Exhibit
10.1
 Execution
Version
 
 Fourth
Amended And Restated Credit Agreement
  Dated
As Of
  April
28, 2009
  Among
  Linn
Energy, LLC,
 As
Borrower,
  BNP
Paribas,
 As
Administrative Agent,
  Royal
Bank of Canada,
 As
Syndication Agent,
  The
Royal Bank of Scotland plc, Citibank, NA, Calyon, New York Branch and
 Barclays
Bank plc,
 As
Co-Documentation Agents
  and
  The
Lenders Party Hereto
  
  
  Joint
Lead Arrangers and Joint Book Runners
  
  BNP
Paribas
 RBC
Capital Markets
  
  Houston 3931255v.7
  TABLE
OF CONTENTS
  Page
  ARTICLE
      IDefinitions
      and Accounting MattersSection
      1.01
              Terms
      Defined Above
              2Section
      1.02
              Certain
      Defined Terms
              2Section
      1.03
              Types
      of Loans and Borrowings
              22Section
      1.04
              Terms
      Generally
              22Section
      1.05
              Accounting
      Terms and Determinations; GAAP
              23ARTICLE
      IIThe
      CreditsSection
      2.01
              Commitments
              23Section
      2.02
              Loans
      and Borrowings.
              23Section
      2.03
              Requests
      for Borrowings
              25Section
      2.04
              Interest
      Elections.
              26Section
      2.05
              Funding
      of Borrowings.
              28Section
      2.06
              Termination
      and Reduction of Aggregate Maximum Credit Amounts.
              29Section
      2.07
              Borrowing
      Base.
              30Section
      2.08
              Letters
      of Credit.
              32ARTICLE
      IIIPayments
      of Principal and Interest; Prepayments; FeesSection
      3.01
              Repayment
      of Loans
              37Section
      3.02
              Interest.
              38Section
      3.03
              Alternate
      Rate of Interest
              39Section
      3.04
              Prepayments.
              39Section
      3.05
              Fees.
              41ARTICLE
      IVPayments;
      Pro Rata Treatment; Sharing of Set-offs.Section
      4.01
              Payments
      Generally; Pro Rata Treatment; Sharing of Set-offs.
              42Section
      4.02
              Presumption
      of Payment by the Borrower
              43Section
      4.03
              Certain
      Deductions by the Administrative Agent
              44Section
      4.04
              Payments
      and Deductions to a Defaulting Lender.
              44ARTICLE
      VIncreased
      Costs; Break Funding Payments; Taxes; IllegalitySection
      5.01
              Increased
      Costs.
              46Section
      5.02
              Break
      Funding Payments
              47Section
      5.03
              Taxes.
              48
  i
 Credit
Agreement
 Houston 3931255v.7
 
 Section
      5.04
              Designation
      of Different Lending Office; Replacement of Lenders.
              49Section
      5.05
              Illegality
              49ARTICLE
      VIConditions
      PrecedentSection
      6.01
              Effective
      Date
              50Section
      6.02
              Each
      Credit Event
              52ARTICLE
      VIIRepresentations
      and WarrantiesSection
      7.01
              Organization;
      Powers
              53Section
      7.02
              Authority;
      Enforceability
              53Section
      7.03
              Approvals;
      No Conflicts
              53Section
      7.04
              Financial
      Position; No Material Adverse Change.
              54Section
      7.05
              Litigation
              54Section
      7.06
              Environmental
      Matters
              54Section
      7.07
              Compliance
      with the Laws and Agreements; No Defaults.
              55Section
      7.08
              Investment
      Company Act
              56Section
      7.09
              Taxes
              56Section
      7.10
              ERISA
              56Section
      7.11
              Disclosure;
      No Material Misstatements
              57Section
      7.12
              Insurance
              57Section
      7.13
              Restriction
      on Liens
              58Section
      7.14
              Subsidiaries
              58Section
      7.15
              Location
      of Business and Offices
              58Section
      7.16
              Properties;
      Titles, Etc.
              58Section
      7.17
              Maintenance
      of Properties
              59Section
      7.18
              Gas
      Imbalances, Prepayments
              60Section
      7.19
              Marketing
      of Production
              60Section
      7.20
              Swap
      Agreements
              60Section
      7.21
              Use
      of Loans and Letters of Credit
              60Section
      7.22
              Solvency
              60ARTICLE
      VIIIAffirmative
      CovenantsSection
      8.01
              Financial
      Statements; Other Information
              61Section
      8.02
              Notices
      of Material Events
              64Section
      8.03
              Existence;
      Conduct of Business
              64Section
      8.04
              Payment
      of Obligations
              65Section
      8.05
              Performance
      of Obligations under Loan Documents
              65Section
      8.06
              Operation
      and Maintenance of Properties
              65Section
      8.07
              Insurance
              66Section
      8.08
              Books
      and Records; Inspection Rights
              66Section
      8.09
              Compliance
      with Laws
              66
  ii
 Credit
Agreement
 Houston 3931255v.7
 
 Section
      8.10
              Environmental
      Matters.
              66Section
      8.11
              Further
      Assurances.
              67Section
      8.12
              Reserve
      Reports.
              68Section
      8.13
              Title
      Information.
              69Section
      8.14
              Additional
      Collateral; Additional Guarantors.
              70Section
      8.15
              ERISA
      Compliance
              70Section
      8.16
              Marketing
      Activities
              71Section
      8.17
              Swap
      Agreements
              71Section
      8.18
              Clean
      Down Period
              71ARTICLE
      IXNegative
      CovenantsSection
      9.01
              Financial
      Covenants.
              72Section
      9.02
              Debt
              72Section
      9.03
              Liens
              73Section
      9.04
              Dividends,
      Distributions and Redemptions.
              74Section
      9.05
              Investments,
      Loans and Advances
              75Section
      9.06
              Nature
      of Business
              76Section
      9.07
              Limitation
      on Leases
              76Section
      9.08
              Proceeds
      of Notes
              77Section
      9.09
              ERISA
      Compliance
              77Section
      9.10
              Sale
      or Discount of Receivables
              77Section
      9.11
              Mergers,
      Etc
              77Section
      9.12
              Sale
      of Properties
              78Section
      9.13
              Environmental
      Matters
              78Section
      9.14
              Transactions
      with Affiliates
              78Section
      9.15
              Subsidiaries
              79Section
      9.16
              Negative
      Pledge Agreements; Dividend Restrictions
              79Section
      9.17
              Gas
      Imbalances, Take-or-Pay or Other Prepayments
              79Section
      9.18
              Swap
      Agreements
              79Section
      9.19
              Tax
      Status as Partnership
              80ARTICLE
      XEvents
      of Default; RemediesSection
      10.01
              Events
      of Default
              80Section
      10.02
              Remedies.
