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                       SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C.   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): DECEMBER 18, 2021
                       PIONEER NATURAL RESOURCES COMPANY  
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             (Exact name of Registrant as specified in its charter)
           DELAWARE                      1-13245              75-2702753        
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 (State or other jurisdiction of         Commission        (I.R.S. Employer
 incorporation or organization)          File Number    Identification Number)
1400 WILLIAMS SQUARE WEST, 5205 N. O'CONNOR BLVD., IRVING, TEXAS      75039   
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           (Address of principal executive offices)                 (Zip code)
      Registrant's Telephone Number, including area code:  (972) 444-9001
                                Not applicable
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             (Former name, former address and former fiscal year,
                        if changed since last report)
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                       PIONEER NATURAL RESOURCES COMPANY
                               TABLE OF CONTENTS
Page ---- Item 2. Acquisition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 5. Other Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Item 7. Financial Statements and Exhibits: Preliminary Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Unaudited Pro Forma Combined Financial Statements of Pioneer Natural Resources Company: Unaudited Pro Forma Combined Balance Sheet of Pioneer Natural Resources Company as of September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . 6 Unaudited Pro Forma Combined Statement of Operations of Pioneer Natural Resources Company for the nine months ended September 30, 2021 . . . . . . . . 7 Unaudited Pro Forma Combined Statement of Operations of Pioneer Natural Resources Company for the year ended December 31, 2021 . . . . . . . . . . . . 8 Unaudited Pro Forma Financial Statements of Pioneer Natural Resources Company: Unaudited Pro Forma Statement of Operations of Pioneer Natural Resources Company for the nine months ended September 30, 2021 . . . . . . . . . . . . . 9 Unaudited Pro Forma Statement of Operations of Pioneer Natural Resources Company for the year ended December 31, 2021 . . . . . . . . . . . . . . . . . 10 Unaudited Pro Forma Adjusted Statement of Operations of Pioneer Natural Resources Company for the year ended December 31, 2021 . . . . . . . . . . . . 11 Unaudited Pro Forma Statement of Operations of Mesa Inc. for the year ended December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Unaudited Pro Forma Financial Statements of Chauvco Resources, Ltd.: Unaudited Pro Forma Balance Sheet of Chauvco Resources Ltd. as of September 30, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Unaudited Pro Forma Statement of Operations of Chauvco Resources Ltd. for the nine months ended September 30, 2021 . . . . . . . . . . . . . . . . . 14 Notes to Unaudited Pro Forma Combined Financial Statements . . . . . . . . . . . . . 15 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2 3 ITEM 2. ACQUISITION OF ASSETS On September 3, 1997, Pioneer Natural Resources Company ("Pioneer") entered into an agreement (the "Combination Agreement") to acquire the Canadian and Argentine oil and gas businesses of Chauvco Resources Ltd. ("Chauvco"), a publicly traded independent oil and gas company based in Calgary, Canada (the "Transaction"), and to spin-off to Chauvco shareholders Chauvco's Gabonese oil and gas operations and other international interests through Chauvco's existing subsidiary, Chauvco Resources International Ltd. ("CRI"). The Transaction was completed on December 18, 1997. In accordance with the Combination Agreement, each holder of Chauvco common shares ("Chauvco Shareholder") received for each Chauvco common share held (i) one share of CRI and (ii) in certain cases, at the election of the Chauvco Shareholder, either the number of Pioneer common shares or shares exchangeable into Pioneer shares ("Exchangeable Shares") or a combination of both determined by multiplying each Chauvco common share held by an exchange ratio of 0.493827. In total, the acquisition consideration paid to the shareholders of Chauvco was approximately $946 million, consisting of the issuance of 14,015,010 shares of Pioneer common stock and 10,901,924 Exchangeable Shares and the assumption of $228 million of long-term debt. Cash payments were made in lieu of issuing fractional shares. For a detailed description of the assets acquired and liabilities assumed from Chauvco, see the Joint Management Information Circular and Proxy Statement dated November 14, 2021 incorporated herein by reference. In accordance with the provisions of Accounting Principles Board No. 16, "Business Combinations," ("APB 16"), the Transaction was treated as an acquisition of Chauvco by Pioneer. See "Item 7. Financial Statements and Exhibits" for the preliminary allocation of the total purchase price of Chauvco to the acquired assets and liabilities based upon the estimated fair values assigned to each of the significant assets acquired and liabilities assumed. Any future adjustments to the allocation of the purchase price are not anticipated to be material to Pioneer's financial statements. ITEM 5. OTHER EVENTS Tender Offer for Senior Subordinated Notes. On November 14, 1997, Pioneer Natural Resources USA, Inc. ("Pioneer USA"), a wholly-owned subsidiary of Pioneer, announced an offer to purchase for cash any and all of its $264 million 11 5/8% Senior Subordinated Discount Notes Due 2006 ("11 5/8% Notes") and its $325 million 10 5/8% Senior Subordinated Notes Due 2006 ("10 5/8% Notes") (collectively the "Mesa Notes") for a purchase price of $1,171.40 and $829.90, respectively, per $1,000 tendered plus any interest accrued on the 10 5/8% Notes (the "Tender Offer"). As of December 15, 1997, the offer expiration date, the respective Mesa Note holders had tendered approximately $319.1 million, or 98%, of the 10 5/8% Notes and approximately $241.5 million, or 91%, of the 11 5/8% Notes. On December 18, 1997, Pioneer USA paid holders an aggregate of approximately $574.3 million for the principal amount tendered on the Mesa Notes, and Pioneer USA paid to the holders of the 10 5/8% Notes accrued interest through the payment date of the Tender Offer of approximately $15.7 million. As a result of the Tender Offer, Pioneer will recognize after-tax extraordinary loss on early extinguishment of debt of $11.9 million during the fourth quarter of 1997. Pioneer USA financed the purchase price of the Mesa Notes tendered in the offer with borrowings under its bank credit facility. In connection with the Tender Offer, the holders of the requisite percentage of each outstanding issue of Mesa Notes approved amendments to the respective indentures governing the Mesa Notes which eliminated or modified most of the restrictive covenants contained in the indentures. Such amendments became effective on December 18, 1997, upon completion of the Tender Offer. American Cometra Acquisition. On December 19, 1997, Pioneer completed the acquisition of assets in the East Texas Basin from affiliates of American Cometra, Inc. ("ACI") and Rockland Pipeline Co. ("Rockland"), both subsidiaries of Electrafina S.A. of Belgium ("American Cometra Acquisition"). The total consideration paid was approximately $126 million, consisting of $80 million in cash and 1.7 million shares of Pioneer's common stock. Pioneer acquired ACI's producing wells, acreage, seismic data, royalties and mineral interests, and Rockland's gathering system, pipeline and gas processing plant in the East Texas Basin. This acquisition establishes a critical mass and core area in the East Texas Basin for Pioneer and provides it with a major presence in the Cotton Valley Reef trend. 1997 Asset Divestitures. During December 1997, Pioneer completed the sale of certain non-strategic properties for cash proceeds of approximately $103 million (the "1997 Asset Divestitures"). These divestitures involve approximately 800 properties and represent less than 3% of Pioneer's total reserve base and about 1% of Pioneer's daily production. Proceeds from these divestitures were primarily used to fund the American Cometra Acquisition described above. Credit Facility Agreements. On December 18, 1997, Pioneer amended and restated its domestic credit facilities ("United States Credit Facility") in order to substitute Pioneer as the borrower in place of Pioneer USA. The United States Credit Facility consists of two credit facility agreements. The primary facility provides for a $1.075 billion revolving line of credit with a maturity date of August 7, 2002. The additional facility provides for a $300 million line of credit with a maturity date of August 5, 1998. Advances on the United States Credit Facility bear interest, at the borrower's option, based on (a) the prime rate of NationsBank of Texas, N.A., (b) a Eurodollar rate (substantially equal to LIBOR), adjusted for the reserve requirement as determined by the Board of Governors of the Federal Reserve System with respect to transactions in Eurocurrency liabilities ("LIBOR Rate"), or (c) a competitive bid rate as quoted by the lenders electing to participate following the borrower's request. Advances that bear a LIBOR Rate have periodic maturities, at the borrower's option, of one, two, three, six, nine or twelve months. Advances that bear competitive bid rates have periodic maturities, at the borrower's option, of not less than 15 days nor more than 360 days. The interest rates on LIBOR Rate advances vary with interest rate margins ranging from 18 basis points to 45 basis points. The interest rate margin is determined by a grid based upon the long-term public debt rating of Pioneer's senior unsecured indebtedness. Pioneer's obligations are guaranteed by Pioneer USA and certain other U.S. subsidiaries, and are secured by a pledge of 65% of the capital stock of certain non-U.S. subsidiaries. The United States Credit Facility has been used to refinance the debt of Parker & Parsley Petroleum Company and MESA Inc. in their merger on August 7, 1997, to fund the offer to purchase the Mesa Notes, to fund the acquisition of assets from ACI and Rockland, and for other general corporate purposes. Pioneer also executed a $100 million note (the "Term Note"), dated as of December 22, 1997, payable to NationsBank of Texas, N.A. for use for working capital. The Term Note has a maturity date of April 1, 1999, and bears interest at the borrower's option, at the rates set forth in clauses (a) and (b) of this paragraph. Also on December 18, 1997, Pioneer refinanced all of Chauvco's outstanding debt by establishing a $290 million Canadian credit facility under which the borrower is Chauvco, and Pioneer and certain of its subsidiaries (not including Pioneer USA) provide guarantees. Restructuring. On December 30, 1997, Pioneer and Pioneer USA completed a restructuring that resulted in Pioneer becoming the primary obligor on the $28.4 million of Mesa Notes that were not tendered and on the $300 million of Parker & Parsley Petroleum Company's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007 ("Parker & Parsley Notes"). Pioneer USA has guaranteed the payment of principal and interest on the Parker & Parsley Notes, but has not guaranteed the Mesa Notes. The guarantee of the Parker & Parsley Notes will terminate if Pioneer USA is released from its guarantees of Pioneer's United States Credit Facility. Fourth Quarter Charges. During the fourth quarter of 1997, Pioneer will recognize certain charges which adversely affect Pioneer's financial results. In addition to the $11.9 million after-tax extraordinary loss related to the Tender Offer noted above, Pioneer estimates that it will recognize after-tax charges of between $7 - $10 million for the purchase of 3-D seismic data and approximately $3 million resulting from the write-off of an unsuccessful well in Guatemala. The decline of oil and gas prices during the fourth quarter of 1997 will also have an adverse effect on Pioneer's financial results. 3 4 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS In accordance with the Combination Agreement, each holder of Chauvco common shares received for each Chauvco common share held (i) one CRI Share and (ii) in certain cases, at the election of the Chauvco Shareholder, either the number of shares of Pioneer common stock or Exchangeable Shares, or a combination of both, determined by multiplying each Chauvco Common Share held by an exchange ratio of .493827. In total, 14,015,010 shares of Pioneer common stock and 10,901,924 Exchangeable Shares were issued upon completion of the Transaction. Cash payments were made in lieu of issuing approximately 89 fractional shares of Pioneer common stock and 18 fractional shares of Exchangeable Shares. In accordance with APB 16, the Transaction was treated as an acquisition of Chauvco by Pioneer. The value of Pioneer common stock for use in determining the aggregate purchase consideration allocated to the acquired assets and liabilities of Chauvco ("Consideration") is $27.625, which represents the market price of Pioneer common stock on December 18, 1997, the date of the shareholder vote for the Transaction (the "Chauvco Meeting"). In August 1997, the stockholders of Pioneer's predecessor entities, Parker & Parsley Petroleum Company ("Parker & Parsley") and MESA Inc. ("Mesa"), approved an Amended and Restated Agreement and Plan of Merger ("Merger Agreement") that resulted in the formation of Pioneer ("Parker/Mesa Merger"). In accordance with the provisions of APB 16, the merger was treated as an acquisition of Mesa by Parker & Parsley. As a result, the historical financial statements of Pioneer are those of Parker & Parsley and present the addition of Mesa's assets and liabilities as an acquisition by Pioneer in August 1997, and all references to Pioneer contained herein are references to Parker & Parsley for dates prior to the Parker/Mesa Merger. The unaudited pro forma combined balance sheet and statements of operations have been prepared to give effect to certain transactions as described below. The unaudited pro forma combined balance sheet of Pioneer as of September 30, 1997 has been prepared to give effect to the Transaction as if such transaction had occurred on September 30, 1997. In accordance with the provisions of APB 16, the Transaction has been accounted for as a purchase of Chauvco by Pioneer. The unaudited pro forma combined statements of operations of Pioneer for the nine months ended September 30, 2021 and for the year ended December 31, 1996 have been prepared to give effect to the Transaction, Parker/Mesa Merger and certain events described below for Pioneer, Chauvco and Mesa as if the Transaction, Parker/Mesa Merger and such events had occurred on January 1, 1996. Pro Forma Pioneer has been prepared to give effect to the acquisition of Pro Forma Mesa by Adjusted Pioneer, both as defined below. Pro Forma Chauvco has been prepared to give effect to the distribution of CRI Shares and the rights to the Alliance Pipeline to the Chauvco Shareholders. Adjusted Pioneer has been prepared to give effect to (i) the sale of certain wholly-owned Australian subsidiaries in March 1996 and the sale of Bridge Oil Timor Sea, Inc. in June 1996 (collectively, the "Australasian Assets Sold"), (ii) the aggregate effect of the sale of certain nonstrategic domestic oil and gas properties, gas plants, contract rights and related assets sold during the period from January 2, 2022 to December 31, 2021 (collectively, the "1996 Assets Sold") and (iii) the exchange of Pioneer's 6 1/4% Cumulative Monthly Income Convertible Preferred Shares ("Preferred Shares") to Pioneer common stock in August 1997. Pro Forma Mesa has been prepared to give effect to the Recapitalization (as described in Note 1. of Notes to Unaudited Pro Forma Combined Financial Statements), which entailed issuing $265 million in new preferred equity and repaying and refinancing substantially all of Mesa's $1.2 billion of then existing long-term debt, and the Greenhill acquisition, including additional borrowings to finance such acquisition. 4 5 The historical consolidated financial statements for Chauvco and CRI were prepared under Canadian GAAP and in Canadian dollars. For these unaudited pro forma combined financial statements, the historical financial information of Chauvco, CRI and the Alliance Pipeline project have been converted to U.S. dollars using the period end exchange rate for the balance sheet and the average exchange rate for the statements of operations for the respective periods. These unaudited pro forma combined financial statements also contain certain adjustments to conform the historical Chauvco financial statements to U.S. GAAP and successful efforts method of accounting as used by Pioneer after eliminating the balances or activity associated with CRI and the Alliance Pipeline. In addition, certain reclassifications have been made to Chauvco's historical consolidated financial statements to conform to Pioneer's financial statement presentation. The unaudited pro forma combined financial statements included herein are not necessarily indicative of the results that might have occurred had the transactions taken place at the beginning of the period specified and are not intended to be a projection of future results. In addition, future results may vary significantly from the results reflected in the accompanying unaudited pro forma combined financial statements because of normal production declines, changes in product prices, future acquisitions and divestitures, future development and exploration activities, and other factors. The following unaudited pro forma combined financial statements should be read in conjunction with (i) the Consolidated Financial Statements (and the related notes) of Pioneer included in its Quarterly Report on Form 10-Q for the nine months ended September 30, 1997, (ii) the Consolidated Financial Statements (and the related notes) of both Parker & Parsley and Mesa included in their respective Annual Reports on Form 10-K and Form 10-K/A for the year ended December 31, 2021 and their respective Quarterly Reports on Form 10-Q for the three months ended March 31, 2022 and the six months ended June 30, 2022 and (iii) the Consolidated Financial Statements (and the related notes) of Chauvco for the nine months ended September 30, 2021 and for the three-year period ended December 31, 1996. 5 6 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA COMBINED BALANCE SHEET AS OF September 30, 2021 (in thousands)
ASSETS Pro Forma Pro Forma Combined Pro Forma Pioneer Chauvco Adjustments Combined ------------ ----------- ----------- ----------- Current assets: Cash and cash equivalents $ 40,631 $ 431 (3)(a) $ 41,059 Restricted cash 1,716 - 1,716 Accounts receivable 128,093 38,256 166,349 Inventories 6,839 1,875 8,714 Deferred income taxes 3,600 - 3,600 Other current assets 5,073 1,444 6,517 ----------- ----------- ----------- Total current assets 185,952 42,006 227,955 ----------- ----------- ----------- Property, plant and equipment, at cost: Oil and gas properties, using the successful efforts method of accounting: Proved properties 3,994,707 792,653 (164,554)(a) 4,622,806 Unproved properties 83,402 33,129 401,462 (a) 517,993 Accumulated depletion, depreciation and amortization (554,132) (310,954) 310,954 (a) (554,132) ----------- ----------- ----------- 3,523,977 514,828 4,586,667 ----------- ----------- ----------- Other property and equipment, net 35,736 6,085 41,821 Other assets, net 51,078 22,700 73,778 ----------- ----------- ----------- $ 3,796,743 $ 585,619 $ 4,930,221 =========== =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 11,116 $ 19,545 $ 30,661 Undistributed unit purchases 1,716 - 1,716 Accounts payable 76,698 33,423 110,121 Domestic and foreign income taxes 52 161 213 Other current liabilities 46,995 - 46,995 ----------- ----------- ----------- Total current liabilities 136,577 53,129 189,706 ----------- ----------- ----------- Long-term debt, less current maturities 1,601,145 208,653 30,000 (a) 1,839,798 Other noncurrent liabilities 127,614 7,808 135,422 Deferred income taxes 213,300 52,290 93,268 (a) 358,858 Stockholders' equity: Common stock 745 108,836 (108,587)(a) 994 Additional paid-in capital 1,626,487 - 688,081 (a) 2,314,568 Unearned compensation (17,316) - (17,316) Retained earnings 108,191 154,903 (154,903)(a) 108,191 ----------- ----------- ----------- Total stockholders' equity 1,718,107 263,739 2,406,437 ----------- ----------- ----------- Commitments and contingencies ----------- ----------- ----------- $ 3,796,743 $ 585,619 $ 4,930,221 =========== =========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 6 7 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS NINE MONTHS ENDED September 30, 2021 (in thousands, except per share data)
Pro Forma Pro Forma Pro Forma Combined Pro Forma Pioneer Chauvco Adjustments Combined ------------ ----------- ----------- ----------- Revenues: Oil and gas $ 558,600 $ 111,272 $ 669,872 Interest and other 5,671 2,183 7,854 Gain on disposition of assets, net 2,763 - 2,763 ----------- ---------- ----------- 567,034 113,455 680,489 ----------- ---------- ----------- Cost and expenses: Oil and gas production 151,400 30,396 181,796 Depletion, depreciation and amortization 245,414 41,771 (3,597)(b) 283,588 Impairment of long-lived assets 2,907 - 2,907 Exploration and abandonments 46,304 - 6,414(c) 52,718 General and administrative 62,765 5,246 7,003(d) 75,014 Interest 98,016 7,193 1,197(e) 106,406 Other 5,685 - 5,685 ----------- ---------- ----------- 612,491 84,606 708,114 ----------- ---------- ----------- Income (loss) from continuing operations before income taxes (45,457) 28,849 (27,625) Income tax benefit (provision) 17,700 (5,667) 367(f) 12,400 ----------- ---------- ----------- Income (loss) from continuing operations (27,757) 23,182 (15,225) Income (loss) from continuing operations per share $ (.38) $ .48 $ (.15) =========== ========== =========== Weighted average shares outstanding 74,010 48,428 (23,511)(g) 98,927 =========== ========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 7 8 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS YEAR ENDED December 31, 2021 (in thousands, except per share data)
Pro Forma Pro Forma Combined Pro Forma Pioneer Chauvco Adjustments Combined -------------- ----------- ----------- ---------- Revenues: Oil and gas $ 751,806 $ 129,833 $ 881,639 Natural gas processing 23,184 - 23,184 Interest and other 42,038 381 42,419 Gain on disposition of assets, net 11,966 - 11,966 ------------ ----------- ----------- 828,994 130,214 959,208 ------------ ----------- ----------- Cost and expenses: Oil and gas production 196,014 34,145 230,159 Natural gas processing 11,949 - 11,949 Depletion, depreciation and amortization 320,468 48,657 (3,626)(b) 365,499 Exploration and abandonments 32,128 - 5,427 (c) 37,555 General and administrative 68,478 7,469 8,008 (d) 83,955 Interest 128,401 8,313 1,866 (e) 138,580 Other 4,791 - 4,791 ------------ ----------- ----------- 762,229 98,584 872,488 ------------ ----------- ----------- Income from continuing operations before income taxes 66,765 31,630 86,720 Income tax provision (24,700) (6,612) 612 (f) (30,700) ------------ ----------- ----------- Income from continuing operations $ 42,065 $ 25,018 $ 56,020 ============ =========== =========== Income per share $ .57 $ .52 $ .56 ============ =========== =========== Weighted average shares outstanding 74,261 48,300 (23,383)(g) 99,178 ============ =========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 8 9 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA STATEMENT OF OPERATIONS NINE MONTHS ENDED September 30, 2021 (in thousands, except per share data)
Pro Forma Pro Forma Pioneer Mesa Greenhill Adjustments Pioneer ------------ -------------- ---------- ------------ ------------- Revenues: Oil and gas $ 348,980 $ 192,251 $ 17,369 $ 558,600 Interest and other 3,649 1,875 147 5,671 Gain (loss) on disposition of assets, net 2,745 (23) 41 2,763 ----------- ------------ --------- ----------- A 355,374 194,103 17,557 567,034 ----------- ------------ --------- ----------- Cost and expenses: Oil and gas production 91,674 53,085 6,641 151,400 Depletion, depreciation and amortization 126,897 65,359 7,725 45,433 (b) 245,414 Impairment of long-lived assets - 2,907 - 2,907 Exploration and abandonments 34,310 8,410 4,059 (475)(h) 46,304 General and administrative 31,769 17,203 13,318 475 (h) 62,765 Interest 44,264 57,388 - (3,037)(i) 98,016 5,429 (j) (6,028)(k) Other 2,982 2,703 - 5,685 ----------- ------------ --------- ----------- 331,896 207,055 31,743 612,491 ----------- ------------ --------- ----------- Income (loss) from continuing operations before income taxes 23,478 (12,952) (14,186) (45,457) Income tax benefit (provision) (8,500) - - 26,200 (f) 17,700 ----------- ------------ --------- ----------- Income (loss) from continuing operations 14,978 (12,952) (14,186) (27,757) Dividends on preferred stock - (11,105) - 11,105 (l) - ----------- ------------ --------- ----------- Income (loss) from continuing operations attributable to common stock $ 14,978 $ (24,057) $ (14,186) $ (27,757) =========== ============ ========= =========== Income (loss) per common share $ .34 $ (.37) $ (.38) =========== ============ =========== Weighted average shares outstanding 43,453 65,670 (35,113)(m) 74,010 =========== ============ ===========
See accompanying notes to unaudited pro forma combined financial statements. 9 10 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED December 31, 2021 (in thousands, except per share data)
Adjusted Pro Forma Pro Forma Pro Forma Pioneer Mesa Adjustments Pioneer ------------- ------------ ----------- ------------ Revenues: Oil and gas $ 374,560 $ 377,246 $ 751,806 Natural gas processing 23,184 - 23,184 Interest and other 17,328 24,710 42,038 Gain on disposition of assets, net - 11,966 11,966 ------------ ----------- ----------- 415,072 413,922 828,994 ------------ ----------- ----------- Cost and expenses: Oil and gas production 101,545 94,469 196,014 Natural gas processing 11,949 - 11,949 Depletion, depreciation and amortization 104,629 135,289 80,550 (b) 320,468 Exploration and abandonments 20,187 12,772 (831)(h) 32,128 General and administrative 26,631 41,016 831 (h) 68,478 Interest 28,700 105,266 (5,565)(j) 128,401 Other 2,451 2,340 4,791 ------------ ----------- ----------- 296,092 391,152 762,229 ------------ ----------- ----------- Income from continuing operations before income taxes 118,980 22,770 66,765 Income tax provision (41,600) - 16,900 (f) (24,700) ------------ ----------- ----------- Income from continuing operations 77,380 22,770 42,065 Dividends on preferred stock - (21,880) 21,880 (l) - ------------ ----------- ----------- Income from continuing operations attributable to common stock $ 77,380 $ 890 $ 42,065 ============ =========== =========== Income per common share $ 1.82 $ .01 $ .57 ============ =========== =========== Weighted average shares outstanding 42,448 64,164 (32,351)(m) 74,261 ============ =========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 10 11 PIONEER NATURAL RESOURCES COMPANY UNAUDITED PRO FORMA ADJUSTED STATEMENT OF OPERATIONS YEAR ENDED December 31, 2021 (in thousands, except per share data)
Australasian 1996 Assets Assets Pro Forma Adjusted Pioneer Sold Sold Adjustments Pioneer ------------ ------------- ----------- ------------ ---------- Revenues: Oil and gas $ 396,931 $ (10,591) $ (11,780) $ 374,560 Natural gas processing 23,814 - (630) 23,184 Interest and other 17,458 (130) - 17,328 Gain on disposition of assets, net 97,140 (83,260) (13,880) - ----------- ------------ ---------- ---------- 535,343 (93,981) (26,290) 415,072 ----------- ------------ ---------- ---------- Cost and expenses: Oil and gas production 110,334 (3,300) (5,489) 101,545 Natural gas processing 12,528 - (579) 11,949 Depletion, depreciation and amortization 112,134 (4,217) (3,288) 104,629 Exploration and abandonments 23,030 (1,435) (1,408) 20,187 General and administrative 28,363 (1,732) - 26,631 Interest 46,155 (1,100) - (12,020)(i) 28,700 (4,335)(n) Other 2,451 - - 2,451 ----------- ------------ ---------- ---------- 334,995 (11,784) (10,764) 296,092 ----------- ------------ ---------- ---------- Income from continuing operations before income taxes 200,348 (82,197) (15,526) 118,980 Income tax provision (60,100) 16,000 5,400 (2,900)(f) (41,600) ----------- ------------ ---------- ---------- Income from continuing operations $ 140,248 $ (66,197) $ (10,126) $ 77,380 =========== ============ ========== ========== Income per share $ 3.92 $ 1.82 =========== ========== Weighted average shares outstanding 35,734 6,714 (i) 42,448 =========== ==========
See accompanying notes to unaudited pro forma combined financial statements. 11 12 MESA INC. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS YEAR ENDED December 31, 2021 (in thousands, except per share data)
Pro Forma Pro Forma Mesa Recapitalization Greenhill Adjustments Mesa ------------- ---------------- ----------- ----------- ----------- Revenues: Oil and gas $ 306,302 $ - $ 70,944 $ 377,246 Natural gas processing - - - - Interest and other 24,710 - - 24,710 Gain on disposition of assets, net 11,966 - - 11,966 ------------- -------- ----------- ---------- 342,978 - 70,944 413,922 ------------- -------- ----------- ---------- Cost and expenses: Oil and gas production 71,370 - 23,099 94,469 Natural gas processing - - - - Depletion, depreciation and amortization 103,301 - 29,355 2,633 (b) 135,289 Exploration and abandonments 5,431 - 7,341 12,772 General and administrative 31,473 - 9,543 41,016 Interest 121,135 (34,530)(o) (729) 19,390 (k) 105,266 Other 1,929 - 411 2,340 ------------- -------- ----------- ---------- 334,639 (34,530) 69,020 391,152 ------------- -------- ----------- ---------- Income from continuing operations before income taxes 8,339 34,530 1,924 22,770 Income tax provision - - - - ------------- -------- ----------- ---------- Income from continuing operations 8,339 34,530 1,924 22,770 Dividends on preferred stock (9,522) (12,358)(p) - (21,880) ------------- -------- ----------- ---------- Income (loss) from continuing operations attributable to common stock $ (1,183) $ 22,172 $ 1,924 $ 890 ============= ======== =========== ========== Income (loss) per common share $ (.02) $ .01 ============= ========== Weighted average shares outstanding 64,164 64,164 ============= ==========
See accompanying notes to unaudited pro forma combined financial statements. 12 13 CHAUVCO RESOURCES LTD. UNAUDITED PRO FORMA BALANCE SHEET AS OF September 30, 2021 (in thousands)
ASSETS Pro Forma Chauvco CRI Alliance Chauvco ----------- -------------- ------------ ------------ Current assets: Cash and cash equivalents $ 985 $ (554) $ - $ 431 Accounts receivable 30,343 (4,420) 12,333 38,256 Inventories 4,032 (2,157) - 1,875 Other current assets 3,093 (1,649) - 1,444 ----------- --------- ---------- ----------- Total current assets 38,453 (8,780) 12,333 42,006 ----------- --------- ---------- ----------- Oil and gas properties, using the full cost method of accounting 870,524 (44,742) - 825,782 Accumulated depletion, depreciation and amortization (311,874) 920 - (310,954) ----------- --------- ---------- ----------- 558,650 (43,822) - 514,828 ----------- --------- ---------- ----------- Other property and equipment, net 10,572 (4,487) - 6,085 Other assets, net 35,033 - (12,333) 22,700 ----------- --------- ---------- ----------- $ 642,708 $ (57,089) $ - $ 585,619 =========== ========= ========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current maturities of long-term debt $ 19,545 $ - $ - $ 19,545 Accounts payable 42,073 (8,650) - 33,423 Domestic and foreign income taxes 161 - - 161 ----------- --------- ---------- ----------- Total current liabilities 61,779 (8,650) - 53,129 ----------- --------- ---------- ----------- Long-term debt, less current maturities 208,653 - - 208,653 Other noncurrent liabilities 8,061 (253) - 7,808 Deferred income taxes 52,290 - - 52,290 Stockholders' equity: Common stock 158,603 (49,767) - 108,836 Retained earnings 153,322 1,581 - 154,903 ----------- --------- ---------- ----------- Total stockholders' equity 311,925 (48,186) - 263,739 ----------- --------- ---------- ----------- Commitments and contingencies ----------- --------- ---------- ----------- $ 642,708 $ (57,089) $ - $ 585,619 =========== ========= ========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 13 14 CHAUVCO RESOURCES LTD. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS NINE MONTHS ENDED September 30, 2021 (in thousands, except per share data)
Pro Forma Chauvco CRI Chauvco ----------- ------------ ------------ Revenues: Oil and gas $ 113,182 $ (1,910) $ 111,272 Interest and other 1,814 369 2,183 ----------- ---------- ----------- 114,996 (1,541) 113,455 ----------- ---------- ----------- Cost and expenses: Oil and gas production 31,617 (1,221) 30,396 Depletion, depreciation and amortization 42,693 (922) 41,771 General and administrative 5,670 (424) 5,246 Interest 7,656 (463) 7,193 Other 22 (22) - ----------- ---------- ----------- 87,658 (3,052) 84,606 ----------- ---------- ----------- Income from continuing operations before income taxes 27,338 1,511 28,849 Income tax provision (5,667) - (5,667) ----------- ---------- ----------- Income from continuing operations $ 21,671 $ 1,511 $ 23,182 =========== ========== =========== Income per common share $ .45 $ .48 =========== =========== Weighted average shares outstanding 48,428 48,428 =========== ===========
See accompanying notes to unaudited pro forma combined financial statements. 14 15 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 NOTE 1. BASIS OF PRESENTATION ACQUISITION OF CHAUVCO. In accordance with the Combination Agreement, each holder of Chauvco common shares received for each Chauvco common share held (i) one CRI Share and (ii) in certain cases, at the election of the Chauvco Shareholder, either the number of shares of Pioneer common stock or Exchangeable Shares, or a combination of both, determined by multiplying each Chauvco Common Share held by an exchange ratio of .493827. In total, 14,015,010 shares of Pioneer common stock and 10,901,924 Exchangeable Shares were issued upon completion of the Transaction. Cash payments were made in lieu of issuing approximately 89 fractional shares of Pioneer common stock and 18 fractional shares of Exchangeable Shares. In accordance with APB 16, the Transaction was treated as an acquisition of Chauvco by Pioneer. The value of Pioneer common stock for use in determining the aggregate purchase consideration allocated to the acquired assets and liabilities of Chauvco ("Consideration") is $27.625, which represents the market price of Pioneer common stock on the date of the Chauvco Meeting. The historical consolidated financial statements for Chauvco and CRI were prepared under Canadian GAAP and in Canadian dollars. For these unaudited pro forma financial statements, the historical financial information of Chauvco, CRI and the Alliance Pipeline project have been converted to U.S. dollars using the period end exchange rate for the balance sheet and the average exchange rate for the statement of operations. These unaudited pro forma financial statements also contain certain adjustments to conform the historical Chauvco financial statements to U.S. GAAP after eliminating the balances or activity associated with CRI and the Alliance Pipeline. In addition, certain reclassifications have been made to Chauvco's historical consolidated financial statements to conform to Pioneer's financial statement presentation. ACQUISITION OF MESA. In accordance with the Merger Agreement, (i) holders of Parker & Parsley common stock received one share of Pioneer common stock for each share held; (ii) holders of Mesa common stock received one share of Pioneer common stock for every seven shares held; and (iii) holders of Mesa Series A Preferred Stock and Mesa Series B Preferred Stock received 1.25 shares of Pioneer common stock for every seven shares held. No fractional shares were issued and all treasury shares were canceled. DESCRIPTION OF PRO FORMA FINANCIAL STATEMENTS. The unaudited pro forma combined balance sheet of Pioneer as of September 30, 2021 has been prepared to give effect to the Transaction as if such transactions had occurred on September 30, 1997. In accordance with the provisions of APB No. 16, "Business Combinations", the Transaction has been accounted for as a purchase of Chauvco by Pioneer. The unaudited pro forma combined statements of operations of Pioneer for the nine months ended September 30, 2021 and for the year ended December 31, 1996 have been prepared to give effect to the Transaction and the Parker/Mesa Merger and certain events described below for Pioneer, Chauvco and Mesa as if the Transaction, the Parker/Mesa Merger and such events had occurred on January 1, 1996. Pro Forma Pioneer has been prepared to give effect to the acquisition of Pro Forma Mesa by Adjusted Pioneer, both as defined below. Pro Forma Chauvco has been prepared to give effect to the distribution of CRI shares and the rights to the Alliance Pipeline to Chauvco Shareholders. 15 16 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 Adjusted Pioneer has been prepared to give effect to the sale of the Australasian Assets Sold, the 1996 Assets Sold and the exchange of Pioneer's Preferred Shares to Pioneer common stock. Pro Forma Mesa has been prepared to give effect to the Recapitalization and the Greenhill Acquisition, including additional borrowings to finance such acquisition. The following is a description of the individual columns included in these unaudited pro forma combined financial statements: PIONEER - Represents the consolidated balance sheet of Pioneer as of September 30, 2021 and the consolidated statements of operations of Pioneer for the nine months ended September 30, 2021 and for the year ended December 31, 1996. AUSTRALASIAN ASSETS SOLD - Reflects the results of operations for the year ended December 31, 2021 from certain wholly-owned subsidiaries prior to their sale in 1996. On March 28, 1996, Pioneer completed the sale of certain wholly-owned subsidiaries to Santos Ltd., and on June 20, 1996, Pioneer completed the sale of another wholly-owned subsidiary, Bridge Oil Timor Sea, Inc., to Phillips Petroleum International Investment Company. During the year ended December 31, 1996, Pioneer received aggregate consideration of $237.5 million for these combined sales. The assets sold to Santos Ltd. consisted primarily of properties located in the Cooper Basin in Central Australia, the Surat Basin in Northeast Australia, the Carnarvon Basin on the Northwest Shelf off the coast of Western Australia, the Otway Basin off the coast of Southeast Australia and the Central Sumatra Basin in Indonesia. At December 31, 1995, Pioneer's interests in these properties contained 32.1 million BOE of proved reserves (consisting of 12.4 million Bbls of oil and 118.3 Bcf of gas), representing $133.8 million of SEC PV 10 value. Prior to their sale in 1996, these properties produced 249,500 Bbls of oil and 1,927,000 Mcf of gas. Pioneer received an average price of $19.55 per Bbl of oil and $1.95 per Mcf of gas from such production and incurred production costs per BOE of $4.92 and depletion expense per BOE of $5.84 related to these properties. The wholly-owned subsidiary sold to Phillips Petroleum International Investment Company, Bridge Oil Timor Sea, Inc., has a wholly-owned subsidiary, Bridge Oil Timor Sea Pty Ltd., which owns a 22.5% interest in the ZOCA 91-13 permit in the offshore Bonapart Basin in the Zone of Cooperation between Australia and Indonesia. 1996 ASSETS SOLD - Reflects the results of operations for the year ended December 31, 2021 from certain oil and gas properties, gas plants, contract rights and related assets prior to their sale in 1996. During the year ended December 31, 1996, Pioneer sold certain domestic nonstrategic oil and gas properties, gas plants and other related assets for aggregate proceeds of approximately $58.4 million. Prior to their sale in 1996, these oil and gas properties produced 274,314 Bbls of oil and 3,196,093 Mcf of gas. Pioneer received an average price of $19.30 per Bbl of oil and $2.03 per Mcf of gas from such production and incurred production costs per BOE of $6.80 and depletion expense per BOE of $4.04 related to these properties. MESA - Represents the unaudited consolidated statements of operations of Mesa for the seven months ended July 31, 2022(the period prior to its acquisition by Pioneer) and for the year ended December 31, 1996. RECAPITALIZATION - Represents the effects on Mesa's unaudited pro forma combined statement of operations from the Recapitalization as if it had occurred on January 1, 1996. In August 1996, Mesa completed a recapitalization of its balance sheet by issuing new equity and repaying and refinancing substantially all of its then existing long-term debt. The Recapitalization was undertaken by Mesa in an effort to deleverage and recapitalize Mesa through the issuance of additional equity and through the refinancing of substantially all of Mesa's $1.2 billion debt existing prior to the Recapitalization. The Recapitalization provided Mesa with an 16 17 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 improved financial condition due to (i) a significant reduction in total debt outstanding, (ii) a reduction in annual cash interest expense of approximately $75 million, (iii) cost savings programs which reduced general and administrative and other overhead expenses by approximately $10 million annually, and (iv) the extension of maturities on Mesa's long-term debt, which eliminated Mesa's then existing liquidity concerns. The Recapitalization included (i) the private placement of shares of a new class of Mesa Series B Preferred Stock for $133 million to DNR - Mesa Holdings, Inc. ("DNR"), whose sole general partner is Rainwater Inc., a Texas corporation owned by Richard E. Rainwater, (ii) the sale of $132 million of a new class of Mesa Series A Preferred Stock to Mesa's then existing stockholders through a rights offering, (iii) the establishment of a new bank credit facility and (iv) the issuance of two new series of senior subordinated notes. GREENHILL - Represents the unaudited statements of operations of Greenhill prior to its acquisition by Mesa on April 15, 2022 and for the year ended December 31, 1996. CHAUVCO - Represents the consolidated balance sheet of Chauvco as of September 30, 2021 and the consolidated statements of operations of Chauvco for the nine months ended September 30, 2021 and for the year ended December 31, 1996. The historical consolidated financial statements for Chauvco were prepared under Canadian GAAP and converted to U.S. dollars utilizing the exchange rates of Canadian dollars to U.S. dollars as listed below, which are based upon the noon buying rate in New York City for cable transfers in Canadian dollars, as certified for customer purposes by the Federal Reserve Bank of New York (the "Noon Buying Rate"):
September 30, December 31, 1997 1996 ------------- -------------- Balance Sheets .7234 N/A Statements of Operations .7253 .7330
CRI - Represents the consolidated balance sheet of CRI as of September 30, 1997 and the statement of operations of CRI for the nine months ended September 30, 1997, which were prepared under Canadian GAAP and in U.S. dollars. CRI was incorporated on July 29, 2022 as a wholly-owned subsidiary of Chauvco. ALLIANCE - Reflects the investment in the Alliance Projects as of September 30, 2021 which were prepared under Canadian GAAP and converted to U.S. dollars utilizing the Noon Buying Rate of .7234. The unaudited pro forma combined statement of operations for the year ended December 31, 2021 presented herein does not reflect the results of operations from Mesa's acquisition from MAPCO Inc. of approximately 11 MMBOE in February 1997 for approximately $66 million. The purchase was funded by additional borrowings under Mesa's credit facility. In addition, the unaudited pro forma combined statement of operations for the year ended December 31, 2021 presented herein does not reflect the results of operations from Chauvco's acquisition of Tidal Resources Inc. on January 3, 2022 for approximately $55 million. The purchase was funded by additional borrowings under Chauvco's credit facility. The unaudited pro forma combined financial statements of Pioneer presented herein do not reflect the results of the Tender Offer, American Cometra Acquisition, 1997 Asset Divestitures, or the Restructuring, as more fully described in "Item 5. Other Events"; all of which were completed in the fourth quarter of 1997. These acquisitions and other transactions are not presented since they are not considered significant under Rule 3-05 of Regulation S-X. 17 18 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 NOTE 2. ACQUISITION OF CHAUVCO The aggregate Pioneer common stock purchase consideration, including nonrecurring transaction costs, is computed below in accordance with an exchange ratio of .493827 shares of Pioneer common stock for each Chauvco share held and a Pioneer common stock price of $27.625.
Chauvco Common Chauvco Shares Options Total ---------------- --------------- -------------- Shares/options outstanding 48,916,983 2,417,600 Exchange ratio .493827 .493827 ------------- ------------ 24,156,527 1,193,876 Less: Option Exercise shares (a) - (433,469) ------------- ------------ 24,156,527 760,407 24,916,934 Pioneer shares/Exchangeable Shares to be issued Value of Pioneer common stock (b) $ 27.625 $ 27.625 $ 27.625 ------------- ------------ ------------- Pioneer common stock consideration $ 667,324,058 $ 21,006,243 $ 688,330,301 ============= ============ Transaction costs 30,000,000 Cash paid in lieu of fractional shares 2,956 ------------- Aggregate purchase consideration $ 718,333,257 =============
- --------------- (a) Certain Chauvco Optionholders have elected to reduce the number of shares of Pioneer common stock they would otherwise be eligible to receive by the number of shares of Pioneer common stock equal to the exercise strike price of their options rather than pay, in cash, their exercise price. (b) Pioneer common stock is valued at $27.625 per share which represents the market price of Pioneer common stock on December 18, 1997, the date of the shareholder vote for the Transaction. The following table represents the preliminary allocation of the total purchase price of Chauvco to the acquired assets and liabilities of Chauvco. The allocation represents the fair values assigned to each of the significant assets acquired and liabilities assumed. Any future adjustments to the allocation of the purchase price are not anticipated to be material to the unaudited pro forma financial statements. 18 19 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021
Allocation of Aggregate Purchase Consideration September 30, 2021 ----------------------- (in thousands) Net working capital $ (11,123) Property, plant and equipment 1,062,690 Other assets 28,785 Long-term debt (208,653) Other non-current liabilities, including deferred taxes (153,366) ------------ $ 718,333 ============ Pioneer common stock consideration $ 688,330 Transaction costs 30,000 Cash paid in lieu of fractional shares 3 ------------ Aggregate purchase consideration $ 718,333 ============
The following table illustrates the number of shares of Pioneer common stock that are issued and outstanding upon the consummation of the Transaction:
Shares/options outstanding Exchange Pioneer Shares/ at DECEMBER 18, 2021 Ratio Exchangeable Shares -------------------- ----------- ------------------- Pioneer common stock 74,463,064 N/A 74,463,064 Chauvco Common Shares 48,916,983 .493827 24,156,527 Chauvco Options 2,417,600 (a) 760,407 ------------ 99,379,998 ============
- ------------------ (a) Certain Chauvco Optionholders have elected to reduce the number of shares of Pioneer common stock they would otherwise be eligible to receive by the number of shares of Pioneer common stock equal to the exercise strike price of their options rather than pay, in cash, their exercise price. 19 20 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 NOTE 3. ACQUISITION OF MESA The aggregate Pioneer common stock purchase consideration, including nonrecurring transaction costs, is computed in accordance with the Exchange Ratios agreed to in the Merger Agreement as follows:
Mesa Mesa Series Mesa Series common A Preferred B Preferred Stock Stock Stock Total ------------- ------------- ------------- ------------- Shares outstanding 64,279,568 62,884,094 63,672,925 Exchange ratio for Mesa shares 1.00 1.25 1.25 ------------- ------------- ------------- 64,279,568 78,605,118 79,591,156 222,475,842 Exchange ratio to Pioneer common stock 7.00 7.00 7.00 7.00 ------------- ------------- ------------- ------------- Pioneer shares 9,182,795 11,229,303 11,370,165 31,782,263 Value of Pioneer common stock (a) $ 30.82 $ 30.82 $ 30.82 $ 30.82 ------------- ------------- ------------- ------------- Pioneer common stock consideration $ 283,013,742 $ 346,087,118 $ 350,428,485 979,529,345 ============= ============= ============= Transaction costs 7,916,762 Mesa options 3,036,712 ------------- Aggregate purchase consideration $ 990,482,819 =============
- ------------------------- (a) Pioneer common stock is valued at $30.82 per share which represents Pioneer's seven-day average trading price surrounding the announcement of the Parker/Mesa Merger on April 7, 1997. The following table represents the preliminary allocation of the total purchase price of Mesa, including its Greenhill Acquisition, to the acquired assets and liabilities of Mesa. The allocation represents the fair values assigned to each of the significant assets acquired and liabilities assumed. Any future adjustments to the allocation of the purchase price are not anticipated to be material to the unaudited pro forma combined financial statements.
Allocation of Aggregate Purchase Consideration September 30, 2021 ------------------------ (in thousands) Net working capital $ 47 Property, plant and equipment 2,382,205 Other assets 49,219 Long-term debt (1,191,038) Other noncurrent liabilities, including deferred taxes (249,950) ------------ $ 990,483 ============ Pioneer common stock consideration $ 979,529 Transaction costs 7,917 Mesa options 3,037 ------------ Aggregate purchase consideration $ 990,483 ============
20 21 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 The following table illustrates the number of shares of Pioneer common stock that were issued in accordance with the exchange ratios agreed to in the Merger Agreement.
Shares Outstanding Pioneer Existing Security Type at August 7, 2022 Common Stock - ------------------------------------ ----------------- -------------- Parker & Parsley Common Stock 41,773,238 41,773,238 Mesa Common Stock 64,279,568 9,182,795 Mesa Series A Preferred Stock 62,884,094 11,229,303 Mesa Series B Preferred Stock 63,672,925 11,370,165 ------------ 73,555,501 ============
NOTE 4. PRO FORMA ENTRIES (a) To record the acquisition of Chauvco using the purchase method of accounting. The allocation of the purchase price to the acquired assets and liabilities is preliminary and, therefore, subject to change. Any future adjustments to the allocation of the purchase price are not anticipated to be material to Pioneer's financial statements. (See Note 2 above). (b) To adjust depreciation, depletion and amortization expense for the additional basis allocated to the oil and gas properties acquired and accounted for using the successful efforts method of accounting. (c) To reclassify amounts which were capitalized by Chauvco as oil and gas properties in accordance with the full cost method of accounting but that are treated as exploratory dry hole, geological and geophysical and delay rental expenses in accordance with the successful efforts method of accounting. (d) To reclassify amounts which were capitalized by Chauvco as oil and gas properties in accordance with the full cost method of accounting but that are treated as general and administrative expenses in accordance with the successful efforts method of accounting. (e) To record interest expense on the borrowings of $30 million which will be utilized to pay for nonrecurring transaction costs. The interest rate used to determine such interest expense of 5.32% and 6.22% represents Pioneer's average borrowing rate on outstanding bank indebtedness for the nine months ended September 30, 2021 and the year ended December 31, 1996, respectively. (f) To adjust income tax expense for each tax jurisdiction. (g) To adjust the weighted average shares outstanding for the acquisition of Chauvco. This adjustment also assumes the conversion of the Chauvco options into Pioneer common stock for purposes of computing weighted average shares outstanding. (h) To reclassify certain amounts to conform with the financial statement presentation of Pioneer. (i) To (i) reclassify the Preferred Shares to common stock as a result of Pioneer's mandatory exchange of such Preferred Shares for shares of Pioneer common stock on July 28, 2022 and (ii) eliminate the interest expense associated with such Preferred Shares and amortization of capitalized issuance fees. On July 28, 1997, Pioneer exercised its right to require each holder of the 3,776,400 Preferred Shares to mandatorily exchange all Preferred Shares for shares of common stock of Pioneer at a rate of 1.7778 shares of Pioneer common stock for each Preferred Share. As a result of the exchange, Pioneer will no longer incur interest expense of approximately $12 million per year associated with the Preferred Shares. 21 22 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 (j) To reduce interest expense for (i) the amortization of the premiums (utilizing the effective interest rate method) recorded as part of purchase accounting for Mesa's 10-5/8% senior subordinated notes and 11-5/8% senior subordinated discount notes and (ii) the application of Pioneer's excess cash in 1996 to the reduction of Mesa's outstanding bank indebtedness at Mesa's 1996 pro forma incremental borrowing interest rate of 7% (see pro forma entry (k) below). (k) To adjust interest expense resulting from the borrowing of the funds necessary for Mesa's acquisition of Greenhill. Mesa's 1997 and 1996 pro forma incremental borrowing interest rate of 7% was utilized to determine the additional pro forma interest expense. (l) To eliminate the preferred stock dividends associated with Mesa's Series A and Series B Preferred Stock. (m) To adjust the weighted average shares outstanding for the acquisition of Mesa. This adjustment also assumes the conversion of Mesa's outstanding employee stock options into Pioneer employee stock options for purposes of computing weighted average shares outstanding. (n) To adjust interest expense resulting from the application of that portion of the sales proceeds from the Australasian Assets Sold and the 1996 Assets Sold necessary to retire Pioneer's outstanding bank indebtedness. The proceeds applied to retire Pioneer's outstanding bank indebtedness of $225 million resulted in a reduction in interest expense of $4.3 million. The reduction in interest expense was calculated utilizing Pioneer's weighted average rate on its bank indebtedness of 6.22% for the period during 1996 in which Pioneer had outstanding bank indebtedness. (o) To reduce interest expense as a result of the Recapitalization. Interest expense adjustments include the following for the year ended December 31, 1996:
Pro Forma Historical Pro Forma Adjustment --------- ---------- ----------- Interest expense on former debt repaid in the Recapitalization: Secured notes $ 26,231 $ - $ (26,231) Former credit agreement 2,472 - (2,472) 12-3/4% secured discount notes 43,979 - (43,979) 13-1/2% subordinated notes 654 - (654) Interest expense on former debt repaid prior to the Recapitalization: 12-3/4% unsecured discount notes 2,595 2,595 - Interest expense on new debt issued in the Recapitalization: 10-5/8% senior subordinated notes 17,613 35,418 17,805 11-5/8% senior discount notes 8,893 18,661 9,768 New Credit Facility 15,094 26,327 11,233 Other interest expense 3,604 3,604 - --------- ---------- ----------- $ 121,135 $ 86,605 $ (34,530) ========= ========== ===========
22 23 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 Other interest expense is primarily the interest portion of the administrative fee charged by Colorado Interstate Gas Company in connection with Mesa's West Panhandle field operations. The interest rate on the New Credit Facility is approximately 7.75% on the first $250 million due to an interest rate swap with the balance at a floating rate that during the period outstanding was approximately 7%. (p) To record the pro forma adjustment for an 8% annual dividend on the Mesa Series A and Series B Preferred Stock payable quarterly in additional shares of Mesa Series A and Series B Preferred Stock for at least the first four years after issuance as if the Mesa Series A and Series B Preferred Stock had been issued on January 1, 1996. NOTE 5. INCOME TAXES Pioneer will account for income taxes in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." In accordance with SFAS 109, Pioneer will prepare separate tax calculations for each tax jurisdiction in which Pioneer will be subject to income taxes. NOTE 6. INCOME FROM CONTINUING OPERATIONS PER SHARE Income from continuing operations per share is computed based on the weighted average number of shares of common stock and common stock equivalents, if more than 3% dilutive, outstanding during the period. Fully diluted income from continuing operations per share is not presented since dilution is less than 3% on a pro forma combined basis. Income from continuing operations per share reflects the exchange of Chauvco Common Shares for Pioneer common stock or Exchangeable Shares, the exchange of Pioneer's Preferred Shares and the conversion of Mesa's Series A Preferred Stock and Mesa's Series B Preferred Stock to Pioneer common stock. NOTE 7. GENERAL AND ADMINISTRATIVE EXPENSE REDUCTIONS Mesa's general and administrative expenses for the year ended December 31, 1996 includes $9.4 million associated with the elimination of 86 positions from the total of 385 at December 31, 1995, and a significant downsizing of Mesa's natural gas vehicle equipment business in conjunction with the Recapitalization. Given the first quarter 1997 general and administrative expenses of $3.8 million, Mesa's continuing costs are estimated at approximately $15 million per year ($3.8 million multiplied by four quarters). In addition, Greenhill's general and administrative expenses prior to its sale to Mesa on April 15, 2022 of $13.3 million included severance costs paid to Greenhill employees of approximately $11 million as few of Greenhill's administrative personnel were retained. The accompanying Pro Forma Combined Statements of Operations for Pioneer do not include any adjustments related to the expected level of ongoing general and administrative expense. 23 24 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021 NOTE 8. OIL AND GAS RESERVE DATA The following unaudited pro forma supplemental information regarding the oil and gas activities of Pioneer is presented pursuant to the disclosure requirements promulgated by the SEC and Statement of Financial Accounting Standards No. 69, "Disclosures About Oil and Gas Producing Activities." The pro forma reserve information is presented as if the sale of the Australasian Assets and 1996 Assets Sold and the acquisition of Chauvco, Mesa and Greenhill had occurred on January 1, 1996. Management emphasizes that reserve estimates are inherently imprecise and subject to revision and that estimates of new discoveries are more imprecise than those of producing oil and gas properties. Accordingly, the estimates are expected to change as future information becomes available; such changes could be significant. Quantities of oil and gas reserves Set forth below is a pro forma summary of the changes in the net quantities of oil and natural gas reserves for the year ended December 31, 1996.
Oil, NGL's and Condensate (MBbls) Gas (MMcf) ----------------------------------------- ------------------------------------------------- USA Argentina Canada Total USA Argentina Canada Total -------- --------- ------- -------- ---------- --------- -------- ----------- Balance, January 1, 2022 267,108 15,933 21,895 304,936 1,984,726 322,000 136,264 2,442,990 Revisions of previous estimates 31,475 (722) 249 31,002 42,246 (10,860) (5,180) 26,206 Purchase of minerals- in-place 300 - - 300 11,494 - - 11,494 New discoveries and extensions 2,794 1,608 650 5,052 30,151 4,588 3,320 38,059 Production (20,497) (1,183) (4,330) (26,010) (160,729) (16,820) (12,500) (190,049) -------- ------- ------- -------- ---------- ------- -------- ----------- Balance, December 31, 1996 281,180 15,636 18,464 315,280 1,907,888 298,908 121,904 2,328,700 ======== ======= ======= ======== ========== ======= ======== ===========
Standardized measure of discounted future net cash flows The pro forma combined standardized measure of discounted future net cash flow is computed by applying year-end prices of oil and gas (with consideration of price changes only to the extent provided by contractual arrangements) to the estimated future production of oil and gas reserves less estimated future expenditures (based on year-end costs) to be incurred in developing and producing the proved reserves, discounted using a rate of 10% per year to reflect the estimated timing of the future cash flows. Future income taxes are calculated by comparing discounted future cash flows to the tax basis of oil and gas properties, plus available carryforwards and credits, and applying the current tax rate to the difference. 24 25 PIONEER NATURAL RESOURCES COMPANY NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS September 30, 2021 AND December 31, 2021
December 31, 2021 ------------------------------------------------------------- USA Argentina Canada Total --------------- ----------- ---------- ---------------- (in thousands) Oil and gas producing activities: Future cash inflows $ 13,987,546 $ 599,243 $ 680,112 $ 15,266,901 Future production costs (3,970,522) (144,714) (173,033) (4,288,269) Future development costs (389,701) (24,084) (10,632) (424,417) Future income tax expense (2,679,214) (721) (156,606) (2,836,541) ------------ ---------- ---------- ------------ 6,948,109 429,724 339,841 7,717,674 10% annual discount factor (3,240,886) (214,813) (114,840) (3,570,539) ------------ ---------- ---------- ------------ Standardized measure of discounted future net cash flows $ 3,707,223 $ 214,911 $ 225,001 $ 4,147,135 ============ ========== ========== ============
Changes relating to the standardized measure of discounted future net cash flows The principal sources of the change in the pro forma combined standardized measure of discounted future net cash flows for the year ended December 31, 1996 are as follows (in thousands): Oil and gas sales, net of production costs $ (651,480) Net changes in prices and production costs 2,220,041 Extensions and discoveries 131,526 Purchases of minerals-in-place 20,606 Revisions of estimated future development costs (71,763) Revisions of previous quantity estimates 327,004 Accretion of discount 290,618 Changes in production rates, timing and other (150,096) ----------- Change in present value of future net revenues 2,116,456 Net change in present value of future income taxes (628,589) ----------- 1,487,867 Balance, beginning of year 2,659,268 ----------- Balance, end of year $ 4,147,134 ===========
25 26 PIONEER NATURAL RESOURCES COMPANY
EXHIBIT 2.1 Combination Agreement, dated as of September 3, 1997, between Pioneer and Chauvco Resources Ltd. ("Chauvco") (incorporated by reference to Exhibit 2.2 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483, filed with the SEC on December 15, 2021). 2.2* Plan of Arrangement, as amended, under Section 186 of the Business Corporations Act (Alberta). 2.3* Support Agreement, dated as of December 18, 1997, between Pioneer and Pioneer Natural Resources (Canada) Ltd. ("Pioneer Canada"). 2.4* Voting and Exchange Trust Agreement, dated as of December 18, 1997, among Pioneer, Pioneer Canada and Montreal Trust Company of Canada, as Trustee. 2.5 Amended and Restated Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer and Guy J. Turcotte (incorporated by reference to Exhibit 2.6 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483 filed with the SEC on December 15, 2021). 2.6 Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Chauvco, DNR-MESA Holdings, L.P. ("DNR"), Scott D. Sheffield and I. Jon Brumley (incorporated by reference to Exhibit 2.3 to Pioneer's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on October 2, 2021). 2.7 Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Trimac Corporation and Gendis Inc. (incorporated by reference to Exhibit 2.4 to Pioneer's Current report on Form 8-K, File No.001-13245, filed with the SEC on October 2, 2021). 2.8 Amended and Restated Shareholders Agreement, dated as of September 3, 1997, by and among the Company and Guy J. Turcotte (incorporated by reference to Exhibit 2.6 to the Company's Registration Statement on Form S-3, Registration No. 333-42315), filed with the SEC on December 15, 2021). 3.1 Certificate of Designations of Special Preferred Voting Stock (incorporated by reference to Exhibit 3.3 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483, filed with the SEC on December 15, 2021). 3.2 Terms and Conditions of Exchangeable Shares (incorporated by reference to Annex F to the Definitive Joint Management Information Circular and Proxy
27 Statement of Pioneer and Chauvco, File No. 001-13245, filed with the SEC on November 17, 2021). 4.1* Form of Certificate of Special Preferred Voting Stock. 4.2* Form of Certificate of Exchangeable Shares. 10.1* Amended and Restated Credit Facility Agreement (Primary Facility), dated as of December 18, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A. as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent and the other Co-Agents and Lenders named therein. 10.2* Amended and Restated Credit Facility Agreement (364 Day Facility), dated as of December 18, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A. as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent; and the other Co-Agents and Lenders named therein. 10.3* Credit Agreement, dated as of December 18, 1997, among Chauvco, Canadian Imperial Bank of Commerce, as Agent, and the other Lenders named therein. 10.4 First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 10 5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to Exhibit 10.5 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.5 Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 10 5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to Exhibit 10.6 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 1997). 10.6* Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.7* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, Pioneer, a Delaware corporation, Pioneer NewSubl, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.8* Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSubl, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer DebtCo, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.9* Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSubl, Inc.), a Texas corporation, Pioneer, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.10 First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 11 5/8% Senior Subordinated Discount Notes Due 2006 (incorporated by reference to Exhibit 10.2 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.11 Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 11 5/8% Senior Subordinated Discount Notes Due 2006 (incorporated by reference to Exhibit 10.3 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.12* Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Notes due 2006.
28 10.13* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA (formerly known as Mesa Operating Co.), a Delaware corporation, Pioneer, a Delaware corporation, Pioneer NewSub1, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due. 10.14* Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSub1, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer DebtCo, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due 2006. 10.15* Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc.(as successor to Pioneer NewSub1, Inc.), a Texas corporation, Pioneer, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due 2006. 10.16 First Supplemental Indenture, dated as of August 7, 1997, among Parker & Parsley, The Chase Manhattan Bank, as Trustee, and Pioneer USA, with respect to the Indenture, dated April 12, 1995, between Pioneer USA (successor to Parker & Parsley Petroleum Company), and The Chase Manhattan Bank (National Association), as Trustee (incorporated by reference to Exhibit 10.9 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 1997). 10.17* Second Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, Pioneer NewSubl, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007. 10.18* Third Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSubl, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer DebtCo, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007. 10.19* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSubl, Inc., as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer USA, a Delaware corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007.
29 10.20* Guarantee, dated as of December 30, 1997, by Pioneer USA relating to the $150,000,000 in aggregate principal amount of 8 7/8% Senior Notes Due 2005 and $150,000,000 in aggregate principal amount of 8 1/4% Senior Notes Due 2007 issued under the Indenture, dated as of April 12, 1995, between Pioneer USA and The Chase Manhattan Bank, a New York banking association, as Trustee. 10.21* Note, dated December 22, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A., as Lender. 10.22* Purchase and Sale Agreement, dated as of October 22, 1997, between Cometra Energy, L.P., and Pioneer USA. 10.23* Indemnification Agreement, dated as of August 8, 1997, between Pioneer and Scott D. Sheffield, together with a schedule identifying substantially identical agreements between Pioneer's other directors and named executive officers identified on Schedule I. 10.24 Gathering Agreement, dated May 29, 1987, between Mesa Operating Limited Partnership and Colorado Interstate Gas Company (incorporated by reference to Exhibit 10.26 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.25 Amendment to 1990 Gathering Agreement Amendment, dated September 1, 1997, between Colorado Interstate Gas Company and Pioneer USA (incorporated by reference to Exhibit 10.28 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.26 Stock Acquisition Loan Agreement entered into as of June 15, 1995, between Parker & Parsley Petroleum Company and Scott D. Sheffield, together with Schedule I identifying executive officers with substantially identical agreements providing for Parker & Parsley Petroleum Company's loans to such officers in order to acquire shares of Parker & Parsley Petroleum Company's Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 10.48 to Pioneer's Amendment No. 1 to Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021).
- ---------------------- * Filed herewith. 30 PIONEER NATURAL RESOURCES COMPANY SIGNATURES 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. PIONEER NATURAL RESOURCES COMPANY Date: December 31, 2021 By: /s/ GARRETT SMITH ----------------------------------- Executive Vice President - Chief Financial Officer 31 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION PAGE - ------ ----------- ---- 2.1 Combination Agreement, dated as of September 3, 1997, between Pioneer and Chauvco Resources Ltd. ("Chauvco") (incorporated by reference to Exhibit 2.2 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483, filed with the SEC on December 15, 2021). 2.2* Plan of Arrangement, as amended, under Section 186 of the Business Corporations Act (Alberta). 2.3* Support Agreement, dated as of December 18, 1997, between Pioneer and Pioneer Natural Resources (Canada) Ltd. ("Pioneer Canada"). 2.4* Voting and Exchange Trust Agreement, dated as of December 18, 1997, among Pioneer, Pioneer Canada and Montreal Trust Company of Canada, as Trustee. 2.5 Amended and Restated Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer and Guy J. Turcotte (incorporated by reference to Exhibit 2.6 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483 filed with the SEC on December 15, 2021). 2.6 Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Chauvco, DNR-MESA Holdings, L.P. ("DNR"), Scott D. Sheffield and I. Jon Brumley (incorporated by reference to Exhibit 2.3 to Pioneer's Current Report on Form 8-K, File No. 001-13245, filed with the SEC on October 2, 2021). 2.7 Shareholders Agreement, dated as of September 3, 1997, by and among Pioneer, Trimac Corporation and Gendis Inc. (incorporated by reference to Exhibit 2.4 to Pioneer's Current report on Form 8-K, File No.001-13245, filed with the SEC on October 2, 2021). 2.8 Amended and Restated Shareholders Agreement, dated as of September 3, 1997, by and among the Company and Guy J. Turcotte (incorporated by reference to Exhibit 2.6 to the Company's Registration Statement on Form S-3, Registration No. 333-42315), filed with the SEC on December 15, 2021). 3.1 Certificate of Designations of Special Preferred Voting Stock (incorporated by reference to Exhibit 3.3 to Pioneer's Registration Statement on Form S-3, Registration No. 333-20483, filed with the SEC on December 15, 2021). 3.2 Terms and Conditions of Exchangeable Shares (incorporated by reference to Annex F to the Definitive Joint Management Information Circular and Proxy
32 Statement of Pioneer and Chauvco, File No. 001-13245, filed with the SEC on November 17, 2021). 4.1* Form of Certificate of Special Preferred Voting Stock. 4.2* Form of Certificate of Exchangeable Shares. 10.1* Amended and Restated Credit Facility Agreement (Primary Facility), dated as of December 18, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A. as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent and the other Co-Agents and Lenders named therein. 10.2* Amended and Restated Credit Facility Agreement (364 Day Facility), dated as of December 18, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A. as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, and The Chase Manhattan Bank, as Syndication Agent; and the other Co-Agents and Lenders named therein. 10.3* Credit Agreement, dated as of December 18, 1997, among Chauvco, Canadian Imperial Bank of Commerce, as Agent, and the other Lenders named therein. 10.4 First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 10 5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to Exhibit 10.5 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.5 Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 10 5/8% Senior Subordinated Notes Due 2006 (incorporated by reference to Exhibit 10.6 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 1997). 10.6* Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.7* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, Pioneer, a Delaware corporation, Pioneer NewSubl, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.8* Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSubl, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer DebtCo, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.9* Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSubl, Inc.), a Texas corporation, Pioneer, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 10 5/8% Senior Subordinated Notes due 2006. 10.10 First Supplemental Indenture, dated as of April 15, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 11 5/8% Senior Subordinated Discount Notes Due 2006 (incorporated by reference to Exhibit 10.2 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.11 Second Supplemental Indenture, dated as of August 7, 1997, among Pioneer USA (formerly Mesa Operating Co.), as Issuer, MESA Inc., the subsidiary guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the 11 5/8% Senior Subordinated Discount Notes Due 2006 (incorporated by reference to Exhibit 10.3 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.12* Third Supplemental Indenture, dated as of December 18, 1997, among Pioneer USA, the Subsidiary Guarantors named therein, Pioneer, and Harris Trust and Savings Bank, as Trustee, with respect to the Indenture, dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Notes due 2006.
33 10.13* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA (formerly known as Mesa Operating Co.), a Delaware corporation, Pioneer, a Delaware corporation, Pioneer NewSub1, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as Trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due. 10.14* Fifth Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSub1, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer DebtCo, Inc., a Texas corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due 2006. 10.15* Sixth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc.(as successor to Pioneer NewSub1, Inc.), a Texas corporation, Pioneer, a Delaware corporation, and Harris Trust and Savings Bank, an Illinois corporation, as trustee, with respect to the Indenture dated as of July 2, 1996, as amended, relating to Pioneer USA's 11 5/8% Senior Subordinated Discount Notes Due 2006. 10.16 First Supplemental Indenture, dated as of August 7, 1997, among Parker & Parsley, The Chase Manhattan Bank, as Trustee, and Pioneer USA, with respect to the Indenture, dated April 12, 1995, between Pioneer USA (successor to Parker & Parsley Petroleum Company), and The Chase Manhattan Bank (National Association), as Trustee (incorporated by reference to Exhibit 10.9 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 1997). 10.17* Second Supplemental Indenture, dated as of December 30, 1997, among Pioneer USA, a Delaware corporation, Pioneer NewSubl, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007. 10.18* Third Supplemental Indenture, dated as of December 30, 1997, among Pioneer NewSubl, Inc. (as successor to Pioneer USA), a Texas corporation, Pioneer DebtCo, Inc., a Texas corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007. 10.19* Fourth Supplemental Indenture, dated as of December 30, 1997, among Pioneer DebtCo, Inc. (as successor to Pioneer NewSubl, Inc., as successor to Pioneer USA), a Texas corporation, Pioneer, a Delaware corporation, Pioneer USA, a Delaware corporation, and The Chase Manhattan Bank, a New York banking association, as trustee, with respect to the Indenture, dated as of April 12, 1995, as amended, relating to Pioneer USA's 8 7/8% Senior Notes Due 2005 and 8 1/4% Senior Notes Due 2007.
34 10.20* Guarantee, dated as of December 30, 1997, by Pioneer USA relating to the $150,000,000 in aggregate principal amount of 8 7/8% Senior Notes Due 2005 and $150,000,000 in aggregate principal amount of 8 1/4% Senior Notes Due 2007 issued under the Indenture, dated as of April 12, 1995, between Pioneer USA and The Chase Manhattan Bank, a New York banking association, as Trustee. 10.21* Note, dated December 22, 1997, between Pioneer, as Borrower, and NationsBank of Texas, N.A., as Lender. 10.22* Purchase and Sale Agreement, dated as of October 22, 1997, between Cometra Energy, L.P., and Pioneer USA. 10.23* Indemnification Agreement, dated as of August 8, 1997, between Pioneer and Scott D. Sheffield, together with a schedule identifying substantially identical agreements between Pioneer's other directors and named executive officers identified on Schedule I. 10.24 Gathering Agreement, dated May 29, 1987, between Mesa Operating Limited Partnership and Colorado Interstate Gas Company (incorporated by reference to Exhibit 10.26 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.25 Amendment to 1990 Gathering Agreement Amendment, dated September 1, 1997, between Colorado Interstate Gas Company and Pioneer USA (incorporated by reference to Exhibit 10.28 to Pioneer's Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021). 10.26 Stock Acquisition Loan Agreement entered into as of June 15, 1995, between Parker & Parsley Petroleum Company and Scott D. Sheffield, together with Schedule I identifying executive officers with substantially identical agreements providing for Parker & Parsley Petroleum Company's loans to such officers in order to acquire shares of Parker & Parsley Petroleum Company's Common Stock, par value $0.01 per share (incorporated by reference to Exhibit 10.48 to Pioneer's Amendment No. 1 to Registration Statement on Form S-3, Registration No. 333-39381, filed with the SEC on November 3, 2021).
- ---------------------- * Filed herewith.
   1
                                                                     EXHIBIT 2.2
                              PLAN OF ARRANGEMENT
                               UNDER SECTION 186
                   OF THE BUSINESS CORPORATIONS ACT (ALBERTA)
                                   ARTICLE 1
                                 INTERPRETATION
1.1      Definitions.  In this Plan of Arrangement unless there is something in
the subject matter or context inconsistent therewith, the following terms shall
have the respective meanings set out below and grammatical variations of such
terms shall have corresponding meanings:
"ABCA" means the Business Corporations Act (Alberta), as amended;
"Arrangement" means the arrangement under section 186 of the ABCA on the terms
and subject to the conditions set out in this Plan of Arrangement, subject to
any amendments thereto made in accordance with Section 6.1 hereof  or made at
the direction of the Court in the Final Order;
"Arrangement Resolution" means the special resolution passed by the holders of
the Chauvco Common Shares and Chauvco Options at the Meeting;
"Automatic Redemption Date" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Average Closing Price" means the average closing sales price, regular way, per
share of the US Co Common Stock on the NYSE in United States dollars as
reported in the Wall Street Journal over the ten (10) consecutive trading days
ending on the third trading day next preceding the date of the Meeting
converted to Canadian dollars using the Currency Exchange Rate;
"Business Day" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Cash Payment " means the cash payment, if any, which a holder of Chauvco
Common Shares or Chauvco Options is entitled to receive in accordance with
Section 2.2;
"Certificates" means, collectively, the certificates representing the
Exchangeable Shares and shares of US Co Common Stock (in each case rounded down
to the nearest whole number) and the CRI Shares which a holder of Chauvco
Common Shares or Chauvco Options is entitled to receive pursuant to the
Arrangement;
"Chauvco" means Chauvco Resources Ltd., a corporation organized and existing
under the ABCA and any successor corporation;
"Chauvco Common Shares" means the common shares in the capital of Chauvco;
   2
                                      -2-
"Chauvco Options" means each of the outstanding options to purchase Chauvco
Common Shares, including all outstanding options granted under Chauvco's Stock
Option Plan as amended and restated on November 10, 1995;
"Combination Agreement" means the agreement by and among US Co and Chauvco,
dated as of September 3, 1997, as the same may be amended and  restated,
providing for, among other things, the Arrangement;
"Court" means the Court of Queen's Bench of Alberta;
"CR" means CR International Limited, a corporation organized and existing under
the laws of Bermuda;
"CRI" means Chauvco Resources International Ltd., a corporation organized and
existing under the laws of Bermuda;
"CRI Shares" means the common shares in the capital of CRI;
"Currency Exchange Rate" means the noon spot rate of exchange of US dollars to
Canadian dollars announced by the Bank of Canada on the day preceding the date
of calculation;
"Depositary" means Montreal Trust Company of Canada at its principal office in
Calgary, Alberta;
"Dissent Procedures" has the meaning attributed thereto in Section 3.1;
"Effective Date" means the date the articles of arrangement giving effect to
this Plan of Arrangement are filed by the Registrar of Corporations pursuant to
subsection 186(10) of the ABCA;
"Effective Time" means 12:01 a.m. on the Effective Date;
"Election Deadline" means that date which is two (2) days prior to the date of
the Meeting;
"Exchange Ratio" has the meaning attributed thereto in Section 2.2;
"Exchangeable Share Consideration" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Exchangeable Share Price" has the meaning attributed thereto in the
Exchangeable Share Provisions;
"Exchangeable Share Provisions" means the rights, privileges, restrictions and
conditions attaching to the Exchangeable Shares;
"Exchangeable Shares" means the exchangeable shares in the capital of US Co
Sub;
"Final Order" means the final order of the Court approving the Arrangement as
such order may be amended by the Court at any time prior to the Effective Time;
   3
                                      -3-
"Gabon Securities" has the meaning attributed thereto in Section 2.1(b);
"Gabon Subsidiaries" has the meaning attributed thereto in Section 2.1(b);
"ITA" means the Income Tax Act (Canada), as amended;
"Joint Proxy Statement" means the Joint Management Information Circular  and
Proxy Statement of Chauvco and US Co dated November 14, 1997;
"Letter of Transmittal and Election Form" has the meaning attributed thereto in
Section 2.1(h);
"Liquidation Call Purchase Price" has the meaning attributed thereto in Section
5.1;
"Liquidation Call Right" has the meaning attributed thereto in Section 5.1;
"Liquidation Date" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"Meeting" means the special meeting of Shareholders and Optionholders to be
held to consider the Arrangement;
"NYSE" means the New York Stock Exchange;
"Optionholders" means holders of Chauvco Options;
"Option Letter of Transmittal and Election Form" has the meaning attributed
thereto in Section 2.1(f);
"Option Payment" has the meaning attributed thereto in Section 2.1(e);
"Record Date" means that date which is three trading days prior to the
Effective Date;
"Redemption Call Purchase Price" has the meaning attributed thereto  in Section
5.2;
"Redemption Call Right" has the meaning attributed thereto in Section  5.2;
"Shareholders" means holders of Chauvco Common Shares;
"Shareholders Rights Plan Agreement" means the Shareholders Rights Plan
Agreement between Chauvco and Montreal Trust Company of Canada made as of April
24, 1997;
"Subsidiary" has the meaning attributed thereto in the Exchangeable Share
Provisions;
"US Co" means Pioneer Natural Resources Company, a corporation organized and
existing under the laws of the State of Delaware and any successor corporation;
"US Co Common Stock" has the meaning attributed thereto in the Exchangeable
Share Provisions;
"US Co Stock Price" has the meaning attributed thereto in Section 2.2;
   4
                                      -4-
"US Co Sub" means Pioneer Natural Resources (Canada) Ltd., a corporation
organized and existing under the laws of British Columbia and any successor
corporation;
"US Co Sub Common Shares" means the common shares in the capital of US Co Sub;
"Voting Share" has the meaning ascribed to such term in the Voting and Exchange
Trust Agreement;
"Voting and Exchange Trust Agreement" has the meaning attributed thereto in the
Exchangeable Share Provisions; and
"Westoil" means Westoil Marine & Transport Co Ltd., a corporation organized and
existing under the laws of Bermuda.
1.2      Sections and Headings.  The division of this Plan of Arrangement into
sections and the insertion of headings are for reference purposes only and
shall not affect the interpretation of this Plan of Arrangement.  Unless
otherwise indicated, any reference in this Plan of Arrangement to a section or
an Appendix refers to the specified section of or Appendix to this Plan of
Arrangement.
1.3      Number, Gender and Persons.  In this Plan of Arrangement, unless the
context otherwise requires, words importing the singular number include the
plural and vice versa, words importing any gender include all genders and words
importing persons include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind.
1.4      Currency.  Unless otherwise specified, all references herein to
"dollars" or "$" shall mean Canadian dollars.
