Common use of Designation and Conversion of Restricted and Unrestricted Subsidiaries Clause in Contracts

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance with Section 9.23(b), any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) immediately prior, and after giving effect, to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)). Except as provided in this Section 9.23(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (ii) the Borrower is in compliance with the requirements of Section 8.14 and Section 8.16. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) constitute the incurrence at the time of such designation of any Investment, Debt or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance Unless designated in writing to the Administrative Agent by the Borrower in accordance with Section 9.23(b)clause (b) below, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries after the date hereof (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. On the date hereof, all Subsidiaries of the Borrower are Restricted Subsidiaries. (b) The Borrower may designate designate, by prior or concurrent written notice thereof to the Administrative Agent, any Restricted Subsidiary, Subsidiary (including a newly formed or newly acquired Subsidiary, ) as an Unrestricted Subsidiary if Subsidiary, provided that (i) immediately priorboth before, and immediately after giving effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Pro Forma Net Leverage Ratio shall not exceed 4.00 to 1.00 and the Borrower shall be in compliance, on a pro forma basis, with the financial covenant set forth in Section 9.01(b) (determined on a pro forma basis using Current Assets and Current Liabilities as of the last day of the Borrower’s most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 8.01(a) or (b)) and (C) the representations and warranties of each Loan Party the Credit Parties and the Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), ; (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (Cii) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to for purposes of any Debt, liabilities indenture or other obligations under any Permitted Debt, agreement governing Debt of the Senior Notes Credit Parties or the Preferred Stock a Restricted Subsidiary; (or any Permitted Refinancing Debt thereofiii) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment such designation shall be deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary on the date of such designation and such designation shall be permitted only to the extent such Investment is permitted under Section 9.05 on the date of such designation; (iv) such designation shall be deemed to be a Disposition pursuant to which the provisions of Section 2.07(f) shall apply; (v) after giving effect to such designation, the Borrower is in compliance with the requirements of Section 9.20; and (vi) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the satisfaction of the conditions and matters set forth in clauses (i)-(v) above (and its subsidiariesin the case of clause (i)(B) above, setting forth reasonably detailed calculations demonstrating that the Pro Forma Net Leverage Ratio will not exceed 4.00 to 1.00 and the Borrower will be in compliance, on a pro forma basis, with the financial covenant set forth in Section 9.01(b) (determined on a pro forma basis using Current Assets and Current Liabilities as of the last day of the Borrower’s most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 8.01(a) or (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii))). Except as provided in this Section 9.23(b)1.06, no Subsidiary may be designated (and no Restricted Subsidiary may be redesignated redesignated) as an Unrestricted Subsidiary. . (c) If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.169.20, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement (and, for the avoidance of doubt, any Investment, Debt and any Debt Liens of such Subsidiary existing at such time shall be deemed to be incurred by a Restricted such Subsidiary of the Borrower as of such date time and, if such Investments, Debt is and Liens are not permitted to be incurred as of such date time under Section 9.02Article IX, the Borrower an Event of Default shall be in default of such covenantoccur). (cd) The Borrower may designate designate, by prior or concurrent written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if Subsidiary; provided that (i) immediately priorboth before, and immediately after giving effect effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Pro Forma Net Leverage Ratio shall not exceed 4.00 to 1.00 and the Borrower shall be in compliance, on a pro forma basis, with the financial covenant set forth in Section 9.01(b) (determined on a pro forma basis using Current Assets and Current Liabilities as of the last day of the Borrower’s most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 8.01(a) or (b)) and (C) the representations and warranties of each Loan Party the Credit Parties and the Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), (Bii) no Event the designation of Default exists any Unrestricted Subsidiary as a Restricted Subsidiary shall constitute the incurrence at the time of designation of any Investment, Debt, or would exist (Liens of such Subsidiary existing at such time, and the Borrower shall be in compliance with Article IX after giving effect to such designation, (iii) immediately after giving effect to such designation, the Borrower and such Subsidiary shall be in compliance with the requirements of Section 8.14 and (iv) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the satisfaction of the conditions and matters set forth in clauses (i)-(iii) above (and in the case of clause (i)(B) above, setting forth reasonably detailed calculations demonstrating that the Pro Forma Net Leverage Ratio will not exceed 4.00 to 1.00 and the Borrower will be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (ii) the Borrower is in compliance with the requirements of Section 8.14 and Section 8.16. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) constitute the incurrence at the time of such designation of any Investment, Debt or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a9.01(b) (determined on a pro forma basis using Current Assets and Current Liabilities as of the last day of the Borrower’s most recently ended fiscal quarter for which financial statements have been delivered pursuant to Section 8.01(a) or (b)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents).