              82Section
      10.03
              Disposition
      of Proceeds
              83ARTICLE
      XIThe
      Administrative AgentSection
      11.01
              Appointment;
      Powers
              83Section
      11.02
              Duties
      and Obligations of Administrative Agent
              83Section
      11.03
              Action
      by Agent
              84Section
      11.04
              Reliance
      by Agent
              85
  iii
 Credit
Agreement
 Houston 3931255v.7
 
 Section
      11.05
              Subagents
              85Section
      11.06
              Resignation
      or Removal of Agents
              85Section
      11.07
              Agents
      and Lenders
              86Section
      11.08
              No
      Reliance.
              86Section
      11.09
              Administrative
      Agent May File Proofs of Claim
              87Section
      11.10
              Authority
      of Administrative Agent to Release Collateral and Liens
              87Section
      11.11
              The
      Arrangers and the Agents
              88ARTICLE
      XIIMiscellaneousSection
      12.01
              Notices.
              88Section
      12.02
              Waivers;
      Amendments.
              89Section
      12.03
              Expenses,
      Indemnity; Damage Waiver.
              90Section
      12.04
              Successors
      and Assigns.
              93Section
      12.05
              Survival;
      Revival; Reinstatement.
              96Section
      12.06
              Counterparts;
      Integration; Effectiveness.
              96Section
      12.07
              Severability
              97Section
      12.08
              Right
      of Setoff
              97Section
      12.09
              GOVERNING
      LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
              97Section
      12.10
              Headings
              99Section
      12.11
              Confidentiality
              99Section
      12.12
              Interest
      Rate Limitation
              100Section
      12.13
              EXCULPATION
      PROVISIONS
              101Section
      12.14
              Collateral
      Matters; Swap Agreements
              101Section
      12.15
              No
      Third Party Beneficiaries
              101Section
      12.16
              USA
      Patriot Act Notice
              102
 
  iv
 Credit
Agreement
 Houston 3931255v.7
  ANNEXES,
EXHIBITS AND SCHEDULES
  Annex
      I
                List
      of Maximum Credit AmountsExhibit
      A
                Form
      of NoteExhibit
      B
                Form
      of Compliance CertificateExhibit
      C
                Security
      InstrumentsExhibit
      D
                Form
      of Assignment and AssumptionExhibit
      E
                Form
      of Borrowing RequestExhibit
      F
                Form
      of Interest Election RequestExhibit
      G
                Reserve
      Report CertificateSchedule
      7.05
                LitigationSchedule
      7.14
                Subsidiaries
      and PartnershipsSchedule
      7.18
                Gas
      ImbalancesSchedule
      7.19
                Marketing
      ContractsSchedule
      7.20
                Swap
      Agreements
 
   v
 Credit
Agreement
 Houston 3931255v.7
  THIS FOURTH AMENDED AND RESTATED
CREDIT AGREEMENT dated as of April 28, 2009, is among Linn Energy, LLC, a
limited liability company duly formed and existing under the laws of the State
of Delaware (the “Borrower”); each of
the Lenders from time to time party hereto; BNP PARIBAS (in its individual
capacity, “BNP
Paribas”), as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Administrative
Agent”); Royal Bank of Canada (in its individual capacity, “RBC”), as syndication
agent for the Lenders (in such capacity, together with its successor in such
capacity, the “Syndication Agent”),
and The Royal Bank of Scotland plc, Citibank, NA, Calyon New York Branch and
Barclays Bank plc, as co-documentation agents (in such capacities, together with
their successors in such capacity, the “Co-Documentation
Agents”) for the Lenders.
  R E C I T A L
S
  A.         The
Borrower, the Administrative Agent and other financial institutions named and
defined therein as lenders and agents entered into that certain Credit Agreement
dated as of April 13, 2005, as amended by the First Amendment, dated May 3,
2005, the Second Amendment dated August 12, 2005, the Third Amendment dated
October 27, 2005 and the Fourth Amendment dated December 19,
2005.
  B.         The
Borrower and the Administrative Agent amended and restated such Credit Agreement
and entered into, with other financial institutions named and defined therein as
lenders and agents, that certain Amended and Restated Credit Agreement dated as
of April 7, 2006 as amended by the First Amendment, dated May 5,
2006.
  C.         The
Borrower, and the Administrative Agent amended and restated such Amended and
Restated Credit Agreement, and entered into, with other financial institutions
named and defined therein as lenders and agents, that certain Second Amended and
Restated Credit Agreement, dated August 1, 2006, as amended by the First
Amendment, dated February 1, 2007, the Second Amendment, dated
June 29, 2007 and the Third Amendment, dated July 13,
2007.
  D.         The
Borrower, and the Administrative Agent amended and restated such Second Amended
and Restated Credit Agreement, and are parties to that certain Third Amended and
Restated Credit Agreement, dated August 31, 2007, as amended by the First
Amendment, dated November 2, 2007, the Second Amendment, dated
January 31, 2008, the Third Amendment, dated June 16, 2008 and the
Fourth Amendment, dated August 20, 2008 pursuant to which such lenders
provided certain loans to and extensions of credit on behalf of the Borrower (as
heretofore amended, modified or supplemented, the “Existing Credit
Agreement”).
  E.          The
Borrower has requested the Lenders, and the Lenders have agreed, to amend and
restate the Existing Credit Agreement, subject to the terms and conditions of
this Agreement.
  F.          Now,
therefore, in consideration of the mutual covenants and agreements herein
contained and of the loans, extensions of credit and commitments hereinafter
referred to, the parties hereto agree as follows:
  Credit
Agreement
 Houston 3931255v.7
 1
  ARTICLE
I
  Definitions
and Accounting Matters
  Section
1.01             Terms Defined
Above.  As used in this Agreement, each term defined above has
the meaning indicated above.
