**Exhibit 10.19**

***Execution Version***

 

**SECOND LIEN GUARANTY AND PLEDGE AGREEMENT**

 

**DATED AS OF**

**JANUARY 31, 2008**

 

 

**MADE BY**

** **

 

**LINN ENERGY, LLC**

**AND**

**EACH OF THE OTHER OBLIGORS (AS DEFINED HEREIN)**

 

 

**IN FAVOR OF**

 

 

**BNP PARIBAS,**

**AS ADMINISTRATIVE AGENT**

 

 

ALLLIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN THEINTERCREDITOR AGREEMENT DATED JANUARY 31, 2008 BY AND AMONG LINN ENERGY, LLC,BNP PARIBAS, AS SENIOR ADMINISTRATIVE AGENT, BNP PARIBAS, AS SUBORDINATEDADMINISTRATIVE AGENT AND PARTIES THERETO, BE SUBORDINATE AND JUNIOR TO ALLLIENS GRANTED BY GRANTOR TO SECURE THE SENIOR INDEBTEDNESS REGARDLESS OF THERELATIVE PRIORITY OF SUCH LIENS, SUCH INTERCREDITOR AGREEMENT BEINGINCORPORATED HEREIN AND BY THIS REFERENCE BEING MADE A PART HEREOF.

 

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**TABLE OF CONTENTS**

 
| ** **                                      | ** **                                                          | **Page**   |
|-------------------------------------------------|---------------------------------------------------------------------|------------|
|                                            |                                                                | ** ** |
| **ARTICLE I Definitions**                       | **1**                                                               |
| ** **                                      |                                                                |
| Section 1.01                               | Definitions                                                         | 1          |
| Section 1.02                               | Other  Definitional Provisions                                      | 6          |
| Section 1.03                               | Rules of  Interpretation                                       | 6          |
|                                            |                                                                |       |
| **ARTICLE II Guarantee**                        | **6**                                                               |
| ** **                                      | ** **                                                          |
| Section 2.01                               | Guarantee                                                           | 6          |
| Section 2.02                               | Right of  Contribution                                              | 7          |
| Section 2.03                               | No  Subrogation                                                     | 7          |
| Section 2.04                               | Guaranty  Amendments, Etc. with respect to the Borrower Obligations | 7          |
| Section 2.05                               | Waivers                                                             | 8          |
| Section 2.06                               | Guaranty  Absolute and Unconditional                                | 8          |
| Section 2.07                               | Reinstatement                                                       | 10         |
| Section 2.08                               | Payments                                                            | 10         |
|                                            |                                                                |       |
| **ARTICLE III Grant of Security  Interest**     | **10**                                                              |
| ** **                                      | ** **                                                          | ** ** |
| Section 3.01                               | Grant of  Security Interest                                         | 10         |
| Section 3.02                               | Transfer  of Pledged Securities                                     | 10         |
|                                            |                                                                |       |
| **ARTICLE IV Representations and  Warranties**  | **11**                                                              |
| ** **                                      | ** **                                                          | ** ** |
| Section 4.01                               | Representations  in Loan Agreement                                  | 11         |
| Section 4.02                               | Title; No  Other Liens                                              | 11         |
| Section 4.03                               | Perfected  Priority Liens                                           | 12         |
| Section 4.04                               | Obligor  Information                                                | 12         |
| Section 4.05                               | Pledged  Securities                                                 | 12         |
| Section 4.06                               | Benefit  to the Guarantor                                           | 13         |
| Section 4.07                               | Solvency                                                            | 13         |
|                                            |                                                                |       |
| **ARTICLE V Covenants**                         | **13**                                                              |
| ** **                                      | ** **                                                          | ** ** |
| Section 5.01                               | Maintenance  of Perfected Security Interest; Further Documentation  | 13         |
| Section 5.02                               | Changes  in Locations, Name, Etc                                    | 13         |
| Section 5.03                               | Pledged  Securities                                                 | 14         |
|                                            |                                                                |       |
| **ARTICLE VI Remedial Provisions**              | **16**                                                              |
| ** **                                      | ** **                                                          | ** ** |
| Section 6.01                               | Code and  Other Remedies                                            | 16         |
| Section 6.02                               | Pledged  Securities                                                 | 17         |
| Section 6.03                               | Private  Sales of Pledged Securities                                | 19         |
| Section 6.04                               | Waiver;  Deficiency                                                 | 20         |
| Section 6.05                               | Non-Judicial  Enforcement                                           | 20         |
|                                            |                                                                |       |
| **ARTICLE VII The Administrative  Agent**       | **20**                                                              |
| ** **                                      | ** **                                                          | ** ** |
| Section 7.01                               | Administrative  Agent’s Appointment as Attorney-in-Fact, Etc   | 20         |
| Section 7.02                               | Duty of  Administrative Agent                                       | 21         |
| Section 7.03                               | Execution  of Financing Statements                                  | 22         |
| Section 7.04                               | Authority  of Administrative Agent                                  | 22         |
|                                            |                                                                |       |
| **ARTICLE VIII Subordination of  Indebtedness** | **22**                                                              |

 

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| Section 8.01            | Subordination  of All Obligor Claims       | 23         |
|------------------------------|--------------------------------------------|------------|
| Section 8.02            | Claims in  Bankruptcy                      | 23         |
| Section 8.03            | Payments  Held in Trust                    | 23         |
| Section 8.04            | Liens  Subordinate                         | 23         |
| Section 8.05            | Notation  of Records                       | 24         |
|                         |                                       |       |
| **ARTICLE IX Miscellaneous** | **24**                                     |
| ** **                   | ** **                                 | ** ** |
| Section 9.01            | Waiver                                     | 24         |
| Section 9.02            | Notices                                    | 24         |
| Section 9.03            | Payment  of Expenses, Indemnities, Etc     | 24         |
| Section 9.04            | Amendments  in Writing                     | 25         |
| Section 9.05            | Successors  and Assigns                    | 25         |
| Section 9.06            | Survival;  Revival; Reinstatement          | 25         |
| Section 9.07            | Counterparts;  Integration; Effectiveness  | 26         |
| Section 9.08            | Severability                               | 26         |
| Section 9.09            | Set-Off                                    | 26         |
| Section 9.10            | Governing  Law; Submission to Jurisdiction | 27         |
| Section 9.11            | Headings                                   | 28         |
| Section 9.12            | Acknowledgments                            | 28         |
| Section 9.13            | Additional  Obligors and Pledgors          | 28         |
| Section 9.14            | Releases                                   | 29         |
| Section 9.15            | Acceptance                                 | 29         |

 

SCHEDULES:

 

1              Notice Addresses of Obligors

2              Description of Pledged Securities

3              Filings and Other Actions Requiredto Perfect Security Interests

4              Location of Jurisdiction ofOrganization and Chief Executive Office

 

ANNEXES:

 

I               Form of Assumption Agreement

II             Form of Supplement

 

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This SECOND LIEN GUARANTY AND PLEDGEAGREEMENT, dated as of January 31, 2008, is made by LINN ENERGY, LLC, aDelaware limited liability company (the “Borrower”), and each of thesignatories hereto (the Borrower and each of the signatories hereto, togetherwith any other Subsidiary of the Borrower that becomes a party hereto from timeto time after the date hereof, the “Obligors”),in favor of BNP PARIBAS, as administrative agent (in such capacity, togetherwith its successors in such capacity, the “AdministrativeAgent”), for the banks and other financial institutions (the “Lenders”)from time to time party to the Second Lien Term Loan Agreement dated of evendate herewith (as amended, supplemented or otherwise modified from time totime, the “Loan Agreement”), among the Borrower, the Lenders and theAdministrative Agent.

 

**R E C I T A L S**

 

A.            It is a condition precedent to theeffectiveness of the Loan Agreement that the Obligors shall have executed anddelivered this Agreement to the Administrative Agent for the ratable benefit ofthe Lenders.

 

G.            NOW,THEREFORE, in consideration of the mutual covenants and agreements hereincontained and of the loans, extensions of credit and commitments hereinafterreferred to, the parties hereto agree as follows:

 

**ARTICLE I****Definitions**

 

Section 1.01           Definitions.

 

(a)           Unlessotherwise defined herein, terms defined in the Loan Agreement and used hereinhave the meanings given to them in the Loan Agreement, and all uncapitalizedterms which are defined in the UCC on the date hereof are used herein as sodefined.

 

(b)           Thefollowing terms have the following meanings:

 

“Agreement” means this SecondLien Guaranty and Pledge Agreement, as the same may be amended, restated,supplemented or otherwise modified from time to time.

 

“AssumptionAgreement” means an Assumption Agreement substantially in the formattached hereto as Annex I.

 

“Bankruptcy Code” means title11, United States Code, as amended from time to time.

 

“Borrower Obligations” means thecollective reference to the payment and performance of all Indebtedness and allobligations of the Borrower and its Subsidiaries under the Guaranteed Documents,including, without limitation, the unpaid principal of and interest on theLoans and all other obligations and liabilities of the Borrower and itsSubsidiaries (including, without limitation, interest accruing at the thenapplicable rate provided in the Loan Agreement after the maturity of the Loansand interest accruing after the filing of any petition in bankruptcy, or thecommencement of any insolvency, reorganization or like proceeding, relating tothe Borrower, whether or not a claim for post-filing or post-petition interestis allowed in such proceeding) to

 

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 the Guaranteed Creditors, whether direct orindirect, absolute or contingent, due or to become due, or now existing orhereafter incurred, which may arise under, out of, or in connection with, theGuaranteed Documents, whether on account of principal, interest, reimbursementobligations, payments in respect of an early termination date, fees,indemnities, costs, expenses or otherwise (including, without limitation, allfees and disbursements of counsel to the Guaranteed Creditors that are requiredto be paid by the Borrower pursuant to the terms of any Guaranteed Document).

 

“Collateral” has the meaningassigned such term in Section 3.01.

 

“Guaranteed Creditors” means thecollective reference to the Administrative Agent and the Lenders.

 

“Guaranteed Documents” means thecollective reference to the Loan Agreement, the other Loan Documents and anyother document made, delivered or given in connection with any of theforegoing.

 

“Guaranteed Swap Agreement”means any present or future Swap Agreement between the Borrower or anySubsidiary and any Senior Revolving Lender or any Affiliate of any SeniorRevolving Lender while such Person (or, in the case of an Affiliate of a SeniorRevolving Lender, the Person affiliated therewith) is a Senior Revolving Lenderregardless of when such Swap Agreement was entered into.  For the avoidance of doubt, a Swap Agreementceases to be a Guaranteed Swap Agreement if the Person that is the counterpartyto the Borrower or a Subsidiary under a Swap Agreement ceases to be a SeniorRevolving Lender under the Senior Revolving Credit Agreement (or, in the caseof an Affiliate of a Senior Revolving Lender, the Person affiliated therewithceases to be a Senior Revolving Lender under the Senior Revolving CreditAgreement).

 

“Guarantor Obligations” meanswith respect to any Guarantor, the collective reference to (a) theBorrower Obligations and (b) all obligations and liabilities of suchGuarantor which may arise under or in connection with any Guaranteed Documentto which such Guarantor is a party, in each case, whether on account ofprincipal, interest, guarantee obligations, reimbursement obligations, paymentsin respect of an early termination date, fees, indemnities, costs, expenses orotherwise (including, without limitation, all fees and disbursements of counselto any Guaranteed Creditor under any Guaranteed Document).

 

“Guarantors” means thecollective reference to each Obligor other than the Borrower.