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance Unless designated in writing to the Administrative Agent by the Borrower in accordance with Section 9.23(b)clause (b) below, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries after the date hereof (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. On the date hereof, except as set forth on Schedule 7.14, all Subsidiaries of the Borrower are Restricted Subsidiaries. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, Subsidiary (including a newly formed or newly acquired Subsidiary, ) as an Unrestricted Subsidiary if (other than any Restricted Subsidiary that owns or has an interest in any Property assigned value in the Borrowing Base then in effect, as determined by the Administrative Agent), provided that (i) immediately priorboth before, and immediately after giving effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Parent, the Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), ; (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (Cii) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to for purposes of any Debt, liabilities indenture or other obligations under any Permitted Debt, agreement governing Debt of the Senior Notes Borrower or the Preferred Stock a Restricted Subsidiary; (or any Permitted Refinancing Debt thereofiii) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment such designation shall be deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s 's direct and indirect ownership interest in such Subsidiary (and its subsidiariessuch designation shall be permitted only to the extent such Investment is permitted under Sections 9.05(k), 9.05(l), 9.05(m), 9.05(n) and (b9.05(p) be deemed a disposition of on the Property date of such Subsidiary designation (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (andit being understood that, for the avoidance of doubt, any calculation regarding whether an Investment is permitted under Section 3.04(c)(ii9.05(k) shall be made without duplication of any Investments previously made in such Person pursuant to Section 9.05(k)); (iv) such designation shall be deemed to be a Disposition pursuant to which the provisions of Section 2.07(e) shall apply; (v) after giving effect to such designation, such Subsidiary is in compliance with the requirements of Section 8.17; and (vi) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the satisfaction of the conditions and matters set forth in clauses (i)-(v) above (and in the case of clause (i)(B) above, setting forth reasonably detailed calculations demonstrating compliance on a pro forma basis with the covenants set forth in Section 9.01). Except as provided in this Section 9.23(b)1.06, no Subsidiary may be designated (and no Restricted Subsidiary may be redesignated redesignated) as an Unrestricted Subsidiary. . (c) If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.168.17, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement (and, for the avoidance of doubt, any Investment, Debt and any Debt Liens of such Subsidiary existing at such time shall be deemed to be incurred by a Restricted such Subsidiary of the Borrower as of such date time and, if such Investments, Debt is and Liens are not permitted to be incurred as of such date time under Section 9.02Article IX, the Borrower an Event of Default shall be in default of such covenantoccur). (cd) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if Subsidiary; provided that (i) immediately priorboth before, and immediately after giving effect effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Parent, the Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (iiiii) the Borrower is in compliance with the requirements designation of Section 8.14 and Section 8.16. Any such designation shall (x) be treated any Unrestricted Subsidiary as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Restricted Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) shall constitute the incurrence at the time of such designation of any Investment, Debt Debt, or Liens of such Subsidiary existing at such time. Any such designation , and the Borrower shall be evidenced by in compliance with Article IX after giving effect to such designation, (iv) immediately after giving effect to such designation, the Borrower and such Subsidiary shall be in compliance with the requirements of Section 8.13 and (v) the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower delivered Officer, in form and substance reasonably satisfactory to the Administrative Agent prior Agent, certifying as to such designation certifying that the satisfaction of the conditions and matters set forth in clauses (i)-(iv) above (and in the case of this Section 9.23(cclause (i)(B) are satisfied as of the date of such designation (andabove, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the reasonably detailed calculations demonstrating compliance on a pro forma basis, basis with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a9.01)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance Unless designated in writing to the Administrative Agent by the Borrower and approved by the Administrative Agent and the Majority Lenders in accordance with Section 9.23(b)clause (b) below, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. (b) The Any Subsidiary of the Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, (including a newly formed or newly acquired Subsidiary, ) may be designated (or redesignated) as an Unrestricted Subsidiary if (i) immediately priorthe Administrative Agent shall have received (1) a written request from the Borrower specifying the applicable Subsidiary and such other information as the Administrative Agent may reasonably request, (2) the written consent of the Administrative Agent and the Majority Lenders approving such designation, and (3) a certificate of a Responsible Officer of the Borrower certifying that the condition set forth in Section 1.7(b)(ii) is satisfied as of the date of such designation and that no Default or Event of Default shall then exist or would result from such designation (after giving effect, effect