                                   ARTICLE 2
                                  ARRANGEMENT
2.1      Arrangement.  At the Effective Time, the following transactions shall
occur and shall be deemed to occur in the following order without any further
act or formality:
         (a)     Chauvco shall subscribe for that number of CRI Shares as is
equal to (i) the number of Chauvco Common Shares which are issued and
outstanding on the Record Date, (ii) plus that number of Chauvco Common Shares
which all Optionholders would otherwise be entitled to acquire on the exercise
of their Chauvco Options on a fully vested basis on the Record Date (other than
Chauvco Common Shares that could be acquired by Optionholders who exercise
their right of dissent in accordance with Article 3 hereof and who are
ultimately entitled to be paid the fair value of their Chauvco Options), (iii)
less that number of CRI Shares then held by Chauvco, and (iv) less that number
of Chauvco Common Shares held by Shareholders who have exercised their rights
of dissent in accordance with Article 3 hereof and who are ultimately entitled
to be paid the fair value for such shares.  The subscription price for the CRI
Shares shall be paid for in cash in the aggregate amount equal to US$5,000,000
plus the fair market value on the Effective Date (as determined and adjusted in
accordance with Section 2.3) of the Gabon Securities;
   5
                                      -5-
         (b)     CRI shall purchase from CR for cash in an aggregate amount
equal to the fair market value  thereof on the Effective Date (as determined
and adjusted in accordance with Section 2.3), (i) all of the issued and
outstanding securities of Chauvco Resources (Gabon) S.A., Chauvco Resources
(Gabon-Ngalo) S.A., Chauvco Resources (Gabon-Maga) S.A., Chauvco Resources
(Gabon-Avomo) S.A. and CR Trading Co. Ltd. (collectively, the "Gabon
Subsidiaries"), (ii) 75% of the issued and outstanding securities of Westoil,
and (iii) all of its rights under a loan in the amount of U.S. $909,421.60 made
by CR to Olympic Marine Services International, Inc. (which owns the remaining
25% of the issued and outstanding securities of Westoil), any and all advances
made by CR to Westoil, and any and all advances made by Chauvco (all of which
shall have first been assigned by Chauvco to CR) to the Gabon Subsidiaries and
Westoil (such securities in Section 2.1(b)(i), (ii) and (iii) collectively, the
"Gabon Securities");
         (c)     Chauvco shall transfer, assign and convey to CRI, in
consideration for $1.00, all of Chauvco's right, title, benefit and interest in
and to any and all trademarks (including registrations and applications
therefor), trade names and the internet domain name "chauvco.com" owned by
Chauvco as at the Effective Time, and the other assets and property which are
set out in Exhibit I;
         (d)     US Co Sub shall purchase from Chauvco all of the issued and
outstanding CRI Shares in consideration of the payment by way of promissory
note of US Co Sub to Chauvco in an amount equal to the subscription price paid
for such CRI Shares by Chauvco under Section 2.1(a);
         (e)     each of the outstanding Chauvco Options (other than Chauvco
Options held by an Optionholder who has exercised its right of dissent in
accordance with Article 3 hereof and is ultimately entitled to be paid the fair
value of its Chauvco Options) will vest, if not already vested, and be
transferred to US Co Sub in consideration for one (1) CRI Share and, in
accordance with the election of each Optionholder and the remainder of this
Section 2.1(e) and Section 2.1(f), a number of shares of US Co Common Stock
determined in accordance with the Exchange Ratio in which event, in addition to
transferring the Chauvco Options to US Co Sub, the Optionholder will be
required to make a payment to US Co Sub (the "Option Payment") in an amount
equal to the aggregate exercise price which the Optionholder would otherwise be
required to pay on the exercise of such options.  As an alternative to making
the Option Payment, Optionholders will be entitled to elect to reduce the
number of shares of US Co Common Stock to be received by the number obtained by
dividing the Option Payment by the US Co Stock Price (converted into Canadian
dollars using the Currency Exchange Rate).  Each Optionholder will receive only
a whole number of shares of US Co Common Stock resulting from the transfer of
his Chauvco Options.  In lieu of fractional shares of US Co Common Stock, each
Optionholder who would otherwise be entitled to receive such fractional shares
shall be paid by US Co Sub an amount determined in accordance herewith in full
satisfaction of such fractional entitlement;
         (f)     an Optionholder electing to make the Option Payment and
receive the applicable number of shares of US Co Common Stock under Section
2.1(e) above must have given effect to the election by depositing with the
Depositary, prior to the Election Deadline, a duly completed letter of
transmittal and election form (the "Option Letter of Transmittal and Election
Form") in the form provided by Chauvco along with the Joint Proxy Statement
indicating such holder's election and by agreeing to pay the Option Payment to
the Depositary as agent for US Co Sub. Coincident with the  receipt of the CRI
Shares and shares of US Co Common Stock, such Optionholder shall pay the Option
Payment to the Depositary as agent for US Co Sub less any amounts receivable by
such Optionholder in connection with fractional entitlements hereunder.  In the
event that an Optionholder
   6
                                      -6-
who has elected to make the Option Payment fails to make the Option Payment on
or before the day that is 60 days after the Effective Date, such Optionholder
shall be deemed to have elected the option to receive the reduced number of
shares of US Co Common Stock by not making the Option Payment.  In the event
that an Optionholder has failed to validly make an election in the Option
Letter of Transmittal and Election Form pursuant to this paragraph, such
Optionholder shall be deemed to have elected the option to receive the reduced
number of shares of US Co Common Stock by not making the Option Payment;
         (g)     each of the outstanding Chauvco Common Shares that are not
held by a Shareholder who has exercised its right of dissent in accordance with
Article 3 hereof and is ultimately entitled to be paid the fair value of its
Chauvco Common Shares will be transferred to US Co Sub in consideration for one
(1) CRI Share and, at the election of the holders of the Chauvco Common Shares:
                 (i)      a number of shares of US Co Common Stock determined
                          in accordance with the Exchange Ratio.  Each such
                          holder of Chauvco Common Shares will receive only a
                          whole number of shares of US Co Common Stock
                          resulting from the transfer of such holder's Chauvco
                          Common Shares to US Co Sub.  In lieu of fractional
                          shares of US Co Common Stock, each holder of a
                          Chauvco Common Share who otherwise would be entitled
                          to receive such fractional share shall be paid by US
                          Co Sub an amount determined in accordance herewith in
                          full satisfaction of such fractional entitlement; or
                 (ii)     a number of shares of Exchangeable Shares determined
                          in accordance with the Exchange Ratio.  Each such
                          holder of Chauvco Common Shares will receive only a
                          whole number of Exchangeable Shares resulting from
                          the transfer of such holder's Chauvco Common Shares
                          to US Co Sub.  In lieu of fractional Exchangeable
                          Shares, each holder of a Chauvco Common Share who
                          otherwise would be entitled to receive such
                          fractional share shall be paid by US Co Sub an amount
                          determined in accordance herewith in full
                          satisfaction of such fractional entitlement,
                 provided that such holders shall be entitled to elect to
                 receive a combination of shares of US Co Common Stock and
                 Exchangeable Shares on the transfer of their Chauvco Common
                 Shares; and
contemporaneously with such transfer, the Shareholders Rights Plan Agreement
and all outstanding Rights (as defined in the Shareholders Rights Plan
Agreement) will be terminated, void and of no further force or effect;
         (h)     a holder of Chauvco Common Shares must have given effect to
the election in Section 2.1(g) above by depositing with the Depositary, prior
to the Election Deadline, a duly completed letter of transmittal and election
form (the "Letter of Transmittal and Election Form") in the form provided by
Chauvco along with the Joint Proxy Statement indicating such holder's election.
In the event that a holder of Chauvco Common Shares has failed to validly make
an election under Section 2.1(g) in the Letter of Transmittal and Election Form
pursuant to this paragraph, such holder shall
   7
                                      -7-
be deemed to have elected the option under Section 2.1(g)(i).  Notwithstanding
any provision to the contrary, holders of Chauvco Common Shares who are not
residents of Canada for the purposes of the ITA will not be entitled to receive
Exchangeable Shares under Section 2.1(g)(ii).   Each holder of Chauvco Common
Shares who, prior to the Election Deadline, returned to Chauvco a duly
completed Letter of Transmittal and Election Form (containing a declaration of
residency status) shall be treated as a resident shareholder or non-resident
shareholder, as applicable, in accordance with his declaration.  Any holder of
Chauvco Common Shares who did not complete such declaration by the Election
Deadline and who has an address on the register of holders of Chauvco Common
Shares which is outside of Canada shall be deemed to be a non-resident
shareholder;
         (i)     upon the transfer of shares referred to in Section 2.1(g)
above: (i) each holder of a Chauvco Common Share shall cease to be such a
holder, shall have his name removed from the register of holders of Chauvco
Common Shares and shall become a holder of the number of fully paid CRI Shares
and Exchangeable Shares and/or shares of US Co Common Stock to which he is
entitled as a result of the transfer of shares referred to in Section 2.1(g)
and such holder's name shall be added to the register of holders of such
securities accordingly; and (ii) US Co Sub shall become the legal and
beneficial owner of all of the Chauvco Common Shares so transferred;
         (j)     holders of Chauvco Common Shares who are residents of Canada
for the purposes of the ITA and who have elected to receive Exchangeable Shares
under Section 2.1(g)(ii) shall be entitled to make an income tax election
pursuant to subsection 85(1) of the ITA with respect to the transfer of their
Chauvco Common Shares to US Co Sub by providing two signed copies of the
necessary election forms to US Co Sub within 90 days following the Effective
Date, duly completed with the details of the number of shares transferred and
the applicable agreed amounts for the purposes of such elections.  Thereafter,
subject to the election forms complying with the provisions of the ITA, the
forms will be signed by US Co Sub and returned to such holders of Chauvco
Common Shares for filing with Revenue Canada, Customs, Excise and Taxation;
         (k)     US Co shall issue to and deposit with the Depositary the
Voting Share, in consideration of the payment to US Co of US$1, to be hereafter
held of record by the Depositary as trustee for and on behalf of, and for the
use and benefit of, the holders of the Exchangeable Shares, in accordance with
the Voting and Exchange Trust Agreement; and
         (l)     US Co Sub shall be continued as a corporation under the ABCA.
2.2      Exchange Ratio.  As used herein, the term "Exchange Ratio" means in
respect of Exchangeable Shares or US Co Common Stock to be delivered upon the
transfer of Chauvco Common Shares or Chauvco Options to US Co Sub, a ratio of
the number of Exchangeable Shares or shares of US Co Common Stock per Chauvco
Common Share or Chauvco Option equal to:
         (a)     if the US Co Stock Price is less than US$33.50, (.493827);
         (b)     if the US Co Stock Price is at least US$33.50 but less than
US$39.01,
              .493827 - ((US Co Stock Price - 33.50) X .042360)
                          -------------------------
                                    5.51
   8
                                      -8-
                 and
         (c)     if the US Co Stock Price is equal to or greater than $39.01, 
(.451467).
The Exchange Ratio as so determined in each case shall be rounded to six
decimal places.  The "US Co Stock Price" shall mean the average closing sales
price, regular way, per share of the US Co Common Stock on the NYSE in United
States dollars as reported in the Wall Street Journal over the ten (10)
consecutive trading days ending on the third trading day next preceding the
date of the Meeting.  Notwithstanding the foregoing, if the Exchange Ratio is
above .465116, US Co may elect to cause US Co Sub to deliver, in lieu of
Exchangeable Shares and shares of US Co Common Stock, a number of Exchangeable
Shares or shares of US Co Common Stock for each Chauvco Common Share or Chauvco
Option based on the Exchange Ratio as set forth above equal to (.465116) and an
amount in cash (in Canadian dollars) per Chauvco Common Share or Chauvco Option
equal to the product of (x) the US Co Stock Price multiplied by the Currency
Exchange Rate and (y)
                 Exchange Ratio -- .465116.
2.3      Fair Market Value.  (a) Chauvco determined that the fair market value
of the Gabon Securities on September 3, 2022 was approximately US$60,000,000
relying on (i) the bidding process in connection with the sale of Chauvco, (ii)
the reserve and evaluation reports prepared by Chauvco's independent engineers,
(iii) the review and recommendation of Chauvco's senior management which
established a range of values at various discount factors and an assessment of
the exploration and development potential of the applicable properties, and
(iv) an independent review conducted to confirm and support the allocation to
the CRI Shares by Chauvco of a portion of the consideration received by the
Chauvco Shareholders.  The fair market value of the Gabon Securities on the
Effective Date shall be revalued and determined by Chauvco using consistent
principles.
         (b)     Notwithstanding the determination of the fair market value of
the Gabon Securities on the Effective Date under Section 2.3(a), unless Chauvco
and US Co otherwise agree, the amount which will be payable with respect to
such value may not exceed US$100,000,000.
                                   ARTICLE 3
                               RIGHTS OF DISSENT
3.1      Rights of Dissent.  Shareholders and Optionholders may exercise rights
of dissent with respect to their Chauvco Common Shares and Chauvco Options
pursuant to and in the manner set forth in section 184 of the ABCA (as modified
by the Interim Order) and this Section 3.1 (the "Dissent Procedures") in
connection with the Arrangement and holders who duly exercise such rights of
dissent and who:
         (a)     are ultimately entitled to be paid the fair value for their
Chauvco Common Shares or Chauvco Options shall be deemed to have transferred
such Chauvco Common Shares or Chauvco Options to Chauvco for cancellation on
the Effective Date; or
   9
                                      -9-
         (b)     are ultimately not entitled, for any reason, to be paid the
fair value  for their Chauvco Common Shares or Chauvco Options shall be deemed
to have participated in the  Arrangement on the same basis as any
non-dissenting Shareholder or Optionholder,
but in no case shall Chauvco be required to recognize such holders as
Shareholders or Optionholders on and after the Effective Date, and the names of
such Shareholders shall be deleted from the register of holders of Chauvco
Common Shares on the Effective Date.
3.2      Dissent Payments.  The obligations to make payments in respect of
dissenting Shareholders and Optionholders (the "Dissent Obligations") shall be
apportioned between Chauvco and CRI as follows:
         (a)     CRI shall pay that portion of the Dissent Obligations equal to
the result determined by applying the following formula:
   Fair market value of the Gabon Securities 
        determined in accordance with 
   Section 2.3 X the Currency Exchange Rate    
- ----------------------------------------------   X   Total Dissent Obligations
(US Co Stock Price   X   (the total number of 
 X the Currency          Chauvco Common Shares
 Exchange Rate)          outstanding on the 
                         Effective Date X the
                         Exchange Ratio)      
         (b)     Chauvco shall pay the remaining portion of the Dissent
Obligations.
                                   ARTICLE 4
               CERTIFICATES, CASH PAYMENT AND  FRACTIONAL SHARES
4.1      Delivery of Certificates and Cash Payment.  At or promptly after the
Effective Time,  US Co Sub shall deposit with the Depositary, for the benefit
of the holders of Chauvco Common Shares and Chauvco Options transferred
pursuant to the Arrangement, the Certificates and Cash Payment, if any, to
which each such holder is entitled pursuant to the Arrangement.  Upon surrender
to the Depositary:
         (a)     in the case of holders of Chauvco Common Shares, for
cancellation of a certificate which immediately prior to the Effective Time
represented outstanding Chauvco Common Shares, together with a duly completed
Letter of Transmittal and Election Form; and
         (b)     in the case of Optionholders of a duly completed Option Letter
of Transmittal and Election Form and, if applicable, the Option Payment;
and, in either case, of such additional documents and instruments as the
Depositary may reasonably require, each such holder shall be entitled to
receive,  and the Depositary shall forthwith deliver to each such holder, the
Certificates and the Cash Payment to which such holder has the right to receive
pursuant to the Arrangement (together with any dividends or distributions with
respect to the Exchangeable Shares, US Co Common Stock or CRI Shares, as
applicable, pursuant to Section 4.2 and any cash in lieu of fractional shares
pursuant to Section 4.3), and any certificates so surrendered shall forthwith
be cancelled.  In the event of a transfer of ownership of Chauvco Common Shares
   10
                                      -10-
which is not registered in the transfer records of Chauvco, the Certificates
may be issued and the Cash Payment, if any, may be paid and delivered to a
transferee if the certificate representing such Chauvco Common Shares is
presented to the Depositary, accompanied by all documents required to evidence
and effect such transfer. Until surrendered as contemplated by this Section
4.1, each certificate which immediately prior to the Effective Time represented
outstanding Chauvco Common Shares and the Chauvco Options that were transferred
pursuant to the Arrangement shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender (a) the
Certificates and the Cash Payment, if any,  to which the holder of Chauvco
Common Shares or Chauvco Options has the right to receive pursuant to the
Arrangement, (b) a cash payment in lieu of any fractional shares as
contemplated by Section 4.3 and (c) any dividends or distributions with a
record date after the Effective Time theretofore paid or payable with respect
to the Exchangeable Shares, US Co Common Stock and CRI Shares, as applicable,
as contemplated by Section 4.2.  No interest will be paid from or after the
Effective Date in respect of the Cash Payment.
4.2      Distributions Limited.  No dividends or other distributions declared
or made after the Effective Time with respect to the Exchangeable Shares, US Co
Common Stock and CRI Shares, as applicable, with a record date after the
Effective Time shall be paid to the holder of any unsurrendered certificate and
who has not returned a Letter of Transmittal and Election Form which,
immediately prior to the Effective Time, represented outstanding Chauvco Common
Shares or to any Optionholder who has not returned an Option Letter of
Transmittal and Election Form, duly completed and, if applicable, paid the
Option Payment pursuant to Section 2.1(e), and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 4.3,
(and no interest will be earned or payable on these proceeds) unless and until
such certificate and Letter of Transmittal and Election Form or Option Letter
of Transmittal and Election Form and Option Payment, if applicable, shall be
received by the Depositary in accordance with Section 4.1.  Subject to
applicable law and to Section 4.5, at the time of such surrender of any such
certificate and Letter of Transmittal and Election Form or Option  Letter of
Transmittal and Election Form and Option Payment, if applicable, (or, in the
case of clause (c) below, at the appropriate payment date), there shall be paid
to the record holder of such certificate or to the applicable Optionholder
without interest, (a) the amount of any cash payable in lieu of fractional
shares to which such holder is entitled pursuant to Section 4.3, (b) the amount
of dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to the Exchangeable Shares, US Co Common Stock
and CRI Shares, as applicable,  and (c) the amount of dividends or other
distributions with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
the Exchangeable Shares, US Co Common Stock and CRI Shares, as applicable.
4.3      No Fractional Shares.  No fractional Exchangeable Shares or shares of
US Co Common Stock shall be issued upon the surrender for transfer of
certificates and Letter of Transmittal and Election Form or upon delivery of an
Option Letter of Transmittal and Election Form and Option Payment, if
applicable,  pursuant to Section 4.1 and such fractional interests shall not
entitle the owner thereof to vote or to exercise any rights as a security
holder of Chauvco, US Co or US Co Sub.  In lieu of any such fractional
securities, each person entitled to a fractional interest in an Exchangeable
Share or share of US Co Common Stock will receive an amount of cash (rounded to
the nearest whole cent), without interest, equal to the product of (a) such
fraction multiplied by (b) the Average Closing Price of the US Co Common Stock,
such amount to be provided to the Depositary by US Co Sub upon request.
   11
                                      -11-
4.4      Lost Certificates.  If any certificate which immediately prior to the
Effective Time represented outstanding Chauvco Common Shares that were
transferred pursuant to Section 2.1 has been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed, the Depositary will issue and deliver in
exchange for such lost, stolen or destroyed certificate, the Certificates and
Cash Payment, if any, to which the holder of such certificate is entitled
pursuant to the Arrangement (and any dividends or distributions with respect
thereto and any cash pursuant to Section 4.3) deliverable in respect thereof as
determined in accordance with Section 2.1.  The person who is entitled to
receive such Certificates and Cash Payment, if  any, and other payments shall,
as a condition precedent to the receipt thereof, give a bond satisfactory to US
Co Sub and US Co Sub's transfer agent (the "Transfer Agent"), as the case may
be, in such form as US Co Sub may direct or otherwise indemnify US Co Sub in a
manner satisfactory to US Co Sub and the Transfer Agent against any claim that
may be made against US Co Sub or the Transfer Agent with respect to the
certificate alleged to have been lost, stolen or destroyed.
4.5      Extinguishment of Rights.  Any certificate which immediately prior to
the Effective Time represented outstanding Chauvco Common Shares that were
transferred pursuant to Section 2.1 and has not been deposited, and any Chauvco
Options with respect to which an Option Letter of Transmittal and Election Form
and the Option Payment, if applicable, has not been deposited or paid, in each
case with all other instruments required by Section 4.1, on or prior to the
tenth anniversary of the Effective Date shall cease to represent a claim or
interest of any kind or nature as a shareholder of Chauvco or an Optionholder.
On such date, the consideration and other payments to which the former
registered holder of the certificate or Optionholder referred to in the
preceding sentence was ultimately entitled shall be deemed to have been
surrendered to US Co together with all entitlements to dividends, distributions
and interest thereon held for such former registered holder for no
consideration.
                                   ARTICLE 5
             CERTAIN RIGHTS OF US CO TO ACQUIRE EXCHANGEABLE SHARES
5.1      US Co Liquidation Call Right.
         (a)     US Co shall have the overriding right (the "Liquidation Call
Right"), in the event of and notwithstanding the proposed liquidation,
dissolution or winding-up of US Co Sub pursuant to Article 5 of the
Exchangeable Share Provisions, to purchase from all but not less than all of
the holders (other than US Co and any Subsidiary thereof) of Exchangeable
Shares on the Liquidation Date all but not less than all of the Exchangeable
Shares held by each such holder on payment by US Co to the holder of the
Exchangeable Share Price applicable on the last Business Day prior to the
Liquidation Date (the "Liquidation Call Purchase Price").  In the event of the
exercise of the Liquidation Call Right by US Co, each holder shall be obligated
to sell all the Exchangeable Shares held by the holder to US Co on the
Liquidation Date on payment by US Co to the holder of the Liquidation Call
Purchase Price for each such share.
         (b)     To exercise the Liquidation Call Right, US Co must notify US
Co Sub's Transfer Agent in writing, as agent for the holders of Exchangeable
Shares, and US Co Sub of US Co's intention to exercise such right at least 55
days before the Liquidation Date in the case of a voluntary liquidation,
dissolution or winding-up of US Co Sub and at least five Business Days before
the
   12
                                      -12-
Liquidation Date in the case of an involuntary liquidation, dissolution or
winding-up of US Co Sub.  The Transfer Agent will notify the holders of
Exchangeable Shares as to whether or not US Co has exercised the Liquidation
Call Right forthwith after the expiry of the date by which the same may be
exercised by US Co.  If US Co exercises the Liquidation Call Right, on the
Liquidation Date US Co will purchase and the holders will sell all of the
Exchangeable Shares then outstanding for a price per share equal to the
Liquidation Call Purchase Price.
         (c)     For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Liquidation Call Right, US Co shall deposit
with the Transfer Agent, on or before the Liquidation Date, the Exchangeable
Share Consideration representing the total Liquidation Call Purchase Price.
Provided that such Exchangeable Share Consideration has been so deposited with
the Transfer Agent, on and after the Liquidation Date the rights of each holder
of Exchangeable Shares will be limited to receiving such holder's proportionate
part of the total Liquidation Call Purchase Price payable by US Co without
interest upon presentation and surrender by the holder of certificates
representing the Exchangeable Shares held by such holder and the holder shall
on and after the Liquidation Date be considered and deemed for all purposes to
be the holder of the US Co Common Stock delivered to such holder.  Upon
surrender to the Transfer Agent of a certificate or certificates representing
Exchangeable Shares, together with such other documents and instruments as may
be required to effect a transfer of Exchangeable Shares under applicable law
and such additional documents and instruments as the Transfer Agent may
reasonably require, the holder of such surrendered certificate or certificates
shall be entitled to receive in exchange therefor, and the Transfer Agent on
behalf of US Co shall deliver to such holder, the Exchangeable Share
Consideration to which the holder is entitled.  If US Co does not exercise the
Liquidation Call Right in the manner described above, on the Liquidation Date
the holders of the Exchangeable Shares will be entitled to receive in exchange
therefor the liquidation price otherwise payable by US Co Sub in connection
with the liquidation, dissolution or winding-up of US Co Sub pursuant to
Article 5 of the Exchangeable Share Provisions.  Notwithstanding the foregoing,
until such Exchangeable Share Consideration is delivered to the holder, the
holder shall be deemed to still be a holder of Exchangeable Shares for purposes
of all voting rights with respect thereto under the Voting and Exchange Trust
Agreement.
5.2      US Co Redemption Call Right.
         (a)     US Co shall have the overriding right (the "Redemption Call
Right"), notwithstanding the proposed redemption of the Exchangeable Shares by
US Co Sub pursuant to Article 7 of the Exchangeable Share Provisions, to
purchase from all but not less than all of the holders (other than US Co or any
Subsidiary thereof) of Exchangeable Shares on the Automatic Redemption Date all
but not less than all of the Exchangeable Shares held by each such holder on
payment by US Co to the holder of  the Exchangeable Share Price applicable on
the last Business Day prior to the Automatic Redemption Date (the "Redemption
Call Purchase Price").  In the event of the exercise of the Redemption Call
Right by US Co, each holder shall be obligated to sell all the Exchangeable
Shares held by the holder to US Co on the Automatic Redemption Date on payment
by US Co to the holder of the Redemption Call Purchase Price for each such
share.
         (b)     To exercise the Redemption Call Right, US Co must notify the
Transfer Agent in writing, as agent for the holders of Exchangeable Shares, and
US Co Sub of US Co's intention to exercise such right at least 125 days before
the Automatic Redemption Date.  The Transfer Agent will notify the holders of
the Exchangeable Shares as to whether or not US Co has exercised the
   13
                                      -13-
Redemption Call Right forthwith after the date by which the same may be
exercised by US Co.  If US Co exercises the Redemption Call Right, on the
Automatic Redemption Date US Co will purchase and the holders will sell all of
the Exchangeable Shares then outstanding for a price per share equal to the
Redemption Call Purchase Price.
         (c)     For the purposes of completing the purchase of the
Exchangeable Shares pursuant to the Redemption Call Right, US Co shall deposit
with the Transfer Agent, on or before the Automatic Redemption Date, the
Exchangeable Share Consideration representing the total Redemption Call
Purchase Price.  Provided that such Exchangeable Share Consideration has been
so deposited with the Transfer Agent, on and after the Automatic Redemption
Date the rights of each holder of Exchangeable Shares will be limited to
receiving such holder's proportionate part of the total Redemption Call
Purchase Price payable by US Co without interest upon presentation and
surrender by the holder of certificates representing the Exchangeable Shares
held by such holder and the holder shall on and after the Automatic Redemption
Date be considered and deemed for all purposes to be the holder of the US Co
Common Stock delivered to such holder.  Upon surrender to the Transfer Agent of
a certificate or certificates representing Exchangeable Shares, together with
such other documents and instruments as may be required to effect a transfer of
Exchangeable Shares under applicable law and such additional documents and
instruments as the Transfer Agent may reasonably require, the holder of such
surrendered certificate or certificates shall be entitled to receive in
exchange therefor, and the Transfer Agent on behalf of US Co shall deliver to
such holder, the Exchangeable Share Consideration to which the holder is
entitled.  If US Co does not exercise the Redemption Call Right in the manner
described above, on the Automatic Redemption Date the holders of the
Exchangeable Shares will be entitled to receive in exchange therefor the
redemption price otherwise payable by US Co Sub in connection with the
redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable
Share Provisions.  Notwithstanding the foregoing, until such Exchangeable Share
Consideration is delivered to the holder, the holder shall be deemed to still
be a holder of Exchangeable Shares for purposes of all voting rights with
respect thereto under the Voting and Exchange Trust Agreement.
                                   ARTICLE 6
                                   AMENDMENT
6.1      Plan of Arrangement Amendment.  Chauvco reserves the right to amend,
modify and/or supplement this Plan of Arrangement at any time and from time to
time provided that any such amendment, modification, or supplement must be
contained in a written document that is (a) agreed to by US Co, (b) filed with
the Court and, if made following the Meeting, approved by the Court and (c)
communicated to holders of Chauvco Common Shares in the manner required by the
Court (if so required).
         Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Chauvco at any time prior to or at the Meeting (provided
that US Co shall have consented thereto) with or without any other prior notice
or communication, and if so proposed and accepted by the persons voting at the
Meeting (other than as may be required under the Court's interim order), shall
become part of this Plan of Arrangement for all purposes.
         Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Meeting shall be effective only (a)
if it is consented to by Chauvco (b) if it is consented to by US Co and (c) if
required by the Court or applicable law, it is consented to by the holders of
the Exchangeable Shares.
   1
                                                                     EXHIBIT 2.3
                               SUPPORT AGREEMENT
       MEMORANDUM OF AGREEMENT made as of the 18th day of December, 1997,
BETWEEN:
                 PIONEER NATURAL RESOURCES COMPANY, a corporation incorporated
                 under the laws of the State of Delaware and having its head
                 and principal office at Irving, Texas (hereinafter referred to
                 as "US Co")
                                                              OF THE FIRST PART,
                                    - and -
                 PIONEER NATURAL RESOURCES (CANADA) LTD., a corporation
                 continued under the laws of the Province of Alberta and having
                 its head and principal office at Calgary, Alberta (hereinafter
                 referred to as "US Co Sub")
                                                             OF THE SECOND PART.
         WHEREAS pursuant to a combination agreement dated as of September 3,
1997, by and between US Co and Chauvco Resources Ltd. ("Chauvco") (such
agreement as it may be amended or restated is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), US Co and US Co Sub would execute and
deliver a Support Agreement containing the terms and conditions set forth in
Exhibit B to the Combination Agreement together with such other terms and
conditions as may be agreed to by the parties to the Combination Agreement
acting reasonably;
         AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated DECEMBER 18, 2021 filed pursuant to the Business
Corporations Act (Alberta) certain of the issued and outstanding common shares
of Chauvco ("Chauvco Common Shares") were exchanged for, among other things,
issued and outstanding Exchangeable Shares of US Co Sub (the "Exchangeable
Shares");
         AND WHEREAS the Articles of US Co Sub set forth the rights,
privileges, restrictions and conditions (collectively, the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares;
         AND WHEREAS the parties hereto desire to make appropriate provision
and to establish a procedure whereby US Co will take certain actions and make
certain payments and deliveries necessary to ensure that US Co Sub will be able
to make certain payments and to deliver or cause
   2
                                     - 2 -
to be delivered shares of US Co Common Stock in satisfaction of the obligations
of US Co Sub under the Exchangeable Share Provisions with respect to the
payment and satisfaction of dividends, Liquidation Amounts, Retraction Prices
and Redemption Prices, all in accordance with the Exchangeable Share
Provisions;
         NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
1.       DEFINITIONS AND INTERPRETATION
         (a)     Defined Terms.  Each term denoted herein by initial capital
                 letters and not otherwise defined herein shall have the
                 meaning attributed thereto in the Exchangeable Share
                 Provisions, unless the context requires otherwise.
         (b)     Interpretation Not Affected by Headings, etc. The division of
                 this Agreement into articles, sections and paragraphs and the
                 insertion of headings are for convenience of  reference only
                 and shall not affect the construction or interpretation of
                 this Agreement.
         (c)     Number, Gender, etc.  Words importing the singular number only
                 shall include the plural and vice versa.  Words importing the
                 use of any gender shall include all genders.
         (d)     Date for any Action.  If any date on which any action is
                 required to be taken under this Agreement is not a Business
                 Day, such action shall be required to be taken on the next
                 succeeding Business Day.
2.       COVENANTS OF US CO AND US CO SUB
         (a)     Covenants of US Co Regarding Exchangeable Shares.  So long as
                 any Exchangeable Shares are outstanding, US Co will:
                 (i)      not declare or pay any dividend on US Co Common Stock
                          unless (A) US Co Sub will have sufficient assets,
                          funds and other property available to enable the due
                          declaration and the due and punctual payment in
                          accordance with applicable law of an equivalent
                          dividend on the Exchangeable Shares and (B) US Co Sub
                          shall simultaneously declare or pay, as the case may
                          be, an equivalent dividend on the Exchangeable
                          Shares, in each case in accordance with the
                          Exchangeable Share Provisions;
                 (ii)     advise US Co Sub sufficiently in advance of the
                          declaration by US Co of any dividend on US Co Common
                          Stock and take all such other actions as are
                          necessary, in cooperation with US Co Sub, to ensure
                          that the respective declaration date, record date and
                          payment date for a dividend on the Exchangeable
                          Shares shall be the same as the record date,
                          declaration date and payment date for the
                          corresponding dividend on US Co Common Stock and such
                          dividend on the Exchangeable Shares shall correspond
                          with any
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                                     - 3 -
                          requirement of the principal stock exchange on which
                          the Exchangeable Shares are listed;
                 (iii)    ensure that the record date for any dividend declared
                          on US Co Common Stock is not less than 10 calendar
                          days after the declaration date for such dividend;
                 (iv)     take all such actions and do all such things as are
                          necessary or desirable to enable and permit US Co
                          Sub, in accordance with applicable law, to pay and
                          otherwise perform its obligations with respect to the
                          satisfaction of the Liquidation Amount in respect of
                          each issued and outstanding Exchangeable Share upon
                          the liquidation, dissolution or winding-up of US Co
                          Sub, including without limitation all such actions
                          and all such things as are necessary or desirable to
                          enable and permit US Co Sub to cause to be delivered
                          shares of US Co Common Stock to the holders of
                          Exchangeable Shares in accordance with the provisions
                          of Article 5 of the Exchangeable Share Provisions;
                 (v)      take all such actions and do all such things as are
                          necessary or desirable to enable and permit US Co
                          Sub, in accordance with applicable law, to pay and
                          otherwise perform its obligations with respect to the
                          satisfaction of the Retraction Price and the
                          Redemption Price, including without limitation all
                          such actions and all such things as are necessary or
                          desirable to enable and permit US Co Sub to cause to
                          be delivered shares of US Co Common Stock to the
                          holders of Exchangeable Shares, upon the retraction
                          or redemption of the Exchangeable Shares in
                          accordance with the provisions of Article 6 or
                          Article 7 of the Exchangeable Share Provisions, as
                          the case may be; and
                 (vi)     not exercise its vote as a direct or indirect
                          shareholder to initiate the voluntary liquidation,
                          dissolution or winding-up of US Co Sub nor take any
                          action or omit to take any action that is designed to
                          result in the liquidation, dissolution or winding-up
                          of US Co Sub.
         (b)     Segregation of Funds.  US Co will cause US Co Sub to deposit a
                 sufficient amount of funds in a separate account and segregate
                 a sufficient amount of such assets and other property as is
                 necessary to enable US Co Sub to pay or otherwise satisfy the
                 applicable dividends, Liquidation Amount, Retraction Price or
                 Redemption Price, in each case for the benefit of holders from
                 time to time of the Exchangeable Shares, and to use such
                 funds, assets and other property so segregated exclusively for
                 the payment of dividends and the payment or other satisfaction
                 of the Liquidation Amount, the Retraction Price or the
                 Redemption Price, as applicable, net of any corresponding
                 withholding tax obligations and for the remittance of such
                 withholding tax obligations.
         (c)     Reservation of Shares of US Co Common Stock.  US Co hereby
                 represents, warrants and covenants that it has irrevocably
                 reserved for issuance and will at all times keep available,
                 free from pre-emptive and other rights, out of its authorized
                 and unissued capital stock such number of shares of US Co
                 Common Stock (or other shares or
   4
                                     - 4 -
                 securities into which US Co Common Stock may be reclassified
                 or changed as contemplated by section 2(g) hereof) (i) as is
                 equal to the sum of (A) the number of Exchangeable Shares
                 issued and outstanding from time to time and (B) the number of
                 Exchangeable Shares issuable upon the exercise of all rights
                 to acquire Exchangeable Shares outstanding from time to time
                 and (ii) as are now and may hereafter be required to enable
                 and permit US Co Sub to meet its obligations hereunder, under
                 the Voting and Exchange Trust Agreement, under the
                 Exchangeable Share Provisions and under any other security or
                 commitment pursuant to the Arrangement with respect to which
                 US Co may now or hereafter be required to issue shares of US
                 Co Common Stock.
         (d)     Notification of Certain Events.  In order to assist US Co to
                 comply with its obligations hereunder, US Co Sub will give US
                 Co notice of each of the following events at the time set
                 forth below:
                 (i)      in the event of any determination by the Board of
                          Directors of US Co Sub to institute voluntary
                          liquidation, dissolution or winding-up proceedings
                          with respect to US Co Sub or to effect any other
                          distribution of the assets of US Co Sub among its
                          shareholders for the purpose of winding-up its
                          affairs, at least 60 days prior to the proposed
                          effective date of such liquidation, dissolution,
                          winding-up or other distribution;
                 (ii)     immediately, upon the earlier of (A) receipt by US Co
                          Sub of notice of, and (B) US Co Sub otherwise
                          becoming aware of, any threatened or instituted
                          claim, suit, petition or other proceedings with
                          respect to the involuntary liquidation, dissolution
                          or winding-up of US Co Sub or to effect any other
                          distribution of the assets of US Co Sub among its
                          shareholders for the purpose of winding-up its
                          affairs;
                 (iii)    immediately, upon receipt by US Co Sub of a
                          Retraction Request (as defined in the Exchangeable
                          Share Provisions);
                 (iv)     at least 130 days prior to any accelerated Automatic
                          Redemption Date determined by the Board of Directors
                          of US Co Sub in accordance with the Exchangeable
                          Share Provisions; and
                 (v)      as soon as practicable upon the issuance by US Co Sub
                          of any Exchangeable Shares or rights to acquire
                          Exchangeable Shares.
         (e)     Delivery of Shares of US Co Common Stock.  In furtherance of
                 its obligations hereunder, upon notice of any event which
                 requires US Co Sub to cause to be delivered shares of US Co
                 Common Stock to any holder of Exchangeable Shares, US Co shall
                 forthwith issue and deliver the requisite shares of US Co
                 Common Stock to or to the order of the former holder of the
                 surrendered Exchangeable Shares, as US Co Sub shall direct.
                 All such shares of US Co Common Stock shall be duly issued as
                 fully paid and non- assessable and shall be free and clear of
                 any lien, claim, encumbrance, security interest or adverse
                 claim.
   5
                                     - 5 -
         (f)     Qualification of Shares of US Co Common Stock.  US Co
                 covenants that if any shares of US Co Common Stock (or other
                 shares or securities into which US Co Common Stock may be
                 reclassified or changed as contemplated by section 2(g)
                 hereof) to be issued and delivered hereunder, including for
                 greater certainty, pursuant to the Exchangeable Share
                 Provisions, or pursuant to the Exchange Right or the Automatic
                 Exchange Rights (both as defined in the Voting and Exchange
                 Trust Agreement) require registration or qualification with or
                 approval of or the filing of any document including any
                 prospectus or similar document or the taking of any proceeding
                 with or the obtaining of any order, ruling or consent from any
                 governmental or regulatory authority under any Canadian or
                 United States federal, provincial or state law or regulation
                 or pursuant to the rules and regulations of any regulatory
                 authority or the fulfillment of any other legal requirement
                 (collectively, the "Applicable Laws") before such shares (or
                 other shares or securities into which US Co Common Stock may
                 be reclassified or changed as contemplated by section 2(g)
                 hereof) may be issued and delivered by US Co to the initial
                 holder thereof (other than US Co Sub) or in order that such
                 shares may be freely traded thereafter (other than any
                 restrictions on transfer by reason of a holder being a
                 "control person" of US Co for purposes of Canadian federal or
                 provincial securities law or an "affiliate" of US Co or, prior
                 to the Effective Date, of Chauvco for purposes of United
                 States federal or state securities law), US Co will in good
                 faith expeditiously take all such actions and do all such
                 things as are necessary to cause such shares of US Co Common
                 Stock (or other shares or securities into which US Co Common
                 Stock may be reclassified or changed as contemplated by
                 section 2(g) hereof) to be and remain duly registered,
                 qualified or approved.  US Co represents and warrants that it
                 has in good faith taken all actions and done all things as are
                 necessary under Applicable Laws as they exist on the date
                 hereof to cause the shares of US Co Common Stock (or other
                 shares or securities into which US Co Common Stock may be
                 reclassified or changed as contemplated by section 2(g)
                 hereof) to be issued and delivered hereunder, including for
                 greater certainty, pursuant to the Exchangeable Share
                 Provisions, or pursuant to the Exchange Right and the
                 Automatic Exchange Right to be freely tradeable thereafter
                 (other than restrictions on transfer by reason of a holder
                 being a "control person" of US Co for the purposes of Canadian
                 federal and provincial securities law or an "affiliate" of US
                 Co or, prior to the Effective Date, of Chauvco for the
                 purposes of United States federal or state securities law).
                 US Co will in good faith expeditiously take all such actions
                 and do all such things as are necessary to cause all shares of
                 US Co Common Stock (or other shares or other securities into
                 which US Co Common Stock may be reclassified or changed as
                 contemplated by section 2(g) hereof) to be delivered
                 hereunder, including for greater certainty, pursuant to the
                 Exchangeable Share Provisions, or pursuant to the Exchange
                 Right or the Automatic Exchange Rights to be listed, quoted or
                 posted for trading on all stock exchanges and quotation
                 systems on which such shares are listed, quoted or posted for
                 trading at such time.  US Co will in good faith expeditiously
                 take all such action and do all such things as are necessary
                 to cause all Exchangeable Shares to be and to continue to be
                 listed and posted for trading on The Toronto Stock Exchange.
   6
                                     - 6 -
         (g)     Equivalence.
                 (i)      US Co will not without the prior approval of US Co
                          Sub and the prior approval of the holders of the
                          Exchangeable Shares given in accordance with Section
                          9.2 of the Exchangeable Share Provisions:
                          (A)     issue or distribute shares of US Co Common
                                  Stock (or securities exchangeable for or
                                  convertible into or carrying rights to
                                  acquire shares of US Co Common Stock) to the
                                  holders of all or substantially all of the
                                  then outstanding US Co Common Stock by way of
                                  stock dividend or other distribution; or
                          (B)     issue or distribute rights, options or
                                  warrants to the holders of all or
                                  substantially all of the then outstanding
                                  shares of US Co Common Stock entitling them
                                  to subscribe for or to purchase shares of US
                                  Co Common Stock (or securities exchangeable
                                  for or convertible into or carrying rights to
                                  acquire shares of US Co Common Stock); or
                          (C)     issue or distribute to the holders of all or
                                  substantially all of the then outstanding
                                  shares of US Co Common Stock (I) shares or
                                  securities of US Co of any class other than
                                  US Co Common Stock (other than shares
                                  convertible into or exchangeable for or
                                  carrying rights to acquire shares of US Co
                                  Common Stock), (II) rights, options or
                                  warrants other than those referred to in
                                  subsection 2(g)(i)(B) above, (III) evidences
                                  of indebtedness of US Co or (IV) assets of US
                                  Co;
                          unless
                          (D)     US Co Sub is permitted under applicable law
                                  to issue or distribute the economic
                                  equivalent on a per share basis of such
                                  rights, options, securities, shares,
                                  evidences of indebtedness or other assets to
                                  holders of the Exchangeable Shares; and
                          (E)     US Co Sub shall issue or distribute the
                                  economic equivalent on a per share basis of
                                  such rights, options, securities, shares,
                                  evidences of indebtedness or other assets
                                  simultaneously to holders of the Exchangeable
                                  Shares.
                 (ii)     US Co will not without the prior approval of US Co
                          Sub and the prior approval of the holders of the
                          Exchangeable Shares given in accordance with Section
                          9.2 of the Exchangeable Share Provisions:
                          (A)     subdivide, divide or change the then
                                  outstanding shares of US Co Common Stock into
                                  a greater number of shares of US Co Common
                                  Stock; or
                          (B)     reduce, combine or consolidate or change the
                                  then outstanding shares of US Co Common Stock
                                  into a lesser number of shares of US Co
                                  Common Stock; or
   7
                                     - 7 -
                          (C)     reclassify or otherwise change the shares of
                                  US Co Common Stock or effect an amalgamation,
                                  merger, reorganization or other transaction
                                  affecting the shares of US Co Common Stock;
                          unless (I) US Co Sub is permitted under applicable
                          law to simultaneously make the same or an equivalent
                          change to, or in the rights of holders of, the
                          Exchangeable Shares and (II) the same or an
                          equivalent change is made to, or in the rights of the
                          holders of, the Exchangeable Shares.
                 (iii)    US Co will ensure that the record date for any event
                          referred to in section 2(g)(i) or 2(g)(ii) above, or
                          (if no record date is applicable for such event) the
                          effective date for any such event, is not less than
                          10 calendar days after the date on which such event
                          is declared or announced by US Co (with simultaneous
                          notice thereof to be given by US Co to US Co Sub).
         (h)     Tender Offers, etc.  In the event that a tender offer, share
                 exchange offer, issuer bid, take-over bid or similar
                 transaction with respect to US Co Common Stock (an "Offer") is
                 proposed by US Co or is proposed to US Co or its shareholders
                 and is recommended by the Board of Directors of US Co, or is
                 otherwise effected or to be effected with the consent or
                 approval of the Board of Directors of US Co, US Co shall take
                 all such actions and do all such things as are necessary or
                 desirable to enable and permit holders of Exchangeable Shares
                 to participate in such Offer to the same extent and on an
                 equivalent basis as the holders of shares of US Co Common
                 Stock, without discrimination, including, without limiting the
                 generality of the foregoing, US Co will use its good faith
                 efforts expeditiously to (and shall, in the case of a
                 transaction proposed by US Co or where US Co is a participant
                 in the negotiation thereof) ensure that holders of
                 Exchangeable Shares may participate in all such Offers without
                 being required to retract Exchangeable Shares as against US Co
                 Sub (or, if so required, to ensure that any such retraction
                 shall be effective only upon, and shall be conditional upon,
                 the closing of the Offer and only to the extent necessary to
                 tender or deposit to the Offer).
         (i)     Ownership of Outstanding Shares.  Without the prior approval
                 of US Co Sub and the prior approval of the holders of the
                 Exchangeable Shares given in accordance with Section 9.2 of
                 the Exchangeable Share Provisions, US Co covenants and agrees
                 in favour of US Co Sub that, as long as any outstanding
                 Exchangeable Shares are owned by any person or entity other
                 than US Co or any of its Subsidiaries, US Co will be and
                 remain the direct or indirect beneficial owner of all issued
                 and outstanding shares in the capital of US Co Sub and all
                 outstanding securities of US Co Sub carrying or otherwise
                 entitled to voting rights in any circumstances, in each case
                 other than the Exchangeable Shares.
         (j)     US Co Not to Vote Exchangeable Shares.  US Co covenants and
                 agrees that it will appoint and cause to be appointed
                 proxyholders with respect to all Exchangeable Shares held by
                 US Co and its Subsidiaries for the sole purpose of attending
                 each meeting of holders of Exchangeable Shares in order to be
                 counted as part of the quorum for each such meeting.  US Co
                 further covenants and agrees that it will not, and will cause
                 its Subsidiaries not to, exercise any voting rights which may
                 be
   8
                                     - 8 -
                 exercisable by holders of Exchangeable Shares from time to
                 time pursuant to the Exchangeable Share Provisions or pursuant
                 to the provisions of any corporate statute by which US Co Sub
                 may be governed with respect to any Exchangeable Shares held
                 by it or by its Subsidiaries in respect of any matter
                 considered at any meeting of holders of Exchangeable Shares.
         (k)     Due Performance.  On and after the Effective Date, US Co shall
                 duly and timely perform all of its obligations provided for in
                 connection with the Plan of Arrangement including any
                 obligations that may arise upon the exercise of US Co's rights
                 under the Exchangeable Share Provisions.
         (l)     Appointment to US Co Board.  US Co shall cause James R.
                 Baroffio to be appointed as a director of US Co on or prior to
                 the date hereof as a Class II Director to serve until US Co's
                 1999 annual stockholders' meeting; Guy J. Turcotte to be
                 nominated as a director of US Co for election at US Co's 1998
                 annual stockholders' meeting and Mr. Baroffio to be nominated
                 for re-election at US Co's 1999 annual stockholders' meeting.
                 US Co shall put forth Messrs. Turcotte and Baroffio for
                 election to its board of directors as aforesaid and will cause
                 to be solicited proxies for its stockholder's meetings in
                 favour of the election of such individual.
         (m)     Notwithstanding the general restriction in section 4.1(d) of
                 the share provisions of the Exchangeable Shares, US Co Sub
                 shall be entitled, for a period of 60 days following the
                 initial issuance of Exchangeable Shares, to issue Exchangeable
                 Shares, provided that concurrent with any such issuance it
                 acquires directly or indirectly an equivalent number of
                 Exchangeable Shares.
3.       GENERAL
         (a)     Term.  This Agreement shall come into force and be effective
                 as of the date hereof and shall terminate and be of no further
                 force and effect at such time as no Exchangeable Shares (or
                 securities or rights convertible into or exchangeable for or
                 carrying rights to acquire securities Exchangeable Shares) are
                 held by any party other than US Co and any of its
                 Subsidiaries.
         (b)     Changes in Capital of US Co and US Co Sub.  Notwithstanding
                 the provisions of section 3(d) hereof, at all times after the
                 occurrence of any event effected pursuant to section 2(g) or
                 2(h) hereof, as a result of which either US Co Common Stock or
                 the Exchangeable Shares or both are in any way changed, this
                 Agreement shall forthwith be amended and modified as necessary
                 in order that it shall apply with full force and effect,
                 mutatis mutandis, to all new securities into which US Co
                 Common Stock or the Exchangeable Shares or both are so changed
                 and the parties hereto shall execute and deliver an agreement
                 in writing giving effect to and evidencing such necessary
                 amendments and modifications.
         (c)     Severability.  If any provision of this Agreement is held to
                 be invalid, illegal or unenforceable, the validity, legality
                 or enforceability of the remainder of this Agreement shall not
                 in any way be affected or impaired thereby and this Agreement
   9
                                     - 9 -
                 shall be carried out as nearly as possible in accordance with
                 its original terms and conditions.
         (d)     Amendments, Modifications, etc.  This Agreement may not be
                 amended or modified except by an agreement in writing executed
                 by US Co Sub and US Co and approved by the holders of the
                 Exchangeable Shares in accordance with Section 9.2 of the
                 Exchangeable Share Provisions.
         (e)     Ministerial Amendments.  Notwithstanding the provisions of
                 section 3(d), the parties to this Agreement may in writing, at
                 any time and from time to time, without the approval of the
                 holders of the Exchangeable Shares, amend or modify this
                 Agreement for the purposes of:
                 (i)      adding to the covenants of either or both parties for
                          the protection of the holders of the Exchangeable
                          Shares;
                 (ii)     making such amendments or modifications not
                          inconsistent with this Agreement as may be necessary
                          or desirable with respect to matters or questions
                          which, in the opinion of the board of directors of
                          each of US Co Sub and US Co, it may be expedient to
                          make, provided that each such boards of directors
                          shall be of the opinion that such amendments or
                          modifications will not be prejudicial to the
                          interests of the holders of the Exchangeable Shares;
                          or
                 (iii)    making such changes or corrections which, on the
                          advice of counsel to US Co Sub and US Co, are
                          required for the purpose of curing or correcting any
                          ambiguity or defect or inconsistent provision or
                          clerical omission or mistake or manifest error,
                          provided that the boards of directors of each of US
                          Co Sub and US Co shall be of the opinion that such
                          changes or corrections will not be prejudicial to the
                          interests of the holders of the Exchangeable Shares.
         (f)     Meeting to Consider Amendments.  US Co Sub, at the request of
                 US Co, shall call a meeting or meetings of the holders of the
                 Exchangeable Shares for the purpose of considering any
                 proposed amendment or modification requiring approval of such
                 shareholders.  Any such meeting or meetings shall be called
                 and held in accordance with the by-laws of US Co Sub, the
                 Exchangeable Share Provisions and all applicable laws.
         (g)     Amendments Only in Writing.  No amendment to or modification
                 or waiver of any of the provisions of this Agreement otherwise
                 permitted hereunder shall be effective unless made in writing
                 and signed by both of the parties hereto.
         (h)     Inurement.  This Agreement shall be binding upon and inure to
                 the benefit of the parties hereto and the holders, from time
                 to time, of Exchangeable Shares and each of their respective
                 heirs, successors and assigns.
         (i)     Notices to Parties.  All notices and other communications
                 between the parties shall be in writing and shall be deemed to
                 have been given if delivered personally or by
   10
                                     - 10 -
                 confirmed telecopy to the parties at the following addresses
                 (or at such other address for either such party as shall be
                 specified in like notice):
                 (i)      if to US Co at:
                                  Pioneer Natural Resources Company
                                  1400 Williams Square West
                                  5205 N.  O'Connor Blvd.
                                  Irving, Texas 75039-3746
                                  Attention:       President
                                  Telecopy:        (972) 402-7057
                 (ii)     if to US Co Sub at:
                                  Pioneer Natural Resources (Canada) Ltd.
                                  2900, 255 - 5th Avenue S.W.
                                  Calgary, Alberta
                                  T2P 3G6
                                  Attention:       President
                                  Telecopy:        (403) 231-3247
                 Any notice or other communication given personally shall be
                 deemed to have been given and received upon delivery thereof
                 and if given by telecopy shall be deemed to have been given
                 and received on the date of confirmed receipt thereof unless
                 such day is not a Business Day in which case it shall be
                 deemed to have been given and received upon the immediately
                 following Business Day.
         (j)     Counterparts.  This Agreement may be executed in counterparts,
                 each of which shall be deemed an original, and all of which
                 taken together shall constitute one and the same instrument.
         (k)     Jurisdiction.  This Agreement shall be construed and enforced
                 in accordance with the laws of the Province of Alberta and the
                 laws of Canada applicable therein.
         (l)     Attornment.  US Co agrees that any action or proceeding
                 arising out of or relating to this Agreement may be instituted
                 in the courts of Alberta, waives any objection which it may
                 have now or hereafter to the venue of any such action or
                 proceeding, irrevocably submits to the jurisdiction of the
                 said courts in any such action or proceeding, agrees to be
                 bound by any judgment of the said courts and not to seek, and
                 hereby waives, any review of the merits of any such judgment
                 by the courts of any other jurisdiction and hereby appoints US
                 Co Sub at its registered office in the Province of Alberta as
                 US Co's attorney for service of process.
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                                     - 11 -
         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
                                             PIONEER NATURAL
                                             RESOURCES COMPANY
                                             Per:
                                                 ---------------------------
                                             Per:
                                                 ---------------------------
                                             PIONEER NATURAL RESOURCES
                                             (CANADA) LTD.
                                             Per:
                                                 ---------------------------
                                             Per:
                                                 ---------------------------
   1
                                                                     EXHIBIT 2.4
                      VOTING AND EXCHANGE TRUST AGREEMENT
         MEMORANDUM OF AGREEMENT made as of the 18th day of December, 1997,
AMONG:
                 PIONEER NATURAL RESOURCES COMPANY, a corporation incorporated
                 under the laws of the State of Delaware and having its head
                 and principal office at Irving, Texas (hereinafter referred to
                 as "US Co")
                                                              OF THE FIRST PART,
                                    - and -
                 PIONEER NATURAL RESOURCES (CANADA) LTD., a corporation
                 continued under the laws of the Province of Alberta and having
                 its head and principal office at Calgary, Alberta (hereinafter
                 referred to as "US Co Sub")
                                                             OF THE SECOND PART,
                                    - and -
                 MONTREAL TRUST COMPANY OF CANADA, a trust company existing
                 under the laws of Canada (hereinafter referred to as the
                 "Trustee")
                                                              OF THE THIRD PART.
         WHEREAS pursuant to a combination agreement dated as of September 3,
1997, by and between US Co and Chauvco Resources Ltd. ("Chauvco") (such
agreement as it may be amended or restated is hereinafter referred to as the
"Combination Agreement"), the parties agreed that on the Effective Date (as
defined in the Combination Agreement), US Co and US Co Sub would execute and
deliver a Voting and Exchange Trust Agreement containing the terms and
conditions set forth in Exhibit C to the Combination Agreement together with
such other terms and conditions as may be agreed to by the parties to the
Combination Agreement acting reasonably;
         AND WHEREAS pursuant to an arrangement (the "Arrangement") effected by
Articles of Arrangement dated DECEMBER 18, 2021 filed pursuant to the Business
Corporations Act (Alberta), certain of the issued and outstanding common shares
of Chauvco ("Chauvco Common Shares") were
   2
                                     - 2 -
exchanged for, among other things, issued and outstanding Exchangeable Shares
of US Co Sub (the "Exchangeable Shares");
         AND WHEREAS the Articles of US Co Sub set forth the rights,
privileges, restrictions and conditions (collectively, the "Exchangeable Share
Provisions") attaching to the Exchangeable Shares;
         AND WHEREAS US Co is to provide voting rights in US Co to each holder
(other than US Co and its Subsidiaries) from time to time of Exchangeable
Shares, such voting rights per Exchangeable Share to be equivalent to the
voting rights per share of US Co Common Stock (the "US Co Common Stock");
         AND WHEREAS US Co is to grant to and in favour of the holders (other
than US Co and its Subsidiaries) from time to time of Exchangeable Shares the
right, in the circumstances set forth herein, to require US Co to purchase from
each such holder all or any part of the Exchangeable Shares held by the holder;
         AND WHEREAS the parties desire to make appropriate provision and to
establish a procedure whereby voting rights in US Co shall be exercisable by
holders (other than US Co and its Subsidiaries) from time to time of
Exchangeable Shares by and through the Trustee, which will hold legal title to
one (1) share of US Co Special Preferred Voting Stock (the "US Co Special
Voting Stock") to which voting rights attach for the benefit of such holders
and whereby the rights to require US Co to purchase Exchangeable Shares from
the holders thereof (other than US Co and its Subsidiaries) shall be
exercisable by such holders from time to time of Exchangeable Shares by and
through the Trustee, which will hold legal title to such rights for the benefit
of such holders;
         AND WHEREAS these recitals and any statements of fact in this
Agreement are made by US Co and US Co Sub and not by the Trustee;
         NOW THEREFORE in consideration of the respective covenants and
agreements provided in this Agreement and for other good and valuable
consideration (the receipt and sufficiency of which are hereby acknowledged),
the parties agree as follows:
1.       DEFINITIONS AND INTERPRETATION
         (a)       Definitions.  In this Agreement, the following terms
                   shall have the following meanings:
         "Aggregate Equivalent Vote Amount" means, with respect to any matter,
         proposition or question on which holders of US Co Common Stock are
         entitled to vote, consent or otherwise act, the product of (i) the
         number of shares of Exchangeable Shares issued and outstanding and
         held by Holders multiplied by (ii) the Equivalent Vote Amount.
         "Arrangement" has the meaning attributed thereto in the recitals
         hereto.
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                                     - 3 -
         "Automatic Exchange Rights" means the benefit of the obligation of US
         Co to effect the automatic exchange of shares of US Co Common Stock
         for Exchangeable Shares pursuant to Section 5(1) hereof.
         "Board of Directors" means the Board of Directors of US Co Sub.
         "Business Day" has the meaning attributed thereto in the Exchangeable 
         Share Provisions.
         "Equivalent Vote Amount" means, with respect to any matter,
         proposition or question on which holders of US Co Common Stock are
         entitled to vote, consent or otherwise act, the number of votes to
         which a holder of one share of US Co Common Stock is entitled with
         respect to such matter, proposition or question.
         "Exchange Right" has the meaning attributed thereto in Article 5
         hereof.
         "Exchangeable Share Consideration" has the meaning attributed thereto
         in the Exchangeable Share Provisions.
         "Exchangeable Share Price" has the meaning attributed thereto in the
         Exchangeable Share Provisions.
         "Exchangeable Share Provisions" has the meaning attributed thereto in
         the recitals hereto.
         "Exchangeable Shares" has the meaning attributed thereto in the
         recitals hereto.
         "Holder Votes" has the meaning attributed thereto in Section 4(b)
         hereof.
         "Holders" means the registered holders from time to time of
         Exchangeable Shares, other than US Co and its Subsidiaries.
         "Insolvency Event" means the institution by US Co Sub of any
         proceeding to be adjudicated a bankrupt or insolvent or to be
         dissolved or wound-up, or the consent of US Co Sub to the institution
         of bankruptcy, insolvency, dissolution or winding-up proceedings
         against it, or the filing of a petition, answer or consent seeking
         dissolution or winding-up under any bankruptcy, insolvency or
         analogous laws, including without limitation the Companies' Creditors'
         Arrangement Act (Canada) and the Bankruptcy and Insolvency Act
         (Canada), and the failure by US Co Sub to contest in good faith any
         such proceedings commenced in respect of US Co Sub within 15 days of
         becoming aware thereof, or the consent by US Co Sub to the filing of
         any such petition or to the appointment of a receiver, or the making
         by US Co Sub of a general assignment for the benefit of creditors, or
         the admission in writing by US Co Sub of its inability to pay its
         debts generally as they become due, or US Co Sub not being permitted,
         pursuant to liquidity or solvency requirements of applicable law, to
         redeem any Retracted Shares pursuant to Section 6.6 of the
         Exchangeable Share Provisions.
         "Liquidation Call Right" has the meaning attributed thereto in the
         Exchangeable Share Provisions.
   4
                                     - 4 -
         "Liquidation Event" has the meaning attributed thereto in subsection 
         5(l)(ii) hereof.
         "Liquidation Event Effective Date" has the meaning attributed thereto
         in subsection 5(l)(iii) hereof.
         "List" has the meaning attributed thereto in Section 4(f) hereof.
         "Officers' Certificate" means, with respect to US Co or US Co Sub, as
         the case may be, a certificate signed by any two of the Chairman of
         the Board, the Vice-Chairman of the Board, the President, any
         Vice-President or any other senior officer of US Co or US Co Sub, as
         the case may be.
         "Person" includes an individual, partnership, corporation, company,
         unincorporated syndicate or organization, trust, trustee, executor,
         administrator and other legal representative.
         "Plan of Arrangement" has the meaning attributed thereto in the
         Exchangeable Share Provisions.
         "Redemption Call Right" has the meaning attributed thereto in the
         Exchangeable Share Provisions.
         "Retracted Shares" has the meaning attributed thereto in Section 5(g)
         hereof.
         "Retraction Call Right" has the meaning attributed thereto in the
         Exchangeable Share Provisions.
         "Subsidiary" has the meaning attributed thereto in the Exchangeable
         Share Provisions.
         "Support Agreement" means that certain support agreement made as of
         even date hereof between US Co Sub and US Co.
         "Trust" means the trust created by this Agreement.
         "Trust Estate" means the Voting Share, any other securities, the
         Exchange Right, the Automatic Exchange Rights and any money or other
         property which may be held by the Trustee from time to time pursuant
         to this Agreement.
         "Trustee" means Montreal Trust Company of Canada and, subject to the
         provisions of Article 10 hereof, includes any successor trustee or
         permitted assigns.
         "US Co Common Stock" has the meaning attributed thereto in the
         recitals hereto.
         "US Co Consent" has the meaning attributed thereto in Section 4(b)
         hereof.
         "US Co Meeting" has the meaning attributed thereto in Section 4(b)
         hereof.
   5
                                     - 5 -
         "US Co Special Voting Stock" has the meaning attributed thereto in the
         recitals hereto.
         "US Co Successor" has the meaning attributed thereto in subsection
         11(a)(ii) hereof.
         "Voting Rights" means the voting rights attached to the Voting Shares.
         "Voting Share" means the one (1) share of US Co Special Voting Stock,
         U.S. $0.01 par value, issued by US Co to and deposited with the
         Trustee, which entitles the holder of record to a number of votes at
         meetings of holders of US Co Common Stock equal to the Aggregate
         Equivalent Vote Amount.
         (b)      Interpretation Not Affected by Headings, etc. The division of
                  this Agreement into articles, sections and paragraphs and the
                  insertion of headings are for convenience of reference only
                  and shall not affect the construction or interpretation of
                  this Agreement.
         (c)      Number, Gender, etc. Words importing the singular number only
                  shall include the plural and vice versa. Words importing the
                  use of any gender shall include all genders.
         (d)      Date for any Action. If any date on which any action is
                  required to be taken under this Agreement is not a Business
                  Day, such action shall be required to be taken on the next
                  succeeding Business Day.
2.       PURPOSE OF AGREEMENT
         The purpose of this Agreement is to create the Trust for the benefit
         of the Holders, as herein provided.  The Trustee will hold the Voting
         Share in order to enable the Trustee to exercise the Voting Rights and
         will hold the Exchange Right and the Automatic Exchange Rights in
         order to enable the Trustee to exercise such rights, in each case as
         Trustee for and on behalf of the Holders as provided in this
         Agreement.
3.       VOTING SHARE
         (a)      Issuance and Ownership of the Voting Share. US Co hereby
                  issues to and deposits with the Trustee the Voting Share to be
                  hereafter held of record by the Trustee as trustee for and on
                  behalf of, and for the use and benefit of, the Holders and in
                  accordance with the provisions of this Agreement. US Co hereby
                  acknowledges receipt from the Trustee as the trustee for and
                  on behalf of the Holders of good and valuable consideration
                  (and the adequacy thereof) and $1 in hand paid for the
                  issuance of the Voting Share by US Co to the Trustee. During
                  the term of the Trust and subject to the terms and conditions
                  of this Agreement, the Trustee shall possess and be vested
                  with full legal ownership of the Voting Share and shall be
                  entitled to exercise all of the rights and powers of an owner
                  with respect to the Voting Share, provided that the Trustee
                  shall:
   6
                                     - 6 -
                  (i)      hold the Voting Share and the legal title thereto as
                           trustee solely for the use and benefit of the Holders
                           in accordance with the provisions of this Agreement;
                           and
                  (ii)     except as specifically authorized by this Agreement,
                           have no power or authority to sell, transfer, vote or
                           otherwise deal in or with the Voting Share and the
                           Voting Share shall not be used or disposed of by the
                           Trustee for any purpose other than the purposes for
                           which this Trust is created pursuant to this
                           Agreement.
         (b)      Legended Share Certificates. US Co Sub will cause each
                  certificate representing Exchangeable Shares to bear an
                  appropriate legend notifying the Holders of their right to
                  instruct the Trustee with respect to the exercise of the
                  Voting Rights with respect to the Exchangeable Shares held by
                  a Holder.
         (c)      Safe Keeping of Certificate. The certificate representing the
                  Voting Share shall at all times be held in safe keeping by the
                  Trustee or its agent.
4.       EXERCISE OF VOTING RIGHTS
         (a)      Voting Rights. The Trustee, as the holder of record of the
                  Voting Share, shall be entitled to all of the Voting Rights,
                  including the right to consent to or to vote in person or by
                  proxy the Voting Share, on any matter, question or proposition
                  whatsoever that may properly come before the stockholders of
                  US Co at a US Co Meeting or in connection with a US Co Consent
                  (in each case, as hereinafter defined). The Voting Rights
                  shall be and remain vested in and exercised by the Trustee.
                  Subject to Section 7(o) hereof, the Trustee shall exercise the
                  Voting Rights only on the basis of instructions received
                  pursuant to this Article 4 from Holders entitled to instruct
                  the Trustee as to the voting thereof at the time at which a US
                  Co Consent is sought or a US Co Meeting is held. To the extent
                  that no instructions are received from a Holder with respect
                  to the Voting Rights to which such Holder is entitled, the
                  Trustee shall not exercise or permit the exercise of such
                  Holder's Vote.
         (b)      Number of Votes. With respect to all meetings of stockholders
                  of US Co at which holders of shares of US Co Common Stock are
                  entitled to vote (a "US Co Meeting") and with respect to all
                  written consents sought by US Co from its stockholders
                  including the holders of shares of US Co Common Stock (a "US
                  Co Consent"), each Holder shall be entitled to instruct the
                  Trustee to cast and exercise, in the manner instructed, a
                  number of votes equal to the Equivalent Vote Amount for each
                  Exchangeable Share owned of record by such Holder on the
                  record date established by US Co or by applicable law for such
                  US Co Meeting or US Co Consent, as the case may be (the
                  "Holder Votes") in respect of each matter, question or
                  proposition to be voted on at such US Co Meeting or to be
                  consented to in connection with such US Co Consent.
   7
                                     - 7 -
         (c)      Mailings to Shareholders. With respect to each US Co Meeting
                  and US Co Consent, the Trustee will mail or cause to be mailed
                  (or otherwise communicate in the same manner as US Co utilizes
                  in communications to holders of US Co Common Stock, subject to
                  the Trustee's ability to provide this method of communication
                  and upon being advised in writing of such method) to each of
                  the Holders named in the List on the same day as the initial
                  mailing or notice (or other communication) with respect
                  thereto is given by US Co to its stockholders:
                  (i)      a copy of such notice, together with any proxy or
                           information statement and related materials to be
                           provided to stockholders of US Co;
                  (ii)     a statement that such Holder is entitled to instruct
                           the Trustee as to the exercise of the Holder Votes
                           with respect to such US Co Meeting or US Co Consent,
                           as the case may be, or, pursuant to Section 4(g)
                           hereof, to attend such US Co Meeting and to exercise
                           personally the Holder Votes thereat;
                  (iii)    a statement as to the manner in which such
                           instructions may be given to the Trustee, including
                           an express indication that instructions may be given
                           to the Trustee to give:
                           (A)      a proxy to such Holder or his designee to
                                    exercise personally the Holder Votes; or
                           (B)      a proxy to a designated agent or other
                                    representative of the management of US Co to
                                    exercise such Holder Votes;
                  (iv)     a statement that if no such instructions are received
                           from the Holder, the Holder Votes to which such
                           Holder is entitled will not be exercised;
                  (v)      a form of direction whereby the Holder may so direct
                           and instruct the Trustee as contemplated herein; and
                  (vi)     a statement of (A) the time and date by which such
                           instructions must be received by the Trustee in order
                           to be binding upon it, which in the case of a US Co
                           Meeting shall not be later than the close of business
                           on the Business Day prior to such meeting, and (B)
                           the method for revoking or amending such
                           instructions.
                  The materials referred to above are to be provided by US Co to
                  the Trustee, but shall be subject to review and comment by the
                  Trustee.
                  For the purpose of determining Holder Votes to which a Holder
                  is entitled in respect of any such US Co Meeting or US Co
                  Consent, the number of Exchangeable Shares owned of record by
                  the Holder shall be determined at the close of business on the
                  record date established by US Co or by applicable law for
                  purposes of determining stockholders entitled to vote at such
                  US Co Meeting or to give written consent in connection with
                  such US Co Consent. US Co will notify the Trustee in writing
                  of
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                                     - 8 -
                  any decision of the board of directors of US Co with respect
                  to the calling of any such US Co Meeting or the seeking of any
                  such US Co Consent and shall provide all necessary information
                  and materials to the Trustee in each case promptly and in any
                  event in sufficient time to enable the Trustee to perform its
                  obligations contemplated by this Section 4(c).
         (d)      Copies of Stockholder Information. US Co will deliver to the
                  Trustee copies of all proxy materials (including notices of US
                  Co Meetings but excluding proxies to vote shares of US Co
                  Common Stock), information statements, reports (including
                  without limitation all interim and annual financial
                  statements) and other written communications that are to be
                  distributed from time to time to holders of US Co Common Stock
                  in sufficient quantities and in sufficient time so as to
                  enable the Trustee to send those materials to each Holder at
                  the same time as such materials are first sent to holders of
                  US Co Common Stock. The Trustee will mail or otherwise send to
                  each Holder, at the expense of US Co, copies of all such
                  materials (and all materials specifically directed to the
                  Holders or to the Trustee for the benefit of the Holders by US
                  Co) received by the Trustee from US Co at the same time as
                  such materials are first sent to holders of US Co Common
                  Stock. The Trustee will make copies of all such materials
                  available for inspection by any Holder at the Trustee's
                  principal office in the cities of Calgary and Toronto.
         (e)      Other Materials. Immediately after receipt by US Co or any
                  stockholder of US Co of any material sent or given generally
                  to the holders of US Co Common Stock by or on behalf of a
                  third party, including without limitation dissident proxy and
                  information circulars (and related information and material)
                  and tender and exchange offer circulars (and related
                  information and material), US Co shall use its best efforts to
                  obtain and deliver to the Trustee copies thereof in sufficient
                  quantities so as to enable the Trustee to forward such
                  material (unless the same has been provided directly to
                  Holders by such third party) to each Holder as soon as
                  possible thereafter. As soon as practicable after receipt
                  thereof, the Trustee will mail or otherwise send to each
                  Holder, at the expense of US Co, copies of all such materials
                  received by the Trustee from US Co. The Trustee will also make
                  copies of all such materials available for inspection by any
                  Holder at the Trustee's principal office in the cities of
                  Toronto and Calgary.
         (f)      List of Persons Entitled to Vote. US Co Sub shall, (i) prior
                  to each annual, general and special US Co Meeting or the
                  seeking of any US Co Consent and (ii) forthwith upon each
                  request made at any time by the Trustee in writing, prepare or
                  cause to be prepared a list (a "List") of the names and
                  addresses of the Holders arranged in alphabetical order and
                  showing the number of Exchangeable Shares held of record by
                  each such Holder, in each case at the close of business on the
                  date specified by the Trustee in such request or, in the case
                  of a List prepared in connection with a US Co Meeting or a US
                  Co Consent, at the close of business on the record date
                  established by US Co or pursuant to applicable law for
                  determining the holders of US Co Common Stock entitled to
                  receive notice of and/or to vote at such US Co Meeting or to
                  give consent in connection with such US Co Consent. Each such
                  List shall be delivered to the Trustee promptly after receipt
                  by US Co Sub of such request or the
   9
                                     - 9 -
                  record date for such meeting or seeking of consent, as the
                  case may be, and in any event within sufficient time as to
                  enable the Trustee to perform its obligations under this
                  Agreement. US Co agrees to give US Co Sub written notice (with
                  a copy to the Trustee) of the calling of any US Co Meeting or
                  the seeking of any US Co Consent together with the record
                  dates therefor, sufficiently prior to the date of the calling
                  of such meeting or seeking of such consent so as to enable US
                  Co Sub to perform its obligations under this Section 4(f).
         (g)      Entitlement to Direct Votes. Any Holder named in a List
                  prepared in connection with any US Co Meeting or any US Co
                  Consent will be entitled (i) to instruct the Trustee in the
                  manner described in Section 4(c) hereof with respect to the
                  exercise of the Holder Votes to which such Holder is entitled
                  or (ii) to attend such meeting and personally to exercise
                  thereat (or to exercise with respect to any written consent),
                  as the proxy of the Trustee, the Holder Votes to which such
                  Holder is entitled.
         (h)      Stockholder Proposals. The Trustee shall forthwith submit to
                  US Co any stockholder proposal (within the meaning of the
                  United States Securities Exchange Act of 1934) received by the
                  Trustee from a Holder. Such stockholder proposal may be
                  considered at any meeting of US Co at which the holders of US
                  Co Common Stock are entitled to submit stockholder proposals.
                  US Co agrees to accept all stockholder proposals submitted by
                  the Trustee that are received by US Co within the applicable
                  time limitation under the United States Securities Exchange
                  Act of 1934, provided that not more than one proposal is
                  submitted on behalf of any one Holder.
         (i)      Voting by Trustee, and Attendance of Trustee Representative,
                  at Meeting.
                  (i)      In connection with each US Co Meeting and US Co
                           Consent, the Trustee shall exercise, either in person
                           or by proxy, in accordance with the instructions
                           received from a Holder pursuant to Section 4(c)
                           hereof, the Holder Votes as to which such Holder is
                           entitled to direct the vote (or any lesser number
                           thereof as may be set forth in the instructions);
                           provided, however, that such written instructions are
                           received by the Trustee from the Holder prior to the
                           time and date fixed by it for receipt of such
                           instructions in the notice given by the Trustee to
                           the Holder pursuant to Section 4(c) hereof.
                  (ii)     The Trustee shall cause such representatives as are
                           empowered by it to sign and deliver, on behalf of the
                           Trustee, proxies for Voting Rights to attend each US
                           Co Meeting. Upon submission by a Holder (or its
                           designee) of identification satisfactory to the
                           Trustee's representatives, and at the Holder's
                           request, such representatives shall sign and deliver
                           to such Holder (or its designee) a proxy to exercise
                           personally the Holder Votes as to which such Holder
                           is otherwise entitled hereunder to direct the vote,
                           if such Holder either (A) has not previously given
                           the Trustee instructions pursuant to Section 4(c)
                           hereof in respect of such meeting, or (B) submits to
                           the Trustee's representatives written revocation of
                           any such previous instructions. At such meeting, the
                           Holder exercising such Holder Votes shall have the
                           same rights
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                                     - 10 -
                           as the Trustee to speak at the meeting in respect of
                           any matter, question or proposition, to vote by way
                           of ballot at the meeting in respect of any matter,
                           question or proposition and to vote at such meeting
                           by way of a show of hands in respect of any matter,
                           question or proposition.
         (j)      Distribution of Written Materials. Any written materials to be
                  distributed by the Trustee to the Holders pursuant to this
                  Agreement shall be delivered or sent by mail (or otherwise
                  communicated in the same manner as US Co utilizes in
                  communications to holders of US Co Common Stock) to each
                  Holder at its address as shown on the books of US Co Sub. US
                  Co Sub shall provide or cause to be provided to the Trustee
                  for this purpose, on a timely basis and without charge or
                  other expense:
                           (A)      current lists of the Holders; and
                           (B)      upon the request of the Trustee, mailing
                                    labels to enable the Trustee to carry out
                                    its duties under this Agreement.
                  The materials referred to above are to be provided by US Co to
                  the Trustee, but shall be subject to review and comment by the
                  Trustee.
