given. The Collateral Agent 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.

          (b) The Collateral Agent may (i) transfer all or any part of the Pledged Collateral into the name of the Collateral Agent or its nominee, with or without disclosing that such Pledged Collateral is subject to the lien and security interest hereunder, (ii) notify the parties obligated on any of the Pledged Collateral to make payment to the Collateral Agent of any amount due or to become due thereunder, (iii) enforce collection of any of the Pledged Collateral by suit or otherwise, and surrender, release or exchange all or any part thereof, or compromise or extend or renew for any period (whether or not longer than the original period) any obligations of any nature of any party with respect thereto, (iv) endorse any checks, drafts, or other writings in the Pledgor’s name to allow collection of the Pledged Collateral, (v) take control of any proceeds of the Pledged Collateral, and (vi) execute (in the name, place and stead of any Pledgor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Pledged Collateral.

          (c) All cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral may, in the discretion of the Collateral Agent, be held by the Collateral Agent as additional collateral security for, or then or at any time thereafter be applied in whole or in part in accordance with Section 6.04.

          SECTION 6.02. Securities Laws. If the Collateral Agent shall determine to exercise its right to sell all or any of the Pledged Collateral pursuant to Section 6.01, then each Pledgor agrees that, upon the reasonable request of the Collateral Agent, such Pledgor will, at its own expense:

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     (a) execute and deliver, and cause each Pledged Interest Issuer of the Pledged Property contemplated to be sold and the members, partners and shareholders thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary or, in the opinion of the Collateral Agent (acting reasonably), prudent to register such Pledged Property under the provisions of the Securities Act of 1933, as from time to time amended (the “Securities Act”), and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all necessary amendments and supplements thereto and to the related prospectus which, in the reasonable opinion of the Collateral Agent, are necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto; and

     (b) use its commercially reasonable efforts to qualify the Pledged Property under the applicable state securities or “Blue Sky” laws and to obtain all necessary governmental approvals for the sale of the Pledged Property, as reasonably requested by the Collateral Agent; and

     (c) cause each such Pledged Interest Issuer to make available to its security holders, as soon as practicable, an earnings statement that will satisfy the provisions of Section 11(a) of the Securities Act; and

     (d) do or cause to be done all such other acts and things reasonably requested by the Collateral Agent that are reasonably necessary to make such sale of the Pledged Property or any part thereof valid and binding and in compliance with applicable law.

          SECTION 6.03. Compliance with Applicable Legal Restrictions. Each Pledgor agrees that in any sale of any of the Pledged Collateral whenever an Event of Default shall have occurred and be continuing, the Collateral Agent is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including compliance with such procedures under applicable law (if any)) as may restrict the number of prospective bidders and purchasers, require that such prospective bidders and purchasers have certain qualifications, and restrict such prospective bidders and purchasers to Persons who will represent and agree that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Pledged Collateral), or in order to obtain any required approval of the sale or of the purchaser by any Governmental Authority, and each Pledgor further agrees that such compliance shall not be the primary or sole reason for such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall the Collateral Agent be liable nor accountable to such Pledgor for any discount allowed by the reason of the fact that such Pledged Collateral is sold in compliance with any such limitation or restriction.

           SECTION 6.04. Application of Proceeds. The Collateral Agent shall apply all proceeds that it shall receive from any collection or sale of Pledged Collateral, as well as any Pledged Collateral consisting of cash, as follows (but subject to the provisions of the Intercreditor Agreement):

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     FIRST, to the payment of all costs and expenses incurred by the Collateral Agent in connection with such collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, the repayment of all advances made by the Collateral Agent hereunder or under any other Loan Document on behalf of any Pledgor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, in each case, payable by the Borrower or any other Pledgor pursuant to this Agreement or any other Loan Document;

     SECOND, to the payment of all such other Term Obligations as shall be owed to the Administrative Agent (in its capacity as such);

     THIRD, to the payment in full of the Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata (as determined by the Collateral Agent) in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution); and

     FOURTH, to the Pledgors, their successors or assigns, or as a court of competent jurisdiction may otherwise direct.

The Collateral Agent shall have absolute discretion as to the time of application of any such proceeds or Pledged Collateral in accordance with this Agreement and the other Loan Documents. Upon any sale of Pledged Collateral by the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt of the Collateral Agent or of the officer making the sale shall be a sufficient discharge to the purchaser or purchasers of the Pledged Collateral so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent or such officer or be answerable in any way for the misapplication thereof.

          SECTION 6.05. Warranties. The Collateral Agent may sell the Pledged Collateral without giving any warranties or representations as to the Pledged Collateral. The Collateral Agent may disclaim any warranties of title or the like. This procedure will not be considered to adversely affect the commercial reasonableness of any sale of the Pledged Collateral.

ARTICLE VII

Miscellaneous Provisions

          SECTION 7.01. “Loan Document”; “Security Document”. This Agreement is a Loan Document and a Security Document (each as defined in the Credit Agreement) executed pursuant to the Credit Agreement and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof.

          SECTION 7.02. Indemnity and Expenses. (a) Without limiting the generality of the provisions of Section 10.03 of the Credit Agreement, and except to the extent reimbursement of expenses is limited by Section 10.03(a) of the Credit Agreement to reimbursement of

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expenses of only certain parties, each Pledgor agrees to indemnify the Administrative Agent (including in its capacity as the Collateral Agent, and any sub-agent thereof), each Arranger and each Lender, and each Related Party of any of the foregoing Persons (each such Person being referred to as an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the reasonable out-of-pocket fees, charges and disbursements of any counsel for any Indemnitee, arising out of, in connection with or as a result of this Agreement or any other Loan Document (including enforcement of this Agreement or any other Security Document), whether based on contract, tort or any other theory and whether initiated against or by any party to this Agreement or any other Loan Document, any Affiliate of any of the foregoing or any third party (and regardless of whether any Indemnitee is a party thereto); provided, that such indemnity and release shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (i) are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee (it being understood that it is the intention of the parties hereto that each of the Indemnitees be indemnified in the case of its own negligence (other than gross negligence), regardless of whether such negligence is sole or contributory, active or passive, imputed, joint or technical), (ii) except where such Indemnitee is the Administrative Agent or the Collateral Agent (or any sub-agent thereof) or a Related Party thereof, relate to claims between or among the Lenders or any of their Affiliates, shareholders, partners or members (other than any such claims arising from a breach by any Pledgor of its obligations under this Agreement or any other Loan Document) or (iii) except where such Indemnitee is the Administrative Agent or the Collateral Agent (or any sub-agent thereof) or a Related Party thereof, are in respect of any property for any occurrence arising from the acts or omissions of any Lender during the period after which such Person, its successors or assigns shall have obtained possession of such property (whether by foreclosure or deed in lieu of foreclosure, as mortgagee-in-possession or otherwise). If and to the extent that the foregoing undertaking may be unenforceable for any reason, each Pledgor hereby agrees to make the maximum contribution to the payment and satisfaction of each of the foregoing which is permissible under applicable law.

          (b) Each Pledgor will upon demand therefor pay to the Collateral Agent the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its outside counsel, which the Collateral Agent incurs in connection with (i) the administration of this Agreement and each other Loan Document to which such Pledgor is a party; (ii) the custody, preservation, use, or operation of, or the sale of, collection from, or other realization upon, any of the Collateral (as defined in the Credit Agreement); (iii) the exercise or enforcement of any of the rights of the Collateral Agent; or (iv) the failure by such Pledgor to perform or observe any of the provisions hereof.

          (c) To the extent permitted by applicable law, no party hereto shall assert, or permit any of its Related Parties to assert, and each party hereby waives, any claim against the Collateral Agent, the Administrative Agent, any Arranger or any Lender, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any other Loan Document or any agreement or instrument contemplated hereby or thereby or any transaction or act contemplated hereby or thereby.

17

          (d) Any amounts payable as provided in paragraphs (a) or (b) of this Section shall be additional Term Obligations secured hereby and by the other Security Documents. The provisions of this Section 7.02 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement or any other Loan Document, the consummation of the transactions contemplated hereby and thereby, the invalidity or unenforceability of any term or provision of this Agreement or any other Security Document, or any investigation made by or on behalf of the Collateral Agent, the Administrative Agent, any Arranger or any Lender. All amounts due under this Section 7.02 shall be payable not later than 30 days after written demand is received by the applicable Pledgor therefor.

          SECTION 7.03. Waivers, Amendments. (a) No failure or delay by the Collateral Agent in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Collateral Agent hereunder are cumulative and are not exclusive of any rights or remedies that the Secured Parties would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Pledgor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except (i) pursuant to an agreement or agreements in writing entered into between the Collateral Agent and the Pledgor or Pledgors with respect to which such waiver, amendment or modification is to apply, subject to any consent required in accordance with Section 10.02 of the Credit Agreement, and (ii) as provided in the Intercreditor Agreement.

          SECTION 7.04. Notices. All communications and notices hereunder shall be in writing and given as provided in Section 10.01 of the Credit Agreement. All communications and notices hereunder to any Pledgor (other than the Borrower) shall be given to it in care of the Borrower as provided in Section 10.01 of the Credit Agreement.

          SECTION 7.05. Headings. Article and Section headings used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

          SECTION 7.06. Severability. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

          SECTION 7.07. Counterparts; Effectiveness; Several Agreement. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement shall become effective as to any Pledgor when a counterpart hereof executed on behalf of such Pledgor shall have been delivered to the

18

Collateral Agent and a counterpart hereof shall have been executed on behalf of the Collateral Agent, and thereafter shall be binding upon such Pledgor and the Collateral Agent and their respective successors and assigns, and shall inure to the benefit of such Pledgor, the Collateral Agent and the other Secured Parties and their respective successors and assigns, except that no Pledgor shall have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Pledged Collateral (and any such assignment or transfer shall be void) except as expressly contemplated by the Credit Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic imaging means shall be effective as delivery of a manually executed counterpart of this Agreement. This Agreement shall be construed as a separate agreement with respect to each Pledgor and may be waived, amended, modified or released with respect to any Pledgor without the approval of any other Pledgor and without affecting the obligations of any other Pledgor hereunder.

          SECTION 7.08. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OR PRIORITY OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

          (b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN NEW YORK COUNTY AND OF THE UNITED STATES DISTRICT COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. NOTHING IN THIS AGREEMENT SHALL AFFECT ANY RIGHT THAT THE COLLATERAL AGENT, ANY ARRANGER OR ANY LENDER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AGAINST ANY PLEDGOR OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

          (c) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT IN ANY COURT REFERRED TO IN

19

PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

          (d) EACH OF THE PARTIES HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 7.04. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW; PROVIDED THAT NOTICE OF THE USE OF ANY SUCH ALTERNATIVE MEANS OF SERVICE SHALL BE PROVIDED TO EACH AFFECTED PARTY IN THE MANNER PROVIDED IN SECTION 7.04.

          SECTION 7.09. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 7.09.

          SECTION 7.10. NO ORAL AGREEMENTS. THIS WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

          SECTION 7.11. Additional Pledgors. Pursuant to Section 5.15 of the Credit Agreement, each Subsidiary that becomes a Designated Credit Party after the Closing Date is required to enter into this Agreement as a Pledgor. Upon the execution and delivery by the Collateral Agent and a Subsidiary of an instrument in the form of Exhibit III, such Subsidiary shall become a Pledgor hereunder with the same force and effect as if originally named as a Pledgor herein. The execution and delivery of any such instrument shall not require the consent of any other Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in full force and effect notwithstanding the addition of any new Pledgor as a party to this Agreement.

          SECTION 7.12. Intercreditor Agreement. (a) Notwithstanding anything herein to the contrary, this Agreement and the security interests and other Liens granted to the Collateral Agent, for the benefit of the Secured Parties, hereunder and the exercise of the rights and remedies of the Collateral Agent and the Secured Parties hereunder are subject to the

20

provisions of the Intercreditor Agreement. In the event of any conflict between the terms of the Intercreditor Agreement and this Agreement, the terms of the Intercreditor Agreement shall govern and control. No Secured Party shall have any right individually to enforce or realize upon any Liens granted under this Agreement, it being understood and agreed that such rights may be exercised solely by the Collateral Agent on behalf of the Secured Parties.

          (b) BY ACCEPTANCE OF THE BENEFITS OF, OR CLAIMING ANY RIGHTS UNDER, THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT, EACH EXISTING SENIOR NOTES SECURED PARTY WILL BE DEEMED IRREVOCABLY (I) TO HAVE ACKNOWLEDGED AND AGREED TO THE PROVISIONS OF THIS SECTION 7.12, (II) TO HAVE ACCEPTED AND CONSENTED TO THE INTERCREDITOR AGREEMENT AND TO EACH ACKNOWLEDGEMENT, AGREEMENT, CONSENT AND WAIVER MADE THEREIN BY THE COLLATERAL AGENT ON BEHALF OF THE EXISTING SENIOR NOTES SECURED PARTIES AND (III) TO HAVE ACKNOWLEDGED AND AGREED THAT ITS ENTITLEMENT TO THE BENEFITS OF THIS AGREEMENT OR ANY OTHER SECURITY DOCUMENT AND THE SECURITY INTERESTS AND OTHER LIENS CREATED HEREBY OR THEREBY IS EXPRESSLY CONDITIONED UPON ITS OBSERVANCE OF THE TERMS OF THE INTERCREDITOR AGREEMENT.

          SECTION 7.13. Concerning BBEP Common Units. The Collateral Agent, on behalf of the Secured Parties, hereby acknowledges the restrictions on the pledge and transfer of the BBEP Common Units set forth in Section 6.20 of the Contribution Agreement, and agrees that, in the event of any exercise of rights or remedies hereunder in respect of the BBEP Common Units, the rights of the Collateral Agent shall be subject thereto.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

          IN WITNESS WHEREOF, each party hereto has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the day and year first above written.

PLEDGORS:
QUICKSILVER RESOURCES INC.,
	by
		/s/ MarLu Hiller
		Name: MarLu Hiller
		Title: Vice President–Treasurer
COWTOWN PIPELINE FUNDING, INC.,
	by
		/s/ MarLu Hiller
		Name: MarLu Hiller
		Title: Vice President–Treasurer
COWTOWN PIPELINE MANAGEMENT, INC.,
	by
		/s/ MarLu Hiller
		Name: MarLu Hiller
		Title: Vice President–Treasurer
COWTOWN PIPELINE L.P.,
By:		Cowtown Pipeline Management, Inc., its general partner
	by
		/s/ MarLu Hiller
		Name: MarLu Hiller
		Title: Vice President–Treasurer
COWTOWN GAS PROCESSING L.P.,
By:		Cowtown Pipeline Management, Inc., its general partner
	by
		/s/ MarLu Hiller
		Name: MarLu Hiller
		Title: Vice President–Treasurer

The undersigned hereby acknowledges and consents to this Pledge Agreement and agrees to the provisions of same.

CREDIT SUISSE, Cayman Islands Branch,
by
	/s/ Vanessa Gomez
	Name: Vanessa Gomez
	Title: Director
by
	/s/ Nupur Kumar
	Name: Nupur Kumar
	Title: Associate

[SIGNATURE PAGE TO PLEDGE AGREEMENT]

EX-99.3 5 d59425exv99w3.htm FORM OF MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, AND SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING

Exhibit 99.3

MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, AND SECURITY
AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING

FROM

QUICKSILVER RESOURCES INC.,
a Delaware corporation

TO

CREDIT SUISSE, Cayman Islands Branch,
as Trustee and Collateral Agent for the Secured Parties defined herein

Dated as of August 8, 2008

“A CARBON, PHOTOGRAPHIC, FACSIMILE, OR OTHER REPRODUCTION OF THIS INSTRUMENT IS SUFFICIENT AS A FINANCING STATEMENT.”

“THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS.”

“THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES AND COVERS PROCEEDS OF MORTGAGED PROPERTY. THIS INSTRUMENT ALSO SECURES OTHER AMOUNTS PROVIDED HEREIN AND AT LAW. THIS INSTRUMENT SECURES AN OBLIGATION THAT MAY INCREASE OR DECREASE FROM TIME TO TIME.”

“THIS INSTRUMENT IS A FIXTURE FILING.”

“THIS INSTRUMENT COVERS MINERALS, INCLUDING OIL AND GAS. THE OIL AND GAS INTERESTS INCLUDED IN THE MORTGAGED PROPERTY WILL BE FINANCED AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO, AND THIS FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS.”

“THOSE PORTIONS OF THE MORTGAGED PROPERTY WHICH ARE MINERALS OR OTHER SUBSTANCES OF VALUE WHICH MAY BE EXTRACTED FROM THE EARTH (INCLUDING, WITHOUT LIMITATION, OIL AND GAS), AND THE ACCOUNTS RELATING THERETO, WILL BE FINANCED AT THE WELLHEADS OF THE WELLS LOCATED ON THE PROPERTIES DESCRIBED IN EXHIBIT A HERETO, AND THIS INSTRUMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS.”

“THE MORTGAGOR HAS AN INTEREST OF RECORD IN THE REAL ESTATE CONCERNED, WHICH IS DESCRIBED IN EXHIBIT A HERETO.”

“THIS INSTRUMENT, WHICH COVERS AS-EXTRACTED COLLATERAL AND GOODS THAT ARE OR ARE TO BECOME FIXTURES ON THE REAL PROPERTY DESCRIBED HEREIN, SHALL BE FILED AS A FIXTURE FILING WITH RESPECT TO ALL FIXTURES INCLUDED IN THE PROPERTY, AND IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS OF THE COUNTIES AND/OR RECORDING DISTRICTS REFERENCED IN EXHIBIT A HERETO.”

“A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. IN CERTAIN STATES, A POWER OF SALE MAY ALLOW THE COLLATERAL AGENT AND THE TRUSTEE (AS SUCH TERMS ARE HEREINAFTER DEFINED) TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON DEFAULT BY THE MORTGAGOR (AS HEREINAFTER DEFINED) UNDER THIS MORTGAGE.”

WARNING: THIS MORTGAGE CONTAINS A POWER OF SALE AND UPON DEFAULT MAY IN CERTAIN STATES BE FORECLOSED NON-JUDICIALLY PURSUANT TO SUCH POWER OF SALE. IN NON-JUDICIAL FORECLOSURE, NO HEARING IS REQUIRED AND THE ONLY NOTICES REQUIRED UNDER EXISTING LAW ARE THOSE REQUIRED BY TEXAS PROPERTY CODE §51.002 AND AS OTHERWISE REQUIRED HEREUNDER.

THIS INSTRUMENT WAS PREPARED BY AND
WHEN RECORDED AND/OR FILED
RETURN TO:

Bracewell & Giuliani LLP
711 Louisiana St.
South Tower Pennzoil Place, Suite 2300
Houston, Texas 77002
Attention: Dale D. Smith

Page 2

EXHIBIT 99.3

     THIS MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FINANCING STATEMENT AND FIXTURE FILING, dated as of August 8, 2008 (this “Mortgage”), is from QUICKSILVER RESOURCES INC., a Delaware corporation (the “Mortgagor”), to CREDIT SUISSE, Cayman Islands Branch (“Credit Suisse”), in its capacity as Trustee and Collateral Agent (in such capacity, together with its successors and assigns in such capacity, referred to herein as the “Trustee” or the “Collateral Agent”, as applicable) for each of the Secured Parties (hereinafter defined).

     1. The Mortgagor, contemporaneously with the execution hereof, is entering into that certain Credit Agreement, dated as of August 8, 2008 (together with all amendments, supplements, restatements and other modifications, if any, from time to time thereafter made thereto, the “Credit Agreement”), among the Mortgagor, the Lenders from time to time party thereto and Credit Suisse, as Administrative Agent, pursuant to which the Lenders have extended Commitments to make Loans to the Mortgagor.

     2. The Mortgagor is a party to the Existing Senior Notes Indenture which provides that the Mortgagor and the other Loan Parties may not create, incur or suffer to exist Liens on the Collateral created under the Security Documents unless such Liens are “Permitted Liens” under and as defined in the Existing Senior Notes Indenture or, contemporaneously with the incurrence of such Liens, effective provision is made to secure the Existing Senior Notes Obligations equally and ratably with the indebtedness secured by such Liens for so long as such indebtedness is so secured.

     3. It is a condition precedent to the making of Loans to the Mortgagor under the Credit Agreement that the Mortgagor execute and deliver this Mortgage.

     4. The Mortgagor has duly authorized the execution, delivery and performance of this Mortgage.

     5. It is in the best interests of the Mortgagor to execute this Mortgage inasmuch as the Mortgagor will derive substantial direct and indirect benefits from the Loans and other financial accommodations from time to time made to the Mortgagor by the Lenders pursuant to the Credit Agreement.

     6. Capitalized terms not otherwise defined herein shall have the meanings attributed to them in the Credit Agreement. For all purposes of this Mortgage, unless the context otherwise requires:

     A. “Combined Loan Documents” means the Loan Documents and the Existing Senior Notes Documents.

     B. “Contingent Obligations” means contingent obligations for indemnification, expense reimbursement, tax gross-up or yield protection as to which no claim has been made.

     C. “Excluded Collateral” means (a) any vehicles, or any equipment the ownership of which is evidenced by certificate(s) of title, now or hereafter owned by the Mortgagor, (b) any Hedging Agreements to which the Mortgagor is now or hereafter

Page 3

party, or any computer and software licenses, now or hereafter held by the Mortgagor, that are nonassignable by their terms without the consent of the other party or parties thereto or the licensor or sublicensor thereof, as applicable (other than to the extent that such terms would be rendered ineffective pursuant to the U.C.C., including, but not limited to, Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such Hedging Agreements or licenses shall cease to constitute Excluded Collateral, (c) any Pledged Collateral as defined in the Pledge Agreement, (d) any voting Equity Interests in a Foreign Subsidiary to the extent such Equity Interests represent more than 65% of the total combined voting power of all classes of voting Equity Interests of such Foreign Subsidiary, and (e) property subject to Liens permitted by clause (o) of the definition of “Permitted Encumbrances” in the Credit Agreement solely in the event and to the extent that a grant or perfection of a Lien in favor of the Collateral Agent on any such property is prohibited by or results in a breach or termination of, or constitutes a default under, the documentation governing such Liens or the obligations secured by such Liens (other than to the extent that such terms would be rendered ineffective pursuant to the U.C.C. including, but not limited to, Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such terms or the obtainment of such consents, such property shall cease to constitute Excluded Collateral, and (ii) any personal property lease, contract, permit, license, franchise or letter of credit right solely (A) with respect to contracts and other agreements to the extent entered into prior to the date hereof and (B) in the event and to the extent that a grant or perfection of a Lien on such personal property lease, contract, permit, license, franchise or letter of credit right is prohibited by law or results in a breach or termination of, or constitutes a default under, any such personal property lease, contract, permit, license, franchise or letter of credit right (other than to the extent that such law or terms would be rendered ineffective pursuant to the U.C.C. including, but not limited to, Sections 9-406, 9-407, 9-408 or 9-409 of the U.C.C. (or any successor provision or provisions) of any relevant jurisdiction and other than to the extent all necessary consents to creation, attachment and perfection of the Collateral Agent’s Liens thereon have been obtained) and, in any event, immediately upon the ineffectiveness, lapse or termination of such law or terms or the obtainment of such consents, such personal property lease, contract, permit, license, franchise or letter of credit right shall cease to constitute Excluded Collateral.

     D. “Existing Senior Notes Obligations” means “Indebtedness” (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) due with respect to the Existing Senior Notes.

     E. “Existing Senior Notes Secured Parties” has the meaning given to the term “Holders”, as defined in the Existing Senior Notes Indenture as in effect on the date hereof.