 

“Intercreditor Agreement” meansthat certain Intercreditor Agreement dated as of the date hereof entered intoby and among the Senior Revolving Administrative Agent, the AdministrativeAgent, and the Borrower and the Guarantors, as the same may from time to timebe amended, modified, supplemented or restated.

 

“Issuers” means the collectivereference to the issuers of the Pledged Securities.

 

“LLC” means, with respect toeach Pledgor, each limited liability company described or referred to inSchedule 2 in which such Pledgor has an interest.

 

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“LLC Agreement” means, withrespect to each Pledgor, each operating agreement relating to an LLC, as eachagreement has heretofore been, and may hereafter be, amended, restated, supplementedor otherwise modified from time to time.

 

“Obligations” means:  (a) in the case of the Borrower, theBorrower Obligations and (b) in the case of each Guarantor, its GuarantorObligations.

 

“ObligorClaims” has the meaning assigned to such term in Section 8.01.

 

“Partnership” means, withrespect to each Pledgor, each partnership described or referred to in Schedule2 (as the same may be supplemented from time to time pursuant to a Supplement)in which such Pledgor has an interest.

 

“Partnership Agreement” means,with respect to each Pledgor, each partnership agreement governing aPartnership, as each such agreement has heretofore been, and may hereafter be,amended, restated, supplemented or otherwise modified.

 

“Pledged LLC Interests” means,with respect to each Pledgor, all right, title and interest of such Pledgor asa member of each LLC and all right, title and interest of any Pledgor in, toand under each LLC Agreement.

 

“Pledged Partnership Interests”means, with respect to each Pledgor, all right, title and interest of suchPledgor as a limited or general partner in all Partnerships and all right,title and interest of any Pledgor in, to and under the Partnership Agreements.

 

“Pledged Securities” means: (a) theEquity Interests described or referred to in Schedule 2 (as the same may besupplemented from time to time pursuant to a Supplement); and (b) (i) thecertificates or instruments, if any, representing such Equity Interests, (ii) alldividends (cash, Equity Interests or otherwise), cash, instruments, rights tosubscribe, purchase or sell and all other rights and Property from time to timereceived, receivable or otherwise distributed in respect of or in exchange forany or all of such securities, (iii) all replacements, additions to and substitutionsfor any of the Property referred to in this definition, including, withoutlimitation, claims against third parties, (iv) the proceeds, interest,profits and other income of or on any of the Property referred to in thisdefinition, (v) all security entitlements in respect of any of theforegoing, if any and (vi) all books and records relating to any of theProperty referred to in this definition.

 

“Pledgor” means any Obligor thatnow or hereafter pledges Pledged Securities hereunder.

 

“Proceeds” means all “proceeds”as such term is defined in Section 9.102(64)****of the UCC on the date hereof and, in any event, shallinclude, without limitation, all dividends or other income from the PledgedSecurities, collections thereon or distributions or payments with respectthereto.

 

“Securities Act” shall mean theSecurities Act of 1933, as amended.

 

“SeniorIndebtedness” means and includes (a) all principal indebtedness forloans now outstanding or hereafter incurred, and all letter of creditreimbursement obligations now existing 

 

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orhereafter arising, under the Senior Revolving Credit Agreement, (b) allamounts now or hereafter owing to any of the Senior Revolving Lenders or any oftheir Affiliates under any Guaranteed Swap Agreement, (c) all interestaccruing on the Senior Indebtedness described in the preceding clauses (a) and(b), and (d) all other monetary obligations (whether now outstanding orhereafter incurred) for which the Borrower or any Guarantor is responsible orliable as obligor, guarantor or otherwise under or pursuant to any of theSenior Revolving Credit Documents including, without limitation, all fees,penalties, yield protections, breakage costs, damages, indemnificationobligations, reimbursement obligations, and expenses (including, withoutlimitation, fees and expenses of counsel to the Senior IndebtednessRepresentative and the Senior Revolving Lenders) together with interest on theforegoing to the extent provided for in the Senior Revolving CreditDocuments.  The interest described in thepreceding clause (c) and the premiums and penalties described in thepreceding clause (d) include, without limitation, all interest accruingafter the commencement of any Insolvency Proceeding under the terms of theSenior Revolving Credit Documents whether or not such interest constitutes anallowed claim in any such Insolvency Proceeding.

 

“SeniorIndebtedness Representative” means (a) initially, BNP Paribas, asadministrative agent for the Senior Revolving Lenders under the SeniorRevolving Credit Agreement or (b) such other Person selected by theMajority Lenders (as such term is defined in the Senior Revolving CreditAgreement) to replace BNP Paribas or the then Senior Indebtedness Representative.

 

“Senior Revolving AdministrativeAgent” means BNP Paribas, as administrative agent for the Senior RevolvingLenders.

 

“Senior Revolving BorrowerObligations” means the collective reference to the payment and performanceof all Senior Indebtedness and all obligations of the Borrower and itsSubsidiaries under the Senior Revolving Credit Documents, including, withoutlimitation, the unpaid principal of and interest on the Loans and the LCExposure (as such terms are defined in the Senior Revolving Credit Agreement)and all other obligations and liabilities of the Borrower and its Subsidiaries(including, without limitation, interest accruing at the then applicable rateprovided in the Senior Revolving Credit Agreement after the maturity of theLoans and LC Exposure and interest accruing after the filing of any petition inbankruptcy, or the commencement of any insolvency, reorganization or likeproceeding, relating to the Borrower, whether or not a claim for post-filing orpost-petition interest is allowed in such proceeding) to the Senior RevolvingGuaranteed Creditors, whether direct or indirect, absolute or contingent, dueor to become due, or now existing or hereafter incurred, which may arise under,out of, or in connection with, the Senior Revolving Guaranteed Documents,whether on account of principal, interest, reimbursement obligations, paymentsin respect of an early termination date, fees, indemnities, costs, expenses orotherwise (including, without limitation, all fees and disbursements of counselto the Senior Revolving Guaranteed Creditors that are required to be paid bythe Borrower pursuant to the terms of any Senior Revolving GuaranteedDocument).

 

“Senior Revolving Credit Agreement”means that certain Third Amended and Restated Credit Agreement dated as of August 1,2007, as amended by that certain First Amendment to Third Amended and RestatedCredit Agreement, dated November 2, 2007 and the Second Amendment to ThirdAmended and Restated Credit Agreement, dated January 31, 2008, among 

 

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theBorrower, BNP Paribas, as administrative agent, and the financial institutionslisted therein from time to time as Senior Revolving Lenders, as from time totime renewed, extended, amended, supplemented, or restated, and any agreementsrepresenting the refinancing, replacement, or substitution in whole or in partof the revolving credit loans and letter of credit liabilities made or incurredunder such Senior Revolving Credit Agreement, provided that the terms of suchrefinancing, replacement or substitution and the financing documentationentered into in connection therewith are consistent with the terms of theSenior Revolving Credit Agreement and other Senior Revolving Credit Documentsin effect prior to such refinancing, replacement or substitution or could havebeen included in such Senior Revolving Credit Documents by an amendment orother modification that would not be prohibited by the terms of theIntercreditor Agreement.

 

“Senior Revolving Credit Documents”means, collectively, (a) the Senior Revolving Credit Agreement and theGuaranteed Swap Agreements, (b) any note, bond or other instrumentevidencing Senior Indebtedness, (c) all mortgages, security agreements,pledge agreements or financing statements evidencing, creating or perfectingany Lien to secure the Senior Indebtedness in any way, (d) all guaranteesof the Senior Indebtedness, (e) all other documents, instruments oragreements relating to the Senior Indebtedness now or hereafter executed ordelivered by and among the Borrower, any Subsidiary, the Senior IndebtednessRepresentative or any Senior Revolving Lender, including without limitationeach of the other “Loan Documents” as such term is defined in the SeniorRevolving Credit Agreement, and (f) all renewals, extensions, amendments,modifications or restatements of the foregoing.

 

“Senior Revolving GuaranteedCreditors” means the collective reference to the Senior RevolvingAdministrative Agent, the Senior Revolving Lenders and the Affiliates to theSenior Revolving Lenders party to the Guaranteed Swap Agreements.

 

“Senior Revolving GuaranteedDocuments” means the collective reference to the Senior Revolving CreditAgreement, the other Senior Revolving Credit Documents, each Guaranteed SwapAgreement and any other document made, delivered or given in connection withany of the foregoing.

 

“Senior Revolving GuarantorObligations” means with respect to any Guarantor, the collective referenceto (a) the Senior Revolving Borrower Obligations and (b) allobligations and liabilities of such Guarantor which may arise under or inconnection with any Senior Revolving Guaranteed Document to which suchGuarantor is a party, in each case, whether on account of principal, interest,guarantee obligations, reimbursement obligations, payments in respect of anearly termination date, fees, indemnities, costs, expenses or otherwise(including, without limitation, all fees and disbursements of counsel to anySenior Revolving Guaranteed Creditor under any Senior Revolving GuaranteedDocument).

 

“Senior Revolving Lenders” meansall Persons which now or hereafter constitute a “Lender” under the SeniorRevolving Credit Agreement and their respective successors and assigns, and allPersons refinancing any Senior Indebtedness and their respective successors andassigns.

 

“Supplement”means a Supplement substantially in the form attached hereto as Annex II.

 

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“UCC” means the UniformCommercial Code as from time to time in effect in the State of Texas; provided,however, that, in the event that, by reason of mandatory provisions of law, anyof the attachment, perfection or priority of the Administrative Agent’s and theGuaranteed Creditors’ security interest in any Collateral is governed by theUniform Commercial Code as in effect in a jurisdiction other than the State ofTexas, the term “UCC” shall mean the Uniform Commercial Code as in effect insuch other jurisdiction for purposes of the provisions hereof relating to suchattachment, perfection, the effect thereof or priority and for purposes ofdefinitions related to such provisions.

 

Section 1.02           Other Definitional Provisions.  Where the context requires, terms relating tothe Collateral or any part thereof, when used in relation to a Pledgor, referto such Pledgor’s Collateral or the relevant part thereof.

 

Section 1.03           Rules of Interpretation.  Section 1.04 and Section 1.05 of theLoan Agreement are hereby incorporated herein by reference and shall apply tothis Agreement, *mutatis mutandis*.

 

**ARTICLE II****Guarantee**

 

Section 2.01           Guarantee.

 

(a)           Each of the Guarantors hereby jointly and severally,unconditionally and irrevocably, guarantees to the Guaranteed Creditors andeach of their respective successors, indorsees, transferees and assigns, theprompt and complete payment in cash and performance by the Borrower when due(whether at the stated maturity, by acceleration or otherwise) of the BorrowerObligations.  This is a guarantee ofpayment and not collection and the liability of each Guarantor is primary andnot secondary.

 

(b)           Anything herein or in any other Loan Document to thecontrary notwithstanding, the maximum liability of each Guarantor hereunder andunder the other Loan Documents shall in no event exceed the amount which can beguaranteed by such Guarantor under applicable federal and state laws relatingto the insolvency of debtors (after giving effect to the right of contributionestablished in Section 2.02).

 

(c)           Each Guarantor agrees that the Borrower Obligations may atany time and from time to time exceed the amount of the liability of suchGuarantor hereunder without impairing the guarantee contained in this ARTICLEII or affecting the rights and remedies of any Guaranteed Creditor hereunder.