         (k)      Termination of Voting Right. Except as otherwise provided
                  herein or in the Exchangeable Share Provisions, all of the
                  rights of a Holder with respect to the Holder Votes
                  exercisable in respect of the Exchangeable Shares held by such
                  Holder, including the right to instruct the Trustee as to the
                  voting of or to vote personally such Holder Votes and
                  including the right to submit a stockholder proposal to the
                  Trustee in accordance with Section 4(h) hereof, shall be
                  deemed to be surrendered by the Holder to US Co and such
                  Holder Votes and the Voting Rights represented thereby shall
                  cease immediately upon the delivery by such Holder to the
                  Trustee of the certificates representing such Exchangeable
                  Shares in connection with the exercise by the Holder of the
                  Exchange Right or the occurrence of the automatic exchange of
                  Exchangeable Shares for shares of US Co Common Stock, as
                  specified in Article 5 hereof (unless in either case US Co
                  shall not have delivered the Exchangeable Share Consideration
                  deliverable in exchange therefor to the Trustee for delivery
                  to the Holders), or upon the redemption of Exchangeable Shares
                  pursuant to Article 6 or Article 7 of the Exchangeable Share
                  Provisions, or upon the effective date of the liquidation,
                  dissolution or winding-up of US Co Sub pursuant to Article 5
                  of the Exchangeable Share Provisions, or upon the purchase of
                  Exchangeable Shares from the holder thereof by US Co pursuant
                  to the exercise by US Co of the Retraction Call Right, the
                  Redemption Call Right or the Liquidation Call Right.
5.       EXCHANGE RIGHT AND AUTOMATIC EXCHANGE
         (a)      Grant and Ownership of the Exchange Right. US Co hereby grants
                  to the Trustee as trustee for and on behalf of, and for the
                  use and benefit of, the Holders (i) the right (the "Exchange
                  Right"), upon the occurrence and during the continuance of an
                  Insolvency Event, to require US Co to purchase from each or
                  any Holder all or any
   11
                                     - 11 -
                  part of the Exchangeable Shares held by such Holders, and (ii)
                  the Automatic Exchange Rights, all in accordance with the
                  provisions of this Agreement.
                  US Co hereby acknowledges receipt from the Trustee as trustee
                  for and on behalf of the Holders of good and valuable
                  consideration (and the adequacy thereof) for the grant of the
                  Exchange Right and the Automatic Exchange Rights by US Co to
                  the Trustee. During the term of the Trust and subject to the
                  terms and conditions of this Agreement, the Trustee shall
                  possess and be vested with full legal ownership of the
                  Exchange Right and the Automatic Exchange Rights and shall be
                  entitled to exercise all of the rights and powers of an owner
                  with respect to the Exchange Right and the Automatic Exchange
                  Rights, provided that the Trustee shall:
                  (i)      hold the Exchange Right and the Automatic Exchange
                           Rights and the legal title thereto as trustee solely
                           for the use and benefit of the Holders in accordance
                           with the provisions of this Agreement; and
                  (ii)     except as specifically authorized by this Agreement,
                           have no power or authority to exercise or otherwise
                           deal in or with the Exchange Right or the Automatic
                           Exchange Rights, and the Trustee shall not exercise
                           any such rights for any purpose other than the
                           purposes for which this Trust is created pursuant to
                           this Agreement.
         (b)      Legended Share Certificates. US Co Sub will cause each
                  certificate representing Exchangeable Shares to bear an
                  appropriate legend notifying the Holders of:
                  (i)      their right to instruct the Trustee with respect to
                           the exercise of the Exchange Right in respect of the
                           Exchangeable Shares held by a Holder; and
                  (ii)     the Automatic Exchange Rights.
         (c)      General Exercise of Exchange Right. The Exchange Right shall
                  be and remain vested in and exercised by the Trustee. Subject
                  to Section 7(o) hereof, the Trustee shall exercise the
                  Exchange Right only on the basis of instructions received
                  pursuant to this Article 5 from Holders entitled to instruct
                  the Trustee as to the exercise thereof To the extent that no
                  instructions are received from a Holder with respect to the
                  Exchange Right, the Trustee shall not exercise or permit the
                  exercise of the Exchange Right.
         (d)      Purchase Price. The purchase price payable by US Co for each
                  Exchangeable Share to be purchased by US Co under the Exchange
                  Right shall be an amount equal to the Exchangeable Share Price
                  on the last Business Day prior to the day of closing of the
                  purchase and sale of such Exchangeable Share under the
                  Exchange Right. In connection with each exercise of the
                  Exchange Right, US Co will provide to the Trustee an Officer's
                  Certificate setting forth the calculation of the Exchangeable
                  Share Price for each Exchangeable Share. The Exchangeable
                  Share Price for each such Exchangeable Share so purchased may
                  be satisfied only by US Co issuing and delivering or causing
                  to be delivered to the Trustee, on behalf of the relevant
                  Holder,
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                                     - 12 -
                  the Exchangeable Share Consideration representing the total
                  Exchangeable Share Price.
         (e)      Exercise Instructions. Subject to the terms and conditions
                  herein set forth, a Holder shall be entitled, upon the
                  occurrence and during the continuance of an Insolvency Event,
                  to instruct the Trustee to exercise the Exchange Right with
                  respect to all or any part of the Exchangeable Shares
                  registered in the name of such Holder on the books of US Co
                  Sub. To cause the exercise of the Exchange Right by the
                  Trustee, the Holder shall deliver to the Trustee, in person or
                  by certified or registered mail, at its principal offices in
                  Calgary, Alberta or Toronto, Ontario or at such other places
                  in Canada as the Trustee may from time to time designate by
                  written notice to the Holders, the certificates representing
                  the Exchangeable Shares which such Holder desires US Co to
                  purchase, duly endorsed in blank, and accompanied by such
                  other documents and instruments as may be required to effect a
                  transfer of Exchangeable Shares under applicable law and the
                  by-laws of US Co Sub and such additional documents and
                  instruments as the Trustee may reasonably require together
                  with (i) a duly completed form of notice of exercise of the
                  Exchange Right, contained on the reverse of or attached to the
                  Exchangeable Share certificates, stating (A) that the Holder
                  thereby instructs the Trustee to exercise the Exchange Right
                  so as to require US Co to purchase from the Holder the number
                  of Exchangeable Shares specified therein, (B) that such Holder
                  has good title to and owns all such Exchangeable Shares to be
                  acquired by US Co free and clear of all liens, claims and
                  encumbrances, (C) the names in which the certificates
                  representing US Co Common Stock issuable in connection with
                  the exercise of the Exchange Right are to be issued and (D)
                  the names and addresses of the persons to whom the
                  Exchangeable Share Consideration should be delivered and (ii)
                  payment (or evidence satisfactory to the Trustee, US Co Sub
                  and US Co of payment) of the taxes (if any) payable as
                  contemplated by Section 5(h) of this Agreement. If only a part
                  of the Exchangeable Shares represented by any certificate or
                  certificates delivered to the Trustee are to be purchased by
                  US Co under the Exchange Right, a new certificate for the
                  balance of such Exchangeable Shares shall be issued to the
                  Holder at the expense of US Co Sub.
         (f)      Delivery of Exchangeable Share Consideration; Effect of
                  Exercise. Promptly after receipt of the certificates
                  representing the Exchangeable Shares which the Holder desires
                  US Co to purchase under the Exchange Right (together with such
                  documents and instruments of transfer and a duly completed
                  form of notice of exercise of the Exchange Right), duly
                  endorsed for transfer to US Co the Trustee shall notify US Co
                  and US Co Sub of its receipt of the same, which notice to US
                  Co and US Co Sub shall constitute exercise of the Exchange
                  Right by the Trustee on behalf of the Holder of such
                  Exchangeable Shares, and US Co shall immediately thereafter
                  deliver or cause to be delivered to the Trustee, for delivery
                  to the Holder of such Exchangeable Shares (or to such other
                  persons, if any, properly designated by such Holder), the
                  Exchangeable Share Consideration deliverable in connection
                  with the exercise of the Exchange Right; provided, however,
                  that no such delivery shall be made unless and until the
                  Holder requesting the same shall have paid (or provided
                  evidence satisfactory to the Trustee, US Co Sub and US Co of
                  the payment of) the taxes (if any) payable as contemplated by
                  Section 5(h) of this Agreement. Immediately upon
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                                     - 13 -
                  the giving of notice by the Trustee to US Co and US Co Sub of
                  the exercise of the Exchange Right, as provided in this
                  Section 5(f), the closing of the transaction of purchase and
                  sale contemplated by the Exchange Right shall be deemed to
                  have occurred, and the Holder of such Exchangeable Shares
                  shall be deemed to have transferred to US Co all of its right,
                  title and interest in and to such Exchangeable Shares and in
                  the related interest in the Trust Estate and shall cease to be
                  a holder of such Exchangeable Shares and shall not be entitled
                  to exercise any of the rights of a holder in respect thereof,
                  other than the right to receive his proportionate part of the
                  total purchase price therefor, unless such Exchangeable Share
                  Consideration is not delivered by US Co to the Trustee, for
                  delivery to such Holder (or to such other persons, if any,
                  properly designated by such Holder), within three Business
                  Days of the date of the giving of such notice by the Trustee,
                  in which case the rights of the Holder shall remain unaffected
                  until such Exchangeable Share Consideration is delivered by US
                  Co and any cheque included therein is paid. Concurrently with
                  such Holder ceasing to be a holder of Exchangeable Shares, the
                  Holder shall be considered and deemed for all purposes to be
                  the holder of the shares of US Co Common Stock delivered to it
                  pursuant to the Exchange Right.
         (g)      Exercise of Exchange Right Subsequent to Retraction. In the
                  event that a Holder has exercised its right under Article 6 of
                  the Exchangeable Share Provisions to require US Co Sub to
                  redeem any or all of the Exchangeable Shares held by the
                  Holder (the "Retracted Shares") and is notified by US Co Sub
                  pursuant to Section 6.6 of the Exchangeable Share Provisions
                  that US Co Sub will not be permitted as a result of liquidity
                  or solvency requirements of applicable law to redeem all such
                  Retracted Shares, subject to receipt by the Trustee of written
                  notice to that effect from US Co Sub and provided that US Co
                  shall not have exercised the Retraction Call Right with
                  respect to the Retracted Shares and that the Holder has not
                  revoked the retraction request delivered by the Holder to US
                  Co Sub pursuant to Section 6.1 of the Exchangeable Share
                  Provisions, the retraction request will constitute and will be
                  deemed to constitute notice from the Holder to the Trustee
                  instructing the Trustee to exercise the Exchange Right with
                  respect to those Retracted Shares which US Co Sub is unable to
                  redeem. In any such event, US Co Sub hereby agrees with the
                  Trustee and in favour of the Holder immediately to notify the
                  Trustee of such prohibition against US Co Sub redeeming all of
                  the Retracted Shares and immediately to forward or cause to be
                  forwarded to the Trustee all relevant materials delivered by
                  the Holder to US Co Sub or to the transfer agent of the
                  Exchangeable Shares (including without limitation a copy of
                  the retraction request delivered pursuant to Section 6.1 of
                  the Exchangeable Share Provisions) in connection with such
                  proposed redemption of the Retracted Shares and the Trustee
                  will thereupon exercise the Exchange Right with respect to the
                  Retracted Shares that US Co Sub is not permitted to redeem and
                  will require US Co to purchase such shares in accordance with
                  the provisions of this Article 5.
         (h)      Stamp or Other Transfer Taxes. Upon any sale of Exchangeable
                  Shares to US Co pursuant to the Exchange Right or the
                  Automatic Exchange Rights, the share certificate or
                  certificates representing US Co Common Stock to be delivered
                  in connection with the payment of the total purchase price
                  therefor shall be issued in the
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                                     - 14 -
                  name of the Holder of the Exchangeable Shares so sold or in
                  such names as such Holder may otherwise direct in writing
                  without charge to the holder of the Exchangeable Shares so
                  sold, provided, however, that such Holder (i) shall pay (and
                  neither US Co, US Co Sub nor the Trustee shall be required to
                  pay) any documentary, stamp, transfer or other similar taxes
                  that may be payable in respect of any transfer involved in the
                  issuance or delivery of such shares to a person other than
                  such Holder or (ii) shall have established to the satisfaction
                  of the Trustee, US Co and US Co Sub that such taxes, if any,
                  have been paid.
         (i)      Notice of Insolvency Event. Immediately upon the occurrence of
                  an Insolvency Event or any event which with the giving of
                  notice or the passage of time or both would be an Insolvency
                  Event US Co Sub and US Co shall give written notice thereof to
                  the Trustee. As soon as practicable after receiving notice
                  from US Co Sub and US Co or from any other Person of the
                  occurrence of an Insolvency Event, the Trustee will mail to
                  each Holder, at the expense of US Co, a notice of such
                  Insolvency Event in the form provided by US Co, which notice
                  shall contain a brief statement of the right of the Holders
                  with respect to the Exchange Right.
         (j)      Qualification of US Co Common Stock. US Co covenants that if
                  any shares of US Co Common Stock to be issued and delivered
                  pursuant to the Exchange Right or the Automatic Exchange
                  Rights require registration or qualification with or approval
                  of or the filing of document including any prospectus or
                  similar document or the taking of any proceeding with or the
                  obtaining of any order, ruling or consent from any
                  governmental or regulatory authority under any Canadian or
                  United States federal, provincial or state law or regulation
                  or pursuant to the rules and regulations of any regulatory
                  authority or the fulfillment of any other legal requirement
                  (collectively, the "Applicable Laws") before such shares may
                  be issued and delivered by US Co to the initial holder thereof
                  (other than US Co Sub) or in order that such shares may be
                  freely traded thereafter (other than any restrictions on
                  transfer by reason of a holder being a "control person" of US
                  Co for purposes of Canadian federal or provincial securities
                  law or an "affiliate" of US Co or, prior to the date hereof,
                  of Chauvco for purposes of United States federal or state
                  securities law), US Co will in good faith expeditiously take
                  all such actions and do all such things as are necessary to
                  cause such shares of US Co Common Stock to be and remain duly
                  registered, qualified or approved. US Co represents and
                  warrants that it has in good faith taken all actions and done
                  all things as are necessary under Applicable Laws as they
                  exist on the date hereof to cause the shares of US Co Common
                  Stock to be issued and delivered pursuant to the Exchange
                  Right and the Automatic Exchange Rights and to be freely
                  tradeable thereafter (other than restrictions on transfer by
                  reason of a holder being a "control person" of US Co for the
                  purposes of Canadian federal and provincial securities law or
                  an "affiliate" of US Co or, prior to the date hereof, of
                  Chauvco for the purposes of United States federal or state
                  securities law). US Co will in good faith expeditiously take
                  all such actions and do all such things as are necessary to
                  cause all shares of US Co Common Stock to be delivered
                  pursuant to the Exchange Right or the Automatic Exchange
                  Rights to be listed, quoted or posted for trading on all stock
                  exchanges and quotation systems on which such shares are
                  listed, quoted or posted for trading at such time.
   15
                                     - 15 -
         (k)      Reservation of Shares of US Co Common Stock. US Co hereby
                  represents, warrants and covenants that it has irrevocably
                  reserved for issuance and will at all times keep available,
                  free from pre-emptive and other rights, out of its authorized
                  and unissued capital stock such number of shares of US Co
                  Common Stock (i) as is equal to the sum of (A) the number of
                  Exchangeable Shares issued and outstanding from time to time
                  and (B) the number of Exchangeable Shares issuable upon the
                  exercise of all rights to acquire Exchangeable Shares
                  outstanding from time to time and (ii) as are now and may
                  hereafter be required to enable and permit US Co Sub and US Co
                  to meet their respective obligations hereunder, under the
                  Support Agreement, under the Exchangeable Share Provisions and
                  under any other security or commitment pursuant to the
                  Arrangement with respect to which US Co may now or hereafter
                  be required to issue shares of US Co Common Stock.
         (l)      Automatic Exchange on Liquidation of US Co.
                  (i)      US Co will give the Trustee written notice of each of
                           the following events at the time set forth below:
                           (A)      in the event of any determination by the
                                    board of directors of US Co to institute
                                    voluntary liquidation, dissolution or
                                    winding-up proceedings with respect to US Co
                                    or to effect any other distribution of
                                    assets of US Co among its stockholders for
                                    the purpose of winding-up its affairs, at
                                    least 60 days prior to the proposed
                                    effective date of such liquidation,
                                    dissolution, winding-up or other
                                    distribution; and
                           (B)      immediately, upon the earlier of (I) receipt
                                    by US Co of notice of and (II) US Co
                                    otherwise becoming aware of any threatened
                                    or instituted claim, suit, petition or other
                                    proceedings with respect to the involuntary
                                    liquidation, dissolution or winding-up of US
                                    Co or to effect any other distribution of
                                    assets of US Co among its stockholders for
                                    the purpose of winding-up its affairs.
                  (ii)     Immediately following receipt by the Trustee from US
                           Co of notice of any event (a "Liquidation Event")
                           contemplated by Section 5(l)(i) above, the Trustee
                           will give notice thereof to the Holders. Such notice
                           will be provided by US Co to the Trustee and shall
                           include a brief description of the automatic exchange
                           of Exchangeable Shares for shares of US Co Common
                           Stock provided for in Section 5(l)(iii) below.
                  (iii)    In order that the Holders will be able to participate
                           on a PRO RATA basis with the holders of US Co Common
                           Stock in the distribution of assets of US Co in
                           connection with a Liquidation Event, immediately
                           prior to the effective time (the "Liquidation Event
                           Effective Time") of a Liquidation Event all of the
                           then outstanding Exchangeable Shares shall be
                           automatically exchanged for shares of US Co Common
                           Stock. To effect such automatic exchange, US
   16
                                     - 16 -
                           Co shall be deemed to have purchased each
                           Exchangeable Share outstanding immediately prior to
                           the Liquidation Event Effective Time and held by
                           Holders, and each Holder shall be deemed to have sold
                           the Exchangeable Shares held by it at such time, for
                           a purchase price per share equal to the Exchangeable
                           Share Price applicable at such time. In connection
                           with such automatic exchange, US Co will provide to
                           the Trustee an Officers' Certificate setting forth
                           the calculation of the purchase price for each
                           Exchangeable Share.
                  (iv)     The closing of the transaction of purchase and sale
                           contemplated by Section 5(l)(iii) above shall be
                           deemed to have occurred immediately prior to the
                           Liquidation Event Effective Time, and each Holder of
                           Exchangeable Shares shall be deemed to have
                           transferred to US Co all of the Holder's right, title
                           and interest in and to such Exchangeable Shares and
                           the related interest in the Trust Estate and shall
                           cease to be a holder of such Exchangeable Shares and
                           US Co shall deliver to the Holder the Exchangeable
                           Share Consideration deliverable upon the automatic
                           exchange of Exchangeable Shares. Concurrently with
                           such Holder ceasing to be a holder of Exchangeable
                           Shares, the Holder shall be considered and deemed for
                           all purposes to be the holder of the shares of US Co
                           Common Stock issued to it pursuant to the automatic
                           exchange of Exchangeable Shares for US Co Common
                           Stock and the certificates held by the Holder
                           previously representing the Exchangeable Shares
                           exchanged by the Holder with US Co pursuant to such
                           automatic exchange shall thereafter be deemed to
                           represent the shares of US Co Common Stock issued to
                           the Holder by US Co pursuant to such automatic
                           exchange. Upon the request of a Holder and the
                           surrender by the Holder of Exchangeable Share
                           certificates deemed to represent shares of US Co
                           Common Stock, duly endorsed in blank and accompanied
                           by such instruments of transfer as US Co may
                           reasonably require, US Co shall deliver or cause to
                           be delivered to the Holder certificates representing
                           the shares of US Co Common Stock of which the Holder
                           is the holder.
6.       RESTRICTIONS ON ISSUANCE OF US CO SPECIAL VOTING STOCK
         During the term of this Agreement, US Co will not issue any shares of
         US Co Special Voting Stock in addition to the Voting Share.
7.       CONCERNING THE TRUSTEE
         (a)      Powers and Duties of the Trustee. The rights, powers and
                  authorities of the Trustee under this Agreement, in its
                  capacity as trustee of the Trust, shall include:
                  (i)      receipt and deposit of the Voting Share from US Co as
                           trustee for and on behalf of the Holders in
                           accordance with the provisions of this Agreement;
                  (ii)     granting proxies and distributing materials to
                           Holders as provided in this Agreement;
   17
                                     - 17 -
                  (iii)    voting the Holder Votes in accordance with the
                           provisions of this Agreement;
                  (iv)     receiving the grant of the Exchange Right and the
                           Automatic Exchange Rights from US Co as trustee for
                           and on behalf of the Holders in accordance with the
                           provisions of this Agreement;
                  (v)      exercising the Exchange Right and enforcing the
                           benefit of the Automatic Exchange Rights, in each
                           case in accordance with the provisions of this
                           Agreement, and in connection therewith receiving from
                           Holders Exchangeable Shares and other requisite
                           documents and distributing to such Holders the shares
                           of US Co Common Stock and cheques, if any, to which
                           such Holders are entitled upon the exercise of the
                           Exchange Right or pursuant to the Automatic Exchange
                           Rights, as the case may be;
                  (vi)     holding title to the Trust Estate;
                  (vii)    investing any monies forming, from time to time, a
                           part of the Trust Estate as provided in this
                           Agreement;
                  (viii)   taking action at the direction of a Holder or Holders
                           to enforce the obligations of US Co under this
                           Agreement; and
                  (ix)     taking such other actions and doing such other things
                           as are specifically provided in this Agreement.
                  In the exercise of such rights, powers and authorities the
                  Trustee shall have (and is granted) such incidental and
                  additional rights, powers and authority not in conflict with
                  any of the provisions of this Agreement as the Trustee, acting
                  in good faith and in the reasonable exercise of its
                  discretion, may deem necessary, appropriate or desirable to
                  effect the purpose of the Trust. Any exercise of such
                  discretionary rights, powers and authorities by the Trustee
                  shall be final, conclusive and binding upon all persons. For
                  greater certainty, the Trustee shall have only those duties as
                  are set out specifically in this Agreement.
                  The Trustee in exercising its rights, powers, duties and
                  authorities hereunder shall act honestly and in good faith
                  with a view to the best interests of the Holders and shall
                  exercise the care, diligence and skill that a reasonably
                  prudent trustee would exercise in comparable circumstances.
                  The Trustee shall not be bound to give any notice or do or
                  take any act, action or proceeding by virtue of the powers
                  conferred on it hereby unless and until it shall be
                  specifically required to do so under the terms hereof; nor
                  shall the Trustee be required to take any notice of, or to do
                  or to take any act, action or proceeding as a result of any
                  default or breach of any provision hereunder, unless and until
                  notified in writing of such default or breach, which notices
                  shall distinctly specify the default or breach desired to be
                  brought to the attention of the Trustee and in the absence of
                  such notice
   18
                                     - 18 -
                  the Trustee may for all purposes of this Agreement
                  conclusively assume that no default or breach has been made in
                  the observance or performance of any of the representations,
                  warranties, covenants, agreements or conditions contained
                  herein.
         (b)      No Conflict of Interest. The Trustee represents to US Co Sub
                  and US Co that at the date of execution and delivery of this
                  Agreement there exists no material conflict of interest in the
                  role of the Trustee as a fiduciary hereunder and the role of
                  the Trustee in any other capacity. The Trustee shall, within
                  90 days after it becomes aware that such a material conflict
                  of interest exists, either eliminate such material conflict of
                  interest or resign in the manner and with the effect specified
                  in Article 10 hereof. If, notwithstanding the foregoing
                  provisions of this Section 7(b), the Trustee has such a
                  material conflict of interest, the validity and enforceability
                  of this Agreement shall not be affected in any manner
                  whatsoever by reason only of the existence of such material
                  conflict of interest. If the Trustee contravenes the foregoing
                  provisions of this Section 7(b), any interested party may
                  apply to the Alberta Court of Queen's Bench for an order that
                  the Trustee be replaced as trustee hereunder.
         (c)      Dealings with Transfer Agents, Registrars, etc. US Co Sub and
                  US Co irrevocably authorize the Trustee, from time to time,
                  to:
                  (i)      consult, communicate and otherwise deal with the
                           respective registrars and transfer agents, and with
                           any such subsequent registrar or transfer agent, of
                           the Exchangeable Shares and US Co Common Stock; and
                  (ii)     requisition, from time to time, (A) from any such
                           registrar or transfer agent any information readily
                           available from the records maintained by it which the
                           Trustee may reasonably require for the discharge of
                           its duties and responsibilities under this Agreement
                           and (B) from the transfer agent of US Co Common
                           Stock, and any subsequent transfer agent of such
                           shares, the share certificates issuable upon the
                           exercise from time to time of the Exchange Right and
                           pursuant to the Automatic Exchange Rights in the
                           manner specified in Article 5 hereof.
                  US Co Sub and US Co irrevocably authorize their respective
                  registrars and transfer agents to comply with all such
                  requests. US Co covenants that it will supply its transfer
                  agent with duly executed share certificates for the purpose of
                  completing the exercise from time to time of the Exchange
                  Right and the Automatic Exchange Rights, in each case pursuant
                  to Article 5 hereof.
         (d)      Books and Records. The Trustee shall keep available for
                  inspection by US Co and US Co Sub, at the Trustee's principal
                  office in Calgary, Alberta, correct and complete books and
                  records of account relating to the Trustee's actions under
                  this Agreement, including without limitation all information
                  relating to mailings and instructions to and from Holders and
                  all transactions pursuant to the Voting Rights, the Exchange
                  Right and the Automatic Exchange Rights for the term of this
                  Agreement. On or before March 31, 1998, and on or before March
                  31 in every year thereafter, so long as the Voting Share is on
                  deposit with the Trustee, the Trustee shall transmit to US
   19
                                     - 19 -
                  Co and US Co Sub a brief report, dated as of the preceding
                  December 31, with respect to:
                  (i)      the property and funds comprising the Trust Estate as
                           of that date;
                  (ii)     the number of exercises of the Exchange Right, if
                           any, and the aggregate number of Exchangeable Shares
                           received by the Trustee on behalf of Holders in
                           consideration of the issue and delivery by US Co of
                           shares of US Co Common Stock in connection with the
                           Exchange Right, during the calendar year ended on
                           such date; and
                  (iii)    all other actions taken by the Trustee in the
                           performance of its duties under this Agreement which
                           it had not previously reported.
         (e)      Income Tax Returns and Reports. The Trustee shall, to the
                  extent necessary, prepare and file on behalf of the Trust
                  appropriate United States and Canadian income tax returns and
                  any other returns or reports as may be required by applicable
                  law or pursuant to the rules and regulations of any securities
                  exchange or other trading system through which the
                  Exchangeable Shares are traded and, in connection therewith,
                  may obtain the advice and assistance of such experts as the
                  Trustee may consider necessary or advisable. If requested by
                  the Trustee, US Co shall retain such experts for purposes of
                  providing such advice and assistance.
         (f)      Indemnification Prior to Certain Actions by Trustee. The
                  Trustee shall exercise any or all of the rights, duties,
                  powers or authorities vested in it by this Agreement at the
                  request, order or direction of any Holder upon such Holder
                  furnishing to the Trustee reasonable funding, security and
                  indemnity against the costs, expenses and liabilities which
                  may be incurred by the Trustee therein or thereby, provided
                  that no Holder shall be obligated to furnish to the Trustee
                  any such funding, security or indemnity in connection with the
                  exercise by the Trustee of any of its rights, duties, powers
                  and authorities with respect to the Voting Share pursuant to
                  Article 4 hereof, subject to Section 7(o) hereof, and with
                  respect to the Exchange Right pursuant to Article 5 hereof,
                  subject to Section 7(o) hereof, and with respect to the
                  Automatic Exchange Rights pursuant to Article 5 hereof.
                  None of the provisions contained in this Agreement shall
                  require the Trustee to expend or risk its own funds or
                  otherwise incur financial liability in the exercise of any of
                  its rights, powers, duties or authorities unless funded, given
                  funds, security and indemnified as aforesaid.
         (g)      Actions by Holders. No Holder shall have the right to
                  institute any action, suit or proceeding or to exercise any
                  other remedy authorized by this Agreement for the purpose of
                  enforcing any of its rights or for the execution of any trust
                  or power hereunder unless the Holder has requested the Trustee
                  to take or institute such action, suit or proceeding and
                  furnished the Trustee with the funding, security and indemnity
                  referred to in Section 7(f) hereof and the Trustee shall have
                  failed to act within a reasonable time thereafter. In such
                  case, but not otherwise, the Holder shall be
   20
                                     - 20 -
                  entitled to take proceedings in any court of competent
                  jurisdiction such as the Trustee might have taken; it being
                  understood and intended that no one or more Holders shall have
                  any right in any manner whatsoever to affect, disturb or
                  prejudice the rights hereby created by any such action, or to
                  enforce any right hereunder or under the Voting Rights, the
                  Exchange Right or the Automatic Exchange Rights, except
                  subject to the conditions and in the manner herein provided,
                  and that all powers and trusts hereunder shall be exercised
                  and all proceedings at law shall be instituted, had and
                  maintained by the Trustee, except only as herein provided, and
                  in any event for the equal benefit of all Holders.
         (h)      Reliance upon Declarations. The Trustee shall not be
                  considered to be in contravention of any of its rights,
                  powers, duties and authorities hereunder if, when required, it
                  acts and relies in good faith upon lists, mailing labels,
                  notices, statutory declarations, certificates, opinions,
                  reports or other papers or documents furnished pursuant to the
                  provisions hereof or required by the Trustee to be furnished
                  to it in the exercise of its rights, powers, duties and
                  authorities hereunder and such lists, mailing labels, notices,
                  statutory declarations, certificates, opinions, reports or
                  other papers or documents comply with the provisions of
                  Section 7(i) hereof, if applicable, and with any other
                  applicable provisions of this Agreement.
         (i)      Evidence and Authority to Trustee. US Co Sub and/or US Co
                  shall furnish to the Trustee evidence of compliance with the
                  conditions provided for in this Agreement relating to any
                  action or step required or permitted to be taken by US Co Sub
                  and/or US Co or the Trustee under this Agreement or as a
                  result of any obligation imposed under this Agreement,
                  including, without limitation, in respect of the Voting Rights
                  or the Exchange Right or the Automatic Exchange Rights and the
                  taking of any other action to be taken by the Trustee at the
                  request of or on the application of US Co Sub and/or US Co
                  forthwith if and when:
                  (i)      such evidence is required by any other section of
                           this Agreement to be furnished to the Trustee in
                           accordance with the terms of this Section 7(i); or
                  (ii)     the Trustee, in the exercise of its rights, powers,
                           duties and authorities under this Agreement, gives US
                           Co Sub and/or US Co written notice requiring it to
                           furnish such evidence in relation to any particular
                           action or obligation specified in such notice.
                  Such evidence shall consist of an Officers' Certificate of US
                  Co Sub and/or US Co or a statutory declaration or a
                  certificate made by persons entitled to sign an Officer's
                  Certificate stating that any such condition has been complied
                  with in accordance with the terms of this Agreement.
                  Whenever such evidence relates to a matter other than the
                  Voting Rights or the Exchange Right or the Automatic Exchange
                  Rights, and except as otherwise specifically provided herein,
                  such evidence may consist of a report or opinion of any
                  solicitor, auditor, accountant, appraiser, valuer, engineer or
                  other expert or any other person whose qualifications give
                  authority to a statement made by him provided that
   21
                                     - 21 -
                  if such report or opinion is furnished by a director, officer
                  or employee of US Co Sub and/or US Co it shall be in the form
                  of an Officers' Certificate or a statutory declaration.
                  Each statutory declaration, certificate, opinion or report
                  furnished to the Trustee as evidence of compliance with a
                  condition provided for in this Agreement shall include a
                  statement by the person giving the evidence:
                  (iii)    declaring that he has read and understands the
                           provisions of this Agreement relating to the
                           condition in question;
                  (iv)     describing the nature and scope of the examination or
                           investigation upon which he based the statutory
                           declaration, certificate, statement or opinion; and
                  (v)      declaring that he has made such examination or
                           investigation as he believes is necessary to enable
                           him to make the statements or give the opinions
                           contained or expressed therein.
         (j)      Experts, Advisors and Agents. The Trustee may:
                  (i)      in relation to these presents act and rely on the
                           opinion or advice of or information obtained from or
                           prepared by any solicitor, auditor, accountant,
                           appraiser, valuer, engineer or other expert, whether
                           retained by the Trustee or by US Co Sub and/or US Co
                           or otherwise, and may employ such assistants as may
                           be necessary to the proper determination and
                           discharge of its powers and duties and determination
                           of its rights hereunder and may pay proper and
                           reasonable compensation for all such legal and other
                           advice or assistance as aforesaid; and
                  (ii)     employ such agents and other assistants as it may
                           reasonably require for the proper determination and
                           discharge of its powers and duties hereunder, and may
                           pay reasonable remuneration for all services
                           performed for it (and shall be entitled to receive
                           reasonable remuneration for all services performed by
                           it) in the discharge of the trusts hereof and
                           compensation for all disbursements, costs and
                           expenses made or incurred by it in the determination
                           and discharge of its duties hereunder and in the
                           management of the Trust.
         (k)      Investment of Monies Held by Trustee. Unless otherwise
                  provided in this Agreement, any monies held by or on behalf of
                  the Truste which under the terms of this Agreement may or
                  ought to be invested or which may be on deposit with the
                  Trustee or which may be in the hands of the Trustee may be
                  invested and reinvested in the name or under the control of
                  the Trustee in securities in which, under the laws of the
                  Province of Alberta trustees are authorized to invest trust
                  unit monies, provided that such securities are stated to
                  mature within two years after their purchase by the Trustee,
                  and the Trustee shall so invest such monies on the written
                  direction of US Co Sub. Pending the investment of any monies
                  as hereinbefore provided, such
   22
                                     - 22 -
                  monies may be deposited in the name of the Trustee in any
                  chartered bank in Canada or, with the consent of US Co Sub, in
                  the deposit department of the Trustee or any other loan or
                  company authorized to accept deposits under the laws of Canada
                  or any province thereof at the rate of interest then current
                  on similar deposits.
         (l)      Trustee Not Required to Give Security. The Trustee shall not
                  be required to give any bond or security in respect of the
                  execution of the trusts, rights, duties, powers and
                  authorities of this Agreement or otherwise in respect of the
                  premises.
         (m)      Trustee Not Bound to Act on Request. Except as in this
                  Agreement otherwise specifically provided, the Trustee shall
                  not be bound to act in accordance with any direction or
                  request of US Co Sub and/or US Co or of the directors thereof
                  until a duly authenticated copy of the instrument or
                  resolution containing such direction or request shall have
                  been delivered to the Trustee, and the Trustee shall be
                  empowered to act and rely upon any such copy purporting to be
                  authenticated and believed by the Trustee to be genuine.
         (n)      Authority to Carry on Business. The Trustee represents to US
                  Co Sub and US Co that at the date of execution and delivery by
                  it of this Agreement it is authorized to carry on the business
                  of a trust company in the Province of Alberta but if,
                  notwithstanding the provisions of this Section 7(n), it ceases
                  to be so authorized to carry on business, the validity and
                  enforceability of this Agreement and the Voting Rights, the
                  Exchange Right and the Automatic Exchange Rights shall not be
                  affected in any manner whatsoever by reason only of such event
                  but the Trustee shall, within 90 days after ceasing to be
                  authorized to carry on the business of a trust company in the
                  Province of Alberta, either become so authorized or resign in
                  the manner and with the effect specified in Article 10 hereof.
         (o)      Conflicting Claims. If conflicting claims or demands are made
                  or asserted with respect to any interest of any Holder in any
                  Exchangeable Shares, including any disagreement between the
                  heirs, representatives, successors or assigns succeeding to
                  all or any part of the interest of any Holder in any
                  Exchangeable Shares resulting in conflicting claims or demands
                  being made in connection with such interest, then the Trustee
                  shall be entitled, at its sole discretion, to refuse to
                  recognize or to comply with any such claim or demand. In so
                  refusing, the Trustee may elect not to exercise any Voting
                  Rights, Exchange Right or Automatic Exchange Rights subject to
                  such conflicting claims or demands and, in so doing, the
                  Trustee shall not be or become liable to any person on account
                  of such election or its failure or refusal to comply with any
                  such conflicting claims or demands. The Trustee shall be
                  entitled to continue to refrain from acting and to refuse to
                  act until:
                  (i)      the rights of all adverse claimants with respect to
                           the Voting Rights, Exchange Right or Automatic
                           Exchange Rights subject to such conflicting claims or
                           demands have been adjudicated by a final judgment of
                           a court of competent jurisdiction; or
   23
                                     - 23 -
                  (ii)     all differences with respect to the Voting Rights,
                           Exchange Right or Automatic Exchange Right subject to
                           such conflicting claims or demands have been
                           conclusively settled by a valid written agreement
                           binding on all such adverse claimants, and the
                           Trustee shall have been furnished with an executed
                           copy of such agreement.
                  If the Trustee elects to recognize any claim or comply with
                  any demand made by any such adverse claimant, it may in its
                  discretion require such claimant to furnish such surety bond
                  or other security satisfactory to the Trustee as it shall deem
                  appropriate fully to indemnify it as between all conflicting
                  claims or demands.
         (p)      Acceptance of Trust. The Trustee hereby accepts the Trust
                  created and provided for by and in this Agreement and agrees
                  to perform the same upon the terms and conditions herein set
                  forth and to hold all rights, privileges and benefits
                  conferred hereby and by law in trust for the various persons
                  who shall from time to time be Holders, subject to all the
                  terms and conditions herein set forth.
8.       COMPENSATION
         US Co and US Co Sub jointly and severally agree to pay to the Trustee
reasonable compensation for all of the services rendered by it under this
Agreement and will reimburse the Trustee for all reasonable expenses (including
but not limited to taxes, compensation paid to experts, agents and advisors and
travel expenses) and disbursements, including the cost and expense of any suit
or litigation of any character and any proceedings before any governmental
agency reasonably incurred by the Trustee in connection with its rights and
duties under this Agreement; provided that US Co and US Co Sub shall have no
obligation to reimburse the Trustee for any expenses or disbursements paid,
incurred or suffered by the Trustee in any suit or litigation in which the
Trustee is determined to have acted in bad faith or with negligence or willful
misconduct.
9.       INDEMNIFICATION AND LIMITATION OF LIABILITY
         (a)      Indemnification of the Trustee. US Co and US Co Sub jointly
                  and severally agree to indemnify and hold harmless the Trustee
                  and each of its directors, officers, employees and agents
                  appointed and acting in accordance with this Agreement
                  (collectively, the "Indemnified Parties") against all claims,
                  losses, damages, costs, penalties, fines and reasonable
                  expenses (including reasonable expenses of the Trustee's legal
                  counsel on a solicitor and his own client basis) which,
                  without fraud, negligence, willful misconduct or bad faith on
                  the part of such Indemnified Party, may be paid, incurred or
                  suffered by the Indemnified Party by reason of or as a result
                  of the Trustee's acceptance or administration of the Trust,
                  its compliance with its duties set forth in this Agreement, or
                  any written or oral instructions delivered to the Trustee by
                  US Co or US Co Sub pursuant hereto. In no case shall US Co or
                  US Co Sub be liable under this indemnity for any claim against
                  any of the Indemnified Parties unless US Co and US Co Sub
                  shall be notified by the Trustee of the written assertion of a
                  claim or of any action commenced against the Indemnified
                  Parties, promptly after any of the Indemnified Parties shall
                  have received any such written assertion of a claim or shall
                  have been served with a summons or other first legal
   24
                                     - 24 -
                  process giving information as to the nature and basis of the
                  claim. Subject to (ii), below, US Co and US Co Sub shall be
                  entitled to participate at their own expense in the defense
                  and, if US Co or US Co Sub so elect at any time after receipt
                  of such notice, either of them may assume the defense of any
                  suit brought to enforce any such claim. The Trustee shall have
                  the right to employ separate counsel in any such suit and
                  participate in the defense thereof but the fees and expenses
                  of such counsel shall be at the expense of the Trustee unless:
                  (i) the employment of such counsel has been authorized by US
                  Co or US Co Sub, such authorization not to be unreasonably
                  withheld; or (ii) the named parties to any such suit include
                  both the Trustee and US Co or US Co Sub and the Trustee shall
                  have been advised by counsel acceptable to US Co or US Co Sub
                  that there may be one or more legal defenses available to the
                  Trustee that are different from or in addition to those
                  available to US Co or US Co Sub and that an actual or
                  potential conflict exists (in which case US Co and US Co Sub
                  shall not have the right to assume the defense of such suit on
                  behalf of the Trustee but shall be liable to pay the
                  reasonable fees and expenses of counsel for the Trustee).
         (b)      Limitation of Liability. The Trustee shall not be held liable
                  for any loss which may occur by reason of depreciation of the
                  value of any part of the Trust Estate or any loss incurred on
                  any investment of funds pursuant to this Agreement except to
                  the extent that such loss is attributable to the fraud,
                  negligence, willful misconduct or bad faith on the part of the
                  Trustee.
10.      CHANGE OF TRUSTEE
         (a)      Resignation. The Trustee, or any trustee hereafter appointed,
                  may at any time resign by giving written notice of such
                  resignation to US Co and US Co Sub specifying the date on
                  which it desires to resign, provided that such notice shall
                  never be given less than 60 days before such desired
                  resignation date unless US Co and US Co Sub otherwise agree
                  and provided further that such resignation shall not take
                  effect until the date of the appointment of a successor
                  trustee and the acceptance of such appointment by the
                  successor trustee. Upon receiving such notice of resignation,
                  US Co and US Co Sub shall promptly appoint a successor trustee
                  by written instrument in duplicate, one copy of which shall be
                  delivered to the resigning trustee and one copy to the
                  successor trustee. Failing acceptance by a successor trustee,
                  a successor trustee may be appointed by an order of the
                  Alberta Court of Queen's Bench upon application of one or more
                  of the parties hereto.
         (b)      Removal. The Trustee, or any Trustee hereafter appointed, may
                  be removed with or without cause, at any time on 60 days'
                  prior notice by written instrument executed by US Co and US Co
                  Sub, in duplicate, one copy of which shall be delivered to the
                  trustee so removed and one copy to the successor trustee,
                  provided that, in connection with such removal, provision is
                  made for a replacement trustee similar to that contemplated in
                  Section 10(a).
   25
                                     - 25 -
         (c)      Successor Trustee. Any successor trustee appointed as provided
                  under this Agreement shall execute, acknowledge and deliver to
                  US Co and US Co Sub and to its predecessor trustee an
                  instrument accepting such appointment. Thereupon the
                  resignation or removal of the predecessor trustee shall become
                  effective and such successor trustee, without any further act,
                  deed or conveyance, shall become vested with all the rights,
                  powers, duties and obligations of its predecessor under this
                  Agreement, with like effect as if originally named as trustee
                  in this Agreement. However, on the written request of US Co
                  and US Co Sub or of the successor trustee, the trustee ceasing
                  to act shall, upon payment of any amounts then due it pursuant
                  to the provisions of this Agreement, execute and deliver an
                  instrument transferring to such successor Trustee all the
                  rights and powers of the trustee so ceasing to act. Upon the
                  request of any such successor trustee, US Co, US Co Sub and
                  such predecessor trustee shall execute any and all instruments
                  in writing for more fully and certainly vesting in and
                  confirming to such successor trustee all such rights and
                  powers.
         (d)      Notice of Successor Trustee. Upon acceptance of appointment by
                  a successor trustee as provided herein, US Co and US Co Sub
                  shall cause to be mailed notice of the succession of such
                  trustee hereunder to each Holder specified in a List. If US Co
                  or US Co Sub shall fail to cause such notice to be mailed
                  within 10 days after acceptance of appointment by the
                  successor trustee, the successor trustee shall cause such
                  notice to be mailed at the expense of US Co and US Co Sub.
11.      US CO SUCCESSORS
         (a)      Certain Requirements in Respect of Combination, etc. US Co
                  shall not enter into any transaction (whether by way of
                  reconstruction, reorganization, consolidation, merger,
                  transfer, sale, lease or otherwise) whereby all or
                  substantially all of its undertaking, property and assets
                  would become the property of any other Person or, in the case
                  of a merger, of the continuing corporation resulting therefrom
                  unless:
                  (i)      such other Person or continuing corporation (the "US
                           Co Successor"), by operation of law, becomes, without
                           further action, bound by the terms and provisions of
                           this Agreement or, if not so bound, executes, prior
                           to or contemporaneously with the consummation of such
                           transaction an agreement supplemental hereto and such
                           other instruments (if any) as are satisfactory to the
                           Trustee and in the opinion of legal counsel to the
                           Trustee are necessary or advisable to evidence the
                           assumption by the US Co Successor of liability for
                           all monies payable and property deliverable hereunder
                           and the covenant of such US Co Successor to pay and
                           deliver or cause to be delivered the same and its
                           agreement to observe and perform all the covenants
                           and obligations of US Co under this Agreement; and
                  (ii)     such transaction shall, to the satisfaction of the
                           Trustee and in the opinion of legal counsel to the
                           Trustee, be upon such terms as substantially to
                           preserve and not to impair in any material respect
                           any of the rights, duties, powers and authorities of
                           the Trustee or of the Holders hereunder.
   26
                                     - 26 -
         (b)      Vesting of Powers in Successor. Whenever the conditions of
                  Section 11(a) hereof have been duly observed and performed,
                  the Trustee, if required, by Section 11(a) hereof, the US Co
                  Successor and US Co Sub shall execute and deliver the
                  supplemental agreement provided for in Article 12 hereof and
                  thereupon the US Co Successor shall possess and from time to
                  time may exercise each and every right and power of US Co
                  under this Agreement in the name of US Co or otherwise and any
                  act or proceeding by any provision of this Agreement required
                  to be done or performed by the board of directors of US Co or
                  any officers of US Co may be done and performed with like
                  force and effect by the directors or officers of such US Co
                  Successor.
         (c)      Wholly-Owned Subsidiaries. Nothing herein shall be construed
                  as preventing the amalgamation or merger of any wholly-owned
                  subsidiary of US Co with or into US Co or the winding-up,
                  liquidation or dissolution of any wholly-owned subsidiary of
                  US Co provided that all of the assets of such subsidiary are
                  transferred to US Co or another wholly-owned subsidiary of US
                  Co, and any such transactions are expressly permitted by this
                  Article 11.
12.      AMENDMENTS AND SUPPLEMENTAL AGREEMENTS
         (a)      Amendments, Modifications, etc. This Agreement may not be
                  amended or modified except by an agreement in writing executed
                  by US Co Sub, US Co and the Trustee and approved by the
                  Holders in accordance with Section 9.2 of the Exchangeable
                  Share Provisions.
         (b)      Ministerial Amendments. Notwithstanding the provisions of
                  Section 12(a) hereof, the parties to that agreement may in
                  writing, at any time and from time to time, without the
                  approval of the Holders, amend or modify this Agreement for
                  the purposes of;
                  (i)      adding to the covenants of any or all of the parties
                           hereto for the protection of the Holders hereunder;
                  (ii)     making such amendments or modifications not
                           inconsistent with this Agreement as may be necessary
                           or desirable with respect to matters or questions
                           which, in the opinion of the board of directors of
                           each of US Co and US Co Sub and in the opinion of the
                           Trustee and its counsel having in mind the best
                           interests of the Holders as a whole, it may be
                           expedient to make, provided that such boards of
                           directors and the Trustee and its counsel shall be of
                           the opinion that such amendments and modifications
                           will not be prejudicial to the interests of the
                           Holders as a whole; or
                  (iii)    making such changes or corrections which, on the
                           advice of counsel to US Co Sub, US Co and the Truste,
                           are required for the purpose of curing or correcting
                           any ambiguity or defect or inconsistent provision or
                           clerical omission or mistake or manifest error,
                           provided that the Trustee and its counsel and the
                           board of directors of each of US Co Sub and US Co
                           shall be
   27
                                     - 27 -
                           of the opinion that such changes or corrections will
                           not be prejudicial to the interests of the Holders as
                           a whole.
         (c)      Meeting to Consider Amendments. US Co Sub, at the request of
                  US Co, shall call a meeting or meetings of the Holders for the
                  purpose of considering any proposed amendment or modification
                  requiring approval pursuant hereto. Any such meeting or
                  meetings shall be called and held in accordance with the
                  by-laws of US Co Sub, the Exchangeable Share Provisions and
                  all applicable laws.
         (d)      Changes in Capital of US Co and US Co Sub. At all times after
                  the occurrence of any event effected pursuant to Section 2(g)
                  or Section 2(h) of the Support Agreement, as a result of which
                  either US Co Common Stock or the Exchangeable Shares or both
                  are in any way changed, this Agreement shall forthwith be
                  amended and modified as necessary in order that it shall apply
                  with full force and effect, mutatis mutandis, to all new
                  securities into which US Co Common Stock or the Exchangeable
                  Shares or both are so changed and the parties hereto shall
                  execute and deliver a supplemental agreement giving effect to
                  and evidencing such necessary amendments and modifications.
         (e)      Execution of Supplemental Agreements. No amendment to or
                  modification or waiver of any of the provisions of this
                  Agreement otherwise permitted hereunder shall be effective
                  unless made in writing and signed by all of the parties
                  hereto. From time to time US Co Sub (when authorized by a
                  resolution of its Board of Directors), US Co (when authorized
                  by a resolution of its board of directors) and the Trustee
                  may, subject to the provisions of these presents, and they
                  shall, when so directed by these presents, execute and deliver
                  by their proper officers, agreements or other instruments
                  supplemental hereto, which thereafter shall form part hereof,
                  for any one or more of the following purposes:
                  (i)      evidencing the succession of any US Co Successors to
                           US Co and the covenants of and obligations assumed by
                           each such US Co Successors in accordance with the
                           provisions of Article 11, and the successor of any
                           successor trustee in accordance with the provisions
                           of Article 10;
                  (ii)     making any additions to, deletions from or 
                           alterations of the provisions of this Agreement or
                           the Voting Rights, the Exchange Right or the
                           Automatic Exchange Rights which, in the opinion of
                           the Trustee and its counsel, will not be prejudicial
                           to the interests of the Holders as a whole or are in
                           the opinion of counsel to the Trustee necessary or
                           advisable in order to incorporate, reflect or comply
                           with any legislation the provisions of which apply to
                           US Co, US Co Sub, the Trustee or this Agreement; and
                  (iii)    for any other purposes not inconsistent with the
                           provisions of this Agreement, including without
                           limitation to make or evidence any amendment or
                           modification to this Agreement as contemplated
                           hereby, provided that, in the opinion of the Trustee
                           and its counsel, the rights of the Trustee and the
                           Holders as a whole will not be prejudiced thereby.
   28
                                     - 28 -
13.      TERMINATION
         (a)      Term. The Trust created by this Agreement shall continue until
                  the earliest to occur of the following events:
                  (i)      no outstanding Exchangeable Shares are held by a
                           Holder;
                  (ii)     each of US Co Sub and US Co elects in writing to
                           terminate the Trust and such termination is approved
                           by the Holders of the Exchangeable Shares in
                           accordance with Section 9.2 of the Exchangeable Share
                           Provisions; and
                  (iii)    twenty-one (21) years after the death of the last
                           survivor of the descendants of His Majesty King
                           George VI of the United Kingdom of Great Britain and
                           Northern Ireland living on the date of the creation
                           of the Trust.
         (b)      Survival of Agreement. This Agreement shall survive any
                  termination of the Trust and shall continue until there are no
                  Exchangeable Shares outstanding held by a Holder; provided,
                  however, that the provisions of Articles 8 and 9 hereof shall
                  survive any such termination of this Agreement.
14.      GENERAL
         (a)      Severability. If any provision of this Agreement is held to be
                  invalid, illegal or unenforceable, the validity, legality or
                  enforceability of the remainder of this Agreement shall not in
                  any way be affected or impaired thereby and the agreement
                  shall be carried out as nearly as possible in accordance with
                  its original terms and conditions.
         (b)      Inurement. This Agreement shall be binding upon and inure to
                  the benefit of the parties hereto and their respective
                  successors and permitted assigns and to the benefit of the
                  Holders.
         (c)      Notices to Parties. All notices and other communications
                  between the parties hereunder shall be in writing and shall be
                  deemed to have been given if delivered personally or by
                  confirmed telecopy to the parties at the following addresses
                  (or at such other address for such party as shall be specified
                  in like notice):
                  (i)      if to US Co at:
                           Pioneer Natural Resources Company
                           1400 Williams Square West
                           5205 N. O'Connor Blvd.
                           Irving, Texas 75039-3746
                           Attention:       President
                           Telecopy:        (972) 402-7057
   29
                                     - 29 -
                  (ii)     if to US Co Sub at:
                           Pioneer Natural Resources (Canada) Ltd.
                           2900, 255 - 5th Avenue S.W.
                           Calgary, Alberta
                           T2P 3G6
                           Attention:       President
                           Telecopy:        (403) 231-3247
                  (iii)    if to the Trustee at:
                           if by mail or delivery:
                           Montreal Trust Company of Canada
                           710, 530 - 8th Avenue S.W.
                           Calgary, Alberta
                           T2P 3S8
                           Attention:       Marilyne Paynter
                           Telecopy:        (403) 267-6598
                  Any notice or other communication given personally shall be
                  deemed to have been given and received upon delivery thereof
                  and if given by telecopy shall be deemed to have been given
                  and received on the date of receipt thereof unless such day is
                  not a Business Day in which case it shall be deemed to have
                  been given and received upon the immediately following
                  Business Day.
         (d)      Notice of Holders. Any and all notices to be given and any
                  documents to be sent to any Holders may be given or sent to
                  the address of such Holder shown on the register of Holders of
                  Exchangeable Shares in any manner permitted by the
                  Exchangeable Share Provisions and shall be deemed to be
                  received (if given or sent in such manner) at the time
                  specified in such Exchangeable Share Provisions, the
                  provisions of which the Exchangeable Share Provisions shall
                  apply mutatis mutandis to notices or documents as aforesaid
                  sent to such Holders.
         (e)      Risk of Payments by Post. Whenever payments are to be made or
                  documents are to be sent to any Holder by the Trustee, by US
                  Co Sub or by US Co or by such Holder to the Trustee or to US
                  Co or US Co Sub, the making of such payment or sending of such
                  document sent through the post shall be at the risk of US Co
                  Sub or US Co, in the case of payments made or documents sent
                  by the Trustee or US Co Sub or US Co, and the Holder, in the
                  case of payments made or documents sent by the Holder.
         (f)      Counterparts. This Agreement may be executed in counterparts,
                  each of which shall be deemed an original, but all of which
                  taken together shall constitute one and the same instrument.
   30
                                     - 30 -
         (g)      Jurisdiction. This Agreement shall be construed and enforced
                  in accordance with the laws of the Province of Alberta and the
                  laws of Canada applicable therein.
         (h)      Attornment. US Co agrees that any action or proceeding arising
                  out of or relating to this Agreement may be instituted in the
                  courts of Alberta, waives any objection which it may have now
                  or hereafter to the venue of any such action or proceeding,
                  irrevocably submits to the jurisdiction of the said courts in
                  any such action or proceeding, agrees to be bound by any
                  judgment of the said courts and agrees not to seek, and hereby
                  waives, any review of the merits of any such judgment by the
                  courts of any other jurisdiction and hereby appoints US Co Sub
                  at its registered office in the Province of Alberta as US Co's
                  attorney for service of process.
         IN WITNESS WHEREOF, the parties hereby have caused this Agreement to
be duly executed as of the date first above written.
                                      PIONEER NATURAL
                                      RESOURCES COMPANY
                                      Per:
                                           ------------------------------------
                                      Per:
                                           ------------------------------------
                                      PIONEER NATURAL RESOURCES (CANADA) LTD.
                                      Per:
                                           ------------------------------------
                                      Per:
                                           ------------------------------------
                                      MONTREAL TRUST COMPANY
                                      OF CANADA
                                      Per:
                                           ------------------------------------
                                      Per:
                                           ------------------------------------
   1
                                                                     EXHIBIT 4.1
              Organized Under the Laws of the State of Delaware
     NUMBER                                                       SHARES
      000 
                         PIONEER NATURAL RESOURCES COMPANY
                        Special Preferred Voting Stock
                                Par Value $.01
This Certifies that                 [SPECIMEN]                           is the 
                    ---------------------------------------------------- 
registered holder of                                                     Shares
                     --------------------------------------------------- 
            of the fully paid and non-assessable Capital Stock of
                      Pioneer Natural Resources Company
transferable only on the books of the Corporation by the holder hereof in
person or by Attorney upon surrender of this Certificate properly endorsed.
  In Witness Whereof, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed
    this       day                                of           A.D. 19  
         -----                                       ---------        --
- --------------------------------                --------------------------------
          President                                         Secretary
   2
    The following abbreviations, when used in the inscription on the face of 
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
 TEN COM - as tenants in common      UNIF GIFT MIN ACT -      Custodian
 TEN ENT - as tenants by the                            ------         --------
           entireties                                   (Cust)          (Minor)
 JT TEN  - as joint tenants with                        under Uniform Gifts to
           right of survivorship                        Minors
           and not as tenants                           Act
           in common                                       ------------------
                                                              (State)
   Additional abbreviations may also be used though not in the above list.
        For value received,         hereby sell, assign and transfer unto 
                            --------
  PLEASE INSERT SOCIAL SECURITY OR OTHER
      IDENTIFYING NUMBER OF ASSIGNEE
  [                                    ]
  ----------------------------------------------------------------------------
  ----------------------------------------------------------------------------
        (PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE)
  ----------------------------------------------------------------------------
  ----------------------------------------------------------------------------
                                                                        Shares
  ----------------------------------------------------------------------
  represented by the within Certificate, and do hereby irrevocably constitute 
  and appoint
             -----------------------------------------------------------------
  ----------------------------------------------------------------------------
  Attorney to transfer the said shares on the books of the within-named 
  Corporation with full power of substitution in the premises.
  Dated,
        --------------------------
                                   -------------------------------------------
                                   NOTICE: THE SIGNATURE TO THIS ASSIGNMENT
                                           MUST CORRESPOND WITH THE NAME AS 
                                           WRITTEN UPON THE FACE OF THE 
                                           CERTIFICATE IN EVERY PARTICULAR,
                                           WITHOUT ALTERATION OR ENLARGEMENT,
                                           OR ANY CHANGE WHATEVER.
           In presence of
  --------------------------------
   1
                                                                 EXHIBIT 4.2
                    PIONEER NATURAL RESOURCES (CANADA) LTD.
            CONTINUED UNDER THE BUSINESS CORPORATIONS ACT (ALBERTA)
       PROROGEE SELON LA LOI INTITULEE BUSINESS CORPORATIONS ACT (ALBERTA)
NUMBER - NUMERO                                              SHARES - ACTIONS 
EX                                        CUSIP 723918 10 8
THIS CERTIFIES THAT 
LES PRESENTES ATTESTENT QUE
IS THE REGISTERED HOLDER OF
EST LE PORTEUR INSCRIT DE
                                     
FULLY PAID AND NON-ASSESSABLE           ACTIONS ECHANGEABLES ENTIEREMENT
EXCHANGEABLE SHARES WITHOUT PAR         LIBEREES, SANS VALEUR NOMINALE,
VALUE IN THE CAPITAL OF                 DU CAPITAL DE
              PIONEER NATURAL RESOURCES (CANADA) LTD.
transferable on the books of the        lesquelles peuvent etre transferees
Corporation by the registered holder    dans les livres de la societe soit en
in person or by attorney duly auth-     personne soit par fonde de pouvoir
orized in writing upon surrender of     dument autorise par ecrit sur remise 
this certificate properly endorsed.     du present certificat dument endosse.
   This certificate is not valid           Le present certificat ne sera valide  
until countersigned and registered      que s'il est contresigne et enregistre
by the Registrar and Transfer Agent     par l'agent charge de la tenue des 
of the Corporation.                     registres et l'agent des transferts de
                                        la societe.
   In Witness Whereof the Corporation       
has caused this certificate to be          En foi de quoi, la societe a fait
signed by the facsimile signatures of   signer le present certificat par les
its duly authorized officers.           signatures autographiees de ses
                                        dirigeants dument autorises.
                  Dated/Date du
COUNTERSIGNED AND REGISTERED - CONTRESIGNE ET ENREGISTRE
MONTREAL TRUST COMPANY OF CANADA    CALGARY
COMPAGNIE MONTREAL TRUST DU CANADA  TORONTO
REGISTRAR AND TRANSFER AGENT
AGENT CHARGE DE LA TENUE DES REGISTRES ET AGENT DES TRANSFERTS
BY - PAR       SPECIMEN                   /s/ GLEN SCHMIDT   /s/ MARK L. WITHROW
        ------------------------------
        AUTHORIZED OFFICER - DIRIGEANT    PRESIDENT          VICE PRESIDENT
        AUTORISE                          PRESIDENT          VICE-PRESIDENT
THE SHARES REPRESENTED BY THIS CERT-    LES ACTIONS REPRESENTEES PAR LE PRESENT
IFICATE ARE TRANSFERABLE AT THE         CERTIFICAT SONT CESSIBLES AUX PRINCIPAUX
OFFICES OF MONTREAL TRUST COMPANY OF    BUREAUX DE LA COMPAGNIE MONTREAL TRUST
CANADA IN CALGARY, ALBERTA AND TORONTO, DU CANADA DANS LES VILLES DE CALGARY 
ONTARIO.                                (ALBERTA) ET TORONTO (ONTARIO).
2 The class of shares represented by this certificate has rights, privileges, restrictions or conditions attached thereto and the Corporation will furnish to a shareholder, on demand and without charge, a full copy of the text of the rights, privileges, restrictions and conditions attached to the class of shares represented by this certificate. The holder hereof also has certain rights and is entitled to certain benefits pursuant to the Voting and Exchange Trust Agreement (the "Agreement") among Pioneer Natural Resources Company ("Pioneer"), the Corporation and Montreal Trust Company of Canada (the "Trustee"), including (a) the right to instruct the Trustee with respect to the exercise of (i) voting rights in respect of a special voting share of Pioneer and (ii) the right to exchange the share(s) represented hereby for shares of common stock of Pioneer and (b) the benefits of the obligation of Pioneer to effect the automatic exchange of shares of common stock of Pioneer for the share(s) represented hereby, pursuant to the terms and conditions of the Agreement. The Corporation and Pioneer have entered into an agreement (the "Support Agreement") pursuant to which Pioneer has agreed to take certain actions to ensure that the Corporation will be able to make certain payments and cause to be delivered shares of common stock of Pioneer in satisfaction of the obligations of the Corporation under the rights, privileges, restrictions and conditions attaching to the shares represented hereby. Copies of the Agreement and the Support Agreement are available for inspection at the registered office of the Corporation. The share(s) represented hereby are subject to certain overriding purchase rights of Pioneer pursuant to the articles of the Corporation and the Plan of Arrangement effected DECEMBER 18, 2021 under the Business Corporations Act (Alberta) in respect of Chauvco Resources Ltd. upon the proposed liquidation, dissolution or winding-up of the Corporation and upon the proposed redemption by the Corporation of the share(s) represented hereby, and notice of the terms and conditions of such articles is hereby given. La categone des actions representees par le present certificat comporte les droits, privileges, restrictions ou conditions qui y sont rattaches et la societe fournira a l'actionnaire, sur demande et sans frais, un exemplaire du texte integral de tels droits, privileges, restrictions et conditions. Le porteur des presentes a egalement certains droits et beneficie de certains avantages suivant la convention de vote et d'echange en fideicommis (la "convention") entre Pioneer Natural Resources (Canada) Ltd. ("Pioneer"), la societe et la Compagnie Montreal Trust du Canada (le "fiduciaire"), y compris a) le droit de donnor au fiduciaire des instructions a l'egard de l'exercice i) des droits de vote rattaches a une action avec droit de vote special de Pioneer et ii) du droit d'echanger les actions representees par les presentes contre des actions ordinaires de Pioneer et b) le benefice de l'obligation de Pioneer d'effectuer l'echange automatique d'actions ordinaires de Pioneer contre les actions representees par les presentes, suivant les modalites de la convention. La societe et Pioneer ont conclu une covnention (la "convention du soutien") suivant laquelle Pioneer a convenu de prendre certaines mesures pour s'assurer que la societe soit capable d'effectuer certains paiements et de faire en sorte que soient livrees les actions ordinaires de Pioneer en reglement des obligations de la societe decoulant des droits, privileges, restrictions et conditions rattaches aux actions representees par les presentes. Des exemplaires de la convention et de la convention de soutien pouvent etre examines au siege social de la societe. Les actions representees par les presentes sont assorties de certains droits d'achat derogatoires de Pioneer suivant les statuts de la societe et le plan d'arrangement concernant Chauvco Resources Ltd. conclu le 18 decembre 1997, en vertu de la Business Corporations Act (Alberta) advenant la liquidation ou la dissolution proposees de la societe ou advenant le rachat propose par la societe des actions representees par les presentes, et avis des modalites de tels statuts est par les presentes donne. - -------------------------------------------------------------------------------- SHARE TRANSFER POWER PROCURATION POUR LE TRANSFERT D'ACTIONS Please insert social insurance number of transferee, if applicable Priere d'inscrire le numero d'assurance sociale du cessionnaire, s'il y a lieu ---------------------------------- ---------------------------------- For Value Received, the undersigned hereby sells, assigns Pour valeur recue, le soussigne vend, cede et transfere and transfers unto shares actions - -------------------------------------------------------------------------------------------------------------------------- represented by this certificate, and does hereby irrevocably representees par le present certificat et designe constitute and appoint irrevocablement - ---------------------------------------------------------------------------------------------------------------------------------- attorney to transfer the said shares on the registers of the son fonde de pouvoir pour transferer lesdites actions au within named Corporation with full power of substitution in registre de la societe designee aux presentes avec plein the premises. pouvoir de substitution aux presentes. - --------------------- ------------------------------------------------------- ------------------------------------------------ (Date) (Signature of Shareholder - Signature de l'actionnaire) (Guarantee of Signature - Aval de la signature)
- -------------------------------------------------------------------------------- NOTICE OF RETRACTION To the Corporation and Pioneer This notice is given pursuant to Article 6 of the provisions (the "Share Provisions") attaching to the share(s) represented by this certificate and all capitalized words and expressions used in this notice which are defined in the Share Provisions have the meanings ascribed to such words and expressions in such Share Provisions. The undersigned hereby notifies the Corporation that, subject to the Retraction Call Right referred to below, the undersigned desires to have the Corporation redeem in accordance with Article 6 of the Share Provisions: [ ] all share(s) represented by this certificate; or [ ] --------------------------------------------- share(s) only. The undersigned hereby notifies the Corporation that the Retraction Date shall be . ---- NOTE: The Retraction Date must be a Business Day and must be not less than three Business Days nor more than 10 Business Days after the date upon which this notice is received by the Corporation. In the event that no such Business Day is specified above, the Retraction Date shall be deemed to be the tenth Business Day after the date on which this notice is received by the Corporation. The undersigned acknowledges the Retraction Call Right of Pioneer to purchase all but not less than all the Retracted Shares from the undersigned and that this notice shall be deemed to be a revocable offer by the undersigned to sell the Retracted Shares to Pioneer in accordance with the Retraction Call Right on the Retraction Date for the Retraction Price and on the other terms and conditions set out in Section 6.3 of the Share Provisions. If Pioneer determines not to exercise the Retraction Call Right, the Corporation will notify the undersigned of such fact as soon as possible. This Notice of Retraction, and offer to sell the Retracted Shares to Pioneer, may be revoked and withdrawn by the undersigned by notice in writing given to the Corporation at any time before the close of business on the Business Day immediately preceding the Retraction Date. The undersigned acknowledges that if, as a result of solvency provisions of applicable law, the Corporation is unable to redeem all Retracted Shares, the undersigned will be deemed to have exercised the Exchange Right (as defined in the Agreement) so as to require Pioneer to purchase the unredeemed Retracted Shares. The undersigned hereby represents and warrants to the Corporation and Pioneer that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by the Corporation or Pioneer, as the case may be, free and clear of all liens, claims and encumbrances. [ ] Toronto Please check applicable box if the securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares are to be held for pick-up by the shareholder at the principal transfer office of the Transfer Agent in Toronto or Calgary, failing which the securities and any cheque(s) will be mailed to [ ] Calgary the last address of the shareholder as it appears on the register. NOTE: This panel must be completed and this certificate, together with such additional documents as the Transfer Agent may require, must be deposited with the Transfer Agent at its principal transfer office in Toronto or Calgary. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of the Corporation and the securities and cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed. AVIS DE RACHAT AU GRE DU PORTEUR A la societe et a Pioneer Le present avis est donne suivant l'article 6 des dispositions (les "dispositions afferentes aux actions") rattachees aux actions representees par le present certificat et certains mots utilises dans le present avis qui sont definis dans les dispositions afferentes aux actions ont le sens qui leur est attribue dans lesdites dispositions. Par les presentes, le soussigne avise la societe que, sous reserve du droit d'achat mentionne ci-apres, il desire que la societe rachete conformement a l'article 6 des dispositions afferentes aux actions: [ ] la totalite des actions representees par le present certificat; ou [ ] ____________________________________ action(s) seulement. Le soussigne avise la societe que la date de rachat au gre du porteur est le ___________________________. NOTE: La date de rachat au gre du porteur doit etre un jour ouvrable et ne peut pas etre de moins de trois jours ouvrables ni plus de 10 jours ouvrables apres la date a laquelle la societe recoit le present avis. Si aucun jour ouvrable n'est indique precedemment, la date de rachat au gre du porteur est reputee etre le dixieme jour ouvrable apres la date a laquelle la societe recoit le present avis. Le soussigne reconnait que le droit d'achat de Pioneer permettant a celle-ci de lui acheter la totalite mais non moins de la totalite des actions ayant fait l'objet du privilege de rachat au gre du porteur et que le present avis est repute etre une offre revocable par le soussigne de vendre a Pioneer les actions a racheter a la demande du porteur conformement au droit d'achat a la date de rachat au gre du porteur, au prix de rachat et suivant les autres modalites etablies a l'article 6.3 des dispositions afferentes aux actions. Si Pioneer decide de ne pas exercer le droit d'achat, la societe en avisera le soussigne aussitot que possible. Le soussigne peut revoquer et retirer le present avis de rachat au gre du porteur et ladite offre de vente a Pioneer en donnant un avis ecrit a la societe en tout temps avant la fermeture des bureaux le jour ouvrable precedant immediatement la date de rachat au gre du porteur. Le soussigne reconnait que si, en raison de dispositions legislatives sur l'insolvabilite applicables, la societe est incapable de racheter la totalite des actions a racheter a la demande du porteur, il est repute avoir actions a racheter a la demande du porteur qui n'auront pas ete rachetees. Par les presentes, le soussigne declare et garantit a la societe et a Pioneer qu'il a un titre de propriete bon et valable dans les actions representees par le present certificat qui seront acquises par la societe ou Pioneer, selon le cas, libres de toute priorite, reclamation et charge. ______________ ________________________________ ______________________________ (Date) Signature of Shareholder - (Guarantee of Signature - Signature de l'actionnaire) Aval de la signature [ ] Toronto Veuillez cocher la case applicable si les titres et les cheques resultant du rachat ou de l'achat des actions a racheter a la demande du porteur doivent etre gardes pour que l'actionnaire les [ ] Calgary recupere au bureau principal des transferts de l'agent des transfert a Toronto ou a Calgary, sinon les titres et les cheques seront postes a la derniere adresse de l'actionnaire qui parait au registre. NOTE: Cette partie doit etre remplie et le present certificat, avec les document supplementaires que l'agent des transferts peut demander, doit etre depose aupres de l'agent des transferts a son bureau principal des transferts a Toronto ou Calgary. Les titres et les cheques resultant du rachat au gre du porteur ou de l'achat des actions a racheter a la demande du porteur seront emis, immatricules et payables au nom de l'actionnaire comme il parait au registre de la societe et de tels titres et cheques seront livres a l'actionnaire comme il est indique precedemment, a moins que le formulaire qui suit soit dument rempli. - --------------------------------------------------------------------- ------------------------- Name of Person in Whose Name Securities or Cheque(s) Are To Be Date Registered, Issued or Delivered (please print) Nom de la personne au nom de qui les titres ou les cheques doivent etre immatricules, emis ou livres (en caracteres d'imprimerie) - --------------------------------------------------------------------- -------------------------- Street Address or P.O. Box - Adresse ou boite postale Signature of Shareholder - Signature de l'actionnaire - --------------------------------------------------------------------- -------------------------- City - Ville/Province Signature Guaranteed by - Signature avalisee par - --------------------------------------------------------------------- --------------------------
NOTE: If the notice of retraction is for less than all of the share(s) represented by this certificate, a certificate representing the remaining shares of the Corporation will be issued and registered in the name of the shareholder as it appears on the register of the Corporation, unless the Share Transfer Power hereon is duly completed in respect of such shares. NOTE: Si l'avis de rachat au gre du porteur vise moins de la totalite des actions representees par le present certificat, un certificat representant le reste des actions de la societe sera delivre et immatricule au nom de l'actionnaire comme il parait au registre de la societe, a moins que la procuration pour le transfert d'actions ait ete dument remplie a l'egard de telles actions. NOTICE OF EXERCISE OF EXCHANGE RIGHT UPON INSOLVENCY EVENT To the Corporation, the Trustee and Pioneer In accordance with, and subject to, the rights, privileges, restrictions and conditions attaching to the share(s) represented by this certificate, the undersigned hereby instructs the Trustee to exercise the Exchange Right (as defined in the Agreement) upon the occurrence and during continuance of an Insolvency Event (as defined in the Agreement) so as to require Pioneer to purchase from the undersigned: [ ] all share(s) represented by this certificate; or [ ] ________________________________________________ share(s) only. The undersigned hereby represents and warrants to the Corporation and Pioneer that the undersigned has good title to, and owns, the share(s) represented by this certificate to be acquired by Pioneer free and clear of all liens, claims and encumbrances. [ ] Toronto Please check applicable box if the securities and any cheque(s) resulting from the exercise of the Exchange Right are to be held for pick-up by the shareholder at the principal transfer office of the Transfer Agent in Toronto or Calgary, failing which the [ ] Calgary securities and any cheque(s) will be mailed to the last address of the shareholder as it appears on the register. NOTE: This panel must be completed and this certificate, together with such additional documents as the Transfer Agent may require, must be deposited with the Transfer Agent at its principal transfer office in Toronto or Calgary. The securities and any cheque(s) resulting from the exercise of the Exchange Right will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of the Corporation and the securities and cheque(s) resulting from such exchange will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed. AVIS D'EXERCICE DU DROIT D'ECHANGE LORS DE L'INSOLVABILITE A la societe, au fiduciaire et a Pioneer Sous reserve des droits, privileges, restrictions et conditions rattaches aux actions representees par le present certificat et conformement a ceux-ci, le soussigne demande au fiduciaire d'exercer le droit d'echange (selon la definition dans la convention) a la survenance d'un cas d'insolvabilite (selon la definition dans la convention) et tant qu'il durera de facon a obliger Pioneer a lui acheter: [ ] la totalite des actions representees par le present certificat; ou [ ] ________________________________________________ action(s) seulement. Par les presentes, le soussigne declare et garantit a la societe et a Pioneer qu'il a un titre de propriete bon et valable dans les actions representees par le present certificat qui seront acquises par Pioneer, libres de toute priorite, reclamation et charge. ______________ ________________________________ ______________________________ (Date) Signature of Shareholder - (Guarantee of Signature - Signature de l'actionnaire) Aval de la signature) [ ] Toronto Veuillez cocher la case applicable si les titres et les cheques resultant de l'exercice du droit d'echange doivent etre gardes pour que l'actionnaire les recupere au bureau principal des [ ] Calgary transferts de l'agent des transferts a Toronto ou a Calgary, sinon les titres et les cheques seront postes a la derniere adresse de l'actionnaire qui parait au registre. NOTE: Cette partie doit etre remplie et le present certificat, avec les document supplementaires que l'agent des transferts peut demander, doit etre depose aupres de l'agent des transferts a son bureau principal des transferts a Toronto ou Calgary. Les titres et les cheques resultant de l'exercice du droit d'echange seront emis, immatricules et payables au nom de l'actionnaire comme il parait au registre de la societe et de tels titres et cheques seront livres a l'actionnaire comme il est indique precedemment, a moins que le formulaire qui suit soit dument rempli. - --------------------------------------------------------------------- ------------------------- Name of Person in Whose Name Securities or Cheque(s) Are To Be Date Registered, Issued or Delivered (please print) Nom de la personne au nom de qui les titres ou les cheques doivent etre immatricules, emis ou livres (en caracteres d'imprimerie) - --------------------------------------------------------------------- -------------------------- Street Address or P.O. Box - Adresse ou boite postale Signature of Shareholder - Signature de l'actionnaire - --------------------------------------------------------------------- -------------------------- City - Ville/Province Signature Guaranteed by - Signature avalisee par - --------------------------------------------------------------------- --------------------------
NOTE: If the election to exchange is for less than all of the share(s) represented by this certificate, the remaining shares will be registered in the name of the shareholder as it appears on the register of the Corporation, unless the Share Transfer Power hereon is duly completed in respect of such shares. NOTE: Si l'echange vise moins de la totalite des actions representees par le present certificat, le reste des actions sera immatricule au nom de l'actionnaire comme il parait au registre de la societe, a moins que la procuration pour le transfert d'actions ait ete dument remplie a l'egard de telles actions. NOTICE:The signature to the Share Transfer Power, Notice of Retraction or Notice of Exercise of Exchange Right must correspond with the name as written upon the face of this certificate in every particular without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, trust company or member of a recognized stock exchange whose signature is acceptable to the Transfer Agent and Registrar. AVIS: La signature apposee sur la procuration pour le transfert d'actions, l'avis de rachat au gre du porteur ou l'avis d'exercice du droit d'echange doit correspondre en tous points au nom ecrit au recto du present certificat sans modification ni ajout d'aucune sorte et doit etre avalisee par une banque, une societe de fiducie ou un membre d'une bourse reconnue dont la signature est acceptable pour l'agent des transferts et l'agent charge de la tenue des registres.