  Section
1.02             Certain Defined
Terms.  As used in this Agreement, the following terms have the
meanings specified below:
  “ABR”, when used in
reference to any Loan or Borrowing, refers to whether such Loan, or the Loans
comprising such Borrowing, are bearing interest at a rate determined by
reference to the Alternate Base Rate.
  “Administrative
Questionnaire” means an Administrative Questionnaire in a form supplied
by the Administrative Agent.
  “Affected Loans” has
the meaning assigned such term in Section 5.05.
  “Affiliate” means,
with respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.
  “Agent” means the
Administrative Agent, the Syndication Agents, any Co-Documentation Agent or any
combination of them as the context requires.
  “Aggregate Maximum Credit
Amounts” at any time shall equal the sum of the Maximum Credit Amounts,
as the same may be reduced or terminated pursuant to Section 2.06.
  “Agreement” means this
Fourth Amended and Restated Credit Agreement as the same may from time to time
be further amended, modified, supplemented or restated.
  “Alternate Base Rate”
means, for any day, a rate per annum equal to the highest of (a) the Prime Rate
in effect on such day, (b) the Federal Funds Effective Rate in effect on such
day plus 1⁄2 of 1%, (c) the LIBO Rate for a one month Interest Period on such day
(or if such day is not a Business Day, the immediately preceding Business Day)
plus 1.50%, and (d) the Reference Bank Cost of Funds Rate on such day, provided that, in the context
of this definition of Alternate Base Rate and for the avoidance of doubt, the
LIBO Rate for any day shall be based on the rate as quoted at approximately
11:00 a.m. London time on such day to the Administrative Agent’s London office
for dollar deposits of $5,000,000 having a one-month maturity.  Any
change in the Alternate Base Rate due to a change in the Prime Rate, the Federal
Funds Effective Rate, the LIBO Rate or the Reference Bank Cost of Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate, the Federal Funds Effective Rate the LIBO Rate or the
Reference Bank Cost of Funds Effective Rate, respectively.
  “Applicable Margin”
means, for any day, with respect to any ABR Loan or Eurodollar Loan, as the case
may be, the rate per annum set forth in the Borrowing Base Utilization Grid
below based upon the Borrowing Base Utilization Percentage then in
effect:
 Credit
Agreement
 Houston 3931255v.7
 2
 Borrowing
      Base Utilization Percentage
              Eurodollar
      Loans
              ABR
      LoansLess
      than 50%
              2.500%
              1.000%Greater
      than or equal to 50% and less than 85%
              2.750%
              1.250%Greater
      than or equal to 85%
              3.250%
              1.750%
 
 Each
change in the Applicable Margin shall apply during the period commencing on the
effective date of such change and ending on the date immediately preceding the
effective date of the next such change, provided, however, that if at any time
the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a), then
until such time as a Reserve Report is delivered the “Applicable Margin” means
the rate per annum set forth on the grid when the Borrowing Base Utilization
Percentage is at its highest level.
  “Applicable
Percentage” means, with respect to any Lender, the percentage of the
Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit
Amount as such percentage is set forth on Annex I.
  “Approved
Counterparty” means (a) any Lender or any Affiliate of a Lender and (b)
any other Person whose long term senior unsecured debt rating is A/A2 by S&P
or Moody’s (or their equivalent) or higher.
  “Arrangers” means BNP
Paribas and RBC Capital Markets, in their capacities as joint lead arrangers and
joint book runners hereunder.
  “Asset Sale” means,
solely for purposes of Section 3.04(c), the sale, transfer or other disposition
(by way of merger, casualty, condemnation or otherwise) by the Borrower or any
of the Subsidiaries to any Person other than the Borrower or any Guarantor of
(a) any Equity Interests in any of the Subsidiaries (including any such sale by
the issuer of such Equity Interests but excluding directors’ qualifying shares)
or (b) any other assets of the Borrower or any of the Subsidiaries (other than
(x)(i) inventory (including Hydrocarbons), (ii) damaged, obsolete or worn out
assets, scrap and equipment no longer used in the operations of the Borrower or
any Subsidiary, and (iii) Investments permitted by Section 9.05, in each case
disposed of in the ordinary course of business and (y) any sale, transfer or
other disposition that, together with all related sales, transfers or other
dispositions, has a value not in excess of $25,000,000 in the
aggregate).
  “Assignee” means the
Person identified as such in an Assignment and Assumption.
  “Assignment and
Assumption” means an assignment and assumption entered into by a Lender
and an assignee (with the consent of any party whose consent is required by
Section 12.04(b)), and accepted by the Administrative Agent, in the form of
Exhibit D or any other form approved by the Administrative Agent.
  “Availability Period”
means the period from and including the Effective Date to but excluding the
Termination Date.
  Credit
Agreement
 Houston 3931255v.7
 3
  “Available Cash”
means, with respect to any fiscal quarter ending prior to the Termination
Date:
  (a)        the
sum of (i) all cash and cash equivalents of the Borrower and each Subsidiary on
hand at the end of such fiscal quarter; and (ii) all additional cash and cash
equivalents of the Borrower and each Subsidiary on hand on the date of
determination of Available Cash for such fiscal quarter resulting from working
capital borrowings made subsequent to the end of such fiscal quarter,
less
  (b)        the
amount of any cash reserves established by the board of directors of the
Borrower to (i) provide for the proper conduct of the business of the Borrower
and each Subsidiary (including reserves for future capital expenditures
including drilling and acquisitions and for anticipated future credit needs of
the Borrower and each Subsidiary), (ii) comply with applicable law or any loan
agreement, security agreement, mortgage, debt instrument or other agreement or
obligation to which the Borrower or any Subsidiary is a party or by which it is
bound or its assets are subject or (iii) provide funds for distributions with
respect to any one or more of the next four fiscal quarters;
  provided that disbursements
made by the Borrower or any Subsidiary or cash reserves established, increased
or reduced after the end of such fiscal quarter but on or before the date of
determination of Available Cash with respect to such fiscal quarter shall be
deemed to have been made, established, increased or reduced, for purposes of
determining Available Cash, within such fiscal quarter if the board of directors
so determines.
  “Bank Price Deck”
means the Administrative Agent’s forward curve for oil, natural gas and other
hydrocarbons as of the most recent Proposed Borrowing Base Notice.