 

(d)           Each Guarantor agrees that if the maturity of the BorrowerObligations is accelerated by bankruptcy or otherwise, such maturity shall alsobe deemed accelerated for the purpose of this guarantee without demand ornotice to such Guarantor.  The guaranteecontained in this ARTICLE II shall remain in full force and effect until allthe Borrower Obligations shall have been satisfied by payment in full in cash.

 

(e)           No payment made by any Obligor, any other guarantor or anyother Person or received or collected by any Guaranteed Creditor from theBorrower, any of the 

 

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Guarantors, any other guarantor or anyother Person by virtue of any action or proceeding or any set-off orappropriation or application at any time or from time to time in reduction ofor in payment of the Borrower Obligations shall be deemed to modify, reduce,release or otherwise affect the liability of any Guarantor hereunder whichshall, notwithstanding any such payment (other than any payment made by suchGuarantor in respect of the Borrower Obligations or any payment received orcollected from such Guarantor in respect of the Borrower Obligations), remainliable for the Borrower Obligations up to the maximum liability of suchGuarantor hereunder until the Borrower Obligations are paid in full in cash.

 

Section 2.02           Right of Contribution.  Each Guarantor hereby agrees that to theextent that a Guarantor shall have paid more than its proportionate share ofany payment made hereunder, such Guarantor shall be entitled to seek andreceive contribution from and against any other Guarantor hereunder which hasnot paid its proportionate share of such payment.  Each Guarantor’s right of contribution shallbe subject to the terms and conditions of Section 2.03.  The provisions of this Section 2.02shall in no respect limit the obligations and liabilities of any Guarantor tothe Guaranteed Creditors, and each Guarantor shall remain liable to theGuaranteed Creditors for the full amount guaranteed by such Guarantorhereunder.

 

Section 2.03           No Subrogation.  Notwithstanding any payment made by anyGuarantor hereunder or any set-off or application of funds of any Guarantor byany Guaranteed Creditor, no Guarantor shall be entitled to be subrogated to anyof the rights of any Guaranteed Creditor against the Borrower or any otherGuarantor or any collateral security or guarantee or right of offset held byany Guaranteed Creditor for the payment of the Borrower Obligations, nor shallany Guarantor seek or be entitled to seek any indemnity, exoneration,participation, contribution or reimbursement from the Borrower or any otherGuarantor in respect of payments made by such Guarantor hereunder, until allamounts owing to the Guaranteed Creditors by the Borrower on account of theBorrower Obligations are irrevocably and indefeasibly paid in full incash.  If any amount shall be paid to anyGuarantor on account of such subrogation rights at any time when all of theBorrower Obligations shall not have been irrevocably and indefeasibly paid infull in cash, such amount shall be held by such Guarantor in trust for theGuaranteed Creditors, and shall, forthwith upon receipt by such Guarantor, beturned over to the Administrative Agent in the exact form received by such Guarantor(duly indorsed by such Guarantor to the Administrative Agent, if required), tobe applied against the Borrower Obligations, whether matured or unmatured, inaccordance with Section 10.02(c) of the Loan Agreement.

 

Section 2.04           Guaranty Amendments, Etc. withrespect to the Borrower Obligations. Each Guarantor shall remain obligatedhereunder, and such Guarantor’s obligations hereunder shall not be released,discharged or otherwise affected, notwithstanding that, without any reservationof rights against any Guarantor and without notice to, demand upon or furtherassent by any Guarantor (which notice, demand and assent requirements arehereby expressly waived by such Guarantor), (a) any demand for payment ofany of the Borrower Obligations made by any Guaranteed Creditor may berescinded by such Guaranteed Creditor or otherwise and any of the BorrowerObligations continued; (b) the Borrower Obligations, the liability of anyother Person upon or for any part thereof or any collateral security orguarantee therefor or right of offset with respect thereto, may, from time totime, in whole or in part, be renewed, extended, amended, modified,accelerated, compromised, waived, surrendered or released by, or any

 

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 indulgence or forbearance in respect thereofgranted by, any Guaranteed Creditor; (c) any Guaranteed Document may beamended, modified, supplemented or terminated, in whole or in part, as theGuaranteed Creditors may deem advisable from time to time; (d) anycollateral security, guarantee or right of offset at any time held by anyGuaranteed Creditor for the payment of the Borrower Obligations may be sold,exchanged, waived, surrendered or released; (e) any additional guarantors,makers or endorsers of the Borrower’s Obligations may from time to time beobligated on the Borrower’s Obligations or any additional security orcollateral for the payment and performance of the Borrower’s Obligations mayfrom time to time secure the Borrower’s Obligations; or (f) any otherevent shall occur which constitutes a defense (other than a defense of paymentor performance in full) or release of sureties generally.  No Guaranteed Creditor shall have anyobligation to protect, secure, perfect or insure any Lien at any time held byit as security for the Borrower Obligations or for the guarantee contained inthis ARTICLE II or any Property subject thereto.

 

Section 2.05           Waivers.  Each Guarantor hereby waives any and allnotice of the creation, renewal, extension or accrual of any of the BorrowerObligations and notice of or proof of reliance by any Guaranteed Creditor uponthe guarantee contained in this ARTICLE II or acceptance of the guaranteecontained in this ARTICLE II; the Borrower Obligations, and any of them, shallconclusively be deemed to have been created, contracted or incurred, orrenewed, extended, amended or waived, in reliance upon the guarantee containedin this ARTICLE II and no notice of creation of the Borrower Obligations or anyextension of credit already or hereafter contracted by or extended to theBorrower need be given to any Guarantor; and all dealings between the Borrowerand any of the Guarantors, on the one hand, and the Guaranteed Creditors, onthe other hand, likewise shall be conclusively presumed to have been had orconsummated in reliance upon the guarantee contained in this ARTICLE II.  Each Guarantor waives diligence, presentment,protest, demand for payment and notice of default or nonpayment to or upon theBorrower or any of the Guarantors with respect to the Borrower Obligations.

 

Section 2.06           Guaranty Absolute andUnconditional.

 

(a)           Each Guarantor understands and agrees that the guaranteecontained in this ARTICLE II is, and shall be construed as, a continuing,completed, absolute and unconditional guarantee of payment, and each Guarantorhereby waives any defense of a surety or guarantor or any other obligor on anyobligations arising in connection with or in respect of any of the followingand hereby agrees that its obligations hereunder shall not be discharged orotherwise affected as a result of any of the following:

 

(i)            the invalidity or unenforceability of any GuaranteedDocument, any of the Borrower Obligations or any other collateral securitytherefor or guarantee or right of offset with respect thereto at any time orfrom time to time held by any Guaranteed Creditor;

 

(ii)           any defense, set-off or counterclaim (other than a defenseof payment or performance) which may at any time be available to or be assertedby the Borrower or any other Person against any Guaranteed Creditor;

 

(iii)          the insolvency, bankruptcy arrangement, reorganization,adjustment, composition, liquidation, disability, dissolution or lack of powerof the Borrower or

 

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any other Guarantor or anyother Person at any time liable for the payment of all or part of theObligations, including any discharge of, or bar or stay against collecting, anyObligation (or any part of them or interest therein) in or as a result of suchproceeding;

 

(iv)          any sale, lease or transfer of any orall of the assets of the Borrower or any other Guarantor, or any changes in theshareholders of the Borrower or any other Guarantor;

 

(v)           any change in the corporate existence(including its constitution, laws, rules, regulations or power), structure orownership of any Obligor or in the relationship between the Borrower and anyObligor;

 

(vi)          the fact that any Collateral or Liencontemplated or intended to be given, created or granted as security for therepayment of the Obligations shall not be properly perfected or created, orshall prove to be unenforceable or subordinate to any other Lien, it beingrecognized and agreed by each of the Guarantors that it is not entering intothis Agreement in reliance on, or in contemplation of the benefits of, thevalidity, enforceability, collectability or value of any of the Collateral forthe Obligations;

 

(vii)         the absence of any attempt to collectthe Obligations or any part of them from any Obligor;

 

(viii)        (A) any Guaranteed Creditor’selection, in any proceeding instituted under chapter 11 of the Bankruptcy Code,of the application of Section 1111(b)(2) of the Bankruptcy Code;(B) any borrowing or grant of a Lien by the Borrower, as debtor-in-possession,or extension of credit, under Section 364 of the Bankruptcy Code;(C) the disallowance, under Section 502 of the Bankruptcy Code, ofall or any portion of any Guaranteed Creditor’s claim (or claims) for repaymentof the Obligations; (D) any use of cash collateral under Section 363of the Bankruptcy Code; (E) any agreement or stipulation as to theprovision of adequate protection in any bankruptcy proceeding; (F) theavoidance of any Lien in favor of the Guaranteed Creditors or any of them for anyreason; or (G) failure by any Guaranteed Creditor to file or enforce aclaim against the Borrower or its estate in any bankruptcy or insolvency caseor proceeding; or

 

(ix)           any other circumstance or actwhatsoever, including any action or omission of the type described inSection 2.04 (with or without notice to or knowledge of the Borrower orsuch Guarantor), which constitutes, or might be construed to constitute, anequitable or legal discharge of the Borrower for the Borrower Obligations, orof such Guarantor under the guarantee contained in this ARTICLE II, inbankruptcy or in any other instance.

 

(b)           When making any demand hereunder orotherwise pursuing its rights and remedies hereunder against any Guarantor, anyGuaranteed Creditor may, but shall be under no obligation to, join or make asimilar demand on or otherwise pursue or exhaust such rights and remedies as itmay have against the Borrower, any other Guarantor or any other Person oragainst any collateral security or guarantee for the Borrower Obligations or anyright of offset with respect thereto, and any failure by any GuaranteedCreditor to make any such demand, to pursue such other rights or remedies or tocollect any payments from the Borrower, any other

 

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Guarantor or any otherPerson or to realize upon any such collateral security or guarantee or toexercise any such right of offset, or any release of the Borrower, any otherGuarantor or any other Person or any such collateral security, guarantee or rightof offset, shall not relieve any Guarantor of any obligation or liabilityhereunder, and shall not impair or affect the rights and remedies, whetherexpress, implied or available as a matter of law, of any Guaranteed Creditoragainst any Guarantor.  For the purposeshereof “demand” shall include the commencement and continuance of any legalproceedings.

 

Section 2.07           Reinstatement.  Theguarantee contained in this ARTICLE II shall continue to be effective, or bereinstated, as the case may be, if at any time payment, or any part thereof, ofany of the Borrower Obligations is rescinded or must otherwise be restored orreturned by any Guaranteed Creditor upon the insolvency, bankruptcy,dissolution, liquidation or reorganization of the Borrower or any Guarantor, orupon or as a result of the appointment of a receiver, intervenor or conservatorof, or trustee or similar officer for, the Borrower or any Guarantor or anysubstantial part of its Property, or otherwise, all as though such payments hadnot been made.

 

Section 2.08           Payments.  Each Guarantor herebyguarantees that payments hereunder will be paid to the Administrative Agent,for the ratable benefit of the Guaranteed Creditors, without set-off, deductionor counterclaim, in dollars, in immediately available funds, at the offices ofthe Administrative Agent specified in Section 12.01 of the Loan Agreement.

 

**ARTICLE IIIGrant of Security Interest**

 

Section 3.01           Grant of Security Interest.  EachPledgor hereby pledges, assigns and transfers to the Administrative Agent, andhereby grants to the Administrative Agent, for the ratable benefit of theGuaranteed Creditors, a security interest in all of the following Property nowowned or at any time hereafter acquired by such Pledgor or in which suchPledgor now has or at any time in the future may acquire any right, title orinterest (collectively, the “Collateral”), as collateral security forthe prompt and complete 

payment and performance when due (whether at the stated maturity, byacceleration or otherwise) of such Pledgor’s Obligations:

 

(1)           all Pledged Securities;

 

(2)           all books and records pertaining to thePledged Securities; and

 

(3)           to the extent not otherwise included, allProceeds and products of any and all of the foregoing and all collateralsecurity and guarantees given by any Person with respect to any of theforegoing.