Page 4

     F. “First Lien Obligations” has the meaning given to such term in the Intercreditor Agreement.

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

     H. “Intercreditor Agreement” means the Intercreditor Agreement dated as of August 8, 2008, among the Mortgagor, the other Loan Parties, JPMorgan Chase Bank, N.A., as the First Lien Collateral Agent (as defined therein), and Credit Suisse, Cayman Islands Branch, as the Second Lien Collateral Agent (as defined therein).

     I. “lands described in Exhibit A” shall (a) include any lands which are either (i) described in Exhibit A or the description of which is incorporated in Exhibit A by reference to another instrument or document, or (ii) now or hereafter unitized or pooled with lands which are either described in Exhibit A or the description of which is incorporated into Exhibit A by reference and (b) exclude lands which are expressly excluded (if any) from Exhibit A.

     J. “Mortgaged Property” means the properties, rights and interests hereinafter described and defined as the Mortgaged Property.

     K. “Oil and Gas Leases” means oil, gas and mineral leases, subleases and assignments thereof and operating rights, and shall also include subleases and assignments of operating rights.

     L. “Operating Equipment” means all surface or subsurface machinery, goods, equipment, fixtures, facilities, supplies or other property of whatsoever kind or nature now or hereafter located on or under any of the lands described in Exhibit A which are useful or required for or in connection with the operation or maintenance (including, without limitation, for the production, gathering, treatment, processing, storage and transportation of Hydrocarbons) of the Mortgaged Property or any portion thereof or related to the Mortgaged Property or any portion thereof or used in connection therewith, including, but not by way of limitation, all oil wells, gas wells, water wells, injection wells, casing, tubing, tubular goods, rods, pumping units and engines, christmas trees, platforms, derricks, separators, compressors, metering equipment, gun barrels, flow lines, tanks, gas systems (for gathering, treatment or compression), pipelines (including gathering lines, laterals and trunklines), chemicals, solutions, water systems (for treating disposal or injection), steam generation and injection equipment systems, power plants, poles, lines, transformers, starters and controllers, machine shops, tools, storage yards and equipment stored therein, buildings and camps, telegraph, telephone and other communication systems, supervisory, control and data acquisition equipment and other control systems, roads, loading docks, loading racks and shipping facilities.

     M. “Permits” means all governmental authorizations, approvals, permits, variances, land use entitlements, consents, licenses, franchises and agreements now or hereafter required in connection with or applicable to the Mortgaged Property or any

Page 5

portion thereof or used in connection therewith (except to the extent that the granting of a Lien hereunder in the Mortgagor’s right, title and interest in any of the foregoing or the exercise of rights by the Trustee thereunder would violate the terms thereof or of any such Governmental Approval or would cause any of the foregoing to become void or voidable).

     N. “Production Sale Contracts” means contracts now in effect, or hereafter entered into by the Mortgagor, or entered into by the Mortgagor’s predecessors in interest, for the sale, purchase, exchange, gathering, transportation, treating or processing of Hydrocarbons produced from the lands described in Exhibit A attached hereto and made a part hereof (except to the extent that the granting of a Lien hereunder in the Mortgagor’s right, title and interest in any of the foregoing or the exercise of rights by the Trustee thereunder would violate the terms thereof or would cause any such contract to become void or voidable (except to the extent expressly provided in Part 4 of Article 9 of the Uniform Commercial Code (if applicable))).

     O. “Secured Obligations” means, collectively, the Term Obligations and the Existing Senior Notes Obligations

     P. “Secured Parties” means, collectively, the Term Secured Parties and the Existing Senior Notes Secured Parties.

     Q. “Term Secured Parties” means, collectively, (a) the Lenders, (b) the Administrative Agent (including in its capacity as the Collateral Agent hereunder), (c) each other Person to whom any of the Term Obligations (including indemnification obligations) is owed and (d) the successors and assigns of each of the foregoing.

     R. “Uniform Commercial Code” or “U.C.C.” shall mean the Uniform Commercial Code as in effect from time to time in the State of Texas and each other State in which any Mortgaged Property is located, as the same shall be amended from time to time; and the terms “Account”, “As-Extracted Collateral”, “Certificated Security”, “Chattel Paper”, “Commodity Account”, “Commodity Contract”, “Deposit Account”, “Document”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letters of Credit”, “Letter-of-Credit Rights”, “Proceeds”, “Securities”, “Securities Account”, “Security Entitlements”, “Supporting Obligations” and “Uncertificated Security” shall have the respective meanings assigned to such terms in the Uniform Commercial Code.

     7. The rules of construction set forth in Section 1.02 of the Credit Agreement shall also apply to this Mortgage, mutatis mutandis.

     NOW, THEREFORE, the Mortgagor, for and in consideration of the premises and of the debts and trusts hereinafter mentioned, does hereby GRANT, BARGAIN, SELL, WARRANT, MORTGAGE, ASSIGN, PLEDGE AND HYPOTHECATE, TRANSFER AND CONVEY unto the Trustee, in trust, WITH A POWER OF SALE, for the use and benefit of the Collateral Agent for the benefit of each Secured Party, all of the Mortgagor’s right, title, and interest, whether now owned or hereafter acquired, in and to all of the hereinafter described properties, rights, and

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interests; and insofar as such properties, rights and interests consist of Accounts, As-Extracted Collateral, Certificated Securities, Chattel Paper, Commodity Accounts, Commodity Contracts, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letters of Credit, Letter-of-Credit Rights, Securities, Securities Accounts, Security Entitlements, Supporting Obligations or Uncertificated Securities or any Proceeds of the foregoing or any other personal property of a kind or character defined in or subject to the applicable provisions of the Uniform Commercial Code, as in effect from time to time in the appropriate jurisdiction with respect to each of said properties, rights and interests (collectively, the “Collateral”), the Mortgagor hereby grants to said Trustee, for the use and benefit of the Collateral Agent for the benefit of each Secured Party, a security interest in the Collateral to the full extent of the Mortgagor’s legal and beneficial interest therein, whether now owned or hereafter acquired, namely:

     (a) the lands described in Exhibit A attached hereto, together with the Oil and Gas Leases, the fee, mineral, overriding royalty, royalty and other interests relating to the lands described in Exhibit A, all tenements, rights, easements, hereditaments, rights of way, servitudes, advantages, privileges, liberties, appendages and appurtenances now or hereafter belonging or in anywise appertaining to the lands described in Exhibit A (including, without limitation, all rights relating to storm and sanitary sewer, water, gas, electric, railway and telephone services); all development rights, air rights, water, water rights, reservoir and reservoir rights, ditches and ditch rights, wells and well rights, water stock, coal and other substances of any kind or character underlying or relating to the lands described in Exhibit A; all estate, claim, demand, right, title or interest of the Mortgagor in and to any street, road, highway or alley (vacated or otherwise) adjoining the lands described in Exhibit A or any part thereof; all strips and gores belonging, adjacent or pertaining to the lands described in Exhibit A; and any after-acquired title to any of the foregoing (all of the foregoing is herein referred to collectively as the “Land”);

     (b) all pipeline, pipes, gathering systems, buildings, structures and improvements now or in the future located on the Land, all replacements, furnishings, fixtures, fittings, equipment, appliances, machinery, plant equipment, motors, boilers, engines, devices for the operation of pumps, all heating, electrical, lighting, power, plumbing, air conditioning, refrigeration and ventilation equipment, all electrical and steam generating components, all electrical and/or steam interconnections, all transmission lines and pipes, all environmental control equipment, all ancillary structures, equipment and systems, and all other component parts, improvements and property located on the Land (collectively, the “Improvements”; the Land and the Improvements, collectively, the “Property”);

     (c) all minerals, oil, gas, and other Hydrocarbons which are in, on or under, upon, produced or to be produced from the Land in which the Mortgagor has an interest;

     (d) all other rights, titles, interests, estates, reversions, remainders and other claims in the Property, whether in law or in equity, that the Mortgagor now own or hereafter may acquire;

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     (e) all rents, issues, profits, products, cash, payments, warranty proceeds, royalties, income and other benefits and amounts derived from the Property or the Mortgagor’s interest therein (collectively, the “Rents”);

     (f) all leases, subleases, subtenancies, occupancy agreements, licenses and concessions covering the Property or any portion thereof;

     (g) all right, title and interest of the Mortgagor in and to all options to purchase or lease the Property or any portion thereof or interest therein, and any and all rights of first offer or first refusal or other similar rights with respect thereto, and any and every greater estate in the Property;

     (h) all easements, appurtenances, tenements, hereditaments, privileges, franchises, appendages, rights-of-way, and all other rights now or hereafter appurtenant or otherwise related to the Property or any portion thereof or used in connection therewith or as a means of access thereto and/or egress therefrom or which are otherwise of benefit thereto or to the users thereof;

     (i) the presently existing and hereafter arising unitization, unit operating, communitization and pooling agreements and the properties covered and the units created thereby (including, without limitation, all units formed under orders, regulations, rules, approvals, decisions or other official acts of any federal, state or other governmental agency having jurisdiction) relating to the Property;

     (j) all the estate, interest, right, title, other claim or demand (and any and all proceeds) which the Mortgagor now has or may hereafter acquire as a result of or related to the taking by eminent domain, or by any proceeding or purchase in furtherance or in lieu thereof, of the whole or any part of the Property, including any awards resulting from a change of grade of streets and awards for severance damages;

     (k) all the estate, interest, right, title and other claim or demand (and any and all proceeds) which the Mortgagor now has or may hereafter acquire with respect to insurance in effect with respect to all or any part of the Mortgaged Property, including without limitation the right to receive proceeds attributable to the insurance loss of the Improvements;

     (l) all other estate, interest, right, title and other claim or demand (and any and all proceeds thereof) which the Mortgagor now has or may hereafter acquire against any Person with respect to any damage to all or any part of the Mortgaged Property, including damage arising from any defect in or with respect to the design or construction of all or any part of the Improvements and damage, injury or both resulting therefrom;

     (m) all deposits or other security or advance payments, including, without limitation, rental and premium payments made by or on behalf of the Mortgagor to others with respect to (i) insurance policies relating to all or any part of the Mortgaged Property, (ii) utility service for all or any part thereof, (iii) cleaning, maintenance, repair, or similar services for all or any part of the Mortgaged Property, (iv) refuse removal or sewer service for all or any part of the Mortgaged Property, (v) rental of equipment, if any, used

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in the operation by or on behalf of the Mortgagor of all or any part of the Mortgaged Property, and (vi) parking or similar services or rights afforded to all or any part of Mortgaged Property;

     (n) any and all liens and security interests in Hydrocarbons securing the payment of proceeds from the sale of Hydrocarbons, including but not limited to those liens and security interests provided by the statutes of Texas;

     (o) all Production Sale Contracts;

     (p) all Operating Equipment;

     (q) all Permits;

     (r) without duplication of any other provision of this granting clause, all other Accounts, As-Extracted Collateral, Certificated Securities, Chattel Paper, Commodity Accounts, Commodity Contracts, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letters of Credit, Letter-of-Credit Rights, Proceeds, Securities, Securities Accounts, Security Entitlements, Supporting Obligations or Uncertificated Securities arising from, or relating to, the properties and other interests described in Exhibit A;

     (s) any and all accessions and additions to, replacements and substitutions for, and proceeds and products of, the properties encumbered by this Mortgage; for purposes of this Mortgage, the term “proceeds” includes whatever is receivable or received when the property and estate referred to herein (or proceeds thereof) is sold, collected, exchanged or otherwise disposed, whether such disposition is voluntary or involuntary, and includes, all rights to payment, including return premiums with respect to any insurance relating thereto; and

     (t) any and all other property of every kind and nature from time to time hereafter, by delivery or by writing of any kind, conveyed, pledged, assigned or transferred as and for additional security hereunder by the Mortgagor or by anyone in its behalf to the Collateral Agent, which is hereby authorized to receive the same at any time as additional security hereunder;

together with any and all corrections or amendments to, or renewals, extensions or ratifications of, or replacements or substitutions for, any of the same, or any instrument relating thereto, and all accounts, instruments, contracts, contract rights, options, nominee agreements, operating agreements, processing agreements, farmin agreements, farmout agreements, joint venture agreements, partnership agreements, exploration agreements, bottomhole agreements, dryhole agreements, support agreements, acreage contribution agreements, surface use and surface damage agreements, Hedging Agreements, insurance policies, title opinions, title abstracts, title materials and information, files, records, writings, data bases, information, systems, logs, well cores, fluid samples, production data and reports, well testing data and reports, maps, seismic and geophysical, geological and chemical data and information, interpretative and analytical reports of any kind or nature (including, without limitation, reserve studies and reserve

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evaluations), computer hardware and software and all documentation therefore or relating thereto (including, without limitation, all licenses relating to or covering such computer hardware, software and/or documentation but excluding software licenses that are non-assignable by their terms without the consent of the other party or parties thereto or the licensor (or sublicensor) thereof, as applicable), trade secrets, trademarks, service marks and business names and the goodwill of the business relating thereto, copyrights, copyright registrations, unpatented inventions, patent applications and patents, rights-of-way, franchises, bonds, easements, servitudes, surface leases, permits, licenses, tenements, hereditaments, appurtenances, concessions, occupancy agreements, privileges, development rights, condemnation awards, claims against third parties, general intangibles, letters of credit and letter-of-credit rights, money, payment intangibles, rents, royalties, issues, profits, products, proceeds, distributions on, rights arising out of, returns of and from, and any and all claims and/or insurance payments arising out of the loss or non-conformity, or interference with the use of, defects or infringement of rights in, or damage to, in each case whether now or hereafter existing or arising, used or useful in connection with, covering, relating to, or arising from or in connection with, any of the aforesaid items (a) through (t), inclusive, in this granting clause referenced, and all other things of value and incident thereto (including, without limitation, any and all liens, lien rights, security interests and other rights and interests) which the Mortgagor might at any time have or be entitled to,

all of the aforesaid properties, rights and interests, together with any additions thereto which may be subjected to the lien and security interest of this Mortgage by means of supplements hereto, being hereinafter called the “Mortgaged Property”; provided, however, that, notwithstanding anything to the contrary contained herein, the Mortgaged Property shall not include, and the Collateral Agent and the Secured Parties shall not by virtue of this Mortgage have a Lien on, any Excluded Collateral.

     Subject, however, to (i) the restrictions, exceptions, reservations, conditions, limitations, interests and other matters, if any, set forth or referred to in the specific descriptions of such properties and interests in Exhibit A, (ii) the assignment of production contained in Article III hereof, but only insofar and so long as said assignment of production is not inoperative under the provisions of Section 3.5 hereof, and (iii) the condition that neither the Collateral Agent nor any of the other Secured Parties shall be liable in any respect for the performance of any covenant or obligation (including, without limitation, measures required to comply with Environmental Laws) of the Mortgagor in respect of the Mortgaged Property.

     TO HAVE AND TO HOLD the Mortgaged Property unto the Trustee for the use and benefit of the Collateral Agent for the benefit of each Secured Party, to secure the payment in full in cash and performance of all the Secured Obligations. The Mortgaged Property is to remain so specially mortgaged, affected and hypothecated unto and in favor of the Trustee to secure payment of the Secured Obligations (including the performance of the obligations of the Mortgagor herein contained) until full and final payment in cash of all the Term Obligations (other than Contingent Obligations) and, except to the extent permitted by the Credit Agreement, the Mortgagor is herein and hereby bound and obligated not to sell or alienate the Mortgaged Property to the prejudice of this act.

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     The Mortgagor, in consideration of the above premises and to induce the Lenders to make Loans and other financial accommodations to the Mortgagor, hereby covenants and agrees with the Collateral Agent, for the benefit of the Secured Parties, as follows:

ARTICLE I.
Secured Obligations

     1.1 Reserved.

     1.2 Reserved.

     1.3 Future Advances; Limit on Principal Amount of Indebtedness.

     (a) The Mortgaged Property secures the payment in full in cash and performance of all the Secured Obligations. The Mortgagor, the Collateral Agent and each other Secured Party expressly intend that this Mortgage secure, and this Mortgage shall secure, a line of credit and other additional amounts advanced, from time to time, or other sums which may be advanced to the Mortgagor or otherwise become due to the Collateral Agent or any other Term Secured Party under the Credit Agreement or this Mortgage, or any extension, renewal or modification thereof, including without limitation, loans made on demand, term or revolving credit basis.

     (b) The maximum principal amount of Secured Obligations which may be outstanding at any time and secured by this Mortgage, exclusive of interest or premium thereon, unpaid balances of advances made with respect to the Mortgaged Property for the payment of taxes, assessments, insurance premiums, amounts owing with respect to indemnity and expense reimbursement obligations of the Mortgagor or any other Loan Party under this Mortgage, or any of the other Combined Loan Documents, costs incurred for the protection of the Mortgaged Property and all other costs, fees or expenses which the Collateral Agent, the Administrative Agent or any other Secured Party is authorized to pay on the Mortgagor’s behalf or for which the Mortgagor or any other Loan Party is liable under the Credit Agreement, this Mortgage or the other Combined Loan Documents, all of which shall also be secured by this Mortgage, is $1,500,000,000. As an inducement to the Term Secured Parties to make the extensions of credit under the Loan Documents, the Mortgagor hereby irrevocably, absolutely and unconditionally waives and relinquishes any right to which it may be entitled to reduce the maximum amount of the Secured Obligations that this Mortgage secures.

ARTICLE II.
Particular Covenants and Warranties of the Mortgagor

     2.1 Payment of the Secured Obligations. The Mortgagor will duly and punctually pay and timely perform the Secured Obligations as and to the extent it is required to do so under any Combined Loan Document to which it is a party.

     2.2 Certain Representations and Warranties. The Mortgagor represents and warrants to the Collateral Agent, for the benefit of the Secured Parties, that (a) the Oil and Gas Leases described in Exhibit A hereto are valid, subsisting leases and are in full force and effect in accordance with their respective terms, (b) all producing oil and gas wells located on the lands described in Exhibit A, or lands pooled therewith, that are owned or operated by the Mortgagor

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have been drilled, operated and produced in material conformity with all applicable laws, rules and regulations of all governmental authorities having jurisdiction, and are subject to no penalties under any such law, rule or regulation on account of past production, and such wells are in fact bottomed under and are producing from, and the well bores are wholly within, the lands described in Exhibit A, or lands pooled therewith, (c) the Mortgagor, to the extent of the interest specified in Exhibit A, has defensible title (subject to Immaterial Title Deficiencies and Permitted Encumbrances) to or a valid leasehold interest in the lands described in Exhibit A and has a good and legal right (subject to Immaterial Title Deficiencies and Permitted Encumbrances) to grant and convey the same to the Trustee, it being understood that the Mortgagor’s interest in each Oil and Gas Lease shall exceed the Mortgagor’s net interest in production from such lease to the extent of the Mortgagor’s proportionate share of the burden of all royalties, overriding royalties and other such payments out of production, (d) the Mortgaged Property is free from all encumbrances or liens whatsoever, except for the Permitted Encumbrances, (e) the Mortgaged Property owned or operated by the Mortgagor is currently being operated, maintained and developed in all material respects in accordance with all applicable currently existing Permits, and all applicable federal, tribal, state and local laws, rules and regulations (except to the extent that the failure to obtain any such Permit or to comply with any such law, rule or regulation would not reasonably be expected to have a Material Adverse Effect), (f) the Mortgagor is not obligated, by virtue of any prepayment under any contract providing for the sale by the Mortgagor of Hydrocarbons which contains a “take or pay” clause or under any similar arrangement, to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor, except to the extent permitted under the Loan Documents and except to the extent such sales of Hydrocarbons would not cause the representation in Section 3.17(b) of the Credit Agreement to no longer be true and correct, and (g) (i) the true legal name of the Mortgagor as registered in the jurisdiction in which the Mortgagor is organized, formed or incorporated is listed on the cover page to this Mortgage or is as set forth in a notice delivered pursuant to Section 2.13, (ii) the Mortgagor’s state of incorporation, formation or organization, its organization identification number as designated by the state of its incorporation, formation or organization, its chief executive office and its principal place of business are as set forth on Schedule I hereto or are as set forth in a notice delivered pursuant to Section 2.13, (iii) the Mortgagor is not now and, within five years prior to the date hereof, has not been known by any trade name, and (iv) the Mortgagor is not now and, within five years prior to the date hereof, has not been known by any legal name different from the one set forth on the cover page of this Mortgage. The Mortgagor will warrant and forever defend the Mortgaged Property unto the Trustee against every Person whomsoever lawfully claiming the same or any part thereof (subject, however, to Immaterial Title Deficiencies and Permitted Encumbrances), and the Mortgagor will maintain and preserve the Liens and security interests hereby created, or purported to be created, until the earlier of such time that (A) all the Term Obligations (other than Contingent Obligations) have been indefeasibly paid in full in cash or (B) such Liens and security interests have otherwise been released by the Collateral Agent (with the consent of the requisite Lenders to the extent required under the Credit Agreement).

     2.3 Further Assurances. (a) The Mortgagor will execute and deliver such other and further instruments and will do such other and further acts as, in the opinion of the Collateral Agent, may be necessary or reasonably requested by the Collateral Agent to carry out the purposes of this Mortgage, including, without limiting the generality of the foregoing, (i) to perfect, preserve and (subject to Immaterial Title Deficiencies and Permitted Encumbrances)

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protect any Lien granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to the Mortgaged Property, (ii) to promptly correct any defect which may hereafter be discovered in the title to the Mortgaged Property (other than Immaterial Title Deficiencies and Permitted Encumbrances) or in the execution and acknowledgment of this Mortgage or any other Loan Document executed in connection herewith, and (iii) to promptly execute and deliver all notices to account debtors of the Mortgagor, including all parties producing, purchasing or receiving proceeds of production of Hydrocarbons from the Mortgaged Property, and all division orders or transfer orders or other agreements or instruments, any of which, in the reasonable opinion of the Collateral Agent, is needed in order to transfer effectually, or to assist in transferring effectually, to the Collateral Agent the assigned proceeds of production from the Mortgaged Property in accordance with Article III.

          (b) Notwithstanding anything to the contrary contained herein but subject to the proviso of this Section 2.3 and subject to requirements set forth in the Security Agreement, the Mortgagor shall not be required to take, at any time when an Event of Default has not occurred and is not continuing, any actions to perfect the Collateral Agent’s Liens in any Mortgaged Property constituting personal property that is not a Fixture (the “Personal Property Collateral”) to the extent such perfection requires more than the authorization, preparation, delivery and the filing of Uniform Commercial Code financing statements (and any necessary amendments, assignments or continuation statements with respect thereto) with the Secretary of State (or other relevant Government Authority) of the jurisdiction of the Mortgagor’s organization, formation or incorporation; provided that the Collateral Agent may independently take any such actions to perfect such Liens in such Personal Property Collateral as it reasonably deems appropriate (without being able to require the Mortgagor to cooperate in such action unless an Event of Default has occurred and is continuing), which actions shall be at the expense of the Mortgagor.

     2.4 Taxes. Subject to the Mortgagor’s right to contest the same, the Mortgagor will promptly pay all Taxes, assessments and governmental charges legally imposed upon this Mortgage or upon the Mortgaged Property, or upon the interest of the Collateral Agent or the other Secured Parties therein, or upon the income and profits of such Mortgaged Property; provided however, that no payment of such Taxes, assessments and charges shall be required to the extent that (i) (a) the amount, applicability or validity thereof is currently being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and no material property of the Mortgagor is subject to any pending levy or execution and (b) the Mortgagor, as and to the extent required in accordance with GAAP, shall have set aside on its books reserves (segregated to the extent required by GAAP) deemed by it to be adequate with respect thereto or (ii) the failure to make such payment pending such contest, when considered in addition to the failure of any other Loan Party to pay Taxes, assessments and governmental charges imposed upon it or any of its assets or with respect to any of its franchises, business, income or profits, would not reasonably be expected to have a Material Adverse Effect or result in the seizure or levy of any material property of any Loan Party.