to such designation) (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis with the covenants set forth in Section 6.1), (Aii) the representations and warranties of each Loan Party Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as of such date as if made on and as of the date of such designation (or, if stated to have been made expressly as of an earlier date, were true and correct as of such date), (iii) such designation is deemed to be an Investment in all material respects an amount equal to the fair market value of Borrower’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted under Section 6.6 to be made at the time of such designation and (iv) such Subsidiary is in compliance with the requirements of Section 5.15. Except as provided in this Section 1.7, no Subsidiary may be designated (and no Restricted Subsidiary may be redesignated) as an Unrestricted Subsidiary. (c) If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 5.15, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 6.2, the Borrower shall be in default of such covenant. (d) Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (Bii) no Default or Event of Default then exists or would exist result from such redesignation (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)). Except as provided in this Section 9.23(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such dateredesignation), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (iiiii) the Borrower is in compliance with the requirements designation of Section 8.14 and Section 8.16. Any such designation shall (x) be treated any Unrestricted Subsidiary as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Restricted Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) shall constitute the incurrence at the time of such designation of any Investment, Debt Indebtedness or Liens of such Subsidiary existing at such time, and the Borrower is in compliance with Sections 6.2 and 6.3 after giving effect to such designation, and (iv) the Borrower complies, or causes such Subsidiary to comply, with the requirements of Section 5.9. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c1.7(d) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, basis with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a6.1)). 148. (de) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents Secured Notes Documents, and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Secured Notes Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance with Section 9.23(b9.19(b), any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) immediately prior, and after giving effect, to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), and (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b9.01)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.069.05(l). The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii))Subsidiary. Except as provided in this Section 9.23(b9.19(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (ii) the Borrower is in compliance with the requirements of Section 8.14 and Section 8.169.20. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations the limitation on Investments under Section 9.06 9.05(l) and (y) constitute the incurrence at the time of such designation of any Investment, Debt Indebtedness or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance with Unless designated after the Closing Date in writing to the Administrative Agent pursuant to this Section 9.23(b)5.15, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries after the Closing Date shall be classified as a Restricted Subsidiary. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, Subsidiary (including a newly formed or newly acquired Subsidiary, ) as an Unrestricted Subsidiary if Subsidiary, provided that (i) any such designation shall be deemed to be an Investment on the date of such designation in an Unrestricted Subsidiary in an amount equal to the sum of the (A) the fair market value of the outstanding Investments of the Borrower and the Restricted Subsidiaries in such Unrestricted Subsidiary and (B) the aggregate principal amount of any Indebtedness owed by such Unrestricted Subsidiary to the Borrower and its Restricted Subsidiaries immediately prior, and after giving effect, prior to such designation, all calculated, on a consolidated basis in accordance with GAAP, (Aii) the representations and warranties of each the Loan Party Parties contained in each of the Loan Documents are shall be true and correct in all material respects on and as of the date of such date designation as if made on and as of the such date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such dateearlier date (except to the extent that any such representations are qualified as to “materiality”, “Material Adverse Effect” or similar language, in which case such representations and warranties shall be true and correct in all respects), (Biii) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)). Except as provided in this Section 9.23(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Default or Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (ii) the Borrower is in compliance with the requirements of Section 8.14 and Section 8.16. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) constitute the incurrence at the time of such designation of any Investment, Debt or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.exist,