 

Section 3.02           Transfer of Pledged Securities.  Uponthe payment in full of all Senior Revolving Guarantor Obligations, thetermination of the commitments under the Senior Revolving Credit Documents andthe expiration, termination, or cash-collateralization of all letters of creditissued by any holder of Senior Indebtedness and to the extent the PledgeSecurities constitute “securities” under Article 8 of the UCC, allcertificates or instruments representing or evidencing such Pledged Securitiesshall be delivered to and held pursuant hereto by the Administrative Agent or aPerson designated by the Administrative Agent and shall be in 

 

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suitable form for transferby delivery, or shall be accompanied by duly executed instruments of transferor assignment in blank, and accompanied by any required transfer tax stamps toeffect the pledge of the Pledged Securities to the Administrative Agent.  Notwithstanding the preceding sentence, atthe Administrative Agent’s reasonable discretion, to the extent the PledgeSecurities constitute “securities” under Article 8 of the UCC and upon thepayment in full of all Senior Revolving Guarantor Obligations, the terminationof the commitments under the Senior Revolving Credit Documents and theexpiration, termination, or cash-collateralization of all letters of creditissued by any holder of Senior Indebtedness, all such Pledged Securities mustbe delivered or transferred in such manner as to permit the AdministrativeAgent to be a “protected purchaser” to the extent of its security interest asprovided in Section 8.303 of the UCC (if the Administrative Agentotherwise qualifies as a protected purchaser). During the continuance of an Event of Default, the Administrative Agentshall have the right, at any time in its discretion and without notice, totransfer to or to register in the name of the Administrative Agent or any ofits nominees any or all of the Pledged Securities, subject only to therevocable rights specified in Section 6.02(b).  In addition, during the continuance of anEvent of Default, after payment in full of all Senior Revolving GuarantorObligations, the termination of the commitments under the Senior RevolvingCredit Documents and the expiration, termination, or cash-collateralization ofall letters of credit issued by any holder of Senior Indebtedness, theAdministrative Agent shall have the right at any time to exchange certificatesor instruments representing or evidencing Pledged Securities for certificatesor instruments of smaller or larger denominations.

 

**ARTICLE IV****Representations and Warranties**

 

To induce the AdministrativeAgent and the Lenders to enter into the Loan Agreement, each Obligor herebyrepresents and warrants to the Administrative Agent and each Lender that:

 

Section 4.01           Representations in Loan Agreement.In the case of each Guarantor, the representations and warranties set forth inArticle VII of the Loan Agreement as they relate to such Guarantor or tothe Loan Documents to which such Guarantor is a party are true and correct inall material respects, provided that each reference in each such representationand warranty to the Borrower’s knowledge shall, for the purposes of thisSection 4.01, be deemed to be a reference to such Guarantor’s knowledge.

 

Section 4.02           Title; No Other Liens.  Except for the security interest granted tothe Administrative Agent for the ratable benefit of the Guaranteed Creditorspursuant to this Agreement and the security interest granted to the SeniorRevolving Administrative Agent to secure the Senior Revolving GuarantorObligations, such Pledgor is the record and beneficial owner of its respectiveitems of the Collateral free and clear of any and all Liens and has rights inor the power to transfer each item of the Collateral in which a Lien is grantedby it hereunder, free and clear of any Lien. No financing statement or other public notice with respect to all or anypart of the Collateral is on file or of record in any public office, exceptsuch as have been filed in favor of the Administrative Agent, for the ratablebenefit of the Guaranteed Creditors, pursuant to this Agreement or the SecurityInstruments and such as have been filed in favor of the Senior RevolvingAdministrative Agent, for the ratable benefit of the Senior RevolvingGuaranteed Creditors, pursuant to the Senior Revolving Credit Documents.

 

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Section 4.03           Perfected Priority Liens.  Thesecurity interests granted pursuant to this Agreement (a) upon thecompletion of the filings and the other actions specified on Schedule 3constitute valid perfected security interests in all of the Collateral in favorof the Administrative Agent, for the ratable benefit of the GuaranteedCreditors, as collateral security for such Pledgor’s Obligations, enforceablein accordance with the terms hereof against all creditors of such Pledgor andany Persons purporting to purchase any Collateral from such Pledgor and(b) are prior to all other Liens on the Collateral in existence on thedate hereof except for Liens securing the Senior Revolving GuarantorObligations.

 

Section 4.04           Obligor Information.  Onthe date hereof, the correct legal name of such Obligor, all names and tradenames that such Obligor has used in the last five years, such Obligor’sjurisdiction of organization and each jurisdiction of organization of suchObligor over the last five years, organizational number, taxpayor identificationnumber, and the location(s) of such Obligor’s chief executive office orsole place of business over the last five years are specified on Schedule 4.

 

Section 4.05           Pledged Securities.

 

(a)           The Pledged Securities required to be pledgedhereunder and under the Loan Agreement by such Pledgor are listed in Schedule2.  The shares of Pledged Securitiespledged by such Pledgor hereunder constitute all the issued and outstandingshares of all classes of the Equity Interests of each Issuer owned by suchPledgor.  All the shares of the PledgedSecurities have been duly and validly issued and are fully paid andnonassessable; and such Pledgor is the record and beneficial owner of, and hasgood title to, the Pledged Securities pledged by it hereunder, free of any andall Liens or options in favor of, or claims of, any other Person, except thesecurity interest created by this Agreement and the security interests in favorof the Senior Revolving Administrative Agent to secure the Senior RevolvingGuarantor Obligations, and has rights in or the power to transfer the PledgedSecurities in which a Lien is granted by it hereunder, free and clear of anyLien except for Liens securing the Senior Revolving Guarantor Obligations.

 

(b)           There are no restrictions on transfer (thathave not been waived or otherwise consented to) in the LLC Agreement governingany Pledged LLC Interest and the Partnership Agreement governing any PledgedPartnership Interest or any other agreement relating thereto which would limitor restrict (i) the grant of a security interest in the Pledged LLCInterests and the Pledged Partnership Interests, (ii) the perfection ofsuch security interest or (iii) the exercise of remedies in respect ofsuch perfected security interest in the Pledged LLC Interests and the PledgedPartnership Interests, in each case, as contemplated by this Agreement.  Upon the transfer of the Pledged LLCInterests or the Pledged Partnership Interests pursuant to an exercise ofremedies hereunder in respect of the Pledged LLC Interests and the PledgedPartnership Interests, a transferee of a membership interest or partnershipinterest, as the case may be, of such LLC or Partnership, as the case may be,shall become a member or partner, as the case may be, of such LLC orPartnership, as the case may be, entitled to participate in the managementthereof and, upon the transfer of the entire interest of such Pledgor, suchPledgor ceases to be a member or partner, as the case may be.

 

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Section 4.06           Benefit to the Guarantor.  The Borrower is a member of an affiliatedgroup of companies that includes each Guarantor, and the Borrower and the otherGuarantors are engaged in related businesses. Each Guarantor is a Subsidiary of the Borrower and its guaranty andsurety obligations pursuant to this Agreement reasonably may be expected tobenefit, directly or indirectly, it; and it has determined that this Agreementis necessary and convenient to the conduct, promotion and attainment of thebusiness of such Guarantor and the Borrower.

 

Section 4.07           Solvency.  Each Obligor (a) is not insolvent as ofthe date hereof and will not be rendered insolvent as a result of thisAgreement (after giving effect to Section 2.02), (b) is not engagedin business or a transaction, or about to engage in a business or atransaction, for which any Property remaining with it constitutes unreasonablysmall capital, and (c) does not intend to incur, or believe it will incur,Debt that will be beyond its ability to pay as such Debt matures.

 

**ARTICLE V****Covenants**

 

Each Obligor covenants andagrees with the Administrative Agent and the Lenders that, from and after thedate of this Agreement until the Borrower Obligations shall have been paid infull in cash:

 

Section 5.01           Maintenance of Perfected SecurityInterest; Further Documentation.  EachPledgor agrees that:

 

(a)           it shall maintain the securityinterest created by this Agreement as a perfected security interest having atleast the priority described in Section 4.03 and shall defend suchsecurity interest against the claims and demands of all Persons, other than theSenior Revolving Guaranteed Creditors, whomsoever.

 

(b)           it will furnish to the AdministrativeAgent from time to time statements and schedules further identifying anddescribing the Collateral and such other reports in connection with theCollateral as the Administrative Agent may reasonably request, all inreasonable detail.

 

(c)           At any time and from time to time,upon the written request of the Administrative Agent and the payment in full ofall Senior Revolving Guarantor Obligations, the termination of the commitmentsunder the Senior Revolving Credit Documents and the expiration, termination, orcash-collateralization of all letters of credit issued by any holder of SeniorIndebtedness, and at the sole expense of such Pledgor, it will promptly andduly execute and deliver, and have recorded, such further instruments anddocuments and take such further actions as the Administrative Agent mayreasonably deem necessary for the purpose of obtaining or preserving the fullbenefits of this Agreement and of the rights and powers herein granted,including, without limitation, the delivery of certificated securities and thefiling of any financing or continuation statements under the UCC (or othersimilar laws) in effect in any jurisdiction with respect to the securityinterests created hereby.

 

Section 5.02           Changes in Locations, Name, Etc.  Such Obligor recognizes that financingstatements pertaining to the Collateral have been or may be filed where suchObligor 

 

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maintains any Collateral oris organized.  Without limitation ofSection 8.01(l) of the Loan Agreement or any other covenant herein,such Obligor will not cause or permit any change in its (a) corporate nameor in any trade name used to identify it in the conduct of its business or inthe ownership of its Properties, (b) the location of its chief executiveoffice or principal place of business, (c) its identity or corporatestructure or in the jurisdiction in which it is incorporated or formed,(d) its jurisdiction of organization or its organizational identificationnumber in such jurisdiction of organization or (e) its federal taxpayeridentification number, unless, in each case, such Obligor shall (i) notifythe Administrative Agent of such change within ten (10) days after anysuch change, and (ii) take all action reasonably requested by theAdministrative Agent for the purpose of maintaining the perfection and priorityof the Administrative Agent’s security interests under this Agreement.  In any notice furnished pursuant to thisSection 5.02, such Obligor will expressly state in a conspicuous mannerthat the notice is required by this Agreement and contains facts that mayrequire additional filings of financing statements or other notices for thepurposes of continuing perfection of the Administrative Agent’s securityinterest in the Collateral.  At therequest of the Administrative Agent, on or prior to the occurrence of suchevent, the Borrower will provide to the Administrative Agent and the Lenders anopinion of counsel, in form and substance reasonably satisfactory to theAdministrative Agent, to the effect that such event will not impair thevalidity of the security interests hereunder, the perfection and prioritythereof, the enforceability of the Loan Documents, and such other matters asmay be reasonably requested by the Administrative Agent.

 

Section 5.03           Pledged Securities.