     2.5 Operation of the Mortgaged Property. As long as any of the Term Obligations (other than Contingent Obligations) remains unpaid, and whether or not the Mortgagor is the

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operator of the Mortgaged Property, the Mortgagor shall, at the Mortgagor’s own reasonable expense:

     (a) Do all commercially reasonable things necessary to keep unimpaired the Mortgagor’s rights in the Mortgaged Property (except for Immaterial Title Deficiencies and Permitted Encumbrances) and not, except in the ordinary course of business or as specified in clauses (i) and (ii) below, abandon any well or forfeit, surrender or release any oil and gas lease or any rights in the Mortgaged Property, or enter into any operating agreement with respect to the Mortgaged Property if a reasonably prudent operator would not undertake such action (except in each case to the extent (i) permitted under Section 2.7, and (ii) any such Mortgaged Property is no longer capable of producing Hydrocarbons in economically reasonable amounts), without the prior written consent of the Collateral Agent;

     (b) Obtain and maintain all Permits required to be obtained for the development or operation of the Mortgaged Property and cause the lands described in Exhibit A to be maintained, developed and operated (including for the operated for the production of Hydrocarbons) in a good and workmanlike manner as would a prudent operator (subject to ordinary wear and tear), and in accordance with generally accepted practices, and in accordance in all material respects with all applicable operating agreements, and all applicable federal, state and local laws, rules and regulations, excepting those being contested in good faith and excepting those for which the failure to obtain would not reasonably be expected to have a Material Adverse Effect;

     (c) Pay or cause to be paid, promptly as and when due and payable, all rentals and royalties (including shut-in royalties) payable in respect of Oil and Gas Leases and other leases and contracts constituting the Mortgaged Property, and all expenses incurred in or arising from the operation or development of the Mortgaged Property, except for those amounts being contested by the Mortgagor in good faith in such manner as not to jeopardize the rights of the Collateral Agent and the other Secured Parties in and to the Mortgaged Property, provided that, in the case of delay rentals, the Mortgagor shall only be required to pay and discharge, or make commercially reasonable efforts to pay and discharge, delay rentals as and to the extent the Mortgagor determines in good faith that payment and discharge thereof is in the Mortgagor’s best interest;

     (d) Cause the Operating Equipment to be kept in good and effective operating condition (normal wear and tear excepted), and all repairs, renewals, replacements, additions and improvements thereof or thereto, to the extent necessary for the production of Hydrocarbons from the lands described in Exhibit A (subject to Section 2.5(b)) to be promptly made (provided that no item of Operating Equipment need be so repaired, renewed, replaced, added to or improved upon if the Mortgagor shall in good faith determine that such action is not necessary or desirable for the continued efficient and profitable operation of that portion of Mortgaged Property relating to such Operating Equipment or if the failure to so repair, renew, replace, add to or improve would not in the aggregate reasonably be expected to have a Material Adverse Effect);

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     (e) Cause the Mortgaged Property to be kept free and clear of liens, charges and encumbrances of every character, other than Immaterial Title Deficiencies and Permitted Encumbrances;

     (f) Maintain or cause to be maintained insurance as required pursuant to the Credit Agreement;

     (g) Not initiate or acquiesce in any change in any material zoning or other land use now or hereafter in effect that materially adversely affects the Mortgagor’s interest in the Mortgaged Property or any part thereof;

     (h) Notwithstanding anything in this Section 2.5 to the contrary, as to any Mortgaged Property which is a working interest operated by a Person other than the Mortgagor, the Mortgagor agrees to use commercially reasonable efforts to cause the operator of such property to comply in all material respects with the applicable covenants and agreements contained herein; and

     (i) Appear in and defend, with counsel reasonably acceptable to the Collateral Agent, any action or proceeding purporting to adversely affect the Liens created or purported to be created hereunder or the rights or powers of the Collateral Agent or the other Secured Parties hereunder; and pay all reasonable out-of-pocket costs and expenses, including cost of evidence of title and attorneys’ fees incurred by the Collateral Agent or other Secured Parties, in any such action or proceeding in which the Collateral Agent or the other Secured Parties may appear.

     2.6 Recording, Filings, etc. The Mortgagor will promptly, and at the Mortgagor’s expense, record, register, deposit and file (and hereby also authorizes the Collateral Agent and its agents, at the Mortgagor’s expense, to record, register, deposit and file) this and every other instrument in addition or supplemental hereto in such offices and places and at such times and as often as may be necessary or as reasonably requested by the Collateral Agent to preserve, protect, perfect and maintain the Lien and security interest hereof as a first prior Lien on the Mortgaged Property (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law), and the rights and remedies of the Collateral Agent and the other Secured Parties, and otherwise will do and cause to be done all things or matters necessary or required to be done or observed by reason of any law or regulation of any State or of the United States of America or of any other competent governmental authority, for the purpose of effectively creating, maintaining, perfecting and preserving the Lien and security interest hereof on and in the Mortgaged Property. The Mortgagor hereby authorizes the Collateral Agent and its agents to file Uniform Commercial Code financing statements, continuations and amendments with respect to the Mortgaged Property describing the collateral as “all property” or words of similar import, and to file Uniform Commercial Code financing statements, continuations and amendments and other similar documents with respect to the Mortgaged Property without its signature (to the extent permitted by applicable law).

     2.7 Sale or Mortgage of the Mortgaged Property. Except as permitted by the Credit Agreement, the Mortgagor will not sell, convey, mortgage, pledge, or otherwise dispose of or

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encumber the Mortgaged Property nor any portion thereof, nor any of the Mortgagor’s right, title or interest therein.

     2.8 Records, Statements and Reports. The Mortgagor will keep proper books of record and account in which complete and correct entries will be made of the Mortgagor’s transactions in accordance with GAAP.

     2.9 No Governmental Approvals. The Mortgagor warrants and represents that no approval or consent of any regulatory or administrative commission or authority, or of any other governmental body, is required to authorize (a) the execution and delivery of this Mortgage, or (b) the observance or performance by the Mortgagor of the covenants herein contained, except for such approvals or consents that have been obtained or will be obtained promptly.

     2.10 Right of Inspection.

     (a) To the full extent the Mortgagor has the right to do so, the Mortgagor will permit the Collateral Agent, or its agents, at the reasonable cost and expense of the Mortgagor, to enter upon the Mortgaged Property and all parts thereof, upon prior written notice to the Mortgagor at such reasonable times during the Mortgagor’s normal business hours (and in a manner so as, to the extent practicable, not to interfere with the normal business operations of the Mortgagor and in accordance with the Mortgagor’s safety policies then in effect for the purpose of examining and inspecting the condition and operation of the Mortgaged Property and to inspect, review and reproduce as reasonably necessary any books, records, accounts, contracts or other documents of the Mortgagor related to the Mortgaged Property, provided that, so long as no Event of Default has occurred and is continuing, the Mortgagor shall not be required to bear the expense of more than one (1) inspection during any calendar year in the aggregate pursuant to this Section and Section 5.06 of the Credit Agreement; provided further that if an Event of Default has occurred and is continuing, the Collateral Agent shall be entitled to conduct more frequent inspections at the Mortgagor’s reasonable expense.

     (b) Without limiting the generality of the foregoing, if either (i) an Event of Default has occurred and is continuing or (ii) the Collateral Agent or the Required Lenders reasonably determine in good faith that (A) the Mortgaged Property is being used in violation of any Environmental Law in any material respect or (B) any Hazardous Materials are being generated, stored, transported or disposed of on, in or under, or Hazardous Discharge has occurred from or on, the Property in violation of any Environmental Law in any material respect, the Collateral Agent and any Lender shall have the right, on five (5) Business Days’ prior notice to the Mortgagor if no Event of Default has occurred and is continuing, to cause such persons and entities as any of them may designate to enter the Mortgaged Property to conduct (at the reasonable cost and expense of the Mortgagor), or to cause the Mortgagor to conduct (at the reasonable cost and expense of the Mortgagor), an environmental site assessment of the affected Mortgaged Property and such other tests as the Collateral Agent, acting reasonably, deems necessary. Such assessment and tests may include, without limitation, underground borings, ground water analyses and borings from the floors, ceilings and walls of any improvements located on the Mortgaged Property. The Collateral Agent or any Lender, as applicable, conducting an environmental site assessment agrees to promptly deliver to the Mortgagor a copy of any final report prepared in connection with such environmental site assessment. This

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Section 2.10 shall not be construed to affect or limit the obligations of the Mortgagor pursuant to Section 2.5 hereof.

     (c) Neither the Collateral Agent nor any Lender shall have any duty to visit or observe the Mortgaged Property or to conduct tests, and no site visit, observation or testing by the Collateral Agent or any Lender shall impose any liability on any of them, nor shall the Mortgagor or any other Loan Party be entitled to rely on any visit, observation or testing by any of them in any respect. The Collateral Agent and the Lenders shall, at the request and expense of the Mortgagor, disclose to the Mortgagor or may, upon contemporaneous notice to the Mortgagor, disclose to any Governmental Authority or may, upon prior notice to the Mortgagor, disclose to any other Person, any report or finding made as a result of, or in connection with, any site visit, observation or testing by any of them. The Mortgagor agrees that neither the Collateral Agent nor any of the Lenders makes any warranty or representation to the Mortgagor or any other Loan Party regarding the truth, accuracy or completeness of any such report or findings so disclosed. The Mortgagor also acknowledges that, depending upon the results of any site visit, observation or testing by the Collateral Agent or the Lenders disclosed to the Mortgagor, the Mortgagor may have a legal obligation to notify one or more governmental agencies of such results and that such reporting requirements are site-specific and are to be evaluated by the Mortgagor without advice or assistance from the Collateral Agent or the Lenders.

     2.11 Environmental Laws. The Mortgagor represents and warrants on the date hereof that except for matters disclosed on Schedule 3.14 to the Credit Agreement (a) there are no claims against Mortgagor alleging potential liability under or responsibility for material violation of any Environmental Laws with respect to the Mortgaged Property, (b) there is no Hazardous Discharge or any Hazardous Material on any Mortgaged Property in violation of any applicable Environmental Laws, and (c) there is no other material violation of or by the Mortgagor of any existing applicable Environmental Laws with respect to the Mortgaged Property, except in each case where the existence or occurrence of any of the foregoing would not reasonably be expected to have a Material Adverse Effect.

     2.12 Corporate Mortgagor. The Mortgagor is duly qualified to transact business in each state where the conduct of its business requires it to be qualified, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.

     2.13 State of Incorporation, Formation or Organization. The Mortgagor will furnish to the Collateral Agent promptly, and in any event within 30 days of an Authorized Officer of the Mortgagor becoming aware of same, written notice of any change in the Mortgagor’s (a) legal name or jurisdiction of organization, (b) identity or corporate structure or (c) organizational number issued to the Mortgagor by its jurisdiction of organization, or if such jurisdiction requires such information to be set forth on the face of a UCC financing statement, the Mortgagor’s Federal Taxpayer Identification Number. The Mortgagor shall take all actions necessary or reasonably requested by the Collateral Agent to ensure that, notwithstanding any such change, the Liens on the Mortgaged Property granted in favor of the Collateral Agent, for the benefit of the Secured Parties, remain perfected, first priority Liens (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law).

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ARTICLE III.
Assignment of Production; Fixtures; Indemnification

     3.1 Assignment. As further security for the payment in full in cash and performance of all the Secured Obligations, the Mortgagor hereby transfers, assigns, warrants and conveys to the Collateral Agent, for the benefit of the Secured Parties, effective as of August 8, 2008, all Hydrocarbons which are thereafter produced from and which accrue to the Mortgaged Property (the “Production”), and all proceeds therefrom (the “Production Proceeds”). Following the occurrence and during the continuance of an Event of Default, the Mortgagor authorizes and empowers the Collateral Agent to demand, collect, receive and give receipt for all Production and Production Proceeds. THE MORTGAGOR IRREVOCABLY APPOINTS THE COLLATERAL AGENT AS THE AGENT AND ATTORNEY-IN-FACT OF MORTGAGOR, FOR THE PURPOSE OF EXECUTING ANY TRANSFER ORDERS, PAYMENT ORDERS, DIVISION ORDERS, RECEIPTS, RELEASES OR OTHER INSTRUMENTS (COLLECTIVELY, “RECEIPTS”) THAT THE COLLATERAL AGENT DEEMS REASONABLY NECESSARY IN ORDER FOR THE COLLATERAL AGENT TO DEMAND, COLLECT, RECEIVE AND GIVE RECEIPTS FOR PRODUCTION AND PRODUCTION PROCEEDS FOLLOWING THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. The Mortgagor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest. In addition, the Mortgagor agrees that, following the occurrence and continuance of an Event of Default, the Mortgagor shall promptly execute and deliver to the Collateral Agent such Receipts as the Collateral Agent may reasonably request in connection with the payment and delivery directly to the Collateral Agent of all Production and Production Proceeds and to effectuate the purposes of this paragraph. All parties producing, purchasing or receiving any Production or having Production or Production Proceeds in their possession for which they or others are accountable to the Collateral Agent by virtue of the provisions of this Article III, are authorized and directed to treat and regard the Collateral Agent, following a written notice from the Collateral Agent to such parties notifying them that an Event of Default has occurred and is continuing, as the assignee and transferee of the Mortgagor and entitled in the Mortgagor’s place and stead to receive Production and Proceeds; and said parties and each of them shall be fully protected in so treating and regarding the Collateral Agent and shall be under no obligation to see to the application by the Collateral Agent of any Production or Production Proceeds received by it. Notwithstanding any term or provision in this Section 3.1, the Collateral Agent, for the benefit of the Secured Parties, has agreed not to exercise its right to directly receive delivery of Production and payment of Production Proceeds until an Event of Default has occurred and is continuing, and each party producing, purchasing or receiving Production may continue to make such deliveries or payments to the Mortgagor until such time as such party has received notice from the Collateral Agent that an Event of Default has occurred and is continuing and that such party is directed to make delivery or payment directly to the Collateral Agent.

     3.2 Application of Production Proceeds. All payments received by the Collateral Agent pursuant to Section 3.1 hereof shall be applied in the manner set forth in Section 5.9 hereof.

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     3.3 Fixture Filing. This Mortgage covers certain items of property which are or are to become fixtures, and constitutes a financing statement to be filed as a fixture filing, as defined in the Uniform Commercial Code, executed (to the extent required) and delivered by the Mortgagor, as “debtor”, in favor of the Collateral Agent, as “secured party”. This Mortgage is to be recorded in the real property records in each appropriate county where any fixtures included within the term “Mortgaged Property”, as that term is used herein, may now or hereafter be located. The address of the Collateral Agent referenced in Section 6.20 is also the address from which information concerning the security may be obtained by any interested party.

     3.4 No Liability of the Collateral Agent in Collecting. The Collateral Agent is hereby absolved from all liability for failure to enforce collection of any proceeds so assigned (and no such failure shall be deemed to be a waiver of any right of the Collateral Agent under this Article III) and from all other responsibility in connection therewith, except for liability for failure to account to the Mortgagor for funds actually received and for the gross negligence or willful misconduct of the Collateral Agent (IT BEING UNDERSTOOD THAT THE COLLATERAL AGENT SHALL NOT BE LIABLE FOR ANY NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL).

     3.5 Assignment Not a Restriction on the Collateral Agent’s Rights. Nothing herein contained shall detract from or limit the absolute obligation of the Mortgagor to make payment of the Secured Obligations regardless of whether the proceeds assigned by this Article III would be sufficient to pay the same, and the rights under this Article III shall be in addition to all other security now or hereafter existing to secure the payment of the Secured Obligations.

     3.6 Status of Assignment. Notwithstanding the other provisions of this Article III and in addition to the other rights hereunder, the Collateral Agent or any receiver appointed in judicial proceedings for the enforcement of this Mortgage shall have the right to receive all of the Production and Production Proceeds after any of the Secured Obligations have been declared due and payable in accordance with the provisions of Section 5.1 hereof and to apply all of said proceeds as provided in Section 5.9 hereof. Upon any sale of the Mortgaged Property or any part thereof that is permitted by the Credit Agreement, the Hydrocarbons thereafter produced from the property so sold, and the proceeds therefrom, shall be included in such sale and shall pass to the purchaser free and clear of the assignment contained in this Article III.

     3.7 Indemnity. WITHOUT LIMITING THE GENERALITY OF THE PROVISIONS OF SECTION 10.03 OF THE CREDIT AGREEMENT, AND EXCEPT TO THE EXTENT REIMBURSEMENT OF EXPENSES IS LIMITED BY SECTION 10.03(A) OF THE CREDIT AGREEMENT TO REIMBURSEMENT OF EXPENSES OF ONLY CERTAIN PARTIES, THE MORTGAGOR AGREES TO INDEMNIFY THE ADMINISTRATIVE AGENT (INCLUDING IN ITS CAPACITY AS THE COLLATERAL AGENT/TRUSTEE, AND ANY SUB-AGENT THEREOF), EACH ARRANGER, EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (THE “INDEMNIFIED PARTIES”) AGAINST ALL CLAIMS, ACTIONS, LIABILITIES, JUDGMENTS, COSTS, ATTORNEYS’ FEES OR OTHER CHARGES OF WHATSOEVER KIND OR NATURE (ALL HEREINAFTER IN THIS

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SECTION 3.7 CALLED “CLAIMS”) MADE AGAINST OR INCURRED BY THEM OR ANY OF THEM AS A CONSEQUENCE OF THE ASSERTION, EITHER BEFORE OR AFTER THE PAYMENT IN FULL IN CASH OF THE TERM OBLIGATIONS, THAT THEY OR ANY OF THEM RECEIVED HYDROCARBONS HEREIN ASSIGNED OR PROCEEDS THEREOF CLAIMED BY THIRD PERSONS, EXCEPT, WITH RESPECT TO ANY INDEMNIFIED PARTY, FOR ANY SUCH CLAIMS DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. THE MORTGAGOR WILL INDEMNIFY AND PAY TO EACH INDEMNIFIED PARTY ANY AND ALL SUCH AMOUNTS AS MAY BE PAID IN RESPECT THEREOF OR AS MAY BE SUCCESSFULLY ADJUDGED AGAINST SUCH INDEMNIFIED PARTY OR ANY OF THEM, EXCEPT AS OTHERWISE LIMITED BY THE PRECEDING SENTENCE. THE OBLIGATIONS OF THE MORTGAGOR AS HEREINABOVE SET FORTH IN THIS SECTION 3.7 SHALL SURVIVE THE RELEASE, TERMINATION, FORECLOSURE OR ASSIGNMENT OF THIS MORTGAGE OR ANY SALE HEREUNDER. NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH INDEMNIFIED PARTY BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL.

     3.8 Rights Under Statutes. The Mortgagor hereby appoints the Collateral Agent as its attorney-in-fact during the continuance of an Event of Default to pursue any and all lien rights of the Mortgagor to liens and security interests in the Mortgaged Property securing payment of Production and Production Proceeds attributable to the Mortgaged Property, including, but not limited to, those liens and security interests provided by the statutes of Texas. The Mortgagor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest. The Mortgagor further hereby assigns to the Collateral Agent, as security for payment in full in cash and performance of all the Secured Obligations, any and all such liens, security interests, financing statements, or similar interests of the Mortgagor attributable to its interests in the Mortgaged Property and Production and Production Proceeds therefrom arising under or created by said statutory provisions, judicial decisions, or otherwise.

ARTICLE IV.
The Collateral Agent and the Trustee

     The provisions of Article V of the Security Agreement are hereby incorporated by reference, mutatis mutandis, with the same force and effect as if set forth in full herein, and by acceptance of the benefits of, or claiming any rights under, this Mortgage, each Secured Party shall be deemed to have agreed to be bound by the terms thereof. Without limiting the generality of the foregoing, by acceptance of the benefits of, or claiming any rights under, this Mortgage, each Secured Party shall be deemed to have (i) irrevocably appointed Credit Suisse (or any successor or assignee Collateral Agent) to serve as the Collateral Agent and the Trustee under this Mortgage, and authorized the Collateral Agent and the Trustee to take such actions on its

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behalf and to exercise such powers as are delegated to the Collateral Agent and the Trustee by the terms of this Mortgage, together with such actions and powers as are reasonably incidental thereto, (ii) irrevocably agreed and consented that (a) the Collateral Agent and the Trustee shall have the authority to act as the exclusive agent of such Secured Party for enforcement of any provisions of this Mortgage against the Mortgagor or the exercise of remedies hereunder and (b) such Secured Party shall not take any action to enforce any provisions of this Mortgage against the Mortgagor or to exercise any remedy hereunder and (iii) irrevocably have agreed and consented to the limitations on duties, obligations, responsibilities and liabilities of the Collateral Agent and the Trustee set forth in such provisions.

ARTICLE V.
Enforcement of the Security

     The Trustee’s enforcement of the security interests granted herein and the remedies available to the Trustee upon the occurrence and during the continuance of an Event of Default shall be subject to the terms of the Intercreditor Agreement as set forth in Section 6.28 hereof.

     5.1 Power of Sale and Foreclosure of Real Property Constituting a Part of the Mortgaged Property. Upon the occurrence and during the continuance of an Event of Default, the Trustee shall have the right and power to sell, to the extent permitted by law, at one or more sales, as an entirety or in parcels, as it may elect, the real property constituting a part of the Mortgaged Property, at such place or places and otherwise in such manner and upon such notice as may be required by law, or, in the absence of any such requirement, as the Trustee may deem appropriate, and to make conveyance to the purchaser or purchasers; and the Mortgagor shall warrant title to such real property to such purchaser or purchasers. The Trustee may postpone the sale of all or any portion of such real property by public announcement at the time and place of such sale, and from time to time thereafter may further postpone such sale by public announcement (and provision of other notices as required by applicable law) made at the time of sale fixed by the preceding postponement. The right of sale hereunder shall not be exhausted by one or any sale, and the Trustee may make other and successive sales until all of the trust estate be legally sold.