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance Unless designated in writing to the Administrative Agent by the Borrower in accordance with Section 9.23(b)clause (b) below, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries after the date hereof (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. On the date hereof, except as set forth on Schedule 7.14, all Subsidiaries of the Borrower are Restricted Subsidiaries. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, Subsidiary (including a newly formed or newly acquired Subsidiary, ) as an Unrestricted Subsidiary if (other than any Restricted Subsidiary that owns or has an interest in any Property assigned value in the Borrowing Base then in effect, as determined by the Administrative Agent), provided that (i) immediately priorboth before, and immediately after giving effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), ; (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (Cii) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to for purposes of any Debt, liabilities indenture or other obligations under any Permitted Debt, agreement governing Debt of the Senior Notes Borrower or the Preferred Stock a Restricted Subsidiary; (or any Permitted Refinancing Debt thereofiii) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment such designation shall be deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of Borrower's direct and indirect ownership interest in such Subsidiary and such designation shall be permitted only to the extent such Investment is permitted under Section 9.05(k) on the date of such designation (it being understood, for the avoidance of doubt, that (A) in the event SPS becomes a Restricted Subsidiary and is promptly designated an Unrestricted Subsidiary, the fair market value of Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiariesSPS shall be deemed to equal the amount of any Investments previously made in SPS pursuant to Section 9.05(k) and (bB) any calculation regarding whether an Investment is permitted under Section 9.05(k) shall be made without duplication of any Investments previously made in such Person pursuant to Section 9.05(k)); (iv) such designation shall be deemed to be a disposition Disposition pursuant to which the provisions of Section 2.07(e) and Section 2.07(g) shall apply; (v) after giving effect to such designation, such Subsidiary is in compliance with the requirements of Section 8.18; and (vi) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the satisfaction of the Property of such Subsidiary conditions and matters set forth in clauses (i)-(v) above (and its subsidiariesin the case of clause (i)(B) (and Equity Interests therein) for purposes of above, setting forth reasonably detailed calculations demonstrating compliance on a pro forma basis with the covenants set forth in Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)9.01). Except as provided in this Section 9.23(b)1.06, no Subsidiary may be designated (and no Restricted Subsidiary may be redesignated redesignated) as an Unrestricted Subsidiary. . (c) If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.168.18, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement (and, for the avoidance of doubt, any Investment, Debt and any Debt Liens of such Subsidiary existing at such time shall be deemed to be incurred by a Restricted such Subsidiary of the Borrower as of such date time and, if such Investments, Debt is and Liens are not permitted to be incurred as of such date time under Section 9.02Article IX, the Borrower an Event of Default shall be in default of such covenantoccur). (cd) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if Subsidiary; provided that (i) immediately priorboth before, and immediately after giving effect effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (iiiii) the Borrower is in compliance with the requirements designation of Section 8.14 and Section 8.16. Any such designation shall (x) be treated any Unrestricted Subsidiary as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Restricted Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) shall constitute the incurrence at the time of such designation of any Investment, Debt Debt, or Liens of such Subsidiary existing at such time. Any such designation , and the Borrower shall be evidenced by in compliance with Article IX after giving effect to such designation, (iv) immediately after giving effect to such designation, the Borrower and such Subsidiary shall be in compliance with the requirements of Section 8.13 and (v) the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower delivered Officer, in form and substance reasonably satisfactory to the Administrative Agent prior Agent, certifying as to such designation certifying that the satisfaction of the conditions and matters set forth in clauses (i)-(iv) above (and in the case of this Section 9.23(cclause (i)(B) are satisfied as of the date of such designation (andabove, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the reasonably detailed calculations demonstrating compliance on a pro forma basis, basis with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a9.01)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance Unless designated in writing to the Administrative Agent by the Borrower in accordance with Section 9.23(b)clause (b) below, any Person that becomes a Subsidiary of the Borrower or any of its Restricted Subsidiaries after the date hereof (whether by formation, acquisition or merger) shall be classified as a Restricted Subsidiary. On the date hereof, except as set forth on Schedule 7.14, all Subsidiaries of the Borrower are Restricted Subsidiaries. (b) The Borrower may designate by prior written notice thereof to the Administrative Agent, any Restricted Subsidiary, Subsidiary (including a newly formed or newly acquired Subsidiary, ) as an Unrestricted Subsidiary if (other than any Restricted Subsidiary that owns or has an interest in any Property assigned value in the Borrowing Base then in effect, as determined by the Administrative Agent), provided that (i) immediately priorboth before, and immediately after giving effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Parent, the Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), ; (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (Cii) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to for purposes of any Debt, liabilities indenture or other obligations under any Permitted Debt, agreement governing Debt of the Senior Notes Borrower or the Preferred Stock a Restricted Subsidiary; (or any Permitted Refinancing Debt thereofiii) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment such designation shall be deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s 's direct and indirect ownership