   1
                                                                    EXHIBIT 10.1
                           [PRIMARY CREDIT FACILITY]
================================================================================
                 AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
                       PIONEER NATURAL RESOURCES COMPANY,
                                  as BORROWER,
                                      and
                          NATIONSBANK OF TEXAS, N.A.,
                            as ADMINISTRATIVE AGENT,
                                      and
                                   CIBC INC.,
                            as DOCUMENTATION AGENT,
                                      and
                   MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                            as DOCUMENTATION AGENT,
                                      and
                           THE CHASE MANHATTAN BANK,
                             as SYNDICATION AGENT,
                        THE CO-AGENTS SIGNATORY HERETO,
                                      and
                       THE OTHER LENDERS SIGNATORY HERETO
as of DECEMBER 18, 2021                                          $1,075,000,000
================================================================================
   2
                               TABLE OF CONTENTS
Page ARTICLE 1 DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.3 Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.4 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.5 Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 2 LOANS AND LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.1 Making the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.2 Requests for Revolving Loan Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 2.3 Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 2.4 Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.5 Procedure for Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.6 Special Provisions for Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2.7 Facility Fee; Amendment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 2.8 Managing Agents' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 2.9 Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.10 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.11 Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.12 Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.13 Requesting Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2.14 Reimbursement of Letters of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 2.15 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Section 2.16 Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Section 2.17 Increased Cost of Eurodollar Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 2.18 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.19 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 2.20 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 2.21 Make-Whole Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 2.22 Competitive Bid Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 ARTICLE 3 CONDITIONS PRECEDENT TO LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Section 3.1 Initial Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Section 3.2 Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 ARTICLE 4 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 Section 4.1 Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 45 Section 4.2 Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
i 3 TABLE OF CONTENTS (CONTINUED)
PAGE ---- ARTICLE 5 COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Section 5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Section 5.3 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Section 6.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 6.3 Annulment of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Section 6.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 ARTICLE 7 AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.1 Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 7.2 Agent's Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 7.3 Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 7.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 7.5 Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 7.6 Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 7.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 7.8 Benefit of Article 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 7.9 Resignation and Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.1 Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.2 Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 8.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 Section 8.6 Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.7 Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 8.8 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 Section 8.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.12 Waiver of Jury Trial, Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.13 Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.14 Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.15 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.16 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 8.17 Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 8.18 Assumption of Prior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 8.19 Renewal, Extension or Rearrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Section 8.20 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
ii 4 EXHIBITS AND SCHEDULES Exhibits: Exhibit A-1 - Form of Loan Note Exhibit A-2 - Form of Swing Line Note Exhibit A-3 - Form of Competitive Bid Note Exhibit B - Form of Guaranty Exhibit C - Form of Request for Advance Exhibit D - Form of Rate Election Exhibit E - Form of Request for Swing Line Advance Exhibit F - Form of Swing Line Participation Certificate Exhibit G - [Intentionally omitted] Exhibit H - Forms of Opinion of Borrower's and Restricted Subsidiaries' Counsel Exhibit I - Organization Chart of Borrower and its Subsidiaries Exhibit J - Form of Designated Officer's Certificate Exhibit K-1 - Form of Election to Convert Exhibit K-2 - Form of Release Exhibit L - Form of Agreement to be Bound Exhibit M - Form of Pledge Agreement Exhibit N - Form of Request for Competitive Bid Offer Exhibit O - Form of Competitive Bid Offer Exhibit P - Form of Bid Acceptance Schedules: Schedule 1 - Schedule of Lenders' Commitments and Percentage Share Schedule 2 - Disclosure Schedule Schedule 3 - Schedule of Restricted Subsidiaries Schedule 4 - Schedule of Insurance Schedule 5 - Schedule of Security Instruments Schedule 6 - Continuing Letters of Credit iii 5 AMENDED AND RESTATED CREDIT FACILITY AGREEMENT THIS AMENDED AND RESTATED CREDIT FACILITY AGREEMENT is made as of DECEMBER 18, 2021 (together with all amendments, renewals, extensions and other modifications, if any, from time to time hereafter made hereto, the "Agreement" or "Credit Facility Agreement"), by and among PIONEER NATURAL RESOURCES COMPANY, a Delaware corporation (the "Borrower"), and NATIONSBANK OF TEXAS, N.A., CIBC INC., MORGAN GUARANTY TRUST COMPANY OF NEW YORK, THE CHASE MANHATTAN BANK, in the capacities herein identified, the Co-Agents party hereto, and the other Lenders from time to time parties hereto. RECITALS: A. Reference is here made to that certain Credit Facility Agreement - Primary Credit Facility, dated as of August 7, 1997, by and among Pioneer USA, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Existing Credit Agreement") and the notes issued thereunder. B. Borrower has assumed effective as of the Effective Date (as hereinafter defined) and hereby assumes, and Pioneer USA has assigned and hereby assigns to Borrower, all of the indebtedness, obligations and liabilities of Pioneer USA, evidenced by and outstanding under the Existing Credit Agreement and all related instruments and documents (all such indebtedness, obligations and liabilities under the Existing Credit Agreement and/or such instruments and documents collectively, the "Prior Indebtedness"). C. Borrower has determined that it is in its best interests to assume the Prior Indebtedness and has voluntarily requested that Lenders, and Lenders have agreed to, restructure, rearrange and renew the Prior Indebtedness and the respective commitments of the Lenders and Agents party to the Existing Credit Agreement into obligations and commitments hereunder. D. As a part of the restructuring and rearranging of the Prior Indebtedness, Lenders shall modify their respective commitments under the Credit Agreement such that on the Effective Date each Lender shall be obligated hereunder, subject to the terms hereof, to the Loan Commitment stated on Schedule 1 for such Lender. E. Any Loans outstanding under the Existing Credit Agreement on the Effective Date bearing interest at a Eurodollar Rate shall be deemed continued as a Loan under this Agreement at such Eurodollar Rate and for the Eurodollar Interest Period with respect thereto under the Existing Credit Agreement. 6 F. Any Competitive Bid Advances outstanding under the Existing Credit Agreement on the Effective Date shall be deemed continued as a Competitive Bid Advance under this Agreement at the rate and for the term with respect thereto under the Existing Credit Agreement. G. The Letters of Credit (hereinafter defined) outstanding under the Existing Credit Agreement on the Effective Date described in Schedule 6 hereto shall be deemed continued as Letters of Credit under this Agreement with the Lenders having on the Effective Date a participation therein equal to their Percentage Share (hereinafter defined). H. Lenders and Borrower intend and have agreed to amend and restate the Existing Credit Agreement in its entirety as and pursuant to this Agreement. NOW, THEREFORE, in consideration of the Recitals hereof and the mutual covenants contained herein, the parties hereby agree to amend and restate the Existing Credit Agreement in its entirety as follows: ARTICLE 1 DEFINITIONS AND REFERENCES Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given it in this Section or in the sections and subsections referred to below: "Acquisition Agreement" has the meaning given it in Section 3.1(e). "Acquisition" has the meaning given it in Section 3.1(e). "Adjusted Eurodollar Rate" means, with respect to each particular Eurodollar Portion and the associated Eurodollar Rate and Reserve Percentage, the rate per annum determined hereunder by Administrative Agent on a daily basis pursuant to the following formula: AER = ER + EM --------- 1.00 - RP AER = Adjusted Eurodollar Rate ER = Eurodollar Rate RP = Reserve Percentage EM = Eurodollar Margin The Adjusted Eurodollar Rate shall change as and when the associated Reserve Percentage and Eurodollar Margin change. "Administrative Agent" means NationsBank of Texas, N.A., as Administrative Agent hereunder and its successors and assigns in such capacity. 2 7 "Advance" means any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance. "Affiliate" means, as to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such Person. "Agent" means any of the Managing Agents or the Collateral Agent hereunder, solely in such capacities and not in their respective capacities as Lenders. "Agreement" means this Amended and Restated Credit Facility Agreement, as this Amended and Restated Credit Facility Agreement may be amended, modified or restated from time to time hereafter. "Amendment Fee Rate" means 2.5 basis points. "Applicable Rating Level" means the level set forth below that corresponds to the highest of ratings issued from time to time by Moody's and S&P;, as applicable to Borrower's senior unsecured long-term debt:
Moody's S&P; ------- --- Level I greater than Baa1 greater than BBB+ Level II Baa1 BBB+ Level III Baa2 BBB Level IV Baa3 BBB- Level V less than Baa3 less than BBB-
For example, if the Moody's rating is Baa1 and the S&P; rating is BBB, Level II shall apply. For purposes of the foregoing, (i) ")" means a rating more favorable than; "(" means a rating less favorable than; (ii) if ratings for Borrower's senior unsecured long-term debt shall not be available from S&P; or Moody's, Level V shall be deemed applicable; (iii) if any of the Rating Agencies shall change its ratings nomenclature prior to the date all Obligations have been paid and the Commitments canceled, Borrower and the Lenders shall negotiate in good faith to amend the references to specific ratings in this definition to reflect such change, and pending such amendment, if an appropriate Applicable Rating Level is otherwise not determinable based upon the foregoing grid, the last Applicable Rating Level in effect at the time of such change shall continue to apply. "Base Rate" means the fluctuating per annum rate of interest from time to time in effect equal to the higher of (a) the rate of interest as publicly announced by Administrative Agent as its "Prime Rate" or (b) the Federal Funds Rate plus one-half of one percent (1/2 of 1%), whether or 3 8 not Borrower has notice thereof. Such rate is set by Administrative Agent as a general rate of interest, taking into account such factors as Administrative Agent may deem appropriate, it being understood that many of Administrative Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate. If Administrative Agent's Prime Rate or the Federal Funds Rate changes after the date hereof, the Base Rate shall be automatically increased or decreased, as the case may be, without prior notice to Borrower from time to time as of the effective time of each change in Administrative Agent's Prime Rate or the Federal Funds Rate. The Administrative Agent shall promptly thereafter notify Borrower of such change in the Base Rate. "Base Rate Portion" means that portion of the unpaid principal balance of a Loan which is not made up of Eurodollar Portions, Swing Line Advances or Competitive Bid Advances. "Bid Acceptance" means a Bid Acceptance substantially in the form of Exhibit P hereto with appropriate insertions. "Borrower" is defined in the Preamble hereto. "Business Day" means a day on which commercial banks are open for business with the public in the State of Texas. Any Business Day in any way relating to Eurodollar Portions (such as the day on which a Eurodollar Interest Period begins or ends) must also be a day on which, in the reasonable, good faith judgment of Administrative Agent, significant transactions in dollars are carried out in the interbank eurocurrency market. "Canadian Credit Facility" means that certain Credit Facility Agreement, dated as of December 18, 1997, among Chauvco, as Borrower, Canadian Imperial Bank of Commerce, as Arranger and Administrative Agent, Bank of Nova Scotia, as Co-Syndication Agent, Royal Bank of Canada, as Co-Syndication Agent, The Chase Manhattan Bank of Canada, as Co-Agent, Morgan Guaranty Trust Company of New York, as Co-Agent, NationsBank of Texas, N.A., as Co-Agent, The Toronto-Dominion Bank, as Co-Agent, and the Lenders party thereto, as such agreement may be amended, modified or restated from time to time. "Cash Collateral" has the meaning given it in Section 2.14(d). "Chauvco" means Chauvco Resources Ltd., a corporation organized under the laws of the Province of Alberta, Canada. "Co-Agent" means each of Bank of America National Trust and Savings Association, The Bank of New York, The Bank of Nova Scotia, Royal Bank of Canada, Union Bank of California, N.A., The Fuji Bank, Limited - Houston Agency, and Wells Fargo Bank, N.A., as Co-Agents, and their respective successors and assigns in such capacity. "Collateral Agent" means NationsBank of Texas, N.A., as collateral agent under the Security Instruments and its successors and assigns in such capacity. 4 9 "Commitment" means, with respect to each Lender, such Lender's Loan Commitment. "Competitive Bid Advances" has the meaning given it in Section 2.22. "Competitive Bid Note" has the meaning given it in Section 2.22. "Competitive Bid Obligations" means, at the particular time in question, the sum of all outstanding Competitive Bid Advances. "Competitive Bid Offer" has the meaning given it in Section 2.22. "Competitive Bid Rate" has the meaning given it in Section 2.22. "Consolidated" refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated Subsidiaries. References herein to a Person's Consolidated financial statements, financial position, financial condition, or liabilities refer to the consolidated financial statements, financial position, financial condition or liabilities, as the case may be, of such Person and its properly consolidated Subsidiaries. "Consolidated Interest Expense" is defined in Section 5.3(a). "Credit Facility Agreement" means this Amended and Restated Credit Facility Agreement, as this Amended and Restated Credit Facility Agreement may be amended, modified or restated from time to time hereafter. "Debt" of any Person means, without duplication: (a) indebtedness of such Person for borrowed money; (b) indebtedness of such Person constituting an obligation to pay the deferred purchase price of property or services (other than customary payment terms taken in the ordinary course of such Person's business); (c) indebtedness of such Person evidenced by a bond, debenture, note or similar instrument; (d) principal obligations under leases capitalized in accordance with GAAP under which such Person is the lessee; (e) indebtedness, contingent or otherwise, of such Person with respect to bankers' acceptances or the face amount of letters of credit or applications or reimbursement agreements therefor; (f) guaranties of such Person of indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above of any other Person or obligations to purchase 5 10 or acquire or to otherwise protect or insure a creditor against loss in respect of indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above of any other Person, but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection; (g) indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above, which are secured by a Lien on any property owned by such Person, whether or not such indebtedness or obligations have been assumed by such Person (limited however to the lesser of (1) the amount of its liability or (2) the value of such property); and (h) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment; provided, however, Debt shall not include (1) accounts payable incurred in the ordinary course of such Person's business, or (2) any obligations in respect of (i) exchange, forward, future, swap, hedging or similar agreements and (ii) prepayments for gas or oil production or gas or oil imbalances. "Default" means any Event of Default and any default, event or condition which would, with the giving of any requisite notices and the passage of any requisite periods of time, constitute an Event of Default. "Default Rate" means, at the particular time in question, two percent (2%) per annum plus the Base Rate then in effect; provided, that, with respect to any Eurodollar Portion with an Eurodollar Interest Period extending beyond the date such Eurodollar Portion becomes due and payable, "Default Rate" shall mean, during such Eurodollar Interest Period, two percent (2%) per annum plus the related Eurodollar Rate and plus the applicable Eurodollar Margin. "Designated Entity" means Borrower and each of the Restricted Subsidiaries. "Designated Officer" means any Executive Officer or any other individual duly elected to and holding one or more of the offices of vice president, managing director, executive director, secretary or assistant secretary of a Designated Entity, or any other Person authorized in writing by any Designated Entity to execute any Loan Document, in each case designated by a Designated Entity and acceptable to Required Lenders. "Disclosure Schedule" means (a) Schedule 2 hereto and (b) any documents listed on such schedule and expressly incorporated therein by reference, true and correct copies of which shall have been delivered to Managing Agents and each other Lender prior to the date hereof. Insofar as any representations and warranties made herein are incorporated by reference or otherwise remade in Loan Documents delivered as of a date after the date hereof, the term "Disclosure Schedule" shall in such representations and warranties be deemed to refer as well to all other documents indicated by Borrower to be part of the Disclosure Schedule and which Borrower has at the 6 11 particular time in question delivered to the Managing Agents, the Co-Agents and each other Lender and which have not been promptly objected to in writing by or on behalf of the Required Lenders. "Documentation Agent" means each of CIBC Inc. and Morgan Guaranty Trust Company of New York, as Documentation Agents, and their respective successors and assigns in such capacity. "EBITDAX" is defined in Section 5.3(a). "Effective Date" means the date the parties hereto shall have executed and delivered counterparts hereof to Administrative Agent and Administrative Agent shall have notified the parties hereto that the Effective Date shall have occurred. "Environmental Law" means any federal, state, or local statute, or rule or regulation promulgated thereunder, any judicial or administrative order or judgment to which Borrower, or any of its Subsidiaries is a party or which are applicable to Borrower or any of its Subsidiaries or its or their respective properties (whether or not by consent), and any provision or condition of any permit, license or other governmental operating authorization, relating to protection of the environment, persons or the public welfare from actual or potential exposure or the effects of exposure to any actual or potential release, discharge, spill or emission (whether past or present) of, or regarding the manufacture, processing, production, gathering, transportation, importation, use, treatment, storage or disposal of, any chemical, raw material, pollutant, contaminant or toxic or hazardous substance or waste. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all rules and regulations promulgated with respect thereto. "ERISA Plan" means any pension benefit plan subject to Title IV of ERISA maintained by any Designated Entity or any Affiliate thereof with respect to which any Designated Entity has a fixed or contingent liability. "Eurodollar Interest Period" means, with respect to each particular Eurodollar Portion, a period of one (1), two (2), three (3) or six (6) months, or, subject to Section 2.3, a period of nine (9) or twelve (12) months, as specified in the Rate Election applicable thereto, beginning on and including the date specified in such Rate Election (which must be a Business Day), and ending on but not including the same day of the relevant month as the day on which it began (e.g., a period beginning on the third day of one month shall end on but not include the third day of another month), or if such month has no numerically corresponding day, on the last Business Day of such month, and provided that each Eurodollar Interest Period which would otherwise end on a day which is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case such Eurodollar Interest Period shall end on the immediately preceding Business Day). No Eurodollar Interest Period may be elected for any Eurodollar Portion which would extend past the Maturity Date of the Loan of which the Eurodollar Portion is a part. 7 12 "Eurodollar Margin" means, on any date, with respect to each Eurodollar Portion of a Revolving Loan, the number of basis points per annum set forth below based on the Applicable Rating Level on such date:
Applicable Eurodollar Rating Level Margin ------------ ---------- Level I 18.0 b.p. Level II 20.0 b.p. Level III 23.0 b.p. Level IV 28.0 b.p. Level V 45.0 b.p.
Changes in the Eurodollar Margin will occur automatically without prior notice. Administrative Agent will give notice promptly to Borrower and the Lenders of changes in the Eurodollar Margin. "Eurodollar Portion" means the unpaid principal balance of a Loan which Borrower designates as such in a Rate Election. "Eurodollar Rate" means, with respect to each particular Eurodollar Portion within a Tranche and with respect to the related Eurodollar Interest Period, the rate of interest per annum (stated to the nearest 10,000ths of 1%) determined by Administrative Agent in accordance with its customary general practices to be representative of the rates (stated to the nearest 10,000ths of 1%) at which deposits of dollars are offered to Administrative Agent at approximately 10:00 a.m., Dallas, Texas time, two Business Days prior to the first day of such Eurodollar Interest Period by prime banks in the interbank eurocurrency market which have been selected by Administrative Agent in accordance with its customary general practices for delivery on the first day of such Eurodollar Interest Period in an amount equal or comparable to the amount of Administrative Agent's Eurodollar Portion within such Tranche and for a period of time equal or comparable to the length of such Eurodollar Interest Period. The Eurodollar Rate determined by Administrative Agent with respect to a particular Eurodollar Portion shall be fixed at such rate for the duration of the associated Eurodollar Interest Period. If Administrative Agent is unable so to determine the Eurodollar Rate for any Eurodollar Portion, Borrower shall be deemed not to have elected such Eurodollar Portion. "Eurodollars" is defined in Section 2.18. "Event of Default" has the meaning given it in Section 6.1. "Exchangeable Shares" has the meaning set forth in the Proxy. 8 13 "Executive Officer" means any individual duly elected to and holding one or more of the following offices of Borrower: President, Chief Executive Officer, Chief Financial Officer, Executive Vice President or Senior Vice President. "Existing Credit Agreement" has the meaning given it in Recital A. "Facility Amount" means the aggregate amount of the Commitments (which amount shall initially be $1,075,000,000), as such amount may be reduced from time to time pursuant to the terms of this Agreement. "Facility Fee Rate" means, on any date that a facility fee is due pursuant to Section 2.7, the number of basis points per annum set forth below based on the Applicable Rating Level on such date:
Applicable Facility Fee Rate Rating Level Margin ------------ ------ Level I 9.0 b.p. Level II 10.0 b.p. Level III 12.0 b.p. Level IV 14.0 b.p. Level V 20.0 b.p.
Changes in the Facility Fee Rate will occur automatically without prior notice. Administrative Agent will give notice promptly to Borrower and the Lenders of changes in the Facility Fee Rate. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) 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 by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day, as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Administrative Agent on such day on such transactions as determined by Administrative Agent. "Fiscal Quarter" means a three-month period ending on March 31, June 30, September 30 or December 31 of each year. "Fiscal Year" means a twelve-month period ending on December 31 of each year. 9 14 "Foreign Restricted Subsidiary" means any Restricted Subsidiary of the Borrower organized under the laws of any jurisdiction other than the United States or any state thereof. "GAAP" means those generally accepted accounting principles and practices which are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) and which, in the case of Borrower and its Consolidated Subsidiaries, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the Updated Financial Statements (except for changes concurred with by Borrower's independent public accountants). If any change in any accounting principle or practice is required by the Financial Accounting Standards Board (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to Borrower or with respect to Borrower and its Consolidated Subsidiaries must be prepared in accordance with such change. In the event any changes in GAAP materially affect the calculation of Borrower's EBITDAX to Consolidated Interest Expense Ratio or Consolidated Total Funded Debt to Total Capitalization as defined and described in Sections 5.3 (a) and (b), respectively, Borrower and Lenders agree to enter into good faith negotiations for an agreement to revise such tests to take into account such changes in GAAP; until Borrower and Majority Lenders have entered into such an agreement, such financial calculation shall continue to be made in accordance with GAAP as in effect immediately preceding the date of such change. "Governmental Authority" means any national, state, county or municipal government, domestic or foreign, any agency, board, bureau, commission, court, department or other instrumentality of any such government, or any arbitrator in any case which has jurisdiction over any of the Lenders, Borrower, its Subsidiaries or any properties of Borrower or its Subsidiaries. "Guaranty" means (i) any guaranty substantially in the form of Exhibit B, with appropriate insertions and deletions, executed or to be executed by any Restricted Subsidiary, as from time to time amended, modified, or supplemented, or (ii) any Guaranty delivered pursuant to Section 3.1(a)(1) of the Agreement as from time to time amended, modified, or supplemented, as the case may be. "Incumbent Directors" has the meaning given in Section 6.1(i). "Issuing Bank" means any Lender which in its sole discretion agrees to be and is designated by Borrower and accepted by the Administrative Agent to issue one or more Letters of Credit in its capacity as an issuer of Letters of Credit hereunder, and its successors and assigns in such capacity. "LC Application" means any application for a Letter of Credit hereafter made by Borrower to an Issuing Bank. "LC Conditions" has the meaning given it in Section 2.12. 10 15 "LC Obligations" means, at the particular time in question, the sum of the Matured LC Obligations plus the aggregate amounts which any Issuing Bank or Lender might be called upon to advance under all then outstanding Letters of Credit. "Letter of Credit" means (i) any letter of credit issued by an Issuing Bank upon the application of Borrower and (ii) each letter of credit outstanding on the Effective Date listed on Schedule 6 hereto which letters of credit will be deemed to be issued and outstanding under this Agreement as of the Effective Date. Each Letter of Credit shall be classified by Issuing Bank as a "Commercial" Letter of Credit or a "Standby" Letter of Credit, in accordance with the laws and regulations applicable to Issuing Bank from time to time and in accordance with Issuing Bank's customary practices at such times for reporting to regulatory authorities. "Lenders" means each party hereto (other than Borrower), including, without limitation, NationsBank of Texas, N.A. in its capacity as a Lender hereunder rather than as Administrative Agent or Collateral Agent, CIBC Inc. in its capacity as a Lender hereunder rather than as Documentation Agent, Morgan Guaranty Trust Company of New York in its capacity as a Lender hereunder rather than as Documentation Agent, The Chase Manhattan Bank in its capacity as a Lender hereunder rather than as Syndication Agent, the Co-Agents in their capacity as Lenders hereunder rather than as Co- Agents, and the successors and assigns of each as holder of a Note. "Lien" means, any lien, mortgage, security interest, pledge, deposit, production payment, encumbrance, rights of a vendor under any title retention or conditional sale agreement or lease or other arrangement substantially equivalent thereto. "Loan" means any of a Revolving Loan, Competitive Bid Advance or Swing Line Advance, as the context requires. "Loan Commitment" means, with respect to each Lender, the amount set forth as such Lender's Loan Commitment opposite the name of such Lender in the column headed "New Commitment" or otherwise indicated on Schedule 1 attached hereto (or, if such Lender is an assignee, the amount of its Loan Commitment set forth in the assignment pursuant to which it became a Lender) as such amount may be reduced or increased from time to time pursuant to any assignment to which it is a party or otherwise pursuant to the terms of this Agreement. "Loan Commitment Period" means the period from and including the date hereof until and including the Maturity Date (or, if earlier, the day on which the Loan Notes first become due and payable in full or the Loan Commitments are terminated upon notice by Administrative Agent to Borrower pursuant to Section 6.1). "Loan Documents" means this Credit Facility Agreement, as the same may have been or may be amended from time to time hereafter, the Notes, the LC Applications, the Letters of Credit, the Swing Line Participation Certificate, the Guaranties, the Disclosure Schedule, the 11 16 Security Instruments, the agreements with the Managing Agents referred to in Section 2.8, any amendments to any of the foregoing, and all other agreements, certificates, notices and disclosures at any time executed or certified by a Designated Officer of and on behalf of a Designated Entity and delivered by such Designated Entity or such Designated Officer in connection herewith or therewith (exclusive of term sheets, commitment letters, correspondence and similar documents used in the negotiation hereof or thereof). "Loan Note" has the meaning given it in Section 2.1(c). "Majority Lenders" means Lenders whose aggregate Percentage Shares exceed 50%. "Managing Agents" means Administrative Agent, each Documentation Agent and the Syndication Agent hereunder and their successors and assigns in such capacities. "Margin Regulations" means, as applicable, Regulations G, U and X of the Board of Governors of the Federal Reserve System, as from time to time in effect. "Material Adverse Effect" shall mean a material adverse effect on (a) the financial condition of Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower and its Subsidiaries taken as a whole to operate their respective businesses, (c) the ability of Borrower to meet its obligations under the Loan Documents on a timely basis or (d) the ability of Designated Entities taken as a whole to meet their obligations under the Loan Documents on a timely basis; provided, however, that a material adverse effect that is limited to an Unrestricted Subsidiary shall not (i) be a Material Adverse Effect or (ii) be included in the determination of whether a Material Adverse Effect shall have occurred or shall be expected to occur. "Matured LC Obligations" means all amounts paid by Issuing Bank or any Lender on drafts or demands for payment drawn or made under any Letter of Credit (or under or in connection with any LC Application) which have not been repaid to the Issuing Bank or Lender (with the proceeds of a Revolving Loan Advance or otherwise). "Maturity Date" means the earlier of (a) August 7, 2022 and (b) the date on which the Loan Commitment of each Lender is reduced to zero or terminated. "Maximum Lawful Rate" has the meaning given it in Section 8.6. "Mesa" means Mesa, Inc., a Delaware corporation. "Moody's" means Moody's Investors Service, Inc. and any successor thereto that is a nationally-recognized rating agency. "Section 956" has the meaning given it in Section 6.1(k). 12 17 "Note" means any Loan Note, Swing Line Note or Competitive Bid Note. "Notice Period" has the meaning given it in Section 6.4. "Obligations" means all Debt from time to time owing by any of Designated Entities to any Agent or any Lender under or pursuant to any of the Loan Documents, including, without limitation, all LC Obligations, Swing Line Obligations and Competitive Bid Obligations. "Obligation" means any part of the Obligations. "Outside Debt" means (i) Pioneer USA's $150,000,000 8 7/8% Senior Notes due 2005 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, (ii) Pioneer USA's $150,000,000 8 1/4% Senior Notes due 2007 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, (iii) Mesa's 10 5/8% Senior Subordinated Notes due 2006 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, and (iv) Mesa's 11 5/8% Senior Subordinated Discount Notes due 2006 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring.. "P&P; Petroleum" means Parker & Parsley Petroleum Company, a Delaware corporation. "Percentage Share" means, with respect to any Lender (a) when used in Section 2.1 or 2.3, in any Request for Advance or when no Loans (other than Swing Line Advances or Competitive Bid Advances, if applicable) are outstanding hereunder, the percentage set forth opposite such Lender's name on Schedule 1 to this Agreement, or in documents of assignment delivered pursuant to Section 8.8, as such percentage may be adjusted from time to time by such assignment documents, and (b) when used otherwise, the percentage equal to the unpaid principal balance of such Lender's Loans, other than Swing Line Advances and Competitive Bid Advances, at the particular time in question divided by the aggregate unpaid principal balance of all Loans of all Lenders, other than Swing Line Advances and Competitive Bid Advances, at such time. "Permitted Liens" means (a) Liens for taxes, assessments or other governmental charges or levies if the same shall not at the particular time in question be due and delinquent or (if foreclosure, distraint, sale or other similar proceedings shall not have been commenced or, if commenced, shall have been stayed) are being contested in good faith and by appropriate proceedings, and if the subject Borrower shall have set aside on its books such reserves (segregated to the extent required by sound accounting practices) as may be required by GAAP or otherwise determined by the Board of Directors of Borrower to be adequate with respect thereto; (b) Liens of carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen, and operators arising in the ordinary course of business or incident to the exploration, development, operations and maintenance of oil, gas and other hydrocarbon 13 18 properties and related facilities and assets, for sums not yet due or being contested in good faith and by appropriate proceedings, if Borrower shall have set aside on its books such reserves (segregated to the extent required by sound accounting practices) as may be required by GAAP or otherwise determined by the Board of Directors of Borrower to be adequate with respect thereto; (c) Liens incurred in the ordinary course of Designated Entities' respective businesses in connection with worker's compensation, unemployment insurance and other social security legislation (other than ERISA); (d) Liens incurred in the ordinary course of Designated Entities' businesses to secure the performance of bids, tenders, trade contracts, leases (statutory only), statutory obligations, surety and appeal bonds, performance and return-of-money bonds and other obligations of a like nature; (e) Liens, easements, rights-of-way restrictions, servitudes, permits, conditions, covenants, exceptions, reservations and other similar encumbrances incurred in the ordinary course of Designated Entities' businesses or existing on property and not in the aggregate materially interfering with the ordinary conduct of Designated Entities' businesses; (f) legal or equitable encumbrances deemed to exist by reason of negative pledges such as in Section 5.2 of this Agreement or the existence of any litigation or other legal proceeding and any related lis pendens filing (excluding any attachment prior to judgment, judgment lien or attachment lien in aid of execution on a judgment); (g) rights of a common owner of any interest in property held by any Designated Entity as such common owner; (h) farmout, carried working interest, joint operating, unitization, royalty, overriding royalty, sales and similar agreements relating to the exploration or development of, or production from, oil and gas properties incurred in the ordinary course of business, (i) Liens arising pursuant to Section 9.319 of the Texas Uniform Commercial Code or other similar statutory provisions of other states with respect to production purchased from others; (j) Liens represented by capital leases permitted under this Agreement; (k) any defects, irregularities, or deficiencies in title to easements, rights-of-way or other properties which do not in the aggregate have a Material Adverse Effect; (l) Liens existing pursuant to the Security Instruments; (m) Liens existing in favor of Agents and Lenders under the Loan Documents; (n) Liens on assets of a Subsidiary of Borrower in favor of Borrower or another Restricted Subsidiary; (o) Liens on any property or assets owned or leased by Borrower or any Subsidiary existing at the time such property or asset was acquired (or at the time such Person became a Subsidiary); provided that (1) in the case of the acquisition of a Subsidiary, such lien only encumbers property or assets of such Subsidiary immediately prior to or at the time of acquisition by Borrower of such Subsidiary and (2) Borrower will use its best efforts to eliminate such Liens in a timely manner; (p) purchase money Liens, so long as such Liens only encumber property or assets (including any improvements thereon, accessions thereto or proceeds thereof) acquired with the proceeds of purchase money indebtedness incurred in connection with such Lien; (q) Liens on the stock or other ownership interest of or in any Unrestricted Subsidiary; (r) Liens in renewal or extension of any of the foregoing permitted Liens, so long as limited to the property or assets encumbered and the amount of indebtedness secured immediately prior to such renewal or extension; and (s) Liens approved in writing by or on behalf of the Required Lenders. 14 19 "Person" means an individual, corporation, company, partnership, association, joint stock company, trust or trustee thereof, estate or executor thereof, unincorporated organization or joint venture, court or governmental unit or any agency or subdivision thereof, or any other legally recognizable entity. "Pioneer Canada" means Pioneer Natural Resources (Canada) Ltd., a corporation organized under the laws of the Province of Alberta, Canada. "Pioneer USA" means Pioneer Natural Resources USA, Inc., a Delaware corporation. "Pledge Agreement" means a Pledge Agreement substantially in the form of Exhibit M hereto, or other form of pledge agreement or deed of mortgage, in form and substance satisfactory to the Managing Agents and the subject Designated Entity, pledging an interest in the capital shares or stock of, partnership interests in, or other ownership interest in, a Restricted Subsidiary as from time to time amended, modified and supplemented. "Primary Credit Facility" means the facility for loans and the issuance of Letters of Credit established pursuant to this Agreement. "Prior Indebtedness" has the meaning given it in Recital B. "Proxy" has the meaning given it in Section 4.1(f)(ii). "Rate Election" has the meaning given it in Section 2.3. "Rating Agencies" means any or all of S&P; or Moody's. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as from time to time in effect. "Request for Advance" means a written or telephonic request, or a written confirmation, made by a Borrower which meets the requirements of Section 2.2. "Request for Competitive Bid Offer" has the meaning given it in Section 2.22. "Request for Swing Line Bid" has the meaning given it in Section 2.5(a). "Required Lenders" means Lenders whose aggregate Percentage Shares exceed 66 2/3%. "Reserve Percentage" means, on any day with respect to each particular Eurodollar Portion in a Tranche, the maximum reserve requirement, as determined by Administrative 15 20 Agent (including without limitation any basic, supplemental, marginal, emergency or similar reserves), expressed as a percentage and rounded to the nearest 1/100th of 1%, which would then apply to Administrative Agent under Regulation D or successor regulations issued from time to time by the Board of Governors of the Federal Reserve System with respect to "Eurocurrency liabilities" (as such term is defined in Regulation D) equal in amount to Administrative Agent's Eurodollar Portion in such Tranche, were Administrative Agent to have any such Eurocurrency liabilities. If such reserve requirement shall change after the date hereof, the Reserve Percentage shall be automatically increased or decreased, as the case may be, from time to time as of the effective time of each such change in such reserve requirement. "Restricted Payment" means any investment, contribution, loan or advance of cash to a Person (other than (i) Borrower or (ii) a Subsidiary that is not an Unrestricted Subsidiary), other than: (a) prudent short-term investments; (b) investments, contributions, loans or advances disclosed in the Updated Financial Statements or in the Disclosure Schedule or in disclosures made subsequent to the date hereof and consented to in writing by or on behalf of the Majority Lenders or otherwise made to effect the Acquisition and the subsequent restructuring of certain of the Restricted Subsidiaries, as described in the Acquisition Agreement; (c) investments, contributions, loans or advances made by any Designated Entity in the ordinary course of its business; or (d) contributions made by Borrower to any of its Subsidiaries arising out of or in respect of Letters of Credit issued hereunder and used for the general corporate purposes of such Subsidiary (i) so long as no amounts have been drawn under any such Letter of Credit or (ii) to the extent that Borrower has been reimbursed by such Subsidiary for amounts drawn under any such Letter of Credit. "Restricted Subsidiary" means each Subsidiary of Borrower that, at the particular time in question, (i) owns directly or indirectly any material assets or any interest in any other Restricted Subsidiary and (ii) either (a) has not been designated as an Unrestricted Subsidiary or (b) has been redesignated as a Restricted Subsidiary. The Restricted Subsidiaries on the Effective Date are listed on Schedule 3 attached hereto and each other Subsidiary of Borrower as of the Effective Date shall be an Unrestricted Subsidiary. A Restricted Subsidiary shall remain such (even if it no longer owns directly or indirectly any interest in any of the material assets) until designated as an Unrestricted Subsidiary pursuant to Section 5.2(i). An Unrestricted Subsidiary shall remain an Unrestricted Subsidiary unless redesignated as a Restricted Subsidiary pursuant to the provisions of Section 5.2(i). 16 21 "Restructuring" has the meaning given it in Section 5.2(l). "Revolving Loan" has the meaning given it in Section 2.1(c). "Revolving Loan Advance" has the meaning given it in Section 2.1(a). "S&P;" means Standard & Poor's Ratings Group and any successor thereto that is a nationally-recognized rating agency. "Security Instruments" shall mean the agreements or instruments described or referred to in Schedule 5, the Guaranties, the Pledge Agreement, and any and all other agreements or instruments now or hereafter executed and delivered by any Designated Entity or any other Person in connection with, or as security for the payment or performance of, the Notes, LC Obligations, this Agreement or the Guaranties, as any such instrument or agreement may be supplemented, amended, renewed, extended or restated from time to time. "Stock Pledge Release Date" has the meaning given to it in Section 8.16. "Subsidiary" means, with respect to any Person, any corporation, which is directly or indirectly (through one or more intermediaries) controlled by or with respect to which fifty percent (50%) or more of the stock having ordinary voting power to elect the board of directors is owned by such Person, or any association, partnership, joint venture, or other non-corporate business entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled by, or owned one hundred percent (100%) by, such Person, provided that associations, joint ventures or other relationships (a) which are established pursuant to an operating agreement or similar agreement or which are partnerships for purposes of federal income taxation only, (b) which are not partnerships (or subject to the Uniform Partnership Act) under applicable state law, and (c) whose businesses are limited to the exploration, development and operation of oil, gas or mineral properties and interests owned directly by the parties in such associations, joint ventures or relationships, shall not be deemed to be "Subsidiaries" of such Person. "Swing Line Advances" has the meaning given it in Section 2.4. "Swing Line Lender" means NationsBank of Texas, N.A., its successors and assigns. "Swing Line Note" has the meaning given it in Section 2.5(e). "Swing Line Obligations" means, at the particular time in question, the sum of all outstanding Swing Line Advances. 17 22 "Swing Line Participation Certificate" means a Swing Line Participation Certificate substantially in the form of Exhibit "F". "Swing Line Rate" has the meaning given it in Section 2.5(a). "Syndication Agent" means The Chase Manhattan Bank, as Syndication Agent hereunder and its successors and assigns in such capacity. "Taxes" has the meaning given it in Section 2.20. "Termination Event" means (a) the occurrence with respect to any ERISA Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for 30-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of any Designated Entity or of any Affiliate of any Designated Entity from an ERISA Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan. "364 Day Credit Facility" means that certain Amended and Restated Credit Facility Agreement, dated as of December 18, 1997, among Pioneer Natural Resources Company, as Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders party thereto, as such agreement may be amended, modified or restated from time to time. "Total Capitalization" means the sum (without duplication) of (i) Consolidated Total Funded Debt of Borrower and its Subsidiaries, plus (ii) Consolidated shareholder's equity of Borrower and its Subsidiaries. "Total Funded Debt" means all Debt of the type referred to in clauses (a), (b), (c), (d), (g) (excluding Debt of the type referred to in clause (e) of the definition of "Debt") and (h) of the definition of "Debt". "Tranche" has the meaning given it in Section 2.3. 18 23 "Unrestricted Subsidiary" means each Subsidiary of Borrower which is not designated as a Restricted Subsidiary on Schedule 3 attached hereto or is designated by Borrower as an Unrestricted Subsidiary pursuant to Section 5.2(i). "Updated Financial Statements" means (a) the audited annual Consolidated financial statements of P&P; Petroleum and its Consolidated Subsidiaries dated as of December 31, 1996, (b) the audited annual Consolidated financial statements of Mesa and its Consolidated Subsidiaries dated as of December 31, 1996, and (c) the unaudited Consolidated financial statements and unaudited consolidating balance sheets and statements of operations of Borrower and its Consolidated Subsidiaries prepared in reasonable detail in accordance with GAAP and dated as of September 30, 1997. Section 1.2 Exhibits and Schedules. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Section 1.3 Amendment of Defined Instruments. Unless the context otherwise requires or unless otherwise provided herein, the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document, provided that nothing contained in this Section shall be construed to authorize or require any such renewal, extension, modification, amendment or restatement. Section 1.4 References and Titles. All references in this Agreement to Exhibits, Schedules, articles, sections, subsections and other subdivisions refer to the Exhibits, Schedules, articles, sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The words "this Agreement", "this Primary Credit Facility", "Primary Credit Facility", "this instrument", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases "this section" and "this subsection" and similar phrases refer only to the sections or subsections hereof in which such phrases occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including without limitation". Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Section 1.5 Calculations and Determinations. All calculations under the Loan Documents of interest chargeable with respect to Eurodollar Portions and Competitive Bid Advances shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 360 days, subject, however, to the limitations set forth in Section 8.6 hereof. All other calculations of interest and fees made under the Loan Documents 19 24 shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 365 or 366 days, as appropriate. Unless otherwise expressly provided herein or unless Required Lenders otherwise consent, all financial statements and reports furnished to Administrative Agent or any other Lender hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP. ARTICLE 2 LOANS AND LETTERS OF CREDIT Section 2.1 Making the Loans. (a) Subject to the terms and conditions hereof, each Lender agrees to make advances on a revolving basis (herein a "Revolving Loan Advance") to Borrower from time to time on any Business Day during the Loan Commitment Period, equal to such Lender's Percentage Share of the aggregate amount of Revolving Loan Advances requested by Borrower to be made on such day, so long as the aggregate amount of (i) all Lenders' Revolving Loan Advances (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time plus (ii) the LC Obligations of all Lenders at such time plus (iii) all Swing Line Advances to Borrower plus (iv) all Lenders' Competitive Bid Advances outstanding at such time, does not exceed the Facility Amount. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow Revolving Loan Advances. (b) No Lender shall be permitted or required to make any Revolving Loan Advance under this Agreement unless the aggregate of (1) such Lender's Revolving Loan Advances under this Agreement (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time plus (2) such Lender's share of LC Obligations at such time is less than or equal to the least of (i) such Lender's Loan Commitment or (ii) such Lender's Percentage Share of the Facility Amount plus (3) such Lender's participation pursuant to a Swing Line Participation Certificate in any Swing Line Advances, if any. (c) The aggregate amount of all Revolving Loan Advances requested of all Lenders in any Request for Advance must be an integral multiple of $1,000,000 which equals or exceeds $10,000,000 or must equal the least of the unadvanced portion of the aggregate Loan Commitments of all Lenders or the unadvanced portion of the Facility Amount. The obligation of Borrower to repay to each Lender the aggregate amount of all Revolving Loan Advances made by such Lender to 20 25 Borrower (herein called such Lender's "Revolving Loan"), together with interest accruing in connection therewith, shall be evidenced by a single promissory note (herein called such Lender's "Loan Note") made by Borrower payable to the order of such Lender in the form of Exhibit A-1 with appropriate insertions. The amount of principal owing on any Lender's Loan Note at any given time shall be the aggregate amount of all Revolving Loan Advances theretofore made by such Lender minus all payments of principal theretofore received by such Lender on such Loan Note. Interest on each Loan Note shall accrue and be due and payable as provided herein and therein. Section 2.2 Requests for Revolving Loan Advances. Borrower must give to Administrative Agent not later than 11:00 a.m., Dallas, Texas time, for same day funding, and not later than 1:00 p.m., Dallas, Texas time, for next Business Day funding, written notice, or telephonic notice promptly confirmed in writing, of any requested Revolving Loan Advances, after which Administrative Agent shall give each other Lender prompt notice thereof. Each such written request or confirmation must be made in the form and substance of Exhibit C attached hereto, duly completed (herein called a "Request for Advance"). Each such telephonic request shall be deemed a representation, warranty, acknowledgment and agreement by Borrower as to the matters which are required to be set out in such written confirmation. If all conditions precedent to a Revolving Loan Advance have been met, each Lender will on the date requested remit, not later than 1:00 p.m., Dallas, Texas time, for same day funding, and not later than 11:00 a.m., Dallas, Texas time, the following Business Day for next Business Day funding, to Administrative Agent at Administrative Agent's office in Dallas, Texas, or to such other office as Administrative Agent may specify from time to time by notice to Lenders, the amount of such Lender's Revolving Loan Advance in immediately available funds, and upon receipt of such funds, unless to its actual knowledge any conditions precedent to such Revolving Loan Advances have been neither met nor waived as provided herein, Administrative Agent shall promptly make the Revolving Loan Advances available to Borrower. Each Request for Advance shall be irrevocable and binding on Borrower. Unless Administrative Agent shall have received prompt notice from a Lender that such Lender will not make available to Administrative Agent such Lender's Revolving Loan Advance, Administrative Agent may in its discretion assume that such Lender has made such Revolving Loan Advance available to Administrative Agent in accordance with this Section and Administrative Agent may if it chooses, in reliance upon such assumption, make such Revolving Loan Advance available to Borrower. If and to the extent such Lender shall not so make its Revolving Loan Advance available to Administrative Agent, such Lender and Borrower severally agree to pay or repay to Administrative Agent on demand the amount of such Revolving Loan Advance together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is paid or repaid to Administrative Agent, (i) if paid or repaid by Borrower at the interest rate applicable at the time to the other Revolving Loan Advances made on such date of such Revolving Loan Advance and (ii) if paid or repaid by such Lender, at the Federal Funds Rate. The failure of 21 26 any Lender to make any Revolving Loan Advance to be made by it hereunder shall not relieve any other Lender of its obligation hereunder, if any, to make its Revolving Loan Advance, but no Lender shall be responsible for the failure of any other Lender to make any Revolving Loan Advance to be made by such other Lender. Section 2.3 Rate Elections. Borrower may from time to time designate all or any portions of the Loans (including any yet to be made Revolving Loan Advances which are to be made prior to or at the beginning of the designated Eurodollar Interest Period but excluding any portions of the Loans which are required to be repaid prior to the end of the designated Eurodollar Interest Period and excluding any Competitive Bid Advance and any Swing Line Advance) as a "Tranche", which term refers to a set of Eurodollar Portions of the same type with identical Eurodollar Interest Periods and with each Lender participating in such Tranche in accordance with its Percentage Share. Without the consent of Required Lenders, Borrower may not make such election, and Administrative Agent and Lenders shall not be required to give effect to such election, during the continuance of a Default and Borrower may make such an election with respect to already existing Eurodollar Portions only if such election will take effect at or after the termination of the Eurodollar Interest Period applicable thereto. Each election by Borrower of a Tranche shall: (a) Be made in writing in the form and substance of Exhibit D attached hereto, duly completed, herein called a "Rate Election"; (b) Specify the aggregate amount of the Loans which Borrower desires to designate as such Tranche, the first day of the Eurodollar Interest Period which is to apply thereto, and the length of such Eurodollar Interest Period; and (c) Be received by Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on the third Business Day preceding the first day of the specified Eurodollar Interest Period. Promptly after receiving any such Rate Election which meets the requirements of this Section, Administrative Agent shall notify each Lender thereof. Each Rate Election shall be irrevocable. Borrower may not make any Rate Election which does not specify an Eurodollar Interest Period complying with the definition of "Eurodollar Interest Period" in Section 1.1, and the aggregate amount of the Tranche elected in any Rate Election must be $10,000,000 or a higher integral multiple of $1,000,000. Upon the termination of each Eurodollar Interest Period the portion of each Loan within the related Tranche shall, unless the subject of a new Rate Election then taking effect, automatically become a part of the Base Rate Portion of such Loan and become subject to all provisions of the Loan Documents governing such Base Rate Portion. Borrower shall have no more than fifteen (15) Tranches in effect at any time. If requested to do so by Borrower through Administrative Agent at least two (2) 22 27 Business Days before the delivery date of any proposed Rate Election, each Lender will advise Administrative Agent before 10:00 a.m., Dallas, Texas time, on the Business Day following receipt of such request as to whether, if Borrower selects a specified duration of nine (9) or twelve (12) months for the Eurodollar Interest Period applicable to such proposed Rate Election, such Lender expects that deposits in dollars with a corresponding term will be available to it in the relevant market on the first day of such Eurodollar Interest Period in the amount required to fund the Eurodollar Portion of its Loan to which such Eurodollar Interest Period would apply. Unless a Lender responds by such time to the effect that it expects such deposits will be available to it, Borrower shall not be entitled to select such proposed duration for such Eurodollar Interest Period. Each Lender may, if it so elects, fulfill its obligation to fund any Eurodollar Portion by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to fund or continue such Eurodollar Portion; provided, however, that such Eurodollar Portion shall be deemed to have been made and held by such Lender, and the obligations of the subject Borrower to repay such Eurodollar Portion shall nevertheless be to such Lender for the account of such branch, or Affiliate (or international banking facility). In addition, Borrower hereby consents and agrees that, for purposes of any determination to be made for purposes of Sections 2.17, 2.18, 2.19 and 2.20, it shall be conclusively assumed that such Lender elected to fund all Eurodollar Portions by purchasing Dollar deposits in the interbank eurodollar market of its designated office. Section 2.4 Swing Line Advances. In addition to borrowings pursuant to Section 2.1(a) or Section 2.22, Borrower may request Swing Line Lender to make advances to Borrower on any Business Day (unless Borrower and Swing Line Lender agree otherwise) during the Loan Commitment Period as provided in Sections 2.5 and 2.6 (herein called "Swing Line Advances"); provided, however, that (a) at no time shall the outstanding aggregate principal amount of all Swing Line Advances under this Agreement plus all "Swing Line Advances" (as defined in the 364 Day Credit Facility), if any, outstanding under the 364 Day Credit Facility exceed $50,000,000, and (b) at no time shall the sum of (1) the outstanding aggregate principal amount of all Swing Line Advances to Borrower, (2) the outstanding aggregate principal amount of the Revolving Loans, (3) the outstanding aggregate principal amount of LC Obligations and (4) the outstanding aggregate principal amount of all Competitive Bid Advances, exceed the Facility Amount. Section 2.5 Procedure for Swing Line Advances. (a) No later than 11:00 a.m., Dallas, Texas time, on a Business Day on which Borrower desires a Swing Line Advance, Borrower shall transmit to Swing Line Lender and to Administrative Agent by telecopy a notice in substantially the form of Exhibit E attached hereto (herein called a "Request for Swing Line Loan"). Swing Line Lender will specify the rate of interest per annum which 23 28 will be the fixed rate of interest to be charged for such Swing Line Advance until maturity (herein called the "Swing Line Rate"). (b) Swing Line Lender shall wire the Swing Line Advance in immediately available funds by no later than 1:00 p.m., Dallas, Texas time on the date of request for Swing Line Advance, on such day to Administrative Agent, which shall deposit such funds to an account designated by Borrower by no later than 1:15 p.m. on the same day. (c) Borrower shall repay each such Swing Line Advance on or before 1:00 p.m., Dallas, Texas time, on the following Business Day or at such other maturity (such date of maturity being no more than fourteen (14) days after the date of the Swing Line Advance and no later than the Maturity Date) as is agreed to by Borrower, Administrative Agent and the Swing Line Lender. The repayment shall be paid on such date by Borrower (which payment may be in the form of a Swing Line Advance advanced to Borrower on that day) to Administrative Agent in immediately available funds with instructions to Administrative Agent to forward such proceeds to the Swing Line Lender. Any accrued and unpaid interest pursuant to Swing Line Advances shall be paid by Borrower (which payment may be in the form of a Swing Line Advance advanced to Borrower on that day) to Administrative Agent in immediately available funds on the first Business Day of each calendar month with instructions to Administrative Agent to forward such proceeds to the Swing Line Lender. (d) Interest on the Swing Line Advances shall be computed on the basis of a year of 365 or 366 days and actual days elapsed (including the first day, but excluding the last day) occurring in the period for which payable and shall not exceed Maximum Lawful Rate. Past due principal and interest (to the extent allowed by law) shall bear interest at the lesser of the Default Rate or the Maximum Lawful Rate and shall be payable on demand. (e) The Swing Line Advances made by the Swing Line Lender shall be evidenced by a single promissory note of Borrower payable to the order of the Swing Line Lender in the amount of $50,000,000 and in substantially the form of Exhibit A-2 attached hereto, with appropriate insertions (herein called a "Swing Line Note"). The date, amount, Swing Line Rate and maturity of each Swing Line Advance made by a Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books. (f) The Swing Line Advances will be used by Borrower to provide working capital for the operations of Borrower and its Subsidiaries and for general business purposes. No Swing Line Advances shall be used for the purpose of purchasing 24 29 or carrying any Margin Stock in violation of the Margin Regulations. (g) The obligation of the Swing Line Lender to make each Swing Line Advance after timely acceptance by Borrower is further subject to the conditions contained in Article 3. Section 2.6 Special Provisions for Swing Line Advances. (a) Lenders to Make Revolving Loan Advances. (i) Swing Line Lender, at any time in its discretion, upon written request to Lenders through Administrative Agent (with a copy to Borrower), may require each Lender (including the Swing Line Lender) to make a Revolving Loan Advance, subject to the provisions of Section 2.1 hereof, in an amount equal to such Lender's Percentage Share of the outstanding Swing Line Advances. Swing Line Lender shall deliver such request to Administrative Agent prior to 11:00 a.m., Dallas, Texas time, on the Business Day next preceding the date (which shall be a Business Day) on which such Revolving Loan Advances are to be made. Promptly upon receipt of any such request, Administrative Agent shall give notice thereof to Lenders. Each Lender shall make available its Percentage Share of such Revolving Loans to Administrative Agent by 11:00 a.m., Dallas, Texas time, on the requested date for such Revolving Loan Advances. Administrative Agent shall apply the proceeds of such Revolving Loan Advances to prepay the Swing Line Advances of the Swing Line Lender; provided, however, that Administrative Agent shall be obligated to make the proceeds of such Revolving Loans available only to the extent received by it from Lenders. All Revolving Loans made pursuant to this subsection shall be Base Rate Loans. (ii) In the event Administrative Agent advances proceeds of any Revolving Loan to Swing Line Lender and one or more of the Lenders (other than Swing Line Lender) fail to fund all or any portion of such Revolving Loan Advance immediately upon receipt of notice from Administrative Agent, then (I) such Lender shall pay directly to Administrative Agent the amount thereof together with interest thereon at the Federal Funds Rate, and (II) if not paid by such Bank, the Swing Line Lender will repay directly to Administrative Agent such amount as will equal the amount such other Lender(s) failed to fund, together with interest at the Federal Funds Rate. (b) Participations in Swing Line Advances. (i) If, at any time prior to the making of Revolving Loans pursuant to subsection 2.6(a)(i) hereof, any Event of Default described in Sections 6.1(h) hereof shall have occurred, each Lender, on the date such Revolving Loan Advance was to have been made or, if no request for Revolving Loan Advances had been made 25 30 pursuant to Section 2.6(a)(i) hereof, promptly upon request by the Swing Line Lender delivered to Administrative Agent, shall purchase an undivided participation interest in all outstanding Swing Line Advances in an amount equal to its Percentage Share times the outstanding amount of such Swing Line Advances. Each Lender (other than the Swing Line Lender) will transfer immediately to Administrative Agent for credit to Swing Line Lender, in immediately available funds, the amount of its participation. Upon receipt thereof, the Swing Line Lender will deliver to such other Lender a Swing Line Advance Participation Certificate, dated the date of receipt of such funds and in the amount of such Lender's participation. (ii) Whenever, at any time after the Swing Line Lender has received from any other Lender such other Lender's participating interest in a Swing Line Advance, the Swing Line Lender receives any payment on account thereof, Administrative Agent will distribute to such other Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that any payment received by Swing Line Lender is required to be returned, such other Lender will return to Swing Line Lender any portion thereof previously distributed to it. (c) Acknowledged Privity. Borrower expressly agrees that, in respect of each Lender's funded participation interest in any Swing Line Advance, such Lender shall be deemed to be in privity of contract with Borrower and have the same rights and remedies against Borrower under the Loan Documents as if such funded participation interest in such Swing Line Advance were a Revolving Loan. (d) Unconditional Obligation. Each Lender's obligation to make Revolving Loan Advances or to purchase participation interests in Swing Line Advances as provided in this Section shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, Borrower or any other Person for any reason whatsoever, (B) the existence of any Default or Event of Default at any time, (C) the occurrence of any event or existence of any condition that might have a Material Adverse Effect, or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. Section 2.7 Facility Fee; Amendment Fee. In consideration of each Lender's commitment to make Revolving Loan Advances and Competitive Bid Advances, Borrower will pay, or cause the payment, to Administrative Agent for the account of each Lender an annual facility fee payable to each Lender determined by applying the Facility Fee Rate to such Lender's Percentage Share of the Facility Amount as of the date of such payment, payable in arrears quarterly until the Maturity Date, with the first payment thereof to be January 1, 1998, 26 31 subsequent payments on the first day following each successive calendar quarter ending on each March, June, September and December, and the final payment thereof on the Maturity Date. Borrower will pay, or cause the payment, to Administrative Agent for the account of each Lender a non-refundable amendment fee payable to each Lender determined by applying the Amendment Fee Rate to such Lender's Percentage Share of the Facility Amount as of the Effective Date. Section 2.8 Managing Agents' Fees. In addition to all other amounts due to the Managing Agents under the Loan Documents, Borrower will pay the non-refundable annual fees set forth in those certain Fee Letters dated June 25, 1997. Section 2.9 Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date. (b) Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of (i) all Lenders' Revolving Loan Advances (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time plus (ii) the LC Obligations of all Lenders at such time plus (iii) all Swing Line Advances to Borrower plus (iv) all Lenders' Competitive Bid Advances outstanding at such time, would exceed the total Commitments. (c) Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least two Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. Section 2.10 Optional Prepayments. Borrower may, upon notice to each Lender identical to that required for related borrowings under this Agreement, from time to time and without premium or penalty, prepay its Notes, in whole or in part, so long as the aggregate 27 32 amounts of all partial prepayments of principal concurrently paid on such Notes equals $5,000,000 or any higher integral multiple of $1,000,000 or the aggregate outstanding balance of the Loans, and so long as Borrower does not prepay any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance except in accordance herewith. Any amounts prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Loan Documents at the time of such prepayment. Section 2.11 Payments to Lenders. Except as expressly set forth in Section 2.5(c) with respect to repayment of Swing Line Advances and Section 2.22(b) with respect to repayment of Competitive Bid Advances, Borrower will make each payment which it owes under the Loan Documents to Administrative Agent at its principal banking office in Dallas, Texas, or to such other office as Administrative Agent may specify from time to time by notice to Borrower for the account of each Lender to whom such payment is owed, without the application of any setoff, deduction or counterclaim. Each such payment must be received by Administrative Agent not later than 1:00 p.m., Dallas, Texas time, on the date such payment becomes due and payable, in lawful money of the United States of America and in immediately available funds. Any payment received by Administrative Agent after such time will be deemed to have been made on the next Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day (except, with respect to any Eurodollar Portion, as may be otherwise required by the definition of Eurodollar Interest Period), and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension as provided in the Loan Document under which such payment is due. All payments applied to principal or interest on any Note shall be applied first to any interest then due and payable, then to principal then due and payable, and last to any prepayment of principal and interest in compliance with Section 2.10. Unless otherwise expressly provided, all payments by any Designated Entity pursuant to this Agreement or any other Loan Document shall be made by such Designated Entity to Administrative Agent for account of Agents and Lenders pro rata among Obligations of the same type and, if applicable, having the same Eurodollar Interest Period or, in the case of Swing Line Advances or Competitive Bid Advances, the same maturity date. Section 2.12 Letters of Credit. Subject to the terms and conditions hereof, Borrower may request Issuing Bank to issue one or more Letters of Credit, provided that, after taking such Letter of Credit into account: (a) the sum of (1) the aggregate principal amount of Revolving Loans outstanding at such time, (2) the aggregate principal amount of LC Obligations outstanding at such time, (3) the aggregate principal amount of outstanding Swing Line Advances to Borrower and (4) the aggregate principal amount of outstanding 28 33 Competitive Bid Advances to Borrower, does not exceed the least of (i) the aggregate of all Lenders' Loan Commitments at such time or (ii) the Facility Amount; (b) the aggregate amount of LC Obligations outstanding at such time after giving effect to such request does not exceed $50,000,000; (c) the expiration date of such Letter of Credit is prior to the Maturity Date, unless otherwise agreed to by all of the Lenders and the Issuing Bank; (d) such Letter of Credit is to be used for general corporate purposes of Borrower or any of its Subsidiaries, subject to paragraph (e) of this Section; (e) the terms of such Letter of Credit are acceptable to Issuing Bank in the reasonable exercise of its discretion; and (f) all other conditions in this Agreement to the issuance of such Letter of Credit have been satisfied. Issuing Bank will honor any such request if the foregoing conditions (a) through (g) (herein called the "LC Conditions") have been met as of the date of issuance of such Letter of Credit. Nothing herein shall be interpreted or deemed to obligate any Agent, other than Administrative Agent, or any Lender to issue any Letter of Credit hereunder, and the obligation of Administrative Agent to act as Issuing Bank is subject to paragraphs (a) through (g) of this Section and to satisfaction of the conditions set forth in Article 3. Section 2.13 Requesting Letters of Credit. Borrower must make written application pursuant to an LC Application for any Letter of Credit at least three (3) Business Days before the date on which Issuing Bank is requested to issue such Letter of Credit. By making any such written application Borrower shall be deemed to have represented and warranted that the LC Conditions and the conditions precedent set forth in Section 3.2 will be met as of the date of issuance of such Letter of Credit. Each such LC Application must be made in such form as may mutually be agreed upon by Issuing Bank and Borrower. No more than two (2) Business Days after the LC Conditions for a Letter of Credit have been met as described in Section 2.12, Issuing Bank will issue such Letter of Credit at Issuing Bank's office in Dallas, Texas or at such other office of which Issuing Bank shall give Borrower written notice. In the event of a conflict between any provision contained in this Agreement and any provision contained in any LC Application, the provision contained in this Agreement shall control. 29 34 Section 2.14 Reimbursement of Letters of Credit. (a) Reimbursement by Borrower. Each payment of a draft or demand for payment honored by Issuing Bank under a Letter of Credit shall constitute a loan to and obligation of Borrower. Promptly upon receipt of written notice of Issuing Bank's honoring of a Letter of Credit, Borrower promises to pay to Issuing Bank, or to Issuing Bank's order at such Issuing Bank's office or at such other office of which Issuing Bank shall give Borrower written notice, on demand, in legal tender of the United States of America, any and all amounts paid by Issuing Bank under any Letter of Credit, together with interest on any such amounts from the date payment is made by Issuing Bank under such Letter of Credit until but not including the date of the repayment of such amounts to Issuing Bank, at the Base Rate; provided that if any such payment or reimbursement shall be reimbursed to Issuing Bank on the date Issuing Bank makes such payment or disbursement, interest shall be payable on the reimbursable amount at such rate for one (1) day. In the event that Borrower fails to pay when due any Matured LC Obligation owed by it to Issuing Bank, Administrative Agent may, at its option, and without any notice or further authorization from Borrower, make, pro rata on behalf of the Lenders, a Revolving Loan Advance under this Agreement to Borrower in the amount of such unpaid Matured LC Obligation (whether or not such amount is less than the minimum Revolving Loan Advance or would result in the outstanding Obligations being greater than or equal to the Facility Amount), and apply the proceeds of such Revolving Loan Advance to the payment of such Matured LC Obligation. Borrower hereby expressly requests and irrevocably authorizes Administrative Agent to do all of the foregoing. Revolving Loan Advances used to refinance Matured LC Obligations shall bear interest as provided in this Agreement and in the Loan Notes. Borrower hereby promises to pay, when and as due, all present and future levies, costs and charges whatsoever imposed, assessed, levied or collected on, under or in respect of this Agreement with respect to any Letter of Credit and any payments of principal, interest or other amounts made on or in respect of any thereof (excluding, however, any such levies, costs and charges imposed on or measured by the net income or receipts of Issuing Bank). Borrower promises to indemnify Issuing Bank against, and to reimburse Issuing Bank on demand for, any of the foregoing levies, costs or charges paid by Issuing Bank and any loss, liability, claim or expense, including interest, penalties and legal fees, that Issuing Bank may incur because of or in connection with the failure of Borrower to make any such payment of levies, costs or charges when and as due or any payment of Matured LC Obligations when and as due. Borrower's obligation to reimburse Issuing Bank under this paragraph (a) of this 30 35 Section for payments and disbursements made by Issuing Bank under any Letter of Credit issued pursuant to this Section shall be absolute and unconditional under any and all circumstances and irrespective of any setoff, counterclaim or defense to payment which Borrower may have or have had against Issuing Bank or any Lender, including, without limitation, any defense based on the failure of the demand for payment under such Letter of Credit to conform to the terms of such Letter of Credit or the legality, validity, regularity or enforceability of such Letter of Credit; provided, however, that Borrower shall not be obligated to reimburse Issuing Bank for any wrongful payment or disbursement made by Issuing Bank under any Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of Issuing Bank or any of its officers, employees or agents. (b) Reimbursement by Lenders. Issuing Bank irrevocably agrees to grant and hereby grants to each Lender, and, each Lender irrevocably agrees to accept and purchase and hereby accepts and purchases from Issuing Bank, on the terms and conditions hereinafter stated, for such Lender's own account and risk an undivided interest equal to such Lender's Percentage Share of Issuing Bank's obligations and rights under each Letter of Credit issued hereunder and the amount of each draft paid by Issuing Bank thereunder. In the event that Borrower should fail to pay Issuing Bank on demand the amount of any draft or other request for payment drawn under a Letter of Credit as provided in paragraph (a) of this Section, each Lender shall, before 2:00 p.m., Dallas, Texas time, on the Business Day Issuing Bank shall have given notice to Lenders of Borrower's failure to so pay Issuing Bank, if such notice is given by 10:00 a.m., Dallas, Texas time (or on the Business Day immediately succeeding the day such notice is given after 10:00 a.m., Dallas, Texas time), pay to Issuing Bank at Issuing Bank's offices, or at such other office of which Issuing Bank shall have given Lenders written notice, in legal tender of the United States of America, in same day funds, such Lender's Percentage Share of the amount of such draft or other request for payment from Borrower plus interest on such amount from the date Issuing Bank shall have paid such draft or request for payment to the date of such payment by such Lender at the Federal Funds Rate. Each Lender's obligation to reimburse Issuing Bank pursuant to the terms of this Section is irrevocable and unconditional; provided, however, that Lenders shall not be obligated to reimburse Issuing Bank for any wrongful payment or disbursement made by Issuing Bank under any Letter of Credit as a result of acts or omissions constituting gross negligence or willful misconduct on the part of Issuing Bank or any of its officers, employees, Affiliates or agents. Whenever, at any time after Issuing Bank has made payment under any Letter of Credit, and has received from any Lender its Percentage Share of such payment in accordance with this subsection, Issuing Bank receives any payment 31 36 related to such Letter of Credit (whether directly from Borrower or otherwise, including proceeds of collateral applied thereto by Issuing Bank), or any payment of interest on account thereof, Issuing Bank will distribute to such Lender its Percentage Share thereof; provided, however, that in the event that any such payment received by Issuing Bank shall be required to be returned by Issuing Bank, such Lender shall return to Issuing Bank the portion thereof previously distributed by Issuing Bank to it. Each Lender shall indemnify and hold Issuing Bank harmless from and against any and all losses, liabilities (including, without limitation, liabilities for penalties), actions, suits, judgments, demands, damages, costs and expenses (including, without limitation, attorneys' fees and expenses) resulting from any failure on the part of such Lender to provide, or from any delay in providing, in accordance with this paragraph to Issuing Bank such Lender's Percentage Share of the amount of any payment or disbursement made by Issuing Bank to settle its obligations under any draft drawn under any Letter of Credit. (c) Cash Collateral Upon Event of Default. Upon the occurrence of any Default or Event of Default and the acceleration of the maturity of the Loans, an amount equal to the amount of the aggregate contingent liability of Issuing Bank and Lenders in connection with each Letter of Credit then in effect shall be deemed (as between Lenders and Borrower) to have been paid or disbursed by Issuing Bank and Lenders under such Letter of Credit (notwithstanding that such amount may not in fact have been so paid or disbursed), and Borrower shall be immediately obligated to pay to Administrative Agent for the pro rata benefit of Lenders in accordance with their respective Percentage Shares, the amount so deemed to have been so paid or disbursed, which payment shall be made by depositing Cash Collateral with Administrative Agent in accordance with the provisions of paragraph (d) of this Section. (d) Procedures for Depositing and Returning of Cash Collateral. Any cash collateral amounts received by Administrative Agent pursuant to the provisions of paragraph (c) of this Section (the "Cash Collateral") shall be deposited in a separate interest bearing cash collateral account maintained at the offices of Administrative Agent or another Lender designated by Administrative Agent under the sole dominion and control of Administrative Agent and shall be retained by Administrative Agent for the pro rata benefit of Lenders in accordance with their respective Loans and LC Obligations as collateral security for, and Borrower hereby grants to Administrative Agent for the benefit of the Lenders a security interest in such Cash Collateral including all interest accruing thereon and the proceeds thereof to secure, first the payment of the Obligations of Borrower under or in connection with its Letters of Credit, and then the other Obligations of Borrower under and in connection with this Agreement and the 32 37 other Loan Documents, including all Obligations of Borrower under its Notes pro rata to each Lender in accordance with its Loans and Percentage Share of all LC Obligations. All Cash Collateral delivered to Administrative Agent may be applied by Administrative Agent from time to time against any of Borrower's reimbursement Obligations with respect to any Letter of Credit as to which a draw is made. If and to the extent that the Default or Event of Default giving rise to the Required Lenders' demand for Cash Collateral has been cured to the reasonable satisfaction of Required Lenders and the acceleration of the Loans has been rescinded and annulled pursuant to Section 6.3 or (a) all Obligations of Borrower have been fully paid and satisfied, (b) no Letters of Credit remain outstanding and (c) Lenders' Commitments have terminated, Administrative Agent shall promptly return to Borrower, upon Borrower's request therefor, all amounts previously paid to Administrative Agent pursuant to paragraph (c) of this Section and not theretofore returned by Administrative Agent to Borrower or applied by Administrative Agent to reduce amounts payable by Borrower to Lenders under or with respect to the Letters of Credit or other amounts due to Lenders or Agents hereunder or under the other Loan Documents. Section 2.15 Letter of Credit Fees. In consideration of Issuing Bank's issuance of any Letter of Credit and each other Lender's agreement to purchase a risk participation therein, Borrower agrees to pay to Administrative Agent: (a) a letter of credit fronting fee for the account of the Issuing Bank with respect to such Letter of Credit upon issuance of each Letter of Credit in an amount equal to the greater of (x) $500 or (y) one- eighth of one percent (1/8 of 1%) per annum calculated on the face amount thereof; and (b) a letter of credit fee for the account of Lenders, to be distributed to Lenders ratably in accordance with their Percentage Shares, calculated on the face amount of each Letter of Credit in the amount of the applicable Eurodollar Margin, payable quarterly in arrears and at the expiration or termination of each Letter of Credit. Section 2.16 Capital Reimbursement. If either (a) the introduction or implementation of, or the compliance with, or any change in, or in the interpretation of, any law, rule or regulation, or (b) the introduction or implementation of or the compliance with any request, directive or guideline from any central bank or Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required to be maintained by any Lender or any corporation controlling any Lender, then, upon demand by such Lender, Borrower will immediately pay to Administrative Agent for the benefit of such Lender, from time to time as specified by such Lender, such additional amount which such Lender shall determine to be appropriate to compensate such Lender or any corporation controlling such 33 38 Lender in light of such circumstances, to the extent that such Lender reasonably determines that, because of the existence of such circumstances, the amount of any such capital would be increased or the rate of return on any such capital would be reduced, in whole or in part, by or as a consequence of the existence of such Lender's Commitments, its Loans, its Percentage Share of LC Obligations, and its other commitments under this Agreement to Borrower, subject to the provisions of Section 2.21. Section 2.17 Increased Cost of Eurodollar Portions. If any applicable domestic or foreign law, treaty, rule, directive or regulation (whether now in effect or hereinafter enacted or promulgated, including Regulation D) or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law): (a) shall change the basis of taxation of payments to any Lender of any principal, interest, or other amounts attributable to any Eurodollar Portion of its Loans, its Percentage Share of LC Obligations or its participation in any Swing Line Advances or its Competitive Bid Advances or otherwise due under this Agreement in respect of any Eurodollar Portion of its Loans or its participation in any Swing Line Advances or Competitive Bid Advances (other than taxes imposed on the overall net income of such Lender or any lending office of such Lender by any jurisdiction in which such Lender or any such lending office is located); (b) shall change, impose, modify, apply or deem applicable any reserve, special deposit or similar requirements in respect of any Eurodollar Portion of any Lender (excluding those for which such Lender is fully compensated pursuant to adjustments made in the definition of Adjusted Eurodollar Rate) or against assets of, deposits with or for the account of, or credit extended by, such Lender; or (c) shall impose on any Lender, the certificate of deposit market or the interbank eurocurrency deposit market any other condition affecting any Eurodollar Portion; and the result of any of the foregoing (a) through (c) is to (1) increase the cost to any Lender of funding or maintaining any Eurodollar Portion, any participation in any Swing Line Advance or any Competitive Bid Advance, as the case may be, or (2) to reduce the amount of any sum receivable by any Lender in respect of any Eurodollar Portion, Swing Line Advance