     With respect to that portion, if any, of the Mortgaged Property situated in the State of Texas, the Trustee and its successors or substitutes are hereby authorized and empowered to sell such Mortgaged Property at public sale to the highest bidder for cash in the area at (or within a reasonable proximity of) the county courthouse of the county in Texas in which the Texas portion of the Mortgaged Property or any part thereof is situated, as herein described, designated by such county’s commissioners court for such proceedings, or if no area is so designated, at the door of the county courthouse of said county, at a time between the hours of 10:00 A.M. and 4:00 P.M. which is no later than three (3) hours after the time stated in the notice described immediately below as the earliest time at which such sale would occur on the first Tuesday of any month, after advertising the earliest time at which said sale would occur, the place, and terms of said sale, and the portion of the Mortgaged Property to be sold, by (a) posting (or by having some person or persons acting for the Trustee post) for at least twenty-one (21) days preceding the date of the sale, written or printed notice of the proposed sale at the courthouse door of said county in which the sale is to be made; and if such portion of the Mortgaged Property lies in

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more than one county, one such notice of sale shall be posted at the courthouse door of each county in which such part of the Mortgaged Property is situated and such part of the Mortgaged Property may be sold in the area at (or within a reasonable proximity of) the county courthouse of any one of such counties designated by such county’s commissioners court for such proceedings, or if no area is so designated, at the courthouse door of such county, and the notice so posted shall designate in which county such property shall be sold, and (b) filing in the office of the county clerk of each county in which any part of the Texas portion of the Mortgaged Property which is to be sold at such sale is situated a copy of the notice posted in accordance with the preceding clause (a). In addition to such posting and filing of notice, the Trustee shall, at least twenty-one (21) days preceding the date of sale, serve or cause to be served written notice of the proposed sale by certified mail on the Mortgagor and on each other debtor, if any, obligated to pay the Secured Obligations according to the records of the Collateral Agent or other holder of the Secured Obligations. Service of such notice shall be completed upon deposit of the notice, enclosed in a postpaid wrapper properly addressed to the Mortgagor and such other debtors at their most recent address or addresses as shown by the records of the Collateral Agent or other holder of the Secured Obligations in a post office or official depository under the care and custody of the United States Postal Service. The affidavit of any person having knowledge of the facts to the effect that such a service was completed shall be prima facie evidence of the fact of service. The Mortgagor agrees that no notice of any sale of Mortgaged Property situated in the State of Texas, other than as set out in this paragraph, need be given by the Trustee, any of the Secured Parties or any other Person. The Mortgagor hereby designates as its address for the purpose of such notice the address set out on the signature page hereof; and agrees that such address shall be changed only by depositing notice of such change enclosed in a postpaid wrapper in a post office or official depository under the care and custody of the United States Postal Service, certified mail, postage prepaid, return receipt requested, addressed to the Collateral Agent at the address for the Collateral Agent set out herein (or to such other address as the Collateral Agent may have designated by notice given as above provided to the Mortgagor and such other debtors). Any such notice of change of address of the Mortgagor or other debtors or of the Collateral Agent shall be effective three (3) business days after such deposit if such post office or official depository is located in the State of Texas, otherwise to be effective upon receipt. The Mortgagor authorizes and empowers the Trustee to sell the Mortgaged Property in lots or parcels or in its entirety as the Trustee shall deem expedient; and to execute and deliver to the purchaser or purchasers thereof deeds conveying the property, but without any covenant or warranty, express or implied. Where portions of the Mortgaged Property lie in different counties, sales in such counties may be conducted in any order that the Trustee may deem expedient; and one or more such sales may be conducted in the same month, or in successive or different months as the Trustee may deem expedient. The Trustee may postpone the sale provided for in this Section 5.1 by public announcement at the time and place of such sale, and from time to time thereafter may further postpone such sale by public announcement (and provision of other notices as required by applicable law) made at the time of sale fixed by the preceding postponement. The provisions hereof with respect to the posting and giving of notices of sale are intended to comply with the provisions of Section 51.002 of the Property Code of the State of Texas, effective January 1, 1984, as amended through and including the date hereof, and in the event the requirements, or any notice, under such Section 51.002 of the Property Code of the State of Texas shall be eliminated or the prescribed manner of giving such notices modified by future amendment to, or adoption of any statute superseding, Section 51.002 of the Property

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Code of the State of Texas, the requirement for such particular notices shall be deemed stricken from or modified in this Mortgage in conformity with such amendment or superseding statute, effective as of the effective date thereof.

     5.2 Rights of the Trustee and the Collateral Agent with Respect to Personal Property Constituting a Part of the Mortgaged Property. (a) Upon the occurrence and during the continuance of an Event of Default, the Trustee and the Collateral Agent will each have all rights and remedies granted by applicable law, and particularly by the applicable Uniform Commercial Code, including, but not limited to, the right to take possession of all Collateral constituting a part of the Mortgaged Property, and for this purpose the Trustee and the Collateral Agent, to the extent permitted by law, may enter upon any premises on which any or all of such Collateral is situated and take possession of and operate such Collateral (or any portion thereof) or remove it therefrom (or, to the extent and for those items of the Collateral permitted under applicable law, render such Collateral unusable). The Trustee or the Collateral Agent may require the Mortgagor to assemble such Collateral and make it available to the Trustee or the Collateral Agent, as applicable, at a place to be designated by the Trustee or the Collateral Agent, as applicable, which is reasonably convenient to all parties. Unless such Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Trustee or the Collateral Agent, as applicable, will give the Mortgagor reasonable notice of the time and place of any public sale or of the time after which any private sale or other disposition of such Collateral is to be made. This requirement of sending reasonable notice will be met if the notice is mailed by first-class mail, postage prepaid, to the Mortgagor at the address shown below the signatures at the end of this Mortgage at least ten (10) days before the time of the sale or disposition.

     (a) In the event of a foreclosure sale, whether made by the Trustee or the Collateral Agent under the terms hereof, or under judgment of a court, the Collateral and the Mortgaged Property may, at the option of the Trustee or the Collateral Agent, as applicable, be sold as a whole. It shall not be necessary that the Trustee or the Collateral Agent take possession of the Mortgaged Property or any part thereof prior to the time that any sale pursuant to the provisions of this Section 5.2 is conducted and it shall not be necessary that the Mortgaged Property or any part thereof be present at the location of such sale. With respect to the application of proceeds of disposition of the Collateral under Section 5.9 hereof, the costs and expenses incident to disposition shall include the reasonable expenses of retaking, holding, preparing for sale or lease, selling, leasing and the like and the reasonable attorneys’ fees and legal expenses incurred by the Trustee and the Collateral Agent. Any and all statements of fact or other recitals made in any bill of sale or assignment or other instrument evidencing any foreclosure sale hereunder as to nonpayment of the Secured Obligations or as to the occurrence of any default, or as to any or all of such Secured Obligations having been declared to be due and payable, or as to notice of time, place and terms of sale and of the properties to be sold having been duly given, or as to any other act or thing having been duly done by the Trustee or the Collateral Agent, shall conclusively establish the truth of the facts so stated and recited; and the Trustee and the Collateral Agent may, to the extent permitted by applicable law, appoint or delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by the Trustee or the Collateral Agent, but in the name and on behalf of the Trustee or the Collateral Agent, as applicable.

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     5.3 Rights of the Trustee with Respect to Fixtures Constituting a Part of the Mortgaged Property. Upon the occurrence and during the continuance of an Event of Default, the Trustee may elect to treat the fixtures constituting a part of the Mortgaged Property as either real property collateral or personal property collateral and then proceed to exercise such rights as apply to such type of collateral.

     5.4 Judicial Proceedings. Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent or the Trustee, in lieu of or in addition to exercising any power of sale herein given, may proceed by a suit or suits in equity or at law, whether for a foreclosure hereunder, or for the sale of the Mortgaged Property or for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for the appointment of a receiver pending any foreclosure hereunder or the sale of the Mortgaged Property or for the enforcement of any other appropriate legal or equitable remedy.

     5.5 Possession of the Mortgaged Property. Upon any sale of Mortgaged Property following the occurrence and during the continuation of an Event of Default, whether under the power of sale hereby given or by virtue of judicial proceedings, it shall not be necessary for the Trustee or any public officer acting under execution or by order of court, to have physically present or constructively in his possession any of the Mortgaged Property, and the Mortgagor hereby agrees to deliver to the purchaser or purchasers at such sale on the date of sale the Mortgaged Property purchased by such purchasers at such sale and if it should be impossible or impracticable to make actual delivery of such Mortgaged Property, then the Mortgagor’s right, title and interest in and to such Mortgaged Property shall pass to the purchaser or purchasers at such sale as completely as if the same had been actually present and delivered. The Mortgagor hereby irrevocably appoints the Trustee, the Mortgagor’s attorney-in-fact, with full authority in the place and stead of the Mortgagor and in the name of the Mortgagor or otherwise, from time to time upon the occurrence and during the continuation of an Event of Default, in the Trustee’s discretion, to take any action and to execute any instrument, writing or paper which the Trustee may deem necessary or advisable to accomplish the purposes of this Mortgage, including without limitation: to file any claims, forms or applications (including, without limitation, any claims, forms or applications with respect to any applicable railroad commission or other governmental agency) or take any action or institute any proceedings which the Trustee may deem necessary or desirable for the collection of any of the Mortgaged Property or otherwise to enforce the rights of the Trustee with respect to any of the Mortgaged Property. The Mortgagor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest.

     5.6 Certain Aspects of a Sale. Subject to applicable law (including the Uniform Commercial Code of any applicable jurisdiction), the Collateral Agent and any other Secured Party shall have the right to become the purchaser at any sale held by the Trustee or by any court, receiver or public officer, and the Collateral Agent shall have the right to credit upon the amount of the bid made therefor the amount payable out of the net proceeds of such sale to it. To the extent permitted by applicable law, recitals contained in any conveyance made to any purchaser at any sale made hereunder shall conclusively establish the truth and accuracy of the matters therein stated, including, without limiting the generality of the foregoing, nonpayment of the Secured Obligations, after the same have become due and payable, advertisement and conduct of such sale in the manner provided herein or appointment of any successor Trustee hereunder.

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     5.7 Receipt to Purchaser. Upon any sale, whether made under the power of sale herein granted and conferred or by virtue of judicial proceedings, the receipt of the Trustee, or of the officer making sale under judicial proceedings, shall be sufficient discharge to the purchaser or purchasers at any sale for its or their purchase money, and such purchaser or purchasers, or its or their assigns or personal representatives, shall not, after paying such purchase money and receiving such receipt of the Trustee or of such officer therefor, be responsible for the application of such purchase money, or be in any manner answerable for any loss, misapplication or nonapplication thereof.

     5.8 Effect of Sale. Any sale or sales of the Mortgaged Property, whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, made in accordance with applicable laws (including the Uniform Commercial Code of any applicable jurisdiction), shall operate to divest all right, title, interest, claim and demand whatsoever either at law or in equity, of the Mortgagor of, in and to the premises and the property sold, and shall be a perpetual bar, both at law and in equity, against the Mortgagor, and the Mortgagor’s successors or assigns, and against any and all persons claiming or who shall thereafter claim all or any of the property sold from, through or under the Mortgagor or the Mortgagor’s successors or assigns. Nevertheless, the Mortgagor, if requested by the Trustee to do so, shall join in the execution and delivery of all proper conveyances, assignments and transfers of the properties so sold.

     5.9 Application of Proceeds. The proceeds of any sale of the Mortgaged Property, or any part thereof, whether under the power of sale herein granted and conferred or by virtue of judicial proceedings, shall be applied as follows (but subject to the provisions of the Intercreditor Agreement):

First: To the payment of all costs and expenses incurred by the Trustee or the Collateral Agent in connection with such collection or sale or otherwise in connection with this Mortgage, any other Loan Document or any of the Secured Obligations, including, without limiting the generality of the foregoing, costs and expenses arising from any entry, taking of possession, sale, advertisement, conveyance or court proceedings, reasonable legal fees, the repayment of all advances made hereunder or under any other Loan Document on behalf of the Mortgagor or any other Person liable for the Secured Obligations and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document;

Second: To the payment of all such other Term Obligations as shall be owed to the Administrative Agent (in its capacity as such);

Third: To the payment in full of the Secured Obligations (the amounts so applied to be distributed among the Secured Parties pro rata (as determined by the Collateral Agent) in accordance with the amounts of the Secured Obligations owed to them on the date of any such distribution); and

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Fourth: Any surplus of cash proceeds held by the Collateral Agent and remaining after application as described above shall be paid over to the Mortgagor or to whomsoever may be lawfully entitled to receive such surplus as directed by a court of competent jurisdiction.

The Collateral Agent shall have absolute discretion as to the time of application of any proceeds received from the sale of any Mortgaged Property in accordance with this Mortgage and the other Loan Documents. Upon any sale of Mortgaged Property by or at the direction of the Collateral Agent (including pursuant to a power of sale granted by statute or under a judicial proceeding), the receipt by the Collateral Agent, Trustee or of the officer making the sale of cash proceeds shall be a sufficient discharge to the purchaser or purchasers of the Mortgaged Property so sold and such purchaser or purchasers shall not be obligated to see to the application of any part of the purchase money paid over to the Collateral Agent, Trustee or such officer or be answerable in any way for the misapplication thereof.

     5.10 The Mortgagor’s Waiver of Appraisement, Marshalling and Other Rights. The Mortgagor agrees, to the full extent that the Mortgagor may lawfully so agree, that the Mortgagor will not at any time insist upon or plead or in any manner whatever claim the benefit of any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the absolute sale of the Mortgaged Property or the possession thereof by any purchaser at any sale made pursuant to any provision hereof, or pursuant to the decree of any court of competent jurisdiction; but the Mortgagor, for the Mortgagor and all who may claim through or under the Mortgagor, so far as the Mortgagor or those claiming through or under the Mortgagor now or hereafter lawfully may, hereby, to the extent that the Mortgagor may lawfully do so, waives the benefit of all such laws. The Mortgagor, for the Mortgagor and all who may claim through or under the Mortgagor, waives, to the extent that the Mortgagor may lawfully do so, any and all right to have the Mortgaged Property marshalled upon any foreclosure of the lien hereof, or sold in inverse order of alienation, and agrees that the Trustee or any court having jurisdiction to foreclose such lien may sell the Mortgaged Property as an entirety. The Mortgagor, for the Mortgagor and all who may claim through or under the Mortgagor, further waives, to the full extent that the Mortgagor may lawfully do so, any requirement for posting a receiver’s bond or replevin bond or other similar type of bond if the Collateral Agent or the Trustee commences an action for appointment of a receiver or an action for replevin to recover possession of any of the Mortgaged Property. If any law in this paragraph referred to and now in force, of which the Mortgagor or the Mortgagor’s successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, then such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the operation or application of the provisions of this paragraph.

     5.11 Costs and Expenses. The Mortgagor will upon demand therefor pay to the Collateral Agent the amount of any and all reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel, which the Collateral Agent incurs in connection with (i) the administration of this Mortgage and any other Security Document to which the Mortgagor is a party, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Mortgaged Property, (iii) the exercise or

Page 26

enforcement of any of the rights of the Collateral Agent or (iv) the failure by the Mortgagor to perform or observe any of the provisions hereof. All of the foregoing shall constitute a portion of the Secured Obligations.

     5.12 Operation of the Mortgaged Property by the Collateral Agent. Upon the occurrence and during the continuance of an Event of Default and in addition to all other rights herein conferred on the Collateral Agent, the Collateral Agent (or any person, firm or corporation designated by the Collateral Agent) shall have the right and power, but shall not be obligated, to enter upon and take possession of any of the Mortgaged Property, and to exclude the Mortgagor, and the Mortgagor’s agents or servants, wholly therefrom, and to hold, use, administer, manage and operate the same to the extent that the Mortgagor shall be at the time entitled and in its place and stead. The Collateral Agent, or any person, firm or corporation designated by the Collateral Agent, may operate the same without any liability to the Mortgagor in connection with such operations, except to use ordinary care in the operation of such properties, and the Collateral Agent, or any person, firm or corporation designated by the Collateral Agent, shall have the right to collect, receive and receipt for all Hydrocarbons produced and sold from said properties, to make repairs, purchase machinery and equipment, conduct work-over operations, drill additional wells as and to the extent required or desirable to realize upon the Mortgaged Property and to exercise every power, right and privilege of the Mortgagor with respect to the Mortgaged Property. When and if the expenses of such operation and development (including costs of unsuccessful work-over operations or additional wells) have been paid and the Secured Obligations paid in full in cash, said properties shall, if there has been no sale or foreclosure, be returned to the Mortgagor.

     5.13 Other Jurisdictions. In the event the Mortgaged Property, or any part thereof, shall be located in any state other than the State of Texas, the procedures for foreclosure and all other provisions of this Article V relating to remedies upon default and related matters shall be modified to the extent necessary to comply with the laws of the state in which such properties are located. It is the intent of Mortgagor that this Mortgage shall be legal and enforceable in any state in which the Mortgaged Property, or any part thereof, is located and that the provisions hereof shall be modified only to the extent necessary to comply with the laws of such state, and that all other provisions contained herein shall be in no way affected or impaired by the necessity to so modify some or all of the provisions of this Article V.

ARTICLE VI.
Miscellaneous Provisions

     6.1 Successor Trustees. Any Trustee may resign in writing addressed to the Collateral Agent or may be removed at any time with or without cause by an instrument in writing duly executed by the Collateral Agent. In case of the death, resignation or removal of a Trustee, one or more successor Trustees may be appointed by the Collateral Agent by instrument of substitution complying with any applicable requirements of law, and in the absence of any such requirement without formality other than appointment and designation in writing. Such appointment and designation shall be full evidence of the right and authority to make the same and of all facts therein recited, and upon the making of any such appointment and designation this conveyance shall vest in the named successor Trustee or Trustees, all of the estate and title of the prior Trustee in all of the Mortgaged Property, and it or they shall thereupon succeed to all

Page 27

of the rights, powers, privileges, immunities and duties hereby conferred upon the prior Trustee. All references herein to the Trustee shall be deemed to refer to the Trustee(s) from time to time acting hereunder. Upon the resignation of the Collateral Agent, the Trustee shall be deemed to have resigned as well, and the successor Collateral Agent shall become the successor Trustee hereunder.

     6.2 Actions or Advances by the Collateral Agent or other Secured Parties. Each and every covenant herein contained shall be performed and kept by the Mortgagor solely at the Mortgagor’s expense. If an Event of Default has occurred and is continuing, the Collateral Agent or any receiver appointed hereunder, may, but shall not be obligated to, take action and/or make advances to perform the same on the Mortgagor’s behalf, and the Mortgagor hereby agrees to repay the reasonable out-of-pocket expense of such action and such advances upon demand. No such advance or action by the Collateral Agent or any receiver appointed hereunder shall be deemed to relieve the Mortgagor from any default hereunder.

     6.3 Defense of Claims. The Mortgagor will notify the Collateral Agent, in writing, promptly of the commencement of any legal proceedings adversely affecting the lien or security interest hereof or the aggregate value of the Mortgaged Property, and will take such action, employing attorneys agreeable to the Collateral Agent, as may be reasonably necessary or appropriate to preserve the Mortgagor’s, the Collateral Agent’s and the other Secured Parties’ rights affected thereby and the Liens granted hereunder and/or to hold harmless the Collateral Agent and the other Secured Parties in respect of such proceedings; and should the Mortgagor fail or refuse to take any such action, the Collateral Agent may, upon giving prior written notice thereof to the Mortgagor, take such action on behalf of and in the name of the Mortgagor and at the Mortgagor’s expense. Moreover, the Collateral Agent, on behalf of the other Secured Parties, may take such independent action in connection therewith as it may, in its reasonable discretion, deem proper, the Mortgagor hereby agreeing that all sums advanced or all expenses incurred in such actions will, on demand, be reimbursed to the Collateral Agent. The obligations of the Mortgagor as hereinabove set forth in this Section 6.3 shall survive the release, termination, foreclosure or assignment of this Mortgage or any sale hereunder.

     6.4 Termination of Liens. If the Term Obligations (other than Contingent Obligations) shall be fully paid in cash, then all Liens of the Mortgaged Property shall terminate and the entire estate, right, title and interest of the Collateral Agent and the other Secured Parties in and to the Mortgaged Property granted hereunder shall thereafter revert to Mortgagor; and the Collateral Agent (for the benefit of the Secured Parties) in such case shall, upon the request of the Mortgagor and at the Mortgagor’s cost and expense, deliver to the Mortgagor all proper instruments and documents reasonably requested by the Mortgagor in recordable form acknowledging the termination of such Liens and satisfaction of this Mortgage.

     6.5 Renewals, Amendments and Other Security. Renewals and extensions of the Secured Obligations may be given at any time, and amendments may be made to agreements relating to any part of such Secured Obligations or the Mortgaged Property, and the Collateral Agent and the Secured Parties may take or may now hold other security for the Secured Obligations, all without notice to or consent of the Mortgagor. The Collateral Agent and the Secured Parties may resort first to such other security or any part thereof or first to the security herein given or any part thereof, or from time to time to either or both, even to the partial or

Page 28

complete abandonment of either security, and such action shall not be a waiver of any rights conferred by this Mortgage, which shall continue as a first priority lien upon and prior perfected security interest (subject, with respect to priority, to the priority of Liens securing the First Lien Obligations as set forth in the Intercreditor Agreement and to Permitted Encumbrances that have priority as a matter of law) in the Mortgaged Property not expressly released until the Term Obligations (other than Contingent Obligations) are fully paid in cash.

     6.6 Instrument as Assignment, etc. This Mortgage shall be deemed to be and may be enforced from time to time as an assignment, chattel mortgage, contract, deed of trust, financing statement, real estate mortgage, or security agreement, and from time to time as any one or more thereof.

     6.7 Reserved.

     6.8 Unenforceable or Inapplicable Provisions. If any provision hereof is invalid or unenforceable in any jurisdiction, the other provisions hereof shall remain in full force and effect in such jurisdiction, and the invalidity of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other jurisdiction. Any reference herein contained to a statute or law of a state in which no part of the Mortgaged Property is situated shall be deemed inapplicable to, and not used in, the interpretation hereof.

     6.9 Rights Cumulative. Each and every right, power and remedy herein given to the Collateral Agent shall be cumulative and not exclusive; and each and every right, power and remedy whether specifically herein given or otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by the Collateral Agent and the Secured Parties, as the case may be, and the exercise, or the beginning of the exercise, of any such right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter, any other right, power or remedy. No delay or omission by the Collateral Agent or the Secured Parties in the exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing.

     6.10 Reserved.

     6.11 Action by Individual Trustee. If more than one Trustee shall serve hereunder, any one Trustee from time to time serving hereunder shall have the absolute right, acting individually, to take any action and to give any consent and to exercise any right, remedy, power, privilege or authority conferred upon the Trustee herein, and any such action taken by a Trustee from time to time serving hereunder shall be binding upon any other Trustee and no person dealing with any Trustee from time to time serving hereunder shall be obligated to confirm the power and authority of such Trustee to act without the concurrence of any other Trustee. In this Mortgage, the term “Trustee” shall mean the Trustee hereinabove named and any successor Trustee(s).

     6.12 Miscellaneous Warranties. The Mortgagor additionally warrants and represents to the Collateral Agent and the other Secured Parties that (a) the execution and delivery by the Mortgagor of this Mortgage, and the performance by the Mortgagor of its obligations hereunder,

Page 29

are within the corporate or other organizational powers of the Mortgagor and have been duly authorized by all necessary corporate or other organizational action on the part of the Mortgagor; (b) this Mortgage has been duly executed and delivered on behalf of the Mortgagor and is the legal, valid and binding obligation of the Mortgagor, enforceable against Mortgagor in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law); and (c) the execution and delivery of this Mortgage by Mortgagor and the performance by Mortgagor of its obligations hereunder do not and will not contravene or conflict with the charter or by-laws of the Mortgagor or violate or constitute a default under any Material Agreement by which the Mortgagor is bound.

     6.13 Environmental Indemnification. EXCEPT TO THE EXTENT REIMBURSEMENT OF EXPENSES IS LIMITED BY SECTION 10.3(a) OF THE CREDIT AGREEMENT TO REIMBURSEMENT OF EXPENSES OF ONLY CERTAIN PARTIES, THE MORTGAGOR AGREES TO INDEMNIFY THE ADMINISTRATIVE AGENT (INCLUDING IN ITS CAPACITY AS THE COLLATERAL AGENT/TRUSTEE, AND ANY SUB-AGENT THEREOF), EACH ARRANGER, EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN "INDEMNITEE”) AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE REASONABLE OUT-OF-POCKET FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH OR AS A RESULT OF ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY CURRENTLY OR FORMERLY OWNED OR OPERATED BY THE MORTGAGOR OR ANY OF ITS SUBSIDIARIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE MORTGAGOR OR ANY OF ITS SUBSIDIARIES, OR ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY AND WHETHER INITIATED AGAINST OR BY ANY PARTY TO THIS MORTGAGE OR ANY OTHER LOAN DOCUMENT, ANY AFFILIATE OF ANY OF THE FOREGOING OR ANY THIRD PARTY (AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO); PROVIDED THAT SUCH INDEMNITY AND RELEASE SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE (IT BEING UNDERSTOOD THAT IT IS THE INTENTION OF THE PARTIES HERETO THAT EACH OF THE INDEMNITEES BE INDEMNIFIED IN THE CASE OF ITS OWN NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE), REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL).