 

(a)           Upon the payment in full of allSenior Revolving Guarantor Obligations, the termination of the commitmentsunder the Senior Revolving Credit Documents and the expiration, termination, orcash-collateralization of all letters of credit issued by any holder of SeniorIndebtedness, if such Pledgor shall become entitled to receive or shall receiveany stock certificate (including, without limitation, any certificaterepresenting a stock dividend or a distribution in connection with anyreclassification, increase or reduction of capital or any certificate issued inconnection with any reorganization), option or rights in respect of the EquityInterests of any Issuer, whether in addition to, in substitution of, as aconversion of, or in exchange for, any shares of the Pledged Securities, orotherwise in respect thereof, such Pledgor shall accept the same as the agentof the Guaranteed Creditors, hold the same in trust for the GuaranteedCreditors, segregated from other Property of such Pledgor, and deliver the sameforthwith to the Administrative Agent in the exact form received, duly indorsedby such Pledgor to the Administrative Agent, if required, together with anundated stock power covering such certificate duly executed in blank by suchPledgor and with, if the Administrative Agent so requests, signatureguaranteed, to be held by the Administrative Agent, subject to the termshereof, as additional collateral security for the Obligations.

 

(b)           Without the prior written consent ofthe Administrative Agent, such Pledgor will not (i) unless otherwiseexpressly permitted hereby or under the other Loan Documents, vote to enable,or take any other action to permit, any Issuer to issue any Equity Interests ofany nature or to issue any other securities convertible into or granting theright to purchase or exchange for any Equity Interests of any nature of anyIssuer, (ii) sell, assign, transfer, exchange, or otherwise dispose of, orgrant any option with respect to, the Pledged Securities or Proceeds thereof(except pursuant to a transaction expressly permitted by the Loan 

 

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Agreement), (iii) create, incur or permit to exist any Lien oroption in favor of, or any claim of any Person with respect to, any of thePledged Securities or Proceeds thereof, or any interest therein, except for thesecurity interests created by this Agreement and the Liens securing the SeniorRevolving Guarantor Obligations or (iv) enter into any agreement orundertaking restricting the right or ability of such Pledgor or theAdministrative Agent to sell, assign or transfer any of the Pledged Securitiesor Proceeds thereof.

 

(c)           In the case of each Pledgor that isan Issuer, such Issuer agrees that (i) it will be bound by the terms ofthis Agreement relating to the Pledged Securities issued by it and will complywith such terms insofar as such terms are applicable to it, (ii) it willnotify the Administrative Agent promptly in writing of the occurrence of any ofthe events described in Section 5.03(a) with respect to the PledgedSecurities issued by it and (iii) the terms of SectionsSection 6.02(a) and Section 6.03 shall apply to it, *mutatis mutandis*, with respect to allactions that may be required of it pursuant to Section 6.02(d) orSection 6.03 with respect to the Pledged Securities issued by it.

 

(d)           In the case of each Pledgor that is apartner in a Partnership, such Pledgor hereby consents to the extent requiredby the applicable Partnership Agreement to the pledge by each other Pledgor,pursuant to the terms hereof, of the Pledged Partnership Interests in suchPartnership and to the transfer of such Pledged Partnership Interests to theAdministrative Agent or its nominee and to the substitution of theAdministrative Agent or its nominee as a substituted partner in suchPartnership with all the rights, powers and duties of a general partner or alimited partner, as the case may be.  Inthe case of each Pledgor member of an LLC, such Pledgor hereby consents to theextent required by the applicable LLC Agreement to the pledge by each otherPledgor, pursuant to the terms hereof, of the Pledged LLC Interests in such LLCand to the transfer of such Pledged LLC Interests to the Administrative Agentor its nominee and to the substitution of the Administrative Agent or its nomineeas a substituted member of the LLC with all the rights, powers and duties of amember of the LLC in question.

 

(e)           Such Pledgor shall not agree to anyamendment of a Partnership Agreement or LLC Agreement that in any way adverselyaffects the perfection of the security interest of the Administrative Agent inthe Pledged Partnership Interests or Pledged LLC Interests pledged by suchPledgor hereunder, including any amendment electing to treat the membershipinterest or partnership interest of such Pledgor as a security underSection 8-103 of the UCC without the prior written consent of theAdministrative Agent.

 

(f)            Each Pledgor shall furnish to theAdministrative Agent such stock powers and other instruments as may be requiredby the Administrative Agent to assure the transferability of the PledgedSecurities when and as often as may be reasonably requested by theAdministrative Agent.

 

(g)           The Pledged Securities will at alltimes constitute not less than 100% of the Equity Interests of the Issuerthereof owned by any Pledgor.  EachPledgor will not permit any Issuer of any of the Pledged Securities to issueany new shares of any class of Equity Interests of such Issuer without theprior written consent of the Administrative Agent.

 

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**ARTICLE VI****Remedial Provisions**

 

Section 6.01           Code and Other Remedies.

 

(a)           Subject to the IntercreditorAgreement and the rights of the Senior Revolving Guaranteed Creditors in theCollateral, upon the occurrence and during the continuance of an Event ofDefault, the Administrative Agent, on behalf of the Guaranteed Creditors, mayexercise, in addition to all other rights and remedies granted to them in thisAgreement, the other Loan Documents and in any other instrument or agreementsecuring, evidencing or relating to the Obligations, all rights and remedies ofa secured party under the UCC or any other applicable law or otherwiseavailable at law or equity.  Withoutlimiting the generality of the foregoing and subject to the IntercreditorAgreement and the rights of the Senior Revolving Guaranteed Creditors in theCollateral, the Administrative Agent, without demand of performance or otherdemand, presentment, protest, advertisement or notice of any kind (except anynotice required by law referred to below) to or upon any Pledgor or any otherPerson (all and each of which demands, defenses, advertisements and notices arehereby waived), may in such circumstances forthwith collect, receive,appropriate and realize upon the Collateral, or any part thereof, and/or mayforthwith sell, lease, assign, give option or options to purchase, or otherwisedispose of and deliver the Collateral or any part thereof (or contract to doany of the foregoing), in one or more parcels at public or private sale orsales, at any exchange, broker’s board or office of any Guaranteed Creditor orelsewhere upon such terms and conditions as it may deem advisable and at suchprices as it may deem best, for cash or on credit or for future deliverywithout assumption of any credit risk. Any Guaranteed Creditor shall have the right upon any such public saleor sales, and, to the extent permitted by law, upon any such private sale orsales, to purchase the whole or any part of the Collateral so sold, free of anyright or equity of redemption in any Pledgor, which right or equity is herebywaived and released.  If applicable toany particular item of Collateral, each Pledgor further agrees, at theAdministrative Agent’s request and subject to the Intercreditor Agreement, toassemble the Collateral and make it available to the Administrative Agent atplaces which the Administrative Agent shall reasonably select, whether at suchPledgor’s premises or elsewhere.  Anysuch sale or transfer by the Administrative Agent either to itself or to anyother Person shall be absolutely free from any claim of right by Pledgor,including any equity or right of redemption, stay or appraisal which Pledgorhas or may have under any rule of law, regulation or statute now existingor hereafter adopted (and such Pledgor hereby waives any rights it may have inrespect thereof).  Upon any such sale ortransfer and subject to the rights of the Senior Revolving Guaranteed Creditorsin the Collateral, the Administrative Agent shall have the right to deliver,assign and transfer to the purchaser or transferee thereof the Collateral sosold or transferred.  Subject to theIntercreditor Agreement, the Administrative Agent shall apply the net proceedsof any action taken by it pursuant to this Section 6.01, after deductingall reasonable costs and expenses of every kind incurred in connectiontherewith or incidental to the care or safekeeping of any of the Collateral orin any way relating to the Collateral or the rights of the Administrative Agentand the Guaranteed Creditors hereunder, including, without limitation,reasonable attorneys’ fees and disbursements, to the payment in whole or inpart of the Obligations, in accordance with Section 10.02(c) of theLoan Agreement, and only after such application and after the payment by theAdministrative Agent of any other amount required by any provision of law,including, without limitation, Section 9.615 of the UCC, need theAdministrative Agent account for the surplus, if 

 

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any, to any Pledgor.  To the extent permitted by applicable law,each Pledgor waives all claims, damages and demands it may acquire against theAdministrative Agent or any Guaranteed Creditor arising out of the exercise bythem of any rights hereunder except to the extent caused by the grossnegligence or willful misconduct of the Administrative Agent or such GuaranteedCreditor or their respective agents.  Ifany notice of a proposed sale or other disposition of Collateral shall be requiredby law, such notice shall be deemed reasonable and proper if given at least 10days before such sale or other disposition.

 

(b)           In the event that the AdministrativeAgent elects not to sell the Collateral, the Administrative Agent retains itsrights, subject to the Intercreditor Agreement and the rights of the SeniorRevolving Guaranteed Creditors in the Collateral, to dispose of or utilize theCollateral or any part or parts thereof in any manner authorized or permittedby law or in equity, and to apply the proceeds of the same towards payment ofthe Obligations.  Each and every methodof disposition of the Collateral described in this Agreement shall constitutedisposition in a commercially reasonable manner.

 

(c)           The Administrative Agent may appointany Person as agent to perform any act or acts necessary or incident to anysale or transfer of the Collateral.

 

Section 6.02           Pledged Securities.

 

(a)           Unless an Event of Default shall haveoccurred and be continuing and the Administrative Agent shall have given noticeto the relevant Pledgor of the Administrative Agent’s intent to exercise itscorresponding rights pursuant to Section 6.02(c), each Pledgor shall bepermitted to receive all cash dividends paid in respect of the PledgedSecurities paid in the normal course of business of the relevant Issuer (otherthan liquidating or distributing dividends), to the extent permitted in theLoan Agreement.  Subject to theIntercreditor Agreement, any sums paid upon or in respect of any PledgedSecurities upon the liquidation or dissolution of any Issuer, any distributionof capital made on or in respect of any Pledged Securities or any propertydistributed upon or with respect to any Pledged Securities pursuant to therecapitalization or reclassification of the capital of any Issuer or pursuantto the reorganization thereof shall, unless otherwise subject to a perfectedsecurity interest in favor of the Administrative Agent, be delivered to theAdministrative Agent to be held by it hereunder as additional collateralsecurity for the Obligations.  If any sumof money or property so paid or distributed in respect of any PledgedSecurities shall be received by such Pledgor, such Pledgor shall, until suchmoney or property is paid or delivered to the Administrative Agent or theSenior Revolving Administrative Agent, hold such money or property in trust forthe Administrative Agent, segregated from other funds of such Pledgor, asadditional security for the Obligations.

 

(b)           Unless an Event of Default shall haveoccurred and be continuing and the and the Administrative Agent shall havegiven notice to the relevant Pledgor of the Administrative Agent’s intent toexercise its corresponding rights pursuant to Section 6.02(c), eachPledgor shall be entitled to exercise all voting, consent and corporate,partnership or limited liability rights with respect to the Pledged Securities;provided, however, that no vote shall be cast, consent given or right exercisedor other action taken by such Pledgor that would impair the Collateral, beinconsistent with or result in any violation of any provision of the LoanAgreement, this Agreement or any other Loan Document or, without the priorconsent of the

 

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 Administrative Agent and the Lenders, enableor permit any Issuer to issue any Equity Interest or to issue any othersecurities convertible into or granting the right to purchase or exchange forany Equity Interest of any Issuer other than as permitted by the LoanAgreement.