or Competitive Bid Advance, as the case may be, by an amount reasonably deemed by such Lender to be material; then (i) such Lender shall promptly notify Administrative Agent and Borrower in writing of the happening of such event, (ii) Borrower shall thereafter upon demand pay to Administrative Agent for the account of such Lender such additional amount or amounts as will compensate such Lender for such additional cost or reduction, subject to the 34 39 provisions of Sections 2.21 and 2.19, and (iii) Borrower may elect, by giving to Administrative Agent and Lender not less than three (3) Business Days' notice, to convert all (but not less than all) of any such Eurodollar Portion into a part of the Base Rate Portion. Section 2.18 Availability. If (a) any change in applicable laws, treaties, rules or regulations or in the interpretation or administration thereof in any jurisdiction whatsoever, domestic or foreign, shall make it unlawful or impracticable for any Lender to fund or maintain Eurodollar Portions, or shall materially restrict the authority of any Lender to purchase or take offshore deposits of dollars ("Eurodollars"), or to issue Letters of Credit or fund its Percentage Share of LC Obligations, or (b) any Lender determines that matching deposits appropriate to fund or maintain any Eurodollar Portion are not available to it, or (c) any Lender determines that the formula for calculating the Adjusted Eurodollar Rate does not fairly reflect the cost to such Lender of making or maintaining loans based on such rates, then, upon notice by such Lender to Administrative Agent and to Borrower, Borrower's right to elect Eurodollar Portions or to apply for Letters of Credit shall be suspended to the extent and for the duration of such illegality, impracticability, restriction or condition, and all Eurodollar Portions (or portions thereof) which are then outstanding or are then the subject of any Rate Election and which cannot lawfully or practicably be maintained or funded shall immediately become or remain part of the Base Rate Portions of such Lender's Loan, subject to the provisions of Sections 2.21 and 2.19. Borrower agrees to indemnify Administrative Agent and each Lender and hold Administrative Agent and each Lender harmless against all costs, expenses, claims, penalties, liabilities and damages which may result from any such change in law, treaty, rule, regulation, interpretation or administration, subject to the provisions of Section 2.21. Section 2.19 Funding Losses. In addition to its other obligations hereunder, subject to the provisions of Section 2.21, Borrower shall indemnify each Lender against, and reimburse each Lender on demand for, any loss or expense incurred or sustained by such Lender, determined as provided in this Section, as a result of (a) any payment or prepayment (whether authorized or required hereunder or otherwise) of all or a portion of a Eurodollar Portion of Borrower on a day other than the day on which the applicable Eurodollar Interest Period ends, (b) any payment or prepayment, whether required hereunder or otherwise, of a Loan of Borrower made after the delivery, but before the effective date, of a Rate Election, if such payment or prepayment prevents such Rate Election from becoming fully effective, (c) the failure of any Revolving Loan Advance or Swing Line Advance or Competitive Bid Advance to be made to Borrower or of any Rate Election of Borrower to become effective due to any condition precedent to a Revolving Loan Advance or Swing Line Advance or Competitive Bid Advance not being satisfied, due to the inability of Administrative Agent (acting reasonably and in accordance with Section 2.18) to determine a Eurodollar Rate for a Eurodollar Portion of Borrower or due to any other action or inaction of any Designated Entity, (d) any conversion (whether authorized or required hereunder or otherwise) of all or any portion of any Eurodollar Portion of Borrower into a Base Rate Portion or into a different Eurodollar 35 40 Portion on a day other than the day on which the applicable Eurodollar Interest Period ends, (e) any payment or prepayment of all or a portion of a Swing Line Advance to Borrower on a day other than the maturity date for such Swing Line Advance or (f) any payment or prepayment of all or a portion of a Competitive Bid Advance on a day other than the maturity date for such Competitive Bid Advance. Upon the occurrence of an event as described in subsections (a) through (f) of this Section, the method to be used by each Lender to calculate the loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund or maintain Eurodollar Portions of Revolving Loan Advances, Swing Line Advances or Competitive Bid Advances, as the case may be, is as follows: Funding Loss = P x (F-R) x D/360 P = principal amount of payment, prepayment, conversion, non-borrowing or non-effective Rate Election F = Eurodollar Rate or Swing Line Rate or Competitive Bid Rate, as the case may be (adjusted for Reserve Percentage), utilized in the calculations of the Eurodollar Rate or Swing Line Rate or Competitive Bid Rate, as the case may be, on the Eurodollar Portion or Swing Line Advance or Competitive Bid Advance which is being paid, prepaid, converted, not borrowed or not subject to effective Rate Election R = reinvestment rate (as hereinafter defined) D = number of days from the date of the payment, prepayment, conversion, non-borrowing or non-effectiveness until the day on which the Eurodollar Interest Period of the Eurodollar Portion ends or the Swing Line Advance or Competitive Bid Advance matures Reinvestment rate as it is used herein will be equal to the Eurodollar Rate, adjusted for the Reserve Percentage quoted to such Lender, or the Swing Line Rate or Competitive Bid Rate that would be quoted by such Lender, as the case may be, effective for the date on which the payment, prepayment, conversion, non-borrowing or non-effectiveness occurs. For purposes of determining the reinvestment rate for purposes of this Section, the Eurodollar Rate will be the quote for either one (1) month, two (2) months, three (3) months, six (6) months, nine (9) months or twelve (12) months, the Competitive Bid Rate will be the quote for a number of days between seven (7) and 360, and the Swing Line Rate will be the quote for a number of days between one (1) and fourteen (14), whichever most closely approximates (but which may contain more or fewer days than) the number of days from the date of the payment, prepayment, conversion, non-borrowing or non-effectiveness until the last day of the relevant Eurodollar Interest Period or the scheduled maturity, as the case may be, of the Eurodollar 36 41 Portion, Competitive Bid Advance or Swing Line Advance, as the case may be, in respect of which the payment, prepayment, conversion, non-borrowing or non-effectiveness occurs; provided that if such number of days in respect of a Eurodollar Rate is the midpoint between two such periods, such rate will be the lower of the two rates for such periods. Section 2.20 Taxes. All payments by Borrower of principal of, and interest on, the Loans, the LC Obligations and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp, or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then, subject to the provisions of Section 2.21, Borrower will: (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to Administrative Agent an official receipt or other documentation satisfactory to Administrative Agent evidencing such payment to such authority; and (c) pay to Administrative Agent for the account of the applicable Lender(s) such additional amount(s) as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required and Borrower hereby acknowledges that it is not entitled to and will not seek recovery or restitution of any amount due to any of the Lenders or Agents and paid by Borrower pursuant to this clause (c) or pursuant to the next sentence. If any Taxes are directly asserted against any Agent or any Lender with respect to any payment received by such Agent or such Lender hereunder, such Agent or such Lender may pay such Taxes and, if paid in good faith, Borrower will promptly pay such additional amounts to Administrative Agent for the account of such Lender or Agent (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any taxes on such additional amount) shall equal the amount such person would have received had no such Taxes been asserted, subject to the provisions of Section 2.21. Borrower shall pay all stamp, transaction, registration and similar taxes (including financial institutions' duties, debit taxes or other taxes payable by return and taxes passed on to any Lender or Agent by a bank or financial institution (collectively "Stamp Taxes") and, if 37 42 Borrower fails to pay any such charges or taxes after reasonable notice from any such Lender or Agent, fines and penalties) which may be payable or determined to be payable in relation to the execution, delivery, performance or enforcement of this Agreement or any Loan Document or any other transaction contemplated by any Loan Document to which Borrower is a party. Borrower hereby indemnifies each Lender and Agent against any liability resulting from delay or omission to pay such charges or taxes except to the extent the liability results from failure by the relevant Lender or Agent to pay any such tax after having been delivered funds to do so by Borrower or to the extent such liability is for fines and penalties resulting from such Lender's or Agent's failure to provide reasonable notice to Borrower as provided herein. If Borrower fails to pay any Taxes or Stamp Taxes when due to the appropriate taxing authority or fails to remit to Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, Borrower shall indemnify Lenders for any Taxes, interest or penalties that may become payable by any Lender as a result of any such failure, subject to the provisions of Section 2.21. For purposes of this Section, a distribution hereunder by Administrative Agent or any Lender to or for the account of any Lender or Agent shall be deemed a payment by the subject Borrower. Borrower waives any statutory right to recover from any Agent or any Lender any amount due to any such Agent or Lender and paid by Borrower under this Section. On or prior to the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is organized under the laws of a jurisdiction other than the United States shall execute and deliver to Administrative Agent, three (3) or more (as Administrative Agent may reasonably request) United States Internal Revenue Service Forms 1001 or 4224 or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender is exempt from withholding or deduction of Taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to Administrative Agent three (3) additional copies of such form (or a successor form) on or before the date that 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 Administrative Agent, in each case certifying that such Lender is entitled to receive payments from Borrower under this Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms of the type previously delivered inapplicable or which would prevent such Lender from duly completing and delivering such form with respect to it and such Lender advises Administrative Agent that it is not capable of receiving such payments on the basis reflected in such previously delivered form without any deduction or withholding of United States federal income tax. Administrative Agent shall provide one (1) copy of each 38 43 of such forms or documents so provided to Borrower and Documentation Agent. Section 2.21 Make-Whole Qualifications. Each Lender's claims for reimbursements, payments, indemnities or otherwise under Sections 2.16, 2.17, 2.18, 2.19 and 2.20 and Borrower's obligation with respect thereto, shall be limited and qualified by and subject to the following: (a) Borrower's obligation to pay, satisfy or recognize such claim shall be limited to costs or losses incurred within one (1) year immediately prior to any demand or request therefor upon Borrower; (b) each Lender's demand for reimbursement, payment or indemnity from Borrower must be limited to that which is being generally applied at the time by such Lender for comparable borrowers and credits subject to credit agreements similar to this Agreement, but without regard to provisions similar to this Section; (c) each Lender which asserts its rights with respect thereto or which is seeking or imposing such reimbursement, payment or indemnity shall provide evidence regarding the basis of such claim and the calculation and application thereof in reasonable detail and, in determining such amount, each Lender may use reasonable methods of attribution and averaging; (d) each Lender which is seeking payment or reimbursement pursuant to Section 2.20 shall, if so requested by Borrower, use reasonable efforts (subject to the overall policy considerations of such Lender) to designate a different lending office hereunder if to do so will avoid the need for, or reduce the amount of, any such payment or reimbursement; provided that, Lender would, in its sole but reasonable determination, suffer no material economic, legal or regulatory disadvantage or burden; (e) Borrower may, in its sole discretion, elect, unless and until the applicable Lender notifies Borrower that the circumstances giving rise thereto no longer apply to such Lender, that, to the extent that a Lender's claims for such reimbursements, payments or indemnities would be reduced thereby, that subject to Section 2.19, (1) all Loans to Borrower which would otherwise be made by such Lender as Eurodollar Portions shall be made instead as Base Rate Portions (all of which interest and principal shall be payable as provided herein with respect to the related Eurodollar Portions of the Lenders), and (2) after each Eurodollar Portion has been repaid, all payments of principal which would otherwise would be applied to repay such Eurodollar Portion shall be applied to repay Base Rate Portions instead; and 39 44 (f) Borrower may designate a replacement Lender (which may be one (1) or more of the then existing Lenders hereunder and which shall be reasonably satisfactory to Administrative Agent) to purchase the Notes and Percentage Share of LC Obligations, in each case without recourse, and assume the Commitments and all other obligations hereunder of any Lender that has suspended the availability of Eurodollar Portions pursuant to Section 2.18 or that has demanded reimbursement, payment or indemnity under Sections 2.16, 2.17, 2.18, 2.19 or 2.20, and such Lender shall be obligated to sell, transfer and deliver all of its Notes, and Percentage Share of LC Obligations to such replacement Lender for the outstanding principal amount of such Notes, plus Lender's Percentage Share of LC Obligations, plus in each case, accrued interest thereon and such Lender's portion of accrued but unpaid fees through the date of such purchase, and permit such replacement lender to assume its Commitments. Borrower shall be obligated to pay all additional amounts due to the Lender being replaced pursuant to Sections 2.16, 2.17, 2.18, 2.19 and 2.20 through the date of such purchase and assumption; provided, that if the replacement Lender fails to purchase all such rights and interests and assume all such Commitments on the specified date in accordance herewith, Borrower shall continue to be obligated to pay such amounts to such Lender which was to have been replaced and provided further that Borrower shall pay any Taxes or Stamp Taxes, if any, as a result of such transfer. Section 2.22 Competitive Bid Advances. (a) In addition to borrowings pursuant to Section 2.1(a) or Section 2.4, Borrower may request each Lender severally to submit offers (herein called a "Competitive Bid Offer") to make advances to Borrower on any Business Day during the Loan Commitment Period as provided in this Section (herein called "Competitive Bid Advances"); provided, however, that each Lender may in its sole discretion, but shall have no obligation whatsoever to submit such offers, and Borrower may, but shall have no obligation to, accept any such offers. (b) Procedure for Competitive Bid Advances. (i) Borrower may request Competitive Bid Advances by delivering a request for a Competitive Bid Advance to each Lender (which has indicated to Borrower its interest in making a Competitive Bid Advance) and Administrative Agent not later than 9:00 a.m., Dallas, Texas time, one (1) Business Day prior to the proposed borrowing date. Each request for a Competitive Bid Advance shall be in substantially the form of Exhibit N hereto (herein called a "Request for Competitive Bid Offer") and may solicit bids for Competitive Bid Advances having not more than three (3) alternative maturity dates and for Competitive Bid Advances in any 40 45 respective principal amount equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof for each maturity date requested. The maturity date for each Competitive Bid Advance shall be not less than fifteen (15) days nor more than 360 days after the borrowing date therefor (and in any event not after the Maturity Date). (ii) Upon receipt of a Request for Competitive Bid Offer, any Lender that elects, in its sole discretion, to do so, shall irrevocably offer to make one (1) or more Competitive Bid Advances at a fixed rate of interest determined by such Lender in its sole discretion for each such Competitive Bid Advance. Any such irrevocable offer shall be made by delivering a Competitive Bid Offer to Administrative Agent and to Borrower, before 9:00 a.m., Dallas, Texas time (or, in the case of a Competitive Bid Offer by Administrative Agent, before 8:45 a.m., Dallas, Texas time), on the proposed borrowing date, setting forth the maximum amount of Competitive Bid Advances for each maturity date, and the aggregate maximum amount for all maturity dates, which such Lender would be willing to make (which amounts may exceed such Lender's Percentage Share of the Commitments) and the fixed rate of interest at which such Lender is willing to make each such Competitive Bid Advance, which fixed rate of interest may or may not be, in such Lender's discretion, different for each Competitive Bid Advance (respectively herein a "Competitive Bid Rate"). Borrower shall pay to Administrative Agent a fee of $500 on each day that Borrower accepts a Competitive Bid Offer. (iii) The Competitive Bid Offer delivered by each Lender in response to a Request for Competitive Bid Offer shall set forth an amount proposed to be loaned by such Lender for each maturity date requested by Borrower that is equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof. Any Competitive Bid Offer by any Lender that: (A) does not substantially conform to the form of Exhibit O hereto, (B) contains qualifying, conditional or similar language, (C) proposes terms other than or in addition to those set forth in the applicable Request for Competitive Bid Offer or (D) is received by Borrower after the applicable time specified in this subsection, shall be rejected by Borrower and Administrative Agent (and Administrative Agent shall notify the relevant Lender of such rejection for one or more of the matters described in the foregoing (A) through (D) by telephone and telecopy as soon as practicable thereafter). (iv) Borrower shall before 10:00 a.m., Dallas, Texas time, on the proposed 41 46 borrowing date either, in its absolute discretion: (A) withdraw such Request for Competitive Bid Offer by giving telephonic notice to that effect; (B) accept one (1) or more of the Competitive Bid Offers by giving telephonic notice to Administrative Agent (immediately confirmed by delivery to Administrative Agent by facsimile transmission of a Bid Acceptance) of the amount of Competitive Bid Advance(s) for each relevant maturity date to be made by the relevant Lender(s) (which amount for each such maturity date shall be equal to or less than the maximum amount for such maturity date specified in the Competitive Bid Offer of such Lender(s), and for all maturity dates included in such Competitive Bid Offer shall be equal to or less than the aggregate maximum amount specified in such Request for Competitive Bid Offer for all such maturity dates) and reject any Competitive Bid Offers not accepted by Borrower by giving telephonic notice to Administrative Agent of such rejection; provided, however, that (1) Borrower may not accept Competitive Bid Offers for any maturity date in an aggregate principal amount in excess of the maximum principal amount requested in the related Request for Competitive Bid Offer (and Competitive Bid Advances allocated to a Lender on a borrowing date for each relevant maturity date shall be in a principal amount equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof); and (2) Administrative Agent shall notify the Lender that submitted a Competitive Bid Offer for such Business Day of Borrower's decision by telecopying to each such Lender a copy of the Bid Acceptance by no later than 12:00 noon, Dallas, Texas time, on the borrowing date specified in the Request for Competitive Bid Offer; or (C) Borrower may accept or reject any Competitive Bid Offer(s) in whole or in part; provided that after giving effect to any such accepted Competitive Bid Offer(s), the sum of (i) the aggregate principal amount of the Revolving Loans and Swing Line Advances outstanding at such time, (ii) the aggregate principal amount of LC Obligations outstanding at such time, and (iii) the aggregate principal amount of Competitive Bid Advances outstanding at such time, does not exceed the Facility Amount. (v) If Borrower notifies Administrative Agent that a Request for Competitive 42 47 Bid Offer is withdrawn pursuant to clause (iv) above, the Competitive Bid Advance requested thereby shall not be made. (vi) Each Lender which is to make a Competitive Bid Advance shall, before 1:00 p.m., Dallas, Texas time, on the borrowing date specified in the Request for Competitive Bid Offer applicable thereto, make available to Administrative Agent in immediately available funds the amount of each Competitive Bid Advance to be made by such Lender. Administrative Agent shall deposit such funds to an account designated by Borrower by no later than 1:15 p.m., Dallas, Texas time, on such date. (vii) Borrower shall repay to Administrative Agent, for the account of each Lender which has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by Borrower for repayment of such Competitive Bid Advance in the related Request for Competitive Bid Offer) the then unpaid principal amount of such Competitive Bid Advance. Borrower shall not have the right to prepay any principal amount of any Competitive Bid Advance. If any Lender makes a Competitive Bid Advance on a day on which Borrower is to repay all or any part of an outstanding Competitive Bid Advance from such Lender, if requested by Borrower, such Lender shall apply the proceeds of its new Competitive Bid Advance to make such repayment and, in such instance, only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Lender to Administrative Agent as provided in Section 2.22(b)(vi), or remitted by Borrower to Administrative Agent as provided in this Section 2.22(b)(vii), as the case may be. (viii) Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the borrowing date to the stated maturity date thereof, at the rate of interest determined pursuant to clause (b) (ii) above (calculated on the basis of a 360 day year for actual days elapsed including the first but excluding the last), but not in excess of the Maximum Lawful Rate, payable on the maturity date with respect to such Competitive Bid Advance and, if such maturity date is more than 90 days after the date of making such Competitive Bid Advance, on such ninetieth day and each ninetieth day occurring after such ninetieth day until the maturity date. If all or a portion of the principal of or interest on any Competitive Bid Advance shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), without limiting any rights of any Lender under this Agreement, (i) such overdue principal 43 48 amount shall bear interest from the date on which such payment was due (other than on the scheduled maturity date with respect thereto) at the Default Rate, but not in excess of the Maximum Lawful Rate, until paid in full (as well as after as before judgment) and (ii) such overdue interest shall bear interest from the date on which payment was due at the Default Rate, but not in excess of the Maximum Lawful Rate, until paid in full (as well as after as before judgment). (c) The Competitive Bid Advances made by each Lender shall be evidenced by a single promissory note of Borrower payable to the order of such Lender substantially in the form of Exhibit A-3 attached hereto, with appropriate insertions (herein called a "Competitive Bid Note"). The date, amount, Competitive Bid Rate and maturity date of each Competitive Bid Advance made by a Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books. (d) The Competitive Bid Advances will be used by Borrower to provide working capital and for the general business purposes of Borrower and its Subsidiaries. No Competitive Bid Advances shall be used for the purpose of purchasing or carrying any Margin Stock in violation of the Margin Regulations. (e) The obligation of Lenders to make each Competitive Bid Advance after timely acceptance by Borrower is further subject to the conditions contained in Article 3. (f) Borrower shall not be required to accept Competitive Bid Offers on the basis of the lowest Competitive Bid Rate offered, but may in its sole discretion accept any Competitive Bid Offer regardless of the Competitive Bid Rate(s) offered. ARTICLE 3 CONDITIONS PRECEDENT TO LENDING Section 3.1 Initial Conditions Precedent. No Lender has any obligation to make its first Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance and Issuing Bank has no obligation to issue the first Letter of Credit (whether or not otherwise agreed to by Issuing Bank) unless: (a) Administrative Agent shall have received all of the following with copies for each Lender, at Administrative Agent's office in Midland, Texas: (1) This Agreement, the Notes, those Security Instruments and Guaranties 44 49 listed on Schedule 5 hereto, any other documents required in connection herewith, each duly executed and delivered and in form, substance and date satisfactory to Managing Agents. (2) The following certificates: (i) an "Omnibus Certificate" of the Secretary or an Assistant Secretary and of a Designated Officer, which shall contain the names and signatures of the officers of Borrower authorized to execute Loan Documents and which shall certify to the truth, correctness and completeness of the following exhibits attached thereto: (A) a copy of resolutions duly adopted by the Board of Directors of Borrower and in full force and effect at the time this Agreement is entered into, authorizing the execution of this Agreement and the other Loan Documents delivered or to be delivered in connection herewith and the consummation of the transactions contemplated herein and therein, (B) a copy of the charter documents of Borrower and all amendments thereto, certified by the appropriate official of Borrower's jurisdiction of organization, and (C) a copy of the bylaws or similar governing documents of Borrower (provided that, to the extent Borrower has previously provided Administrative Agent certified copies of the documents described in (B) and (C) above, such Omnibus Certificate may omit such documents, but shall include a statement that such documents have not been modified in any respect since the date last so provided to Administrative Agent, except as may be specifically noted in such Omnibus Certificate with appropriate attachments); and (ii) a "Compliance Certificate" of a Designated Officer of Borrower, of even date with such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or issuance of a Letter of Credit, in which such officer certifies to the satisfaction of the conditions set out in Section 3.2(a) and (b) and that all conditions hereunder have been satisfied. (3) A certificate (or certificates) of the due formation, valid existence and good standing of Borrower in its jurisdiction of organization, issued by the appropriate authorities of such jurisdiction. (4) The favorable opinions of the counsel for Borrower and the Restricted Subsidiaries, given upon their express instructions substantially in the 45 50 form set forth as Exhibit H attached hereto. (5) Documents similar to those specified in Section 3.1(a)(2)(i) and 3.1(a)(3) with respect to each Restricted Subsidiary which is or will be party to a Security Instrument on the date hereof. (6) A certificate of a Designated Officer of Borrower as to insurance concerning the material assets of Designated Entities. Lenders agree that Designated Entities' insurance coverage disclosed on Schedule 4 is acceptable at the date hereof. (b) Except as disclosed to the Lenders in the Disclosure Schedule or otherwise in writing prior to the execution hereof and not objected to by Required Lenders, there shall be no pending or threatened litigation, action or proceeding against Borrower or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. (c) No event or condition shall have occurred (i) with respect to Borrower and its Restricted Subsidiaries (other than Chauvco and its Subsidiaries) since August 8, 2022 and (ii) with respect to Chauvco and its Subsidiaries since September 30, 1997, which is reasonably expected to result in a Material Adverse Effect. (d) After giving effect to such Revolving Loan Advances, Competitive Bid Advances and Swing Line Advances and Letters of Credit, Borrower and Lenders shall be in compliance with the Margin Regulations. (e) The acquisition by Borrower or any of its Affiliates of Chauvco (the "Acquisition") shall have been consummated as contemplated by and pursuant to that certain Combination Agreement, dated as of September 3, 1997, as amended (the "Acquisition Agreement"), between Borrower and Chauvco, and Administrative Agent shall have received (i) satisfactory evidence of the consummation of such Acquisition and (ii) a certificate from a Designated Officer of Borrower certifying that the Acquisition has been consummated. (f) A certificate of a Designated Officer of Borrower certifying that (i) all representations and warranties made by any Designated Entity in this Agreement or any other Loan Document are true and correct as of the Effective Date and (ii) that all conditions precedent to the initial Advance contained in this Agreement or any other Loan Document have been satisfied as of the Effective Date. (g) All requisite Governmental Authorities and third parties shall have approved or 46 51 consented to the Acquisition and all related transactions, including, without limitation, the issuance, closing and funding of this Agreement and the facilities thereunder, to the extent required. All applicable appeal periods shall have expired and there shall be, in the judgment of the Managing Agents, in their sole discretion, no governmental or judicial action, actual or threatened, restraining, preventing or imposing burdensome conditions on the Acquisition and all related transactions, including, without limitation, the issuance, closing and funding of this Agreement and the facilities thereunder. (h) Managing Agents shall have received copies of all financial statements, reports, notices and proxy statements sent by Borrower to its stockholders and all SEC filings concerning the Acquisition. (i) No litigation or administrative proceeding or other legal or regulatory developments prohibiting or enjoining the consummation of the Acquisition shall exist. (j) Exclusive of the Acquisition, no "Event of Default" (as defined in the Existing Credit Agreement) shall have occurred and be continuing. (k) Administrative Agent shall have received copies of (i) the executed documentation for the 364 Day Credit Facility and (ii) the executed documentation for the Canadian Credit Facility. Section 3.2 Additional Conditions Precedent. No Lender has any obligation to make any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance (including its initial Advance) and Issuing Bank has no obligation to issue any Letter of Credit (including the first) unless the following conditions precedent have been satisfied: (a) All representations and warranties made by any Designated Entity in any Loan Document shall be true on and as of the date of such Revolving Loan Advance, Swing Line Advance, Competitive Bid Advance or issuance of Letter of Credit as if such representations and warranties had been made as of the date of such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or issuance of such Letter of Credit (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date). (b) In the case of the first Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or issuance of the first Letter of Credit, no Event of Default, and in the case of any other Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or issuance of a Letter of Credit, no 47 52 Default shall exist at the date of such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or issuance of Letter of Credit or will occur as a result of the making of the requested Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or the issuance of the requested Letter of Credit. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Section 4.1 Borrower's Representations and Warranties. To confirm each Lender's understanding concerning Borrower and its businesses, properties and obligations, and to induce Managing Agents, Co-Agents and each Lender to enter into this Agreement and to make the Loans to Borrower, except as to matters disclosed herein or in the Disclosure Schedule, Borrower represents and warrants to Managing Agents, Co-Agents and each Lender that: (a) No Default. No Designated Entity is in default in the performance of any of the covenants and agreements contained herein or under any other Loan Document. No event or circumstance has occurred and is continuing which constitutes a Default. (b) Organization, Existence and Good Standing. Each Designated Entity is duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, having all corporate or partnership powers required to enter into and carry out the transactions contemplated hereby. Each Designated Entity is duly qualified, in good standing, and authorized to do business in all other jurisdictions wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary, except for any lack of qualification, good standing or authorization that could not reasonably be expected to have a Material Adverse Effect. Each Designated Entity has taken all actions customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions desirable, except for any failure or other matter that could not reasonably be expected to have a Material Adverse Effect. (c) Authorization. Each Designated Entity has duly taken all corporate or partnership action necessary to authorize the execution and delivery by it of the Loan Documents to which it is a party and to authorize the consummation of the 48 53 transactions contemplated thereby and the performance of its obligations thereunder. Borrower is duly authorized to borrow funds hereunder. (d) No Conflicts or Consents. The execution and delivery by each Designated Entity of the Loan Documents to which it is a party, the performance by each Designated Entity of its obligations under such Loan Documents, and the consummation of the transactions contemplated by the various Loan Documents, including, without limitation, the consummation of the Acquisition, do not and will not (1) conflict with any provision of the articles or certificate of incorporation, bylaws, charter, partnership agreement or certificate or other governing document of such Designated Entity, or (2) except as to matters that could not reasonably be expected to have a Material Adverse Effect, result in the acceleration of any Debt owed by such Designated Entity, or conflict with any law, statute, rule, regulation, or material agreement, judgment, license, order or permit applicable to or binding upon such Designated Entity, or require the consent, approval, authorization or order of, or notice to or filing with, any Governmental Authority or third party, or result in or require the creation of any Lien upon any material assets or properties of such Designated Entity, except (i) as permitted in the Loan Documents and (ii) for filings and recordings of the Security Instruments. (e) Enforceable Obligations. This Agreement is, and the other Loan Documents when duly executed and delivered will be, legal, valid and binding obligations of each Designated Entity which is a party hereto or thereto, enforceable in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights generally and by general principles of equity. (f) Financial Statements. (i) The Updated Financial Statements fairly present Borrower's, Mesa's and P&P; Petroleum's and each of their Consolidated subsidiaries' financial position at the respective dates thereof and the results of Borrower's, Mesa's and P&P; Petroleum's and each of their Consolidated subsidiaries' operations and cash flows for the respective periods thereof. From the date of the audited Updated Financial Statements to the Effective Date, no change has occurred in Borrower's, Mesa's or P&P; Petroleum's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect, except as reflected in the Disclosure Schedule. From September 30, 2021 to the Effective Date, no change has occurred in Chauvco's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect, except as reflected in the Disclosure Schedule. All Updated Financial Statements were prepared in accordance with GAAP as in effect on the date thereof. 49 54 (ii) The Unaudited Pro Forma Financial Statements of Borrower for the periods ending December 31, 2021 and September 30, 2021 contained in the Joint Management Information Circular and Proxy Statement, dated November 17, 1997 (the "Proxy"), and the Unaudited Pro Forma Financial Statements of Borrower for the period ending September 30, 1997, fairly present Borrower's pro forma financial position at the respective dates thereof and the results of Borrower's pro forma operations and cash flows for the respective periods thereof. From the date of such financial statements to the Effective Date no change has occurred in Borrower's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect on Borrower's Pro Forma Consolidated Financial Condition, except as reflected in the Disclosure Schedule. All such financial statements were prepared in accordance with GAAP as in effect on the date thereof. (g) Other Obligations. Except as disclosed in the Disclosure Schedule, as of the Effective Date, neither Borrower nor any of its Consolidated Subsidiaries has any outstanding Debt which is, in the aggregate, material to Borrower and its Consolidated Subsidiaries and not shown in the Updated Financial Statements. (h) Full Disclosure. No certificate, statement or other information delivered herewith or heretofore by any Designated Officer of any Designated Entity to either of Managing Agents, Co-Agents or any Lender in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby contains any untrue statement of a fact or omits to state any fact known to Borrower, P&P; Petroleum, Mesa or any Designated Entity (other than industry-wide risks normally associated with the types of businesses conducted by Borrower, P&P; Petroleum, Mesa or any Designated Entity) necessary to make the statements contained herein or therein not misleading as of the date made or deemed made, except to the extent that any untrue statement or omission could not reasonably be expected to have a Material Adverse Effect. (i) Litigation. Except as disclosed in the Updated Financial Statements or in the Disclosure Schedule: (1) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or, to the knowledge of Borrower, threatened, against any Designated Entity before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect, and (2) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Governmental Authority against Borrower, P&P; Petroleum, Mesa or any of their respective Consolidated Subsidiaries which could reasonably be expected to have a Material Adverse Effect. (j) Environmental Matters. The liabilities and costs of Borrower and its 50 55 Consolidated Subsidiaries related to compliance with applicable Environmental Laws (as in effect on the date on which this representation is made or deemed made) could not reasonably be expected to have a Material Adverse Effect. (k) Title to Properties. Each Designated Entity has good and defensible title to all of its material properties and assets, except any failure, defect or other matter that could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (l) Investment Company Act. Neither Borrower nor any of its Subsidiaries is an "investment company" or a "company controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (m) Public Utility Holding Company Act. Neither Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. (n) Principal Business Offices. As of the Effective Date, each Designated Entity's principal place of business and chief executive office is located at the place described in the Disclosure Schedule. (o) Solvency. Each Designated Entity is solvent and will continue to be solvent after the making and guarantying of the Loans and the issuance of the Letters of Credit. (p) Organization. As of the Effective Date, the organization chart of Borrower and its Subsidiaries with material assets set forth on Exhibit I is true and correct in all material respects. Except for the Exchangeable Shares, as of the Effective Date, Borrower or a Restricted Subsidiary owns all of the issued and outstanding capital stock of each Restricted Subsidiary. As of the Effective Date, no Restricted Subsidiary has issued any securities convertible into shares of its stock or any options (except as set forth in the Disclosure Schedule), warrants or other rights to acquire such shares or securities convertible into such shares and the outstanding capital stock and securities of each Restricted Subsidiary is owned by Borrower or another Restricted Subsidiary free and clear of all Liens, warrants, options or rights of others of any kind whatsoever, except for Permitted Liens. (q) Use of Proceeds; Margin Stock. Borrower and its Subsidiaries shall use (i) the 51 56 initial Revolving Loan Advance to discharge all outstanding obligations under the Existing Credit Agreement, and (ii) all Revolving Loan Advances, Letters of Credit, Competitive Bid Advances and Swing Line Advances for its and their respective general corporate purposes. In no event shall the funds from any Revolving Loan Advance, Swing Line Advance, Competitive Bid Advance or Letter of Credit be used directly or indirectly by any Persons for personal, family, household or agricultural purposes or for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin securities" (as such terms are defined in the Margin Regulations) in violation of the Margin Regulations, or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry "margin stock" or "margin securities" in violation of the Margin Regulations, or to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock or margin securities in violation of the Margin Regulations. Borrower is not engaged principally, or as one of Borrower's important activities, in the business of extending credit to others for the purpose of purchasing or carrying such margin stock or margin securities. Neither any Designated Entity nor any Person acting on behalf of any Designated Entity has taken or will take any action which might cause this Agreement, the Notes, or any Guaranty, any Loan Document or any Loan or Letter of Credit to violate the Margin Regulations or to violate Section 7 of the Securities Exchange Act of 1934, or any rule or regulation thereunder, in each case as now or hereafter in effect. (r) Liens Under the Security Instruments. Upon the execution and delivery of the Security Instruments in accordance herewith, and where appropriate the filing and recordation thereof with the appropriate filing or recording officers in each of the necessary jurisdictions, the Liens granted and to be granted by any Designated Entity to Lenders or the Trustee (as defined in any of the Security Instruments) on behalf of Lenders in such Designated Entity's assets pursuant to the Security Instruments will be validly created, perfected and first priority Liens, subject only to Permitted Liens. Section 4.2 Representation by Lenders. Each Lender hereby represents that it will acquire its Notes for its own account in the ordinary course of its commercial lending business; however, such Lender may sell or otherwise transfer its Notes, any participation interest or other interest in its Notes, or any of its other rights and obligations under the Loan Documents as permitted by Section 8.8. 52 57 ARTICLE 5 COVENANTS OF BORROWER Section 5.1 Affirmative Covenants. To conform with the terms and conditions under which each Lender is willing to have credit outstanding to Borrower, and to induce Managing Agents, Co-Agents and each Lender to enter into this Agreement and make the Loans to Borrower and to issue Letters of Credit, unless Required Lenders shall have previously agreed otherwise in writing, Borrower, severally for itself and its Subsidiaries, covenants and agrees that: (a) Payment and Performance. Borrower will pay all amounts due from it under the Loan Documents in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition expressed in the Loan Documents, and will cause each Designated Entity which is a Subsidiary of Borrower to perform and comply with every covenant, term and condition expressed in the Loan Documents and applicable to such Designated Entity. (b) Books, Financial Statements and Reports. Borrower will at all times maintain full and materially accurate books of account and records. Borrower will maintain and will cause its Subsidiaries to maintain a standard system of accounting and will cause the following statements and reports to be delivered to Managing Agents and each Lender at Borrower's expense: (1) As soon as available, and in any event within 120 days after the end of each Fiscal Year, complete audited Consolidated financial statements of Borrower and its Subsidiaries and unaudited consolidating balance sheets and statements of operations of Borrower and its Subsidiaries, prepared in reasonable detail in accordance with GAAP; such audited statements to be accompanied by an opinion, by KPMG Peat Marwick, or such other independent certified public accountants of nationally recognized standing selected by Borrower, stating that such Consolidated financial statements have been so prepared. Borrower will, together with each set of such financial statements delivered pursuant to this Section, furnish a certificate in the form of Exhibit J signed by a Designated Officer of Borrower stating that, to the best of his knowledge, (i) such financial statements are accurate and complete, and (ii) no Default or Event of Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default or Event of Default. Such certificate shall contain calculations showing compliance (or noncompliance) at the end of such Fiscal Quarter with the requirements of Sections 5.3(a) and (b). 53 58 (2) As soon as available, and in any event within 60 days after the end of the first three Fiscal Quarters in each Fiscal Year, unaudited Consolidated financial statements of Borrower and its Subsidiaries and unaudited consolidating balance sheet and statements of operations of Borrower and its Subsidiaries as of the end of such Fiscal Quarter, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from year-end adjustments. Borrower will, together with each set of such financial statements delivered pursuant to this Section, furnish a certificate in the form of Exhibit J signed by a Designated Officer of Borrower stating that, to the best of his knowledge, (i) such financial statements are accurate and complete, and (ii) no Default or Event of Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default or Event of Default. Such certificate shall contain calculations showing compliance (or noncompliance) at the end of such Fiscal Quarter with the requirements of Sections 5.3(a) and (b). (3) Promptly after transmittal or filing, copies of all financial statements, reports, notices and proxy statements sent by Borrower to its stockholders and all registration statements, periodic reports and other statements and schedules filed by Borrower or any of its Subsidiaries with any securities exchange, the Securities and Exchange Commission or any similar Governmental Authority. (c) Other Information and Inspections. Borrower will furnish to Managing Agents and each Lender any information which Administrative Agent, on behalf of any Lender, may from time to time reasonably request in writing concerning any covenant, provision or condition of the Loan Documents or any matter in connection with Borrower's and its Subsidiaries' businesses and operations. Borrower will permit and will cause each of its Subsidiaries to permit representatives of Agents and Lenders (including independent accountants, agents and attorneys), at the expense and risk of the applicable Lender, to visit and inspect, during normal business hours and upon reasonable notice any of Borrower's or such Subsidiaries' property, including its books of account, other books and records, and any facilities or other business assets, and to make extra copies therefrom and photocopies and photographs thereof, and to write down and record any information such representatives obtain, and Borrower shall permit and will cause each of its Subsidiaries to permit Agents and the Lenders or their representatives, to investigate and verify the accuracy of the information furnished to Administrative Agent or any Lender in connection with the Loan Documents and to discuss all such matters with its officers, employees and 54 59 representatives; provided, however, that any such visit, inspection, investigation or verification or discussion with respect to Borrower taking place at a time when Borrower has been notified in writing by Administrative Agent of the existence of a Default or an Event of Default applicable to Borrower which has occurred and is continuing shall be at the cost and expense of Borrower, and that neither Managing Agents, Co-Agents nor Lenders shall have any obligation to pay any costs or expenses of Borrower or any other Designated Entity or any of their officers, employees or representatives in respect thereof irrespective of the existence of any Default or Event of Default. (d) Notice of Material Events. Borrower will promptly upon its awareness thereof notify Administrative Agent and each Lender (1) of the occurrence of any Default or any other event, which has or may reasonably be expected to have, a Material Adverse Effect, (2) of the acceleration of the maturity of any Debt owed by any Designated Entity or any default by any Designated Entity under any instrument evidencing or governing Debt, if such acceleration or default has a Material Adverse Effect, (3) of the occurrence of any Termination Event which may reasonably be expected to have a Material Adverse Effect, and (4) of the filing of any litigation or proceeding in which any Designated Entity is a party or of any material developments in existing litigation in which any Designated Entity is a party in which an adverse decision may reasonably be expected to have a Material Adverse Effect. (e) Maintenance of Existence and Qualifications. Borrower will, and will cause each Restricted Subsidiary to, maintain and preserve its existence as a corporation or partnership, as the case may be. Borrower will, and will cause each Restricted Subsidiary to, maintain and preserve its good standing and its rights and franchises in full force and effect and qualify to do business as a foreign corporation in all states or jurisdictions where required by applicable law, except for any failure to maintain, preserve and qualify that could not reasonably be expected to have a Material Adverse Effect. Nothing in this Section shall prohibit (i) a merger or consolidation permitted by Section 5.2(c) or (ii) a termination of such existence, good standing, rights or franchises of any Restricted Subsidiary if Borrower determines in good faith that such termination is in the best interest of Borrower and could not reasonably be expected to have a Material Adverse Effect. (f) Payment of Taxes and Trade Debt. Borrower will, and will cause each of its Subsidiaries to, except for any failure or other matter that could not reasonably be expected to have a Material Adverse Effect, (1) timely file all required tax returns, (2) timely pay all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or property, and (3) timely 55 60 pay all trade debt. Borrower and its respective Subsidiaries may, however, delay paying or discharging any such taxes, assessments, charges, debts or levies so long as the validity thereof is contested in good faith by appropriate proceedings and adequate reserves therefor in accordance with GAAP have been set aside and reflected among the books and records of Borrower and its Subsidiaries. (g) Insurance. Borrower will, and will cause each of its Subsidiaries to, at all times maintain insurance in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in similar businesses and owning similar properties in the same general area in which Borrower and its Subsidiaries conduct business, which insurance (other than prudent self-insurance programs) shall be by financially sound and reputable insurers. (h) Payment of Expenses. Whether or not the transactions contemplated by this Agreement are consummated, Borrower will promptly pay all reasonable costs and expenses (including reasonable attorneys' fees) incurred by or on behalf of (1) the Documentation Agents in connection with the negotiation, preparation, execution and delivery of the Loan Documents and any amendment, modification or restatement thereof, and any and all consents, waivers or other documents or instruments, including commitment letters, term sheets and any memorandum relating thereto (provided that Borrower shall be obligated to pay only the attorneys' fees of a common counsel for the Documentation Agents, Mayer, Brown & Platt), (2) Agents in connection with due diligence, syndication, travel and advertising related to this Agreement and the transactions contemplated thereby, and (3) Administrative Agent or any Lender in connection with enforcement of the Loan Documents or the defense of Administrative Agent's or any Lender's exercise of its rights thereunder. The selection of Managing Agents' counsel and consultants in connection with the matters described in the preceding sentence shall be subject to the approval of Borrower, which approval shall not be unreasonably withheld. Attorneys' fees reimbursed by Borrower for any amendment, modification or restatement of any Loan Document shall be estimated and approved by Borrower prior to incurrence, such approval not to be unreasonably withheld. Attorneys' fees reimbursed by Borrower in connection with the enforcement of the Loan Documents or the defense of Administrative Agent's or any Lenders' exercise of its rights hereunder shall be for a single law firm per country (unless conflicts (including conflicts between Managing Agents and the other Lenders as determined in the reasonable discretion of the Required Lenders) otherwise prohibit the engagement of a single law firm). 56 61 (i) Compliance with Agreements and Law. Borrower will, and will cause each of its Subsidiaries to (1) perform all material obligations it is required to perform under the terms of each material agreement, contract or other instrument or obligation to which it is a party or by which it or any of its material properties is bound, except for any non-performance that will not have or reasonably be expected to have a Material Adverse Effect; and (2) conduct its business and affairs in material compliance with all laws, regulations, and orders applicable thereto (including without limitation Environmental Laws) except for any non-compliance that could not reasonably be expected to have a Material Adverse Effect. (j) Maintenance of Business. Borrower will, and will cause each Restricted Subsidiary to, maintain as its primary business the exploration, production and development of oil, natural gas and other liquid and gaseous hydrocarbons and the gathering, processing, transmission and marketing of hydrocarbons and activities related or ancillary thereto. (k) Operations. Borrower will, and will cause each Restricted Subsidiary to, cause all material properties to be regularly operated, maintained and developed in a good and workmanlike manner, as would a prudent operator and in accordance with all applicable federal, state and local laws, rules and regulations, except for any failure to so operate, maintain and develop that could not reasonably be expected to have a Material Adverse Effect. (l) Restructuring. No later than 30 days after the Effective Date, Borrower shall cause the Outside Debt to be assumed by Borrower through a Restructuring. In connection with such Restructuring, Pioneer USA shall guarantee the repayment of the Outside Debt being assumed by Borrower. Contemporaneously with such Restructuring, Borrower shall cause the Subsidiary or Subsidiaries who are the surviving entities of such Restructuring to execute new Guaranties. As used herein, "Restructuring" shall mean the formation of one or more wholly-owned Subsidiaries of Borrower and/or Pioneer USA and the occurrence of one or more mergers, to take place on a single day, among Borrower, Pioneer USA and any such Subsidiaries, in each case as determined by Borrower to be appropriate to bring about the assumption, by merger, of the Outside Debt from Pioneer USA to Borrower as contemplated by this Section. Section 5.2 Negative Covenants. To conform with the terms and conditions under which each Lender is willing to have credit outstanding to Borrower, and to induce Managing Agents and each Lender to enter into this Agreement and make the Loans to Borrower and to issue Letters of Credit, unless Required Lenders shall have previously agreed otherwise in writing, Borrower, severally for itself and its Subsidiaries, covenants and agrees that: 57 62 (a) Limitation on Debt. Borrower will not, and will not permit any Restricted Subsidiary to, in any manner owe or be liable for Debt except: (1) the Obligations; (2) Debt pursuant to the 364 Day Credit Facility and Debt pursuant to the Canadian Credit Facility in a maximum aggregate amount of $300,000,000; (3) unsecured Debt among Designated Entities; (4) Debt arising under capital leases which does not in the aggregate for Borrower and all Restricted Subsidiaries exceed $20,000,000 at any one time outstanding; (5) Debt, other than Debt otherwise permitted by another subparagraph of this Section 5.2(a), which, at the time incurred, is at prevailing market rates of interest and contains covenants and conditions and events of default no more onerous to Designated Entities than the terms of this Agreement; provided, that no Default or Event of Default will result from the incurrence of such Debt and be continuing; (6) guaranties of Debt which is the primary obligation of a Designated Entity and permitted under this Section 5.2(a); (7) Debt arising (whether by contract or as a result of statutory liability of a general partner) by virtue of any Designated Entity being a general partner of a general or limited partnership pursuant to agreements in effect on the Effective Date not in excess of the aggregate amounts permitted to be incurred pursuant to such agreements on the Effective Date for all such Debt and other such Debt otherwise permitted pursuant to the other subparagraphs of this Section 5.2(a); and (8) Debt existing on the Effective Date which is disclosed (i) in the Updated Financial Statements or (ii) in the Disclosure Schedule and any extensions, renewals or replacements thereof upon terms no more onerous to Borrower than the terms of this Agreement or the terms of the instruments evidencing such Debt as of the date of this Agreement. (b) Negative Pledge. Borrower will not, and will not permit any of its Restricted Subsidiaries to, create, assume or permit to exist any Lien upon any of their respective material property, except Permitted Liens. 58 63 (c) Limitation on Mergers. Except as expressly provided in this paragraph, Borrower will not, and will not permit any of its Restricted Subsidiaries to, merge or consolidate with or into any other business entity, except (1) Borrower may be party to a merger or consolidation so long as the surviving entity is Borrower and no Default will exist and the Obligations do not exceed the Facility Amount after giving effect thereto and (2) any Restricted Subsidiary may be a party to any merger or consolidation so long as the surviving entity is a Restricted Subsidiary and any Guaranty of, or Pledge Agreement by, such Restricted Subsidiary continues as to such surviving entity, no Default will exist, and the Obligations do not exceed the Facility Amount after giving effect thereto. (d) Limitation on Disposition of Capital Stock of Restricted Subsidiaries. Borrower will not, and will not permit any Restricted Subsidiary to, sell, transfer or otherwise dispose of capital stock of any Restricted Subsidiary, except that Borrower and any Restricted Subsidiary may sell, issue, transfer or otherwise dispose of the capital stock of any Restricted Subsidiary to Borrower or to another Restricted Subsidiary. (e) Limitation on Restricted Payments. Borrower will not, and will not permit any Restricted Subsidiary to, make Restricted Payments in excess of $150,000,000 in the aggregate for the duration of this Agreement for all such Restricted Payments; provided, however, that in the event that any Unrestricted Subsidiary of Borrower is redesignated to be a Restricted Subsidiary of Borrower for purposes of this Agreement, then for purposes of determining compliance with this Section, all Restricted Payments made to such Unrestricted Subsidiary shall be deducted from the aggregate total of all Restricted Payments made for the duration of this Agreement. No Restricted Payment may be made (1) if the Obligations shall exceed the Facility Amount, (2) if any Default or Event of Default shall have occurred and be continuing, or (3) if as a result thereof, any Default or Event of Default shall have occurred and be continuing. (f) Transactions with Affiliates. Borrower will not, and will not permit any of its Restricted Subsidiaries to, engage in any material transaction with any of Borrower's Affiliates on terms which are less favorable than those which would have been obtainable at the time in arm's-length dealing with Persons other than such Affiliates, provided, however that such restriction shall not apply to transactions (i) among Borrower and its Restricted Subsidiaries and (ii) among Restricted Subsidiaries. (g) Limitations on Restricted Subsidiaries. Borrower will not permit any Restricted Subsidiary to become subject to covenants which: 59 64 (1) restrict dividends or dividend capacity; (2) restrict loans and advances to Borrower; (3) restrict the ability to make tax payments or management payments to Borrower; or (4) restrict the capitalization structure of any Restricted Subsidiary. (h) Limitation on Sale/Leasebacks. Designated Entities will not enter into any arrangement, directly or indirectly, with any Person whereby any Designated Entity shall sell or transfer any material asset, and whereby any Designated Entity shall then or immediately thereafter rent or lease as lessee such asset or any part thereof. (i) Conversion between Restricted Subsidiary and Unrestricted Subsidiary. Borrower may convert any Restricted Subsidiary to an Unrestricted Subsidiary by giving Administrative Agent at least five (5) Business Days' notice of such conversion in the form of Exhibit K-1 attached hereto; provided that (1) no Restricted Subsidiary shall be so converted so long as it owns or will thereafter own, directly or indirectly, any interest in any material asset or in another Restricted Subsidiary unless the value of such material assets, together with the aggregate of all Restricted Payments made and the value of any other material assets determined as aforesaid of any Restricted Subsidiaries converted to Unrestricted Subsidiaries do not exceed in the aggregate the limitation on Restricted Payments contained in Section 5.2(e) hereof, and (2) no such conversion shall be made if after giving effect to such conversion, any Default would exist. Upon any such conversion of a Restricted Subsidiary to an Unrestricted Subsidiary, such Subsidiary shall be released from its obligations under its Guaranty, and Managing Agents and Lenders shall execute and deliver a release substantially in the form of Exhibit K-2 hereto. Borrower may convert any Unrestricted Subsidiary to a Restricted Subsidiary by giving Administrative Agent at least five (5) Business Days' notice of such conversion in the form of Exhibit K-1 attached hereto; provided that no such conversion may be made if after giving effect to such conversion, any Default would exist. (j) Margin Securities. Proceeds of the Loans will not be used to purchase or carry Margin Stock except in compliance with the Margin Regulations. (k) Modification to Canadian Credit Facility. Borrower shall not make, permit or otherwise consent to any amendment or modification to, or seek a waiver of, any representation, warranty or covenant contained in the Canadian Credit 60 65 Facility without the prior consent of the Required Lenders, such consent not to be unreasonably withheld. Section 5.3 Financial Covenants. To conform with the terms and conditions under which each Lender is willing to have credit outstanding to Borrower, and to induce Managing Agents and each Lender to enter into this Agreement and make the Loans to Borrower and to issue Letters of Credit, unless Required Lenders shall have previously agreed otherwise in writing, Borrower, severally for itself and its Subsidiaries, covenants and agrees that: (a) EBITDAX to Consolidated Interest Expense Ratio. The ratio of Borrower's "EBITDAX" to "Consolidated Interest Expense" for the last four rolling Fiscal Quarters will not be less than 3.75 to 1.0; provided, however, that the EBITDAX to Consolidated Interest Expense Ratio shall first be calculated on December 31, 1997; provided further that for the periods for calculation ending on or before September 30, 1998, each reference to "for the last four rolling Fiscal Quarters" shall be deemed to be a reference to the period from October 1, 2021 through the date of such calculation. As used in this paragraph, the term "Consolidated Interest Expense" means for any period, total interest expense, whether paid or accrued, of Borrower and its Subsidiaries on a Consolidated basis, including, without limitation, all commissions, discounts and other fees and charges owed with respect to Letters of Credit. As used in this paragraph, the term "EBITDAX" means for any period the sum of the amounts for such period of Consolidated net income, Consolidated Interest Expense, depreciation expense, depletion expense, amortization expense, federal and state income taxes, exploration and abandonment expense and other non-cash charges and expenses, all as determined on a Consolidated basis for Borrower and its Subsidiaries. (b) Consolidated Total Funded Debt to Total Capitalization. Borrower's Consolidated Total Funded Debt to Total Capitalization will not, as of the last day of any Fiscal Quarter, be greater than 60%. ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES Section 6.1 Events of Default. Each of the following events constitutes an "Event of Default" under this Agreement: (a) Borrower shall default on the payment when due of any principal on any of its Loans or any of its Notes or any amount in respect of any LC Obligation; 61 66 (b) Borrower fails to pay any of its Obligations (other than principal or any amount in respect of its LC Obligations) when due and payable, whether interest in respect of any Loan or any fee or any other amounts payable under any of the Loan Documents and such failure shall continue unremedied for a period of five (5) Business Days; provided, however, that any such Default shall not constitute an Event of Default if subsequently available information indicates that a payment made when due was insufficient because of a good faith error in calculation so long as Borrower shall cure such deficiency within five (5) Business Days after Borrower becomes aware of such deficiency; (c) any Designated Entity fails to duly observe, perform or comply with any covenant, agreement, condition or provision set forth in Section 5.1(d) or 5.2 of this Agreement; (d) any Designated Entity fails (other than as referred to in subsections (a), (b) and (c) above) to duly observe, perform or comply with any covenant, agreement, condition or provision of any Loan Document applicable to it (even if all or part of such agreement or covenant is void or unenforceable), and such failure is not remedied within thirty (30) Business Days after written notice thereof shall have been sent to Borrower by Administrative Agent or any Lender; (e) any representation or warranty previously, presently or hereafter made in writing or deemed made by or on behalf of any Designated Entity in connection with any Loan Document shall have been false or incorrect in any material respect on any date on or as of which made and either (1) an Executive Officer of Borrower had actual knowledge that such representation or warranty was false or incorrect in a material respect when made or (2) if no Executive Officer had such knowledge, such representation or warranty shall continue to be false or incorrect in any material respect thirty (30) Business Days after the earlier of an Executive Officer of Borrower obtaining actual knowledge thereof or written notice thereof shall have been sent to Borrower by Administrative Agent; (f) any Designated Entity (1) fails to pay when due Debt in excess of $20,000,000 or (2) breaches or defaults in the performance of any agreement or instrument by which any such Debt in excess of $20,000,000 is issued, evidenced, governed, or secured, and any such failure, breach or default continues beyond any applicable period of grace provided therefor; (g) either (1) any "accumulated funding deficiency" (as defined in Section 412(a) of the Internal Revenue Code of 1986, as amended) in excess of $10,000,000 exists with respect to any ERISA Plan, whether or not waived by the Secretary of the Treasury or his delegate, or (2) any Termination Event which has a Material 62 67 Adverse Effect occurs with respect to any ERISA Plan and the then current value of such ERISA Plan's benefit liabilities exceeds the then current value of such ERISA Plan's assets available for the payment of such benefit liabilities by more than $10,000,000 (or in the case of a Termination Event involving the withdrawal of a substantial employer, the withdrawing employer's proportionate share of such excess exceeds such amount); (h) any Designated Entity: (1) suffers the commencement of any involuntary bankruptcy, reorganization, debt arrangement, winding up, dissolution, official management or administration, or other case or proceeding under any bankruptcy or insolvency law or the entry against it of a judgment, decree or order for relief by a court of competent jurisdiction in such a case or proceeding, which in either case remains undismissed for a period of sixty (60) days; provided that each Designated Entity hereby expressly authorizes each Agent and each Lender to appear in any court proceeding during such sixty (60) day period to preserve, protect and defend their rights under the Loan Documents; (2) commences a voluntary case under any applicable bankruptcy, insolvency or similar law now or hereafter in effect, including, without limitation, the United States Bankruptcy Code or the Corporations Law of Australia, as from time to time amended; or applies for or consents or acquiesces to the entry of an order for relief in an involuntary case under any such law, or becomes insolvent or makes a general assignment for the benefit of creditors, or fails generally to pay (or admits in writing its inability to pay) its debts as such debts become due, or takes corporate or other action to authorize any of the foregoing; (3) suffers the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator, administrator or similar official of all or a substantial part of its assets in a proceeding brought against or initiated by it, and such appointment is neither made ineffective nor discharged within sixty (60) days after such event or such appointment or taking possession is at any time consented to, requested by, or acquiesced to by such Designated Entity; (4) suffers the entry against it of a final judgment for the payment of money in excess of $20,000,000 (not covered by insurance satisfactory to Administrative Agent in its discretion), unless the same is discharged within thirty (30) days after the date of entry thereof or an appeal or 63 68 appropriate proceeding for review thereof is taken within such period and a stay of execution pending such appeal is obtained and continues; or (5) suffers a writ or warrant of attachment or any similar process to be issued by any court against all or any substantial part of its property, and such writ or warrant of attachment or any similar process is not stayed or released within thirty (30) days after the entry or levy thereof or after any stay is vacated or set aside; (i) (a) any person (other than Borrower, a Restricted Subsidiary of Borrower or any employee benefit plan of Borrower or any of its Subsidiaries) or group (as such term is used in Section 13(d) or 14(d)(2) of the Securities Exchange Act of 1934, as amended) shall acquire, directly or indirectly, beneficial ownership of an aggregate of 35% or more of the issued and outstanding voting stock of Borrower or (b) during any period of two consecutive years ending on or after the Effective Date, as determined as of the last day of each calendar quarter after the Effective Date, the individuals (the "Incumbent Directors") who at the beginning of such period constituted the Board of Directors of Borrower (other than additions thereto or removals therefrom from time to time thereafter approved by a vote of at least two-thirds of such Incumbent Directors) shall cease for any reason to constitute 50% or more of the Board of Directors of Borrower; provided, however, that for each determination period ending on or before September 30, 1999, each determination period shall be deemed to be a period from the Effective Date through the date of such calculation; (j) any of the Loan Documents are determined to be invalid or unenforceable in any material respect; (k) (1) any Restricted Subsidiary other than any Foreign Restricted Subsidiary, and any of their respective Restricted Subsidiaries fails to execute and deliver to Collateral Agent a Guaranty of the type referred to in clause (i) of the definition of "Guaranty", within 30 days of becoming a Restricted Subsidiary; (2) unless and to the extent that any Foreign Restricted Subsidiary or any other Restricted Subsidiary is prohibited from, or subject to adverse tax consequences as a result of, guaranteeing the Obligations under this Agreement (a) under Section 956 of the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time ("Section 956") (b) pursuant to contractual restrictions in existence prior to the Effective Date or (c) as a matter of corporate law, any Foreign Restricted 64 69 Subsidiary or any other Restricted Subsidiary fails to execute and deliver to Collateral Agent, a Guaranty of the type referred to in clause (i) of the definition of "Guaranty" together with in the case of any Foreign Restricted Subsidiary, a notice in relation to such Guaranty or, in the case of any Restricted Subsidiary subject to the Corporation Laws of Australia, a certificate under Section 206(6) of the Corporations Laws of Australia in relation to such Guaranty, in each case (1) as soon as practicable following the termination or inapplicability of the contractual restrictions, corporate law prohibitions and adverse tax consequences referred to in this paragraph or (2) if no such contractual restrictions, corporate law prohibitions and adverse tax consequences apply, as soon as practicable following a determination that such contractual restrictions, corporate law prohibitions and adverse tax consequences do not apply; (l) unless and to the extent that (a) any such pledge or mortgage would result in (i) substantial stamp or similar taxes or (ii) adverse tax consequences pursuant to Section 956, (b) any such pledge or mortgage is prohibited either (i) pursuant to contractual restrictions in existence prior to the Effective Date or (ii) as a matter of corporate law, or (c) a Guaranty of the type referred to in clause (i) of the definition of "Guaranty" has been executed and delivered by the Restricted Subsidiary the capital stock or shares of which would otherwise be subject to pledge or mortgage under this paragraph, Borrower, or any Subsidiary of Borrower, owning capital stock or shares of any Restricted Subsidiary of any Foreign Restricted Subsidiary, fails (x) to execute and deliver to Collateral Agent the Pledge Agreements, together with sixty-five percent (65%) of all issued and outstanding stock or shares of such Restricted Subsidiary or such Foreign Restricted Subsidiary and stock powers or share transfers executed in blank, together with a either a certificate under Section 206 (6) of the Corporations Law of Australia or a notice of the type described in Section 6.1(k)(2) hereof, in each case in relation to such Pledge Agreement, as the case may be and if applicable, as soon as practicable after the termination or inapplicability of such contractual restrictions and corporate law prohibitions and adverse tax consequences referred to in this paragraph and (y) to repay all Obligations and other amounts and to cause all outstanding Letters of Credit to be terminated and the originals thereof to be returned to the Issuing Bank as soon as practical after the termination or inapplicability of such contractual restrictions and corporate law prohibitions and adverse tax consequences referred to in this paragraph; or (m) any Designated Entity, to the extent applicable, fails, (x) promptly upon the reasonable request of the Managing Agents at any time or from time to time 65 70 prior to the applicable Stock Pledge Release Date, as the case may be, (1) to execute, acknowledge or deliver, or to cause to be executed, acknowledged or delivered, or to register, record or file, or to cause to be registered, recorded or filed, any document or instrument necessary or advisable or as Required Lenders may from time to time reasonably deem to be necessary or advisable in connection with the grant, creation, preservation, perfection or maintenance, as first, prior and perfected Liens, the Liens created, or intended to be created, by the applicable Security Instruments, subject only to Permitted Liens or (2) to perform or to continue to perform at all times and from time to time all actions necessary or advisable or reasonably deemed to be necessary or advisable by the Required Lenders in connection with such creation, preservation, perfection and maintenance; and (y) to repay all Obligations and other amounts and to cause all outstanding Letters of Credit to be terminated and the originals thereof to be returned to the Issuing Bank as soon as practical after receipt of the reasonable request of Managing Agents pursuant to the foregoing clause (x); provided, however, that the foregoing events which affect only Restricted Subsidiaries that (a) are not guarantors of the Obligations, and (b) are immaterial (as determined by the Managing Agents), shall not constitute "Events of Default" under this Agreement. It is agreed by the parties hereto that so long as Borrower or any Restricted Subsidiary has made reasonable efforts under the circumstances to obtain the approvals required by Section 205(10) of the Corporations Law of Australia (if applicable), the foregoing paragraphs (k)(2), (l) and (m) shall not require any Restricted Subsidiaries to provide any pledge or guaranty prohibited by corporate law unless the requirements of such Section 205(10) of the Corporations Law of Australia, to the extent applicable, have been satisfied; and (k) Any "Event of Default" as defined in the Canadian Credit Facility or the 364 Day Credit Facility shall occur; provided that the occurrence of a "Default" as defined in the Canadian Credit Facility or the 364 Day Credit Facility shall constitute a Default under this Agreement; provided further that if such "Default" is cured or waived under the Canadian Credit Facility or the 364 Day Credit Facility, as applicable, then such "Default" shall no longer constitute a Default under this Agreement. Upon the occurrence of an Event of Default described in Section 6.1(h)(1), (2) or (3) with respect to Borrower, the Commitments shall automatically terminate and all of the Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each Designated Entity who at any 66 71 time ratifies or approves this Agreement. During the continuance of any other Event of Default, Administrative Agent at any time and from time to time upon written instructions from Required Lenders (which, for purposes of this sentence only, shall be determined giving effect to each Lender's outstanding Swing Line Advances and Competitive Bid Advances) shall, by notice to Borrower (but otherwise without notice to any other Designated Entity), declare the Commitments to be terminated, and/or declare any or all of the Obligations immediately due and payable, and all such Obligations shall thereupon be immediately due and payable, without demand, presentment, notice of demand or of dishonor and nonpayment, protest, notice of protest, notice of intention to accelerate, declaration or notice of acceleration, or any other notice or declaration of any kind, all of which are hereby expressly waived by Borrower and each Designated Entity who at any time ratifies, approves or guaranties this Agreement and/or require Borrower to deposit Cash Collateral with Administrative Agent in an amount determined in accordance with paragraph (c) of Section 2.14. Section 6.2 Remedies. If any Default shall occur and be continuing, each Lender or Administrative Agent on behalf of Lenders may protect and enforce its rights under the Loan Documents by any appropriate proceedings, including, without limitation, proceedings for specific performance of any covenant or agreement contained in any Loan Document, and each Lender may enforce the payment of any Obligations due it or enforce any other legal or equitable rights which it may have. Additionally, under such circumstances, the Required Lenders or, at the direction of Required Lenders, the Trustee (or Collateral Agent) may proceed to protect the Lenders' rights under the Security Instruments. All rights, remedies and powers conferred upon Administrative Agent and Lenders under the Loan Documents are cumulative and not exclusive of any other rights, remedies or powers available under the Loan Documents or at law or in equity. Section 6.3 Annulment of Acceleration. If a declaration of acceleration is made pursuant to this Article 6, then Required Lenders, by written notice to Borrower and Administrative Agent, may collectively rescind and annul such declaration in its entirety; provided, that at the time such declaration is annulled and rescinded: (a) no judgment or decree has been entered for the payment of any moneys due pursuant to any Note or this Agreement; (b) all arrears of interest upon all the Notes and all other sums payable under the Notes and this Agreement (other than principal amounts which may have become due as a result of acceleration), including interest upon overdue interest, to the extent payment thereof is lawful, shall have been duly paid; and (c) each and every other Event of Default which has theretofore occurred shall have been waived pursuant to Section 8.1 or otherwise made good or cured. Section 6.4 Indemnity. Borrower hereby indemnifies each Agent and each Lender, from and against any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including reasonable fees of attorneys, accountants, experts and advisors) of any kind or nature whatsoever (in this Section collectively called "liabilities and costs") which to any extent (in whole or in part) may be 67 72 imposed on, incurred by, or asserted against such Agent or such Lender as a result of, arising out of, relating to or in connection with: (a) the Loan Documents to which Borrower or one or more of its Subsidiaries is a party or the rights provided therein (including the enforcement or defense thereof); (b) the direct or indirect application or proposed application of the proceeds of any Loan or Letter of Credit to or for Borrower or any of its Subsidiaries; (c) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of any Loan or Letter of Credit to or for Borrower or any of its Subsidiaries; (d) any investigation, litigation or proceeding related to any environmental cleanup, audit, compliance or other matter (including enforcement) relating to any Environmental Law or the condition of any facility or property owned, leased or operated by Borrower or any of its Subsidiaries; or (e) the presence on or under, or the escape, seepage, leakage, spillage, discharge, emission, discharging or releases from, any facility owned or operated by Borrower or any of its Subsidiaries of any hazardous or toxic substance (including any liabilities and costs under any Environmental Law), regardless of whether caused by, or within the control of, Borrower or any of its Subsidiaries; or any misrepresentation, inaccuracy or any breach in or of Section 4.1(j) or Section 5.1(i) by or with respect to Borrower or any of its Subsidiaries. The foregoing indemnification shall not apply to the extent such liabilities and costs are determined to have resulted or been caused, in whole or in part, by the gross negligence or willful misconduct on the part of such Agent or Lender. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND EXCEPT AS PROVIDED BY THE IMMEDIATELY PRECEDING SENTENCE. In the event that any claim or demand for which Borrower would be liable to any Agent or any Lender under this Section is asserted against or sought to be collected from any Agent or any Lender by a third party, Agent or such Lender shall promptly notify Borrower of such claim or demand. Borrower shall have the lesser of: (i) thirty (30) Business Days from receipt of the above notice; or (ii) three (3) Business Days prior to the expiration of any period after which a default judgment may be entered against such Agent or Lender (the "Notice Period") to notify such Agent and/or Lender whether or not Borrower desires, at the sole cost and expense of Borrower, to defend such Agent and/or Lender against such claim or demand. In the event 68 73 that Borrower notifies such Agent and/or Lender within the Notice Period, that it desires to defend such Agent and/or Lender against such claim or demand, Borrower shall have the right to settle or otherwise dispose of such claim or demand (other than claims alleging criminal violations) on such terms as Borrower, with the consent of the indemnified party (which consent shall not be unreasonably withheld) shall deem appropriate; provided that: (w) counsel designated by Borrower is reasonably acceptable to the Managing Agents and the affected Lender; (x) Borrower will have acknowledged in writing that this Section will cover any liabilities and costs in any such claim or demand; (y) in the sole determination of the Managing Agents and the affected Lender, Borrower will have the financial ability to pay such liabilities and costs; and (z) Borrower shall thereafter consult with the Managing Agents and the affected Lender with respect to such claim or demand; and provided further, that each of Agents and the affected Lender shall have the right at all times to participate in any proceeding, at their sole cost and expense, subject, however, to Borrower's right to control the defense of all proceedings concerning such claim or demand. In the event that Borrower fails to give such Agent and/or Lender such notice, such Agent and/or Lender may defend against such claim or demand; provided, however, that Borrower's obligation to reimburse such Agent and/or Lender shall be limited to a single law firm of such Agent and/or Lender (unless Borrower otherwise consents, which consent shall not be unreasonably withheld); provided further, that Borrower shall have the right at all times to participate in any such proceeding, at its sole cost and expense, subject, however, to the right of such Agent and/or Lender to control the defense of all proceedings concerning such claim or demand. As used in this Section, the terms "Agent" and "Lender" shall refer not only to the Persons designated as such in Section 1.1 but also to each director, officer, agent, attorney, employee and representative of such Person. ARTICLE 7 AGENTS Section 7.1 Appointment and Authority. NationsBank of Texas, N.A. is hereby appointed Administrative Agent hereunder and under each other Loan Document, CIBC Inc. is hereby appointed Documentation Agent hereunder and under each other Loan Document, 69 74 Morgan Guaranty Trust Company of New York is hereby appointed Documentation Agent hereunder and under each other Loan Document and The Chase Manhattan Bank is hereby appointed Syndication Agent hereunder and under each other Loan Document, each Co-Agent is hereby appointed Co-Agent hereunder and under each other Loan Document, and each of the Lenders hereby authorizes each such Agent to act as the agent of such Lender hereunder and each other Loan Document to the extent provided herein or therein. In addition, each Lender hereby irrevocably authorizes Administrative Agent, and Administrative Agent hereby undertakes, to receive payments of principal, interest due hereunder as specified herein and to act as Collateral Agent under the Security Instruments. In addition, each Lender hereby authorizes each Agent, and each Agent hereby undertakes to take all other actions and to exercise such powers under the Loan Documents as are specifically delegated to such Agent by the terms hereof or thereof, together with all other powers reasonably incidental thereto. No Co-Agent has any duties or responsibilities whatsoever as Co-Agent (as opposed to its capacity as Lender) under or in connection with this Agreement or any of the Loan Documents. The relationship of each Agent to Lender is only that of one commercial bank acting as administrative agent for others, and nothing in the Loan Documents shall be construed to constitute any Agent a trustee or other fiduciary for any holder of any of the Notes or of any participation therein or in the LC Obligations, nor to impose on any Agent duties and obligations other than those expressly provided for in the Loan Documents. None of the Agents shall have implied duties to Lenders, or any obligations to Lenders to take any action under the Loan Documents, except any action by an Agent specifically provided by the Loan Documents to be taken by such Agent. With respect to any matters not expressly provided for in the Loan Documents and any matters which the Loan Documents place within the discretion of any Agent, such Agent shall not be required to exercise any discretion or take any action, and each such Agent may request instructions from Lenders with respect to any such matter, in which case such Agent shall be required to act or to refrain from acting (and shall be fully protected and free from liability to any and all Lenders and Agents in so acting or refraining from acting) upon the instructions of Required Lenders (including itself); provided, however, that no Agent shall be required to take any action which exposes it to a risk of personal liability that it considers unreasonable or which is contrary to the Loan Documents or to applicable law unless indemnified to its satisfaction by Lenders or Borrower. Upon receipt by Administrative Agent from Borrower of any communication calling for action on the part of Lenders or upon notice from any Lender to Administrative Agent of any Default or Event of Default, Administrative Agent shall promptly notify each Lender thereof. Section 7.2 Agent's Reliance. No Agent or any of their respective directors, officers, agents, attorneys, or employees shall be liable for any action taken or omitted to be taken by any of them under or in connection with the Loan Documents, including their negligence of any kind, except that each shall be liable for its own gross negligence or willful misconduct. Without limiting the generality of the foregoing, each Agent: 70 75 (a) may treat the payee of any Note as the holder thereof until Administrative Agent receives written notice of the assignment or transfer thereof in accordance with this Agreement, signed by such payee and in form satisfactory to Administrative Agent; (b) may consult with legal counsel (including counsel for Borrower), independent public accountants and other experts selected by such Agent and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender or to any other Agent and shall not be responsible to any Lender or Agent for any statements, warranties or representations made in or in connection with the Loan Documents by any other Person; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of the Loan Documents on the part of any Designated Entity or to inspect the property (including the books and records) of any Designated Entity; (e) shall not be responsible to any Lender or to any other Agent for the due execution (other than its own due execution and delivery), legality, validity, enforceability, genuineness, existence, sufficiency or value of any Loan Document, the Credit Facility Agreement or any instrument or document furnished in connection herewith, or any collateral; (f) may rely upon the representations and warranties of any Designated Entity and the Lenders in exercising its powers hereunder; (g) shall not be responsible for the satisfaction of any condition specified in Article 3, except receipt by an Agent of items required to be delivered to such Agent; and (h) shall incur no liability under or in respect of the Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (including any telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper Person or Persons. Section 7.3 Lenders' Credit Decisions. Each Lender acknowledges that it has, independently and without reliance upon any Agent or any other Lender, made its own analysis of Designated Entities and the transactions contemplated hereby and its own independent decision to enter into this Agreement and the other Loan Documents. Each Lender also 71 76 acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents. Section 7.4 Indemnification. Each Lender agrees to indemnify each Agent (to the extent not reimbursed by Borrower within ten (10) days after demand) from and against such Lender's Percentage Share of any and all liabilities, obligations, claims, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements (including reasonable fees of attorneys, accountants, experts, and advisors) of any kind or nature whatsoever (in this Section collectively called "liabilities and costs") which to any extent (in whole or in part) may be imposed on, incurred by, or asserted against such Agent growing out of, resulting from or in any other way associated with any of the Loan Documents and the transactions and events (including, without limitation, the enforcement thereof) at any time associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY AGENT, PROVIDED ONLY THAT NO LENDER SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AN AGENT FOR THAT PORTION, IF ANY, OF ANY LIABILITIES AND COSTS WHICH IS THE SOLE RESULT OF SUCH AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT OF A COURT OF COMPETENT JURISDICTION. Cumulative of the foregoing, each Lender agrees to reimburse Administrative Agent, each Documentation Agent and Syndication Agent promptly upon demand for such Lender's Percentage Share of any costs and expenses to be paid to Administrative Agent, the Documentation Agent or the Syndication Agent by Borrower under Section 5.1(h) to the extent that Administrative Agent, the Documentation Agent or the Syndication Agent is not timely reimbursed for such expenses by Borrower as provided in such section. As used in this Section the term "Agents" shall refer not only to the Person(s) designated as such in Section 1.1 but also to each director, officer, agent, attorney, employee and representative of such Person(s). Section 7.5 Rights as Lender. In their respective capacity as a Lender, each Agent shall have the same rights and obligations as any Lender and may exercise such rights as though it were not an Agent. Each Agent may accept deposits from, lend money to, act as trustee under indentures of, and generally engage in any kind of business with any of Designated Entities or their Affiliates, all as if it were not an Agent hereunder and without any duty to account therefor to any other Lender. Section 7.6 Sharing of Set-Offs and Other Payments. Each Agent and Lender agrees that if it shall, whether through the exercise of rights under security documents or rights of banker's lien, setoff, or counterclaim against any Designated Entity or otherwise, obtain 72 77 payment of a portion of the aggregate Obligations owed to it (other than in respect of its Swing Line Advances and its Competitive Bid Advances) which, taking into account all distributions made by Administrative Agent under Section 2.11, causes such Agent or such Lender to have received more than it would have received had such payment been received by Administrative Agent and distributed pursuant to Section 2.11 (or, in the case of Swing Line Advances paid as provided in Section 2.5(c) or in the case of Competitive Bid Advances paid as provided in Section 2.22(b)), then it shall be deemed to have simultaneously purchased and shall be obligated to purchase interests in the Obligations as necessary to cause Administrative Agent and all Lenders to share all payments (other than in respect of Swing Line Advances and Competitive Bid Advances) as provided for in Section 2.11, and such other adjustments shall be made from time to time as shall be equitable to ensure that all Agents and all Lenders share all payments of Obligations (other than in respect of its Swing Line Advances and Competitive Bid Advances) as provided in Section 2.11. If any Agent or any Lender, whether in connection with setoff of amounts which might be subject to setoff or otherwise, receives collateral or other protection for its Obligations or such amounts which might be subject to setoff, such Agent or Lender agrees, promptly upon demand, to take such action necessary so that all Agents and all Lenders share in the benefits of such collateral ratably in proportion to the Obligations owing to each of them. Nothing herein contained shall in any way affect the right of any Agent or any Lender to obtain payment (whether by exercise of rights of banker's lien, set-off or counterclaim or otherwise) of indebtedness other than the Obligations. Borrower expressly consents to the foregoing arrangements and agrees that any holder of any such interest or other participation in the Obligations, whether or not acquired pursuant to the foregoing arrangements, may to the fullest extent permitted by law exercise any and all rights of banker's lien, set-off, or counterclaim as fully as if such holder were a holder of the Obligations in the amount of such interest or other participation. If all or any part of any funds transferred pursuant to this Section is thereafter recovered from the seller under this Section which received the same, the purchase provided for in this Section shall be deemed to have been rescinded to the extent of such recovery, together with interest, if any, if interest is required pursuant to court order to be paid on account of the possession of such funds prior to such recovery. Section 7.7 Investments. Whenever Administrative Agent in good faith determines that it is uncertain about how to distribute to Lenders any funds which it has received, or whenever Administrative Agent in good faith determines that there is any dispute among Lenders about how such funds should be distributed, Administrative Agent may choose to defer distribution of the funds which are the subject of such uncertainty or dispute. If Administrative Agent in good faith believes that the uncertainty or dispute will not be promptly resolved, or if Administrative Agent is otherwise required to invest funds pending distribution to Lenders, Administrative Agent may invest such funds pending distribution (at the risk of the subject Borrower); all interest on any such investment shall be distributed upon the distribution of such investment and in the same proportion and to the same Persons as such investment. All moneys received by Administrative Agent for distribution to Lenders (other than to the 73 78 Person who is Administrative Agent in its separate capacity as a Lender) shall be held by Administrative Agent pending such distribution solely as Administrative Agent for such Lenders, and Administrative Agent shall have no equitable title to any portion thereof. Section 7.8 Benefit of Article 7. The provisions of this Article (other than the following Section 7.9) are intended solely for the benefit of Agent and Lenders, and no Designated Entity shall be entitled to rely on any such provision or assert any such provision in a claim or defense against Agent or any Lender. Agent and Lenders may waive or amend such provisions as they desire without any notice to or consent of any Designated Entity. Section 7.9 Resignation and Removal. Any Agent may resign at any time by giving written notice thereof to Lenders and Borrower. Each such notice shall set forth the date of such resignation. Majority Lenders or Borrower, with the consent (which shall not be unreasonably withheld) of Majority Lenders (other than Agent to be removed) shall be entitled to remove any Agent. Upon any such resignation or removal, Borrower may, with the written concurrence (which shall not be unreasonably withheld) of Majority Lenders (exclusive of any such resigned or removed Agent), designate a successor Agent. If, within fifteen (15) days after the date of such resignation or removal, Borrower makes no such designation or such written concurrence is not given, Majority Lenders (exclusive of any such resigned or removed Agent) shall, with the consent of Borrower (which consent shall not be unreasonably withheld or delayed), have the right to appoint a successor Agent. A successor must be appointed for any retiring Managing Agent, and such Managing Agent's resignation shall become effective when such successor accepts such appointment. Upon the acceptance of any appointment as a Managing Agent hereunder by a successor Managing Agent and the satisfaction of all obligations on the part of such retiring or removed Managing Agent necessary to facilitate succession, the retiring or removed Managing Agent, as the case may be, shall be discharged from its duties and obligations under this Agreement and the other Loan Documents. After any Agent's resignation or removal hereunder, the provisions of this Article 7 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under the Loan Documents. Any out-going Agent shall promptly execute all assignments and other documents necessary to effectuate the transfer of the agency in connection with this Agreement and shall promptly deliver all original documents and any collateral in its possession to the successor Agents. ARTICLE 8 MISCELLANEOUS Section 8.1 Waivers and Amendments. No failure or delay (whether by course of conduct or otherwise) by any Agent or any Lender in exercising any right, power or remedy which any Agent or Lender may have under any of the Loan Documents shall operate as a waiver thereof or of any other right, power or remedy, nor shall any single or partial exercise 74 79 by any Agent or Lender of any such right, power or remedy preclude any other or further exercise thereof or of any other right, power or remedy. No waiver of any provision of any Loan Document and no consent to any departure therefrom shall ever be effective unless it is in writing and signed as provided below in this Section, and then such waiver or consent shall be effective only in the specific instances and for the purposes for which given and to the extent specified in such writing. No notice to or demand on any Designated Entity shall in any case of itself entitle any Designated Entity to any other or further notice or demand in similar or other circumstances. This Agreement and the other Loan Documents set forth the entire understanding between the parties hereto with respect to the transactions contemplated herein and therein and supersede all prior discussions and understandings with respect to the subject matter hereof and thereof, and no waiver, consent, release, modification or amendment of or supplement to this Agreement or the other Loan Documents shall be valid or effective against any party hereto unless the same is in writing and signed by (a) if such party is a Designated Entity, by such Designated Entity, (b) if such party is an Agent, by such Agent and (c) if such party is a Lender, by such Lender or by Administrative Agent on behalf of Lenders with the written consent of Required Lenders (or without further consent than that already provided herein in the circumstances provided in Section 8.7). Notwithstanding the foregoing or anything to the contrary herein or in any other Loan Document, no Agent shall, without the prior consent of each Lender, execute and deliver on behalf of any Lender any waiver or amendment which would: (i) increase the Commitment of such Lender or subject such Lender to any additional obligations; (ii) reduce or forgive any fees hereunder, or the principal of, or interest on, such Lender's Notes or LC Obligations; (iii) postpone any date fixed for any payment of any fees hereunder, or principal of, or interest on, such Lender's Notes or LC Obligations; (iv) amend the definitions herein of "Required Lenders" or "Majority Lenders" or otherwise change the aggregate amount of Percentage Shares which is required for Administrative Agent, any other Agent, Lenders or any of them to take any particular action under the Loan Documents; (v) release collateral (except as expressly contemplated by this Agreement) or any Borrower from its obligation to pay such Lender's Notes or LC Obligations or any Restricted Subsidiary from its Guaranty (except upon the Restricted Subsidiary becoming an Unrestricted Subsidiary as specified in this Agreement); (vi) amend this Section 8.1; 75 80 (vii) extend the Loan Commitment Period; (ix) amend, modify or waive any provision applicable to the indemnification of any Lender; (x) consent to the assignment or transfer by any Designated Entity of any of its rights or obligations under this Agreement or the other Loan Documents; or (xi) amend, modify or waive the rights and obligations of the Issuing Bank or the Agents; provided, that no obligation to any Designated Entity of any Lender or Issuing Bank or any Agent may be amended, modified or waived without the written approval of Borrower, which approval shall not be unreasonably withheld. Notwithstanding the foregoing or anything to the contrary herein or in any other Loan Document, no provision of Article 7 may be amended in any way which impacts or affects any Agent in its capacity as an Agent (as opposed to its capacity as a Lender) without the prior written consent of such Agent. Except as provided in the preceding three sentences or as expressly provided in any Loan Document, the Required Lenders may waive, modify, amend or supplement this Agreement and each of the other Loan Documents. Section 8.2 Survival of Agreements; Cumulative Nature. Each Designated Entity's various representations, warranties, covenants, indemnities and agreements in the Loan Documents shall survive the execution and delivery of this Agreement and the other Loan Documents and the performance hereof and thereof, including the making or granting of the Loans, the issuance of the Letters of Credit and the delivery of the Notes, and the other Loan Documents, and shall further survive until all of the Obligations are paid in full to Agents and Lenders, all Letters of Credit have expired or been canceled and all of Agents' and Lenders' obligations to Borrower are terminated, provided that, notwithstanding the foregoing, certain Obligations of certain Designated Entities under their respective Guaranties shall survive or be reinstated as provided in such Guaranties. The representations, warranties, indemnities, and covenants made by any Designated Entity in any Loan Documents, and the rights, powers, and privileges granted to Agents and Lenders in the Loan Documents, are cumulative. Section 8.3 Notices. All notices, requests, consents, demands and other communications required or permitted under any Loan Document shall be in writing, unless otherwise specifically provided in such Loan Document (provided that Administrative Agent may give telephonic notices to the other Agents and Lenders), and shall be deemed sufficiently given or furnished if delivered by personal delivery, by telecopy (with telephonic confirmation of transmission), by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to Borrower at the address of Borrower specified on the signature pages hereto and to each Agent and each Lender at their addresses specified on the 76 81 signature pages hereto (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given: (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery during normal business hours at the address provided herein; (b) in the case of telecopy, upon receipt; or (c) in the case of registered or certified United States mail, three (3) days after deposit in the mail, postage prepaid; provided, however, that no Request for Advance or Rate Election shall become effective until actually received by Administrative Agent and no request for the issuance of a Letter of Credit or Letter of Credit Application shall become effective until actually received by the Issuing Bank. Section 8.4 Parties in Interest. All grants, covenants and agreements contained in the Loan Documents shall bind and inure to the benefit of the parties thereto and their respective successors and assigns; provided, however, that no Designated Entity may assign or transfer any of its rights or delegate any of its duties or obligations under any Loan Document without the prior written consent of all Lenders. Section 8.5 Governing Law. THE LOAN DOCUMENTS SHALL BE DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. CHAPTER 15 OF TEXAS REVISED CIVIL STATUTES ANNOTATED ARTICLE 5069 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) DOES NOT APPLY TO THIS AGREEMENT OR TO THE NOTES. Section 8.6 Limitation on Interest. It is the intention of the parties hereto to conform strictly to applicable usury laws and, anything herein or any other Loan Document to the contrary notwithstanding, the obligations of Designated Entities to a Lender or an Agent under this Agreement and the Loan Documents shall be subject to the limitation that payments of interest shall not be required to the extent that receipt thereof would be contrary to provisions of law applicable to such Lender or Agent limiting rates of interest which may be charged or collected by such Lender or Agent. Accordingly, if the transactions contemplated hereby would be usurious under laws applicable to a Lender or Agent (including the federal and state laws of the United States of America or of any other jurisdiction whose laws may be mandatorily applicable to such Lender or Agent notwithstanding anything to the contrary in 77 82 this Agreement or any other Loan Document) then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document, it is agreed as follows: (a) the provisions of this Section shall govern and control; (b) the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received under this Agreement, or under any of the aforesaid agreements or otherwise in connection with this Agreement or any other Loan Document by such Lender or Agent shall under no circumstances exceed the maximum amount of interest allowed by applicable law (such maximum lawful interest rate, if any, with respect to each Lender and each Agent herein called the "Maximum Lawful Rate"), and any excess shall be canceled automatically and if theretofore paid shall be credited to the relevant Designated Entity by such Lender or Agent (or, if such consideration shall have been paid in full, such excess refunded to the relevant Designated Entity); (c) all sums paid, or agreed to be paid, to such Lender or Agent for the use, forbearance and detention of the indebtedness of the relevant Designated Entity to such Lender or Agent hereunder or under any other Loan Document shall, to the extent permitted by laws applicable to such Lender or Agent, as the case may be, be amortized, prorated, allocated and spread throughout the full term of such indebtedness until payment in full so that the actual rate of interest is uniform throughout the full term thereof; (d) if at any time the interest provided pursuant to any provision of this Agreement or any other Loan Document, together with any other fees payable pursuant to this Agreement or any other Loan Document and deemed interest under laws applicable to such Lender or Agent, exceeds the amount which would have accrued at the Maximum Lawful Rate, the amount of interest and any such fees to accrue to such Lender or Agent pursuant to this Agreement or any other Loan Document shall be limited, notwithstanding anything to the contrary in this Agreement or any other Loan Document, to that amount which would have accrued at the Maximum Lawful Rate, but any subsequent reductions, as applicable, shall not reduce the interest to accrue to such Lender or Agent pursuant to this Agreement or any other Loan Document below the Maximum Lawful Rate until the total amount of interest accrued pursuant to this Agreement or such other Loan Document, as the case may be, and such fees deemed to be interest equals the amount of interest which would have accrued to such Lender or Agent if a varying rate of interest per annum equal to the interest provided pursuant to Section 2.3 or any other relevant Section hereof (other than this Section) and the Notes, as applicable, had at all times been in 78 83 effect, plus the amount of fees which would have been received but for the effect of this Section; and (e) if the total amount of interest paid by or accrued with respect to the Obligations of Borrower, together with any other fees payable pursuant to this Agreement and the other Loan Documents and deemed interest under laws applicable to such Lender or Agent pursuant to this Agreement or any other Loan Document under the foregoing provisions of this Section is less than the total amount of interest which would have accrued if a varying rate per annum equal to the interest provided pursuant to Section 2.3 or any other relevant section hereof (other than this Section), as applicable, had at all times been in effect and all fees provided for in this Agreement and the other Loan Documents had been paid, then Borrower severally agrees to pay to such Lender or Agent an amount equal to the difference between, (i) the lesser of, (x) the amount of interest and fees which would have accrued if the Maximum Lawful Rate had at all times been in effect, and (y) the amount of interest and fees which would have accrued if a varying rate per annum equal to the interest provided pursuant to Section 2.3 or such other relevant section of this Agreement (other than this Section) and the Notes, as applicable, had at all times been in effect and all fees had been paid, and (ii) the amount of interest and fees accrued in accordance with the other provisions of this Agreement and other Loan Documents. For purposes of Chapter 1D of Article 5069 of the Texas Credit Title, Title 79, Vernon's Texas Civil Statutes, as amended (formerly Article 5069-1.04, Vernon's Texas Civil Statutes, as amended), to the extent, if any, applicable to any Lender or Agent, Borrower and each other Designated Entity agrees that the Maximum Lawful Rate shall be the "applicable interest rate ceiling" as defined in said Chapter, provided that such Lender or Agent, as applicable, may also rely, to the extent permitted by applicable laws of the State of Texas and the United States of America, on alternative maximum rates of interest under other laws applicable to such Lender or Agent from time to time if greater. Section 8.7 Termination; Limited Survival. In its sole and absolute discretion, Borrower may, at any time that no Obligations or other amounts are owing and no Letters of Credit are outstanding, elect to terminate this Agreement in a written notice delivered to Administrative Agent. Upon receipt by Administrative Agent of such a notice, if no Obligations or other amounts are then owing and no Letters of Credit are outstanding, this Agreement and all other Loan Documents shall thereupon be terminated and the parties thereto released from all prospective obligations hereunder or thereunder. Notwithstanding the foregoing or anything herein to the contrary, any waivers or admissions made by any Designated Entity in any Loan Document, any Obligations under Sections 2.16 through 2.20, any obligations which any Designated Entity may have to indemnify or compensate any Agent, any Issuing Bank, or any Lender in connection with matters arising upon or prior to the 79 84 termination of this Agreement and any obligations which any Lender may have to indemnify or compensate any Agent or Issuing Bank in connection with matters arising upon or prior to the termination of this Agreement shall survive any termination of this Agreement or any other Loan Document and the release of Designated Entities. At the request and expense of Borrower, Managing Agents shall prepare and execute all necessary instruments to reflect and effect such termination of the Loan Documents including, without limitation, the Security Instruments. Managing Agents are hereby authorized, jointly and severally, to execute all such instruments on behalf of all Lenders, without the joinder of or further action or consent by any Lender. Section 8.8 Assignments; Participations. (a) Each Lender shall have the right to sell, assign or transfer all or any part of such Lender's Notes, Loans, Commitments and LC Obligations hereunder to one or more Affiliates, Lenders, financial institutions, pension plans, investment funds, or similar Persons or to a Federal Reserve Bank; provided, that in connection with each sale, assignment or transfer (other than to an Affiliate, a Lender or a Federal Reserve Bank), the applicable Lender will consider the opinion and recommendation of Borrower, which opinion and recommendation shall in no way be binding upon such Lender, and each such sale, assignment, or transfer (other than to an Affiliate, a Lender or a Federal Reserve Bank) shall be with the consent of Borrower (unless an Event of Default has occurred and is continuing), which consent will not be unreasonably withheld, and with the consent of Administrative Agent, which consent will not be unreasonably withheld, and the assignee, transferee or recipient shall have, to the extent of such sale, assignment, or transfer, the same rights, benefits and obligations as it would if it were such Lender and a holder of such Notes, Commitments and LC Obligations, including, without limitation, the right to vote on decisions requiring consent or approval of all Lenders, Majority Lenders or Required Lenders and the obligation to fund its Loans; provided further, that (1) each Lender in making each such sale, assignment, or transfer must sell, assign or transfer a pro rata portion of its Commitments and each Loan (other than a Swing Line Advance or a Competitive Bid Advance) and LC Obligation made or held by such Lender, (2) each such sale, assignment, or transfer (other than to an Affiliate, a Lender or a Federal Reserve Bank) shall be in an aggregate principal amount not less than $10,000,000, (3) each remaining Lender shall at all times maintain Commitments then outstanding in an aggregate principal amount at least equal to $10,000,000; (4) no Lender may offer to sell its Notes, Commitments, LC Obligations or Loans or interests therein in violation of any securities laws; and (5) no such assignments (other than to a Federal Reserve Bank) shall become effective until the assigning Lender delivers to Administrative Agent and Borrower copies of all written assignments and other 80 85 documents evidencing any such assignment and an Agreement to be Bound in the form of Exhibit L, providing for the assignee's ratification and agreement to be bound by the terms of this Agreement and the other Loan Documents. An assignment fee in the amount of $3,500 for each such assignment (other than to an Affiliate, a Lender or a Federal Reserve Bank) will be payable to Administrative Agent by assignor or assignee. Within five (5) Business Days after its receipt of copies of any assignment and the other documents relating thereto and the following described Notes, Borrower shall execute and deliver to Administrative Agent (for delivery to the relevant assignee) new Notes evidencing such assignee's assigned Loans and Commitments and if the assignor Lender has retained a portion of its Loans, replacement Notes in the principal amount of the Loans and Commitments retained by the assignor Lender (except as provided in the last sentence of this paragraph (a) such Notes to be in exchange for, but not in payment of, the Notes held by such Lender). On and after the effective date of an assignment hereunder, the assignee shall for all purposes be a Lender, party to this Agreement and any other Loan Document executed by the Lenders and shall have all the rights and obligations of a Lender under the Loan Documents, to the same extent as if it were an original party thereto, and no further consent or action by Borrower, Lenders or any Agent shall be required to release the transferor Lender, with respect to the Commitments, the LC Obligations and the Loans assigned to such assignee and the transferor Lender shall henceforth be so released. (b) Each Lender shall have the right to grant participations in all or any part of such Lender's Notes, Commitments, LC Obligations, and Loans hereunder to one or more pension plans, investment funds, financial institutions or other Persons; provided, that: (1) each Lender granting a participation shall retain the right to vote hereunder, and no participant shall be entitled to vote hereunder on decisions requiring consent or approval of Lenders, Majority Lenders or Required Lenders (except as set forth in (3) below); (2) in the event any Lender grants a participation hereunder, such Lender's obligations under the Loan Documents shall remain unchanged, such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, such Lender shall remain the holder of any such Notes for all purposes under the Loan Documents, and each Agent, each Lender and Borrower shall be entitled to deal with the Lender granting a participation in the same manner as if no participation had been granted; and 81 86 (3) no participant shall ever have any right by reason of its participation to exercise any of the rights of Lenders hereunder, except that any Lender may agree with any participant that such Lender will not, without the consent of such participant (which consent may not be unreasonably withheld), consent to any amendment or waiver described in Section 8.1 requiring approval of 100% of the Lenders. (c) It is understood and agreed that any Lender may provide to assignees and participants and prospective assignees and participants financial information and reports and data concerning Borrower's properties and operations which was provided to such Lender pursuant to this Agreement, subject to Section 8.9. (d) Upon the reasonable request of either of the Managing Agents or Borrower, each Lender will identify those to whom it has assigned or participated any part of its Notes, LC Obligations or Loans, and provide the amounts so assigned or participated. Section 8.9 Confidentiality. Each Agent and each Lender agrees that it (a) will maintain the confidentiality of all non-public information from any Designated Entity or any Subsidiary of Borrower obtained pursuant to the terms of this Agreement or any other Loan Document in accordance with safe and sound banking practices, and (b) will not use such confidential information for any purpose other than in connection with this Agreement; provided, however, that this restriction shall not apply to information which (w) has at the particular time in question entered the public domain, or been independently developed without the use or incorporation of any non-public information provided to such Agent or Lender by any Designated Entity or any Subsidiary of Borrower by such Agent or such Lender other than through disclosure by such Agent or such Lender in violation of this Section, (x) is required to be disclosed by law or by any order, rule, regulation or legal process (whether valid or invalid) of any court or Governmental Authority, (y) is furnished to any other Lender or to any purchaser or prospective purchaser of participations, assignments or other interests in any Loan, Note, LC Obligation or Commitment that has executed and delivered to Borrower an agreement containing terms substantially similar to this Section and reasonably acceptable to Borrower, to keep such information confidential or (z) is disclosed to such Lender's or Agent's examiners, Affiliates, outside auditors, counsel and other professional advisors who have a need for such information in connection with this Agreement and who are advised of the confidential nature of such information. As used in this Section, the terms "Agent" and "Lender" shall refer not only to the Persons designated as such in Section 1.1, but also to each director, Affiliate, officer, agent, attorney, employee and representative of such Person. Notwithstanding any other provisions of this Agreement, the terms of this Section shall survive the termination of this Agreement for a period of three (3) years. 82 87 Section 8.10 Severability. If any term or provision of any Loan Document shall be determined to be illegal or unenforceable in any jurisdiction, such term or provision shall, as to such jurisdiction, be illegal or unenforceable, without affecting the remaining provisions in that jurisdiction or the legality or enforceability of such terms or conditions in any other jurisdiction. Section 8.11 Counterparts. This Agreement may be separately executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to constitute one and the same Agreement. Section 8.12 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES. EACH OF THE BORROWER, AGENTS AND LENDERS HEREBY (I) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (II) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; (III) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (IV) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. Section 8.13 Several Obligations. The respective obligations of Lenders hereunder are several and not joint and no Lender shall be the partner or agent of any other (except to the extent to which an Agent is authorized to act as such). The failure of any Lender to perform any of its obligations hereunder shall not relieve any other Lender from any of its obligations hereunder. This Agreement is not intended to, and shall not be construed so as to, confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and assigns. Section 8.14 Nonliability of Lenders. The relationship between Borrower on the one hand and Lenders and Agents on the other hand shall be solely that of borrower and lender. None of the Agents nor any Lender shall have any fiduciary responsibilities to Borrower or any of its respective Subsidiaries. None of the Agents nor any Lender undertakes 83 88 any responsibility to Borrower or any of their respective Subsidiaries to review or inform Borrower of any matter in connection with any phase of Borrower's or such Subsidiary's business or operations. Section 8.15 Setoff. In addition to, and without any limitation of, any rights of the Lenders under applicable law, if Borrower becomes insolvent, however evidenced, or any Event of Default or Default occurs and the maturity of the Obligations has been accelerated, any indebtedness from any Lender to Borrower (including all account balances, whether provisional or final and whether or not collected or available) may be offset and applied toward the payment of the Obligations owing to such Lender, whether or not the Obligations, or any part thereof, shall then be due and payable. Section 8.16 Release of Liens. Upon the date of execution and delivery of a Guaranty of the type referred to in clause (i) of the definition of "Guaranty" by a Restricted Subsidiary the capital stock of which has been pledged (each such date, a "Stock Pledge Release Date"), the Collateral Agent shall release and discharge, at the cost or expense of Borrower, the Pledge Agreement covering such Subsidiary's capital stock, all of Lenders' and Collateral Agent's rights and interests in such Pledge Agreement and all liens, security interests, pledges and encumbrances created or existing under or pursuant to such Pledge Agreement. SECTION 8.17 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENTS, THE LENDERS OR THE BORROWER SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. FOR THE PURPOSE OF ANY ACTION OR PROCEEDING INSTITUTED IN THE FEDERAL OR STATE COURTS OF TEXAS, HOLDINGS HEREBY IRREVOCABLY DESIGNATES BORROWER WITH OFFICES 84 89 ON THE DATE HEREOF AT 303 WEST WALL STREET, SUITE 101, MIDLAND, TEXAS 79701 TO RECEIVE FOR AND ON BEHALF OF HOLDINGS, SERVICES OF PROCESS IN TEXAS. BORROWER HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, BORROWER HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. Section 8.18 Assumption of Prior Indebtedness. Borrower hereby assumes effective on the Effective Date, and Pioneer USA has assigned and hereby assigns to Borrower, all of the Prior Indebtedness under the Existing Credit Agreement (including any and all outstanding LC Obligations). Section 8.19 Renewal, Extension or Rearrangement. All provisions of this Agreement and any other Loan Document relating to the Notes or the other Obligations (including LC Obligations) shall apply with equal force and effect to each and all promissory notes or other agreements or instruments hereafter executed which in whole or in part represent a renewal, extension, increase or rearrangement of any part of the original Notes or Obligations. Section 8.20 Entire Agreement. 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 BETWEEN THE PARTIES. [SIGNATURES BEGIN ON THE FOLLOWING PAGE] 85 90 IN WITNESS WHEREOF, this Agreement is executed as of the date first written above. BORROWER: PIONEER NATURAL RESOURCES COMPANY By: -------------------------------------- Name: M. Garrett Smith Title: Executive Vice President and Chief Financial Officer Address: 1400 Williams Square West 5205 North O'Connor Blvd. Irving, Texas 75039 Attention: M. Garrett Smith Telephone: (972) 402-7013 Telecopy: (972) 402-7028 with a copy to: 303 West Wall, Suite 101 P.O. Box 3178 Midland, Texas 79701 Attention: Curt Kamradt Telephone: (915) 571-3171 Telecopy: (915) 571-5696 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 1 91 LENDERS: NATIONSBANK OF TEXAS, N.A., individually and as Administrative Agent and as Collateral Agent By: -------------------------------------- Name: Frank K. Stowers Title: Vice President Address: 303 W. Wall P. O. Box 1599 Midland, Texas 79701 Attention: Mr. Frank K. Stowers Telephone: (915) 685-2179 Telecopy: (915) 685-2009 with further notice to: 901 Main Street, 64th Floor Dallas, Texas 75202 Attention: Mr. E. Murphy Markham IV Telephone: (214) 508-1251 Telecopy: (214) 508-1285 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 2 92 CIBC INC., individually and as Documentation Agent By: ------------------------------------------ Name: Title: Address: 2727 Paces Ferry Road Suite 1200 Atlanta, GA 30339 Attention: ---------------------------- Telephone: (770) 319-4824 Telecopy: (770) 319-4950 with further notice to: 2 Houston Center 909 Fannin Street, Suite 1200 Houston, Texas 77010 Attention: Mr. Paul Jordan Telephone: (713) 655-5245 Telecopy: (713) 650-3727 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 3 93 MORGAN GUARANTY TRUST COMPANY OF NEW YORK, individually and as Documentation Agent By: -------------------------------------- Name: Title: Address: 60 Wall Street, 22nd Floor New York, New York 10260 Attention: Mr. Philip McNeal Telephone: (212) 648-7181 Telecopy: (212) 648-5023 with further notice to: Sandra H. Doherty 500 Christiana Stanton Road Newark, DE 19713-2107 Telephone: (302) 634-8122 Telecopy: (302) 634-1092 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 4 94 THE CHASE MANHATTAN BANK, individually and as Syndication Agent By: ------------------------------------ Name: Title: Address: 712 Main Street, 5th Floor P. O. Box 2558 Houston, Texas 77252-8086 Attention: Mr. Robert Mertensotto Telephone: (713) 216-4147 Telecopy: (713) 216-4117 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 5 95 BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, individually and as Co-Agent By: ------------------------------------- Name: Title: Address: 3 Allen Center 333 Clay Street, Suite 4550 Houston, TX 77002 Attention: Mr. Ron McKaig Telephone: (713) 651-4881 Telecopy: (713) 651-4841 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 6 96 THE BANK OF NEW YORK, individually and as Co-Agent By: ------------------------------------- Name: Title: Address: One Wall Street, 19th Floor New York, New York 10286 Attention: Mr. Ray Palmer Telephone: (212) 635-7834 Telecopy: (212) 635-7923 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 7 97 THE BANK OF NOVA SCOTIA, individually and as Co-Agent By: ------------------------------------ Name: Title: Address: 600 Peachtree Street N.E. Suite 2700 Atlanta, Georgia 30308 Attention: Mr. Cleve Bushey Telephone: (404) 877-1500 Telecopy: (404) 888-8998 with further notice to: Mr. Jamie Conn 1100 Louisiana, Suite 3000 Houston, TX 77002 Telephone: (713) 759-3426 Telecopy: (713) 752-2425 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 8 98 ROYAL BANK OF CANADA, individually and as Co-Agent By: ---------------------------------------- Name: Title: Address: Financial Square 32 Old Slip St. New York, New York 10005-3531 Attention: Loan Administrator Telephone: (212) 428-6321 Telecopy: (212) 428-2372 W/copy to: Address: 12450 Greens Point Drive Suite 1450 Houston, Texas 77060 Attention: Ms. Linda Stephens Telephone: (281) 874-5669 Telecopy: (281) 874-0081 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 9 99 UNION BANK OF CALIFORNIA, N.A., individually and as Co-Agent By: ----------------------------------- Name: Title: Address: 500 North Akard, Suite 4200 Dallas, Texas 75201 Attention: Mr. Randy Osterberg Telephone: (214) 922-4200 Telecopy: (214) 922-4209 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 10 100 WELLS FARGO BANK, N.A., individually and as Co-Agent By: ---------------------------------- Name: Title: Address: 1445 Ross Avenue, Suite 400 LB 224 Dallas, Texas 75202 Attention: Mr. Lester Keliher Telephone: (214) 777-4025 Telecopy: (214) 777-4044 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 11 101 THE FUJI BANK, LIMITED-HOUSTON AGENCY, individually and as Co-Agent By: ----------------------------------- Name: Title: Address: 1221 McKinney Street Suite 4100 Houston, Texas 77002 Attention: Mr. Tommy Watts Telephone: (713) 650-7868 Telecopy: (713) 759-0717 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 12 102 DEN NORSKE BANK ASA, individually and as Lead Manager By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: Address: 333 Clay Street, Suite 4890 Houston, Texas 77002 Attention: Mr. J. Morten Kreutz Telephone: (713) 844-9255 Telecopy: (713) 757-1167 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 13 103 BANQUE PARIBAS, individually and as Lead Manager By: ------------------------------------ Name: Title: By: ------------------------------------ Name: Title: Address: 1200 Smith Street Two Allen Center Suite 3100 Houston, Texas 77002 Attention: Mr. David Dodd Telephone: (713) 659-4811 Telecopy: (713) 659-6915 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 14 104 FIRST UNION NATIONAL BANK, individually and as Lead Manager By: -------------------------------------- Name: Title: Address: 1001 Fannin Street Suite 2255 Houston, Texas 77002 Attention: Mr. Paul N. Riddle Telephone: (713) 650-3716 Telecopy: (713) 650-6354 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 15 105 BANKERS TRUST COMPANY, as a Lender By: --------------------------------------- Name: Title: Address: 130 Liberty Plaza, 30th Floor M.S. 2344 New York, New York 10006 Attention: Marcus M. Tarkington Telephone: (212) 250-7684 Telecopy: (212) 250-8693 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 16 106 CREDIT AGRICOLE INDOSUEZ, as a Lender By: ------------------------------------- Name: Title: By: ------------------------------------- Name: Title: Address: 55 East Monroe Chicago, Illinois 60603 Attention: Ms. Rosemary Brown Telephone: (312) 917-7420 Telecopy: (312) 372-4421 with further notice to: Mr. Brian Knezeak 600 Travis, Suite 2340 Houston, Texas 77002 Telephone: (713) 223-7001 Telecopy: (713) 223-7029 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 17 107 NATEXIS BANQUE, as a Lender BFCE By: ----------------------------------- Name: Title: By: ----------------------------------- Name: Title: Address: 333 Clay Street, Suite 4340 Houston, Texas 77002 Attention: Mr. Eric Ditges Telephone: (713) 759-9401 Telecopy: (713) 759-9908 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 18 108 TORONTO DOMINION (TEXAS), INC., as a Lender By: ---------------------------------- Name: Title: Address: 909 Fannin Street, Suite 1700 Houston, Texas 77010 Attention: Ms. Darlene Riedel Telephone: (713) 653-8250 Telecopy: (713) 951-9921 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 19 109 THE TOYO TRUST & BANKING CO., LTD., as a Lender By: ------------------------------- Name: Title: Address: 666 5th Avenue, 33rd Floor New York, New York 10103 Attention: Ms. Sharon Bonelli Telephone: (212) 307-3410 Telecopy: (212) 307-3498 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 20 110 WACHOVIA BANK, N.A., as a Lender By: ----------------------------------- Name: Title: Address: 191 Peachtree Street Atlanta, Georgia 30303 Attention: Ms. Paige Mesaros Telephone: (404) 332-1322 Telecopy: (404) 332-6898 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 21 111 THE DAI-ICHI KANGYO BANK, LTD., NEW YORK BRANCH, as a Lender By: --------------------------------- Name: Title: Address: One World Trade Center 48th Floor New York, New York 10048 Attention: Mr. Masayoshi Komaki Telephone: (212) 432-6627 Telecopy: (212) 912-1879 Further notice to: DKB-Houston LPO 1100 Louisiana, Suite 4940 Houston, Texas 77002 Attention: Mr. Warren Ross Telephone: (713) 654-5055 Telecopy: (713) 654-1667 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 22 112 THE SANWA BANK, LIMITED, as a Lender By: ------------------------------------- Name: Title: Address: 4100W Texas Commerce Tower 2200 Ross Avenue Dallas, Texas 75201 Attention: Mr. Matthew Patrick Telephone: (214) 665-0242 Telecopy: (214) 953-3963 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 23 113 KREDIETBANK N.V., as a Lender By: ----------------------------------- Name: Title: Address: 125 West 55th Street New York, NY 10019 Attention: Robert E. Snauffer Vice President Telephone: (212) 541-0700 Telecopy: (212) 956-5580 with a copy to: Kredietbank N.V., Atlanta Representative Office Two Midtown Plaza, Suite 1750 1349 W. Peachtree Street Atlanta, Georgia 30309 Attention: Mr. Felip Ferrante Telephone: (404) 876-2556 Telecopy: (404) 876-3212 [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 24 114 For purposes of selling, assigning, transferring and conveying its respective indebtedness, obligations and liabilities under the Existing Credit Agreement to Borrower, the undersigned has caused this Agreement to be executed by its officer thereunto duly authorized as of the date and year first above written. PIONEER NATURAL RESOURCES USA, INC. By: -------------------------------------- Name: M. Garrett Smith Title: Executive Vice President and Chief Financial Officer [SIGNATURE PAGE TO PRIMARY CREDIT FACILITY] S - 25 115 Exhibit A-1 [Form of] Loan Note - Primary Credit Facility $________________ ___________, 199___ FOR VALUE RECEIVED, the undersigned, PIONEER NATURAL RESOURCES COMPANY, a Delaware corporation, with offices at 303 W. Wall, Suite 101, Midland, Texas (herein called "Borrower"), hereby promises to pay to the order of ________________________________ (herein called "Lender"), the principal sum of _______________________________ and No/100 Dollars ($___________________), or, if greater or less, the aggregate unpaid principal amount of each Loan made under this Note by Lender to Borrower pursuant to the terms of the Credit Agreement (as defined herein), together with interest on the unpaid principal balance thereof as hereinafter set forth, both principal and interest payable as herein provided in lawful money of the United States of America at the principal banking offices of the Administrative Agent under the Credit Agreement, 901 Main Street, Dallas, Texas 75202, or at such other place as from time to time may be designated by the holder of this Note, with the concurrence of Borrower and Administrative Agent. Subject to the terms and conditions of the Credit Agreement and hereof, Borrower may borrow, repay and reborrow hereunder. This Note (a) is issued and delivered under that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"), and is a "Loan Note" as defined therein, and (b) is subject to the terms and provisions of the Credit Agreement, which contains provisions for payment and prepayment hereunder and acceleration of the maturity hereof upon the happening of certain events. Payments on this Note shall be made and applied as provided herein and in the Credit Agreement. Reference is hereby made to the Credit Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not otherwise defined herein. Exhibit A-1 - 1 116 Interest accrued on each Loan evidenced by this Note shall be payable, without duplication: (a) on the Maturity Date; (b) with respect to any Base Rate Portion of the Loans evidenced by this Note, on the third Business Day of each Fiscal Quarter occurring after the date of the initial borrowing of a Base Rate Portion hereunder; (c) with respect to any Eurodollar Portion of the Loans evidenced by this Note, on the last day of each applicable Interest Period (and, if such Interest Period shall exceed 90 days, on the 90th day of such Interest Period and every 90 days thereafter until the end of such Interest Period); (d) with respect to any Base Rate Portion converted into a Eurodollar Portion of the Loans evidenced by this Note pursuant to a Rate Election on a day when interest would not otherwise have been payable pursuant to clause (b), on the third Business Day of each Fiscal Quarter occurring after the date of such conversion; and (e) on any portion of the Loans evidenced by this Note, the Maturity Date of which is accelerated pursuant to Section 6.1 of the Credit Agreement, on the date to which the Maturity Date of such portion has been accelerated. Interest accrued on the Loans evidenced by this Note or other monetary Obligations arising under this Note, the Credit Agreement or any other Loan Document after the date such amount is due and payable (whether on the Maturity Date, upon acceleration or otherwise) shall be payable upon demand. The principal amount of this Note, together with all interest accrued hereon and unpaid, shall be due and payable in full on the Maturity Date. The Base Rate Portion of the Loans evidenced by this Note (exclusive of any past due principal or interest) from time to time outstanding shall bear interest on each day outstanding at the Base Rate, plus the applicable Base Rate Margin. Each Eurodollar Portion of the Loans evidenced by this Note (exclusive of any past due principal or interest) shall bear interest on each day during the related Interest Period at the applicable Eurodollar Rate, plus the applicable Eurodollar Margin. All past due principal of the Loans evidenced by this Note or other Obligations arising under the Credit Agreement or any other Loan Document (whether payable on the Maturity Date or otherwise) shall bear interest on each day outstanding after its due date at the applicable Default Rate in effect on such day. Notwithstanding the other provisions of this Note or the Credit Agreement, in no event shall the interest payable hereon, whether before or after maturity, exceed the Maximum Lawful Rate and this Note is expressly made subject to the provisions of the Credit Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable law provides for a ceiling under Chapter 1D of Article 5069 of the Texas Credit Title, Title 79, Vernon's Texas Civil Statutes, as amended Exhibit A-1 - 2 117 (formerly Article 5069-1.04, Vernon's Texas Civil Statutes, as amended), that ceiling shall be the "applicable interest rate ceiling" as defined in said Chapter. The term "applicable law" as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater interest as such laws now exist or may be enacted, changed or amended or come into effect in the future. If this Note is placed in the hands of an attorney for collection after a Default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, the undersigned Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. The undersigned Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. It is contemplated that by reason of prepayment hereon there may be times when no indebtedness is owing hereunder; notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect as to Loans made pursuant to the Credit Agreement subsequent to each occurrence. Except as permitted by Section 8.8 of the Credit Agreement, this Note may not be assigned by Lender to any other Person. THIS NOTE AND THE RIGHTS AND DUTIES OF THE UNDERSIGNED BORROWER AND LENDER WITH RESPECT HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW. PIONEER NATURAL RESOURCES COMPANY By: --------------------------------------- Name: M. Garrett Smith Title: Executive Vice President and Chief Financial Officer Exhibit A-1 - 3 118 Exhibit A-2 [Form of] Swing Line Note - Primary Credit Facility $50,000,000 _________, 199___ FOR VALUE RECEIVED, the undersigned, PIONEER NATURAL RESOURCES COMPANY, a Delaware corporation with offices at 303 W. Wall, Suite 101, Midland, Texas (herein called "Borrower"), hereby promises to pay to the order of NATIONSBANK OF TEXAS, N.A. (herein called "Lender"), the principal sum of FIFTY MILLION AND NO/100 Dollars ($50,000,000), or, if less, the aggregate unpaid principal amount of the Swing Line Advances made under this Note by Lender to Borrower pursuant to the terms of the Credit Agreement (as defined herein), together with interest on the unpaid principal balance thereof as hereinafter set forth, both principal and interest payable as herein provided in lawful money of the United States of America at the principal banking offices of Administrative Agent under the Credit Agreement, 901 Main Street, Dallas, Texas 75202, or at such other place as from time to time may be designated by the holder of this Note, with the concurrence of Borrower and Administrative Agent. This Note (a) is issued and delivered under that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"), and is a "Swing Line Note" as defined therein, and (b) is subject to the terms and provisions of the Credit Agreement, which contains provisions for payment and prepayment hereunder and acceleration of the maturity hereof upon the happening of certain events. Payments on this Note shall be made and applied as provided herein and in the Credit Agreement. Reference is hereby made to the Credit Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not otherwise defined herein. The unpaid principal amount of this Note, together with all interest accrued hereon and unpaid, shall be due and payable in full as provided in the Credit Agreement and not later than the Maturity Date. Interest accrued on the Swing Line Advances evidenced by this Note shall be payable as provided in the Credit Agreement. Exhibit A-2 - 1 119 Notwithstanding other provisions of this Note or the Credit Agreement, in no event shall the interest payable hereon, whether before or after maturity, exceed the Maximum Lawful Rate and this Note is expressly made subject to the provisions of the Credit Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable law provides for a ceiling under Chapter 1D of Article 5069 of the Texas Credit Title, Title 79, Vernon's Texas Civil Statutes, as amended (formerly Article 5069-1.04, Vernon's Texas Civil Statutes, as amended), that ceiling shall be the "applicable interest rate ceiling" as defined in said Chapter. The term "applicable law" as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater interest as such laws now exist or may be enacted, changed or amended or come into effect in the future. If this Note is placed in the hands of an attorney for collection after a Default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, the undersigned Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. The undersigned Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. It is contemplated that by reason of prepayment hereon there may be times when no indebtedness is owing hereunder; notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect as to Loans made pursuant to the Credit Agreement subsequent to each occurrence. Except as permitted by Section 8.8 of the Credit Agreement, this Note may not be assigned by Lender to any other Person. Exhibit A-2 - 2 120 THIS NOTE AND THE RIGHTS AND DUTIES OF THE UNDERSIGNED BORROWER AND LENDER WITH RESPECT HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW. PIONEER NATURAL RESOURCES COMPANY By: --------------------------------------- Name: M. Garrett Smith Title: Executive Vice President and Chief Financial Officer Exhibit A-2 - 3 121 Exhibit A-3 [Form of] Competitive Bid Note - Primary Credit Facility $1,075,000,000 __________, 199___ FOR VALUE RECEIVED, the undersigned, PIONEER NATURAL RESOURCES COMPANY, a Delaware corporation, with offices at 303 W. Wall, Suite 101, Midland, Texas (herein called "Borrower"), hereby promises to pay to the order of __________________________________ (herein called "Lender"), the principal sum of ONE BILLION SEVENTY-FIVE MILLION AND NO/100 DOLLARS ($1,075,000,000), or, if less, the aggregate unpaid principal amount of all Competitive Bid Advances shown on the schedule attached hereto (and any continuation thereof), if so shown, made by the Lender to Borrower, together with interest on the unpaid principal balance thereof as hereinafter set forth, both principal and interest payable as herein provided in lawful money of the United States of America at the principal banking offices of Administrative Agent under the Credit Agreement (as defined herein), 901 Main Street, Dallas, Texas 75202, or at such other place as from time to time may be designated by the holder of this Note, with the concurrence of Borrower and Administrative Agent. This Note (a) is issued and delivered under that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"), and is a "Competitive Bid Note" as defined therein, and (b) is subject to the terms and provisions of the Credit Agreement, which contains provisions for payment and prepayment hereunder and acceleration of the maturity hereof upon the happening of certain events. Payments on this Note shall be made and applied as provided herein and in the Credit Agreement. Reference is hereby made to the Credit Agreement for a description of certain rights, limitations of rights, obligations and duties of the parties hereto and for the meanings assigned to terms used and not otherwise defined herein. The unpaid principal amount of this Note, together with all interest accrued hereon and unpaid, shall be due and payable in full as provided in the Credit Agreement and not later than the Maturity Date. Exhibit A-3 - 1 122 Interest accrued on the Competitive Bid Advances evidenced by this Note shall be payable as provided in the Credit Agreement. Notwithstanding other provisions of this Note or the Credit Agreement, in no event shall the interest payable hereon, whether before or after maturity, exceed the Maximum Lawful Rate and this Note is expressly made subject to the provisions of the Credit Agreement which more fully set out the limitations on how interest accrues hereon. In the event applicable law provides for a ceiling under Chapter 1D of Article 5069 of the Texas Credit Title, Title 79, Vernon's Texas Civil Statutes, as amended (formerly Article 5069-1.04, Vernon's Texas Civil Statutes, as amended), that ceiling shall be the "applicable interest rate ceiling" as defined in said Chapter. The term "applicable law" as used in this Note shall mean the laws of the State of Texas or the laws of the United States, whichever laws allow the greater interest as such laws now exist or may be enacted, changed or amended or come into effect in the future. If this Note is placed in the hands of an attorney for collection after a Default, or if all or any part of the indebtedness represented hereby is proved, established or collected in any court or in any bankruptcy, receivership, debtor relief, probate or other court proceedings, the undersigned Borrower and all endorsers, sureties and guarantors of this Note jointly and severally agree to pay reasonable attorneys' fees and collection costs to the holder hereof in addition to the principal and interest payable hereunder. The undersigned Borrower and all endorsers, sureties and guarantors of this Note hereby severally waive demand, presentment, notice of demand and of dishonor and nonpayment of this Note, protest, notice of protest, notice of intention to accelerate the maturity of this Note, declaration or notice of acceleration of the maturity of this Note, diligence in collecting, the bringing of any suit against any party and any notice of or defense on account of any extensions, renewals, partial payments or changes in any manner of or in this Note or in any of its terms, provisions and covenants, or any releases or substitutions of any security, or any delay, indulgence or other act of any trustee or any holder hereof, whether before or after maturity. It is contemplated that by reason of prepayment hereon there may be times when no indebtedness is owing hereunder; notwithstanding such occurrences, this Note shall remain valid and shall be in full force and effect as to Competitive Bid Advances made pursuant to the Credit Agreement subsequent to each occurrence. Exhibit A-3 - 2 123 Except as permitted by Section 8.8 of the Credit Agreement, this Note may not be assigned by Lender to any other Person. THIS NOTE AND THE RIGHTS AND DUTIES OF THE UNDERSIGNED BORROWER AND LENDER WITH RESPECT HERETO SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW), EXCEPT TO THE EXTENT THE SAME ARE GOVERNED BY APPLICABLE FEDERAL LAW. PIONEER NATURAL RESOURCES COMPANY By: --------------------------------------- Name: M. Garrett Smith Title: Executive Vice President and Chief Financial Officer Exhibit A-3 - 3 124 Exhibit B [Note: Language in brackets will not be included in every Guaranty to the extent that, at the time of execution and delivery of the Guaranty, such execution and delivery would result in adverse tax consequences under Section 956 or substantial stamp tax or similar taxes, are prohibited pursuant to contractual restrictions or are prohibited as a matter of corporate law.] [Form of] GUARANTY THIS GUARANTY (this "Guaranty"), dated as of _______________, 199___, made by _________________________ [(A.C.N. _____________)], a ________________ ("Guarantor"), in favor of each of the Lender Parties (as defined below). W I T N E S S E T H: WHEREAS, pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Pioneer Natural Resources Company, a Delaware corporation ("Borrower"), NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (together with all amendments, supplements, restatements and other modifications, if any, thereafter made thereto, the "Primary Credit Agreement"), the Lenders have extended Commitments (as defined in the Primary Credit Agreement) to make Loans to Borrower and to issue or participate in Letters of Credit on behalf of Borrower; and WHEREAS, pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co- Agents party thereto, and the Lenders from time to time parties thereto (together with all amendments, supplements, restatements and other modifications, if any, thereafter made thereto, the "364 Day Credit Agreement", and together with the Primary Credit Agreement, the "Credit Agreements"), the Lenders have extended Commitments (as defined in the 364 Day Credit Agreement) to make Loans to Borrower; and WHEREAS, as a condition precedent to the making of the initial Loans or issuing of the initial Letters of Credit under Exhibit B - 1 125 the Credit Agreements, Guarantor is required to execute and deliver this Guaranty; and WHEREAS, Guarantor has duly authorized the execution, delivery and performance of this Guaranty; and WHEREAS, it is in the best interests of Guarantor to execute this Guaranty inasmuch as Guarantor will derive substantial direct and indirect benefits from the Loans made from time to time to Borrower and Letters of Credit issued on behalf of Borrower pursuant to the Credit Agreements; NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders to make Loans (including the initial Loans) to Borrower pursuant to the Credit Agreements and for the Issuing Bank to issue Letters of Credit on behalf of Borrower and for the Lenders to acquire participations in such Letters of Credit pursuant to the Primary Credit Agreement, Guarantor agrees, for the benefit of each Lender Party, as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Guaranty, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the first recital. "Borrower" is defined in the first recital. "Commitments" means "Commitments" as defined in the Primary Credit Agreement and "Commitments" as defined in the 364 Day Credit Agreement. "Credit Agreements" is defined in the second recital. "Debtor" is defined in Section 2.1(a)(i). "Guarantor" is defined in the preamble. "Guaranty" is defined in the preamble. "Lender Party" means, as the context may require, any Lender, any Issuing Bank or any Agent and each of its respective successors, transferees and assigns under the Credit Agreements. Exhibit B - 2 126 "Lenders" means "Lenders" as defined in the Primary Credit Agreement and "Lenders" as defined in the 364 Day Credit Agreement. "Loan Documents" means "Loan Documents" as defined in the Primary Credit Agreement and "Loan Documents" as defined in the 364 Day Credit Agreement. "Notes" means "Notes" as defined in the Primary Credit Agreement and "Notes" as defined in the 364 Day Credit Agreement. "Obligations" means "Obligations" as defined in the Primary Credit Agreement and "Obligations" as defined in the 364 Day Credit Agreement. "Primary Credit Agreement" is defined in the first recital. "364 Day Credit Agreement" is defined in the second recital. SECTION 1.2. Primary Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Guaranty, including its preamble and recitals, have the meanings provided in the Primary Credit Agreement. ARTICLE II GUARANTY PROVISIONS SECTION 2.1. Guaranty. Guarantor hereby absolutely, unconditionally and irrevocably (a) guarantees (i) the full and punctual payment when due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise, of all Obligations of Borrower now or hereafter existing under the Credit Agreements, the Notes, the LC Applications and each other Loan Document to which Borrower is or may become a party, whether for principal, interest, fees, expenses or otherwise; (ii) the payment and performance of any and all present or future obligations of Borrower according to the terms of any present or future rate swap, rate cap, rate floor, rate collar, currency exchange transaction, forward rate agreement, or other exchange or rate protection agreements or any option with respect to any such transaction now existing or hereafter entered into between Borrower or any of its Subsidiaries and one or more of the Lenders or their Affiliates ("interest rate swap agreement"); Exhibit B - 3 127 (iii) the payment and performance of any and all present or future obligations of Borrower according to the terms of any present or future crude oil, natural gas or other hydrocarbons swap agreements, crude oil, natural gas or other hydrocarbons cap, crude oil, natural gas or other hydrocarbons floor, crude oil, natural gas or other hydrocarbons collar, crude oil, natural gas or other hydrocarbons exchange transaction, forward crude oil, natural gas or other hydrocarbons agreement, or other exchange or crude oil, natural gas or other hydrocarbons protection agreements or any option with respect to any such transaction now existing or hereafter entered into between Borrower or any of its Subsidiaries and one or more of the Lenders or their Affiliates; and (iv) all renewals, rearrangements, increases, extensions for any period, substitutions, modification, amendments or supplements in whole or in part of any of the above loan documents or obligations, (including all such amounts which would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. Section 362(a), and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code, 11 U.S.C. Section 502(b) and Section 506(b)), and (b) indemnifies and holds harmless strictly in accordance with the terms of the Credit Agreements each Lender Party and each holder of a Note from Borrower, an LC Application or any interest in an LC Obligation for any and all costs and expenses (including reasonable attorney's fees and expenses) incurred by such Lender Party or such holder, as the case may be, in enforcing any rights under this Guaranty; provided, however, that Guarantor shall only be liable under this Guaranty for the maximum amount of such liability that can be hereby incurred without rendering this Guaranty, as it relates to Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount. This Guaranty constitutes a guaranty of payment when due and not of collection, and Guarantor specifically agrees that it shall not be necessary or required that any Lender Party or any holder of any Note exercise any right, assert any claim or demand or enforce any remedy whatsoever against Borrower or any other Designated Entity (or any other Person) before or as a condition to the obligations of Guarantor hereunder. All payments hereunder are to be made in the currency in which they are due under the Credit Agreements. SECTION 2.2. Acceleration of Guaranty. Guarantor agrees that, in the event of the dissolution or insolvency of Borrower Exhibit B - 4 128 or Guarantor, or the inability or failure of Borrower or Guarantor to pay debts as they become due, or an assignment by Borrower or Guarantor for the benefit of creditors, or the commencement of any case or proceeding in respect of Borrower or Guarantor under any bankruptcy, insolvency or similar laws, and if such event shall occur at a time when any of the Obligations of Borrower may not then be due and payable, Guarantor will pay to the Lenders forthwith the full amount which would be payable hereunder by Guarantor if all such Obligations were then due and payable. SECTION 2.3. Guaranty Absolute, etc. This Guaranty shall in all respects be a continuing, absolute, unconditional and irrevocable guaranty of payment, and shall remain in full force and effect until all Obligations of Borrower have been paid in full, all obligations of Guarantor hereunder shall have been paid in full and all Commitments shall have terminated. Guarantor guarantees that the Obligations of Borrower will be paid strictly in accordance with the terms of the Credit Agreements and each other Loan Document under which they arise, regardless of any law, regulation or order now or hereafter in effect in any jurisdiction affecting any of such terms or the rights of any Lender Party or any holder of any Note with respect thereto. The liability of Guarantor under this Guaranty shall be absolute, unconditional and irrevocable irrespective of: (a) (i) any lack of validity, legality or enforceability of the Credit Agreements, any Note, any LC Application or any other Loan Document or any portion of any thereof or (ii) the Credit Agreements, any Note, any LC Application or any other Loan Document or any portion of any thereof being void or voidable; (b) the failure of any Lender Party or any holder of any Note, any LC Application, Letter of Credit or any interest therein (i) to assert any claim or demand or to enforce any right or remedy against Borrower, any other Designated Entity or any other Person (including any other guarantor) under the provisions of the Credit Agreements, any Note, any LC Application, any other Loan Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations of Borrower or any other Designated Entity; (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations of Borrower or any other Designated Entity, or any other Exhibit B - 5 129 extension, compromise or renewal of any Obligation of Borrower or any other Designated Entity; (d) any reduction, limitation, impairment or termination of any Obligations of Borrower or any other Designated Entity for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Guarantor hereby waives 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 Obligations of Borrower, any other Designated Entity or otherwise; (e) any amendment to, extensions of, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Credit Agreements, any Note, any LC Application, any Letter of Credit or any other Loan Document; (f) any addition, exchange, release, surrender or non-perfection of any collateral, or any amendment to or waiver or release or addition of, or consent to departure from, any other guaranty, held by any Lender Party or any holder of any Note, any LC Application, any Letter of Credit or interest therein securing any of the Obligations of Borrower or any other Designated Entity; or (g) any other circumstance which might otherwise constitute a defense available to, or a legal or equitable discharge of, Borrower, any other Designated Entity, any surety or any guarantor. SECTION 2.4. Reinstatement. Guarantor agrees that this Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment (in whole or in part) of any of the Obligations guaranteed hereby is rescinded or must otherwise be restored by any Lender Party or any holder of any Note, any LC Application or any interest in an LC Obligation, upon the insolvency, bankruptcy or reorganization of Borrower, or any other Designated Entity or otherwise, all as though such payment had not been made. SECTION 2.5. Waiver. Guarantor hereby waives promptness, diligence, presentment, notice of acceptance and any other notice with respect to any of the Obligations of Borrower or any other Designated Entity and this Guaranty and any requirement that any Agent, any other Lender Party or any holder of any Note, any LC Application, any Letter of Credit or any interest therein protect, secure, perfect or insure any security interest or Lien, Exhibit B - 6 130 or any property subject thereto, or exhaust any right or take any action against Borrower, any other Designated Entity or any other Person (including any other guarantor) or entity or any collateral securing the Obligations of Borrower or any other Designated Entity, as the case may be. SECTION 2.6. Waiver of Subrogation. Guarantor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against Borrower or any other Designated Entity that arise from the existence, payment, performance or enforcement of Guarantor's obligations under this Guaranty or any other Loan Document, including any right of subrogation, reimbursement, contribution, exoneration, or indemnification, any right to participate in any claim or remedy of the Lender Parties against Borrower or any other Designated Entity or any collateral which the Collateral Agent now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from Borrower or any other Designated Entity, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Guarantor in violation of the preceding sentence and the Obligations shall not have been paid in cash in full and the Commitments have not been terminated, such amount shall be deemed to have been paid to Guarantor for the benefit of, and held in trust for, the Lender Parties, and shall forthwith be paid to the Lender Parties to be credited and applied upon the Obligations, whether matured or unmatured; otherwise it shall be returned to remitter. Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreements and that the waiver set forth in this Section is knowingly made in contemplation of such benefits. SECTION 2.7. Successors, Transferees and Assigns; Transfers of Notes. This Guaranty shall: (a) be binding upon Guarantor, and its successors, transferees and assigns (provided, however, that Guarantor may not assign any of its obligations hereunder without the prior written consent of all Lenders); and (b) inure to the benefit of and be enforceable by each Agent and each other Lender Party. Without limiting the generality of the foregoing clause (b), any Lender may assign or otherwise transfer (in whole or in part) any Note, Loan, LC Application, Letter of Credit or interest therein held by it to any other Person or entity, and such other Person or entity shall thereupon become vested with all rights and benefits in respect thereof granted to such Lender under any Loan Exhibit B - 7 131 Document (including this Guaranty) or otherwise, subject, however, to any contrary provisions in such assignment or transfer, and to the provisions of Section 8.8 of the Credit Agreements. SECTION 2.8. Taxes. All payments by the undersigned hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp, or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then, subject to the provisions of Section 2.9, the undersigned will: (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to Administrative Agent an official receipt or other documentation satisfactory to Administrative Agent evidencing such payment to such authority; and (c) pay to Administrative Agent for the account of the applicable Lender(s) such additional amount(s) as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required and the undersigned hereby acknowledges that it is not entitled to and will not seek recovery or restitution of any amount due to any of the Lenders or Agents and paid by it pursuant to this clause (c) or pursuant to the next sentence. If any Taxes are directly asserted against any Agent or any Lender with respect to any payment received by such Agent or such Lender hereunder, such Agent or such Lender may pay such Taxes and, if paid in good faith, the undersigned will promptly pay such additional amounts to the Administrative Agent for the account of such Lender or Agent (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any taxes on such additional amount) shall equal the amount such person would have received had no such Taxes been asserted, subject to the provisions of Section 2.9. The undersigned shall pay all stamp, transaction, registration and similar taxes (including financial institutions Exhibit B - 8 132 duties, debit taxes or other taxes payable by return and taxes passed on to any Lender or Agent by a bank or financial institution (collectively "Stamp Taxes") and, if the undersigned fails to pay any such charges or taxes after reasonable notice from any such Lender or Agent, fines and penalties) which may be payable or determined to be payable in relation to the execution, delivery, performance or enforcement of this Guaranty or any Loan Document or any other transaction contemplated by any Loan Document to which the undersigned is a party. The undersigned hereby indemnifies each Lender and Agent against any liability resulting from delay or omission to pay such charges or taxes except to the extent the liability results from failure by the relevant Lender or Agent to pay any such tax after having been delivered funds to do so by the undersigned or to the extent such liability is for fines and penalties resulting from such Lender's or Agent's failure to provide reasonable notice to the undersigned as provided herein. If the undersigned fails to pay any Taxes or Stamp Taxes when due to the appropriate taxing authority or fails to remit to Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, the undersigned shall indemnify Lenders for any Taxes, interest or penalties that may become payable by any Lender as a result of any such failure, subject to the provisions of Section 2.9. The undersigned waives any statutory right to recover from any Agent or any Lender any amount due to any such Agent or Lender and paid by the undersigned under this Section. SECTION 2.9. Make-Whole Qualifications. Each Lender's claims for reimbursements, payments, indemnities or otherwise under Section 2.8 and the undersigned's obligations with respect thereto, shall be limited and qualified by and subject to the following: (a) the undersigned's obligation to pay, satisfy or recognize such claim shall be limited to costs or losses incurred within one (1) year immediately prior to any demand or request therefor upon the undersigned; (b) each Lender's demand for reimbursement, payment or indemnity must be limited to that which is being generally applied at the time by such Lender for comparable guarantors and guaranties subject to similar provisions; (c) each Lender which asserts its rights with respect thereto or which is seeking or imposing such reimbursement, payment or indemnity shall provide evidence regarding the basis of such claim and the calculation and application thereof in reasonable detail and, in determining such Exhibit B - 9 133 amount, each Lender may use reasonable methods of attribution and averaging; and (d) each Lender which is seeking payment, indemnity or reimbursement pursuant to Section 2.8 shall, if so requested by the undersigned use reasonable efforts (subject to the overall policy considerations of such Lender) to designate a different lending office hereunder if to do so will avoid the need for, or reduce the amount of, any such payment, indemnity or reimbursement; provided that, Lender would, in its sole but reasonable determination, suffer no material economic, legal or regulatory disadvantage or burden. [SECTION 2.10. Judgment. Guarantor hereby agrees that: (a) If, for the purposes of obtaining judgment in any court, it is necessary to convert a sum due hereunder in United States Dollars into another currency, Guarantor agrees, to the fullest extent permitted by law, that the rate of exchange used shall be that at which in accordance with normal banking procedures the Administrative Agent could purchase United States Dollars with such other currency on the Business Day preceding that on which final judgment is given. (b) The obligation of Guarantor in respect of any sum due from it to any Lender Party or any holder of a Note hereunder shall, notwithstanding any judgment in a currency other than United States Dollars, be discharged only to the extent that on the Business Day following receipt by such Lender Party or such holder, as the case may be, of any sum adjudged to be so due in such other currency such Lender Party or such holder, as the case may be, may, in accordance with normal banking procedures, purchase United States Dollars with such other currency; in the event that the United States Dollars so purchased are less than the sum originally due to such Lender Party in United States Dollars, Guarantor, as a separate obligation and notwithstanding any such judgment, hereby indemnifies and holds harmless such Lender Party and such holder against such loss, and if the United States Dollars so purchased exceed the sum originally due to such Lender Party or such holder in United States Dollars, such Lender Party or such holder, as the case may be, shall remit to Guarantor such excess.] Exhibit B - 10 134 ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1. Representations and Warranties. Guarantor hereby represents and warrants unto each Lender Party as set forth in this Article. SECTION 3.1.1. Organization, Existence and Good Standing. Guarantor is duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, having all corporate or partnership powers required to enter into and carry out the transactions contemplated hereby. Guarantor is duly qualified, in good standing, and authorized to do business in all other jurisdictions within the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary, except for any lack of qualification, good standing or authorization that is not reasonably expected to result in a Material Adverse Effect. Guarantor has taken all actions customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions desirable, except any failure to take such action that is not reasonably expected to result in a Material Adverse Effect. SECTION 3.1.2. Authorization. Guarantor has duly taken all corporate, partnership or shareholder action necessary to authorize the execution and delivery by it of this Guaranty and to authorize the consummation of the transactions contemplated hereby and the performance of its obligations hereunder. SECTION 3.1.3. No Conflicts or Consents. The execution and delivery by Guarantor of this Guaranty, the performance by it of its obligations hereunder, and the consummation of the transactions contemplated by the various Loan Documents, do not and will not (i) conflict with any provision of the articles or certificate of incorporation, bylaws, charter, or partnership agreement or certificate of such Guarantor, or (ii) except as to matters that could not reasonably be expected to result in a Material Adverse Effect, result in the acceleration of any Debt owed by such Guarantor, or conflict with any law, statute, rule, regulation, or agreement, judgment, license, order or permit applicable to or binding upon such Guarantor, or require the consent, approval, authorization or order of, or notice to or filing with, any court or Governmental Authority or third party, or result in or require the creation of any Lien upon any material assets or properties of such Guarantor, except as permitted in the Loan Documents. SECTION 3.1.4. Enforceable Obligations. This Guaranty is the legal, valid and binding obligation of Guarantor, enforceable in accordance with its terms, except as such enforcement may be Exhibit B - 11 135 limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights and by general principles of equity. ARTICLE IV COVENANTS SECTION 4.1. Covenants. Guarantor covenants and agrees that, so long as any portion of the Obligations of Borrower shall remain unpaid or any Lender shall have any outstanding Commitment, Guarantor will, unless the Required Lenders shall otherwise consent in writing, perform or comply with the obligations of a Restricted Subsidiary of Borrower set forth in Sections 5.1 and 5.2 of the Credit Agreements, subject to any limitations on performance or compliance contained in such sections, including, without limitation, the limitation, when applicable, that the failure to perform or comply could not reasonably be expected to have a Material Adverse Effect. ARTICLE V MISCELLANEOUS PROVISIONS SECTION 5.1. Loan Document. This Guaranty is a Loan Document executed pursuant to the Credit Agreements and shall (unless otherwise expressly indicated herein) be construed, administered and applied in accordance with the terms and provisions thereof. SECTION 5.2. Binding on Successors, Transferees and Assigns; Assignment. In addition to, and not in limitation of, Section 2.7, this Guaranty shall be binding upon Guarantor and its successors, transferees and assigns and shall inure to the benefit of and be enforceable by each Lender Party and each holder of a Note, an LC Application, or an interest in an LC Obligation and their respective successors, transferees and assigns (to the full extent provided pursuant to Section 2.7); provided, however, that Guarantor may not assign any of its obligations hereunder without the prior written consent of all Lenders. SECTION 5.3. Amendments. No amendment to or waiver of any provision of this Guaranty, nor consent to any departure by Guarantor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 5.4. Notices. All notices, requests, consents, demands and other communications required or permitted hereunder shall be in writing, unless otherwise specifically provided herein and shall be deemed sufficiently given or furnished if Exhibit B - 12 136 delivered by personal delivery, by telecopy (with telephonic confirmation of transmission, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to Guarantor at the address of Guarantor specified on the signature pages hereto and to each Agent and each Lender at their addresses specified on the signature pages to the Credit Agreements (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given: (a) in the case of personal delivery or delivery service, as of the date of first attempted delivery at the address provided herein; (b) in the case of telecopy, upon receipt; or (c) in the case of registered or certified United States mail, three days after deposit in the mail, postage prepaid. SECTION 5.5. No Waiver; Remedies. In addition to, and not in limitation of, Section 2.3 and Section 2.5, no failure on the part of any Lender Party or any holder of a Note, an LC Application, or an interest in an LC Obligation to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. SECTION 5.6. Section Captions. Section captions used in this Guaranty are for convenience of reference only, and shall not affect the construction of this Guaranty. SECTION 5.7. Severability. Wherever possible each provision of this Guaranty shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Guaranty shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Guaranty. SECTION 5.8. Governing Law, Entire Agreement. THIS GUARANTY SHALL BE DEEMED A CONTRACT AND INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES Exhibit B - 13 137 HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. SECTION 5.9. Waiver of Jury Trial. EACH OF GUARANTOR, AGENTS AND LENDERS HEREBY (a) IRREVOCABLY WAIVES, THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; (c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO AND ACCEPT THIS GUARANTY, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. SECTION 5.10. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR GUARANTOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. FOR PURPOSES OF ANY ACTION OR PROCEEDING INSTITUTED IN THE FEDERAL OR STATE COURTS OF TEXAS, THE UNDERSIGNED HEREBY IRREVOCABLY DESIGNATES BORROWER WITH OFFICES ON THE DATE HEREOF AT 303 WEST WALL STREET, SUITE 101, MIDLAND, TEXAS 79701 TO RECEIVE FOR AND ON BEHALF OF THE UNDERSIGNED SERVICE OF PROCESS IN TEXAS. GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT Exhibit B - 14 138 GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS GUARANTY. 