  “Board” means the
Board of Governors of the Federal Reserve System of the United States of America
or any successor Governmental Authority.
  “Borrowing” means
Loans of the same Type, made, converted or continued on the same date and, in
the case of Eurodollar Loans, as to which a single Interest Period is in
effect.
  “Borrowing Base” means
at any time an amount equal to the amount determined in accordance with Section
2.07, as the same may be adjusted from time to time pursuant to Section 2.07(e),
Section 2.07(f), Section 8.13(c), Section 9.02(e) or Section
9.12(d).
  “Borrowing Base
Deficiency” occurs if at any time the total Revolving Credit Exposures
exceeds the Borrowing Base then in effect.
  “Borrowing Base Utilization
Percentage” means, as of any day, the fraction expressed as a percentage,
the numerator of which is the sum of the Revolving Credit Exposures of the
Lenders on such day, and the denominator of which is the Borrowing Base in
effect on such day.
  “Borrowing Request”
means a request by the Borrower for a Borrowing in accordance with Section 2.03
in substantially the form of Exhibit E.
  Credit
Agreement
 Houston 3931255v.7
 4
  “Business Day” means
any day that is not a Saturday, Sunday or other day on which commercial banks in
New York City or Houston, Texas are authorized or required by law to remain
closed; and if such day relates to a Borrowing or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect
to any such Borrowing or continuation, payment, prepayment, conversion or
Interest Period, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank market.
  “Capital Leases”
means, in respect of any Person, all leases which shall have been, or should
have been, in accordance with GAAP, recorded as capital leases on the balance
sheet of the Person liable (whether contingent or otherwise) for the payment of
rent thereunder.
  “Casualty Event” means
any loss, casualty or other insured damage to, or any nationalization, taking
under power of eminent domain or by condemnation or similar proceeding of, any
Property of the Borrower or any of its Subsidiaries having a fair market value
in excess of $10,000,000 in the aggregate for any calendar year.
  “Change in Control”
means the occurrence of any of the following events:  (a) any Person
or group of Persons acting in concert as a partnership or other group (a “Group
of Persons”), shall be the legal or beneficial owner (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of more than 35% of
the combined voting power of the then total membership interests (including all
securities which are convertible into membership interests) of the Borrower,
provided, that a “Group
of Persons” shall not include the underwriter in any firm underwriting
undertaken in connection with any public offering of the Borrower, or (b)
occupation of a majority of the seats (other than vacant seats) on the board of
directors (or board of managers) of the Company by Persons who were neither (i)
nominated by the board of directors of the Borrower nor (ii) appointed by
directors a majority of whom were so nominated.
  “Change in Law” means
(a) the adoption of any law, rule or regulation after the date of this
Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender or any Issuing Bank (or,
for purposes of Section 5.01(b), by any lending office of such Lender or by such
Lender’s or such Issuing Bank’s holding company, if any) with any request,
guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this
Agreement.
  “Clean Down Period”
has the meaning assigned such term in Section 8.18.
  “Code” means the
Internal Revenue Code of 1986, as amended from time to time, and any successor
statute.
  “Commitment” means,
with respect to each Lender, the commitment of such Lender to make Loans and to
acquire participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender’s Revolving Credit
Exposure hereunder, as such commitment may be (a) modified from time to time
pursuant to Section 2.06
  Credit
Agreement
 Houston 3931255v.7
 5
  and (b)
modified from time to time pursuant to assignments by or to such Lender pursuant
to Section 12.04(b).  The amount representing each Lender’s Commitment
shall at any time be the lesser of such Lender’s Maximum Credit Amount and such
Lender’s Applicable Percentage of the then effective Borrowing
Base.
  “Consolidated Net
Income” means with respect to the Borrower and the Consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of the
Borrower and the Consolidated Subsidiaries after allowances for taxes for such
period determined on a consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following:  (a) the net income of any Person in which the Borrower or
a Consolidated Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Consolidated Subsidiaries in accordance with GAAP), except to
the extent of the amount of dividends or distributions actually paid in cash
during such period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (b) the net income (but not loss) during such
period of any Consolidated Subsidiary to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Consolidated Subsidiary is not at the time permitted by operation of the terms
of its charter or any agreement, instrument or Governmental Requirement
applicable to such Consolidated Subsidiary or is otherwise restricted or
prohibited, in each case determined in accordance with GAAP; (c) any
extraordinary gains or losses during such period; (d) non-cash gains, losses or
adjustments under FASB Statement No. 133 as a result of changes in the fair
market value of derivatives; (e) any gains or losses attributable to writeups or
writedowns of assets, including ceiling test writedowns; and (f) non-cash
share-based payments under FASB Statement No. 123R; and provided further that if the
Borrower or any Consolidated Subsidiary shall acquire or dispose of any Property
during such period, then Consolidated Net Income shall be calculated after
giving pro forma effect to such acquisition or disposition, as if such
acquisition or disposition had occurred on the first day of such
period.
  “Consolidated
Subsidiaries” means each Subsidiary of the Borrower (whether now existing
or hereafter created or acquired) the financial statements of which shall be (or
should have been) consolidated with the financial statements of the Borrower in
accordance with GAAP.
  “Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.  For the purposes
of this definition, and without limiting the generality of the foregoing, any
Person that owns directly or indirectly 10% or more of the Equity Interests
having ordinary voting power for the election of the directors or other
governing body of a Person will be deemed to “control” such other
Person.  “Controlling” and
“Controlled”
have meanings correlative thereto.
  “Cost of Funds” means
with respect to any Non-Defaulting Lender, the rate per annum quoted by such
Non-Defaulting Lender to the Administrative Agent as contemplated in Section
2.04(f) as its cost of funds with respect to a Borrowing Request, as determined
solely by such Non-Defaulting Lender in its reasonable discretion based upon
such factors as such non
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 Houston 3931255v.7
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  Defaulting
Lender shall deem appropriate from time to time, including market, regulatory
and liquidity conditions; provided that such rate is not necessarily the cost to
such Non-Defaulting Lender of funding the specific Borrowing
Request.