 

(c)           Upon the occurrence and during thecontinuance of an Event of Default, upon notice by the Administrative Agent ofits intent to exercise such rights to the relevant Pledgor or Pledgors, andsubject in all respects to the Intercreditor Agreement, (i) the AdministrativeAgent shall have the right to receive any and all cash dividends, payments,Property or other Proceeds paid in respect of the Pledged Securities and makeapplication thereof to the Borrower Obligations in accordance withSection 10.02(c) of the Loan Agreement, and (ii) any or all ofthe Pledged Securities shall be registered in the name of the AdministrativeAgent or its nominee, and (iii) the Administrative Agent or its nomineemay exercise (A) all voting, consent, corporate, partnership or limitedliability and other rights pertaining to such Pledged Securities at any meetingof shareholders, partners or members (or other equivalent body), as the casemay be, of the relevant Issuer or Issuers or otherwise and (B) any and allrights of conversion, exchange and subscription and any other rights,privileges or options pertaining to such Pledged Securities as if it were theabsolute owner thereof (including, without limitation, the right to exchange atits discretion any and all of the Pledged Securities upon the merger,consolidation, reorganization, recapitalization or other fundamental change inthe organizational structure of any Issuer, or upon the exercise by any Pledgoror the Administrative Agent of any right, privilege or option pertaining tosuch Pledged Securities, and in connection therewith, the right to deposit anddeliver any and all of the Pledged Securities with any committee, depositary,transfer agent, registrar or other designated agency upon such terms andconditions as the Administrative Agent may determine), all without liabilityexcept to account for Property actually received by it, but the AdministrativeAgent shall have no duty to any Pledgor to exercise any such right, privilegeor option and shall not be responsible for any failure to do so or delay in sodoing.

 

(d)           Upon the occurrence and during thecontinuance of an Event of Default and subject in all respects to theIntercreditor Agreement, in order to permit the Administrative Agent toexercise the voting and other consensual rights that it may be entitled toexercise pursuant hereto and to receive all dividends and other distributionsthat it may be entitled to receive hereunder, (i) each Pledgor shallpromptly execute and deliver (or cause to be executed and delivered) to theAdministrative Agent all such proxies, dividend payment orders and otherinstruments as the Administrative Agent may from time to time reasonablyrequest and (ii) without limiting the effect of clause (i) above,such Pledgor hereby grants to the Administrative Agent an irrevocable proxy tovote all or any part of the Pledged Securities and to exercise all otherrights, powers, privileges and remedies to which a holder of the PledgedSecurities would be entitled (including giving or withholding written consentsof shareholders, partners or members, as the case may be, calling specialmeetings of shareholders, partners or members, as the case may be, and votingat such meetings), which proxy shall be effective, automatically and withoutthe necessity of any action (including any transfer of any Pledged Securitieson the record books of the Issuer thereof) by any other Person (including suchIssuer or any officer or agent thereof).

 

(e)           Subject to the Intercreditor Agreement, eachPledgor hereby authorizes and instructs each Issuer of any Pledged Securitiespledged by such Pledgor hereunder to (i) 

 

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comply with any instructionreceived by it from the Administrative Agent in writing that (A) statesthat an Event of Default has occurred and is continuing and (B) isotherwise in accordance with the terms of this Agreement, without any other orfurther instructions from such Pledgor, and each Pledgor agrees that eachIssuer shall be fully protected in so complying, and (ii) unless otherwiseexpressly permitted hereby, pay any dividends or other payments with respect tothe Pledged Securities directly to the Administrative Agent.

 

(f)            Upon the occurrence and during thecontinuance of an Event of Default, if the Issuer of any Pledged Securities isthe subject of bankruptcy, insolvency, receivership, custodianship or otherproceedings under the supervision of any Governmental Authority, then allrights of the Pledgor in respect thereof to exercise the voting and otherconsensual rights which such Pledgor would otherwise be entitled to exercisewith respect to the Pledged Securities issued by such Issuer shall cease, andall such rights shall, subject to the Intercreditor Agreement, thereupon becomevested in the Administrative Agent who shall thereupon have the sole right toexercise such voting and other consensual rights, but the Administrative Agentshall have no duty to exercise any such voting or other consensual rights andshall not be responsible for any failure to do so or delay in so doing.

 

Section 6.03           Private Sales of Pledged Securities.

 

(a)           Each Pledgor recognizes that theAdministrative Agent may be unable to effect a public sale of any or all thePledged Securities, by reason of certain prohibitions contained in theSecurities Act and applicable state securities laws or otherwise or maydetermine that a public sale is impracticable or not commercially reasonableand, accordingly, may resort to one or more private sales thereof to arestricted group of purchasers which will be obliged to agree, among otherthings, to acquire such securities for their own account for investment and notwith a view to the distribution or resale thereof.  Each Pledgor acknowledges and agrees that anysuch private sale may result in prices and other terms less favorable than ifsuch sale were a public sale and, notwithstanding such circumstances, agreesthat any such private sale shall be deemed to have been made in a commerciallyreasonable manner.  The AdministrativeAgent shall be under no obligation to delay a sale of any of the PledgedSecurities for the period of time necessary to permit the Issuer thereof toregister such securities for public sale under the Securities Act, or underapplicable state securities laws, even if such Issuer would agree to do so.

 

(b)           Each Pledgor agrees to use commerciallyreasonable efforts to do or cause to be done all such other acts as mayreasonably be necessary to make such sale or sales of all or any portion of thePledged Securities pursuant to this Section 6.03 valid and binding and incompliance with any and all other applicable Governmental Requirements.  Each Pledgor further agrees that a breach ofany of the covenants contained in this Section 6.03 will cause irreparableinjury to the Guaranteed Creditors, that the Guaranteed Creditors have noadequate remedy at law in respect of such breach and, as a consequence, thateach and every covenant contained in this Section 6.03 shall bespecifically enforceable against such Pledgor, and such Pledgor hereby waivesand agrees not to assert any defenses against an action for specificperformance of such covenants except for a defense that no Event of Default hasoccurred or is continuing under the Loan Agreement.

 

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Section 6.04           Waiver; Deficiency.  Each Pledgor shall remain liable for anydeficiency if the proceeds of any sale or other disposition of the Collateralare insufficient to pay its Obligations and the fees and disbursements of anyattorneys employed by the Administrative Agent or any Guaranteed Creditor tocollect such deficiency.

 

Section 6.05           Non-Judicial Enforcement.  The Administrative Agent may enforce itsrights hereunder without prior judicial process or judicial hearing, and to theextent permitted by law, each Pledgor expressly waives any and all legal rightswhich might otherwise require the Administrative Agent to enforce its rights byjudicial process.

 

**ARTICLE VIIThe Administrative Agent**

 

Section 7.01           Administrative Agent’s Appointmentas Attorney-in-Fact, Etc.

 

(a)           Each Pledgor hereby irrevocablyconstitutes and appoints the Administrative Agent and any officer or agentthereof, with full power of substitution, as its true and lawfulattorney-in-fact with full irrevocable power and authority in the place andstead of such Pledgor and in the name of such Pledgor or in its own name, forthe purpose of carrying out the terms of this Agreement, to, subject to theIntercreditor Agreement, take any and all reasonably appropriate action and toexecute any and all documents and instruments which may be reasonably necessaryor desirable to accomplish the purposes of this Agreement, and, withoutlimiting the generality of the foregoing, each Pledgor hereby gives the AdministrativeAgent the power and right, on behalf of such Pledgor but subject to theIntercreditor Agreement, without notice to or assent by such Pledgor, to do anyor all of the following:

 

(i)            in the name of such Pledgor or itsown name, or otherwise, take possession of and indorse and collect any check,draft, note, acceptance or other instrument for the payment of moneys due withrespect to any Collateral and file any claim or take any other action orproceeding in any court of law or equity or otherwise deemed appropriate by theAdministrative Agent for the purpose of collecting any such moneys due withrespect to any other Collateral whenever payable;

 

(ii)           unless being disputed underSection 8.04 of the Loan Agreement, pay or discharge Taxes and Liens leviedor placed on or threatened against the Collateral, effect any repairs or anyinsurance called for by the terms of this Agreement or any other Loan Documentand pay all or any part of the premiums therefor and the costs thereof;

 

(iii)          execute, in connection with any saleprovided for in Section 6.01 or Section 6.03, any endorsements,assignments or other instruments of conveyance or transfer with respect to theCollateral; and

 

(iv)          (A) direct any party liable forany payment under any of the Collateral to make payment of any and all moneysdue or to become due thereunder directly to the Administrative Agent or as theAdministrative Agent shall direct; (B) ask or demand for, collect, andreceive payment of and receipt for, any and all moneys, claims and otheramounts due or to become due at any time in respect of or arising out of anyCollateral; (C) commence 

 

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and prosecute any suits,actions or proceedings at law or in equity in any court of competentjurisdiction to collect the Collateral or any portion thereof and to enforceany other right in respect of any Collateral; (D) defend any suit, actionor proceeding brought against such Pledgor with respect to any Collateral;(E) settle, compromise or adjust any such suit, action or proceeding and,in connection therewith, give such discharges or releases as the AdministrativeAgent may deem appropriate; and (F) generally, sell, transfer, pledge andmake any agreement with respect to or otherwise deal with any of the Collateralas fully and completely as though the Administrative Agent were the absoluteowner thereof for all purposes, and do, at the Administrative Agent’s optionand such Pledgor’s expense, at any time, or from time to time, all acts andthings which the Administrative Agent deems necessary to protect, preserve orrealize upon the Collateral and the Administrative Agent’s and the GuaranteedCreditors’ security interests therein and to effect the intent of thisAgreement, all as fully and effectively as such Pledgor might do.

 

Anything in thisSection 7.01(a) to the contrary notwithstanding, the AdministrativeAgent agrees that it will not exercise any rights under the power of attorneyprovided for in this Section 7.01(a) unless (a) an Event ofDefault shall have occurred and be continuing and (b) a “Blockage Period”or “Standstill Period”, as such terms are defined in the IntercreditorAgreement, shall not have occurred and be continuing.

 

(b)           If any Obligor fails to perform orcomply with any of its agreements contained herein within the applicable graceperiods, the Administrative Agent, at its option, but without any obligation soto do, may perform or comply, or otherwise cause performance or compliance,with such agreement.

 

(c)           The expenses of the AdministrativeAgent incurred in connection with actions undertaken as provided in thisSection 7.01, together with interest thereon at a rate per annum equal tothe post-default rate specified in Section 3.02(c) of the LoanAgreement, but in no event to exceed the Highest Lawful Rate, from the date ofpayment by the Administrative Agent to the date reimbursed by the relevantObligor, shall be payable by such Obligor to the Administrative Agent ondemand.

 

(d)           Each Obligor hereby ratifies all thatsaid attorneys shall lawfully do or cause to be done by virtue and incompliance hereof.  All powers,authorizations and agencies contained in this Agreement are coupled with aninterest and are irrevocable until this Agreement is terminated.