interest in such Subsidiary (and its subsidiariessuch designation shall be permitted only to the extent such Investment is permitted under Sections 9.05(k), 9.05(l), 9.05(m), 9.05(n), 9.05(p) and (b9.05(q) be deemed a disposition of on the Property date of such Subsidiary designation (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (andit being 40 understood that, for the avoidance of doubt, any calculation regarding whether an Investment is permitted under Section 3.04(c)(ii9.05(k) shall be made without duplication of any Investments previously made in such Person pursuant to Section 9.05(k)); (iv) such designation shall be deemed to be a Disposition pursuant to which the provisions of Section 2.07(e) shall apply; (v) after giving effect to such designation, such Subsidiary is in compliance with the requirements of Section 8.17; and (vi) the Administrative Agent shall have received a certificate of a Responsible Officer, in form and substance reasonably satisfactory to the Administrative Agent, certifying as to the satisfaction of the conditions and matters set forth in clauses (i)-(v) above (and in the case of clause (i)(B) above, setting forth reasonably detailed calculations demonstrating compliance on a pro forma basis with the covenants set forth in Section 9.01). Except as provided in this Section 9.23(b)1.06, no Subsidiary may be designated (and no Restricted Subsidiary may be redesignated redesignated) as an Unrestricted Subsidiary. . (c) If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.168.17, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement (and, for the avoidance of doubt, any Investment, Debt and any Debt Liens of such Subsidiary existing at such time shall be deemed to be incurred by a Restricted such Subsidiary of the Borrower as of such date time and, if such Investments, Debt is and Liens are not permitted to be incurred as of such date time under Section 9.02Article IX, the Borrower an Event of Default shall be in default of such covenantoccur). (cd) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if Subsidiary; provided that (i) immediately priorboth before, and immediately after giving effect effect, to such designation, (A) no Default, Event of Default or Borrowing Base Deficiency exists or would result from such designation, (B) the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01, (C) the representations and warranties of each Loan Party Parent, the Borrower and its Restricted Subsidiaries contained in this Agreement and each of the other Loan Documents are shall be true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) on and as of such date as if made on and as of the date of such redesignation designation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects (except that any representation and warranty that is qualified by materiality shall be true and correct in all respects) as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (iiiii) the Borrower is in compliance with the requirements designation of Section 8.14 and Section 8.16. Any such designation shall (x) be treated any Unrestricted Subsidiary as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Restricted Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) shall constitute the incurrence at the time of such designation of any Investment, Debt Debt, or Liens of such Subsidiary existing at such time. Any such designation , and the Borrower shall be evidenced by in compliance with Article IX after giving effect to such designation, (iv) immediately after giving effect to such designation, the Borrower and such Subsidiary shall be in compliance with the requirements of Section 8.13 and (v) the Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower delivered Officer, in form and substance reasonably satisfactory to the Administrative Agent prior Agent, certifying as to such designation certifying that the satisfaction of the conditions and matters set forth in clauses (i)-(iv) above (and in the case of this Section 9.23(cclause (i)(B) are satisfied as of the date of such designation (andabove, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the reasonably detailed calculations demonstrating compliance on a pro forma basis, basis with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a9.01)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming compliance with Section 9.23(b)Unless designated as an Unrestricted Subsidiary on Schedule 3.12 as of the Effective Date or thereafter, any Person that becomes a Subsidiary of the Borrower Parent or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary. (b) The Borrower Parent may designate by prior written notice notification thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) immediately prior, and after giving effect, to such designation, no Default would exist and (Ai) such designation is deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date of such designation of the Parent’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 6.05(i) or (l); but no Borrower may become an Unrestricted Subsidiary. Except as provided in this Section, no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. (c) The Parent may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of each Loan Party the Parent and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (Di) no Borrowing Base Deficiency Default would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)). Except as provided in this Section 9.23(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (ii) the Borrower is in compliance with the requirements of Section 8.14 and Section 8.16. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the BorrowerParent’s direct and indirect ownership interest in such Subsidiary or the amount of the BorrowerParent’s cash investment Investment previously made for purposes of any applicable limitations the limitation on Investments under Section 9.06 Sections 6.05(i) and (y) constitute the incurrence at the time of such designation of any Investment, Debt or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(al)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents.