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     6.14 No Partnership. Nothing contained in this Mortgage is intended to, or shall be construed as, creating to any extent and in any manner whatsoever, any partnership, joint venture, or association among the Mortgagor, the Collateral Agent, the other Secured Parties and their respective Affiliates, or in any way make the Collateral Agent or the other Secured Parties coprincipals with the Mortgagor with reference to the Mortgaged Property, and any inferences to the contrary are hereby expressly negated.

     6.15 Successors and Assigns. This Mortgage is binding upon the Mortgagor, the Mortgagor’s successors and assigns, and shall inure to the benefit of the Collateral Agent and the other Secured Parties and their respective successors and assigns, and the provisions hereof shall likewise be covenants running with the land; provided that the Mortgagor acknowledges and agrees that foregoing does not give rise to the Mortgagor having a right to assign or transfer its rights or obligations hereunder or any interest herein or in the Mortgaged Property and Mortgagor hereby expressly acknowledges and agrees that Mortgagor shall not have the right to assign or transfer its rights or obligations hereunder or any interest herein or in the Mortgaged Property (and any such assignment or transfer shall be void) except as expressly contemplated by this Mortgage or the Credit Agreement.

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

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

     6.18 Special Filing as Financing Statement. This Mortgage shall likewise be a Security Agreement and a financing statement and may be filed as a fixture filing with respect to all fixtures included within the Mortgaged Property and is to be filed for record in the real estate records of each county in which any portion of the lands described in Exhibit A hereto is situated, and, when filed in such counties, shall be effective as a financing statement covering fixtures located on the lands described in Exhibit A and as-extracted collateral relating to the oil and gas properties described in Exhibit A hereto, including accounts arising from the sale of Hydrocarbons at the wellheads of the wells located on the lands described in Exhibit A hereto. At the option of the Collateral Agent, a carbon, photographic or other reproduction of this Mortgage or of any financing statement covering the Mortgaged Property or any portion thereof shall be sufficient as a financing statement and may be filed as such. By the execution and delivery hereof, Mortgagor hereby authorizes the Collateral Agent to file any financing statements, and any amendments or continuation statements with respect thereto, covering the Mortgaged Property pursuant to the applicable Uniform Commercial Code without the Mortgagor’s signature thereon.

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

Page 31

cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Mortgage or consent to any departure by the Mortgagor therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

     (b) Neither this Mortgage nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into between the Collateral Agent and the Mortgagor, subject to any consent required in accordance with Section 10.02 of the Credit Agreement.

     6.20 Notices. Except as otherwise specifically provided for herein or required by law in connection with a foreclosure of any of the Mortgaged Property, all notices and other communications provided to any party hereto under this Mortgage shall be in writing and given (a) in the case of the Collateral Agent/Trustee, at the address of the Administrative Agent as set forth in the Credit Agreement and (b) in the case of the Mortgagor, at the address for the Mortgagor as set forth in the Credit Agreement, and shall conclusively be deemed and considered to have been given and received in accordance with Section 10.01 of the Credit Agreement.

     6.21 Reliance. Notwithstanding any reference herein to the Combined Loan Agreements, no party shall have any obligation to inquire into the terms or conditions of any such documents and all parties shall be fully authorized to rely upon any statement, certificate, or affidavit of the Collateral Agent or any future holder of any portion of the indebtedness evidenced by the Combined Loan Documents as to the occurrence of any event, such as the occurrence of any “Event of Default” under the Credit Agreement.

     6.22 Reserved.

     6.23 Effective as Mortgage. As to the Mortgaged Property, this Mortgage shall be effective as a mortgage as well as a deed of trust and during the continuation of an Event of Default may be foreclosed as to the Mortgaged Property, or any portion thereof, in any manner permitted by applicable law, and any foreclosure suit may be brought by the Collateral Agent or the Trustee. To the extent, if any, required to cause this Mortgage to be so effective as a mortgage as well as a deed of trust, Mortgagor hereby mortgages the Mortgaged Property to the Collateral Agent, for the benefit of the Secured Parties.

     6.24 No Liability for Trustee and Collateral Agent. NEITHER THE TRUSTEE NOR THE COLLATERAL AGENT SHALL BE LIABLE FOR ANY ERROR OF JUDGMENT OR ACT DONE BY SUCH PERSON IN GOOD FAITH, OR BE OTHERWISE RESPONSIBLE OR ACCOUNTABLE UNDER ANY CIRCUMSTANCES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, THE TRUSTEE’S OR COLLATERAL AGENT’S NEGLIGENCE), EXCEPT FOR THE TRUSTEE’S OR THE COLLATERAL AGENT’S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT (IT BEING UNDERSTOOD THAT NEITHER THE TRUSTEE NOR THE COLLATERAL AGENT SHALL BE LIABLE FOR ANY NEGLIGENCE (OTHER THAN GROSS NEGLIGENCE) REGARDLESS OF WHETHER SUCH NEGLIGENCE IS SOLE OR

Page 32

CONTRIBUTORY, ACTIVE OR PASSIVE, IMPUTED, JOINT OR TECHNICAL). The Trustee and the Collateral Agent shall have the right to rely on any instrument, document or signature authorizing or supporting any action taken or proposed to be taken by them hereunder, believed by them in good faith to be genuine. All moneys received by the Trustee and the Collateral Agent shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated in any manner from any other moneys (except to the extent required by law), and neither the Trustee nor the Collateral Agent shall be liable for interest on any moneys received by either of them hereunder.

     6.25 GOVERNING LAW. THIS MORTGAGE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW EXCEPT AS SET FORTH IN THE U.C.C. WITH RESPECT TO THE CREATION, PERFECTION AND PRIORITY OF THE LIENS AND SECURITY INTERESTS GRANTED HEREUNDER); PROVIDED, HOWEVER, THAT WITH RESPECT TO ANY MORTGAGED PROPERTY LOCATED OUTSIDE OF THE STATE OF TEXAS, THE LAWS OF THE STATE IN WHICH THE MORTGAGED PROPERTY IS LOCATED SHALL APPLY WITH RESPECT TO THE PROCEDURAL AND SUBSTANTIVE MATTERS RELATING TO THE CREATION, PERFECTION, FORECLOSURE AND ENFORCEMENT OF THE LIENS, SECURITY INTERESTS AND OTHER RIGHTS AND REMEDIES GRANTED HEREUNDER.

     6.26 NO UNWRITTEN ORAL AGREEMENTS. THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

     6.27 Limitation on Collateral. To the extent any of the Mortgaged Property in which a Lien, pledge, security interest or other encumbrance is purported to be granted hereby consists of leases from the United States of America (the “Federal Leases”) or any Indian tribal leases (“Tribal Leases”), the grant of any such purported Lien, pledge, security interest or other encumbrance in such Federal Leases or Tribal Leases pursuant to the terms hereof shall be effective to the extent permissible under the Mineral Leasing Act of 1920 Section 30 U.S.C. § 181, et seq., all rules and regulations promulgated thereunder, 43 C.F.R. § 3000, et seq., the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq., all rules and regulations promulgated thereunder, 30 C.F.R. Part 250, et seq., or other applicable law.

     6.28 Intercreditor Agreement. (a) Notwithstanding anything herein to the contrary, this Mortgage and the security interests and other Liens granted to the Trustee (for the use and benefit of the Collateral Agent, for the benefit of the Secured Parties) hereunder, and the exercise of any right or remedy by the Trustee/Collateral Agent or any other Secured Party hereunder, are subject to the provisions of the Intercreditor Agreement. In the event of any conflict or inconsistency between the provisions of the Intercreditor Agreement and this Mortgage, the provisions of the Intercreditor Agreement shall control. No Secured Party shall have any right

Page 33

individually to enforce or realize upon any Liens granted under this Mortgage, it being understood and agreed that such rights may be exercised solely by the Collateral Agent on behalf of the Secured Parties.

     (b) BY ACCEPTANCE OF THE BENEFITS OF, OR CLAIMING ANY RIGHTS UNDER, THIS MORTGAGE OR ANY OTHER SECURITY DOCUMENT, EACH EXISTING SENIOR NOTES SECURED PARTY WILL BE DEEMED IRREVOCABLY (I) TO HAVE ACKNOWLEDGED AND AGREED TO THE PROVISIONS OF THIS SECTION 6.28, (II) TO HAVE ACCEPTED AND CONSENTED TO THE INTERCREDITOR AGREEMENT AND TO EACH ACKNOWLEDGEMENT, AGREEMENT, CONSENT AND WAIVER MADE THEREIN BY THE COLLATERAL AGENT ON BEHALF OF THE EXISTING SENIOR NOTES SECURED PARTIES AND (III) TO HAVE ACKNOWLEDGED AND AGREED THAT ITS ENTITLEMENT TO THE BENEFITS OF THIS MORTGAGE OR ANY OTHER SECURITY DOCUMENT AND THE SECURITY INTERESTS AND OTHER LIENS CREATED HEREBY OR THEREBY IS EXPRESSLY CONDITIONED UPON ITS OBSERVANCE OF THE TERMS OF THE INTERCREDITOR AGREEMENT.

[SIGNATURES BEGIN ON FOLLOWING PAGE]

Page 34

     IN WITNESS WHEREOF, the undersigned, as a duly authorized officer of the Mortgagor, has executed or caused to be executed this Mortgage, Deed of Trust, Assignment of Production, Security Agreement, Financing Statement and Fixture Filing effective as of the day, month and year first above written.

MORTGAGOR:
QUICKSILVER RESOURCES INC.
By:	/s/ Wanda Murphy
Name:	Wanda Murphy
Title:	Assistant Treasurer

The name and mailing address of the Mortgagor is:

Quicksilver Resources Inc.
777 West Rosedale Street
Suite 300
Fort Worth, Texas 76104
Attention:      MarLu Hiller
Telephone:      (817) 665-4860
Telecopy:       (817) 665-5016

[Signature Page to Mortgage, Deed of Trust, Assignment of Production and Security
Agreement, Financing Statement and Fixture Filing]

STATE OF TEXAS	)
	)	SS.
COUNTY OF TARRANT	)

     BE IT REMEMBERED that I, Lisa Liberatore, a Notary Public duly qualified, commissioned, sworn and acting in and for the County and State aforesaid, hereby certify that, effective as of this 7th day of August, 2008, there appeared before me the following person, who is the designated officer of the corporation set opposite her name, and each such corporation being a party to the foregoing instrument:

     Wanda Murphy, the Assistant Treasurer of QUICKSILVER RESOURCES INC., a Delaware corporation, whose address is 777 West Rosedale Street, Suite 300, Fort Worth, Texas 76104.

TEXAS This instrument was acknowledged before me on this day by each such person as the designated officer of the corporation set opposite his name on behalf of said corporation set opposite his name.

     Witness my hand and official seal.

/s/ Lisa Liberatore  

Notary Public, State of Texas 

My commission expires: 09.07.2009

[Notary Seal]

[Notary Page to Mortgage, Deed of Trust, Assignment of Production and Security
Agreement, Financing Statement and Fixture Filing]

EX-99.3

exv99w3

EX-99.4

Exhibit 99.4

INTERCREDITOR AGREEMENT

dated as of August 8, 2008,

among

QUICKSILVER RESOURCES INC.,
as the Borrower,

ITS SUBSIDIARIES PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,
as the First Lien Collateral Agent

and

CREDIT SUISSE,
as the Second Lien Collateral Agent

[CS&M Ref No. 05865-651]

TABLE OF CONTENTS

	Page
ARTICLE I
Definitions
SECTION 1.01. Defined Terms		2
SECTION 1.02. Terms Generally		10
SECTION 1.03. Concerning Certain Secured Parties		11
ARTICLE II
Lien Priorities
SECTION 2.01. Relative Priorities		12
SECTION 2.02. Prohibition on Contesting Liens		12
SECTION 2.03. No New Liens		12
SECTION 2.04. Cooperation; Similar Liens and Agreements		13
ARTICLE III
Enforcement of Rights; Matters Relating to Collateral
SECTION 3.01. Exercise of Rights and Remedies		14
SECTION 3.02. No Interference		16
SECTION 3.03. Rights as Unsecured Creditors		18
SECTION 3.04. Automatic Release of Second Priority Liens		18
SECTION 3.05. Insurance and Condemnation Awards		19
ARTICLE IV
Payments
SECTION 4.01. Application of Proceeds		19
SECTION 4.02. Payment Over		20
SECTION 4.03. Certain Agreements with Respect to Unenforceable Liens		20
ARTICLE V
Bailment for Perfection of Certain Security Interests
ARTICLE VI
Insolvency or Liquidation Proceedings

i

	Page
SECTION 6.01. Finance and Sale Matters		22
SECTION 6.02. Relief from the Automatic Stay		23
SECTION 6.03. Reorganization Securities		24
SECTION 6.04. Post-Petition Interest		24
SECTION 6.05. Certain Waivers by the Second Lien Secured Parties		24
SECTION 6.06. Certain Voting Matters		24
ARTICLE VII
Other Agreements
SECTION 7.01. Matters Relating to Loan Documents		25
SECTION 7.02. Effect of Refinancing of Indebtedness under First Lien Loan Documents		27
SECTION 7.03. No Waiver by First Lien Secured Parties		28
SECTION 7.04. Reinstatement		28
SECTION 7.05. Further Assurances		28
ARTICLE VIII
Representations and Warranties
SECTION 8.01. Representations and Warranties of Each Party		28
SECTION 8.02. Representations and Warranties of Each Collateral Agent		29
ARTICLE IX
No Reliance; No Liability; Obligations Absolute
SECTION 9.01. No Reliance; Information		29
SECTION 9.02. No Warranties or Liability		30
SECTION 9.03. Obligations Absolute		31
ARTICLE X
Miscellaneous
SECTION 10.01. Notices		31
SECTION 10.02. Conflicts		32
SECTION 10.03. Effectiveness; Survival		32
SECTION 10.04. Severability		33
SECTION 10.05. Amendments; Waivers		33
SECTION 10.06. Subrogation		33
SECTION 10.07. Applicable Law; Jurisdiction; Consent to Service of Process		34
SECTION 10.08. Waiver of Jury Trial		34
SECTION 10.09. Parties in Interest		34
SECTION 10.10. Specific Performance		35

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	Page
SECTION 10.11. Headings		35
SECTION 10.12. Counterparts		35
SECTION 10.13. Provisions Solely to Define Relative Rights		35
SECTION 10.14. Additional US Grantors		35

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     INTERCREDITOR AGREEMENT dated as of August 8, 2008, among QUICKSILVER RESOURCES INC., a Delaware corporation (the “Borrower”), the SUBSIDIARIES of the Borrower whose signatures appear below or who in the future become parties hereto as provided in Section 10.14, JPMORGAN CHASE BANK, N.A., in its capacity as global administrative agent for the First Lien Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “First Lien Collateral Agent”), and CREDIT SUISSE, Cayman Islands branch, in its capacity as administrative agent for the Term Lenders and as collateral agent for the Second Lien Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “Second Lien Collateral Agent”). Capitalized terms used in this Agreement have the meanings assigned to them in Article I below.

               On the date hereof, the Borrower, the Term Lenders and Credit Suisse, Cayman Islands branch, as administrative agent, are entering into the Term Credit Agreement. Prior to the date hereof, the Borrower, Quicksilver Canada, the First Lien Consenting Lenders, the First Lien Global Administrative Agent and the First Lien Canadian Administrative Agent entered into the First Lien Fifth Amendment, which shall become effective on the date hereof.

               The First Lien Fifth Amendment provides that the Second Priority Liens may be granted to the Second Lien Collateral Agent only if such Liens are subject to the terms of an intercreditor agreement in the form of this Agreement.

               The Existing Senior Notes Indenture provides that the US Grantors may not create, incur or suffer to exist Liens on the Collateral created under the Term Security Documents unless such Liens are “Permitted Liens” under and as defined in the Existing Senior Notes Indenture or, contemporaneously with the incurrence of such Liens, effective provision is made to secure the Existing Senior Notes Obligations equally and ratably with the indebtedness secured by such Liens for so long as such indebtedness is so secured.

               The Term Security Documents create, in favor of the Second Lien Collateral Agent, for the benefit of the Term Secured Parties and the Existing Senior Notes Secured Parties, Liens on the Second Lien Collateral described therein as security for the indefeasible payment in full in cash and performance of the Term Obligations and the Existing Senior Notes Obligations.

               In consideration of the foregoing and the mutual covenants and obligations herein set forth and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

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ARTICLE I

Definitions

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

               “Affiliate” of any person shall mean any person directly or indirectly Controlled by, Controlling or under common Control with such first Person. For purposes of this definition, the term “Control” shall means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ability to exercise voting power, by contract or otherwise, but not solely by being an officer or director of such person, and the terms “Controlling” and “Controlled” shall have meanings correlative thereto.

               “Agreement” shall mean this Intercreditor Agreement.

               “Amend” shall mean, in respect of any agreement, to amend, restate, supplement, waive or otherwise modify such agreement, in whole or in part. The terms “Amended” and “Amendment” shall have correlative meanings.

               “Bankruptcy Code” shall mean Title 11 of the United States Code entitled “Bankruptcy,” as now and hereinafter in effect, or any successor statute.

               “Bankruptcy Law” shall mean the Bankruptcy Code and any other Federal, state or foreign bankruptcy, insolvency, receivership or similar law.

               “Borrower” shall have the meaning assigned to such term in the preamble.

               “Business Day” shall mean any day that is not a Saturday, Sunday or a United States federal holiday or any other day on which commercial banks in New York City are authorized or required by law to remain closed.

               “Canadian Borrower” shall mean Quicksilver Resources Canada Inc., an Alberta, Canada corporation.

               “Cash Collateral” shall have the meaning assigned to such term in Section 6.01(a)(i).

               “Collateral” shall mean, collectively, the First Lien US Collateral and the Second Lien Collateral.

               “Collateral Agents” shall mean the First Lien Collateral Agent and the Second Lien Collateral Agent.

               “Comparable Second Lien Security Document” shall mean, in relation to any Collateral subject to any Lien created under any First Lien Security Document, the

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Second Lien Security Document that creates a Lien on the same Collateral, granted by the same US Grantor.

               “DIP Financing” shall have the meaning assigned to such term in Section 6.01(a)(ii).

               “DIP Financing Liens” shall have the meaning assigned to such term in Section 6.01(a)(ii).

               “Discharge of First Lien Obligations” shall mean, subject to Sections 7.02 and 7.04, (a) payment in full in cash of the principal of and interest on (including interest accruing during the pendency of any Insolvency or Liquidation Proceeding, regardless of whether allowed or allowable in such Insolvency or Liquidation Proceeding), and premium, if any, on, all Indebtedness outstanding under the First Lien Loan Documents, (b) payment in full of all other First Lien Obligations that are due and payable or otherwise accrued and owing at or prior to the time such principal and interest are paid, (c) cancellation of or the entry into arrangements satisfactory to the First Lien Global Administrative Agent and each applicable issuing bank with respect to all letters of credit issued and outstanding under the First Lien Credit Agreements (any such arrangement in the form of cash collateralization to be in an amount not greater than 105% of the aggregate undrawn face amount of such letters of credit), (d) cancellation of or the entry into arrangements satisfactory to the First Lien Global Administrative Agent and each applicable hedging counterparty with respect to all obligations under Hedging Agreements that constitute First Lien Obligations and (e) termination or expiration of all commitments to lend under the First Lien Credit Agreements.

               “Disposition” shall mean any sale, lease, exchange, transfer or other disposition. “Dispose” shall have a correlative meaning.

               “Domestic Subsidiary” shall mean any Subsidiary other than a Foreign Subsidiary.

               “Equity Interests” shall mean, with respect to any person, shares of the capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity interests in such person, or any warrants, options or other rights to acquire any of the foregoing.

               “Exercise of a Buy-Out Right” shall have the meaning assigned to such term in Section 3.01(d).

               “Existing Senior Notes” shall mean the 8¹/4% Senior Notes due 2015 of the Borrower issued under the Existing Senior Notes Indenture.

               “Existing Senior Notes Fifth Supplemental Indenture” shall mean the Fifth Supplemental Indenture dated as of June 27, 2008, by and among the Borrower, the Subsidiary Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee.

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               “Existing Senior Notes Indenture” shall mean the Indenture dated as of December 22, 2005, between the Borrower and The Bank of New York Mellon Trust Company, N.A. (as successor in interest to JPMorgan Chase Bank, National Association), as trustee, as supplemented by the Existing Senior Notes Fifth Supplemental Indenture and the Existing Senior Notes Sixth Supplemental Indenture.

               “Existing Senior Notes Obligations” means Indebtedness (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) due with respect to (a) the Existing Senior Notes and (b) the Subsidiary Guarantee (as defined in the Existing Senior Notes Indenture as in effect on the date hereof) of any US Grantor.

               “Existing Senior Notes Secured Parties” shall mean “Holders”, as defined in the Existing Senior Notes Indenture.

               “Existing Senior Notes Sixth Supplemental Indenture” shall mean the Sixth Supplemental Indenture dated as of July 10, 2008, by and among the Borrower, the Subsidiary Guarantors party thereto and The Bank of New York Mellon Trust Company, N.A., as trustee.

               “First Lien Canadian Administrative Agent” shall mean JPMorgan Chase Bank, N.A., Toronto Branch, in its capacity as the Canadian administrative agent under the First Lien Canadian Credit Agreement, together with its successors and assigns in such capacity.

               “First Lien Canadian Credit Agreement” shall mean the Amended and Restated Credit Agreement dated as of February 9, 2007, among the Canadian Borrower, the lenders party thereto, BNP Paribas and Bank of America, N.A., as co-global syndication agents, Fortis Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust Company Americas, as co-global documentation agents, JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian administrative agent, and JPMorgan Chase Bank, N.A., as global administrative agent.

               “First Lien Canadian Lenders” shall mean, at any time, persons that are at such time “Lenders” under and as defined in the First Lien Canadian Credit Agreement.

               “First Lien Collateral Agent” shall have the meaning assigned to such term in the preamble.

               “First Lien Consenting Lenders” shall mean, collectively, (a) each First Lien Lender that is a party to the First Lien Fifth Amendment and (b) each person that becomes a First Lien Lender (including pursuant to the provisions of Section 7.02) after the date of the First Lien Fifth Amendment (other than any such person that (i) is (A) a Lender Affiliate (as defined in the First Lien US Credit Agreement as of the date hereof) of a First Lien Non-Consenting Lender or (B) an Approved Fund (as defined in the First Lien US Credit Agreement as of the date hereof) that is administered or managed by a

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First Lien Non-Consenting Lender, a Lender Affiliate of a First Lien Non-Consenting Lender or a person or Affiliate of a person that administers or manages a First Lien Non-Consenting Lender and (ii) becomes a First Lien Lender as an assignee of a First Lien Non-Consenting Lender), together with their respective successors and assigns.

               “First Lien Credit Agreements” shall mean the First Lien US Credit Agreement and the First Lien Canadian Credit Agreement.

               “First Lien Fifth Amendment” shall mean the Fifth Amendment to Combined Credit Agreements, dated as of August 4, 2008, among the Borrower, Quicksilver Canada, the First Lien Lenders party thereto, the First Lien Global Administrative Agent and the First Lien Canadian Administrative Agent.

               “First Lien Global Administrative Agent” shall mean JPMorgan Chase Bank, N.A., in its capacity as the global administrative agent under the First Lien Credit Agreements, together with its successors and assigns in such capacity.

               “First Lien Global Borrowing Base” shall mean “Global Borrowing Base”, as defined in the First Lien Credit Agreements (or, in respect of any New First Lien Loan Documents, a term connoting a meaning substantially similar to that connoted by the term “Global Borrowing Base” under the First Lien Credit Agreements as of the date hereof).