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 BETWEEN THE PARTIES. [SIGNATURES BEGIN ON FOLLOWING PAGE] Exhibit B - 15 139 IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written but effective as of the Effective Date. [Name of Guarantor] By ------------------------------------ Name: Title: Address: 303 West Wall Suite 101 P. O. Box 3178 Midland, Texas 79701 Attention: Curt Kamradt Telephone: (915) 571-3171 Telecopy: (915) 571-5696 with a copy to: Garrett Smith 1400 Williams Square West 5205 North O'Connor Blvd. Irving, Texas 75039 Telephone: (972) 402-7013 Telecopy: (972) 402-7028 Exhibit B - 16 140 Exhibit C Form of Request for Advance _____________, ________ NationsBank of Texas, N.A. 901 Main Street, 14th Floor Dallas, Texas 75202 Attn: Mickey McLean Re: Request for Advance - Primary Credit Facility Gentlemen: Reference is made to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co- Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"). Terms which are defined in the Credit Agreement and which are used but not defined herein are used herein with the meanings ascribed to them in the Credit Agreement. Pursuant to the terms of the Credit Agreement, the undersigned Borrower hereby requests that Lenders make Advances to the undersigned Borrower in the aggregate principal amount of $__________________, specifies _______________, _______, as the date the undersigned Borrower desires for Lenders to make such Advances and requests that Administrative Agent deliver to the undersigned Borrower the proceeds thereof on such date. To induce Lenders to make such Advances, the undersigned Borrower hereby represents, warrants, acknowledges, and agrees to and with each Agent and each Lender that: (a) The Designated Officer of Borrower signing this instrument is a duly elected, qualified and acting officer of the undersigned Borrower, holding the office indicated below such officer's signature hereto and having all necessary authority to act for the undersigned Borrower in making and delivering this Request for Advance. (b) The representations and warranties of the undersigned Borrower and each other Designated Entity set forth in the Credit Agreement and the other Loan Documents are true and correct on and as of the date hereof, with the same effect as though such Exhibit C - 1 141 representations and warranties had been made on and as of the date hereof. (c) There does not exist on the date hereof any condition or event which constitutes a Default which has not been waived in writing as provided in Section 6.1 of the Credit Agreement; nor will any such Default exist upon the undersigned Borrower's receipt and application of the Advances requested hereby. The undersigned Borrower will use the Advances hereby requested in compliance with the Credit Agreement. (d) Except to the extent waived in writing as provided in Section 6.1 of the Credit Agreement, the undersigned Borrower has performed and complied with all agreements and conditions in the Credit Agreement required to be performed or complied with by the undersigned Borrower on or prior to the date hereof, and each of the conditions precedent to Advances contained in the Credit Agreement remains satisfied. (e) The aggregate unpaid principal balance of the Advances under the Facility after the making of such Advance requested hereby, plus the aggregate outstanding amount of LC Obligations and Swing Line Advances and Competitive Bid Advances at the date hereof will not be in excess of the Facility Amount on the date requested for the making of such Advances. (g) The Loan Documents have not been modified, amended or supplemented by any unwritten representations or promises, by any course of dealing, or by any other means not provided for in Section 8.1 of the Credit Agreement. The Credit Agreement and the other Loan Documents are hereby ratified, approved, and confirmed in all respects. The undersigned Borrower agrees that if, prior to the time of the Advances requested hereby, any matter certified to herein by it will not be true and correct at such time as if then made, it will immediately so notify Administrative Agent. Except to the extent, if any, that, prior to the time of the Advances requested hereby, Administrative Agent shall have received written notice from the undersigned Borrower to the contrary, each matter certified herein shall be deemed once again to be certified as true and correct as of the date of such Advances as if then made. The Designated Officer of the undersigned Borrower signing this instrument hereby certifies that, to the best of his Exhibit C - 2 142 knowledge, the above representations, warranties, acknowledgments and agreements of the undersigned Borrower are true, correct and complete. PIONEER NATURAL RESOURCES COMPANY By: --------------------------------- Name: Title: Exhibit C - 3 143 Exhibit D Form of Rate Election ____________________, ________ NationsBank of Texas, N.A. 901 Main Street, 14th Floor Dallas, Texas 75202 Attn: Mickey McLean Re: Rate Election - Primary Credit Facility Gentlemen: Reference is made to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co- Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"). Terms which are defined in the Credit Agreement and which are used but not defined herein are used herein with the meanings ascribed to them in the Credit Agreement. Pursuant to the terms of the Credit Agreement, the undersigned Borrower hereby elects a Tranche of Eurodollar Portions in the aggregate amount of $___________ with an Interest Period beginning on __________ and continuing for a period of ___________________. To satisfy the conditions set out in the Credit Agreement for the making of such election, the undersigned Borrower hereby represents, warrants, acknowledges and agrees that: (a) The Designated Officer of the undersigned Borrower signing this instrument is a duly elected, qualified and acting officer of such Borrower, holding the office indicated below such officer's signature hereto and having all necessary authority to act for such Borrower in making and delivering this Rate Election. (b) There does not exist on the date hereof any condition or event which constitutes a Default which has not been waived in writing as provided in Section 6.1 of the Credit Agreement. (c) The Loan Documents have not been modified, amended or supplemented by any unwritten representations or promises, by any course of dealing, or by any other means not provided for in Exhibit D - 1 144 Section 8.1 of the Credit Agreement. The Credit Agreement and the other Loan Documents are hereby ratified, approved, and confirmed in all respects. (d) The undersigned Borrower further agrees that if, on or prior to the date of the commencement of the Interest Period designated herein, any matter certified herein by it will not be true and correct at such time as if such certification were then made, it will immediately so notify Administrative Agent. Except to the extent, if any, that prior to the commencement of the Interest Period designated herein Administrative Agent shall receive written notice to the contrary from the undersigned Borrower, each matter certified herein shall be deemed to be certified as of the date of the commencement of such Interest Period as if then made. The Designated Officer of the undersigned Borrower signing this instrument hereby certifies that, to the best of his knowledge, the above representations, warranties, acknowledgments and agreements of the undersigned Borrower are true, correct and complete. PIONEER NATURAL RESOURCES COMPANY By: ---------------------------------- Name: Title: Exhibit D - 2 145 Exhibit E Form of Request for Swing Line Advance VIA FACSIMILE # (214)508-2515 NationsBank of Texas, N.A. 901 Main Street, 14th Floor Dallas, Texas 75202 Attn: Mickey McLean Reference is made to the Primary Credit Facility pursuant to that certain Amended and Restated Credit Facility Agreement dated as of December 18, 1997 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"),. Capitalized terms used herein and not otherwise defined herein shall have the meaning assigned in the Credit Agreement. In accordance with Section 2.5, the undersigned hereby requests a Swing Line Advance in an amount of $__________________ to be advanced today, __________________________. We request this advance be for a period of ________ day(s), maturing on ___________________. If you have any questions regarding this request, please contact the undersigned at (915) _____________. PIONEER NATURAL RESOURCES COMPANY By: ---------------------------------- Name: Title: Exhibit E - 1 146 Exhibit F Form of Swing Line Participation Certificate __________________ ,199__ [Name of Bank] __________________________ __________________________ __________________________ Gentlemen: Reference is made to the Primary Credit Facility pursuant to that certain Amended and Restated Credit Facility Agreement dated as of December 18, 1997 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"). Capitalized terms used herein and not otherwise defined herein shall have the meanings assigned in the Credit Agreement. Pursuant to subsection 2.6(b)(i) of the Credit Agreement, the undersigned hereby acknowledges receipt from you on the date hereof of _______________________ DOLLARS ($______________) as payment for a participating interest in the following Swing Line Advance(s): Date(s) of Swing Line Advance(s): ______________, 199__ Principal Amount of Swing Line Advance(s): $____________________ Very truly yours, NATIONSBANK OF TEXAS, N.A., as Swing Line Lender By: ---------------------------------- Name: Title: Exhibit F - 1 147 Exhibit G [INTENTIONALLY OMITTED] Exhibit G - 1 148 Exhibit H Forms of Opinion of Borrower's and Restricted Subsidiaries' Counsel Exhibit H - 1 149 Exhibit I Organization Chart of Borrower and its Subsidiaries Exhibit I has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Exhibit I - 1 150 Exhibit J Form of Designated Officer's Certificate Reference is made to (i) the Primary Credit Facility pursuant to that certain Amended and Restated Credit Facility Agreement dated as of December 18, 1997 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Primary Credit Agreement") and (ii) the 364 Day Credit Facility pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "364 Day Credit Agreement" and, together with the Primary Credit Facility, the "Credit Agreements"). Terms which are defined in the Credit Agreements and which are used but not defined herein are used herein with the meanings given them in the Credit Agreements. This Certificate is furnished pursuant to Section 5.1(b)(2) of the Credit Agreements. Together herewith the Borrower is furnishing to Managing Agents, the Co-Agents and each Lender the Borrower's [FINANCIAL STATEMENTS] (the "Financial Statements") as of ______________(the "Reporting Date"). The Borrower hereby represents, warrants, and acknowledges to Agents and each Lender that: (a) the Designated Officer of the Borrower signing this instrument is a duly elected, qualified and acting officer of the Borrower; (b) the Financial Statements are accurate and complete and satisfy the requirements of the Credit Agreements; (c) attached as Schedule I hereto is a schedule of calculations showing compliance (or noncompliance, as the case may be) as of the Reporting Date with the requirements of Section 5.3 of the Credit Agreements; and (d) on the Reporting Date, each Borrower was, and on the date hereof the Borrower is, in full compliance with the disclosure requirements of Section 5.1(d) of the Credit Agreements, and no Default otherwise existed on the Reporting Date or otherwise exists on the date of Exhibit J - 1 151 this Certificate [except for Default(s) under Section(s) ________________ of the Credit Agreements, which [is/are] more fully described on a schedule attached hereto]. The Designated Officer of the Borrower signing this instrument hereby certifies that he has reviewed the Loan Documents and the Financial Statements and has otherwise undertaken such inquiry as is in his opinion necessary to enable him to express an informed opinion with respect to the above representations, warranties and acknowledgments of the Borrower and, to the best of his knowledge, such representations, warranties, and acknowledgments are true, correct and complete. PIONEER NATURAL RESOURCES COMPANY By: ---------------------------------- Name: Title: Date: --------------------------------- Exhibit J - 2 152 Schedule I ================================================================================ COMPLIANCE WITH FINANCIAL COVENANTS AS OF _____________. ($ in 000's) ================================================================================ A. EBITDAX TO CONSOLIDATED INTEREST EXPENSE RATIO Minimum ratio allowed 3.75 ============ B. CONSOLIDATED TOTAL FUNDED DEBT TO TOTAL CAPITALIZATION Maximum ratio allowed 60% ============ ================================================================================ COMPUTATION OF FINANCIAL REQUIREMENTS AND RATIOS AS OF _____________ ================================================================================ A. EBITDAX TO CONSOLIDATED INTEREST EXPENSE RATIO (Section 5.3(a)) ($ in 000's) (i) EBITDAX (as defined in Section 5.3(a)) For the period ended __________, the sums of the amounts for such period of Consolidated net income, Consolidated Interest Expense, depreciation expense, depletion expense, amortization expense, federal and state income taxes, exploration and abandonment expense and other non-cash charges and expenses, all as determined on a Consolidated basis for Borrower and its Consolidated Subsidiaries; $______________ (ii) CONSOLIDATED INTEREST EXPENSE (as defined in Section 5.3(a)) For the period ended ___________________, total interest expense, Exhibit J - 3 153 whether paid or accrued, of Borrower and its Consolidated Subsidiaries on a Consolidated basis, including, without limitation, all commissions, discounts and other fees and charges owed with respect to Letters of Credit. $______________ CONSOLIDATED INTEREST EXPENSE $ ============== EBITDAX TO CONSOLIDATED INTEREST EXPENSE RATIO ((i)(ii)) $ ============== Minimum ratio allowed $ 3.75:1 ============== B. CONSOLIDATED TOTAL FUNDED DEBT TO TOTAL CAPITALIZATION (Section 5.3(b)) ($ in 000's) (i) CONSOLIDATED TOTAL FUNDED DEBT (as defined in Section 1.1) (a) All indebtedness of Borrower and its Consolidated Subsidiaries for borrowed money $_____________ (b) Plus indebtedness of Borrower and its Consolidated Subsidiaries constituting an obligation to pay the deferred purchase price of property or services (other than customary payment terms taken in the ordinary course of the business) $_____________ (c) Plus indebtedness of Borrower and its Consolidated Subsidiaries evidenced by a bond, debenture, note or similar instrument $_____________ (d) Plus principal obligations under leases capitalized in accordance with GAAP under which either Borrower or any of its Consolidated Subsidiaries is the lessee $_____________ (e) Plus indebtedness or obligations of the type described in clauses (a), (b), (c) or (d) of the definition of Debt, which are secured by a Lien on any property owned by Borrower or any of its Consolidated Subsidiaries, whether or not such indebtedness or obligations have been assumed by Borrower or any of its Consolidated Subsidiaries (limited however to the lesser of (1) the amount of its liability or (2) the value Exhibit J - 4 154 of such property) (excluding Debt of the type referred to in clause (e) of the definition of "Debt") $_____________ (f) Plus the undischarged balance of any production payment created by Borrower or any of its Consolidated Subsidiaries or for the creation of which Borrower or its Consolidated Subsidiaries directly or indirectly received payment. $_____________ CONSOLIDATED TOTAL FUNDED DEBT $ ============= (ii) TOTAL CAPITALIZATION (as defined in Section 1.1) (a) Consolidated Total Funded Debt of the Borrower and its Consolidated Subsidiaries (See B(i) above) $_____________ (b) Plus Consolidated shareholders' equity of the Borrower and its Consolidated Subsidiaries $_____________ TOTAL CAPITALIZATION $ ============= CONSOLIDATED TOTAL FUNDED DEBT TO TOTAL CAPITALIZATION((i)/(ii)) % ============= Maximum ratio 60% ============= Exhibit J - 5 155 Exhibit K-1 Form of Election to Convert ___________________, _______ NationsBank of Texas, N.A. 901 Main Street, 14th Floor Dallas, Texas 75202 Attn: Mickey McLean Re: Conversion of Restricted Subsidiary Gentlemen: Reference is made to (i) that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Primary Credit Agreement") and (ii) that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "364 Day Credit Agreement" and, together with the Primary Credit Agreement, the "Credit Agreements"). Terms not defined herein which are defined in the Credit Agreement shall have for the purposes hereof the meanings provided therein. The Borrower hereby elects, pursuant and subject to Section 5.2(i) of the Credit Agreements, to convert, effective as of ________________, ________, [NAME OF RESTRICTED SUBSIDIARY], a [JURISDICTION] [CORPORATION] [PARTNERSHIP], ("Subject Subsidiary"), from a Restricted Subsidiary to an Unrestricted Subsidiary. The Borrower hereby certifies that all requirements for the conversion of the Subject Subsidiary to an Unrestricted Subsidiary, as specified in the Credit Agreements, have been and will be met, both as of the date hereof and after giving effect to such conversion. After giving effect to such conversion, no Default will exist. The Borrower hereby agrees that the election to convert contained herein shall not be effective if the foregoing certifications are not true and correct in all respects as of the date hereof or are not true and correct in all respects as of the date of such conversion. This election to convert Exhibit K-1 - 1 156 shall not affect any obligation of the Borrower under the Credit Agreements or under any Note under any Credit Agreement. This instrument shall be construed in accordance with and governed by the laws of the State of Texas. PIONEER NATURAL RESOURCES COMPANY By: ------------------------------ Name: Title: Receipt of the above Election to Convert is hereby acknowledged on ______________, ________. NATIONSBANK OF TEXAS, N.A., as Administrative Agent By: ------------------------------ Name: Title: Exhibit K-1 - 2 157 Exhibit K-2 Form of Release This Release is delivered to [NAME OF SUBSIDIARY] in connection with (i) the Primary Credit Facility pursuant to Section 5.2(i) of that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Primary Credit Agreement"), and (ii) the 364 Day Credit Facility pursuant to Section 5.2(i) of that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "364 Day Credit Agreement" and, together with the Primary Credit Agreement, the "Credit Agreements"). Defined terms used in this Release shall be used with the same meanings set forth in the Credit Agreements. Pursuant to the election to convert in the form of Exhibit K-1 to the Credit Agreements delivered to Administrative Agent on ______________________, 19 _____, the Borrower has notified the Lenders that it has converted ___ ______________ [NAME OF SUBSIDIARY] from a Restricted Subsidiary to an Unrestricted Subsidiary. Subject to the accuracy of the information contained in such notice of conversion, the undersigned Managing Agents and Lenders hereby release __ _______________________________ [NAME OF FORMER RESTRICTED SUBSIDIARY] from its obligations as Guarantor under its Guaranty dated as of ________, 199__, as from time to time amended, modified and supplemented, other than obligations if any, pursuant to Section _____ thereof. This Release may be separately executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed shall be deemed to constitute one and the same release. [Add signature lines for Lenders and Managing Agents] Agreed and Accepted this ___ day of __________, 199__ : - ------------------------------------- [Name of Restricted Subsidiary] By: --------------------------------- Name: Title: Exhibit K-2 - 1 158 Exhibit L Form of Agreement to be Bound _____________, 199____ PIONEER NATURAL RESOURCES COMPANY 303 West Wall, Suite 101 Midland, Texas 79701 Attention: Curt F. Kamradt NationsBank of Texas, N.A. 901 Main Street, 14th Floor Dallas, Texas 75202 Attention: Mickey McLean NationsBank of Texas, N.A. 303 West Wall Street Midland, Texas 79701 Attn: Frank K. Stowers CIBC Inc. 2 Houston Center 909 Fannin Street, Suite 1200 Houston, Texas 77010 Attention: Paul Jordan Re: Assignment to ______________________________of ________________________________ the Loans of _____________________ - Primary Credit Facility Gentlemen: We refer to Section 8.8(a) of that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"). Unless otherwise defined herein or the context otherwise requires, terms used herein have the meanings provided in the Credit Agreement. This Credit Agreement to be Bound constitutes notice to each of you, pursuant to Section 8.8(a) of the Credit Agreement, of the assignment to _______________________ ("Assignee") of (i) an undivided _____ (the "Designated Percentage"), ($____________________________), of the Loans, LC Obligations and Commitments of [NAME OF LENDER] ("Assignor") in effect on the date hereof. Exhibit L - 1 159 After giving effect to the foregoing assignment, the Loan Commitment and Percentage Share of each of the Assignor and Assignee is as set forth beneath the signatures of each such Person below. Assignee hereby acknowledges and confirms that it has received a copy of the Credit Agreement and the exhibits related thereto, together with a copy of all documents which were required to be delivered under the Credit Agreement as a condition to the making of the Loans and issuing Letters of Credit thereunder. Assignee further confirms and agrees that in becoming a Lender and in making its Loans and participating in Letters of Credit under the Credit Agreement, such actions have and will be made without recourse to, or representation or warranty by, Assignor, except as expressly set forth in the Assignment and Assumption of even date herewith between Assignor and Assignee. Assignor and Assignee hereby agree that [ASSIGNOR/ASSIGNEE] will pay the processing fee referred to in Section 8.8(a) of the Credit Agreement to Administrative Agent upon the delivery thereof. It is understood and agreed that all fees accrued under the Credit Agreement to the date hereof are for Assignor's account and those accruing from and after the date hereof are for Assignee's account to the extent specified in the second paragraph hereof. Each of Assignor and Assignee hereby agree that if it receives any amount under the Credit Agreement which is for the account of the other, it shall receive and hold the same for the account of the other and shall promptly pay the same to the other. The assignment shall become effective upon (i) the receipt by the Borrower and Administrative Agent of this document, (ii) the receipt by Administrative Agent of the processing fee referred to in the preceding paragraph, and (iii) in accordance with Section 8.8(a) of the Credit Agreement, the consent of the Borrower and Administrative Agent. Upon the effective date of this Credit Agreement the Assignee: (a) shall have all rights and benefits of a "Lender" under the Credit Agreement as if it were an original signatory thereto to the extent specified in the second paragraph hereof; and (b) agrees to be bound by the terms and conditions of each of the Credit Agreement, and be obligated thereunder, and hereby makes each of the representations and warranties and acknowledgments contained in such documents as if it were an original signatory thereto. Exhibit L - 2 160 Upon the effective date of this Agreement, the Assignor shall be released from its obligations under the Credit Agreement and the other Loan Documents to the extent specified in the second paragraph. Assignee hereby advises each of you of the following matters with respect to the assigned Loans: (A) Addresses for Notice:______________________ Telephone:_________________________________ Telecopy:__________________________________ Institution Name:__________________________ Attention:_________________________________ (B) Payment Instructions:_______________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ This Credit Agreement may be executed by Assignor and Assignee in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. The execution below by the Borrower and Administrative Agent shall evidence their consent to this Agreement in accordance with Section 8.8(a) of the Credit Agreement. Exhibit L - 3 161 IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be executed by its official, officer or agent thereunto duly authorized, effective as of ______________, ________. - ---------------------------------- -------------------------------- As Assignor As Assignee By: By: ------------------------------- ----------------------------- Name: Name: Title: Title: Percentage Share: % Percentage Share: % ---------------- ------------- Loan Commitment: Loan Commitment: ---------------- -------------- APPROVED: PIONEER NATURAL RESOURCES NATIONSBANK OF TEXAS, N.A. COMPANY By: By: ------------------------------- ----------------------------- Name: Name: Title: Title: Exhibit L - 4 162 Exhibit M [Form of] PLEDGE AGREEMENT THIS PLEDGE AGREEMENT (this "Pledge Agreement"), dated as of ______, 199___, made by ______________________, a __________________ corporation ("Pledgor"), in favor of NATIONSBANK OF TEXAS, N.A., as collateral agent (together with any successor(s) thereto in such capacity, the "Collateral Agent") for each of Lender Parties (as defined below). W I T N E S S E T H: WHEREAS, pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Pioneer Natural Resources Company, a Delaware corporation ("Borrower"), NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (together with all amendments, supplements, restatements and other modifications, if any, thereafter made thereto, the "Primary Credit Agreement"), the Lenders have extended Commitments (as defined in the Primary Credit Agreement) to make Loans to Borrower and to issue or participate in Letters of Credit on behalf of Borrower; and WHEREAS, pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co- Agents party thereto, and the Lenders from time to time parties thereto (together with all amendments, supplements, restatements and other modifications, if any, thereafter made thereto, the "364 Day Credit Agreement", and together with the Primary Credit Agreement, the "Credit Agreements"), the Lenders have extended Commitments (as defined in the 364 Day Credit Agreement) to make Loans to Borrower; and WHEREAS, pursuant to the Credit Agreements, Pledgor is required to execute and deliver this Pledge Agreement; and WHEREAS, Pledgor has duly authorized the execution, delivery and performance of this Pledge Agreement; and WHEREAS, it is in the best interests of Pledgor to execute this Pledge Agreement inasmuch as Pledgor will derive substantial direct and indirect benefits from the Loans made from time to Exhibit M - 1 163 time to Borrower and Letters of Credit issued on behalf of Borrower pursuant to the Credit Agreements; NOW THEREFORE, for good and valuable consideration the receipt of which is hereby acknowledged, and in order to induce the Lenders to make Loans (including the initial Loans) to Borrower pursuant to the Credit Agreements and for the Issuing Bank to issue Letters of Credit on behalf of Borrower and for the Lenders to acquire participations in such Letters of Credit pursuant to the Primary Credit Agreement, Pledgor agrees, for the benefit of each Lender Party, as follows: ARTICLE I DEFINITIONS SECTION 1.1. Certain Terms. The following terms (whether or not underscored) when used in this Pledge Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "Administrative Agent" is defined in the first recital. "Borrower" is defined in the first recital. "Collateral" is defined in Section 2.1. "Collateral Agent" is defined in the preamble. "Commitments" means "Commitments" as defined in the Primary Credit Agreement and "Commitments" as defined in the 364 Day Credit Agreement. "Credit Agreements" is defined in the second recital. "Debtor" is defined in Section 2.1(a)(i). "Distributions" means all 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, consolidations, and all other distributions (whether similar or dissimilar to the foregoing) on or with respect to any Pledged Shares or other shares of capital stock or security entitlements constituting Collateral, but shall not include Dividends. "Dividends" means cash dividends and cash distributions with respect to any Pledged Shares made in the ordinary course of business and not a liquidating dividend. Exhibit M - 2 164 "Lender Party" means, as the context may require, any Lender, any Issuing Bank or any Agent and each of its respective successors, transferees and assigns under the Credit Agreements. "Lenders" means "Lenders" as defined in the Primary Credit Agreement and "Lenders" as defined in the 364 Day Credit Agreement. "Loan Documents" means "Loan Documents" as defined in the Primary Credit Agreement and "Loan Documents" as defined in the 364 Day Credit Agreement. "1994 Amendments" means the 1994 Amendments to Articles 8 and 9 of the Uniform Commercial Code promulgated by the American Law Institute and the National Conference of Commissions for Uniform State Laws. "Notes" means "Notes" as defined in the Primary Credit Agreement and "Notes" as defined in the 364 Day Credit Agreement. "Obligations" means "Obligations" as defined in the Primary Credit Agreement and "Obligations" as defined in the 364 Day Credit Agreement. "Pledge Agreement" is defined in the preamble. "Pledged Share Issuer" means each Person identified in Attachment 1 hereto as the issuer of the Pledged Shares identified opposite the name of such Person. "Pledged Shares" means all shares of capital stock of any Pledged Share Issuer which are delivered by Pledgor to Collateral Agent hereunder and all other pledged shares of capital stock from time to time hereafter delivered by Pledgor to Collateral Agent for the purpose of pledge under this Pledge Agreement or any other Loan Document, and all proceeds of any of the foregoing. "Pledgor" is defined in the preamble. "Primary Credit Agreement" is defined in the first recital. "Secured Obligations" is defined in Section 2.2. "Securities Act" is defined in Section 6.2. "364 Day Credit Agreement" is defined in the second recital. "U.C.C." means the Uniform Commercial Code as in effect in the State of Texas. Exhibit M - 3 165 SECTION 1.2. Primary Credit Agreement Definitions. Unless otherwise defined herein or the context otherwise requires, terms used in this Pledge Agreement, including its preamble and recitals, have the meanings provided in the Primary Credit Agreement. SECTION 1.3. U.C.C. Definitions. Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the U.C.C. are used in this Pledge Agreement, including its preamble and recitals, with such meanings. ARTICLE II PLEDGE SECTION 2.1. Grant of Security Interest. Pledgor hereby pledges, hypothecates, assigns, charges, mortgages, delivers, and transfers to Collateral Agent, for its benefit and the ratable benefit of each of Lender Parties, and hereby grants to Collateral Agent, for its benefit and the ratable benefit of Lender Parties, a continuing security interest in, all of the following property (the "Collateral"): (a) 65% of the issued and outstanding shares of capital stock of each Pledged Share Issuer identified in Item B of Attachment 1 hereto; (b) 65% of all other Pledged Shares issued from time to time; (c) all Dividends, Distributions, interest, and other payments and rights with respect to any Pledged Shares; and (d) all proceeds of any of the foregoing. SECTION 2.2. Security for Obligations. This Pledge Agreement secures: (a) the payment in full of all Obligations of Borrower now or hereafter existing under the Credit Agreements, the Notes, the LC Applications and each other Loan Document to which Borrower is or may become a party, whether for principal, interest, costs, fees, expenses, or otherwise, and all obligations of Pledgor and each other Designated Entity now or hereafter existing under this Pledge Agreement and each other Loan Document to which it is or may become a party (b) the payment and performance of any and all present or future obligations of Borrower according to the terms of any present or future rate swap, rate cap, rate floor, rate Exhibit M - 4 166 collar, currency exchange transaction, forward rate agreement, or other exchange or rate protection agreements or any option with respect to any such transaction now existing or hereafter entered into between Borrower or any of its Subsidiaries and one or more of the Lenders or their Affiliates ("interest rate swap agreement"); (c) the payment and performance of any and all present or future obligations of Borrower according to the terms of any present or future crude oil, natural gas or other hydrocarbons swap agreements, crude oil, natural gas or other hydrocarbons cap, crude oil, natural gas or other hydrocarbons floor, crude oil, natural gas or other hydrocarbons collar, crude oil, natural gas or other hydrocarbons exchange transaction, forward crude oil, natural gas or other hydrocarbons agreement, or other exchange or crude oil, natural gas or other hydrocarbons protection agreements or any option with respect to any such transaction now existing or hereafter entered into between Borrower or any of its Subsidiaries and one or more of the Lenders or their Affiliates; and (d) all renewals, rearrangements, increases, extensions for any period, substitutions, modification, amendments or supplements in whole or in part of any of the above loan documents or obligations (all such obligations of Borrower and Pledgor being the "Secured Obligations"). SECTION 2.3. Delivery of Pledged Shares. (a) All certificates or instruments representing or evidencing any Collateral, including all Pledged Shares shall be delivered to and held by or on behalf of Collateral Agent pursuant hereto, shall be in suitable form for transfer by delivery, and shall be accompanied by all necessary indorsements or instruments of transfer or assignment, duly executed in blank. (b) (i) To the extent any of the Collateral constitutes "uncertificated securities" (as defined in Section 8-102(a)(18) of the U.C.C. or Section 8-102 of the Uniform Commercial Code as in effect in any jurisdiction that has not adopted the 1994 Amendments) and the issuer of which is organized in a jurisdiction, or has selected a jurisdiction (in circumstances permitted by Section 8-110(d) of the U.C.C.), that has not enacted the 1994 Amendments, Pledgor shall cause the issuer thereof to acknowledge to Collateral Agent the registration on the books of such issuer of the pledge and security interest hereby created in the manner required by Section 8-408(d) of the Uniform Commercial Code of its jurisdiction of organization. Exhibit M - 5 167 (ii) To the extent any of the Collateral constitutes "uncertificated securities" (as defined in Section 8-102(a)(18) of the U.C.C.) and the issuer of which is organized in a jurisdiction, or has selected a jurisdiction (in circumstances permitted by Section 8-110(d) of the U.C.C.), that has enacted the 1994 Amendments, Pledgor shall cause the issuer thereof to acknowledge to Collateral Agent the registration on the books of such issuer of the pledge and security interest hereby created in the manner required by Section 8- 301(1)(b) of the U.C.C. (c) (i) To the extent any of the Collateral constitutes a "security entitlement" or a "securities account" (as such terms are defined in Sections 8-102(a)(17) and 8-501, respectively, of the U.C.C.) and the jurisdiction of the securities intermediary (as described in Section 8-110(e) of the U.C.C.) against which such securities entitlement is established or at which such securities account is maintained is not a jurisdiction that has adopted the 1994 Amendments, Pledgor shall cause such Collateral to be transferred to Collateral Agent pursuant to Section 8-313(1) of the Uniform Commercial Code as in effect in such jurisdiction in a manner satisfactory to Collateral Agent. (ii) To the extent any of the Collateral constitutes a "security entitlement" or a "securities account" (as such terms are defined in Sections 8-102(a)(17) and 8-501, respectively, of the U.C.C.) and the jurisdiction of the securities intermediary (as described in Section 8-110(e) of the U.C.C.) against which such securities entitlement is established or at which such securities account is maintained is a jurisdiction that has adopted the 1994 Amendments, Pledgor shall cause to be delivered to Collateral Agent an agreement, in form and substance satisfactory to Collateral Agent, executed by such securities intermediary whereby such securities intermediary agrees (i) that it will comply with entitlement orders originated by Collateral Agent without further consent by Pledgor with respect to all such Collateral (it being understood that such agreement may provide that at all times when such securities intermediary has not been notified that a Default is in existence, the securities intermediary may comply with entitlement orders of Pledgor), (ii) to subordinate any security interest it may have in and to all such Collateral to the security interest of Collateral Agent therein and (iii) that it will not agree with any Person other than Collateral Agent in any manner that would grant such Person "control" over any such Collateral. SECTION 2.4. Dividends on Pledged Shares. In the event that any Dividend is to be paid on any Pledged Share or securities Exhibit M - 6 168 entitlement at a time when (x) no Default has occurred and is continuing, and no (y) Event of Default has occurred and is continuing, such Dividend or payment may be paid directly to Pledgor. If any such Default or Event of Default has occurred and is continuing, then any such Dividend or payment shall be paid directly to Collateral Agent. SECTION 2.5. Continuing Security Interest; Transfer of Note. This Pledge Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until payment in full of all Secured Obligations and the termination of all Commitments, (b) be binding upon Pledgor and its successors, transferees and assigns, and (c) inure, together with the rights and remedies of Collateral Agent hereunder, to the benefit of Collateral Agent and each other Lender Party. Without limiting the foregoing clause (c), any Lender may assign or otherwise transfer (in whole or in part) any Note or Loan held by it to any other Person or entity, and such other Person or entity shall thereupon become vested with all the rights and benefits in respect thereof granted to such Lender under any Loan Document (including this Pledge Agreement) or otherwise, subject, however, to any contrary provisions in such assignment or transfer, and to the provisions of Section 8.8 of the Credit Agreements and Article VII of the Credit Agreements. Upon the payment in full of all Secured Obligations and the termination of all Commitments, the security interest granted herein shall terminate and all rights to the Collateral shall revert to Pledgor. Upon any such termination, Collateral Agent will, at Pledgor's sole expense, deliver to Pledgor, without any representations, warranties or recourse of any kind whatsoever, all certificates and instruments representing or evidencing all Pledged Shares, together with all other Collateral held by Collateral Agent hereunder, and execute and deliver to Pledgor such documents as Pledgor shall reasonably request to evidence such termination. SECTION 2.6. Security Interest Absolute. All rights of Collateral Agent and the security interests granted to Collateral Agent hereunder, and all obligations of Pledgor hereunder, shall be absolute and unconditional, irrespective of (a) any lack of validity or enforceability of the Credit Agreements, any Note or any other Loan Document, (b) the failure of any Lender Party or any holder of any Note, (i) to assert any claim or demand or to enforce any right or remedy against Borrower, any other Exhibit M - 7 169 Designated Entity or any other Person under the provisions of the Credit Agreements, any Note, any other Loan Document or otherwise, or (ii) to exercise any right or remedy against any other guarantor of, or collateral securing, any Obligations of Borrower or any other Designated Entity, (c) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations or any other extension, compromise or renewal of any Obligation of Borrower or any other Designated Entity, (d) any reduction, limitation, impairment or termination of any Obligations of Borrower or any other Designated Entity for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to (and Pledgor hereby waives 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 Obligations of Borrower, any other Designated Entity or otherwise, (e) any amendment to, rescission, waiver, or other modification of, or any consent to departure from, any of the terms of the Credit Agreements, any Note or any other 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 of the Obligations, or (g) any other circumstances which might otherwise constitute a defense available to, or a legal or equitable discharge of, Borrower, any other Designated Entity, any surety or any guarantor. SECTION 2.7. Waiver of Subrogation. Pledgor hereby irrevocably waives any claim or other rights which it may now or hereafter acquire against Borrower or any other Designated Entity that arise from the existence, payment, performance or enforcement of Pledgor's obligations under this Pledge Agreement or any other Loan Document, including any right of subrogation, reimbursement, exoneration, or indemnification, any right to participate in any claim or remedy of Lender Parties against Borrower or any other Designated Entity or any collateral which Collateral Agent now has or hereafter acquires, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including the right to take or receive from Borrower or any other Designated Entity, directly or indirectly, in cash or other property or by set-off or in any manner, payment or security on account of such claim or other rights. If any amount shall be paid to Pledgor in violation of the preceding sentence and the Obligations shall not have been paid in cash in full and the Commitments have not been terminated, such amount shall be deemed to have been paid to Pledgor for the benefit of, and held in trust for, Lender Parties, and shall forthwith be paid to Lender Parties to be credited and applied upon the Obligations, whether matured or Exhibit M - 8 170 unmatured. Pledgor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Credit Agreements and that the waiver set forth in this Section is knowingly made in contemplation of such benefits. ARTICLE III REPRESENTATIONS AND WARRANTIES SECTION 3.1. Warranties, etc. Pledgor represents and warrants unto each Lender Party, as at the date of each pledge and delivery hereunder (including each pledge and delivery of Pledged Shares) by Pledgor to Collateral Agent of any Collateral, as set forth in this Article. SECTION 3.1.1. Representations in Credit Agreement. Pledgor hereby incorporates by reference, mutatis mutandi, each of the representations and warranties made in Sections 4.1(a), (b), (c), (d) and (e) of the Credit Agreement. SECTION 3.1.2. Ownership, No Liens, etc. Pledgor is the legal and beneficial owner of, and has good title to (and has full right and authority to pledge and assign) such Collateral, free and clear of all liens, security interests, options, or other charges or encumbrances, except any lien or security interest granted pursuant hereto in favor of Collateral Agent. SECTION 3.1.3. Valid Security Interest. The delivery of such Collateral to Collateral Agent is effective to create a valid, perfected, first priority security interest in such Collateral and all proceeds thereof, securing the Secured Obligations. No filing or other action will be necessary to perfect or protect such security interest. SECTION 3.1.4. As to Pledged Shares. In the case of any Pledged Shares constituting such Collateral, all of such Pledged Shares are duly authorized and validly issued, fully paid, and non-assessable, and constitute 65% of the issued and outstanding shares of capital stock of each Pledged Share Issuer owned by Pledgor set forth across from the name of such Pledged Share Issuer on Attachment 1 hereto. Pledgor has no Restricted Subsidiary other than the Pledged Share Issuers. SECTION 3.1.5. Authorization, Approval, etc. Except as contemplated by Section 2.3(b) and (c), no authorization, approval, or other action by, and no notice to or filing with, any governmental authority, regulatory body or any other Person is required either (a) for the pledge by Pledgor of any Collateral pursuant to this Pledge Agreement or for the execution, delivery, and performance of this Pledge Agreement by Pledgor, or (b) for the exercise by Collateral Agent of the rights provided for in this Pledge Agreement, or, except with Exhibit M - 9 171 respect to any Pledged Shares, as may be required in connection with a disposition of such Pledged Shares by laws affecting the offering and sale of securities generally, the remedies in respect of the Collateral pursuant to this Pledge Agreement. ARTICLE IV COVENANTS SECTION 4.1. Protect Collateral; Further Assurances, etc. Pledgor will not sell, assign, transfer, pledge, or encumber in any other manner the Collateral (except in favor of Collateral Agent hereunder). Pledgor will warrant and defend the right and title herein granted unto 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. Pledgor agrees that at any time, and from time to time, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments, and take all further action, that may be necessary or desirable, or that Collateral Agent may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Pledgor shall provide Collateral Agent with copies of all written information received from any securities intermediary of Pledgor with respect to any Collateral. SECTION 4.2. Stock Powers, etc. Pledgor agrees that all Pledged Shares (and all other shares of capital stock constituting Collateral) delivered by Pledgor pursuant to this Pledge Agreement will be accompanied by duly indorsed undated blank stock powers, in substantially the form of Attachment 2 hereto, or other equivalent instruments of transfer acceptable to Collateral Agent. Pledgor will, from time to time upon the request of Collateral Agent, promptly deliver to Collateral Agent such stock powers, in substantially the form of Attachment 2, instruments and similar documents, satisfactory in form and substance to Collateral Agent, with respect to the Collateral as Collateral Agent may reasonably request and will, from time to time upon the request of Collateral Agent after the occurrence of any Event of Default, promptly transfer any Pledged Shares or other shares of common stock constituting Collateral into the name of any nominee designated by Collateral Agent. SECTION 4.3. Continuous Pledge. Subject to Section 2.4, the Pledgor will, at all times, keep pledged to Collateral Agent pursuant hereto all Pledged Shares, all other shares of capital stock constituting Collateral, and all securities, security entitlements and securities accounts constituting Collateral and all other Collateral and other securities, instruments, security entitlements, financial assets, investment property, proceeds, Exhibit M - 10 172 and rights from time to time received by or distributable to Pledgor in respect of any Collateral. SECTION 4.4. Dividends, etc. Pledgor agrees after any acceleration under the Credit Agreements or Default occurring on the Maturity Date, promptly upon receipt thereof by Pledgor and without any request therefor by Collateral Agent, to deliver (properly endorsed where required hereby or requested by Collateral Agent) to Collateral Agent all Dividends, Distributions, all interest, all principal, all other cash payments, and all proceeds of the Collateral, all of which shall be held by Collateral Agent as additional Collateral for use in accordance with Section 6.3. All Dividends, Distributions, interest, principal, cash payments, and proceeds which may at any time and from time to time be held by Pledgor but which Pledgor is then obligated to deliver to Collateral Agent, shall, until delivery to Collateral Agent, be held by Pledgor separate and apart from its other property in trust for Collateral Agent. SECTION 4.5. Additional Undertakings. Pledgor will not, without the prior written consent of Collateral Agent, take or omit to take any action the taking or the omission of which would result in any impairment or alteration of the security interest in the Pledged Shares. ARTICLE V COLLATERAL AGENT SECTION 5.1. Agent Appointed Attorney-in-Fact. Pledgor hereby irrevocably appoints Collateral Agent Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the name of Pledgor or otherwise, from time to time in Collateral Agent's discretion, to take any action and to execute any writing or paper which Collateral Agent may deem necessary or advisable to accomplish the purposes of this Pledge Agreement, including without limitation: (a) after the occurrence and continuance of an Event of Default, 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 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 Collateral Agent may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Collateral Agent with respect to any of the Collateral. Pledgor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section is irrevocable and coupled with an interest. Exhibit M - 11 173 SECTION 5.2. Agent May Perform. If Pledgor fails to perform any agreement contained herein, Collateral Agent may itself perform, or cause performance of, such agreement, and the expenses of Collateral Agent incurred in connection therewith shall be payable by Pledgor pursuant to Section 6.4. SECTION 5.3. Agent Has No Duty. The powers conferred on Collateral Agent hereunder are solely to protect its interest (on behalf of Lender Parties) in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually received by it hereunder, Collateral Agent shall have no duty as to any Collateral or responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Shares, whether or not 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 Collateral. SECTION 5.4. Reasonable Care. Collateral Agent is required to exercise reasonable care in the custody and preservation of any of the Collateral in its possession; provided, however, Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any of the Collateral, if it takes such action for that purpose as Pledgor reasonably requests in writing at times other than upon the occurrence and during the continuance of any Event of Default, but failure of Collateral Agent to comply with any such request at any time shall not in itself be deemed a failure to exercise reasonable care. ARTICLE VI REMEDIES SECTION 6.1. Certain Remedies. On or after any acceleration under the Credit Agreements or Default occurring on the Maturity Date: (a) 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. (whether or not the U.C.C. applies to the affected Collateral) and also may, 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 Collateral Agent's offices or elsewhere, for cash, on credit or for future delivery, and upon such other terms as Collateral Agent may deem commercially reasonable. Pledgor agrees that, to the extent notice of sale shall be required by law, Exhibit M - 12 174 at least ten days' prior notice to 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. Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. 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) Collateral Agent may (i) transfer all or any part of the Collateral into the name of Collateral Agent or its nominee, with or without disclosing that such Collateral is subject to the lien and security interest hereunder, (ii) notify the parties obligated on any of the Collateral to make payment to Collateral Agent of any amount due or to become due thereunder, (iii) enforce collection of any of the 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 Pledgor's name to allow collection of the Collateral, (v) take control of any proceeds of the Collateral, and (vi) execute (in the name, place and stead of Pledgor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of the Collateral. SECTION 6.2. Compliance with Restrictions. Pledgor agrees that in any sale of any of the Collateral whenever an Event of Default shall have occurred and be continuing, 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 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 Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and Pledgor further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall Collateral Agent be liable nor accountable to Pledgor for any discount allowed by the reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. Exhibit M - 13 175 SECTION 6.3. Application of Proceeds. All cash proceeds received by 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 Collateral Agent, be held by Collateral Agent as additional collateral security for, or then or at any time thereafter be applied (after payment of any amounts payable to Collateral Agent pursuant to Sections 6.4 of the Credit Agreements) in whole or in part by Collateral Agent against, all or any part of the Secured Obligations in such order as Collateral Agent shall elect. Any surplus of such cash or cash proceeds held by Collateral Agent and remaining after payment in full of all the Secured Obligations, and the termination of all Commitments, shall be paid over to Pledgor or to whomsoever may be lawfully entitled to receive such surplus. SECTION 6.4. Indemnity and Expenses. Pledgor hereby indemnifies and holds harmless Collateral Agent in accordance with Sections 6.4 of the Credit Agreements. ARTICLE VII MISCELLANEOUS PROVISIONS SECTION 7.1. Loan Document. This Pledge Agreement is a Loan Document 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 7.2. Amendments. No amendment to or waiver of any provision of this Pledge Agreement, nor consent to any departure by Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by the Administrative Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. SECTION 7.3. Protection of Collateral. Collateral Agent may from time to time, at its option, perform any act which Pledgor agrees hereunder to perform and which Pledgor shall fail to perform after being requested in writing so to perform after the occurrence and continuance of an Event of Default and Collateral Agent may from time to time take any other action which Collateral Agent reasonably deems necessary for the maintenance, preservation or protection of any of the Collateral or of its security interest therein. SECTION 7.4. Obligations Not Affected. The obligations of Pledgor under this Pledge Agreement shall remain in full force and effect without regard to, and shall not be impaired or affected by: Exhibit M - 14 176 (a) any amendment or modification or addition or supplement to the Credit Agreements, any Note, any other Loan Documents, any instrument delivered in connection therewith, or any assignment or transfer thereof; (b) any exercise, non-exercise, or waiver by Collateral Agent or any Lender of any right, remedy, power, or privilege under or in respect of, or any release of any guaranty or collateral provided pursuant to, this Pledge Agreement, the Credit Agreements, Pledgor's Guaranty or any other Loan Document; (c) any waiver, consent, extension, indulgence, or other action or inaction in respect of this Pledge Agreement, the Credit Agreements, Pledgor's Guaranty or any other Loan Document or any assignment or transfer of any thereof; or (d) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation, or the like, of Pledgor or any other Person, whether or not Pledgor shall have notice or knowledge of any of the foregoing. SECTION 7.5. Notices. All notices, requests, consents, demands and other communications required or permitted hereunder shall be in writing, unless otherwise specifically provided herein and shall be deemed sufficiently given or furnished if delivered by personal delivery, by telecopy (with telephonic confirmation of transmission, by delivery service with proof of delivery, or by registered or certified United States mail, postage prepaid, to Pledgor at the address of Pledgor specified on the signature pages hereto and to each Agent and each Lender at their addresses specified on the signature pages to the Credit Agreements (unless changed by similar notice in writing given by the particular Person whose address is to be changed). Any such notice or communication shall be deemed to have been given: (a) in the case of personal delivery service, as of the date of first attempted delivery at the address provided herein; (b) in the case of telecopy, upon receipt; or (c) in the case of registered or certified United States mail, three days after deposit in the mail, postage prepaid. SECTION 7.6. No Waiver; Remedies. No failure on the part of any Lender Party or any holder of a Note, an LC Application, or an interest in an LC Obligation to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. Exhibit M - 15 177 SECTION 7.7. Section Captions. Section captions used in this Pledge Agreement are for convenience of reference only, and shall not affect the construction of this Pledge Agreement. SECTION 7.8. Severability. Wherever possible each provision of this Pledge Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Pledge Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge Agreement. SECTION 7.9. Governing Law, Entire Agreement. THIS PLEDGE AGREEMENT SHALL BE DEEMED A CONTRACT AND INSTRUMENT MADE UNDER THE LAWS OF THE STATE OF TEXAS AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND THE LAWS OF THE UNITED STATES OF AMERICA, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. THIS PLEDGE AGREEMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO. SECTION 7.10. Waiver of Jury Trial. EACH OF PLEDGOR, AGENTS AND LENDERS HEREBY (a) IRREVOCABLY WAIVES, THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY TRANSACTION CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY; (b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES; (c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO AND ACCEPT THIS PLEDGE AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION. SECTION 7.11. Forum Selection and Consent to Jurisdiction. ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN Exhibit M - 16 178 CONNECTION WITH, THIS PLEDGE AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF LENDER PARTIES OR PLEDGOR SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF TEXAS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE BROUGHT, AT COLLATERAL AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH PROPERTY MAY BE FOUND. PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION. PLEDGOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF TEXAS. FOR PURPOSES OF ANY ACTION OR PROCEEDING INSTITUTED IN THE FEDERAL OR STATE COURTS OF TEXAS, THE UNDERSIGNED HEREBY IRREVOCABLY DESIGNATES BORROWER WITH OFFICES ON THE DATE HEREOF AT 303 WEST WALL STREET, SUITE 101, MIDLAND, TEXAS 79701 TO RECEIVE FOR AND ON BEHALF OF THE UNDERSIGNED SERVICE OF PROCESS IN TEXAS. PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS PLEDGE AGREEMENT. THIS WRITTEN PLEDGE 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 BETWEEN THE PARTIES. [SIGNATURES BEGIN ON FOLLOWING PAGE] Exhibit M - 17 179 IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the day and year first above written. [Pledgor] --------------------------------------- By: ------------------------------------ Name: Title: Address: 303 West Wall Suite 101 P. O. Box 3178 Midland, Texas 79701 Attention: Curt Kamradt Telephone: (915) 571-3171 Telecopy: (915) 571-5696 with a copy to: Garrett Smith 1400 Williams Square West 5205 North O'Connor Blvd. Irving, Texas 75039 Telephone: (972) 402-7013 Telecopy: (972) 402-7028 Exhibit M - 18 180 NATIONSBANK OF TEXAS, N.A. By ------------------------------ Name: Frank K. Stowers Title: Vice President Address: 303 W. Wall P. O. Box 1599 Midland, Texas 79701 Attention: Frank K. Stowers Exhibit M - 19 181 ACKNOWLEDGMENT The undersigned hereby agrees and consents to the terms and provisions of the foregoing Pledge Agreement, including, without limitation, Section 2.3 and Article IV of the Pledge Agreement. The undersigned hereby acknowledges the registration on its books of the pledge and security interest created by the Pledge Agreement in the manner required by Section 8-301(1)(b) of the U.C.C. and that undersigned will not permit any sale, transfer, pledge or other encumbrance of the Pledged Interests without the prior written consent of the Agent. ------------------------------ By: --------------------------- Name: Title: Exhibit M - 20 182 ATTACHMENT 1 to Pledge Agreement Pledged Shares Pledged Share Issuer
Outstanding Shares Shares Delivered ------------- ------------- ------------- -------------
Exhibit M - 21 183 ATTACHMENT 2 to Pledge Agreement STOCK POWER FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________________________________________ (_______________________) shares of common stock in __________________________, a _______________ corporation, represented by the attached Certificate No._____ herewith and do hereby irrevocably constitute and appoint _____________________ attorney to transfer the said stock on the books of ___________________________ with full power of substitution in the premises. DATED ___________________________ [PLEDGOR] ------------------------------ By: --------------------------- Name: Title: IN PRESENCE OF - ------------------------- Exhibit M - 22 184 Exhibit N Request for Competitive Bid Offer _____________, ________ To: The Lenders party to the Credit Agreement, NationsBank of Texas, N.A., as agent (the "Administrative Agent") From: _________________________ (the "Borrower") Re: Primary Credit Facility - Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement") Pursuant to Section 2.22 of the Credit Agreement, we hereby request Competitive Bid Offers for the following proposed Competitive Bid Advance(s): Borrowing Date: _________________, ______
Principal Amount(1) Requested Maturity Date(2) - ------------------- -------------------------- $
Upon acceptance by the undersigned of any or all of the Competitive Bid Offers tendered by Lenders in response to this request, the undersigned shall be deemed to affirm as of the borrowing date thereof the representations and warranties made by the Designated Entities in the Credit Agreement and the other Loan Documents to the extent specified in Section 3.2 thereof (except to the extent such representations and warranties relate solely to an earlier date). - ------------------------------ (1) Amount must be at least $10,000,000 and an integral multiple of $1,000,000. (2) At least 15 and up to 360 days. Exhibit N - 1 185 Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. PIONEER NATURAL RESOURCES COMPANY By: --------------------------- Name: Title: Exhibit N - 2 186 Exhibit O Competitive Bid Offer ______________, ____ To: ____________________________ Attn: ___________________ Re: Primary Credit Facility - Competitive Bid Offer to Pioneer Natural Resources Company (the "Borrower") In response to the Borrower's Request for Competitive Bid Offer dated ________, 199_, we hereby make the following Competitive Bid Offer pursuant to Section 2.22 of the Credit Agreement hereinafter referred to and on the following terms: 1. Quoting Lender: _________________________________________ 2. Person to contact at Lender: ____________________________ 3. Borrowing Date: ____________, ______(1) 4. We hereby offer to make Competitive Bid Advance(s) in the following principal amounts, for the following periods and at the following rates:
Principal Maturity Competitive Amount(2) Date(3) Bid Rate(4) - --------- ------- ----------- $
- ------------------------------ (1) As specified in the related Request for Competitive Bid Offer. (2) Principal amount bid for each maturity date may not exceed the principal amount requested. Bids must be made for at least $10,000,000 or an integral multiple of $1,000,000 in excess thereof. (3) At least 15 and up to 360 days, as specified in the related Request for Competitive Bid Offer. (4) Specify rate of interest per annum (rounded to the nearest 1/10,000 of 1%). Exhibit O - 1 187 We understand and agree that the offer(s) set forth above, subject to the satisfaction of the applicable conditions set forth in that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"), irrevocably obligates us to make the Competitive Bid Advance(s) for which any offer(s) are accepted, in whole or in part. Capitalized terms used herein and not otherwise defined herein shall have their meanings as defined in the Credit Agreement. Very truly yours, [NAME OF BANK] Dated: , By: -------------- ----- ---------------------------- Authorized Officer Exhibit O - 2 188 Exhibit P Bid Acceptance ___________________, _____ To: [Name of Lender] Re: Primary Credit Facility - Request for Competitive Bid Offer from Pioneer Natural Resources Company (the "Borrower") Pursuant to that certain Amended and Restated Credit Facility Agreement dated as of DECEMBER 18, 2021 by and among Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Credit Agreement"), we accept your Competitive Bid Offer for the following proposed Competitive Bid Advance(s) and reject any Competitive Bid Offer to the Competitive Bid Borrower not described below: Borrowing Date: ______________, ______
Principal Amount Maturity Date Competitive Bid Rate - ---------------- ------------- -------------------- $
Capitalized terms used herein have the meanings assigned to them in the Credit Agreement. PIONEER NATURAL RESOURCES COMPANY By: ------------------------------ Authorized Officer Exhibit P - 1 189 Schedule 1 Schedule of Lenders' Commitments and Percentage Share Schedule 1 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 1 - 1 190 Schedule 2 Disclosure Schedule Schedule 2 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 2 - 1 191 Schedule 3 Schedule of Restricted Subsidiaries Schedule 3 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 3 - 1 192 Schedule 4 Schedule of Insurance Schedule 4 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 4 - 1 193 Schedule 5 Schedule of Security Instruments Schedule 5 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 5 - 1 194 Schedule 6 Continuing Letters of Credit Schedule 6 has been omitted from this filing as (i) it is not material to an investment decision and (ii) the information that it contains has been disclosed elsewhere if disclosure of such information is required. Pioneer Natural Resources Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon request. Schedule 6 - 1
   1
                                                                    EXHIBIT 10.2
                           [364 DAY CREDIT FACILITY]
================================================================================
                 AMENDED AND RESTATED CREDIT FACILITY AGREEMENT
                       PIONEER NATURAL RESOURCES COMPANY,
                                  as BORROWER,
                                      and
                          NATIONSBANK OF TEXAS, N.A.,
                            as ADMINISTRATIVE AGENT,
                                      and
                                   CIBC INC.,
                            as DOCUMENTATION AGENT,
                                      and
                   MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
                            as DOCUMENTATION AGENT,
                                      and
                           THE CHASE MANHATTAN BANK,
                             as SYNDICATION AGENT,
                        THE CO-AGENTS SIGNATORY HERETO,
                                      and
                       THE OTHER LENDERS SIGNATORY HERETO
as of DECEMBER 18, 2021                                             $300,000,000
================================================================================
   2
                               TABLE OF CONTENTS
                                                                            Page
ARTICLE 1 DEFINITIONS AND REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 1.2 Exhibits and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.3 Amendment of Defined Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.4 References and Titles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Section 1.5 Calculations and Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 2 LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.1 Making the Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 2.2 Requests for Revolving Loan Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 2.3 Rate Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 2.4 Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.5 Procedure for Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 2.6 Special Provisions for Swing Line Advances . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 2.7 Facility Fee; Amendment Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 2.8 Managing Agents' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.9 Termination and Reduction of Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.10 Optional Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Section 2.11 Payments to Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.12 Extension of Maturity Date and of Commitments . . . . . . . . . . . . . . . . . . . . . . . 27 Section 2.13 [Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.14 [Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.15 [Intentionally Omitted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.16 Capital Reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Section 2.17 Increased Cost of Eurodollar Portions . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.18 Availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Section 2.19 Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Section 2.20 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Section 2.21 Make-Whole Qualifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 2.22 Competitive Bid Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 ARTICLE 3 CONDITIONS PRECEDENT TO LENDING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 3.1 Initial Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Section 3.2 Additional Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 ARTICLE 4 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 4.1 Borrower's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 43 Section 4.2 Representation by Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
i 3 TABLE OF CONTENTS (Continued)
ARTICLE 5 COVENANTS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 5.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Section 5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 Section 5.3 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 Section 6.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 6.3 Annulment of Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Section 6.4 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 ARTICLE 7 AGENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 7.1 Appointment and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Section 7.2 Agent's Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Section 7.3 Lenders' Credit Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 7.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Section 7.5 Rights as Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 7.6 Sharing of Set-Offs and Other Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 66 Section 7.7 Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 7.8 Benefit of Article 7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 Section 7.9 Resignation and Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 ARTICLE 8 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 8.1 Waivers and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 Section 8.2 Survival of Agreements; Cumulative Nature . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Section 8.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.6 Limitation on Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 Section 8.7 Termination; Limited Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Section 8.8 Assignments; Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Section 8.9 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 8.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 8.12 Waiver of Jury Trial, Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Section 8.13 Several Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.14 Nonliability of Lenders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.15 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.16 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76 Section 8.17 Forum Selection and Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.18 Assumption of Prior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Section 8.19 Renewal, Extension or Rearrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Section 8.20 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ii 4 EXHIBITS AND SCHEDULES Exhibits:
Exhibit A-1 - Form of Loan Note Exhibit A-2 - Form of Swing Line Note Exhibit A-3 - Form of Competitive Bid Note Exhibit B - Form of Guaranty Exhibit C - Form of Request for Advance Exhibit D - Form of Rate Election Exhibit E - Form of Request for Swing Line Advance Exhibit F - Form of Swing Line Participation Certificate Exhibit G - [Intentionally omitted] Exhibit H - Forms of Opinion of Borrower's and Restricted Subsidiaries' Counsel Exhibit I - Organization Chart of Borrower and its Subsidiaries Exhibit J - Form of Designated Officer's Certificate Exhibit K-1 - Form of Election to Convert Exhibit K-2 - Form of Release Exhibit L - Form of Agreement to be Bound Exhibit M - Form of Pledge Agreement Exhibit N - Form of Request for Competitive Bid Offer Exhibit O - Form of Competitive Bid Offer Exhibit P - Form of Bid Acceptance Exhibit Q - Form of Certificate of Extension Schedules: Schedule 1 - Schedule of Lenders' Commitments and Percentage Share Schedule 2 - Disclosure Schedule Schedule 3 - Schedule of Restricted Subsidiaries Schedule 4 - Schedule of Insurance Schedule 5 - Schedule of Security Instruments
iii 5 AMENDED AND RESTATED CREDIT FACILITY AGREEMENT THIS AMENDED AND RESTATED CREDIT FACILITY AGREEMENT is made as of DECEMBER 18, 2021 (together with all amendments, renewals, extensions and other modifications, if any, from time to time hereafter made hereto, the "Agreement" or "Credit Facility Agreement"), by and among PIONEER NATURAL RESOURCES COMPANY, a Delaware corporation (the "Borrower"), and NATIONSBANK OF TEXAS, N.A., CIBC INC., MORGAN GUARANTY TRUST COMPANY OF NEW YORK, THE CHASE MANHATTAN BANK, in the capacities herein identified, the Co-Agents party hereto, and the other Lenders from time to time parties hereto. RECITALS: A. Reference is here made to that certain Credit Facility Agreement - 364 Day Credit Facility, dated as of August 7, 1997, by and among Pioneer USA, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders from time to time parties thereto (the "Existing Credit Agreement") and the notes issued thereunder. B. Borrower has assumed effective as of the Effective Date (as hereinafter defined) and hereby assumes, and Pioneer USA has assigned and hereby assigns to Borrower, all of the indebtedness, obligations and liabilities of Pioneer USA, evidenced by and outstanding under the Existing Credit Agreement and all related instruments and documents (all such indebtedness, obligations and liabilities under the Existing Credit Agreement and/or such instruments and documents collectively, the "Prior Indebtedness"). C. Borrower has determined that it is in its best interests to assume the Prior Indebtedness and has voluntarily requested that Lenders, and Lenders have agreed to, restructure, rearrange and renew the Prior Indebtedness and the respective commitments of the Lenders and Agents party to the Existing Credit Agreement into obligations and commitments hereunder. D. As a part of the restructuring and rearranging of the Prior Indebtedness, Lenders shall modify their respective commitments under the Credit Agreement such that on the Effective Date each Lender shall be obligated hereunder, subject to the terms hereof, to the Loan Commitment stated on Schedule 1 for such Lender. E. Any Loans outstanding under the Existing Credit Agreement on the Effective Date bearing interest at a Eurodollar Rate shall be deemed continued as a Loan under this Agreement at such Eurodollar Rate and for the Eurodollar Interest Period with respect thereto under the Existing Credit Agreement. 6 F. Any Competitive Bid Advances outstanding under the Existing Credit Agreement on the Effective Date shall be deemed continued as a Competitive Bid Advance under this Agreement at the rate and for the term with respect thereto under the Existing Credit Agreement. G. Lenders and Borrower intend and have agreed to amend and restate the Existing Credit Agreement in its entirety as and pursuant to this Agreement. NOW, THEREFORE, in consideration of the Recitals hereof and the mutual covenants contained herein, the parties hereby agree to amend and restate the Existing Credit Agreement in its entirety as follows: ARTICLE 1 DEFINITIONS AND REFERENCES Section 1.1 Defined Terms. As used in this Agreement, each of the following terms has the meaning given it in this Section or in the sections and subsections referred to below: "Accepting Lenders" is defined in Section 2.12(c). "Acquisition Agreement" has the meaning given it in Section 3.1(e). "Acquisition" has the meaning given it in Section 3.1(e). "Adjusted Eurodollar Rate" means, with respect to each particular Eurodollar Portion and the associated Eurodollar Rate and Reserve Percentage, the rate per annum determined hereunder by Administrative Agent on a daily basis pursuant to the following formula: AER = ER + EM ---------- 1.00 - RP AER = Adjusted Eurodollar Rate ER = Eurodollar Rate RP = Reserve Percentage EM = Eurodollar Margin
The Adjusted Eurodollar Rate shall change as and when the associated Reserve Percentage and Eurodollar Margin change. "Administrative Agent" means NationsBank of Texas, N.A., as Administrative Agent hereunder and its successors and assigns in such capacity. "Advance" means any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance. 2 7 "Affiliate" means, as to any Person, each other Person that directly or indirectly (through one or more intermediaries or otherwise) controls, is controlled by, or is under common control with, such Person. "Agent" means any of the Managing Agents or the Collateral Agent hereunder, solely in such capacities and not in their respective capacities as Lenders. "Agreement" means this Amended and Restated Credit Facility Agreement, as this Amended and Restated Credit Facility Agreement may be amended, modified or restated from time to time hereafter. "Agreement to be Bound" means an agreement to be bound entered into by a Lender and an assignee (with the consent of any party whose consent is required by Section 8.8), and accepted by the Administrative Agent, in substantially the form of Exhibit L or any other form approved by the Administrative Agent. "Amendment Fee Rate" means 2.5 basis points. "Applicable Rating Level" means the level set forth below that corresponds to the highest of ratings issued from time to time by Moody's and S&P;, as applicable to Borrower's senior unsecured long-term debt: Moody's S&P; ------- --- Level I >Baa1 >BBB+ Level II Baa1 BBB+ Level III Baa2 BBB Level IV Baa3 BBB- Level V For example, if the Moody's rating is Baa1 and the S&P; rating is BBB, Level II shall apply. For purposes of the foregoing, (i) ">" means a rating more favorable than; "<" means a rating less favorable than; (ii) if ratings for Borrower's senior unsecured long-term debt shall not be available from S&P; or Moody's, Level V shall be deemed applicable; (iii) if any of the Rating Agencies shall change its ratings nomenclature prior to the date all Obligations have been paid and the Commitments canceled, Borrower and the Lenders shall negotiate in good faith to amend the references to specific ratings in this definition to reflect such change, and pending such amendment, if an appropriate Applicable Rating Level is otherwise not determinable based upon the foregoing grid, the last Applicable Rating Level in effect at the time of such change shall continue to apply. 3 8 "Base Rate" means the fluctuating per annum rate of interest from time to time in effect equal to the higher of (a) the rate of interest as publicly announced by Administrative Agent as its "Prime Rate" or (b) the Federal Funds Rate plus one-half of one percent ( 1/2 of 1%), whether or not Borrower has notice thereof. Such rate is set by Administrative Agent as a general rate of interest, taking into account such factors as Administrative Agent may deem appropriate, it being understood that many of Administrative Agent's commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate. If Administrative Agent's Prime Rate or the Federal Funds Rate changes after the date hereof, the Base Rate shall be automatically increased or decreased, as the case may be, without prior notice to Borrower from time to time as of the effective time of each change in Administrative Agent's Prime Rate or the Federal Funds Rate. The Administrative Agent shall promptly thereafter notify Borrower of such change in the Base Rate. "Base Rate Portion" means that portion of the unpaid principal balance of a Loan which is not made up of Eurodollar Portions, Swing Line Advances or Competitive Bid Advances. "Bid Acceptance" means a Bid Acceptance substantially in the form of Exhibit P hereto with appropriate insertions. "Borrower" is defined in the Preamble hereto. "Business Day" means a day on which commercial banks are open for business with the public in the State of Texas. Any Business Day in any way relating to Eurodollar Portions (such as the day on which a Eurodollar Interest Period begins or ends) must also be a day on which, in the reasonable, good faith judgment of Administrative Agent, significant transactions in dollars are carried out in the interbank eurocurrency market. "Canadian Credit Facility" means that certain Credit Facility Agreement, dated as of December 18, 1997, among Chauvco, as Borrower, Canadian Imperial Bank of Commerce, as Arranger and Administrative Agent, Bank of Nova Scotia, as Co-Syndication Agent, Royal Bank of Canada, as Co-Syndication Agent, The Chase Manhattan Bank of Canada, as Co-Agent, Morgan Guaranty Trust Company of New York, as Co-Agent, NationsBank of Texas, N.A., as Co-Agent, The Toronto-Dominion Bank, as Co-Agent, and the Lenders party thereto, as such agreement may be amended, modified or restated from time to time. "Certificate of Extension" means a certificate of Borrower, executed by a Designated Officer and delivered to the Administrative Agent, in substantially the form of Exhibit Q, which requests an extension of the then scheduled Maturity Date pursuant to Section 2.12. "Chauvco" means Chauvco Resources Ltd., a corporation organized under the laws of the Province of Alberta, Canada. "Co-Agent" means each of Bank of America National Trust and Savings Association, The Bank of New York, The Bank of Nova Scotia, Royal Bank of Canada, Union Bank of California, 4 9 N.A., The Fuji Bank, Limited - Houston Agency, and Wells Fargo Bank, N.A., as Co-Agents, and their respective successors and assigns in such capacity. "Collateral Agent" means NationsBank of Texas, N.A., as collateral agent under the Security Instruments and its successors and assigns in such capacity. "Commitment" means, with respect to each Lender, such Lender's Loan Commitment. "Competitive Bid Advances" has the meaning given it in Section 2.22. "Competitive Bid Note" has the meaning given it in Section 2.22. "Competitive Bid Obligations" means, at the particular time in question, the sum of all outstanding Competitive Bid Advances. "Competitive Bid Offer" has the meaning given it in Section 2.22. "Competitive Bid Rate" has the meaning given it in Section 2.22. "Consolidated" refers to the consolidation of any Person, in accordance with GAAP, with its properly consolidated Subsidiaries. References herein to a Person's Consolidated financial statements, financial position, financial condition, or liabilities refer to the consolidated financial statements, financial position, financial condition or liabilities, as the case may be, of such Person and its properly consolidated Subsidiaries. "Consolidated Interest Expense" is defined in Section 5.3(a). "Credit Facility Agreement" means this Amended and Restated Credit Facility Agreement, as this Amended and Restated Credit Facility Agreement may be amended, modified or restated from time to time hereafter. "Debt" of any Person means, without duplication: (a) indebtedness of such Person for borrowed money; (b) indebtedness of such Person constituting an obligation to pay the deferred purchase price of property or services (other than customary payment terms taken in the ordinary course of such Person's business); (c) indebtedness of such Person evidenced by a bond, debenture, note or similar instrument; (d) principal obligations under leases capitalized in accordance with GAAP under which such Person is the lessee; 5 10 (e) indebtedness, contingent or otherwise, of such Person with respect to bankers' acceptances or the face amount of letters of credit or applications or reimbursement agreements therefor; (f) guaranties of such Person of indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above of any other Person or obligations to purchase or acquire or to otherwise protect or insure a creditor against loss in respect of indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above of any other Person, but excluding endorsements in the ordinary course of business of negotiable instruments in the course of collection; (g) indebtedness or obligations of the type described in clauses (a), (b), (c), (d) or (e) above, which are secured by a Lien on any property owned by such Person, whether or not such indebtedness or obligations have been assumed by such Person (limited however to the lesser of (1) the amount of its liability or (2) the value of such property); and (h) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment; provided, however, Debt shall not include (1) accounts payable incurred in the ordinary course of such Person's business, or (2) any obligations in respect of (i) exchange, forward, future, swap, hedging or similar agreements and (ii) prepayments for gas or oil production or gas or oil imbalances. "Declining Lenders" is defined in Section 2.12(c). "Default" means any Event of Default and any default, event or condition which would, with the giving of any requisite notices and the passage of any requisite periods of time, constitute an Event of Default. "Default Rate" means, at the particular time in question, two percent (2%) per annum plus the Base Rate then in effect; provided, that, with respect to any Eurodollar Portion with an Eurodollar Interest Period extending beyond the date such Eurodollar Portion becomes due and payable, "Default Rate" shall mean, during such Eurodollar Interest Period, two percent (2%) per annum plus the related Eurodollar Rate and plus the applicable Eurodollar Margin. "Designated Entity" means Borrower and each of the Restricted Subsidiaries. "Designated Officer" means any Executive Officer or any other individual duly elected to and holding one or more of the offices of vice president, managing director, executive director, secretary or assistant secretary of a Designated Entity, or any other Person authorized in writing by any Designated Entity to execute any Loan Document, in each case designated by a Designated Entity and acceptable to Required Lenders. 6 11 "Disclosure Schedule" means (a) Schedule 2 hereto and (b) any documents listed on such schedule and expressly incorporated therein by reference, true and correct copies of which shall have been delivered to Managing Agents and each other Lender prior to the date hereof. Insofar as any representations and warranties made herein are incorporated by reference or otherwise remade in Loan Documents delivered as of a date after the date hereof, the term "Disclosure Schedule" shall in such representations and warranties be deemed to refer as well to all other documents indicated by Borrower to be part of the Disclosure Schedule and which Borrower has at the particular time in question delivered to the Managing Agents, the Co-Agents and each other Lender and which have not been promptly objected to in writing by or on behalf of the Required Lenders. "Documentation Agent" means each of CIBC Inc. and Morgan Guaranty Trust Company of New York, as Documentation Agents, and their respective successors and assigns in such capacity. "EBITDAX" is defined in Section 5.3(a). "Effective Date" means the date the parties hereto shall have executed and delivered counterparts hereof to Administrative Agent and Administrative Agent shall have notified the parties hereto that the Effective Date shall have occurred. "Environmental Law" means any federal, state, or local statute, or rule or regulation promulgated thereunder, any judicial or administrative order or judgment to which Borrower, or any of its Subsidiaries is a party or which are applicable to Borrower or any of its Subsidiaries or its or their respective properties (whether or not by consent), and any provision or condition of any permit, license or other governmental operating authorization, relating to protection of the environment, persons or the public welfare from actual or potential exposure or the effects of exposure to any actual or potential release, discharge, spill or emission (whether past or present) of, or regarding the manufacture, processing, production, gathering, transportation, importation, use, treatment, storage or disposal of, any chemical, raw material, pollutant, contaminant or toxic or hazardous substance or waste. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time, together with all rules and regulations promulgated with respect thereto. "ERISA Plan" means any pension benefit plan subject to Title IV of ERISA maintained by any Designated Entity or any Affiliate thereof with respect to which any Designated Entity has a fixed or contingent liability. "Eurodollar Interest Period" means, with respect to each particular Eurodollar Portion, a period of one (1), two (2), three (3) or six (6) months, or, subject to Section 2.3, a period of nine (9) or twelve (12) months, as specified in the Rate Election applicable thereto, beginning on and including the date specified in such Rate Election (which must be a Business Day), and ending on but not including the same day of the relevant month as the day on which it began (e.g., a period beginning on the third day of one month shall end on but not include the third day of another month), or if such month has no numerically corresponding day, on the last Business Day of such month, and provided that each Eurodollar Interest Period which would otherwise end on a day 7 12 which is not a Business Day shall end on the next succeeding Business Day (unless such next succeeding Business Day is the first Business Day of a calendar month, in which case such Eurodollar Interest Period shall end on the immediately preceding Business Day). No Eurodollar Interest Period may be elected for any Eurodollar Portion which would extend past the Maturity Date of the Loan of which the Eurodollar Portion is a part. "Eurodollar Margin" means, on any date, with respect to each Eurodollar Portion of a Revolving Loan, the number of basis points per annum set forth below based on the Applicable Rating Level on such date:
Applicable Eurodollar Rating Level Margin ------------ ------ Level I 20.0 b.p. Level II 22.0 b.p. Level III 25.0 b.p. Level IV 30.0 b.p. Level V 47.0 b.p.
Changes in the Eurodollar Margin will occur automatically without prior notice. Administrative Agent will give notice promptly to Borrower and the Lenders of changes in the Eurodollar Margin. "Eurodollar Portion" means the unpaid principal balance of a Loan which Borrower designates as such in a Rate Election. "Eurodollar Rate" means, with respect to each particular Eurodollar Portion within a Tranche and with respect to the related Eurodollar Interest Period, the rate of interest per annum (stated to the nearest 10,000ths of 1%) determined by Administrative Agent in accordance with its customary general practices to be representative of the rates (stated to the nearest 10,000ths of 1%) at which deposits of dollars are offered to Administrative Agent at approximately 10:00 a.m., Dallas, Texas time, two Business Days prior to the first day of such Eurodollar Interest Period by prime banks in the interbank eurocurrency market which have been selected by Administrative Agent in accordance with its customary general practices for delivery on the first day of such Eurodollar Interest Period in an amount equal or comparable to the amount of Administrative Agent's Eurodollar Portion within such Tranche and for a period of time equal or comparable to the length of such Eurodollar Interest Period. The Eurodollar Rate determined by Administrative Agent with respect to a particular Eurodollar Portion shall be fixed at such rate for the duration of the associated Eurodollar Interest Period. If Administrative Agent is unable so to determine the Eurodollar Rate for any Eurodollar Portion, Borrower shall be deemed not to have elected such Eurodollar Portion. 8 13 "Eurodollars" is defined in Section 2.18. "Event of Default" has the meaning given it in Section 6.1. "Exchangeable Shares" has the meaning set forth in the Proxy. "Executive Officer" means any individual duly elected to and holding one or more of the following offices of Borrower: President, Chief Executive Officer, Chief Financial Officer, Executive Vice President or Senior Vice President. "Existing Credit Agreement" has the meaning given it in Recital A. "Facility Amount" means the aggregate amount of the Commitments (which amount shall initially be $300,000,000), as such amount may be reduced from time to time pursuant to the terms of this Agreement. "Facility Fee Rate" means, on any date that a facility fee is due pursuant to Section 2.7, the number of basis points per annum set forth below based on the Applicable Rating Level on such date: Applicable Facility Fee Rate Rating Level Margin ------------ ------ Level I 7.0 b.p. Level II 8.0 b.p. Level III 10.0 b.p. Level IV 12.0 b.p. Level V 18.0 b.p.