  “Debt” means, for any
Person, the sum of the following (without duplication):  (a) all
obligations of such Person for borrowed money or evidenced by bonds, bankers’
acceptances, debentures, notes or other similar instruments; (b) all obligations
of such Person (whether contingent or otherwise) in respect of letters of
credit, surety or other bonds and similar instruments; (c) all accounts payable,
accrued expenses, liabilities or other obligations of such Person, in each such
case to pay the deferred purchase price of Property or services; (d) all
obligations under Capital Leases; (e) all obligations under Synthetic Leases;
(f) all Debt (as defined in the other clauses of this definition) of others
secured by (or for which the holder of such Debt has an existing right,
contingent or otherwise, to be secured by) a Lien on any Property of such
Person, whether or not such Debt is assumed by such Person; (g) all Debt (as
defined in the other clauses of this definition) of others guaranteed by such
Person or with respect to which such Person otherwise assures a creditor against
loss of the Debt (howsoever such assurance shall be made) to the extent of the
lesser of the amount of such Debt and the maximum stated amount of such
guarantee or assurance against loss; (h) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or covenants
of others or to purchase the Debt or Property of others; (i) obligations to
deliver commodities, goods or services, including, without limitation,
Hydrocarbons, in consideration of one or more advance payments, other than gas
balancing arrangements in the ordinary course of business; (j) obligations to
pay for goods or services whether or not such goods or services are actually
received or utilized by such Person (other than obligations under firm
transportation or drilling contracts); (k) any Debt of a partnership for which
such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment.  The Debt of any Person shall include
all obligations of such Person of the character described above to the extent
such Person remains legally liable in respect thereof notwithstanding that any
such obligation is not included as a liability of such Person under
GAAP.
  “Default” means any
event or condition which constitutes an Event of Default or which upon notice,
lapse of time or both would, unless cured or waived, become an Event of
Default.
  “Defaulting Lender”
means any Lender, as reasonably determined by the Administrative Agent, that has
(a) failed to fund any portion of its Loans or participations in Letters of
Credit within three (3) Business Days of the date required to be funded by it
hereunder, unless with respect to the Loans, the subject of a good faith
dispute, (b) notified the Borrower, the Administrative Agent, the Issuing Bank
or any Lender in writing that it does not intend to comply with any of its
funding obligations under this Agreement or has made a public statement to the
effect that it does not intend to comply with its funding obligations under this
Agreement, unless the reason such Lender is not complying with such obligations
is due to a good faith dispute with regard to such obligations, (c) otherwise
failed to pay over to the Administrative Agent or any other Lender any other
amount required to be paid by it hereunder within three (3)
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 Houston 3931255v.7
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  Business
Days of the date when due, unless the subject of a good faith dispute, or (d)
become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment or has a parent company that
has become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any
action in furtherance of, or indicating its consent to, approval of or
acquiescence in any such proceeding or appointment, provided that a Lender shall
not be a Defaulting Lender solely by virtue of the ownership or acquisition of
any Equity Interest in such Lender or parent company thereof by a Governmental
Authority or agency thereof.
  “Determination Date”
has the meaning given such term in Section 2.04(f)(i).
  “Disqualified Capital
Stock” means any Equity Interest that, by its terms (or by the terms of
any security into which it is convertible or for which it is exchangeable) or
upon the happening of any event, matures or is mandatorily redeemable for any
consideration other than other Equity Interests (which would not constitute
Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise,
or is convertible or exchangeable for Debt or redeemable for any consideration
other than other Equity Interests (which would not constitute Disqualified
Capital Stock) at the option of the holder thereof, in whole or in part, on or
prior to the date that is one year after the earlier of (a) the Maturity Date
and (b) the date on which there are no Loans, LC Exposure or other obligations
hereunder outstanding and all of the Commitments are terminated.
  “Distribution
Borrowing” means that portion of any Borrowing the proceeds of which are
used to make any Restricted Payment constituting a distribution to members of
the Borrower made in accordance with Section 9.04(a)(iii).
  “dollars” or “$” refers to lawful
money of the United States of America.
  “Domestic Subsidiary”
means any Subsidiary that is organized under the laws of the United States of
America or any state thereof or the District of Columbia.
  “EBITDA” means, for
any period, the sum of Consolidated Net Income for such period plus the
following expenses or charges to the extent deducted from Consolidated Net
Income in such period: Interest Expense, income taxes, depreciation, depletion,
amortization and other similar charges, minus all noncash income added to
Consolidated Net Income.
  “EDGAR” means the
Electronic Data Gathering Analysis and Retrieval system operated by the
SEC.
  “Effective Date” means
the date on which the conditions specified in Section 6.01 are satisfied (or
waived in accordance with Section 12.02).
  “Engineering Reports”
has the meaning assigned such term in Section 2.07(c)(i).
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  “Environmental Laws”
means any and all Governmental Requirements pertaining in any way to health and
safety (to the extent relating to exposure to Hazardous Materials), the
environment or the preservation or reclamation of natural resources, in effect
in any and all jurisdictions in which the Borrower or any Subsidiary is
conducting or at any time has conducted business, or where any Property of the
Borrower or any Subsidiary is located, including without limitation, the Oil
Pollution Act of 1990 (“OPA”), as amended,
the Clean Air Act, as amended, the Comprehensive Environmental, Response,
Compensation, and Liability Act of 1980 (“CERCLA”), as amended,
the Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 (“RCRA”),
as amended, the Safe Drinking Water Act, as amended, the Toxic Substances
Control Act, as amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, and Hazardous Materials Transportation Act, as
amended.  The term “oil” shall have the meaning specified in OPA, the
terms “hazardous
substance” and “release” (or “threatened release”)
have the meanings specified in CERCLA, the terms “solid waste” and
“disposal” (or
“disposed”)
have the meanings specified in RCRA and the term “oil and gas waste”
shall mean those waste that are excluded from the definition of “hazardous waste”
pursuant to 40 C.F.R. Section 261.4(b)(5) (“Section
261.4(b)(5)”); provided, however, that (a) in the
event either OPA, CERCLA, RCRA or Section 261.4(b)(5) is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment and (b) to the extent
the laws of the state or other jurisdiction in which any Property of the
Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous substance,”
“release,”
“solid waste,”
“disposal” or
“oil and gas
waste” which is broader than that specified in either OPA, CERCLA, RCRA
or Section 261.4(b)(5), such broader meaning shall apply.