               “First Lien Intercreditor Agreement” shall mean the Amended and Restated Intercreditor Agreement dated as of February 9, 2007, among the First Lien Lenders, the First Lien Global Administrative Agent, the First Lien Canadian Administrative Agent and certain other persons party thereto.

               “First Lien Lenders” shall mean (a) the First Lien US Lenders and (b) the First Lien Canadian Lenders.

               “First Lien Loan Documents” shall mean the “Loan Documents”, as defined in any First Lien Credit Agreement.

               “First Lien Obligations” shall mean the “Combined Obligations”, as defined in the First Lien US Credit Agreement.

               “First Lien Non-Consenting Lender” shall mean (a) for purposes of the definition of the term “First Lien Consenting Lender”, each person that is a First Lien Lender as of the date of the First Lien Fifth Amendment but is not a party to the First Lien Fifth Amendment, and (b) for all other purposes of this Agreement, each First Lien Lender that is not a First Lien Consenting Lender.

               “First Lien Required Lenders” shall mean the “Majority Lenders”, as defined in the First Lien US Credit Agreement as of the date hereof.

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               “First Lien Secured Parties” shall mean (a) the First Lien Lenders, (b) the First Lien Global Administrative Agent, (c) the First Lien Canadian Administrative Agent, (d) the First Lien Collateral Agent, (e) each other person to whom any of the First Lien Obligations (including First Lien Obligations under Hedging Agreements and indemnification obligations) is owed and (f) the successors and assigns of each of the foregoing.

               “First Lien Security Documents” shall mean any and all agreements, documents or instruments now existing or entered into after the date hereof that grant a Lien on any assets of any US Grantor to secure any First Lien Obligations or under which rights or remedies with respect to any such Lien are governed.

               “First Lien Subsidiary Guarantee” shall mean, in respect of any US Grantor, the Guarantee by such US Grantor of the First Lien Obligations pursuant to the First Lien Loan Documents.

               “First Lien US Collateral” shall mean any assets of any US Grantor that constitute “Collateral” or “Mortgaged Property” as defined in the First Lien Security Documents, and any other assets of any US Grantor now or at any time hereafter subject to a Lien securing any First Lien Obligation.

               “First Lien US Credit Agreement” shall mean the Amended and Restated Credit Agreement dated as of February 9, 2007, among the Borrower, the lenders party thereto, BNP Paribas and Bank of America, N.A., as co-global syndication agents, Fortis Capital Corp., The Bank of Nova Scotia and Deutsche Bank Trust Company Americas, as co-global documentation agents, and JPMorgan Chase Bank, N.A., as global administrative agent.

               “First Lien US Lenders” shall mean, at any time, persons that are at such time “Lenders” under and as defined in the First Lien US Credit Agreement.

               “First Priority Liens” shall mean all Liens on the Collateral securing the First Lien Obligations, whether created under the First Lien Security Documents or acquired by possession, statute (including any judgment lien), operation of law, subrogation, pursuant to the terms of this Agreement or otherwise.

               “Foreign Subsidiary” shall mean any Subsidiary that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia.

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

               “Governmental Authority” shall mean the government of the United States of America, Canada, any other nation or any political subdivision thereof, whether state, provincial, territorial or local, and any agency, authority, instrumentality, regulatory

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body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.

               “Guarantee” shall mean “Guarantee”, as defined in the First Lien US Credit Agreement as of the date hereof.

               “Hedging Agreement” shall mean any agreement, instrument, arrangement or schedule or supplement thereto evidencing any Hedging Transaction.

               “Hedging Transaction” shall mean any financial derivative transaction, including any commodity, interest rate, currency or other derivative, swap, option, collar, futures contract or other contract pursuant to which a person hedges risks related to commodity prices, interest rates, currency exchange rates, securities prices or financial market conditions.

               “Indebtedness” shall mean “Indebtedness”, as defined in the First Lien US Credit Agreement as of the date hereof.

               “Insolvency or Liquidation Proceeding” shall mean (a) any voluntary or involuntary proceeding under the Bankruptcy Code or any other Bankruptcy Law with respect to any US Grantor, (b) any voluntary or involuntary appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any US Grantor or for a substantial part of the property or assets of any US Grantor, (c) any voluntary or involuntary winding-up or liquidation of any US Grantor or (d) any general assignment for the benefit of creditors by any US Grantor.

               “Lien” shall mean, with respect to any asset, any lien, charge or security interest arising from a mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment, bailment or margin account for security purposes.

               “Loan Documents” shall mean the First Lien Loan Documents and the Second Lien Loan Documents.

               “New First Lien Collateral Agent” shall have the meaning assigned to such term in Section 7.02.

               “New First Lien Loan Documents” shall have the meaning assigned to such term in Section 7.02.

               “New First Lien Obligations” shall have the meaning assigned to such term in Section 7.02.

               “Obligations” shall mean the First Lien Obligations and the Second Lien Obligations.

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

               “Quicksilver Canada” shall mean Quicksilver Resources Canada Inc., an Alberta, Canada corporation.

               “Pledged or Controlled Collateral” shall have the meaning assigned to such term in Article V.

               “Refinance” shall mean, in respect of any Indebtedness, to refinance, extend, renew, restructure or replace, or to issue other Indebtedness in exchange or replacement for, such Indebtedness, in whole or in part. “Refinanced” and “Refinancing” shall have correlative meanings.

               “Refinancing Notice” shall have the meaning assigned to such term in Section 7.02.

               “Release” shall have the meaning assigned to such term in Section 3.04(a).

               “Second Lien Collateral” shall mean any assets of any US Grantor that constitute “Collateral” or “Mortgaged Property” as defined in the Second Lien Security Documents, and any other assets of any US Grantor now or at any time hereafter subject to a Lien securing any Term Obligations.

               “Second Lien Collateral Agent” shall have the meaning assigned to such term in the preamble.

               “Second Lien Loan Documents” shall mean the Term Loan Documents and the Existing Senior Notes Indenture.

               “Second Lien Obligations” shall mean the Term Obligations and the Existing Senior Notes Obligations.

               “Second Lien Permitted Actions” shall have the meaning assigned to such term in Section 3.01(a).

               “Second Lien Secured Parties” shall mean the Term Secured Parties and the Existing Senior Notes Secured Parties.

               “Second Lien Security Documents” shall mean (a) the Term Security Documents and (b) any and all agreements, documents or instruments now existing or entered into after the date hereof that grant in favor of the Second Lien Collateral Agent, for the benefit of the Second Lien Secured Parties, or directly in favor of any Term Secured Party, a Lien on any assets of any US Grantor to secure any Second Lien Obligations or under which rights or remedies with respect to any such Lien are governed.

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               “Second Priority Liens” shall mean (a) all Liens on the Collateral securing the Second Lien Obligations created under the Second Lien Security Documents and (b) all other Liens on the Collateral securing the Term Obligations, whether acquired by possession, statute (including any judgment lien), operation of law, subrogation or otherwise.

               “Security Documents” shall mean the First Lien Security Documents and the Second Lien Security Documents.

               “Standstill Period” shall have the meaning assigned to such term in Section 3.02(a).

               “Subsidiary” shall mean, with respect to any person (the “parent”) at any date, any corporation, limited liability company, partnership (limited or general), association or other entity the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date. Unless otherwise indicated herein, each reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower.

               “Term Administrative Agent” shall mean Credit Suisse, Cayman Islands branch, in its capacity as the administrative agent under the Term Credit Agreement, together with its successors and assigns in such capacity.

               “Term Credit Agreement” shall mean the Credit Agreement dated as of August 8, 2008, among the Borrower, the lenders party thereto and Credit Suisse, Cayman Islands branch, as administrative agent.

               “Term Lenders” shall mean, at any time, persons that are at such time “Lenders” under and as defined in the Term Credit Agreement.

               “Term Loan Documents” shall mean the “Loan Documents”, as defined in the Term Credit Agreement.

               “Term Obligations” shall mean “Obligations”, as defined in the Term Credit Agreement.

               “Term Required Lenders” shall mean the “Required Lenders”, as defined in the Term Credit Agreement as of the date hereof.

               “Term Secured Parties” shall mean (a) the Term Lenders, (b) the Term Administrative Agent, (c) the Second Lien Collateral Agent, (d) each other person to whom any of the Term Obligations (including indemnification obligations) is owed and (e) the successors and assigns of each of the foregoing.

               “Term Security Documents” shall mean any and all agreements, documents or instruments now existing or entered into after the date hereof that grant a

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Lien on any assets of any US Grantor to secure any Term Obligations or under which rights or remedies with respect to any such Lien are governed.

               “Term Subsidiary Guarantee” shall mean, in respect of any US Grantor, the Guarantee by such US Grantor of the Term Obligations pursuant to the Term Loan Documents.

               “Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect from time to time in any applicable jurisdiction.

               “US Grantors” means, at any time, the Borrower and each Domestic Subsidiary that, at such time, (a) pursuant to any First Lien Security Document has granted a Lien to secure any First Lien Obligations and (b) pursuant to any Second Lien Security Document has granted a Lien to secure any Second Lien Obligations; provided, however, that solely for purposes of Section 2.03, a Domestic Subsidiary shall be deemed to be a “US Grantor” so long as it satisfies either clause (a) or (b) above (even if it does not satisfy both clauses (a) and (b) above) so long as such Domestic Subsidiary is required pursuant to the terms of the First Lien Loan Documents and the Term Loan Documents to grant a Lien on assets owned by it to secure the First Lien Obligations and the Term Obligations, respectively.

               SECTION 1.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. The words “asset” and “property” shall be construed as having the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time Amended (subject to any restrictions on such Amendments set forth herein), (b) any definition of or reference to any statute, regulation or other law herein shall be construed (i) as referring to such statute, regulation or other law as from time to time amended, supplemented or otherwise modified (including by succession of comparable successor statutes, regulations or other laws) and (ii) to include all official rulings and interpretations thereunder, (c) any reference herein to any person shall be construed to include such person’s successors and assigns and (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof.

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               SECTION 1.03. Concerning Certain Secured Parties. (a) Notwithstanding any other provision hereof, each acknowledgement, agreement, consent and waiver (whether express or implied) in this Agreement made by the First Lien Collateral Agent shall not be binding on any First Lien Lender that is not also a First Lien

Consenting Lender, except to the extent such acknowledgement, agreement, consent or waiver is permitted to be made by the First Lien Collateral Agent on behalf of such First Lien Lender under the terms of the First Lien Loan Documents as in effect on the date hereof (and without giving effect to the First Lien Fifth Amendment). The First Lien Collateral Agent agrees, on behalf of each First Lien Consenting Lender, that such First Lien Consenting Lender will not consent to, and will exercise its voting and other consensual rights under the First Lien Credit Agreements and the other First Lien Loan Documents in opposition to, any action that would be inconsistent with any acknowledgement, agreement, consent or waiver made by the First Lien Collateral Agent in this Agreement.

               (b) Notwithstanding any other provision hereof, each acknowledgement, agreement, consent and waiver (whether express or implied) in this Agreement purported to be made by or on behalf of the Existing Senior Notes Secured Parties, including any such acknowledgement, agreement, consent or waiver limiting any of the rights or remedies of the Existing Senior Notes Secured Parties, will apply to and be binding on the Existing Senior Notes Secured Parties only insofar as the rights and remedies that are the subject of such acknowledgments, agreements, consents and waivers are created by, or derive from the status of the Existing Senior Notes Secured Parties as secured parties under, the Second Lien Security Documents. Each acknowledgment, agreement, consent or waiver by the Second Lien Collateral Agent purported to be made on behalf of the Existing Senior Notes Secured Parties shall in all respects be subject to, and qualified by, the immediately preceding sentence.

               (c) Subject to paragraph (b) of this Section, each acknowledgement, agreement, consent and waiver in this Agreement made by the Second Lien Collateral Agent on behalf of the Existing Senior Notes Secured Parties is made in reliance on the authority expressed to be granted to the Second Lien Collateral Agent under the Second Lien Security Documents, including the provisions thereof to the effect that (i) the entitlement of each Existing Senior Notes Secured Party to the benefits of the Second Lien Security Documents and the Liens created thereby is expressly conditioned on such Existing Senior Notes Secured Party’s observance of the terms of this Agreement, and (ii) each Existing Senior Notes Secured Party will, by accepting the benefit of, or claiming any rights under, any Second Lien Security Documents or the Liens created thereby, be deemed to have accepted and consented to this Agreement and to each acknowledgement, agreement, consent and waiver made in this Agreement by the Second Lien Collateral Agent on its behalf.

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ARTICLE II

Lien Priorities

               SECTION 2.01. Relative Priorities. (a) Notwithstanding the date, manner or order of grant, attachment or perfection of any Second Priority Lien or any First Priority Lien, and notwithstanding any provision of the UCC or any other applicable law, the provisions of any Security Document, any other First Lien Loan Document or any other Term Loan Document, or any other circumstance whatsoever, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby agrees that, so long as the Discharge of First Lien Obligations has not occurred, (i) any First Priority Lien now or hereafter held by or for the benefit of any First Lien Secured Party shall be senior in right, priority, operation, effect and all other respects to any and all Second Priority Liens and (ii) any Second Priority Lien now or hereafter held by or for the benefit of any Second Lien Secured Party shall be junior and subordinate in right, priority, operation, effect and all other respects to any and all First Priority Liens. The First Priority Liens shall be and remain senior in right, priority, operation, effect and all other respects to the Second Priority Liens for all purposes, whether or not the First Priority Liens are subordinated in any respect to any other Lien securing any other obligation of the Borrower, any other US Grantor or any other person.

               (b) The relative Lien priorities set forth in this Section are only with respect to the priority of the First Priority Liens and the Second Priority Liens, and shall not constitute a subordination of any Obligations to any other Obligations.

               SECTION 2.02. Prohibition on Contesting Liens. Each of the First Lien Collateral Agent, for itself and on behalf of the First Lien Consenting Lenders, and the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that neither it nor any such Secured Party will, and hereby waives any right to, contest or support any other person in contesting, in any proceeding (including any Insolvency or Liquidation Proceeding), the perfection, priority, validity or enforceability of any Second Priority Lien or any First Priority Lien, as the case may be; provided that nothing in this Agreement shall be construed to prevent or impair the rights of the First Lien Collateral Agent or any other First Lien Secured Party, or the Second Lien Collateral Agent or any other Second Lien Secured Party, to enforce this Agreement.

               SECTION 2.03. No New Liens. It is the intent of the parties hereto that, so long as the Discharge of First Lien Obligations has not occurred, none of the US Grantors should (a) grant or permit any additional Lien on any asset to secure any Second Lien Obligation unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the First Lien Obligations or (b) grant or permit any additional Lien on any asset to secure any First Lien Obligation unless it has granted, or concurrently therewith grants, a Lien on such asset to secure the Second Lien Obligations, with each such Lien to be subject to the provisions of this Agreement, and no party hereto shall act or fail to act in a manner inconsistent with such intent. In furtherance of the foregoing and subject to the provisions of Section 6.01 with respect to collateral provided in connection with a

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DIP Financing, each of the First Lien Collateral Agent and the Second Lien Collateral Agent agrees that, so long as the Discharge of the First Lien Obligations has not occurred, it shall not accept the grant of any Lien on any assets of the Borrower, any other US Grantor or any other Domestic Subsidiary to secure the First Lien Obligations or the Second Lien Obligations, as the case may be, unless the grantor thereof shall have represented to the First Lien Collateral Agent or the Second Lien Collateral Agent, as the case may be, that such assets are then subject, or concurrently with such grant shall become subject, to a Second Priority Lien or a First Priority Lien, as the case may be. If the Second Lien Collateral Agent or any other Term Secured Party shall (nonetheless and in breach hereof) acquire or hold any Second Priority Lien on any asset that is not also subject to a First Priority Lien, then such person shall, without the need for any further consent of any person and notwithstanding anything to the contrary in any Second Lien Security Document, be deemed to also hold and have held such Lien for the benefit of the First Lien Collateral Agent as security for the First Lien Obligations (subject to the relative Lien priorities set forth in Section 2.01 and other terms of this Agreement), shall promptly notify the First Lien Collateral Agent in writing of the existence of such Second Priority Lien and shall take such action as may be requested by the First Lien Collateral Agent to ensure that the First Lien Collateral Agent shall acquire a Lien on such asset as security for the First Lien Obligations (which may include an assignment of such Second Priority Lien in favor of the First Lien Collateral Agent). To the extent that the provisions of this Section are not complied with for any reason, without limiting any other right or remedy available to the First Lien Collateral Agent or the other First Lien Secured Parties, the Second Lien Collateral Agent agrees, for itself and on behalf of the other Second Lien Secured Parties, that any amounts received by or distributed to any Second Lien Secured Party pursuant to or as a result of any Second Priority Lien granted in contravention of this Section shall be subject to Section 4.02.

               SECTION 2.04. Cooperation; Similar Liens and Agreements. In furtherance of the agreements set forth herein, including in Section 2.03, the US Grantors, the First Lien Collateral Agent and the Second Lien Collateral Agent acknowledge and agree that it is their intention that the First Lien US Collateral and the Second Lien Collateral be identical, and further agree:

     (a) to cooperate in good faith (and to direct their counsel to cooperate in good faith) in order to determine, upon any reasonable request by the First Lien Collateral Agent or the Second Lien Collateral Agent, the specific assets included in the First Lien US Collateral or the Second Lien Collateral, the steps taken to perfect the First Priority Liens or the Second Priority Liens and the identity of the parties obligated under the First Lien Loan Documents or the Second Lien Loan Documents; and

     (b) that the documents, agreements and instruments creating or evidencing the Second Priority Liens shall be in all material respects in the same form as the documents, agreements and instruments creating or evidencing the First Priority Liens, other than with respect to the first priority and second priority nature of the Liens created or evidenced thereunder, the nature of the obligations secured

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thereby, the identity of the secured parties that are parties thereto or have the benefit thereof and other matters contemplated by this Agreement.

ARTICLE III

Enforcement of Rights; Matters Relating to Collateral

               SECTION 3.01. Exercise of Rights and Remedies. (a) So long as the Discharge of First Lien Obligations has not occurred, whether or not any Insolvency or Liquidation Proceeding has been commenced, the First Lien Collateral Agent and the other First Lien Secured Parties shall have the exclusive right to enforce rights and exercise remedies (including any right of setoff) with respect to the Collateral (including making determinations regarding the release, Disposition or restrictions with respect to the Collateral), or to commence or seek to commence any action or proceeding with respect to such rights or remedies (including any foreclosure action or proceeding or any Insolvency or Liquidation Proceeding), in each case, without any consultation with or the consent of the Second Lien Collateral Agent or any other Second Lien Secured Party; provided that, notwithstanding the foregoing, (i) in any Insolvency or Liquidation Proceeding, the Second Lien Secured Parties may file proofs of claim or statements of interest with respect to the Second Lien Obligations; (ii) the Second Lien Collateral Agent may take any action to create, perfect, preserve or protect the validity and enforceability of the Second Priority Liens (provided that no such action is, or could reasonably be expected to be, (A) adverse to the First Priority Liens or the rights of the First Lien Collateral Agent or any other First Lien Secured Party to exercise remedies in respect thereof or (B) otherwise inconsistent with the terms of this Agreement, including the automatic release of the Second Priority Liens provided in Section 3.04); (iii) the Second Lien Secured Parties may file any responsive or defensive pleadings in opposition to any motion, claim, adversary proceeding or other pleading made by any person objecting to or otherwise seeking the disallowance of the claims of the Second Lien Secured Parties, including any claims secured by the Collateral, or otherwise make any agreements or file any motions pertaining to the Second Lien Obligations, in each case, to the extent not inconsistent with the terms of this Agreement; (iv) the Second Lien Secured Parties may exercise rights and remedies as unsecured creditors as provided in Section 3.03; (v) the Second Lien Secured Parties may vote on any plan of reorganization, make other filings and make any arguments and motions with respect to the Second Priority Liens that are, in each case, in accordance with the terms of this Agreement; (vi) the Second Lien Secured Parties may bid for or purchase Collateral for cash at any private or judicial foreclosure sale, in each case initiated by the First Lien Secured Parties; (vii) the Second Lien Secured Parties may hold a Lien on the Collateral pursuant to the Second Lien Security Documents for the period and to the extent granted therein; and (viii) subject to Section 3.02, the Second Lien Collateral Agent and the other Second Lien Secured Parties may enforce any of their rights and exercise any of their remedies with respect to the Collateral after the termination of the Standstill Period (the actions described in this proviso being referred to herein as the “Second Lien Permitted Actions”). Except for the Second Lien Permitted Actions, unless and until the Discharge of First Lien Obligations has occurred, the sole right of the Second Lien Collateral Agent

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and the other Second Lien Secured Parties with respect to the Second Priority Liens on the Collateral shall be to receive, after the Discharge of First Lien Obligations has occurred and in accordance with this Agreement, the Second Lien Security Documents and applicable law, proceeds, if any, of the Collateral subject thereto.

               (b) In exercising rights and remedies with respect to the Collateral, the First Lien Collateral Agent and the other First Lien Secured Parties may enforce the provisions of the First Lien Loan Documents and exercise remedies thereunder, all in such order and in such manner as they may determine in their sole discretion and in accordance with this Agreement, the other First Lien Loan Documents and applicable law. Such exercise and enforcement shall include the rights of an agent appointed by them to Dispose of Collateral upon foreclosure, to incur expenses in connection with any such Disposition and to exercise all the rights and remedies of a secured creditor under the Uniform Commercial Code, the Bankruptcy Code or any other Bankruptcy Law. The First Lien Collateral Agent agrees to provide prior written notice to the Second Lien Collateral Agent of its intention to foreclose upon or Dispose of any Collateral prior to the commencement of any actions to effect such foreclosure or Disposition (which notice shall be effective for all enforcement actions taken by the First Lien Collateral Agent after the date of such notice).

               (c) The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby acknowledges and agrees that no covenant, agreement or restriction contained in any Second Lien Security Document or any other Term Loan Document (other than this Agreement) shall be deemed to restrict in any way the rights and remedies of the First Lien Collateral Agent or the other First Lien Secured Parties with respect to the Collateral as set forth in this Agreement and the other First Lien Loan Documents.

               (d) Notwithstanding anything herein to the contrary, following the acceleration of the Indebtedness then outstanding under the First Lien Credit Agreements, the Second Lien Secured Parties (or any of them) may, at their sole expense and effort, upon notice (any such notice being referred to as an “Exercise of a Buy-Out Right”) to the Borrower and the First Lien Collateral Agent (who shall promptly inform the First Lien Global Administrative Agent, the First Lien Canadian Administrative Agent and the First Lien Lenders thereof), request the First Lien Secured Parties to transfer and assign to such Second Lien Secured Parties, without warranty or representation or recourse, all (but not less than all) of the First Lien Obligations; provided that (i) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority having jurisdiction; and (ii) such Second Lien Secured Parties shall have offered to pay to the First Lien Collateral Agent, for the account of the First Lien Secured Parties, in immediately available funds, an amount equal to 100% of the principal of such Indebtedness, plus (A) all accrued and unpaid interest thereon, (B) all accrued and unpaid fees under the First Lien Credit Agreements and (C) all the other First Lien Obligations then outstanding (which shall include, with respect to (x) the aggregate face amount of the letters of credit outstanding under any First Lien Credit Agreement, an amount in cash equal to 105% thereof, and (y) Hedging Agreements that constitute First Lien

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Obligations, 100% of the aggregate amount of such First Lien Obligations (calculated in accordance with the terms of such Hedging Agreements and giving effect to any netting arrangements) that the applicable US Grantor would be required to pay if such Hedging Agreements were terminated at such time). Following any Exercise of a Buy-Out Right by any Second Lien Secured Parties in accordance with the terms of this Section, if all (but not less than all) First Lien Non-Consenting Lenders agree to transfer and assign the First Lien Obligations held by them, then each First Lien Consenting Lender shall be obligated to transfer and assign the First Lien Obligations held by it to such Second Lien Secured Parties contemporaneously with the transfer and assignment of the First Lien Obligations held by the First Lien Non-Consenting Lenders, in each case subject to the receipt of payment therefor determined in accordance with the immediately preceding sentence. In order to effectuate the foregoing, the First Lien Collateral Agent shall calculate, upon the written request of the Second Lien Collateral Agent from time to time, the amount in cash that would be necessary so to purchase the First Lien Obligations.