 

Section 7.02           Duty of Administrative Agent.  The Administrative Agent’s sole duty withrespect to the custody, safekeeping and physical preservation of the Collateralin its possession, under Section 9.207 of the UCC or otherwise, shall beto deal with it in the same manner as the Administrative Agent deals withsimilar Property for its own account and the Administrative Agent shall bedeemed to have exercised reasonable care in the custody and preservation of theCollateral in its possession if the Collateral is accorded treatmentsubstantially equal to that which comparable secured parties accord comparablecollateral.  Neither the AdministrativeAgent, any Guaranteed Creditor nor any of their Related Parties shall be liablefor failure to demand, collect or realize upon any of the Collateral or for anydelay in doing so or shall be under any obligation to sell or otherwise disposeof any Collateral upon the

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request of any Pledgor orany other Person or to take any other action whatsoever with regard to theCollateral or any part thereof.  Thepowers conferred on the Administrative Agent and the Guaranteed Creditorshereunder are solely to protect the Administrative Agent’s and the GuaranteedCreditors’ interests in the Collateral and shall not impose any duty upon theAdministrative Agent or any Guaranteed Creditor to exercise any suchpowers.  The Administrative Agent and theGuaranteed Creditors shall be accountable only for amounts that they actuallyreceive as a result of the exercise of such powers, and neither they nor any oftheir Related Parties shall be responsible to any Obligor for any act orfailure to act hereunder, except for their own gross negligence or willfulmisconduct.  To the fullest extentpermitted by applicable law, the Administrative Agent shall be under no dutywhatsoever to make or give any presentment, notice of dishonor, protest, demandfor performance, notice of non-performance, notice of intent to accelerate,notice of acceleration, or other notice or demand in connection with anyCollateral or the Obligations, or to take any steps necessary to preserve anyrights against any Pledgor or other Person or ascertaining or taking actionwith respect to calls, conversions, exchanges, maturities, tenders or othermatters relative to any Collateral, whether or not it has or is deemed to haveknowledge of such matters.  Each Obligor,to the extent permitted by applicable law, waives any right of marshaling inrespect of any and all Collateral, and waives any right to require theAdministrative Agent or any Guaranteed Creditor to proceed against any Obligoror other Person, exhaust any Collateral or enforce any other remedy which theAdministrative Agent or any Guaranteed Creditor now has or may hereafter haveagainst any Obligor or other Person.

 

Section 7.03           Execution of Financing Statements.  Pursuant to the UCC and any other applicablelaw, each Pledgor authorizes the Administrative Agent to file or recordfinancing statements and other filing or recording documents or instrumentswith respect to the Collateral without the signature of such Pledgor in suchform and in such offices as the Administrative Agent reasonably determinesappropriate to perfect the security interests of the Administrative Agent underthis Agreement.  A photographic or otherreproduction of this Agreement shall be sufficient as a financing statement orother filing or recording document or instrument for filing or recording in anyjurisdiction.

 

Section 7.04           Authority of Administrative Agent.  Each Obligor acknowledges that the rights andresponsibilities of the Administrative Agent under this Agreement with respectto any action taken by the Administrative Agent or the exercise or non-exerciseby the Administrative Agent of any option, voting right, request, judgment orother right or remedy provided for herein or resulting or arising out of thisAgreement shall, as between the Administrative Agent and the GuaranteedCreditors, be governed by the Loan Agreement and by such other agreements withrespect thereto as may exist from time to time among them, but, as between theAdministrative Agent and the Obligors, the Administrative Agent shall beconclusively presumed to be acting as agent for the Guaranteed Creditors with fulland valid authority so to act or refrain from acting, and no Obligor shall beunder any obligation, or entitlement, to make any inquiry respecting suchauthority.

 

**ARTICLE VIII****Subordination of Indebtedness**

 

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Section 8.01           Subordination of All Obligor Claims.  Asused herein, the term “Obligor Claims” shall mean all debts andobligations of the Borrower or any other Obligor to any other Obligor, whethersuch debts and obligations now exist or are hereafter incurred or arise, orwhether the obligation of the debtor thereon be direct, contingent, primary,secondary, several, joint and several, or otherwise, and irrespective ofwhether such debts or obligations be evidenced by note, contract, open account,or otherwise, and irrespective of the Person or Persons in whose favor suchdebts or obligations may, at their inception, have been, or may hereafter becreated, or the manner in which they have been or may hereafter be acquired bysuch other Obligor.  After and during thecontinuation of an Event of Default, no Obligor shall receive or collect,directly or indirectly, from any other Obligor in respect thereof any amountupon the Obligor Claims.

 

Section 8.02           Claims in Bankruptcy.  Inthe event of receivership, bankruptcy, reorganization, arrangement, debtor’srelief, or other insolvency proceedings involving any Obligor, theAdministrative Agent on behalf of the Administrative Agent and the GuaranteedCreditors shall have the right to prove their claim in any proceeding, so as toestablish their rights hereunder and receive, subject in all respects to theIntercreditor Agreement, directly from the receiver, trustee or other courtcustodian, dividends and payments which would otherwise be payable upon ObligorClaims.  Each Obligor hereby assigns suchdividends and payments to the Administrative Agent for the benefit of theAdministrative Agent and the Guaranteed Creditors for application against theBorrower Obligations as provided under Section 10.02(c) of the LoanAgreement.  Should any Agent orGuaranteed Creditor receive, for application upon the Obligations, any suchdividend or payment which is otherwise payable to any Obligor, and which, asbetween such Obligors, shall constitute a credit upon the Obligor Claims, thenupon payment in full in cash of the Borrower Obligations under the LoanAgreement, the intended recipient shall become subrogated to the rights of theAdministrative Agent and the Guaranteed Creditors to the extent that suchpayments to the Administrative Agent and the Guaranteed Creditors on theObligor Claims have contributed toward the liquidation of the Obligations, andsuch subrogation shall be with respect to that proportion of the Obligationswhich would have been unpaid if the Administrative Agent and the GuaranteedCreditors had not received dividends or payments upon the Obligor Claims.

 

Section 8.03           Payments Held in Trust.  Inthe event that, notwithstanding Section 8.01 and Section 8.02 andsubject in all respects to the Intercreditor Agreement, any Obligor shouldreceive any funds, payments, claims or distributions which are prohibited bysuch Sections, then it agrees: (a) to hold in trust for the AdministrativeAgent and the Guaranteed Creditors an amount equal to the amount of all funds,payments, claims or distributions so received, and (b) that it shall haveabsolutely no dominion over the amount of such funds, payments, claims ordistributions except to pay them promptly to the Administrative Agent, for thebenefit of the Guaranteed Creditors or the Senior Revolving AdministrativeAgent, for the benefit of the Senior Revolving Guaranteed Creditors; and eachObligor covenants promptly to pay the same to the Administrative Agent or theSenior Revolving Administrative Agent.

 

Section 8.04           Liens Subordinate.  EachObligor agrees that, until the Borrower Obligations are paid in full in cash,any Liens securing payment of the Obligor Claims shall be and remain inferiorand subordinate to any Liens securing payment of the Obligations and the Lienssecuring payment of the Senior Revolving Guarantor Obligations, regardless ofwhether

 

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such encumbrances in favor of such Obligor,the Administrative Agent or any Guaranteed Creditor presently exist or arehereafter created or attach.  Without theprior written consent of the Administrative Agent and subject in all respectsto the Intercreditor Agreement, no Obligor, during the period in which any ofthe Borrower Obligations are outstanding, shall (a) exercise or enforceany creditor’s right it may have against any debtor in respect of the ObligorClaims, or (b) foreclose, repossess, sequester or otherwise take steps orinstitute any action or proceeding (judicial or otherwise, including withoutlimitation the commencement of or joinder in any liquidation, bankruptcy,rearrangement, debtor’s relief or insolvency proceeding) to enforce any Liensecuring payment of the Obligor Claims held by it.

 

Section 8.05           Notation of Records.  Upon the request of the Administrative Agent,all promissory notes and all accounts receivable ledgers or other evidence ofthe Obligor Claims accepted by or held by any Obligor shall contain a specificwritten notice thereon that the indebtedness evidenced thereby is subordinatedunder the terms of this Agreement.

 

**ARTICLE IX****Miscellaneous**

 

Section 9.01           Waiver.  No failure on the part of the AdministrativeAgent or any Lender to exercise and no delay in exercising, and no course ofdealing with respect to, any right, power, privilege or remedy or anyabandonment or discontinuance of steps to enforce such right, power, privilegeor remedy under this Agreement or any other Loan Document shall operate as awaiver thereof, nor shall any single or partial exercise of any right, power,privilege or remedy under this Agreement or any other Loan Document preclude orbe construed as a waiver of any other or further exercise thereof or theexercise of any other right, power, privilege or remedy.  The remedies provided herein are cumulativeand not exclusive of any remedies provided by law or equity.

 

Section 9.02           Notices.  Allnotices and other communications provided for herein shall be given in themanner and subject to the terms of Section 12.01 of the Loan Agreement;provided that any such notice, request or demand to or upon any Guarantor shallbe addressed to such Guarantor at its notice address set forth on Schedule 1.

 

Section 9.03           Payment of Expenses, Indemnities, Etc.

 

(a)           Each Guarantor agrees to pay orreimburse each Guaranteed Creditor and the Administrative Agent for allout-of-pocket expenses incurred by such Person, including the fees, charges anddisbursements of any counsel for the Administrative Agent or any GuaranteedCreditor, in connection with the enforcement or protection of its rights inconnection with this Agreement or any other Loan Document, including, withoutlimitation, all costs and expenses incurred in collecting against suchGuarantor under the guarantee contained in ARTICLE II or otherwise enforcing orpreserving any rights under this Agreement and the other Loan Documents towhich such Guarantor is a party.

 

(b)           Each Guarantor agrees to pay, and tosave the Administrative Agent and the Guaranteed Creditors harmless from, anyand all liabilities with respect to, or resulting from any delay in paying, anyand all Other Taxes which may be payable or determined to be payable 

 

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with respect to any of the Collateral or inconnection with any of the transactions contemplated by this Agreement.

 

(c)           Each Guarantor agrees to pay, and tosave the Administrative Agent and the Guaranteed Creditors harmless from, anyand all liabilities, obligations, losses, damages, penalties, actions,judgments, suits, costs, expenses or disbursements of any kind or naturewhatsoever with respect to the execution, delivery, enforcement, performanceand administration of this Agreement to the extent the Borrower would berequired to do so pursuant to Section 12.03 of the Loan Agreement.

 

Section 9.04           Amendments in Writing.  None of the terms or provisions of thisAgreement may be waived, amended, supplemented or otherwise modified except inaccordance with Section 12.02 of the Loan Agreement.

 

Section 9.05           Successors and Assigns.  The provisions of this Agreement shall bebinding upon the Obligors and their successors and assigns and shall inure tothe benefit of the Administrative Agent and the Guaranteed Creditors and theirrespective successors and assigns; provided that except as set forth in Section 9.11of the Loan Agreement, no Obligor may assign, transfer or delegate any of itsrights or obligations under this Agreement without the prior written consent ofthe Administrative Agent and the Lenders, and any such purported assignment,transfer or delegation shall be null and void.

 

Section 9.06           Survival; Revival; Reinstatement.

 

(a)           All covenants, agreements,representations and warranties made by any Obligor herein and in thecertificates or other instruments delivered in connection with or pursuant tothis Agreement or any other Loan Document to which it is a party shall beconsidered to have been relied upon by the Administrative Agent, the otherAgents and the Lenders and shall survive the execution and delivery of thisAgreement and the making of any Loans, regardless of any investigation made byany such other party or on its behalf and notwithstanding that the AdministrativeAgent, the other Agents or any Lender may have had notice or knowledge of anyDefault or incorrect representation or warranty at the time any credit isextended hereunder, and shall continue in full force and effect as long as theprincipal of or any accrued interest on any Loan or any fee or any other amountpayable under the Loan Agreement is outstanding and unpaid.  The provisions of Section 9.03 shallsurvive and remain in full force and effect regardless of the consummation ofthe transactions contemplated hereby, the repayment of the Loans or thetermination of this Agreement, any other Loan Document or any provision hereofor thereof.