  “Environmental Permit”
means any permit, registration, license, approval, consent, exemption, variance,
or other authorization of a Governmental Authority required under or issued
pursuant to applicable Environmental Laws.
  “Equity Interests”
means shares of capital stock, partnership interests, membership interests in a
limited liability company, beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants, options or other rights
entitling the holder thereof to purchase or acquire any such Equity
Interest.
  “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended, and any successor
statute.
  “ERISA Affiliate”
means each trade or business (whether or not incorporated) which together with
the Borrower or any of its Subsidiaries would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections (b),
(c), (m) or (o) of section 414 of the Code.
  “ERISA Event” means
(a) a reportable event described in section 4043 of ERISA and the regulations
issued thereunder, (b) the withdrawal of the Borrower or any of its Subsidiaries
or any ERISA Affiliate from a Plan during a plan year in which it was a
“substantial employer” as defined in section 4001(a)(2) of ERISA, (c) in each
case solely with respect to a Plan subject to
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 Houston 3931255v.7
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  Title IV
of ERISA, the filing of a notice of intent to terminate a Plan or the treatment
of a Plan amendment as a termination under section 4041 of ERISA, (d) the
institution of proceedings to terminate a Plan by the PBGC, (e) receipt by the
Borrower or any of its Subsidiaries or any ERISA Affiliate of a notice of
withdrawal liability pursuant to section 4202 of ERISA with respect to any
Multiemployer Plan or (f) any other event or condition which might constitute
grounds under section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan subject to Title IV of ERISA.
  “Eurodollar”, when
used in reference to any Loan or Borrowing, refers to whether such Loan, or the
Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the LIBO Rate.
  “Event of Default” has
the meaning assigned such term in Section 10.01.
  “Excepted Liens”
means:  (a) Liens for Taxes, assessments or other governmental charges
or levies which are not delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP; (b) Liens in connection with workers’ compensation,
unemployment insurance or other social security, old age pension or public
liability obligations which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’,
vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’,
workers’, materialmen’s, construction or other like Liens arising by operation
of law in the ordinary course of business or incident to the exploration,
development, operation and maintenance of Oil and Gas Properties each of which
is in respect of obligations that are not delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP; (d) contractual Liens which arise
in the ordinary course of business under operating agreements, joint venture
agreements, oil and gas partnership agreements, oil and gas leases, farm-out
agreements, division orders, contracts for the sale, transportation or exchange
of oil and natural gas, unitization and pooling declarations and agreements,
area of mutual interest agreements, overriding royalty agreements, marketing
agreements, processing agreements, net profits agreements, development
agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or other geophysical permits or agreements, and other agreements which
are usual and customary in the oil and gas business and are for claims which are
not delinquent or which are being contested in good faith by appropriate action
and for which adequate reserves have been maintained in accordance with GAAP,
provided that any such
Lien referred to in this clause does not materially impair the use of the
Property covered by such Lien for the purposes for which such Property is held
by the Borrower or any of its Subsidiaries or materially impair the value of
material Property subject thereto; (e) Liens arising solely by virtue of any
statutory or common law provision relating to banker’s liens, rights of set-off
or similar rights and remedies and burdening only deposit accounts or other
funds maintained with a creditor depository institution, provided that no such deposit
account is a dedicated cash collateral account or is subject to restrictions
against access by the depositor in excess of those set forth by regulations
promulgated by the Board and no such deposit account is intended by the Borrower
or any of its Subsidiaries to provide collateral to the depository institution;
(f)
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 Houston 3931255v.7
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  easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in any Property of the Borrower or any of its Subsidiaries for the
purpose of roads, pipelines, transmission lines, transportation lines,
distribution lines for the removal of gas, oil, coal or other minerals or
timber, and other like purposes, or for the joint or common use of real estate,
rights of way, facilities and equipment, that do not secure any monetary
obligations and which in the aggregate do not materially impair the use of such
Property for the purposes of which such Property is held by the Borrower or any
of its Subsidiaries or materially impair the value of any material Property
subject thereto; (g) Liens on cash or securities pledged to secure performance
of tenders, surety and appeal bonds, government contracts, performance and
return of money bonds, bids, trade contracts, leases, statutory obligations,
regulatory obligations and other obligations of a like nature incurred in the
ordinary course of business; (h) judgment and attachment Liens not giving rise
to an Event of Default, provided that any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment shall not have been finally terminated or the period within which such
proceeding may be initiated shall not have expired and no action to enforce such
Lien has been commenced; and (i) Liens arising from precautionary Uniform
Commercial Code financing statement filings entered into by the Borrower and the
Subsidiaries covering Property under true leases entered into in the ordinary
course of business; provided, further that Liens described
in clauses (a) through (e) shall remain “Excepted Liens” only for so long as no
action to enforce such Lien has been commenced and no intention to subordinate
the first priority Lien granted in favor of the Administrative Agent and the
Lenders is to be hereby implied or expressed by the permitted existence of such
Excepted Liens.
  “Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, any Issuing Bank or
any other recipient of any payment to be made by or on account of any obligation
of the Borrower or any Guarantor hereunder or under any other Loan Document, (a)
income or franchise taxes imposed on (or measured by) its net income by the
United States of America or such other jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower or any Guarantor is
located and (c) in the case of a Foreign Lender any withholding tax that is
imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office) or
is attributable to such Foreign Lender’s failure to comply with Section 5.03(e),
unless such Foreign Lender (or its assignor, if any) was entitled at the time of
designation of a new lending office (or assignment) to receive additional
amounts with respect to such withholding tax pursuant to Section 5.03(a) or
Section 5.03(c).
  “Existing Credit
Agreement” has the meaning assigned to such term in Recital
D.
  “Federal Funds Effective
Rate” means, for any day, the weighted average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day that
is a Business Day, the average (rounded upwards, if
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Agreement
 Houston 3931255v.7
 11
  necessary,
to the next 1/100 of 1%) of the quotations for such day for such transactions
received from three Federal funds brokers of recognized standing selected by the
Administrative Agent.
  “Financial Officer”
means, for any Person, the chief financial officer, principal accounting
officer, treasurer or controller of such Person.  Unless otherwise
specified, all references to a Financial Officer herein means a Financial
Officer of the Borrower.