               SECTION 3.02. No Interference. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, whether or not any Insolvency or Liquidation Proceeding has been commenced, the Second Lien Secured Parties:

          (a) except for Second Lien Permitted Actions, will not, so long as the Discharge of First Lien Obligations has not occurred, (i) enforce or exercise, or seek to enforce or exercise, any rights or remedies (including any right of setoff) with respect to any Collateral (including the enforcement of any right under any account control agreement, landlord waiver or bailee’s letter or any similar agreement or arrangement to which the Second Lien Collateral Agent or any other Term Secured Party is a party) or (ii) commence or join with any person (other than the First Lien Collateral Agent) in commencing, or petition for or vote in favor of any resolution for, any action or proceeding with respect to such rights or remedies (including any foreclosure action); provided, however, that the Second Lien Collateral Agent may enforce or exercise any or all such rights and remedies, or commence, join with any person in commencing, or petition for or vote in favor of any resolution for, any such action or proceeding, after a period of 150 days has elapsed since the date on which the Second Lien Collateral Agent has delivered to the First Lien Collateral Agent written notice of an Event of Default (as defined in the Term Credit Agreement) under the Term Credit Agreement (the “Standstill Period”); provided further, however, that (A) notwithstanding the expiration of the Standstill Period or anything herein to the contrary, in no event shall the Second Lien Collateral Agent or any other Second Lien Secured Party enforce or exercise any rights or remedies with respect to any Collateral, or commence, join with any person in commencing, or petition for or vote in favor of any resolution for, any such action or proceeding, if the First Lien Collateral Agent or any other First Lien Secured Party shall have commenced, and shall be diligently and in good faith pursuing (or shall have sought or requested relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding to enable the commencement and pursuit thereof), the enforcement or

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exercise of any rights or remedies with respect to any material portion of the Collateral or any such action or proceeding (prompt written notice thereof to be given to the Second Lien Collateral Agent by the First Lien Collateral Agent) and (B) after the expiration of the Standstill Period, so long as neither the First Lien Collateral Agent nor the other First Lien Secured Parties have commenced any action to enforce First Priority Liens on any material portion of the Collateral, in the event that and for so long as the Second Lien Collateral Agent has commenced any actions to enforce the Second Priority Liens with respect to any material portion of the Collateral to the extent permitted hereunder and is diligently and in good faith pursuing such actions, neither the First Lien Consenting Lenders nor the First Lien Collateral Agent shall take any action of a similar nature with respect to such Collateral; provided that all other provisions of this Intercreditor Agreement (including the turnover provisions of Article IV) are complied with;

          (b) subject to the rights of the Second Lien Secured Parties under clause (a) above, will not contest, protest or object to any foreclosure action or proceeding brought by the First Lien Collateral Agent or any other First Lien Secured Party, or any other enforcement or exercise by any First Lien Secured Party of any rights or remedies relating to the Collateral under the First Lien Loan Documents or otherwise, so long as the Second Priority Liens attach to the proceeds thereof, subject to the relative priorities set forth in Section 2.01;

          (c) subject to the rights of the Second Lien Secured Parties under clause (a) above, will not object to the forbearance by the First Lien Collateral Agent or any other First Lien Secured Party from commencing or pursuing any foreclosure action or proceeding or any other enforcement or exercise of any rights or remedies with respect to the Collateral;

          (d) except for Second Lien Permitted Actions, will not, so long as the Discharge of First Lien Obligations has not occurred, take or receive any Collateral, or any proceeds thereof or payment with respect thereto, in connection with the exercise of any right or enforcement of any remedy (including any right of setoff) with respect to any Collateral or in connection with any insurance policy award under a policy of insurance relating to any Collateral or any condemnation award (or deed in lieu of condemnation) relating to any Collateral;

          (e) except for Second Lien Permitted Actions, will not take any action that would, or could reasonably be expected to, hinder, in any manner, any exercise of remedies under the First Lien Loan Documents, including any Disposition of any Collateral, whether by foreclosure or otherwise;

          (f) except for Second Lien Permitted Actions, will not object to the manner in which the First Lien Collateral Agent or any other First Lien Secured Party may seek to enforce the First Priority Liens or collect the First Lien Obligations, regardless of whether any action or failure to act by or on behalf of the First Lien Collateral Agent or any other First Lien Secured Party is, or could

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be, adverse to the interests of the Second Lien Secured Parties, and will not assert, and hereby waives, to the fullest extent permitted by law, any right to demand, request, plead or otherwise assert or claim the benefit of any marshalling, appraisal, valuation or other similar right that may be available under applicable law with respect to the Collateral or any similar rights a junior secured creditor may have under applicable law; and

          (g) will not attempt, directly or indirectly, whether by judicial proceeding or otherwise, to challenge or question the validity or enforceability of any First Lien Obligation, First Priority Lien or First Lien Security Document, including this Agreement, or the validity or enforceability of the priorities, rights or obligations established by this Agreement.

               SECTION 3.03. Rights as Unsecured Creditors. Notwithstanding anything to the contrary set forth herein, the Second Lien Collateral Agent and the other Second Lien Secured Parties may, in accordance with the terms of the Second Lien Loan Documents and applicable law, enforce rights and exercise remedies against the Borrower and any other US Grantor as unsecured creditors; provided that no such action is otherwise inconsistent with the terms of this Agreement. Nothing in this Agreement shall prohibit the receipt by the Second Lien Collateral Agent or any other Second Lien Secured Party of the required payments of principal, premium, interest, fees and other amounts due under the Second Lien Loan Documents so long as such receipt is not the direct or indirect result of the enforcement or exercise by the Second Lien Collateral Agent or any other Second Lien Secured Party of rights or remedies as a secured creditor (including any right of setoff) or enforcement in contravention of this Agreement of any Second Priority Lien (including any judgment Lien resulting from the exercise of remedies available to an unsecured creditor).

               SECTION 3.04. Automatic Release of Second Priority Liens. (a) If, in connection with (i) any Disposition of any Collateral permitted under the terms of both the First Lien Loan Documents and the Term Loan Documents or (ii) the enforcement or exercise of any rights or remedies with respect to any Collateral, including any Disposition of such Collateral, the First Lien Collateral Agent, for itself and on behalf of the other First Lien Secured Parties, releases the First Priority Liens on such Collateral (in each case, a “Release”), other than any such Release granted in connection with the Discharge of First Lien Obligations, then (A) the Second Priority Liens on such Collateral shall be automatically, unconditionally and simultaneously released (provided, in each case, that the Second Priority Liens on such Collateral shall attach to the proceeds thereof, subject to the relative priorities set forth in Section 2.01) and (B) in the case of any such Disposition of all the Equity Interests of any US Grantor as a result of which such US Grantor ceases to be a Subsidiary, in the event the First Lien Subsidiary Guarantee of such US Grantor shall have been released in connection therewith, the Term Subsidiary Guarantee of such US Grantor shall be automatically, unconditionally and simultaneously released, and the Second Lien Collateral Agent shall, for itself and on behalf of the other applicable Second Lien Secured Parties, promptly execute and deliver to the First Lien Collateral Agent or the applicable US Grantor such termination statements, releases and

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other documents as the First Lien Collateral Agent or the applicable US Grantor may reasonably request to effectively confirm such Release.

               (b) Until the Discharge of First Lien Obligations has occurred, the Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, hereby appoints the First Lien Collateral Agent, and any officer or agent of the First Lien Collateral Agent, with full power of substitution, as the attorney-in-fact of each Second Lien Secured Party for the limited purpose of carrying out the provisions of this Section and taking any action and executing any instrument that the First Lien Collateral Agent may in good faith deem necessary or advisable to accomplish the purposes of this Section (including any endorsements or other instruments of transfer or release), which appointment is irrevocable and coupled with an interest; provided that the First Lien Collateral Agent shall only exercise such rights upon the failure of the Second Lien Collateral Agent to take any action when required to do so.

               SECTION 3.05. Insurance and Condemnation Awards. So long as the Discharge of First Lien Obligations has not occurred, the First Lien Collateral Agent and the other First Lien Secured Parties shall have the exclusive right, subject to the rights of the US Grantors under the First Lien Loan Documents, to settle and adjust claims in respect of Collateral under policies of insurance covering Collateral and to approve any award granted in any condemnation or similar proceeding, or any deed in lieu of condemnation, in respect of the Collateral. All proceeds of any such policy and any such award, or any payments with respect to a deed in lieu of condemnation, shall (a) first, prior to the Discharge of First Lien Obligations and subject to the rights of the US Grantors under the First Lien Loan Documents, be paid to the First Lien Collateral Agent for the benefit of the First Lien Secured Parties pursuant to the terms of the First Lien Loan Documents, (b) second, after the Discharge of First Lien Obligations and subject to the rights of the US Grantors under the Term Loan Documents, be paid to the Second Lien Collateral Agent for the benefit of the Second Lien Secured Parties pursuant to the terms of the Second Lien Security Documents and (c) third, if no Second Lien Obligations are outstanding, be paid to the owner of the subject property, such other person as may be entitled thereto or as a court of competent jurisdiction may otherwise direct. Until the Discharge of First Lien Obligations has occurred, if the Second Lien Collateral Agent or any other Second Lien Secured Party shall, at any time, receive any proceeds of any such insurance policy or any such award or payment, it shall transfer and pay over such proceeds to the First Lien Collateral Agent in accordance with Section 4.02.

ARTICLE IV

Payments

               SECTION 4.01. Application of Proceeds. So long as the Discharge of First Lien Obligations has not occurred, any Collateral or proceeds thereof received by the First Lien Collateral Agent in connection with any Disposition of, or collection on, such Collateral upon the enforcement or exercise of any right or remedy (including any right of

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setoff) shall, subject to Sections 7.01(a)(iv) and 7.01(a)(v), be applied by the First Lien Collateral Agent to the First Lien Obligations. Upon the Discharge of First Lien Obligations, the First Lien Collateral Agent shall deliver to the Second Lien Collateral Agent any remaining Collateral and any proceeds thereof then held by it in the same form as received, together with any necessary endorsements, or as a court of competent jurisdiction may otherwise direct, to be applied by the Second Lien Collateral Agent to the Second Lien Obligations.

          SECTION 4.02. Payment Over. So long as the Discharge of First Lien Obligations has not occurred, any Collateral, or any proceeds thereof or payment with respect thereto (together with assets or proceeds subject to Liens referred to in the final sentence of Section 2.03), received by the Second Lien Collateral Agent or any other Second Lien Secured Party in connection with any Disposition of, or collection on, such Collateral upon the enforcement or the exercise of any right or remedy (including any right of setoff) with respect to the Collateral, or in connection with any insurance policy claim or any condemnation award (or deed in lieu of condemnation), shall be segregated and held in trust and forthwith transferred or paid over to the First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received, together with any necessary endorsements, or as a court of competent jurisdiction may otherwise direct. Until the Discharge of First Lien Obligations has occurred, the Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, hereby appoints the First Lien Collateral Agent, and any officer or agent of the First Lien Collateral Agent, with full power of substitution, as the attorney-in-fact of each Second Lien Secured Party for the limited purpose of carrying out the provisions of this Section and taking any action and executing any instrument that the First Lien Collateral Agent may in good faith deem necessary or advisable to accomplish the purposes of this Section, which appointment is irrevocable and coupled with an interest.

          SECTION 4.03. Certain Agreements with Respect to Unenforceable Liens. Notwithstanding anything to the contrary contained herein, if in any Insolvency or Liquidation Proceeding a determination is made that any Lien created by the First Lien Security Documents encumbering any Collateral is not enforceable for any reason, then the Second Lien Collateral Agent and the other Second Lien Secured Parties agree that any distribution or recovery they may receive with respect to, or allocable to, the value of the assets intended to constitute such Collateral or any proceeds thereof as a result of their Second Priority Liens shall (for so long as the Discharge of First Lien Obligations has not occurred) be segregated and held in trust and forthwith paid over to the First Lien Collateral Agent for the benefit of the First Lien Secured Parties in the same form as received without recourse, representation or warranty (other than a representation of the Second Lien Collateral Agent that it has not otherwise sold, assigned, transferred or pledged any right, title or interest in and to such distribution or recovery) but with any necessary endorsements or as a court of competent jurisdiction may otherwise direct until such time as the Discharge of First Lien Obligations has occurred. Until the Discharge of First Lien Obligations has occurred, the Second Lien Collateral Agent, for itself and on behalf of each other Second Lien Secured Party, hereby appoints the First Lien Collateral Agent, and any officer or agent of the First Lien Collateral Agent, with full power of

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substitution, as the attorney-in-fact of each Second Lien Secured Party for the limited purpose of carrying out the provisions of this Section and taking any action and executing any instrument that the First Lien Collateral Agent may in good faith deem necessary or advisable to accomplish the purposes of this Section, which appointment is irrevocable and coupled with an interest.

ARTICLE V

Bailment for Perfection of Certain Security Interests

          (a) The First Lien Collateral Agent agrees that if it shall at any time hold a First Priority Lien on any Collateral that can be perfected by the possession or control of such Collateral or of any account in which such Collateral is held, and if such Collateral or any such account is in fact in the possession or under the control of the First Lien Collateral Agent, or of agents or bailees of the First Lien Collateral Agent (such Collateral being referred to herein as the “Pledged or Controlled Collateral”), the First Lien Collateral Agent shall, solely for the purpose of perfecting the Second Priority Liens granted under the Second Lien Security Documents and subject to the terms and conditions of this Article V, also hold such Pledged or Controlled Collateral as gratuitous bailee for the Second Lien Collateral Agent.

          (b) For purposes of this Article, so long as the Discharge of First Lien Obligations has not occurred, the First Lien Collateral Agent shall be entitled to deal with the Pledged or Controlled Collateral in accordance with the terms of this Agreement and the other First Lien Loan Documents as if the Second Priority Liens thereon did not exist. The obligations and responsibilities of the First Lien Collateral Agent to the Second Lien Collateral Agent and the other Second Lien Secured Parties under this Article V shall be limited solely to holding or controlling the Pledged or Controlled Collateral as gratuitous bailee in accordance with this Article V. Without limiting the foregoing, the First Lien Collateral Agent shall have no obligation or responsibility to ensure that any Pledged or Controlled Collateral is genuine or owned by any of the Grantors. The First Lien Collateral Agent acting pursuant to this Article V shall not, by reason of this Agreement, any other Security Document or any other document, have a fiduciary relationship in respect of any other First Lien Secured Party, the Second Lien Collateral Agent or any other Second Lien Secured Party.

          (c) Upon the Discharge of First Lien Obligations, the First Lien Collateral Agent shall transfer the possession and control of the Pledged or Controlled Collateral, together with any necessary endorsements but without recourse or warranty, (i) if the Second Lien Obligations are outstanding at such time, to the Second Lien Collateral Agent and (ii) if no Second Lien Obligations are outstanding at such time, to the applicable US Grantor, in each case so as to allow such person to obtain possession and control of such Pledged or Controlled Collateral. In connection with any transfer under clause (i) above, the First Lien Collateral Agent agrees to take all actions in its power as shall be reasonably requested by the Second Lien Collateral Agent to permit the Second Lien Collateral Agent to obtain, for the benefit of the Second Lien Secured Parties, a first

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priority security interest in the Pledged or Controlled Collateral or as directed by a court of competent jurisdiction.

ARTICLE VI

Insolvency or Liquidation Proceedings

          SECTION 6.01. Finance and Sale Matters. (a) Until the Discharge of First Lien Obligations has occurred, the Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, in the event of any Insolvency or Liquidation Proceeding, the Second Lien Secured Parties:

     (i) will not oppose or object to the use of any Collateral constituting “Cash Collateral” under Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, unless the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall oppose or object to such use of cash collateral;

     (ii) will not oppose or object to any post-petition financing, whether provided by the First Lien Secured Parties or any other person, under Section 364 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law (a “DIP Financing”), or the Liens securing any DIP Financing (“DIP Financing Liens”), unless the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall then oppose or object to such DIP Financing or such DIP Financing Liens, and, to the extent that such DIP Financing Liens are senior to, or rank pari passu with, the First Priority Liens, the Second Lien Collateral Agent will, for itself and on behalf of the other Second Lien Secured Parties, subordinate (and will be deemed to have hereunder so subordinated) the Second Priority Liens to the First Priority Liens (including any such Liens granted as adequate protection to the First Lien Secured Parties) and the DIP Financing Liens (as well as to any administrative or similar charges for professional fees and expenses and fees and expenses of the U.S. Trustee granted in such Insolvency or Liquidation Proceeding and agreed to by the First Lien Collateral Agent or the other First Lien Secured Parties) on the terms of this Agreement; provided that the foregoing shall not prevent the Second Lien Secured Parties from proposing any other DIP Financing to any US Grantors or to a court of competent jurisdiction;

     (iii) except to the extent permitted by paragraph (b) of this Section, in connection with the use of Cash Collateral as described in clause (i) above or a DIP Financing, will not request adequate protection or any other relief in connection with such use of Cash Collateral, DIP Financing or DIP Financing Liens; and

     (iv) subject to Section 3.03, will not oppose or object to any Disposition of any Collateral free and clear of the Second Priority Liens or other claims under

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Section 363 of the Bankruptcy Code, or any comparable provision of any other Bankruptcy Law, if the First Lien Secured Parties, or a representative authorized by the First Lien Secured Parties, shall consent to such Disposition; provided, that the Second Priority Liens on such Collateral shall attach to the proceeds thereof, subject to the relative priorities set forth in Section 2.01.

          (b) The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that no Second Lien Secured Party shall contest, or support any other person in contesting, (i) any request by the First Lien Collateral Agent or any other First Lien Secured Party for adequate protection or (ii) any objection, based on a claim of a lack of adequate protection, by the First Lien Collateral Agent or any other First Lien Secured Party to any motion, relief, action or proceeding. Notwithstanding the immediately preceding sentence, if, in connection with any DIP Financing or use of cash collateral, (A) any First Lien Secured Party is granted adequate protection in the form of a Lien on additional collateral, the Second Lien Collateral Agent may, for itself and on behalf of the other Second Lien Secured Parties, seek or request adequate protection in the form of a Lien on such additional collateral, which Lien will be subordinated to the First Priority Liens and DIP Financing Liens on the same basis as the other Second Priority Liens are subordinated to the First Priority Liens under this Agreement or (B) any Second Lien Secured Party is granted adequate protection in the form of a Lien on additional collateral, the First Lien Collateral Agent, for itself and on behalf of the other First Lien Secured Parties, and the secured parties under any DIP Financing, shall be granted adequate protection in the form of a Lien on such additional collateral that is senior to such Second Priority Lien as security for the First Lien Obligations and for such DIP Financing.

          (c) Notwithstanding the foregoing, the applicable provisions of paragraphs (a) and (b) of this Section shall only be binding on the Second Lien Secured Parties with respect to any DIP Financing to the extent the sum of (i) the aggregate principal amount of such DIP Financing plus (ii) the aggregate amount of the pre-petition First Lien Obligations (to the extent they are not included in such DIP Financing) does not exceed 120% of the sum of (A) the aggregate amount of the pre-petition First Lien Obligations plus (B) the pre-petition unused portion of the available revolving commitments under the First Lien Loan Documents (with the availability thereof to be determined based on the then-current First Lien Global Borrowing Base, but without regard to the satisfaction of the conditions precedent to borrowing thereunder).

          SECTION 6.02. Relief from the Automatic Stay. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that, so long as the Discharge of First Lien Obligations has not occurred, no Second Lien Secured Party shall, without the prior written consent of the First Lien Collateral Agent, seek or request relief from or modification of the automatic stay or any other stay in any Insolvency or Liquidation Proceeding in respect of any part of the Collateral, any proceeds thereof or any Second Priority Lien.

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          SECTION 6.03. Reorganization Securities. If, in any Insolvency or Liquidation Proceeding, debt obligations of the reorganized debtor secured by Liens upon any property of the reorganized debtor are distributed, pursuant to a plan of reorganization or similar dispositive restructuring plan, on account of both the First Lien Obligations and the Second Lien Obligations, then, to the extent the debt obligations distributed on account of the First Lien Obligations and on account of the Second Lien Obligations are secured by Liens upon the same assets or property, the provisions of this Agreement will survive the distribution of such debt obligations pursuant to such plan and will apply with like effect to the Liens securing such debt obligations.

          SECTION 6.04. Post-Petition Interest. (a) The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, agrees that no Second Lien Secured Party shall oppose or seek to challenge any claim by the First Lien Collateral Agent or any other First Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of First Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the First Priority Liens (it being understood and agreed that such value shall be determined without regard to the existence of the Second Priority Liens on the Collateral).

          (b) The First Lien Collateral Agent, for itself and on behalf of the First Lien Consenting Lenders, agrees that neither it nor any First Lien Consenting Lender shall oppose or seek to challenge any claim by the Second Lien Collateral Agent or any other Second Lien Secured Party for allowance in any Insolvency or Liquidation Proceeding of Second Lien Obligations consisting of post-petition interest, fees or expenses to the extent of the value of the Second Priority Liens (it being understood and agreed that such value shall be determined taking into account the First Priority Liens on the Collateral).

          SECTION 6.05. Certain Waivers by the Second Lien Secured Parties. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, waives any claim any Second Lien Secured Party may hereafter have against any First Lien Secured Party arising out of (a) the election by any First Lien Secured Party of the application of Section 1111(b)(2) of the Bankruptcy Code or any comparable provision of any other Bankruptcy Law or (b) any use of cash collateral or financing arrangement, or any grant of a security interest in the Collateral, in any Insolvency or Liquidation Proceeding.

          SECTION 6.06. Certain Voting Matters. Each of the First Lien Collateral Agent, on behalf of the First Lien Consenting Lenders, and the Second Lien Collateral Agent, on behalf of the Term Secured Parties, agrees that, without the written consent of the other, it will not seek to vote with the other as a single class in connection with any plan of reorganization in any Insolvency or Liquidation Proceeding. Except as provided in this Section, nothing in this Agreement is intended, or shall be construed, to limit the ability of the Second Lien Collateral Agent or the Second Lien Secured Parties to vote on any plan of reorganization.