Changes in the Facility Fee Rate will occur automatically without prior notice. Administrative Agent will give notice promptly to Borrower and the Lenders of changes in the Facility Fee Rate. "Federal Funds Rate" means, for any day, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) 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 by the Federal Reserve Bank of New York on the Business Day next succeeding such day, provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the next preceding Business Day, as so published on the next succeeding Business Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to Administrative Agent on such day on such transactions as determined by Administrative Agent. 9 14 "Fiscal Quarter" means a three-month period ending on March 31, June 30, September 30 or December 31 of each year. "Fiscal Year" means a twelve-month period ending on December 31 of each year. "Foreign Restricted Subsidiary" means any Restricted Subsidiary of the Borrower organized under the laws of any jurisdiction other than the United States or any state thereof. "GAAP" means those generally accepted accounting principles and practices which are recognized as such by the Financial Accounting Standards Board (or any generally recognized successor) and which, in the case of Borrower and its Consolidated Subsidiaries, are applied for all periods after the date hereof in a manner consistent with the manner in which such principles and practices were applied to the Updated Financial Statements (except for changes concurred with by Borrower's independent public accountants). If any change in any accounting principle or practice is required by the Financial Accounting Standards Board (or any such successor) in order for such principle or practice to continue as a generally accepted accounting principle or practice, all reports and financial statements required hereunder with respect to Borrower or with respect to Borrower and its Consolidated Subsidiaries must be prepared in accordance with such change. In the event any changes in GAAP materially affect the calculation of Borrower's EBITDAX to Consolidated Interest Expense Ratio or Consolidated Total Funded Debt to Total Capitalization as defined and described in Sections 5.3 (a) and (b), respectively, Borrower and Lenders agree to enter into good faith negotiations for an agreement to revise such tests to take into account such changes in GAAP; until Borrower and Majority Lenders have entered into such an agreement, such financial calculation shall continue to be made in accordance with GAAP as in effect immediately preceding the date of such change. "Governmental Authority" means any national, state, county or municipal government, domestic or foreign, any agency, board, bureau, commission, court, department or other instrumentality of any such government, or any arbitrator in any case which has jurisdiction over any of the Lenders, Borrower, its Subsidiaries or any properties of Borrower or its Subsidiaries. "Guaranty" means (i) any guaranty substantially in the form of Exhibit B, with appropriate insertions and deletions, executed or to be executed by any Restricted Subsidiary, as from time to time amended, modified, or supplemented, or (ii) any Guaranty delivered pursuant to Section 3.1(a)(1) of the Agreement as from time to time amended, modified, or supplemented, as the case may be. "Incumbent Directors" has the meaning given in Section 6.1(i). "Lenders" means each party hereto (other than Borrower), including, without limitation, NationsBank of Texas, N.A. in its capacity as a Lender hereunder rather than as Administrative Agent or Collateral Agent, CIBC Inc. in its capacity as a Lender hereunder rather than as Documentation Agent, Morgan Guaranty Trust Company of New York in its capacity as a Lender hereunder rather than as Documentation Agent, The Chase Manhattan Bank in its capacity as a 10 15 Lender hereunder rather than as Syndication Agent, the Co-Agents in their capacity as Lenders hereunder rather than as Co-Agents, and the successors and assigns of each as holder of a Note. "Lien" means, any lien, mortgage, security interest, pledge, deposit, production payment, encumbrance, rights of a vendor under any title retention or conditional sale agreement or lease or other arrangement substantially equivalent thereto. "Loan" means any of a Revolving Loan, Competitive Bid Advance or Swing Line Advance, as the context requires. "Loan Commitment" means, with respect to each Lender, the amount set forth as such Lender's Loan Commitment opposite the name of such Lender in the column headed "New Commitment" or otherwise indicated on Schedule 1 attached hereto (or, if such Lender is an assignee, the amount of its Loan Commitment set forth in the assignment pursuant to which it became a Lender) as such amount may be reduced or increased from time to time pursuant to any assignment to which it is a party or otherwise pursuant to the terms of this Agreement. "Loan Commitment Period" means the period from and including the date hereof until and including the Maturity Date (or, if earlier, the day on which the Loan Notes first become due and payable in full or the Loan Commitments are terminated upon notice by Administrative Agent to Borrower pursuant to Section 6.1). "Loan Documents" means this Credit Facility Agreement, as the same may have been or may be amended from time to time hereafter, the Notes, the Swing Line Participation Certificate, the Guaranties, the Disclosure Schedule, the Security Instruments, the agreements with the Managing Agents referred to in Section 2.8, any amendments to any of the foregoing, and all other agreements, certificates, notices and disclosures at any time executed or certified by a Designated Officer of and on behalf of a Designated Entity and delivered by such Designated Entity or such Designated Officer in connection herewith or therewith (exclusive of term sheets, commitment letters, correspondence and similar documents used in the negotiation hereof or thereof). "Loan Note" has the meaning given it in Section 2.1(c). "Majority Lenders" means Lenders whose aggregate Percentage Shares exceed 50%. "Managing Agents" means Administrative Agent, each Documentation Agent and the Syndication Agent hereunder and their successors and assigns in such capacities. "Margin Regulations" means, as applicable, Regulations G, U and X of the Board of Governors of the Federal Reserve System, as from time to time in effect. "Material Adverse Effect" shall mean a material adverse effect on (a) the financial condition of Borrower and its Subsidiaries taken as a whole, (b) the ability of Borrower and its Subsidiaries taken as a whole to operate their respective businesses, (c) the ability of Borrower to meet its obligations under the Loan Documents on a timely basis or (d) the ability of Designated 11 16 Entities taken as a whole to meet their obligations under the Loan Documents on a timely basis; provided, however, that a material adverse effect that is limited to an Unrestricted Subsidiary shall not (i) be a Material Adverse Effect or (ii) be included in the determination of whether a Material Adverse Effect shall have occurred or shall be expected to occur. "Maturity Date" means the Original Maturity Date, or such other later date as may result from any extension requested by Borrower and consented to by the Lenders pursuant to Section 2.12. "Maximum Lawful Rate" has the meaning given it in Section 8.6. "Mesa" means Mesa, Inc., a Delaware corporation. "Moody's" means Moody's Investors Service, Inc. and any successor thereto that is a nationally-recognized rating agency. "Section 956" has the meaning given it in Section 6.1(k). "Note" means any Loan Note, Swing Line Note or Competitive Bid Note. "Notice Period" has the meaning given it in Section 6.4. "Obligations" means all Debt from time to time owing by any of Designated Entities to any Agent or any Lender under or pursuant to any of the Loan Documents, including, without limitation, all Swing Line Obligations and Competitive Bid Obligations. "Obligation" means any part of the Obligations. "Original Maturity Date" means the earlier of (a) August 5, 2022 and (b) the date on which the Loan Commitment of each Lender is reduced to zero or terminated. "Outside Debt" means (i) Pioneer USA's $150,000,000 8 7/8% Senior Notes due 2005 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, (ii) Pioneer USA's $150,000,000 8 1/4% Senior Notes due 2007 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, (iii) Mesa's 10 5/8% Senior Subordinated Notes due 2006 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring, and (iv) Mesa's 11 5/8% Senior Subordinated Discount Notes due 2006 which obligations thereunder will be transferred to Borrower pursuant to the Restructuring. "P&P; Petroleum" means Parker & Parsley Petroleum Company, a Delaware corporation. "Percentage Share" means, with respect to any Lender (a) when used in Section 2.1 or 2.3, in any Request for Advance or when no Loans (other than Swing Line Advances or Competitive Bid Advances, if applicable) are outstanding hereunder, the percentage set forth opposite such Lender's name on Schedule 1 to this Agreement, or in documents of assignment delivered pursuant to Section 8.8, as such percentage may be adjusted from time to time by such assignment 12 17 documents and (b) when used otherwise, the percentage equal to the unpaid principal balance of such Lender's Loans, other than Swing Line Advances and Competitive Bid Advances, at the particular time in question divided by the aggregate unpaid principal balance of all Loans of all Lenders, other than Swing Line Advances and Competitive Bid Advances, at such time. "Permitted Liens" means (a) Liens for taxes, assessments or other governmental charges or levies if the same shall not at the particular time in question be due and delinquent or (if foreclosure, distraint, sale or other similar proceedings shall not have been commenced or, if commenced, shall have been stayed) are being contested in good faith and by appropriate proceedings, and if the subject Borrower shall have set aside on its books such reserves (segregated to the extent required by sound accounting practices) as may be required by GAAP or otherwise determined by the Board of Directors of Borrower to be adequate with respect thereto; (b) Liens of carriers, warehousemen, mechanics, laborers, materialmen, landlords, vendors, workmen, and operators arising in the ordinary course of business or incident to the exploration, development, operations and maintenance of oil, gas and other hydrocarbon properties and related facilities and assets, for sums not yet due or being contested in good faith and by appropriate proceedings, if Borrower shall have set aside on its books such reserves (segregated to the extent required by sound accounting practices) as may be required by GAAP or otherwise determined by the Board of Directors of Borrower to be adequate with respect thereto; (c) Liens incurred in the ordinary course of Designated Entities' respective businesses in connection with worker's compensation, unemployment insurance and other social security legislation (other than ERISA); (d) Liens incurred in the ordinary course of Designated Entities' businesses to secure the performance of bids, tenders, trade contracts, leases (statutory only), statutory obligations, surety and appeal bonds, performance and return-of-money bonds and other obligations of a like nature; (e) Liens, easements, rights-of-way restrictions, servitudes, permits, conditions, covenants, exceptions, reservations and other similar encumbrances incurred in the ordinary course of Designated Entities' businesses or existing on property and not in the aggregate materially interfering with the ordinary conduct of Designated Entities' businesses; (f) legal or equitable encumbrances deemed to exist by reason of negative pledges such as in Section 5.2 of this Agreement or the existence of any litigation or other legal proceeding and any related lis pendens filing (excluding any attachment prior to judgment, judgment lien or attachment lien in aid of execution on a judgment); (g) rights of a common owner of any interest in property held by any Designated Entity as such common owner; (h) farmout, carried working interest, joint operating, unitization, royalty, overriding royalty, sales and similar agreements relating to the exploration or development of, or production from, oil and gas properties incurred in the ordinary course of business, (i) Liens arising pursuant to Section 9.319 of the Texas Uniform Commercial Code or other similar statutory provisions of other states with respect to production purchased from others; (j) Liens represented by capital leases permitted under this Agreement; (k) any defects, irregularities, or deficiencies in title to easements, rights-of-way or other properties which do not in the aggregate have a Material Adverse Effect; (l) Liens existing pursuant to the Security Instruments; (m) Liens existing in favor of Agents and Lenders under the Loan Documents; (n) Liens on assets of a Subsidiary of Borrower in favor of Borrower or another Restricted Subsidiary; (o) Liens on any property or assets owned or leased by Borrower or any Subsidiary existing at the time such property or asset was acquired (or at the time such Person became a Subsidiary); provided that (1) in the case of the acquisition of a Subsidiary, such lien only encumbers property or assets of such Subsidiary immediately prior to or at the time of 13 18 acquisition by Borrower of such Subsidiary and (2) Borrower will use its best efforts to eliminate such Liens in a timely manner; (p) purchase money Liens, so long as such Liens only encumber property or assets (including any improvements thereon, accessions thereto or proceeds thereof) acquired with the proceeds of purchase money indebtedness incurred in connection with such Lien; (q) Liens on the stock or other ownership interest of or in any Unrestricted Subsidiary; (r) Liens in renewal or extension of any of the foregoing permitted Liens, so long as limited to the property or assets encumbered and the amount of indebtedness secured immediately prior to such renewal or extension; and (s) Liens approved in writing by or on behalf of the Required Lenders. "Person" means an individual, corporation, company, partnership, association, joint stock company, trust or trustee thereof, estate or executor thereof, unincorporated organization or joint venture, court or governmental unit or any agency or subdivision thereof, or any other legally recognizable entity. "Pioneer Canada" means Pioneer Natural Resources (Canada) Ltd., a corporation organized under the laws of the Province of Alberta, Canada. "Pioneer USA" means Pioneer Natural Resources USA, Inc., a Delaware corporation. "Pledge Agreement" means a Pledge Agreement substantially in the form of Exhibit M hereto, or other form of pledge agreement or deed of mortgage, in form and substance satisfactory to the Managing Agents and the subject Designated Entity, pledging an interest in the capital shares or stock of, partnership interests in, or other ownership interest in, a Restricted Subsidiary as from time to time amended, modified and supplemented. "Primary Credit Facility" means that certain Amended and Restated Credit Facility Agreement, dated as of December 18, 1997, among Pioneer Natural Resources Company, as Borrower, NationsBank of Texas, N.A., as Administrative Agent, CIBC Inc., as Documentation Agent, Morgan Guaranty Trust Company of New York, as Documentation Agent, The Chase Manhattan Bank, as Syndication Agent, the Co-Agents party thereto, and the Lenders party thereto, as such agreement may be amended, modified or restated from time to time. "Prior Indebtedness" has the meaning given it in Recital B. "Proxy" has the meaning given it in Section 4.1(f)(ii). "Rate Election" has the meaning given it in Section 2.3. "Rating Agencies" means any or all of S&P; or Moody's. "Regulation D" means Regulation D of the Board of Governors of the Federal Reserve System, as from time to time in effect. "Replacement Lenders" is defined in Section 2.12(c)(ii). 14 19 "Request for Advance" means a written or telephonic request, or a written confirmation, made by a Borrower which meets the requirements of Section 2.2. "Request for Competitive Bid Offer" has the meaning given it in Section 2.22. "Request for Swing Line Bid" has the meaning given it in Section 2.5(a). "Required Lenders" means Lenders whose aggregate Percentage Shares exceed 66 2/3%. "Reserve Percentage" means, on any day with respect to each particular Eurodollar Portion in a Tranche, the maximum reserve requirement, as determined by Administrative Agent (including without limitation any basic, supplemental, marginal, emergency or similar reserves), expressed as a percentage and rounded to the nearest 1/100th of 1%, which would then apply to Administrative Agent under Regulation D or successor regulations issued from time to time by the Board of Governors of the Federal Reserve System with respect to "Eurocurrency liabilities" (as such term is defined in Regulation D) equal in amount to Administrative Agent's Eurodollar Portion in such Tranche, were Administrative Agent to have any such Eurocurrency liabilities. If such reserve requirement shall change after the date hereof, the Reserve Percentage shall be automatically increased or decreased, as the case may be, from time to time as of the effective time of each such change in such reserve requirement. "Restricted Payment" means any investment, contribution, loan or advance of cash to a Person (other than (i) Borrower or (ii) a Subsidiary that is not an Unrestricted Subsidiary), other than: (a) prudent short-term investments; (b) investments, contributions, loans or advances disclosed in the Updated Financial Statements or in the Disclosure Schedule or in disclosures made subsequent to the date hereof and consented to in writing by or on behalf of the Majority Lenders or otherwise made to effect the Acquisition and the subsequent restructuring of certain of the Restricted Subsidiaries, as described in the Acquisition Agreement; (c) investments, contributions, loans or advances made by any Designated Entity in the ordinary course of its business; or (d) contributions made by Borrower to any of its Subsidiaries arising out of or in respect of Letters of Credit (as defined in the Primary Credit Facility) issued under the Primary Credit Facility and used for the general corporate purposes of such Subsidiary (i) so long as no amounts have been drawn under any such Letter of Credit or (ii) to the extent that Borrower has been reimbursed by such Subsidiary for amounts drawn under any such Letter of Credit. "Restricted Subsidiary" means each Subsidiary of Borrower that, at the particular time in question, (i) owns directly or indirectly any material assets or any interest in any other Restricted 15 20 Subsidiary and (ii) either (a) has not been designated as an Unrestricted Subsidiary or (b) has been redesignated as a Restricted Subsidiary. The Restricted Subsidiaries on the Effective Date are listed on Schedule 3 attached hereto and each other Subsidiary of Borrower as of the Effective Date shall be an Unrestricted Subsidiary. A Restricted Subsidiary shall remain such (even if it no longer owns directly or indirectly any interest in any of the material assets) until designated as an Unrestricted Subsidiary pursuant to Section 5.2(i). An Unrestricted Subsidiary shall remain an Unrestricted Subsidiary unless redesignated as a Restricted Subsidiary pursuant to the provisions of Section 5.2(i). "Restructuring" has the meaning given it in Section 5.2(l). "Revolving Loan" has the meaning given it in Section 2.1(c). "Revolving Loan Advance" has the meaning given it in Section 2.1(a). "S&P;" means Standard & Poor's Ratings Group and any successor thereto that is a nationally-recognized rating agency. "Security Instruments" shall mean the agreements or instruments described or referred to in Schedule 5, the Guaranties, the Pledge Agreement, and any and all other agreements or instruments now or hereafter executed and delivered by any Designated Entity or any other Person in connection with, or as security for the payment or performance of, the Notes, this Agreement or the Guaranties, as any such instrument or agreement may be supplemented, amended, renewed, extended or restated from time to time. "Stock Pledge Release Date" has the meaning given to it in Section 8.16. "Subsidiary" means, with respect to any Person, any corporation, which is directly or indirectly (through one or more intermediaries) controlled by or with respect to which fifty percent (50%) or more of the stock having ordinary voting power to elect the board of directors is owned by such Person, or any association, partnership, joint venture, or other non-corporate business entity, enterprise or organization which is directly or indirectly (through one or more intermediaries) controlled by, or owned one hundred percent (100%) by, such Person, provided that associations, joint ventures or other relationships (a) which are established pursuant to an operating agreement or similar agreement or which are partnerships for purposes of federal income taxation only, (b) which are not partnerships (or subject to the Uniform Partnership Act) under applicable state law, and (c) whose businesses are limited to the exploration, development and operation of oil, gas or mineral properties and interests owned directly by the parties in such associations, joint ventures or relationships, shall not be deemed to be "Subsidiaries" of such Person. "Swing Line Advances" has the meaning given it in Section 2.4. "Swing Line Lender" means NationsBank of Texas, N.A., its successors and assigns. 16 21 "Swing Line Note" has the meaning given it in Section 2.5(e). "Swing Line Obligations" means, at the particular time in question, the sum of all outstanding Swing Line Advances. "Swing Line Participation Certificate" means a Swing Line Participation Certificate substantially in the form of Exhibit "F". "Swing Line Rate" has the meaning given it in Section 2.5(a). "Syndication Agent" means The Chase Manhattan Bank, as Syndication Agent hereunder and its successors and assigns in such capacity. "Taxes" has the meaning given it in Section 2.20. "Termination Event" means (a) the occurrence with respect to any ERISA Plan of (1) a reportable event described in Sections 4043(b)(5) or (6) of ERISA or (2) any other reportable event described in Section 4043(b) of ERISA other than a reportable event not subject to the provision for 30-day notice to the Pension Benefit Guaranty Corporation pursuant to a waiver by such corporation under Section 4043(a) of ERISA, or (b) the withdrawal of any Designated Entity or of any Affiliate of any Designated Entity from an ERISA Plan during a plan year in which it was a "substantial employer" as defined in Section 4001(a)(2) of ERISA, or (c) the filing of a notice of intent to terminate any ERISA Plan or the treatment of any ERISA Plan amendment as a termination under Section 4041 of ERISA, or (d) the institution of proceedings to terminate any ERISA Plan by the Pension Benefit Guaranty Corporation under Section 4042 of ERISA, or (e) any other event or condition which might constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any ERISA Plan. "364 Day Credit Facility" means the facility for loans established pursuant to this Agreement. "Total Capitalization" means the sum (without duplication) of (i) Consolidated Total Funded Debt of Borrower and its Subsidiaries, plus (ii) Consolidated shareholder's equity of Borrower and its Subsidiaries. "Total Funded Debt" means all Debt of the type referred to in clauses (a), (b), (c), (d), (g) (excluding Debt of the type referred to in clause (e) of the definition of "Debt") and (h) of the definition of "Debt". "Tranche" has the meaning given it in Section 2.3. "Unrestricted Subsidiary" means each Subsidiary of Borrower which is not designated as a Restricted Subsidiary on Schedule 3 attached hereto or is designated by Borrower as an Unrestricted Subsidiary pursuant to Section 5.2(i). 17 22 "Updated Financial Statements" means (a) the audited annual Consolidated financial statements of P&P; Petroleum and its Consolidated Subsidiaries dated as of December 31, 1996, (b) the audited annual Consolidated financial statements of Mesa and its Consolidated Subsidiaries dated as of December 31, 1996, and (c) the unaudited Consolidated financial statements and unaudited consolidating balance sheets and statements of operations of Borrower and its Consolidated Subsidiaries prepared in reasonable detail in accordance with GAAP and dated as of September 30, 1997. Section 1.2 Exhibits and Schedules. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Section 1.3 Amendment of Defined Instruments. Unless the context otherwise requires or unless otherwise provided herein, the terms defined in this Agreement which refer to a particular agreement, instrument or document also refer to and include all renewals, extensions, modifications, amendments and restatements of such agreement, instrument or document, provided that nothing contained in this Section shall be construed to authorize or require any such renewal, extension, modification, amendment or restatement. Section 1.4 References and Titles. All references in this Agreement to Exhibits, Schedules, articles, sections, subsections and other subdivisions refer to the Exhibits, Schedules, articles, sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any subdivisions are for convenience only and do not constitute any part of such subdivisions and shall be disregarded in construing the language contained in such subdivisions. The words "this Agreement", "this 364 Day Credit Facility", "364 Day Credit Facility", "this instrument", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The phrases "this section" and "this subsection" and similar phrases refer only to the sections or subsections hereof in which such phrases occur. The word "or" is not exclusive, and the word "including" (in its various forms) means "including without limitation". Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. Section 1.5 Calculations and Determinations. All calculations under the Loan Documents of interest chargeable with respect to Eurodollar Portions and Competitive Bid Advances shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 360 days, subject, however, to the limitations set forth in Section 8.6 hereof. All other calculations of interest and fees made under the Loan Documents shall be made on the basis of actual days elapsed (including the first day but excluding the last) and a year of 365 or 366 days, as appropriate. Unless otherwise expressly provided herein or unless Required Lenders otherwise consent, all financial statements and reports furnished to Administrative Agent or any other Lender hereunder shall be prepared and all financial computations and determinations pursuant hereto shall be made in accordance with GAAP. 18 23 ARTICLE 2 LOANS Section 2.1 Making the Loans. (a) Subject to the terms and conditions hereof, each Lender agrees to make advances on a revolving basis (herein a "Revolving Loan Advance") to Borrower from time to time on any Business Day during the Loan Commitment Period, equal to such Lender's Percentage Share of the aggregate amount of Revolving Loan Advances requested by Borrower to be made on such day, so long as the aggregate amount of (i) all Lenders' Revolving Loan Advances (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time plus (ii) all Swing Line Advances to Borrower plus (iii) all Lenders' Competitive Bid Advances outstanding at such time, does not exceed the Facility Amount. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow Revolving Loan Advances. (b) No Lender shall be permitted or required to make any Revolving Loan Advance under this Agreement unless the aggregate of (1) such Lender's Revolving Loan Advances under this Agreement (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time is less than or equal to the least of (i) such Lender's Loan Commitment or (ii) such Lender's Percentage Share of the Facility Amount plus (2) such Lender's participation pursuant to a Swing Line Participation Certificate in any Swing Line Advances, if any. (c) The aggregate amount of all Revolving Loan Advances requested of all Lenders in any Request for Advance must be an integral multiple of $1,000,000 which equals or exceeds $10,000,000 or must equal the least of the unadvanced portion of the aggregate Loan Commitments of all Lenders or the unadvanced portion of the Facility Amount. The obligation of Borrower to repay to each Lender the aggregate amount of all Revolving Loan Advances made by such Lender to Borrower (herein called such Lender's "Revolving Loan"), together with interest accruing in connection therewith, shall be evidenced by a single promissory note (herein called such Lender's "Loan Note") made by Borrower payable to the order of such Lender in the form of Exhibit A-1 with appropriate insertions. The amount of principal owing on any Lender's Loan Note at any given time shall be the aggregate amount of all Revolving Loan Advances theretofore made by such Lender minus all payments of principal theretofore received by such Lender on such Loan Note. Interest on each Loan Note shall accrue and be due and payable as provided herein and therein. Section 2.2 Requests for Revolving Loan Advances. Borrower must give to Administrative Agent not later than 11:00 a.m., Dallas, Texas time, for same day funding, and not 19 24 later than 1:00 p.m., Dallas, Texas time, for next Business Day funding, written notice, or telephonic notice promptly confirmed in writing, of any requested Revolving Loan Advances, after which Administrative Agent shall give each other Lender prompt notice thereof. Each such written request or confirmation must be made in the form and substance of Exhibit C attached hereto, duly completed (herein called a "Request for Advance"). Each such telephonic request shall be deemed a representation, warranty, acknowledgment and agreement by Borrower as to the matters which are required to be set out in such written confirmation. If all conditions precedent to a Revolving Loan Advance have been met, each Lender will on the date requested remit, not later than 1:00 p.m., Dallas, Texas time, for same day funding, and not later than 11:00 a.m., Dallas, Texas time, the following Business Day for next Business Day funding, to Administrative Agent at Administrative Agent's office in Dallas, Texas, or to such other office as Administrative Agent may specify from time to time by notice to Lenders, the amount of such Lender's Revolving Loan Advance in immediately available funds, and upon receipt of such funds, unless to its actual knowledge any conditions precedent to such Revolving Loan Advances have been neither met nor waived as provided herein, Administrative Agent shall promptly make the Revolving Loan Advances available to Borrower. Each Request for Advance shall be irrevocable and binding on Borrower. Unless Administrative Agent shall have received prompt notice from a Lender that such Lender will not make available to Administrative Agent such Lender's Revolving Loan Advance, Administrative Agent may in its discretion assume that such Lender has made such Revolving Loan Advance available to Administrative Agent in accordance with this Section and Administrative Agent may if it chooses, in reliance upon such assumption, make such Revolving Loan Advance available to Borrower. If and to the extent such Lender shall not so make its Revolving Loan Advance available to Administrative Agent, such Lender and Borrower severally agree to pay or repay to Administrative Agent on demand the amount of such Revolving Loan Advance together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is paid or repaid to Administrative Agent, (i) if paid or repaid by Borrower at the interest rate applicable at the time to the other Revolving Loan Advances made on such date of such Revolving Loan Advance and (ii) if paid or repaid by such Lender, at the Federal Funds Rate. The failure of any Lender to make any Revolving Loan Advance to be made by it hereunder shall not relieve any other Lender of its obligation hereunder, if any, to make its Revolving Loan Advance, but no Lender shall be responsible for the failure of any other Lender to make any Revolving Loan Advance to be made by such other Lender. Section 2.3 Rate Elections. Borrower may from time to time designate all or any portions of the Loans (including any yet to be made Revolving Loan Advances which are to be made prior to or at the beginning of the designated Eurodollar Interest Period but excluding any portions of the Loans which are required to be repaid prior to the end of the designated Eurodollar Interest Period and excluding any Competitive Bid Advance and any Swing Line Advance) as a "Tranche", which term refers to a set of Eurodollar Portions of the same type with identical Eurodollar Interest Periods and with each Lender participating in such Tranche in accordance with its Percentage Share. Without the consent of Required Lenders, Borrower may not make such election, and Administrative Agent and Lenders shall not be required to give effect to such election, during the continuance of a Default and Borrower may make such an election with respect to already existing Eurodollar Portions only if such election will take effect at or after the termination of the Eurodollar Interest Period applicable thereto. Each election by Borrower of a Tranche shall: 20 25 (a) Be made in writing in the form and substance of Exhibit D attached hereto, duly completed, herein called a "Rate Election"; (b) Specify the aggregate amount of the Loans which Borrower desires to designate as such Tranche, the first day of the Eurodollar Interest Period which is to apply thereto, and the length of such Eurodollar Interest Period; and (c) Be received by Administrative Agent not later than 10:00 a.m., Dallas, Texas time, on the third Business Day preceding the first day of the specified Eurodollar Interest Period. Promptly after receiving any such Rate Election which meets the requirements of this Section, Administrative Agent shall notify each Lender thereof. Each Rate Election shall be irrevocable. Borrower may not make any Rate Election which does not specify an Eurodollar Interest Period complying with the definition of "Eurodollar Interest Period" in Section 1.1, and the aggregate amount of the Tranche elected in any Rate Election must be $10,000,000 or a higher integral multiple of $1,000,000. Upon the termination of each Eurodollar Interest Period the portion of each Loan within the related Tranche shall, unless the subject of a new Rate Election then taking effect, automatically become a part of the Base Rate Portion of such Loan and become subject to all provisions of the Loan Documents governing such Base Rate Portion. Borrower shall have no more than fifteen (15) Tranches in effect at any time. If requested to do so by Borrower through Administrative Agent at least two (2) Business Days before the delivery date of any proposed Rate Election, each Lender will advise Administrative Agent before 10:00 a.m., Dallas, Texas time, on the Business Day following receipt of such request as to whether, if Borrower selects a specified duration of nine (9) or twelve (12) months for the Eurodollar Interest Period applicable to such proposed Rate Election, such Lender expects that deposits in dollars with a corresponding term will be available to it in the relevant market on the first day of such Eurodollar Interest Period in the amount required to fund the Eurodollar Portion of its Loan to which such Eurodollar Interest Period would apply. Unless a Lender responds by such time to the effect that it expects such deposits will be available to it, Borrower shall not be entitled to select such proposed duration for such Eurodollar Interest Period. Each Lender may, if it so elects, fulfill its obligation to fund any Eurodollar Portion by causing one of its foreign branches or Affiliates (or an international banking facility created by such Lender) to fund or continue such Eurodollar Portion; provided, however, that such Eurodollar Portion shall be deemed to have been made and held by such Lender, and the obligations of the subject Borrower to repay such Eurodollar Portion shall nevertheless be to such Lender for the account of such branch, or Affiliate (or international banking facility). In addition, Borrower hereby consents and agrees that, for purposes of any determination to be made for purposes of Sections 2.17, 2.18, 2.19 and 2.20, it shall be conclusively assumed that such Lender elected to fund all Eurodollar Portions by purchasing Dollar deposits in the interbank eurodollar market of its designated office. 21 26 Section 2.4 Swing Line Advances. In addition to borrowings pursuant to Section 2.1(a) or Section 2.22, Borrower may request Swing Line Lender to make advances to Borrower on any Business Day (unless Borrower and Swing Line Lender agree otherwise) during the Loan Commitment Period as provided in Sections 2.5 and 2.6 (herein called "Swing Line Advances"); provided, however, that (a) at no time shall the outstanding aggregate principal amount of all Swing Line Advances under this Agreement plus all "Swing Line Advances" (as defined in the Primary Credit Facility), if any, outstanding under the Primary Credit Facility exceed $50,000,000, and (b) at no time shall the sum of (1) the outstanding aggregate principal amount of all Swing Line Advances to Borrower, (2) the outstanding aggregate principal amount of the Revolving Loans, and (3) the outstanding aggregate principal amount of all Competitive Bid Advances, exceed the Facility Amount. Section 2.5 Procedure for Swing Line Advances. (a) No later than 11:00 a.m., Dallas, Texas time, on a Business Day on which Borrower desires a Swing Line Advance, Borrower shall transmit to Swing Line Lender) and to Administrative Agent by telecopy a notice in substantially the form of Exhibit E attached hereto (herein called a "Request for Swing Line Loan"). Swing Line Lender will specify the rate of interest per annum which will be the fixed rate of interest to be charged for such Swing Line Advance until maturity (herein called the "Swing Line Rate"). (b) Swing Line Lender shall wire the Swing Line Advance in immediately available funds by no later than 1:00 p.m., Dallas, Texas time on the date of request for Swing Line Advance, on such day to Administrative Agent, which shall deposit such funds to an account designated by Borrower by no later than 1:15 p.m. on the same day. (c) Borrower shall repay each such Swing Line Advance on or before 1:00 p.m., Dallas, Texas time, on the following Business Day or at such other maturity (such date of maturity being no more than fourteen (14) days after the date of the Swing Line Advance and no later than the Maturity Date) as is agreed to by Borrower, Administrative Agent and the Swing Line Lender. The repayment shall be paid on such date by Borrower (which payment may be in the form of a Swing Line Advance advanced to Borrower on that day) to Administrative Agent in immediately available funds with instructions to Administrative Agent to forward such proceeds to the Swing Line Lender. Any accrued and unpaid interest pursuant to Swing Line Advances shall be paid by Borrower (which payment may be in the form of a Swing Line Advance advanced to Borrower on that day) to Administrative Agent in immediately available funds on the first Business Day of each calendar month with instructions to Administrative Agent to forward such proceeds to the Swing Line Lender. (d) Interest on the Swing Line Advances shall be computed on the basis of a year of 365 or 366 days and actual days elapsed (including the first day, but excluding the 22 27 last day) occurring in the period for which payable and shall not exceed Maximum Lawful Rate. Past due principal and interest (to the extent allowed by law) shall bear interest at the lesser of the Default Rate or the Maximum Lawful Rate and shall be payable on demand. (e) The Swing Line Advances made by the Swing Line Lender shall be evidenced by a single promissory note of Borrower payable to the order of the Swing Line Lender in the amount of $50,000,000 and in substantially the form of Exhibit A-2 attached hereto, with appropriate insertions (herein called a "Swing Line Note"). The date, amount, Swing Line Rate and maturity of each Swing Line Advance made by a Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books. (f) The Swing Line Advances will be used by Borrower to provide working capital for the operations of Borrower and its Subsidiaries and for general business purposes. No Swing Line Advances shall be used for the purpose of purchasing or carrying any Margin Stock in violation of the Margin Regulations. (g) The obligation of the Swing Line Lender to make each Swing Line Advance after timely acceptance by Borrower is further subject to the conditions contained in Article 3. Section 2.6 Special Provisions for Swing Line Advances. (a) Lenders to Make Revolving Loan Advances. (i) Swing Line Lender, at any time in its discretion, upon written request to Lenders through Administrative Agent (with a copy to Borrower), may require each Lender (including the Swing Line Lender) to make a Revolving Loan Advance, subject to the provisions of Section 2.1 hereof, in an amount equal to such Lender's Percentage Share of the outstanding Swing Line Advances. Swing Line Lender shall deliver such request to Administrative Agent prior to 11:00 a.m., Dallas, Texas time, on the Business Day next preceding the date (which shall be a Business Day) on which such Revolving Loan Advances are to be made. Promptly upon receipt of any such request, Administrative Agent shall give notice thereof to Lenders. Each Lender shall make available its Percentage Share of such Revolving Loans to Administrative Agent by 11:00 a.m., Dallas, Texas time, on the requested date for such Revolving Loan Advances. Administrative Agent shall apply the proceeds of such Revolving Loan Advances to prepay the Swing Line Advances of the Swing Line Lender; provided, however, that Administrative Agent shall be obligated to make the proceeds of such Revolving Loans available only to the extent received by it from Lenders. All Revolving Loans made pursuant to this subsection shall be Base Rate Loans. (ii) In the event Administrative Agent advances proceeds of any Revolving Loan to Swing Line Lender and one or more of the Lenders (other than Swing Line Lender) fail to fund all or any portion of such Revolving Loan Advance immediately upon receipt of 23 28 notice from Administrative Agent, then (I) such Lender shall pay directly to Administrative Agent the amount thereof together with interest thereon at the Federal Funds Rate, and (II) if not paid by such Bank, the Swing Line Lender will repay directly to Administrative Agent such amount as will equal the amount such other Lender(s) failed to fund, together with interest at the Federal Funds Rate. (b) Participations in Swing Line Advances. (i) If, at any time prior to the making of Revolving Loans pursuant to subsection 2.6(a)(i) hereof, any Event of Default described in Sections 6.1(h) hereof shall have occurred, each Lender, on the date such Revolving Loan Advance was to have been made or, if no request for Revolving Loan Advances had been made pursuant to Section 2.6(a)(i) hereof, promptly upon request by the Swing Line Lender delivered to Administrative Agent, shall purchase an undivided participation interest in all outstanding Swing Line Advances in an amount equal to its Percentage Share times the outstanding amount of such Swing Line Advances. Each Lender (other than the Swing Line Lender) will transfer immediately to Administrative Agent for credit to Swing Line Lender, in immediately available funds, the amount of its participation. Upon receipt thereof, the Swing Line Lender will deliver to such other Lender a Swing Line Advance Participation Certificate, dated the date of receipt of such funds and in the amount of such Lender's participation. (ii) Whenever, at any time after the Swing Line Lender has received from any other Lender such other Lender's participating interest in a Swing Line Advance, the Swing Line Lender receives any payment on account thereof, Administrative Agent will distribute to such other Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); provided, however, that in the event that any payment received by Swing Line Lender is required to be returned, such other Lender will return to Swing Line Lender any portion thereof previously distributed to it. (c) Acknowledged Privity. Borrower expressly agrees that, in respect of each Lender's funded participation interest in any Swing Line Advance, such Lender shall be deemed to be in privity of contract with Borrower and have the same rights and remedies against Borrower under the Loan Documents as if such funded participation interest in such Swing Line Advance were a Revolving Loan. (d) Unconditional Obligation. Each Lender's obligation to make Revolving Loan Advances or to purchase participation interests in Swing Line Advances as provided in this Section shall be absolute and unconditional and shall not be affected by any circumstance, including without limitation, (A) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against Swing Line Lender, Borrower or any other Person for any reason whatsoever, (B) the existence of any Default or Event of Default at any time, (C) the occurrence of any event or existence of any condition that might have a Material Adverse Effect, or (D) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. 24 29 Section 2.7 Facility Fee; Amendment Fee. In consideration of each Lender's commitment to make Revolving Loan Advances and Competitive Bid Advances, Borrower will pay, or cause the payment, to Administrative Agent for the account of each Lender an annual facility fee payable to each Lender determined by applying the Facility Fee Rate to such Lender's Percentage Share of the Facility Amount as of the date of such payment, payable in arrears quarterly until the Maturity Date, with the first payment thereof to be January 1, 1998, subsequent payments on the first day following each successive calendar quarter ending on each March, June, September and December, and the final payment thereof on the Maturity Date. Borrower will pay, or cause the payment, to Administrative Agent for the account of each Lender a non-refundable amendment fee payable to each Lender determined by applying the Amendment Fee Rate to such Lender's Percentage Share of the Facility Amount as of the Effective Date. Section 2.8 Managing Agents' Fees. In addition to all other amounts due to the Managing Agents under the Loan Documents, Borrower will pay the non-refundable annual fees set forth in those certain Fee Letters dated June 25, 1997. Section 2.9 Termination and Reduction of Commitments. (a) Unless previously terminated, the Commitments shall terminate on the Maturity Date. (b) Borrower may at any time terminate, or from time to time reduce, the Commitments; provided that (i) each reduction of the Commitments shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (ii) Borrower shall not terminate or reduce the Commitments if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 2.10, the sum of (i) all Lenders' Revolving Loan Advances (including any Revolving Loan Advances to be made but not yet made pursuant to a Request for Advance) outstanding at any time plus (ii) all Swing Line Advances to Borrower plus (iii) all Lenders' Competitive Bid Advances outstanding at such time, would exceed the total Commitments. (c) Borrower shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least two Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments shall be permanent. Each reduction of the Commitments shall be made ratably among the Lenders in accordance with their respective Commitments. Section 2.10 Optional Prepayments. Borrower may, upon notice to each Lender identical to that required for related borrowings under this Agreement, from time to time and without premium or penalty, prepay its Notes, in whole or in part, so long as the aggregate amounts of all 25 30 partial prepayments of principal concurrently paid on such Notes equals $5,000,000 or any higher integral multiple of $1,000,000 or the aggregate outstanding balance of the Loans, and so long as Borrower does not prepay any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance except in accordance herewith. Any amounts prepaid pursuant to this Section shall be in addition to, and not in lieu of, all payments otherwise required to be paid under the Loan Documents at the time of such prepayment. Section 2.11 Payments to Lenders. Except as expressly set forth in Section 2.5(c) with respect to repayment of Swing Line Advances and Section 2.22(b) with respect to repayment of Competitive Bid Advances, Borrower will make each payment which it owes under the Loan Documents to Administrative Agent at its principal banking office in Dallas, Texas, or to such other office as Administrative Agent may specify from time to time by notice to Borrower for the account of each Lender to whom such payment is owed, without the application of any setoff, deduction or counterclaim. Each such payment must be received by Administrative Agent not later than 1:00 p.m., Dallas, Texas time, on the date such payment becomes due and payable, in lawful money of the United States of America and in immediately available funds. Any payment received by Administrative Agent after such time will be deemed to have been made on the next Business Day. Should any such payment become due and payable on a day other than a Business Day, the maturity of such payment shall be extended to the next succeeding Business Day (except, with respect to any Eurodollar Portion, as may be otherwise required by the definition of Eurodollar Interest Period), and, in the case of a payment of principal or past due interest, interest shall accrue and be payable thereon for the period of such extension as provided in the Loan Document under which such payment is due. All payments applied to principal or interest on any Note shall be applied first to any interest then due and payable, then to principal then due and payable, and last to any prepayment of principal and interest in compliance with Section 2.10. Unless otherwise expressly provided, all payments by any Designated Entity pursuant to this Agreement or any other Loan Document shall be made by such Designated Entity to Administrative Agent for account of Agents and Lenders pro rata among Obligations of the same type and, if applicable, having the same Eurodollar Interest Period or, in the case of Swing Line Advances or Competitive Bid Advances, the same maturity date. Section 2.12 Extension of Maturity Date and of Commitments. (a) Subject to the other provisions of this Agreement and provided that no Event of Default has occurred and is continuing, the total Commitments shall be effective for an initial period from the Effective Date to the Original Maturity Date; provided that the Maturity Date, and concomitantly the total Commitments, may be extended for successive 364 day periods expiring on the date which is 364 days from the then scheduled Maturity Date. If Borrower shall request in a Certificate of Extension delivered to the Administrative Agent not more than 60 days and not less than 45 days prior to the Maturity Date that the Maturity Date be extended for 364 days from the then scheduled Maturity Date, then the Administrative Agent shall promptly notify each Lender of such request and each Lender shall notify the Administrative Agent, no later than 30 days prior to the Maturity Date, whether such Lender, in the exercise of its sole discretion, will extend the 26 31 Maturity Date for such 364 day period. Any Lender which shall not timely notify the Administrative Agent whether it will extend the Maturity Date shall be deemed to not have agreed to extend the Maturity Date. No Lender shall have any obligation whatsoever to agree to extend the Maturity Date. Any agreement to extend the Maturity Date by any Lender shall be irrevocable, except as provided in clause (c) of this Section. (b) If all Lenders notify the Administrative Agent pursuant to clause (a) of this Section of their agreement to extend the Maturity Date, then the Administrative Agent shall so notify each Lender and Borrower, and such extension shall be effective without other or further action by any party hereto for such additional 364 day period. (c) If Lenders constituting at least the Majority Lenders approve the extension of the then scheduled Maturity Date (such Lenders agreeing to extend the Maturity Date herein called the "Accepting Lenders") and if one or more Lenders shall notify, or be deemed to notify, the Administrative Agent pursuant to clause (a) of this Section that they will not extend the then scheduled Maturity Date (such Lenders herein called the "Declining Lenders"), then (A) the Administrative Agent shall promptly so notify Borrower and the Accepting Lenders, (B) the Accepting Lenders shall, upon Borrower's election to extend the then scheduled Maturity Date in accordance with clause (i) or (ii) below, extend the then scheduled Maturity Date and (C) Borrower shall, pursuant to a notice delivered to the Administrative Agent, the Accepting Lenders and the Declining Lenders, no later than the tenth (10th) day following the date by which each Lender is required, pursuant to clause (a) of this Section, to approve or disapprove the requested extension of the total Commitments, either: (i) elect to extend the Maturity Date with respect to the Accepting Lenders and direct the Declining Lenders to terminate their Commitments, which termination shall become effective on the date which would have been the Maturity Date except for the operation of this Section. On such date, (x) Borrower shall deliver a notice of the effectiveness of such termination to the Declining Lenders with a copy to the Administrative Agent and (y) Borrower shall pay in full in immediately available funds all Obligations of Borrower owing to the Declining Lenders, including any amounts required pursuant to Section 2.19, and (z) upon the occurrence of the events set forth in clauses (x) and (y), the Declining Lenders shall each cease to be a Lender hereunder for all purposes, other than for purposes of Sections 2.16 through 2.20 and Section 6.4, and shall cease to have any obligations or any Commitment hereunder, other than to the Agents pursuant to Article 7, and the Administrative Agent shall promptly notify the Accepting Lenders and Borrower of the new Commitments; or (ii) elect to extend the Maturity Date with respect to the Accepting Lenders and, prior to or no later than the then scheduled Maturity Date, (A) to replace one or more of the Declining Lender or Declining Lenders with another lender or lenders reasonably acceptable to the Administrative Agent or any Accepting Lender (such lenders herein called the "Replacement Lenders") and (B) Borrower shall pay in full in immediately available funds all Obligations of Borrower owing to any Declining Lenders which are not being replaced, as provided in clause (i) above; provided that (x) the Replacement Lender or 27 32 Replacement Lenders shall purchase, and the Declining Lender or Declining Lenders shall sell, the Declining Lender's or Declining Lenders' rights and obligations hereunder without recourse or expense to, or warranty by, such Declining Lender or Declining Lenders being replaced for a purchase price equal to the aggregate outstanding principal amount of the Obligations payable to such Declining Lender or Declining Lenders plus any accrued but unpaid interest on such Obligations and accrued but unpaid fees or other amounts owing in respect of such Declining Lender's or Declining Lenders' Loans and Commitments hereunder, and (y) upon the payment of such amounts referred to in clause (x) and the execution of an Agreement to be Bound by the Replacement Lender or Replacement Lenders and the Declining Lender or Declining Lenders (which each such Declining Lender agrees to execute promptly), the Replacement Lender or Replacement Lenders shall each constitute a Lender hereunder and the Declining Lender or Declining Lenders being so replaced shall no longer constitute a Lender (other than for purposes of Sections 2.16 through 2.20 and Section 6.4), and shall no longer have any obligations hereunder, other than to the Agents pursuant to Article 7; or (iii) elect to revoke and cancel the extension request in such Certificate of Extension by giving notice of such revocation and cancellation to the Administrative Agent (which shall promptly notify the Lenders thereof) no later than the tenth (10th) day following the date by which each Lender is required, pursuant to clause (a) of this Section, to approve or disapprove the requested extension of the Maturity Date, and concomitantly the total Commitments. If Borrower fails to timely provide the election notice referred to in this clause (c), Borrower shall be deemed to have revoked and canceled the extension request in the Certificate of Extension and to have elected not to extend the Maturity Date, and, on the then scheduled Maturity Date, Borrower shall repay in full all Obligations under the Loan Documents. Section 2.13 [Intentionally Omitted]. Section 2.14 [Intentionally Omitted]. Section 2.15 [Intentionally Omitted]. Section 2.16 Capital Reimbursement. If either (a) the introduction or implementation of, or the compliance with, or any change in, or in the interpretation of, any law, rule or regulation, or (b) the introduction or implementation of or the compliance with any request, directive or guideline from any central bank or Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required to be maintained by any Lender or any corporation controlling any Lender, then, upon demand by such Lender, Borrower will immediately pay to Administrative Agent for the benefit of such Lender, from time to time as specified by such Lender, such additional amount which such Lender shall determine to be appropriate to compensate such Lender or any corporation controlling such Lender in light of such circumstances, to the extent that such Lender reasonably determines that, because of the existence of such circumstances, the amount of any such capital would be increased or the rate of return on any such capital would 28 33 be reduced, in whole or in part, by or as a consequence of the existence of such Lender's Commitments, its Loans, and its other commitments under this Agreement to Borrower, subject to the provisions of Section 2.21. Section 2.17 Increased Cost of Eurodollar Portions. If any applicable domestic or foreign law, treaty, rule, directive or regulation (whether now in effect or hereinafter enacted or promulgated, including Regulation D) or any interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof (whether or not having the force of law): (a) shall change the basis of taxation of payments to any Lender of any principal, interest, or other amounts attributable to any Eurodollar Portion of its Loans or its participation in any Swing Line Advances or its Competitive Bid Advances or otherwise due under this Agreement in respect of any Eurodollar Portion of its Loans or its participation in any Swing Line Advances or Competitive Bid Advances (other than taxes imposed on the overall net income of such Lender or any lending office of such Lender by any jurisdiction in which such Lender or any such lending office is located); (b) shall change, impose, modify, apply or deem applicable any reserve, special deposit or similar requirements in respect of any Eurodollar Portion of any Lender (excluding those for which such Lender is fully compensated pursuant to adjustments made in the definition of Adjusted Eurodollar Rate) or against assets of, deposits with or for the account of, or credit extended by, such Lender; or (c) shall impose on any Lender, the certificate of deposit market or the interbank eurocurrency deposit market any other condition affecting any Eurodollar Portion; and the result of any of the foregoing (a) through (c) is to (1) increase the cost to any Lender of funding or maintaining any Eurodollar Portion, any participation in any Swing Line Advance or any Competitive Bid Advance, as the case may be, or (2) to reduce the amount of any sum receivable by any Lender in respect of any Eurodollar Portion, Swing Line Advance or Competitive Bid Advance, as the case may be, by an amount reasonably deemed by such Lender to be material; then (i) such Lender shall promptly notify Administrative Agent and Borrower in writing of the happening of such event, (ii) Borrower shall thereafter upon demand pay to Administrative Agent for the account of such Lender such additional amount or amounts as will compensate such Lender for such additional cost or reduction, subject to the provisions of Sections 2.21 and 2.19, and (iii) Borrower may elect, by giving to Administrative Agent and Lender not less than three (3) Business Days' notice, to convert all (but not less than all) of any such Eurodollar Portion into a part of the Base Rate Portion. Section 2.18 Availability. If (a) any change in applicable laws, treaties, rules or regulations or in the interpretation or administration thereof in any jurisdiction whatsoever, domestic or foreign, shall make it unlawful or impracticable for any Lender to fund or maintain Eurodollar Portions, or shall materially restrict the authority of any Lender to purchase or take 29 34 offshore deposits of dollars ("Eurodollars"), or (b) any Lender determines that matching deposits appropriate to fund or maintain any Eurodollar Portion are not available to it, or (c) any Lender determines that the formula for calculating the Adjusted Eurodollar Rate does not fairly reflect the cost to such Lender of making or maintaining loans based on such rates, then, upon notice by such Lender to Administrative Agent and to Borrower, Borrower's right to elect Eurodollar Portions shall be suspended to the extent and for the duration of such illegality, impracticability, restriction or condition, and all Eurodollar Portions (or portions thereof) which are then outstanding or are then the subject of any Rate Election and which cannot lawfully or practicably be maintained or funded shall immediately become or remain part of the Base Rate Portions of such Lender's Loan, subject to the provisions of Sections 2.21 and 2.19. Borrower agrees to indemnify Administrative Agent and each Lender and hold Administrative Agent and each Lender harmless against all costs, expenses, claims, penalties, liabilities and damages which may result from any such change in law, treaty, rule, regulation, interpretation or administration, subject to the provisions of Section 2.21. Section 2.19 Funding Losses. In addition to its other obligations hereunder, subject to the provisions of Section 2.21, Borrower shall indemnify each Lender against, and reimburse each Lender on demand for, any loss or expense incurred or sustained by such Lender, determined as provided in this Section, as a result of (a) any payment or prepayment (whether authorized or required hereunder or otherwise) of all or a portion of a Eurodollar Portion of Borrower on a day other than the day on which the applicable Eurodollar Interest Period ends, (b) any payment or prepayment, whether required hereunder or otherwise, of a Loan of Borrower made after the delivery, but before the effective date, of a Rate Election, if such payment or prepayment prevents such Rate Election from becoming fully effective, (c) the failure of any Revolving Loan Advance or Swing Line Advance or Competitive Bid Advance to be made to Borrower or of any Rate Election of Borrower to become effective due to any condition precedent to a Revolving Loan Advance or Swing Line Advance or Competitive Bid Advance not being satisfied, due to the inability of Administrative Agent (acting reasonably and in accordance with Section 2.18) to determine a Eurodollar Rate for a Eurodollar Portion of Borrower or due to any other action or inaction of any Designated Entity, (d) any conversion (whether authorized or required hereunder or otherwise) of all or any portion of any Eurodollar Portion of Borrower into a Base Rate Portion or into a different Eurodollar Portion on a day other than the day on which the applicable Eurodollar Interest Period ends, (e) any payment or prepayment of all or a portion of a Swing Line Advance to Borrower on a day other than the maturity date for such Swing Line Advance or (f) any payment or prepayment of all or a portion of a Competitive Bid Advance on a day other than the maturity date for such Competitive Bid Advance. Upon the occurrence of an event as described in subsections (a) through (f) of this Section, the method to be used by each Lender to calculate the loss or expense incurred by reason of the liquidation or reemployment of deposits or other funds required by such Lender to fund or maintain Eurodollar Portions of Revolving Loan Advances, Swing Line Advances or Competitive Bid Advances, as the case may be, is as follows: 30 35 Funding Loss = P x (F-R) x D/360 P = principal amount of payment, prepayment, conversion, non-borrowing or non-effective Rate Election F = Eurodollar Rate or Swing Line Rate or Competitive Bid Rate, as the case may be (adjusted for Reserve Percentage), utilized in the calculations of the Eurodollar Rate or Swing Line Rate or Competitive Bid Rate, as the case may be, on the Eurodollar Portion or Swing Line Advance or Competitive Bid Advance which is being paid, prepaid, converted, not borrowed or not subject to effective Rate Election R = reinvestment rate (as hereinafter defined) D = number of days from the date of the payment, prepayment, conversion, non-borrowing or non-effectiveness until the day on which the Eurodollar Interest Period of the Eurodollar Portion ends or the Swing Line Advance or Competitive Bid Advance matures
Reinvestment rate as it is used herein will be equal to the Eurodollar Rate, adjusted for the Reserve Percentage quoted to such Lender, or the Swing Line Rate or Competitive Bid Rate that would be quoted by such Lender, as the case may be, effective for the date on which the payment, prepayment, conversion, non-borrowing or non-effectiveness occurs. For purposes of determining the reinvestment rate for purposes of this Section, the Eurodollar Rate will be the quote for either one (1) month, two (2) months, three (3) months, six (6) months, nine (9) months or twelve (12) months, the Competitive Bid Rate will be the quote for a number of days between seven (7) and 360, and the Swing Line Rate will be the quote for a number of days between one (1) and fourteen (14), whichever most closely approximates (but which may contain more or fewer days than) the number of days from the date of the payment, prepayment, conversion, non-borrowing or non-effectiveness until the last day of the relevant Eurodollar Interest Period or the scheduled maturity, as the case may be, of the Eurodollar Portion, Competitive Bid Advance or Swing Line Advance, as the case may be, in respect of which the payment, prepayment, conversion, non-borrowing or non-effectiveness occurs; provided that if such number of days in respect of a Eurodollar Rate is the midpoint between two such periods, such rate will be the lower of the two rates for such periods. Section 2.20 Taxes. All payments by Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp, or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by any Lender's net income or receipts (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then, subject to the provisions of Section 2.21, Borrower will: 31 36 (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; (b) promptly forward to Administrative Agent an official receipt or other documentation satisfactory to Administrative Agent evidencing such payment to such authority; and (c) pay to Administrative Agent for the account of the applicable Lender(s) such additional amount(s) as is necessary to ensure that the net amount actually received by each Lender will equal the full amount such Lender would have received had no such withholding or deduction been required and Borrower hereby acknowledges that it is not entitled to and will not seek recovery or restitution of any amount due to any of the Lenders or Agents and paid by Borrower pursuant to this clause (c) or pursuant to the next sentence. If any Taxes are directly asserted against any Agent or any Lender with respect to any payment received by such Agent or such Lender hereunder, such Agent or such Lender may pay such Taxes and, if paid in good faith, Borrower will promptly pay such additional amounts to Administrative Agent for the account of such Lender or Agent (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any taxes on such additional amount) shall equal the amount such person would have received had no such Taxes been asserted, subject to the provisions of Section 2.21. Borrower shall pay all stamp, transaction, registration and similar taxes (including financial institutions' duties, debit taxes or other taxes payable by return and taxes passed on to any Lender or Agent by a bank or financial institution (collectively "Stamp Taxes") and, if Borrower fails to pay any such charges or taxes after reasonable notice from any such Lender or Agent, fines and penalties) which may be payable or determined to be payable in relation to the execution, delivery, performance or enforcement of this Agreement or any Loan Document or any other transaction contemplated by any Loan Document to which Borrower is a party. Borrower hereby indemnifies each Lender and Agent against any liability resulting from delay or omission to pay such charges or taxes except to the extent the liability results from failure by the relevant Lender or Agent to pay any such tax after having been delivered funds to do so by Borrower or to the extent such liability is for fines and penalties resulting from such Lender's or Agent's failure to provide reasonable notice to Borrower as provided herein. If Borrower fails to pay any Taxes or Stamp Taxes when due to the appropriate taxing authority or fails to remit to Administrative Agent, for the account of the respective Lenders, the required receipts or other required documentary evidence, Borrower shall indemnify Lenders for any Taxes, interest or penalties that may become payable by any Lender as a result of any such failure, subject to the provisions of Section 2.21. For purposes of this Section, a distribution hereunder by Administrative Agent or any Lender to or for the account of any Lender or Agent shall be deemed a payment by the subject Borrower. Borrower waives any statutory right to recover from any Agent or any Lender any amount due to any such Agent or Lender and paid by Borrower under this Section. 32 37 On or prior to the first date on which interest or fees are payable hereunder for the account of any Lender, each Lender that is organized under the laws of a jurisdiction other than the United States shall execute and deliver to Administrative Agent, three (3) or more (as Administrative Agent may reasonably request) United States Internal Revenue Service Forms 1001 or 4224 or such other forms or documents (or successor forms or documents), appropriately completed, as may be applicable to establish the extent, if any, to which a payment to such Lender is exempt from withholding or deduction of Taxes. Each Lender which so delivers a Form 1001 or 4224 further undertakes to deliver to Administrative Agent three (3) additional copies of such form (or a successor form) on or before the date that 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 Administrative Agent, in each case certifying that such Lender is entitled to receive payments from Borrower under this Agreement and the Notes without deduction or withholding of any United States federal income taxes, unless an event (including without limitation any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms of the type previously delivered inapplicable or which would prevent such Lender from duly completing and delivering such form with respect to it and such Lender advises Administrative Agent that it is not capable of receiving such payments on the basis reflected in such previously delivered form without any deduction or withholding of United States federal income tax. Administrative Agent shall provide one (1) copy of each of such forms or documents so provided to Borrower and Documentation Agent. Section 2.21 Make-Whole Qualifications. Each Lender's claims for reimbursements, payments, indemnities or otherwise under Sections 2.16, 2.17, 2.18, 2.19 and 2.20 and Borrower's obligation with respect thereto, shall be limited and qualified by and subject to the following: (a) Borrower's obligation to pay, satisfy or recognize such claim shall be limited to costs or losses incurred within one (1) year immediately prior to any demand or request therefor upon Borrower; (b) each Lender's demand for reimbursement, payment or indemnity from Borrower must be limited to that which is being generally applied at the time by such Lender for comparable borrowers and credits subject to credit agreements similar to this Agreement, but without regard to provisions similar to this Section; (c) each Lender which asserts its rights with respect thereto or which is seeking or imposing such reimbursement, payment or indemnity shall provide evidence regarding the basis of such claim and the calculation and application thereof in reasonable detail and, in determining such amount, each Lender may use reasonable methods of attribution and averaging; (d) each Lender which is seeking payment or reimbursement pursuant to Section 2.20 shall, if so requested by Borrower, use reasonable efforts (subject to the overall policy considerations of such Lender) to designate a different lending office hereunder if to do so will avoid the need for, or reduce the amount of, any such 33 38 payment or reimbursement; provided that, Lender would, in its sole but reasonable determination, suffer no material economic, legal or regulatory disadvantage or burden; (e) Borrower may, in its sole discretion, elect, unless and until the applicable Lender notifies Borrower that the circumstances giving rise thereto no longer apply to such Lender, that, to the extent that a Lender's claims for such reimbursements, payments or indemnities would be reduced thereby, that subject to Section 2.19, (1) all Loans to Borrower which would otherwise be made by such Lender as Eurodollar Portions shall be made instead as Base Rate Portions (all of which interest and principal shall be payable as provided herein with respect to the related Eurodollar Portions of the Lenders), and (2) after each Eurodollar Portion has been repaid, all payments of principal which would otherwise would be applied to repay such Eurodollar Portion shall be applied to repay Base Rate Portions instead; and (f) Borrower may designate a replacement Lender (which may be one (1) or more of the then existing Lenders hereunder and which shall be reasonably satisfactory to Administrative Agent) to purchase the Notes, in each case without recourse, and assume the Commitments and all other obligations hereunder of any Lender that has suspended the availability of Eurodollar Portions pursuant to Section 2.18 or that has demanded reimbursement, payment or indemnity under Sections 2.16, 2.17, 2.18, 2.19 or 2.20, and such Lender shall be obligated to sell, transfer and deliver all of its Notes to such replacement Lender for the outstanding principal amount of such Notes, plus in each case, accrued interest thereon and such Lender's portion of accrued but unpaid fees through the date of such purchase, and permit such replacement lender to assume its Commitments. Borrower shall be obligated to pay all additional amounts due to the Lender being replaced pursuant to Sections 2.16, 2.17, 2.18, 2.19 and 2.20 through the date of such purchase and assumption; provided, that if the replacement Lender fails to purchase all such rights and interests and assume all such Commitments on the specified date in accordance herewith, Borrower shall continue to be obligated to pay such amounts to such Lender which was to have been replaced and provided further that Borrower shall pay any Taxes or Stamp Taxes, if any, as a result of such transfer. Section 2.22 Competitive Bid Advances. (a) In addition to borrowings pursuant to Section 2.1(a) or Section 2.4, Borrower may request each Lender severally to submit offers (herein called a "Competitive Bid Offer") to make advances to Borrower on any Business Day during the Loan Commitment Period as provided in this Section (herein called "Competitive Bid Advances"); provided, however, that each Lender may in its sole discretion, but shall have no obligation whatsoever to submit such offers, and Borrower may, but shall have no obligation to, accept any such offers. 34 39 (b) Procedure for Competitive Bid Advances. (i) Borrower may request Competitive Bid Advances by delivering a request for a Competitive Bid Advance to each Lender (which has indicated to Borrower its interest in making a Competitive Bid Advance) and Administrative Agent not later than 9:00 a.m., Dallas, Texas time, one (1) Business Day prior to the proposed borrowing date. Each request for a Competitive Bid Advance shall be in substantially the form of Exhibit N hereto (herein called a "Request for Competitive Bid Offer") and may solicit bids for Competitive Bid Advances having not more than three (3) alternative maturity dates and for Competitive Bid Advances in any respective principal amount equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof for each maturity date requested. The maturity date for each Competitive Bid Advance shall be not less than fifteen (15) days nor more than 360 days after the borrowing date therefor (and in any event not after the Maturity Date). (ii) Upon receipt of a Request for Competitive Bid Offer, any Lender that elects, in its sole discretion, to do so, shall irrevocably offer to make one (1) or more Competitive Bid Advances at a fixed rate of interest determined by such Lender in its sole discretion for each such Competitive Bid Advance. Any such irrevocable offer shall be made by delivering a Competitive Bid Offer to Administrative Agent and to Borrower, before 9:00 a.m., Dallas, Texas time (or, in the case of a Competitive Bid Offer by Administrative Agent, before 8:45 a.m., Dallas, Texas time), on the proposed borrowing date, setting forth the maximum amount of Competitive Bid Advances for each maturity date, and the aggregate maximum amount for all maturity dates, which such Lender would be willing to make (which amounts may exceed such Lender's Percentage Share of the Commitments) and the fixed rate of interest at which such Lender is willing to make each such Competitive Bid Advance, which fixed rate of interest may or may not be, in such Lender's discretion, different for each Competitive Bid Advance (respectively herein a "Competitive Bid Rate"). Borrower shall pay to Administrative Agent a fee of $500 on each day that Borrower accepts a Competitive Bid Offer. (iii) The Competitive Bid Offer delivered by each Lender in response to a Request for Competitive Bid Offer shall set forth an amount proposed to be loaned by such Lender for each maturity date requested by Borrower that is equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof. Any Competitive Bid Offer by any Lender that: (A) does not substantially conform to the form of Exhibit O hereto, (B) contains qualifying, conditional or similar language, (C) proposes terms other than or in addition to those set forth in the applicable Request for Competitive Bid Offer or (D) is received by Borrower after the applicable time specified in 35 40 this subsection, shall be rejected by Borrower and Administrative Agent (and Administrative Agent shall notify the relevant Lender of such rejection for one or more of the matters described in the foregoing (A) through (D) by telephone and telecopy as soon as practicable thereafter). (iv) Borrower shall before 10:00 a.m., Dallas, Texas time, on the proposed borrowing date either, in its absolute discretion: (A) withdraw such Request for Competitive Bid Offer by giving telephonic notice to that effect; (B) accept one (1) or more of the Competitive Bid Offers by giving telephonic notice to Administrative Agent (immediately confirmed by delivery to Administrative Agent by facsimile transmission of a Bid Acceptance) of the amount of Competitive Bid Advance(s) for each relevant maturity date to be made by the relevant Lender(s) (which amount for each such maturity date shall be equal to or less than the maximum amount for such maturity date specified in the Competitive Bid Offer of such Lender(s), and for all maturity dates included in such Competitive Bid Offer shall be equal to or less than the aggregate maximum amount specified in such Request for Competitive Bid Offer for all such maturity dates) and reject any Competitive Bid Offers not accepted by Borrower by giving telephonic notice to Administrative Agent of such rejection; provided, however, that (1) Borrower may not accept Competitive Bid Offers for any maturity date in an aggregate principal amount in excess of the maximum principal amount requested in the related Request for Competitive Bid Offer (and Competitive Bid Advances allocated to a Lender on a borrowing date for each relevant maturity date shall be in a principal amount equal to $10,000,000 or an integral multiple of $1,000,000 in excess thereof); and (2) Administrative Agent shall notify the Lender that submitted a Competitive Bid Offer for such Business Day of Borrower's decision by telecopying to each such Lender a copy of the Bid Acceptance by no later than 12:00 noon, Dallas, Texas time, on the borrowing date specified in the Request for Competitive Bid Offer; or (C) Borrower may accept or reject any Competitive Bid Offer(s) in whole or in part; provided that after giving effect to any such accepted Competitive Bid Offer(s), the sum of (i) the aggregate principal amount of the Revolving Loans and Swing Line Advances outstanding at such time, and (ii) the aggregate principal amount of Competitive Bid Advances outstanding at such time, does not exceed the Facility Amount. 36 41 (v) If Borrower notifies Administrative Agent that a Request for Competitive Bid Offer is withdrawn pursuant to clause (iv) above, the Competitive Bid Advance requested thereby shall not be made. (vi) Each Lender which is to make a Competitive Bid Advance shall, before 1:00 p.m., Dallas, Texas time, on the borrowing date specified in the Request for Competitive Bid Offer applicable thereto, make available to Administrative Agent in immediately available funds the amount of each Competitive Bid Advance to be made by such Lender. Administrative Agent shall deposit such funds to an account designated by Borrower by no later than 1:15 p.m., Dallas, Texas time, on such date. (vii) Borrower shall repay to Administrative Agent, for the account of each Lender which has made a Competitive Bid Advance, on the maturity date of each Competitive Bid Advance (such maturity date being that specified by Borrower for repayment of such Competitive Bid Advance in the related Request for Competitive Bid Offer) the then unpaid principal amount of such Competitive Bid Advance. Borrower shall not have the right to prepay any principal amount of any Competitive Bid Advance. If any Lender makes a Competitive Bid Advance on a day on which Borrower is to repay all or any part of an outstanding Competitive Bid Advance from such Lender, if requested by Borrower, such Lender shall apply the proceeds of its new Competitive Bid Advance to make such repayment and, in such instance, only an amount equal to the difference (if any) between the amount being borrowed and the amount being repaid shall be made available by such Lender to Administrative Agent as provided in Section 2.22(b)(vi), or remitted by Borrower to Administrative Agent as provided in this Section 2.22(b)(vii), as the case may be. (viii) Borrower shall pay interest on the unpaid principal amount of each Competitive Bid Advance from the borrowing date to the stated maturity date thereof, at the rate of interest determined pursuant to clause (b) (ii) above (calculated on the basis of a 360 day year for actual days elapsed including the first but excluding the last), but not in excess of the Maximum Lawful Rate, payable on the maturity date with respect to such Competitive Bid Advance and, if such maturity date is more than 90 days after the date of making such Competitive Bid Advance, on such ninetieth day and each ninetieth day occurring after such ninetieth day until the maturity date. If all or a portion of the principal of or interest on any Competitive Bid Advance shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), without limiting any rights of any Lender under this Agreement, (i) such overdue principal amount shall bear interest from the date on which such payment was due (other than on the scheduled maturity date with respect thereto) at the Default Rate, but not in excess of the Maximum Lawful Rate, until paid in full (as well as after as before 37 42 judgment) and (ii) such overdue interest shall bear interest from the date on which payment was due at the Default Rate, but not in excess of the Maximum Lawful Rate, until paid in full (as well as after as before judgment). (c) The Competitive Bid Advances made by each Lender shall be evidenced by a single promissory note of Borrower payable to the order of such Lender substantially in the form of Exhibit A-3 attached hereto, with appropriate insertions (herein called a "Competitive Bid Note"). The date, amount, Competitive Bid Rate and maturity date of each Competitive Bid Advance made by a Lender to Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books. (d) The Competitive Bid Advances will be used by Borrower to provide working capital and for the general business purposes of Borrower and its Subsidiaries. No Competitive Bid Advances shall be used for the purpose of purchasing or carrying any Margin Stock in violation of the Margin Regulations. (e) The obligation of Lenders to make each Competitive Bid Advance after timely acceptance by Borrower is further subject to the conditions contained in Article 3. (f) Borrower shall not be required to accept Competitive Bid Offers on the basis of the lowest Competitive Bid Rate offered, but may in its sole discretion accept any Competitive Bid Offer regardless of the Competitive Bid Rate(s) offered. ARTICLE 3 CONDITIONS PRECEDENT TO LENDING Section 3.1 Initial Conditions Precedent. No Lender has any obligation to make its first Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance unless: (a) Administrative Agent shall have received all of the following with copies for each Lender, at Administrative Agent's office in Midland, Texas: (1) This Agreement, the Notes, those Security Instruments and Guaranties listed on Schedule 5 hereto, any other documents required in connection herewith, each duly executed and delivered and in form, substance and date satisfactory to Managing Agents. 38 43 (2) The following certificates: (i) an "Omnibus Certificate" of the Secretary or an Assistant Secretary and of a Designated Officer, which shall contain the names and signatures of the officers of Borrower authorized to execute Loan Documents and which shall certify to the truth, correctness and completeness of the following exhibits attached thereto: (A) a copy of resolutions duly adopted by the Board of Directors of Borrower and in full force and effect at the time this Agreement is entered into, authorizing the execution of this Agreement and the other Loan Documents delivered or to be delivered in connection herewith and the consummation of the transactions contemplated herein and therein, (B) a copy of the charter documents of Borrower and all amendments thereto, certified by the appropriate official of Borrower's jurisdiction of organization, and (C) a copy of the bylaws or similar governing documents of Borrower (provided that, to the extent Borrower has previously provided Administrative Agent certified copies of the documents described in (B) and (C) above, such Omnibus Certificate may omit such documents, but shall include a statement that such documents have not been modified in any respect since the date last so provided to Administrative Agent, except as may be specifically noted in such Omnibus Certificate with appropriate attachments); and (ii) a "Compliance Certificate" of a Designated Officer of Borrower, of even date with such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance, in which such officer certifies to the satisfaction of the conditions set out in Section 3.2(a) and (b) and that all conditions hereunder have been satisfied. (3) A certificate (or certificates) of the due formation, valid existence and good standing of Borrower in its jurisdiction of organization, issued by the appropriate authorities of such jurisdiction. (4) The favorable opinions of the counsel for Borrower and the Restricted Subsidiaries, given upon their express instructions substantially in the form set forth as Exhibit H attached hereto. (5) Documents similar to those specified in Section 3.1(a)(2)(i) and 3.1(a)(3) with respect to each Restricted Subsidiary which is or will be party to a Security Instrument on the date hereof. (6) A certificate of a Designated Officer of Borrower as to insurance concerning the material assets of Designated Entities. Lenders agree that Designated 39 44 Entities' insurance coverage disclosed on Schedule 4 is acceptable at the date hereof. (b) Except as disclosed to the Lenders in the Disclosure Schedule or otherwise in writing prior to the execution hereof and not objected to by Required Lenders, there shall be no pending or threatened litigation, action or proceeding against Borrower or any of its Subsidiaries which, if adversely determined, could reasonably be expected to have a Material Adverse Effect. (c) No event or condition shall have occurred (i) with respect to Borrower and its Restricted Subsidiaries (other than Chauvco and its Subsidiaries) since August 8, 2022 and (ii) with respect to Chauvco and its Subsidiaries since September 30, 1997, which is reasonably expected to result in a Material Adverse Effect. (d) After giving effect to such Revolving Loan Advances, Competitive Bid Advances and Swing Line Advances, Borrower and Lenders shall be in compliance with the Margin Regulations. (e) The acquisition by Borrower or any of its Affiliates of Chauvco (the "Acquisition") shall have been consummated as contemplated by and pursuant to that certain Combination Agreement, dated as of September 3, 1997, as amended (the "Acquisition Agreement"), between Borrower and Chauvco, and Administrative Agent shall have received (i) satisfactory evidence of the consummation of such Acquisition and (ii) a certificate from a Designated Officer of Borrower certifying that the Acquisition has been consummated. (f) A certificate of a Designated Officer of Borrower certifying that (i) all representations and warranties made by any Designated Entity in this Agreement or any other Loan Document are true and correct as of the Effective Date and (ii) that all conditions precedent to the initial Advance contained in this Agreement or any other Loan Document have been satisfied as of the Effective Date. (g) All requisite Governmental Authorities and third parties shall have approved or consented to the Acquisition and all related transactions, including, without limitation, the issuance, closing and funding of this Agreement and the facilities thereunder, to the extent required. All applicable appeal periods shall have expired and there shall be, in the judgment of the Managing Agents, in their sole discretion, no governmental or judicial action, actual or threatened, restraining, preventing or imposing burdensome conditions on the Acquisition and all related transactions, including, without limitation, the issuance, closing and funding of this Agreement and the facilities thereunder. (h) Managing Agents shall have received copies of all financial statements, reports, notices and proxy statements sent by Borrower to its stockholders and all SEC filings concerning the Acquisition. 40 45 (i) No litigation or administrative proceeding or other legal or regulatory developments prohibiting or enjoining the consummation of the Acquisition shall exist. (j) Exclusive of the Acquisition, no "Event of Default" (as defined in the Existing Credit Agreement shall have occurred and be continuing. (k) Administrative Agent shall have received copies of (i) the executed documentation for the Primary Credit Facility and (ii) the executed documentation for the Canadian Credit Facility. Section 3.2 Additional Conditions Precedent. No Lender has any obligation to make any Revolving Loan Advance, Competitive Bid Advance or Swing Line Advance (including its initial Advance) unless the following conditions precedent have been satisfied: (a) All representations and warranties made by any Designated Entity in any Loan Document shall be true on and as of the date of such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance as if such representations and warranties had been made as of the date of such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date). (b) In the case of the first Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance, no Event of Default, and in the case of any other Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance, no Default shall exist at the date of such Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance or will occur as a result of the making of the requested Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance. ARTICLE 4 REPRESENTATIONS AND WARRANTIES Section 4.1 Borrower's Representations and Warranties. To confirm each Lender's understanding concerning Borrower and its businesses, properties and obligations, and to induce Managing Agents, Co-Agents and each Lender to enter into this Agreement and to make the Loans to Borrower, except as to matters disclosed herein or in the Disclosure Schedule, Borrower represents and warrants to Managing Agents, Co-Agents and each Lender that: (a) No Default. No Designated Entity is in default in the performance of any of the covenants and agreements contained herein or under any other Loan Document. No event or circumstance has occurred and is continuing which constitutes a Default. 41 46 (b) Organization, Existence and Good Standing. Each Designated Entity is duly organized or incorporated, validly existing and in good standing under the laws of its jurisdiction of organization or incorporation, having all corporate or partnership powers required to enter into and carry out the transactions contemplated hereby. Each Designated Entity is duly qualified, in good standing, and authorized to do business in all other jurisdictions wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such qualification necessary, except for any lack of qualification, good standing or authorization that could not reasonably be expected to have a Material Adverse Effect. Each Designated Entity has taken all actions customarily taken in order to enter, for the purpose of conducting business or owning property, each jurisdiction outside the United States wherein the character of the properties owned or held by it or the nature of the business transacted by it makes such actions desirable, except for any failure or other matter that could not reasonably be expected to have a Material Adverse Effect. (c) Authorization. Each Designated Entity has duly taken all corporate or partnership action necessary to authorize the execution and delivery by it of the Loan Documents to which it is a party and to authorize the consummation of the transactions contemplated thereby and the performance of its obligations thereunder. Borrower is duly authorized to borrow funds hereunder. (d) No Conflicts or Consents. The execution and delivery by each Designated Entity of the Loan Documents to which it is a party, the performance by each Designated Entity of its obligations under such Loan Documents, and the consummation of the transactions contemplated by the various Loan Documents, including, without limitation, the consummation of the Acquisition, do not and will not (1) conflict with any provision of the articles or certificate of incorporation, bylaws, charter, partnership agreement or certificate or other governing document of such Designated Entity, or (2) except as to matters that could not reasonably be expected to have a Material Adverse Effect, result in the acceleration of any Debt owed by such Designated Entity, or conflict with any law, statute, rule, regulation, or material agreement, judgment, license, order or permit applicable to or binding upon such Designated Entity, or require the consent, approval, authorization or order of, or notice to or filing with, any Governmental Authority or third party, or result in or require the creation of any Lien upon any material assets or properties of such Designated Entity, except (i) as permitted in the Loan Documents and (ii) for filings and recordings of the Security Instruments. (e) Enforceable Obligations. This Agreement is, and the other Loan Documents when duly executed and delivered will be, legal, valid and binding obligations of each Designated Entity which is a party hereto or thereto, enforceable in accordance with their terms except as such enforcement may be limited by bankruptcy, insolvency or similar laws of general application relating to the enforcement of creditors' rights generally and by general principles of equity. 42 47 (f) Financial Statements. (i) The Updated Financial Statements fairly present Borrower's, Mesa's and P&P; Petroleum's and each of their Consolidated subsidiaries' financial position at the respective dates thereof and the results of Borrower's, Mesa's and P&P; Petroleum's and each of their Consolidated subsidiaries' operations and cash flows for the respective periods thereof. From the date of the audited Updated Financial Statements to the Effective Date no change has occurred in Borrower's, Mesa's or P&P; Petroleum's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect, except as reflected in the Disclosure Schedule. From September 30, 2021 to the Effective Date, no change has occurred in Chauvco's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect, except as reflected in the Disclosure Schedule. All Updated Financial Statements were prepared in accordance with GAAP as in effect on the date thereof. (ii) The Unaudited Pro Forma Financial Statements of Borrower for the periods ending December 31, 2021 and September 30, 2021 contained in the Joint Management Information Circular and Proxy Statement, dated November 17, 1997 (the "Proxy"), and the Unaudited Pro Forma Financial Statements of Borrower for the period ending September 30, 1997, fairly present Borrower's pro forma financial position at the respective dates thereof and the results of Borrower's pro forma operations and cash flows for the respective periods thereof. From the date of such financial statements to the Effective Date no change has occurred in Borrower's Consolidated financial condition which could reasonably be expected to result in a Material Adverse Effect on Borrower's Pro Forma Consolidated Financial Condition, except as reflected in the Disclosure Schedule. All such financial statements were prepared in accordance with GAAP as in effect on the date thereof. (g) Other Obligations. Except as disclosed in the Disclosure Schedule, as of the Effective Date, neither Borrower nor any of its Consolidated Subsidiaries has any outstanding Debt which is, in the aggregate, material to Borrower and its Consolidated Subsidiaries and not shown in the Updated Financial Statements. (h) Full Disclosure. No certificate, statement or other information delivered herewith or heretofore by any Designated Officer of any Designated Entity to either of Managing Agents, Co-Agents or any Lender in connection with the negotiation of this Agreement or in connection with any transaction contemplated hereby contains any untrue statement of a fact or omits to state any fact known to Borrower, P&P; Petroleum, Mesa or any Designated Entity (other than industry-wide risks normally associated with the types of businesses conducted by Borrower, P&P; Petroleum, Mesa or any Designated Entity) necessary to make the statements contained herein or therein not misleading as of the date made or deemed made, except to the extent that any untrue statement or omission could not reasonably be expected to have a Material Adverse Effect. 43 48 (i) Litigation. Except as disclosed in the Updated Financial Statements or in the Disclosure Schedule: (1) there are no actions, suits or legal, equitable, arbitrative or administrative proceedings pending, or, to the knowledge of Borrower, threatened, against any Designated Entity before any Governmental Authority that could reasonably be expected to have a Material Adverse Effect, and (2) there are no outstanding judgments, injunctions, writs, rulings or orders by any such Governmental Authority against Borrower, P&P; Petroleum, Mesa or any of their respective Consolidated Subsidiaries which could reasonably be expected to have a Material Adverse Effect. (j) Environmental Matters. The liabilities and costs of Borrower and its Consolidated Subsidiaries related to compliance with applicable Environmental Laws (as in effect on the date on which this representation is made or deemed made) could not reasonably be expected to have a Material Adverse Effect. (k) Title to Properties. Each Designated Entity has good and defensible title to all of its material properties and assets, except any failure, defect or other matter that could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. (l) Investment Company Act. Neither Borrower nor any of its Subsidiaries is an "investment company" or a "company controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. (m) Public Utility Holding Company Act. Neither Borrower nor any of its Subsidiaries is a "holding company", or a "subsidiary company" of a "holding company", or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company", or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. (n) Principal Business Offices. As of the Effective Date, each Designated Entity's principal place of business and chief executive office is located at the place described in the Disclosure Schedule. (o) Solvency. Each Designated Entity is solvent and will continue to be solvent after the making and guarantying of the Loans. (p) Organization. As of the Effective Date, the organization chart of Borrower and its Subsidiaries with material assets set forth on Exhibit I is true and correct in all material respects. Except for the Exchangeable Shares, as of the Effective Date, Borrower or a Restricted Subsidiary owns all of the issued and outstanding capital stock of each Restricted Subsidiary. As of the Effective Date, no Restricted Subsidiary has issued any securities convertible into shares of its stock or any options (except as set forth in the Disclosure Schedule), warrants or other rights to acquire such shares or securities convertible into such shares and the outstanding capital stock and securities of each Restricted Subsidiary is owned by Borrower or 44 49 another Restricted Subsidiary free and clear of all Liens, warrants, options or rights of others of any kind whatsoever, except for Permitted Liens. (q) Use of Proceeds; Margin Stock. Borrower and its Subsidiaries shall use (i) the initial Revolving Loan Advance to discharge all outstanding obligations under the Existing Credit Agreement, and (ii) all Revolving Loan Advances, Competitive Bid Advances and Swing Line Advances for its and their respective general corporate purposes. In no event shall the funds from any Revolving Loan Advance, Swing Line Advance or Competitive Bid Advance be used directly or indirectly by any Persons for personal, family, household or agricultural purposes or for the purpose, whether immediate, incidental or ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin securities" (as such terms are defined in the Margin Regulations) in violation of the Margin Regulations, or for the purpose of reducing or retiring any indebtedness which was originally incurred to purchase or carry "margin stock" or "margin securities" in violation of the Margin Regulations, or to extend credit to others directly or indirectly for the purpose of purchasing or carrying any such margin stock or margin securities in violation of the Margin Regulations. Borrower is not engaged principally, or as one of Borrower's important activities, in the business of extending credit to others for the purpose of purchasing or carrying such margin stock or margin securities. Neither any Designated Entity nor any Person acting on behalf of any Designated Entity has taken or will take any action which might cause this Agreement, the Notes, or any Guaranty, any Loan Document or any Loan to violate the Margin Regulations or to violate Section 7 of the Securities Exchange Act of 1934, or any rule or regulation thereunder, in each case as now or hereafter in effect. (r) Liens Under the Security Instruments. Upon the execution and delivery of the Security Instruments in accordance herewith, and where appropriate the filing and recordation thereof with the appropriate filing or recording officers in each of the necessary jurisdictions, the Liens granted and to be granted by any Designated Entity to Lenders or the Trustee (as defined in any of the Security Instruments) on behalf of Lenders in such Designated Entity's assets pursuant to the Security Instruments will be validly created, perfected and first priority Liens, subject only to Permitted Liens. Section 4.2 Representation by Lenders. Each Lender hereby represents that it will acquire its Notes for its own account in the ordinary course of its commercial lending business; however, such Lender may sell or otherwise transfer its Notes, any participation interest or other interest in its Notes, or any of its other rights and obligations under the Loan Documents as permitted by Section 8.8. 45 50 ARTICLE 5 COVENANTS OF BORROWER Section 5.1 Affirmative Covenants. To conform with the terms and conditions under which each Lender is willing to have credit outstanding to Borrower, and to induce Managing Agents, Co-Agents and each Lender to enter into this Agreement and make the Loans to Borrower, unless Required Lenders shall have previously agreed otherwise in writing, Borrower severally for itself and its Subsidiaries, covenants and agrees that: (a) Payment and Performance. Borrower will pay all amounts due from it under the Loan Documents in accordance with the terms thereof and will observe, perform and comply with every covenant, term and condition expressed in the Loan Documents, and will cause each Designated Entity which is a Subsidiary of Borrower to perform and comply with every covenant, term and condition expressed in the Loan Documents and applicable to such Designated Entity. (b) Books, Financial Statements and Reports. Borrower will at all times maintain full and materially accurate books of account and records. Borrower will maintain and will cause its Subsidiaries to maintain a standard system of accounting and will cause the following statements and reports to be delivered to Managing Agents and each Lender at Borrower's expense: (1) As soon as available, and in any event within 120 days after the end of each Fiscal Year, complete audited Consolidated financial statements of Borrower and its Subsidiaries and unaudited consolidating balance sheets and statements of operations of Borrower and its Subsidiaries, prepared in reasonable detail in accordance with GAAP; such audited statements to be accompanied by an opinion, by KPMG Peat Marwick, or such other independent certified public accountants of nationally recognized standing selected by Borrower, stating that such Consolidated financial statements have been so prepared. Borrower will, together with each set of such financial statements delivered pursuant to this Section, furnish a certificate in the form of Exhibit J signed by a Designated Officer of Borrower stating that, to the best of his knowledge, (i) such financial statements are accurate and complete, and (ii) no Default or Event of Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default or Event of Default. Such certificate shall contain calculations showing compliance (or noncompliance) at the end of such Fiscal Quarter with the requirements of Sections 5.3(a) and (b). (2) As soon as available, and in any event within 60 days after the end of the first three Fiscal Quarters in each Fiscal Year, unaudited Consolidated financial statements of Borrower and its Subsidiaries and unaudited 46 51 consolidating balance sheet and statements of operations of Borrower and its Subsidiaries as of the end of such Fiscal Quarter, all in reasonable detail and prepared in accordance with GAAP, subject to changes resulting from year-end adjustments. Borrower will, together with each set of such financial statements delivered pursuant to this Section, furnish a certificate in the form of Exhibit J signed by a Designated Officer of Borrower stating that, to the best of his knowledge, (i) such financial statements are accurate and complete, and (ii) no Default or Event of Default exists at the end of such Fiscal Quarter or at the time of such certificate or specifying the nature and period of existence of any such Default or Event of Default. Such certificate shall contain calculations showing compliance (or noncompliance) at the end of such Fiscal Quarter with the requirements of Sections 5.3(a) and (b). (3) Promptly after transmittal or filing, copies of all financial statements, reports, notices and proxy statements sent by Borrower to its stockholders and all registration statements, periodic reports and other statements and schedules filed by Borrower or any of its Subsidiaries with any securities exchange, the Securities and Exchange Commission or any similar Governmental Authority. (c) Other Information and Inspections. Borrower will furnish to Managing Agents and each Lender any information which Administrative Agent, on behalf of any Lender, may from time to time reasonably request in writing concerning any covenant, provision or condition of the Loan Documents or any matter in connection with Borrower's and its Subsidiaries' businesses and operations. Borrower will permit and will cause each of its Subsidiaries to permit representatives of Agents and Lenders (including independent accountants, agents and attorneys), at the expense and risk of the applicable Lender, to visit and inspect, during normal business hours and upon reasonable notice any of Borrower's or such Subsidiaries' property, including its books of account, other books and records, and any facilities or other business assets, and to make extra copies therefrom and photocopies and photographs thereof, and to write down and record any information such representatives obtain, and Borrower shall permit and will cause each of its Subsidiaries to permit Agents and the Lenders or their representatives, to investigate and verify the accuracy of the information furnished to Administrative Agent or any Lender in connection with the Loan Documents and to discuss all such matters with its officers, employees and representatives; provided, however, that any such visit, inspection, investigation or verification or discussion with respect to Borrower taking place at a time when Borrower has been notified in writing by Administrative Agent of the existence of a Default or an Event of Default applicable to Borrower which has occurred and is continuing shall be at the cost and expense of Borrower, and that neither Managing Agents, Co-Agents nor Lenders shall have any obligation to pay any costs or expenses of Borrower or any other Designated Entity or any of 47 52 their officers, employees or representatives in respect thereof irrespective of the existence of any Default or Event of Default. (d) Notice of Material Events. Borrower will promptly upon its awareness thereof notify Administrative Agent and each Lender (1) of the occurrence of any Default or any other event, which has or may reasonably be expected to have, a Material Adverse Effect, (2) of the acceleration of the maturity of any Debt owed by any Designated Entity or any default by any Designated Entity under any instrument evidencing or governing Debt, if such acceleration or default has a Material Adverse Effect, (3) of the occurrence of any Termination Event which may reasonably be expected to have a Material Adverse Effect, and (4) of the filing of any litigation or proceeding in which any Designated Entity is a party or of any material developments in existing litigation in which any Designated Entity is a party in which an adverse decision may reasonably be expected to have a Material Adverse Effect. (e) Maintenance of Existence and Qualifications. Borrower will, and will cause each Restricted Subsidiary to, maintain and preserve its existence as a corporation or partnership, as the case may be. Borrower will, and will cause each Restricted Subsidiary to, maintain and preserve its good standing and its rights and franchises in full force and effect and qualify to do business as a foreign corporation in all states or jurisdictions where required by applicable law, except for any failure to maintain, preserve and qualify that could not reasonably be expected to have a Material Adverse Effect. Nothing in this Section shall prohibit (i) a merger or consolidation permitted by Section 5.2(c) or (ii) a termination of such existence, good standing, rights or franchises of any Restricted Subsidiary if Borrower determines in good faith that such termination is in the best interest of Borrower and could not reasonably be expected to have a Material Adverse Effect. (f) Payment of Taxes and Trade Debt. Borrower will, and will cause each of its Subsidiaries to, except for any failure or other matter that could not reasonably be expected to have a Material Adverse Effect, (1) timely file all required tax returns, (2) timely pay all taxes, assessments, and other governmental charges or levies imposed upon it or upon its income, profits or property, and (3) timely pay all trade debt. Borrower and its respective Subsidiaries may, however, delay paying or discharging any such taxes, assessments, charges, debts or levies so long as the validity thereof is contested in good faith by appropriate proceedings and adequate reserves therefor in accordance with GAAP have been set aside and reflected among the books and records of Borrower and its Subsidiaries. (g) Insurance. Borrower will, and will cause each of its Subsidiaries to, at all times maintain insurance in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in similar businesses and 48 53 owning similar properties in the same general area in which Borrower and its Subsidiaries conduct business, which insurance (other than prudent self-insurance programs) shall be by financially sound and reputable insurers. (h) Payment of Expenses. Whether or not the transactions contemplated by this Agreement are consummated, Borrower will promptly pay all reasonable costs and expenses (including reasonable attorneys' fees) incurred by or on behalf of (1) the Documentation Agents in connection with the negotiation, preparation, execution and delivery of the Loan Documents and any amendment, modification or restatement thereof, and any and all consents, waivers or other documents or instruments, including commitment letters, term sheets and any memorandum relating thereto (provided that Borrower shall be obligated to pay only the attorneys' fees of a common counsel for the Documentation Agents, Mayer, Brown & Platt), (2) Agents in connection with due diligence, syndication, travel and advertising related to this Agreement and the transactions contemplated thereby, and (3) Administrative Agent or any Lender in connection with enforcement of the Loan Documents or the defense of Administrative Agent's or any Lender's exercise of its rights thereunder. The selection of Managing Agents' counsel and consultants in connection with the matters described in the preceding sentence shall be subject to the approval of Borrower, which approval shall not be unreasonably withheld. Attorneys' fees reimbursed by Borrower for any amendment, modification or restatement of any Loan Document shall be estimated and approved by Borrower prior to incurrence, such approval not to be unreasonably withheld. Attorneys' fees reimbursed by Borrower in connection with the enforcement of the Loan Documents or the defense of Administrative Agent's or any Lenders' exercise of its rights hereunder shall be for a single law firm per country (unless conflicts (including conflicts between Managing Agents and the other Lenders as determined in the reasonable discretion of the Required Lenders) otherwise prohibit the engagement of a single law firm). (i) Compliance with Agreements and Law. Borrower will, and will cause each of its Subsidiaries to (1) perf