  “Financial Statements”
means the financial statement or statements of the Borrower and its Consolidated
Subsidiaries referred to in Section 7.04(a).
  “Foreign Lender” means
any Lender that is organized under the laws of a jurisdiction other than that in
which the Borrower is located.  For purposes of this definition, the
United States of America, each State thereof and the District of Columbia shall
be deemed to constitute a single jurisdiction.
  “Foreign Subsidiary”
means any Subsidiary that is not a Domestic Subsidiary.
  “Funded Debt” means
any Debt of the type described in clause (a), (e), (i) or (m) of the definition
thereof other than Loans.
  “GAAP” means generally
accepted accounting principles in the United States of America as in effect from
time to time subject to the terms and conditions set forth in Section
1.05.
  “Governmental
Authority” means the government of the United States of America, any
other nation or any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government over the
Borrower or any of its Subsidiaries, any of their Properties, any Agent, any
Issuing Bank or any Lender.
  “Governmental
Requirement” means any law, statute, code, ordinance, order,
determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement,
whether now or hereinafter in effect, including, without limitation,
Environmental Laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
  “Guarantors” means the
Subsidiaries of the Borrower listed on Part I of Schedule 7.14 and each
other Material Domestic Subsidiary or other Domestic Subsidiary that guarantees
the Indebtedness pursuant to Section 8.14(b).
  “Guaranty Agreement”
means the Fourth Amended and Restated Guaranty and Pledge Agreement executed by
the Guarantors on the date hereof unconditionally guarantying on a joint and
several basis, payment of the Indebtedness, as the same may be amended, modified
or supplemented from time to time.
  “Hazardous Material”
means any substance regulated or as to which liability might arise under any
applicable Environmental Law and including, without limitation:  (a)
any chemical,
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 Houston 3931255v.7
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  compound,
material, product, byproduct, substance or waste defined as or included in the
definition or meaning of “hazardous substance,” “hazardous material,” “hazardous
waste,” “solid waste,” “toxic waste,” “extremely hazardous substance,” “toxic
substance,” “contaminant,” “pollutant,” or words of similar meaning or import
found in any applicable Environmental Law; (b) petroleum hydrocarbons, petroleum
products, petroleum substances, natural gas, oil, oil and gas waste, crude oil,
and any components, fractions, or derivatives thereof; and (c) radioactive
materials, asbestos containing materials, polychlorinated biphenyls, or
radon.
  “Highest Lawful Rate”
means, with respect to each Lender, the maximum nonusurious interest rate, if
any, that at any time or from time to time may be contracted for, taken,
reserved, charged or received on the Notes or on other Indebtedness under laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws
allow as of the date hereof.
  “Hydrocarbon
Interests” means all rights, titles, interests and estates now or
hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or
other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and production payment
interests, including any reserved or residual interests of whatever
nature.
  “Hydrocarbons” means
oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.
  “Indebtedness” means,
without duplication, any and all amounts owing or to be owing by the Borrower or
any Guarantor (whether direct or indirect (including those acquired by
assumption), absolute or contingent, due or to become due, now existing or
hereafter arising):  (a) to the Administrative Agent, any Issuing Bank
or any Lender under any Loan Document; (b) to any Lender or any Affiliate of a
Lender under any Swap Agreements among such Person and the Borrower or any
Subsidiary and (c) all renewals, extensions and/or rearrangements of any of the
above.
  “Indemnified Taxes”
means Taxes other than Excluded Taxes.
  “Initial Reserve
Report” means that certain Reserve Report by DeGolyer and MacNaughton,
dated January 23, 2009, with respect to Oil and Gas Properties of the Borrower,
as of December 31, 2008.
  “Interest Election
Request” means a request by the Borrower to convert or continue a
Borrowing in accordance with Section 2.04 in substantially the form of Exhibit
F.
  “Interest Expense”
means, for any period, the sum (determined without duplication) of the aggregate
gross interest expense of the Borrower and the Consolidated Subsidiaries for
such period, including (a) to the extent included in interest expense under
GAAP:  (i) amortization of debt discount, (ii) capitalized interest
and (iii) the portion of any payments or accruals under
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 Houston 3931255v.7
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  Capital
Leases allocable to interest expense, plus the portion of any payments or
accruals under Synthetic Leases allocable to interest expense whether or not the
same constitutes interest expense under GAAP and (b) cash dividend payments by
the Borrower in respect of any Disqualified Capital Stock; but excluding
non-cash gains, losses or adjustments under FASB Statement No. 133 as a result
of changes in the fair market value of derivatives.
  “Interest Period”
means with respect to any Eurodollar Borrowing, the period commencing on the
date of such Borrowing and ending on the numerically corresponding day in the
calendar month that is one, two, three or six months thereafter, as the Borrower
may elect; provided,
that (a) if any Interest Period would end on a day other than a Business Day,
such Interest Period shall be extended to the next succeeding Business Day
unless such next succeeding Business Day would fall in the next calendar month,
in which case such Interest Period shall end on the next preceding Business Day
and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences
on the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period.  For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and thereafter shall
be the effective date of the most recent conversion or continuation of such
Borrowing.
  “Interim
Redetermination” has the meaning assigned such term in Section
2.07(b).
  “Investment” means,
for any Person:  (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of Equity Interests of any other Person or
any unfunded subscription agreement to make any such acquisition or fund capital
calls (including, without limitation, any “short sale” or any sale of any
securities at a time when such securities are not owned by the Person entering
into such short sale, but excluding any unconsummated purchase and sale
agreements to purchase all or substantially all the Equity Interests of Persons
owning Oil and Gas Properties); (b) the making of any deposit with, or advance,
loan or capital contribution to, assumption of Debt of, purchase or other
acquisition of any other Debt or equity participation or interest in, or other
extension of credit to, any other Person (including the purchase of Property
from another Person subject to an understanding or agreement, contingent or
otherwise, to resell such Property to such Person, but excluding any such
advance, loan or extension of credit having a term not exceeding ninety (90)
days representing the purchase price of inventory or supplies sold by such
Person in the ordinary course of business); (c) the purchase or acquisition (in
one or a series of transactions) of Property of another Person that constitutes
a business unit or (d) the entering into of any guarantee of, or other
contingent obligation (including the deposit of any Equity Interests to be sold)
with respect to, Debt or other liability of any other Person and (without
duplication) any amount committed to be advanced, lent or extended to such
Person.