Designation and Conversion of Restricted and Unrestricted Subsidiaries. (a) Assuming Unless designated as an Unrestricted Subsidiary on Schedule 7.11 as of the Effective Date or thereafter, assuming compliance with Section 9.23(b9.07(b), any Person that becomes a Domestic Subsidiary of the Borrower or any of its Restricted Subsidiaries shall be classified as a Restricted Subsidiary. (b) The Borrower may designate by prior written notice notification thereof to the Administrative Agent, any Restricted Subsidiary, including a newly formed or newly acquired Subsidiary, as an Unrestricted Subsidiary if (i) immediately prior, and after giving effect, to such designation, neither a Default nor a Borrowing Base Deficiency would exist and (Aii) such designation is deemed to be an Investment in an Unrestricted Subsidiary in an amount equal to the fair market value as of the date of such designation of the Borrower’s direct and indirect ownership interest in such Subsidiary and such Investment would be permitted to be made at the time of such designation under Section 9.06(j), (p) or (q). (c) The Borrower may designate any Unrestricted Subsidiary to be a Restricted Subsidiary if after giving effect to such designation, (i) the representations and warranties of each Loan Party the Borrower and its Restricted Subsidiaries contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (Bii) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01 and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating such compliance on a pro forma basis and certifying as to the satisfaction of the other conditions set forth in this Section 9.23(b)), (C) such Subsidiary (1) is not a Material Subsidiary, (2) is not the owner or the operator, by contract or otherwise, of any Oil and 147 Gas Properties included in the Borrowing Base, (3) does not provide gathering, transporting, processing, marketing or other midstream services in respect of the Oil and Gas Properties included in the Borrowing Base and (4) is not a guarantor, “restricted subsidiary” or the primary obligor with respect to any Debt, liabilities or other obligations under any Permitted Debt, the Senior Notes or the Preferred Stock (or any Permitted Refinancing Debt thereof) and (D) no Borrowing Base Deficiency would exist; and (ii) the Investment deemed to be made in such Subsidiary (and its subsidiaries) pursuant to the next sentence would be permitted to be made at the time of such designation under Section 9.06. The designation of any Restricted Subsidiary as an Unrestricted Subsidiary shall (a) constitute an Investment in an Unrestricted Subsidiary (and its subsidiaries) in an amount equal to the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary (and its subsidiaries) and (b) be deemed a disposition of the Property of such Subsidiary (and its subsidiaries) (and Equity Interests therein) for purposes of Section 9.05(d) (and, for the avoidance of doubt, Section 3.04(c)(ii)). Except as provided in this Section 9.23(b), no Restricted Subsidiary may be redesignated as an Unrestricted Subsidiary. If, at any time, any Unrestricted Subsidiary would fail to meet the requirements for an Unrestricted Subsidiary set forth in Section 8.16, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Debt of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Debt is not permitted to be incurred as of such date under Section 9.02, the Borrower shall be in default of such covenant. (c) The Borrower may designate by prior written notice thereof to the Administrative Agent any Unrestricted Subsidiary to be a Restricted Subsidiary if (i) immediately prior, and after giving effect to such designation, (A) the representations and warranties of each Loan Party contained in each of the Loan Documents are true and correct in all material respects on and as of such date as if made on and as of the date of such redesignation (or, if stated to have been made expressly as of an earlier date, were true and correct in all material respects as of such date), (B) no Event of Default exists or would exist (and the Borrower shall be in compliance, on a pro forma basis, with the covenants set forth in Section 9.01) and (iiiii) the Borrower is in compliance complies with the requirements of Section 8.14 8.13 and Section 8.16. Any such designation shall (x) be treated as a cash dividend in an amount equal to the lesser of the fair market value of the Borrower’s direct and indirect ownership interest in such Subsidiary or the amount of the Borrower’s cash investment previously made for purposes of any applicable limitations on Investments under Section 9.06 and (y) constitute the incurrence at the time of such designation of any Investment, Debt or Liens of such Subsidiary existing at such time. Any such designation shall be evidenced by a certificate of a Responsible Officer of the Borrower delivered to the Administrative Agent prior to such designation certifying that the conditions of this Section 9.23(c) are satisfied as of the date of such designation (and, as a condition precedent to the effectiveness of any such designation, the Borrower shall deliver to the Administrative Agent a certificate setting forth in reasonable detail the calculations demonstrating compliance on a pro forma basis, with the covenants set forth in Section 9.01 (including Pro Forma Compliance with the financial ratio covenant set forth in Section 9.01(a)). 148 (d) No Subsidiary may be designated as an Unrestricted Subsidiary hereunder unless it is also designated as an “Unrestricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents and (ii) no Subsidiary designated as an Unrestricted Subsidiary may be designated as a Restricted Subsidiary hereunder unless it is also designated as a “Restricted Subsidiary” for purposes of the Senior Notes Documents or any Permitted Debt Documents8.15.