 

(b)           To the extent that any payments onthe Guarantor Obligations or proceeds of any Collateral are subsequently invalidated,declared to be fraudulent or preferential, set aside or required to be repaidto a trustee, debtor in possession, receiver or other Person under anybankruptcy law, common law or equitable cause, then to such extent, theGuarantor Obligations so satisfied shall be revived and continue as if suchpayment or proceeds had not been received and the Administrative Agent’s andthe Guaranteed Creditors’ Liens, security interests, rights, powers andremedies under this Agreement and each other Loan Document shall continue infull force and effect.  In such event,each Loan Document shall be automatically reinstated and the 

 

 

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Borrower shall take such action as may bereasonably requested by the Administrative Agent and the Guaranteed Creditorsto effect such reinstatement.

 

Section 9.07           Counterparts; Integration; Effectiveness.

 

(a)           This Agreement may be executed incounterparts (and by different parties hereto on different counterparts), eachof which shall constitute an original, but all of which when taken togethershall constitute a single contract.

 

(b)           This Agreement, the other LoanDocuments and any separate letter agreements with respect to fees payable tothe Administrative Agent constitute the entire contract among the partiesrelating to the subject matter hereof and thereof and supersede any and allprevious agreements and understandings, oral or written, relating to thesubject matter hereof and thereof.  **THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENTTHE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPERANEOUS OR SUBSEQUENT ORALAGREEMENTS OF THE PARTIES.  THERE ARE NOUNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.**

 

(c)           This Agreement shall become effectivewhen it shall have been executed by the Administrative Agent and when theAdministrative Agent shall have received counterparts hereof which, when takentogether, bear the signatures of each of the other parties hereto, andthereafter shall be binding upon and inure to the benefit of the partieshereto, the Lenders and their respective successors and assigns.  Delivery of an executed counterpart of asignature page of this Agreement by telecopy shall be effective asdelivery of a manually executed counterpart of this Agreement.

 

Section 9.08           Severability. Any provision of this Agreement or any other Loan Document held to beinvalid, illegal or unenforceable in any jurisdiction shall, as to suchjurisdiction, be ineffective to the extent of such invalidity, illegality orunenforceability without affecting the validity, legality and enforceability ofthe remaining provisions hereof or thereof; and the invalidity of a particularprovision in a particular jurisdiction shall not invalidate such provision inany other jurisdiction.

 

Section 9.09           Set-Off. Subject to the Intercreditor Agreement, if an Event of Default shallhave occurred and be continuing, each Lender and each of its Affiliates ishereby authorized at any time and from time to time, to the fullest extentpermitted by law, to set off and apply any and all deposits (general orspecial, time or demand, provisional or final) at any time held and otherobligations (of whatsoever kind, including, without limitations obligationsunder Swap Agreements) at any time owing by such Lender or Affiliate to or forthe credit or the account of any Obligor against any of and all the obligationsof the Obligor owed to such Lender now or hereafter existing under thisAgreement or any other Loan Document, irrespective of whether or not suchLender shall have made any demand under this Agreement or any other LoanDocument and although such obligations may be unmatured.  The rights of each Lender under this Section 9.09are in addition to other rights and remedies (including other rights of setoff)which such Lender or its Affiliates may have.

 

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Section 9.10           Governing Law; Submission to Jurisdiction.

 

(a)           THIS AGREEMENT SHALL BE GOVERNED BY,AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITHRESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE BROUGHT IN THECOURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THESOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT,EACH OF THE PARTIES HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BYLAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THEJURISDICTION OF THE AFORESAID COURTS. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUTLIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OFFORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGINGOF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION ISNON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVERANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.

 

(c)           EACH PARTY IRREVOCABLY CONSENTS TOTHE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTIONOR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN SECTION 12.01 OF THELOAN AGREEMENT (OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO SECTION 12.01OF THE LOAN AGREEMENT) OR SCHEDULE 1 HERETO, AS APPLICABLE, SUCH SERVICE TOBECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF APARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BYLAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTYIN ANY OTHER JURISDICTION.

 

(d)           EACH PARTY HEREBY (1) IRREVOCABLYAND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BYJURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHERLOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (2) IRREVOCABLY WAIVES, TOTHE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIMOR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE ORCONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUALDAMAGES; (3) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE ORAGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TOENFORCE THE FOREGOING WAIVERS, AND (4) ACKNOWLEDGES THAT IT HAS BEENINDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THETRANSACTIONS 

 

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CONTEMPLATED HEREBY AND THEREBY BY, AMONGOTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION 9.10.

 

Section 9.11           Headings.  Article andSection headings and the Table of Contents used herein are for convenienceof reference only, are not part of this Agreement and shall not affect theconstruction of, or be taken into consideration in interpreting, thisAgreement.

 

Section 9.12           Acknowledgments. Each Obligor hereby acknowledges that:

 

(a)           it has been advised by counsel in thenegotiation, execution and delivery of this Agreement and the other LoanDocuments to which it is a party;

 

(b)           neither the Administrative Agent norany Guaranteed Creditor has any fiduciary relationship with or duty to anyObligor arising out of or in connection with this Agreement or any of the otherLoan Documents, and the relationship between the Obligors, on the one hand, andthe Administrative Agent and Guaranteed Creditors, on the other hand, inconnection herewith or therewith is solely that of debtor and creditor; and

 

(c)           no joint venture is created hereby orby the other Loan Documents or otherwise exists by virtue of the transactionscontemplated hereby among the Guaranteed Creditors or among the Obligors andthe Guaranteed Creditors.

 

(d)           Each of the parties heretospecifically agrees that it has a duty to read this Agreement, the SecurityInstruments and the other Loan Documents and agrees that it is charged withnotice and knowledge of the terms of this Agreement, the Security Instrumentsand the other Loan Documents; that it has in fact read this Agreement, theSecurity Instruments and the other Loan Documents and is fully informed and hasfull notice and knowledge of the terms, conditions and effects thereof; that ithas been represented by independent legal counsel of its choice throughout thenegotiations preceding its execution of this Agreement and the SecurityInstruments; and has received the advice of its attorney in entering into thisAgreement and the Security Instruments; and that it recognizes that certain ofthe terms of this Agreement and the Security Instruments result in one partyassuming the liability inherent in some aspects of the transaction andrelieving the other party of its responsibility for such liability.  **EACH PARTYHERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY ORENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE SECURITYINSTRUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCHPROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”**

 

Section 9.13           Additional Obligors and Pledgors.  Each Subsidiary of the Borrower that isrequired to become a party to this Agreement pursuant to Section 8.14 ofthe Loan Agreement shall become an Obligor for all purposes of this Agreementupon execution and delivery by such Subsidiary of an Assumption Agreement andshall thereafter have the same rights, benefits and obligations as an Obligorparty hereto on the date hereof.  EachGuarantor that is required to pledge Equity Interests of its Subsidiaries shallexecute and deliver a Supplement, if such Equity Interests were not previouslypledged.

 

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Section 9.14           Releases.

 

(a)           Release Upon Payment in Full.  The grant of a security interest hereunderand of all rights, powers and remedies in connection herewith shall remain infull force and effect until the Administrative Agent has (i) retransferredand delivered all Collateral in its possession to the Pledgors, and (ii) executeda written release or termination statement and reassigned to the Pledgorswithout recourse or warranty any remaining Collateral and all rights conveyedhereby.  Upon the complete payment of theBorrower Obligations and the compliance by the Obligors with all covenants andagreements hereof, the Administrative Agent, at the expense of the Borrower,will promptly release, reassign and transfer the Collateral to the Pledgors anddeclare this Agreement to be of no further force or effect.

 

(b)           Partial Releases.  If any of the Collateral shall be sold,transferred or otherwise disposed of by any Pledgor in a transaction permittedby the Loan Agreement, then the Administrative Agent, at the request and soleexpense of such Pledgor, shall promptly execute and deliver to such Pledgor allreleases or other documents reasonably necessary or desirable for the releaseof the Liens created hereby on such Collateral and the Equity Interests of theIssuer thereof.  At the request and soleexpense of the Borrower, a Guarantor shall be released from its obligationshereunder in the event that all the Equity Interests of such Guarantor shall besold, transferred or otherwise disposed of in a transaction permitted by theLoan Agreement; provided that the Borrower shall have delivered to theAdministrative Agent, at least ten Business Days prior to the date of theproposed release, a written request of a Responsible Officer of the Borrowerfor release identifying the relevant Guarantor and the terms of the sale orother disposition in reasonable detail, including the price thereof and anyexpenses in connection therewith, together with a certification by the Borrowerstating that such transaction is in compliance with the Loan Agreement and theother Loan Documents.

 

(c)           Retention in Satisfaction.  Except as may be expressly applicablepursuant to Section **9.620**of the UCC, no action taken or omission to act by the Administrative Agent orthe Guaranteed Creditors hereunder, including, without limitation, any exerciseof voting or consensual rights or any other action taken or inaction, shall bedeemed to constitute a retention of the Collateral in satisfaction of theObligations or otherwise to be in full satisfaction of the Obligations, and theObligations shall remain in full force and effect, until the AdministrativeAgent and the Guaranteed Creditors shall have applied payments (including,without limitation, collections from Collateral) towards the Obligations in thefull amount then outstanding or until such subsequent time as is provided in Section 9.14(a).

 

Section 9.15           Acceptance. Each Obligor hereby expressly waives notice of acceptance of thisAgreement, acceptance on the part of the Administrative Agent and theGuaranteed Creditors being conclusively presumed by their request for thisAgreement and delivery of the same to the Administrative Agent.

 

[Remainder of page intentionally leftblank; signature page follows]

 

29

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IN WITNESS WHEREOF, each of the undersignedhas caused this Second Lien Guaranty and Pledge Agreement to be duly executedand delivered as of the date first above written.

 

 
| **BORROWER:**   | **LINN ENERGY, LLC**                   |
|-----------------|----------------------------------------|
|            |                                   |
|            |                                   |
|            | By:                                    | /s/  Kolja Rockov |
|            |                                   | Kolja Rockov |
|            |                                   | Executive Vice President and Chief  Financial Officer |
|            |                                   |
|            |                                   |
| **GUARANTORS:** | **LINN ENERGY HOLDINGS, LLC**          |
|            | **LINN OPERATING, INC.**               |
|            | **PENN WEST PIPELINE, LLC**            |
|            | **MID ATLANTIC WELL SERVICE, INC.**    |
|            | **MID-CONTINENT HOLDINGS I, LLC**      |
|            | **MID-CONTINENT HOLDINGS II, LLC**     |
|            | **MID-CONTINENT I, LLC**               |
|            | **MID-CONTINENT II, LLC**              |
|            | **LINN GAS MARKETING, LLC**            |
|            | **LINN EXPLORATION MIDCONTINENT, LLC** |
|            |                                   |
|            |                                   |
|            | By:                                    | /s/  Kolja Rockov |
|            |                                   | Kolja Rockov |
|            |                                   | Executive  Vice President and Chief Financial Officer |
|            |                                   |
|            |                                   |

 

Signature Page - Guaranty andPledge Agreement

 

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Acknowledged and Agreed to as

of the date hereof by:

 
| **ADMINISTRATIVE  AGENT:** | **BNP PARIBAS**          |
|----------------------------|--------------------------|
|                       |                     |
|                       | By:                      | /s/ Doug Liftman |
|                       | Name: Doug Liftman       |
|                       | Title: Managing Director |
|                       |                     |
|                       | By:                      |  /s/ Betsy Jocher |
|                       | Name: Betsy Jocher       |
|                       | Title: Director          |
|                       |                     |

 

 

Signature Page- Guaranty and Pledge Agreement

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