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ARTICLE VII

Other Agreements

          SECTION 7.01. Matters Relating to Loan Documents. (a) The First Lien Loan Documents may be Amended in accordance with their terms, and the Indebtedness under the First Lien Credit Agreements may be Refinanced, in each case without the consent of any Second Lien Secured Party; provided, however, that, without the consent of the Term Required Lenders, neither the First Lien Collateral Agent nor any First Lien Consenting Lender shall agree to such Amendment or Refinancing (or successive Amendments or Refinancings) that shall, directly or indirectly, have any of the following effects (and no Refinancing that has any of the following effects shall be entitled to the benefits of this Agreement): (i) contravene any provision of this Agreement, (ii) increase the “Applicable Margin” (or a similar component of the interest rate under the First Lien Loan Documents, however denominated), at any level of the pricing grid, by more than 300 basis points compared to the “Applicable Margin” applicable to such level on the pricing grid under the First Lien Credit Agreements as in effect on the date hereof (giving effect to the First Lien Fifth Amendment), excluding increases resulting from the accrual of interest at the default rate, (iii) Amend, directly or indirectly, any limitations set forth in the First Lien Loan Documents on the date hereof in respect of the individual right of any First Lien Secured Party (A) to enforce any right arising out of the First Lien Loan Documents other than through the First Lien Global Administrative Agent, (B) to realize upon any Liens granted under any First Lien Loan Documents or to otherwise enforce or exercise any right or remedy in respect of such Liens, (C) to institute any judicial action pertaining to the First Lien Loan Documents or exercise any other remedy pertaining to the First Lien Loan Documents, including the limitations set forth in Sections 2.5(a) and 5.12 of the First Lien Intercreditor Agreement, (iv) Amend, directly or indirectly, the provisions set forth in Section 3.2(b) of the First Lien Intercreditor Agreement or (v) Amend, directly or indirectly, the provisions set forth in Section 3.2(d) or 3.2(e) of the First Lien Intercreditor Agreement, or the provisions set forth in Section 3.2(c) of the First Lien Intercreditor Agreement insofar as such provisions refer to any such Section 3.2(d) or 3.2(e) (it being agreed that the provisions referred to in the foregoing clauses (iii), (iv) and (v) shall be deemed to have been incorporated and made part of any New First Lien Loan Documents and shall apply to any Refinancing of the Indebtedness under the First Lien Credit Agreements); provided, that the holders of the Indebtedness resulting from any such Refinancing, or a duly authorized agent on their behalf, shall agree in writing to be bound by the terms of this Agreement (including the provisions of this Section); and provided further that nothing in this paragraph shall affect any limitation on any such Amendment or Refinancing that is set forth in the Term Credit Agreement or the Existing Senior Notes Indenture.

          (b) The Second Lien Loan Documents may be Amended, and the Indebtedness under the Term Credit Agreement and the Existing Senior Notes Indenture may be Refinanced, in each case without the consent of any First Lien Secured Party; provided, however, that, without the consent of the First Lien Required Lenders, no such Amendment or Refinancing (or successive Amendments or Refinancings) of Term Loan

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Documents shall, directly or indirectly, have any of the following effects: (i) contravene any provision of this Agreement, (ii) increase the “Applicable Margin” (or a similar component of the interest rate under the Term Loan Documents) in effect on the date hereof (without giving effect to any scheduled increase thereof) by more than 300 basis points, excluding increases resulting from the accrual of interest at the default rate, (iii) change to earlier dates any scheduled dates for payment of principal or of interest on Indebtedness under the Term Loan Documents, (iv) change the event of default provisions set forth in the Term Loan Documents in a manner adverse to the First Lien Secured Parties or the Borrower, (v) change the put, redemption, prepayment or defeasance provisions set forth in the Term Loan Documents in a manner materially adverse, when taken as a whole, to the First Lien Secured Parties or (vi) otherwise materially increase, when taken as a whole, the obligations of the Borrower or the other US Grantors or confer additional rights on the Second Lien Secured Parties in a manner materially adverse, when taken as a whole, to the First Lien Secured Parties; provided that the holders of the Indebtedness resulting from any such Refinancing, or a duly authorized agent on their behalf, shall agree in writing to be bound by the terms of this Agreement (including the provisions of this Section); and provided further, that nothing in this paragraph shall affect any limitation on any such Amendment or Refinancing that is set forth in the First Lien Credit Agreements. As an intercreditor agreement only and without prejudice to any rights of the First Lien Lenders under the First Lien Credit Agreements (including any covenants therein that may restrict such Refinancings), Indebtedness under the Term Credit Agreement may be Refinanced if (A) the final maturity and the average life to maturity of such Refinancing Indebtedness is at least equal to that of the Indebtedness then outstanding under the Term Credit Agreement and (B) if such Refinancing Indebtedness is secured, the holders of such Refinancing Indebtedness, or a duly authorized agent on their behalf, agree in writing to be bound by the terms of this Agreement.

          (c) Each of the Borrower and the Second Lien Collateral Agent agrees that the Term Credit Agreement and each Second Lien Security Document creating a Lien on any Collateral shall contain the applicable provisions set forth on Annex I hereto, or similar provisions approved by the First Lien Collateral Agent, which approval shall not be unreasonably withheld, conditioned or delayed. Each of the Borrower and the Second Lien Collateral Agent further agrees that each Second Lien Security Document creating a Lien on any Collateral shall contain such other language as the First Lien Collateral Agent may reasonably request to reflect the subordination pursuant to this Agreement of such Lien to the Liens created on such Collateral by the First Lien Security Document.

          (d) If the First Lien Collateral Agent or the other First Lien Secured Parties and the applicable US Grantor enter into any amendment or other modification of, or any waiver or consent under, any First Lien Security Document (other than this Agreement), then, insofar as such amendment, modification, waiver or consent relates to the obligations of the Borrower or any US Grantor in respect of any Collateral, or rights and remedies with respect thereto, such amendment, modification, waiver or consent shall apply automatically to any comparable provisions of the applicable Comparable Second Lien Security Document, in each case without the consent of any Second Lien Secured

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Party and without any action by the Second Lien Collateral Agent, the Borrower or any other US Grantor; provided that (i) no such amendment, modification, waiver or consent (A) shall have the effect of reducing the scope of assets subject to the Second Priority Liens, releasing any such Liens (except to the extent that such release is required by Section 3.04) or affecting the perfection, priority, validity or enforceability of any such Liens, (B) shall amend, modify or otherwise affect the rights or duties of the Second Lien Collateral Agent without its prior written consent or (C) permit Liens on the Collateral (other than DIP Financing Liens) that are not permitted under the terms of the Second Lien Loan Documents and (ii) notice of such amendment, modification, waiver or consent shall have been given to the Second Lien Collateral Agent no later than the 10th Business Day following the effective date of such amendment, modification, waiver or consent.

          SECTION 7.02. Effect of Refinancing of Indebtedness under First Lien Loan Documents. If, substantially contemporaneously with the Discharge of First Lien Obligations, the Borrower Refinances Indebtedness outstanding under the First Lien Loan Documents (provided that (a) such Refinancing is permitted hereby and under each of the Term Credit Agreement and the Existing Senior Notes Indenture, each as in effect on the date hereof, (b) the Borrower provides to the Second Lien Collateral Agent prior to such Refinancing, written notice (the “Refinancing Notice”) electing the application of the provisions of this Section to such Refinancing Indebtedness and (c) the penultimate sentence of this Section is complied with), then (i) such Discharge of First Lien Obligations shall automatically be deemed not to have occurred for all purposes of this Agreement, (ii) such Refinancing Indebtedness and all other obligations under the loan documents evidencing such Indebtedness (the “New First Lien Obligations”) shall automatically be treated as First Lien Obligations for all purposes of this Agreement, including for purposes of the Lien priorities and rights in respect of Collateral set forth herein, (iii) the credit agreement and the other loan documents evidencing such Refinancing Indebtedness (the “New First Lien Loan Documents”) shall automatically be treated as the First Lien Credit Agreements and the First Lien Loan Documents and, in the case of New First Lien Loan Documents that are security documents, as the First Lien Security Documents for all purposes of this Agreement, (iv) the collateral agent under the New First Lien Loan Documents (the “New First Lien Collateral Agent”) shall be deemed to be the First Lien Collateral Agent for all purposes of this Agreement, and (v) the lenders under the New First Lien Loan Documents shall be deemed to be the First Lien Lenders for all purposes of this Agreement. Upon receipt of a Refinancing Notice, which notice shall include the identity of the New First Lien Collateral Agent, the Second Lien Collateral Agent shall promptly enter into such documents and agreements (including amendments or supplements to this Agreement) as the Borrower or such New First Lien Collateral Agent may reasonably request in order to provide to the New First Lien Collateral Agent the rights and powers contemplated hereby, in each case consistent in all material respects with the terms of this Agreement. The Borrower shall cause the agreement, document or instrument pursuant to which the New First Lien Collateral Agent is appointed to provide that the New First Lien Collateral Agent, the secured parties for which it acts and their respective successors and assigns agree to be bound by the terms of this Agreement. In furtherance of Section 2.03, if the New First Lien

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Obligations are secured by assets of the US Grantors that do not also secure the Second Lien Obligations, the applicable US Grantors shall promptly grant a Second Priority Lien on such assets to secure the Second Lien Obligations.

          SECTION 7.03. No Waiver by First Lien Secured Parties. Other than with respect to the Second Lien Permitted Actions, nothing contained herein shall prohibit or in any way limit the First Lien Collateral Agent or any other First Lien Secured Party from opposing, challenging or objecting to, in any Insolvency or Liquidation Proceeding or otherwise, any action taken, or any claim made, by the Second Lien Collateral Agent or any other Second Lien Secured Party, including any request by the Second Lien Collateral Agent or any other Second Lien Secured Party for adequate protection or any exercise by the Second Lien Collateral Agent or any other Second Lien Secured Party of any of its rights and remedies under the Second Lien Loan Documents or otherwise.

          SECTION 7.04. Reinstatement. If, in any Insolvency or Liquidation Proceeding or otherwise, all or part of any payment with respect to the First Lien Obligations previously made shall be rescinded for any reason whatsoever, then the First Lien Obligations shall be reinstated to the extent of the amount so rescinded and, if theretofore terminated, this Agreement shall be reinstated in full force and effect and such prior termination shall not diminish, release, discharge, impair or otherwise affect the Lien priorities and the relative rights and obligations of the First Lien Secured Parties and the Second Lien Secured Parties provided for herein.

          SECTION 7.05. Further Assurances. Each of the First Lien Collateral Agent, the Second Lien Collateral Agent and the US Grantors agrees that it will execute, or will cause to be executed, any and all further documents, agreements and instruments, and take all such further actions, as may be required under any applicable law, or which the First Lien Collateral Agent or the Second Lien Collateral Agent may reasonably request, to effectuate the terms of this Agreement, including the relative Lien priorities provided for herein.

ARTICLE VIII

Representations and Warranties

          SECTION 8.01. Representations and Warranties of Each Party. Each party hereto represents and warrants to the other parties hereto as follows:

     (a) Such party is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization (if such concept is applicable in such jurisdiction) and has all requisite corporate power and authority to execute and deliver this Agreement and perform its obligations hereunder.

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     (b) This Agreement has been duly executed and delivered by such party and constitutes a legal, valid and binding obligation of such party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

     (c) The execution, delivery and performance by such party of this Agreement (i) do not require any consent or approval of, registration or filing with or any other action by any Governmental Authority and (ii) will not violate any provision of law, statute, rule or regulation, or of the certificate or articles of incorporation or other constitutive documents or by-laws of such party or any order of any Governmental Authority or any provision of any indenture, agreement or other instrument binding upon such party.

          SECTION 8.02. Representations and Warranties of Each Collateral Agent. The First Lien Collateral Agent represents and warrants to the other parties hereto that it has been authorized by the First Lien Consenting Lenders, and the Second Lien Collateral Agent represents and warrants to the other parties hereto that it has been authorized by the Term Lenders, to enter into this Agreement.

ARTICLE IX

No Reliance; No Liability; Obligations Absolute

          SECTION 9.01. No Reliance; Information. The First Lien Collateral Agent, for itself and on behalf of the First Lien Consenting Lenders, and the Second Lien Collateral Agent, for itself and on behalf of the other Term Secured Parties, acknowledges that (a) such Secured Parties have, independently and without reliance upon, in the case of the First Lien Consenting Lenders, any Second Lien Secured Party and, in the case of the Term Secured Parties, any First Lien Secured Party, and based on such documents and information as they have deemed appropriate, made their own credit analysis and decision to enter into the Loan Documents to which they are party and (b) such Secured Parties will, independently and without reliance upon, in the case of the First Lien Consenting Lenders, any Second Lien Secured Party and, in the case of the Term Secured Parties, any First Lien Secured Party, and based on such documents and information as they shall from time to time deem appropriate, continue to make their own credit decision in taking or not taking any action under this Agreement or any other Loan Document to which they are party. The First Lien Secured Parties and the Second Lien Secured Parties shall have no duty to disclose to any Second Lien Secured Party or to any First Lien Secured Party, as the case may be, any information relating to the Borrower or any of the Subsidiaries, or any other circumstance bearing upon the risk of nonpayment of any of the Obligations, that is known or becomes known to any of them or any of their Affiliates. If any First Lien Secured Party or any Second Lien Secured Party, in its sole discretion, undertakes at any time or from time to time to provide any such information to, as the case may be, any Second Lien Secured Party or any First Lien Secured Party, it

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shall be under no obligation (i) to make, and shall not be deemed to have made, any express or implied representation or warranty, including with respect to the accuracy, completeness, truthfulness or validity of the information so provided, (ii) to provide any additional information or to provide any such information on any subsequent occasion or (iii) to undertake any investigation.

          SECTION 9.02. No Warranties or Liability. (a) The First Lien Collateral Agent, for itself and on behalf of the First Lien Consenting Lenders, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII, neither the Second Lien Collateral Agent nor any other Second Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the Second Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon. Except as otherwise provided herein, the Second Lien Secured Parties will be entitled to manage and supervise their loans and extensions of credit. The Second Lien Collateral Agent, for itself and on behalf of the other Term Secured Parties, acknowledges and agrees that, except for the representations and warranties set forth in Article VIII, neither the First Lien Collateral Agent nor any other First Lien Secured Party has made any express or implied representation or warranty, including with respect to the execution, validity, legality, completeness, collectability or enforceability of any of the First Lien Loan Documents, the ownership of any Collateral or the perfection or priority of any Liens thereon.

          (b) The Second Lien Collateral Agent and the other Second Lien Secured Parties shall have no express or implied duty to the First Lien Collateral Agent or any other First Lien Secured Party, and the First Lien Collateral Agent and the other First Lien Secured Parties shall have no express or implied duty to the Second Lien Collateral Agent or any other Second Lien Secured Party, to act or refrain from acting in a manner which allows, or results in, the occurrence or continuance of a default or an event of default under any First Lien Loan Document and any Second Lien Loan Document (other than, in each case, this Agreement), regardless of any knowledge thereof which they may have or be charged with.

          (c) The Second Lien Collateral Agent, for itself and on behalf of the other Term Secured Parties, agrees that no First Lien Secured Party shall have any liability to the Second Lien Collateral Agent or any other Term Secured Party, and hereby waives any claim against any First Lien Secured Party, arising out of any and all actions that the First Lien Collateral Agent or the other First Lien Secured Parties may take or permit or omit to take with respect to (i) the First Lien Loan Documents (other than this Agreement and subject to Sections 7.01(a) and 7.02), (ii)  the collection of the First Lien Obligations (subject to Section 7.01(a)) or (iii) the maintenance of, the preservation of, the foreclosure upon or the Disposition of any Collateral; provided that nothing in this paragraph shall be construed to prevent or impair the rights of the Second Lien Collateral Agent or any other Second Lien Secured Party to enforce this Agreement.

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          SECTION 9.03. Obligations Absolute. The Lien priorities provided for herein and the respective rights, interests, agreements and obligations hereunder of the First Lien Collateral Agent and the other First Lien Secured Parties and the Second Lien Collateral Agent and the other Second Lien Secured Parties shall remain in full force and effect irrespective of:

     (a) any lack of validity or enforceability of any Loan Document;

     (b) any change in the time, place or manner of payment of, or in any other term of (including, subject to the limitations set forth in Section 7.01(a), the Refinancing of), all or any portion of the First Lien Obligations or the Second Lien Obligations, it being specifically acknowledged that a portion of the First Lien Obligations consists or may consist of Indebtedness that is revolving in nature, and the amount thereof that may be outstanding at any time or from time to time may be increased or reduced and subsequently reborrowed;

     (c) any release of any security interest or any amendment, waiver or other modification, whether by course of conduct or otherwise, of any Loan Document;

     (d) the securing of any First Lien Obligations or Second Lien Obligations with any additional collateral or Guarantees, or any exchange, release, voiding, avoidance or non-perfection of any security interest in any Collateral or any other collateral or any release of any Guarantee securing any First Lien Obligations or Second Lien Obligations; or

     (e) any other circumstances that otherwise might constitute a defense available to, or a discharge of, the Borrower or any other US Grantor in respect of the First Lien Obligations or this Agreement, or any Term Secured Party (or, subject to Sections 1.03(b) and 1.03(c), any Existing Senior Notes Secured Party) in respect of this Agreement.

ARTICLE X

Miscellaneous

          SECTION 10.01. Notices. Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by fax, as follows:

          (a) if to the Borrower or any other US Grantor:

Quicksilver Resources Inc.
777 West Rosedale Street, Suite 300
Fort Worth, Texas 76104
Attention: MarLu Hiller
Telephone: (817) 665-4860

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Facsimile: (817) 665-5016

Email: mhiller@qrinc.com

          (b) if to the First Lien Collateral Agent:

JPMorgan Chase Bank, N.A.
10 South Dearborn, 7^th Floor
Mail Code: IL1-0010
Chicago, Illinois 60603
Attention: Leonida G. Mischke
Telephone: (312) 385-7055
Telecopy: (312) 385-7096
Email: leonida.g.mischke@jpmchase.com

          (c) if to the Second Lien Collateral Agent:

Credit Suisse
Eleven Madison Avenue
New York, NY 10010
Attention: Agency Group
Facsimile: (212) 322-2291
Email: agency.loanops@credit-suisse.com

          All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by fax or on the date five Business Days after dispatch by certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section or in accordance with the latest unrevoked direction from such party given in accordance with this Section. As agreed to between the Borrower, the First Lien Collateral Agent and the Second Lien Collateral Agent from time to time, notices and other communications may also be delivered by e-mail to the e-mail address of a representative of the applicable person provided from time to time by such person.

          SECTION 10.02. Conflicts. In the event of any conflict or inconsistency between the provisions of this Agreement and the provisions of the other First Lien Loan Documents or Term Loan Documents, the provisions of this Agreement shall control.

          SECTION 10.03. Effectiveness; Survival. This Agreement shall become effective when executed and delivered by the parties hereto. All covenants, agreements, representations and warranties made by any party in this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement. The terms of this Agreement shall survive, and shall continue in full force and effect, in any Insolvency or Liquidation Proceeding. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby waives any and all rights the Second Lien Secured Parties may now or

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hereafter have under applicable law to revoke this Agreement or any of the provisions of this Agreement.

          SECTION 10.04. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby (it being understood that the invalidity of a particular provision in a particular jurisdiction shall not in and of itself affect the validity of such provision in any other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions.

          SECTION 10.05. Amendments; Waivers. (a) No failure or delay on the part of any party hereto in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereto are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given.

          (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the First Lien Collateral Agent and the Second Lien Collateral Agent; provided that no such agreement shall amend, modify or otherwise affect the rights or obligations of any US Grantor without such person’s prior written consent.

          SECTION 10.06. Subrogation. The Second Lien Collateral Agent, for itself and on behalf of the other Second Lien Secured Parties, hereby waives, until the Discharge of First Lien Obligations has occurred, any rights of subrogation it or they may acquire solely as a result of any payment made by the Second Lien Collateral Agent to the First Lien Collateral Agent pursuant to Section 4.02; provided, however, that, as between the Borrower and the other US Grantors, on the one hand, and the Second Lien Secured Parties, on the other hand, any payment made to the Second Lien Collateral Agent or any other Second Lien Secured Party that is paid over to the First Lien Collateral Agent pursuant to Section 4.02 shall be deemed not to reduce any of the Second Lien Obligations unless and until the Discharge of First Lien Obligations shall have occurred and the First Lien Collateral Agent delivers any such payment to the Second Lien Collateral Agent.

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          SECTION 10.07. Applicable Law; Jurisdiction; Consent to Service of Process. (a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

          (b) Each party hereto hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each party hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

          (c) Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State court or in any such Federal court. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

          (d) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law.

          SECTION 10.08. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

          SECTION 10.09. Parties in Interest. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, as well as, subject to Section 1.03, the other First Lien Secured Parties and Second Lien Secured Parties, all of whom are intended to be bound by, and to

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be third party beneficiaries of, this Agreement. No other person shall have or be entitled to assert rights or benefits hereunder.

          SECTION 10.10. Specific Performance. Each of the First Lien Collateral Agent, on behalf of itself and the First Lien Consenting Lenders, and the Second Lien Collateral Agent, on behalf of itself and the other Second Lien Secured Parties, may demand specific performance of this Agreement. The First Lien Collateral Agent, on behalf of itself and the First Lien Consenting Lenders, and the Second Lien Collateral Agent, on behalf of itself and the other Term Secured Parties, hereby irrevocably waives any defense based on the adequacy of a remedy at law and any other defense that might be asserted to bar the remedy of specific performance in any action which may be brought by the Secured Parties.

          SECTION 10.11. Headings. Article and Section headings used herein and the Table of Contents hereto are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.

          SECTION 10.12. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which when taken together shall constitute a single contract, and shall become effective as provided in Section 10.03. Delivery of an executed signature page to this Agreement by facsimile transmission or other electronic imaging means shall be as effective as delivery of a manually signed counterpart of this Agreement.

          SECTION 10.13. Provisions Solely to Define Relative Rights. The provisions of this Agreement are and are intended solely for the purpose of defining the relative rights of the First Lien Secured Parties, on the one hand, and the Second Lien Secured Parties, on the other hand. Except as expressly provided in this Agreement, none of the Borrower, any other US Grantor, any other Subsidiary or any other creditor of any of the foregoing shall have any rights or obligations hereunder, and none of the Borrower, any other US Grantor or any other Subsidiary may rely on the terms hereof. Nothing in this Agreement is intended to or shall impair the obligations of the Borrower, any other US Grantor or any other Subsidiary, which are absolute and unconditional, to pay the First Lien Obligations and the Second Lien Obligations as and when the same shall become due and payable in accordance with their terms.

          SECTION 10.14. Additional US Grantors. Pursuant to the First Lien US Credit Agreement and the Term Credit Agreement, certain Subsidiaries not party hereto on the date hereof are required to become a party hereto as a “US Grantor”. Upon the execution and delivery by any Subsidiary of an instrument in the form of Exhibit I hereto, any such Subsidiary shall become a party hereto and a US Grantor hereunder with the same force and effect as if originally named as such herein. The execution and delivery of any such instrument shall not require the consent of any other party hereto. The rights

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and obligations of each party hereto shall remain in full force and effect notwithstanding the addition of any new US Grantor as a party to this Agreement.

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

QUICKSILVER RESOURCES INC.,
	by
		/s/ Philip Cook
		Name:	Philip W. Cook
		Title:	Senior Vice President–Chief Financial Officer

COWTOWN PIPELINE FUNDING, INC.,
	by
		/s/ Philip Cook
		Name: Philip W. Cook
		Title: Senior Vice President–Chief Financial Officer
COWTOWN PIPELINE MANAGEMENT, INC.,
	by
		/s/ Philip Cook
		Name: Philip W. Cook
		Title: Senior Vice President–Chief Financial Officer
COWTOWN PIPELINE L.P.,
By:	Cowtown Pipeline Management, Inc., its general partner
	by
		/s/ Philip Cook
		Name: Philip W. Cook
		Title: Senior Vice President–Chief Financial Officer
COWTOWN GAS PROCESSING L.P.,
By:	Cowtown Pipeline Management, Inc., its general partner
	by
		/s/ Philip Cook
		Name: Philip W. Cook
		Title: Senior Vice President–Chief Financial Officer

JPMORGAN CHASE BANK, N.A, as the First Lien Collateral Agent,
	by
		/s/ Wm. Mark Cranmer
		Name: Wm. Mark Cranmer
		Title: Senior Vice President

CREDIT SUISSE, Cayman Islands branch, as the Second Lien Collateral Agent,
	by
		/s/ Vanessa Gomez
		Name: Vanessa Gomez
		Title: Director
	by
		/s/ Nupur Kumar
		Name: Nupur Kumar
		Title: Associate