  “Issuing Bank” means
each of BNP Paribas and any other Lender agreeing to act as an Issuing Bank, in
its capacity as an issuer of Letters of Credit hereunder, and its successors in
such capacity as provided in Section 2.08(i).  Any Issuing Bank may,
in its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of such Issuing Bank, in which case
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  the term
“Issuing Bank” shall include any such Affiliate with respect to Letters of
Credit issued by such Affiliate.
  “LC Commitment” at any
time means Fifty Million Dollars ($50,000,000).
  “LC Disbursement”
means a payment made by any Issuing Bank pursuant to a Letter of Credit issued
by such Issuing Bank.
  “LC Exposure” means,
at any time, the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit at such time plus (b) the aggregate amount of all LC
Disbursements that have not yet been reimbursed by or on behalf of the Borrower
at such time.  The LC Exposure of any Lender at any time shall be its
Applicable Percentage of the total LC Exposure at such time.
  “Lender Hedging
Obligation” means all liabilities and obligations of a Lender or its
Affiliates as a counterparty under a Swap Agreement to the Borrower or a
Subsidiary of the Borrower.
  “Lenders” means the
Persons listed on Annex I, and any Person that shall have become a party hereto
pursuant to an Assignment and Assumption, other than any such Person that ceases
to be a party hereto pursuant to an Assignment and Assumption.
  “Letter of Credit”
means any letter of credit issued pursuant to this Agreement.
  “Letter of Credit
Agreements” means all letter of credit applications and other agreements
(including any amendments, modifications or supplements thereto) submitted by
the Borrower, or entered into by the Borrower, with any Issuing Bank relating to
any Letter of Credit issued by such Issuing Bank.
  “LIBO Rate” means,
with respect to any Eurodollar Borrowing for any Interest Period, the rate
appearing on Reuters Screen LIBOR01 Page as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period.  In the
event that such rate does not appear on such page (or otherwise on such screen),
the “LIBO Rate”
shall be determined by reference to such other comparable publicly available
service for displaying eurodollar rates as may be selected by the Administrative
Agent or, in the absence of such availability, by reference to the rate at which
the Administrative Agent is offered dollar deposits at or about 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest Period in
the interbank Eurodollar market where its Eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.
  “Lien” means any
interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the
common law, statute or contract, and whether such obligation or claim is fixed
or contingent, and including but not limited to (a) the lien or security
interest arising from a mortgage, encumbrance, pledge, security agreement,
conditional sale or trust receipt or a lease, consignment or bailment
for
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 Houston 3931255v.7
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  security
purposes or (b) production payments and the like payable out of Oil and Gas
Properties.  The term “Lien” shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed to
be the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a
financing.
  “Loan Documents” means
this Agreement, the Notes, the Letter of Credit Agreements, the Letters of
Credit and the Security Instruments.
  “Loans” means the
loans made by the Lenders to the Borrower pursuant to this
Agreement.
  “Majority Lenders”
means, at any time while no Loans or LC Exposure is outstanding, Lenders having
more than fifty percent (50.0%) of the Aggregate Maximum Credit Amounts; and at
any time while any Loans or LC Exposure is outstanding, Lenders holding more
than fifty percent (50.0%) of the outstanding aggregate principal amount of the
Loans and participation interests in Letters of Credit (without regard to any
sale by a Lender of a participation in any Loan under Section
12.04(c)).
  “Managers” means the
members of the Board of Managers or Board of Directors (however designated from
time to time) of the Borrower as constituted from time to time.
  “Material Adverse
Effect” means a material adverse change in, or material adverse effect on
(a) the business, operations, Property, condition (financial or otherwise) or
prospects of the Borrower and the Guarantors taken as a whole, (b) the ability
of the Borrower, any of its Subsidiaries or any Guarantor to perform any of its
obligations under any Loan Document to which it is a party, (c) the validity or
enforceability of any Loan Document or (d) the rights and remedies of or
benefits available to the Administrative Agent, any other Agent, any Issuing
Bank or any Lender under any Loan Document.
  “Material Domestic
Subsidiary” means, as of any date, any Domestic Subsidiary that (a) is a
Wholly-Owned Subsidiary and (b) together with its Subsidiaries, owns Property
having a fair market value of $10,000,000 or more.
  “Material
Indebtedness” means Debt (other than the Loans and Letters of Credit), or
obligations in respect of one or more Swap Agreements, of any one or more of the
Borrower and its Subsidiaries in an aggregate principal amount exceeding
$10,000,000.  For purposes of determining Material Indebtedness, the
“principal amount” of the obligations of the Borrower or any of its Subsidiaries
in respect of any Swap Agreement at any time shall be the maximum aggregate
amount (giving effect to any netting agreements) that the Borrower or such
Subsidiary would be required to pay if such Swap Agreement were terminated at
such time.
  “Maturity Date” means
August 1, 2012.
  Credit
Agreement
 Houston 3931255v.7
 16
  “Maximum Credit
Amount” means, as to each Lender, the amount set forth opposite such
Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same
may be (a) reduced or terminated from time to time in connection with a
reduction or termination of the Aggregate Maximum Credit Amounts pursuant to
Section 2.06(b) or (b) modified from time to time pursuant to any assignment
permitted by Section 12.04(b).
  “Moody’s” means
Moody’s Investors Service, Inc. and any successor thereto that is a nationally
recognized rating agency.
  “Mortgaged Property”
means any Property owned by the Borrower or any Guarantor which is subject to
the Liens existing and to exist under the terms of the Security
Instruments.
  “Multiemployer Plan”
means a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of ERISA
to which any Borrower or any Subsidiary or any ERISA Affiliate is making or
accruing an obligation to make contributions, or has within the six calendar
years preceding the date hereof, made or accrued an obligation to make
contributions.
  “Net Cash Proceeds”
means (a) in connection with any issuance or sale of Equity Interests, Debt
securities, Casualty Events or the incurrence of Debt, the cash proceeds
received from such issuance or incurrence, net of attorneys’ fees, investment
banking fees, accountants’ fees, underwriting discounts and commissions and
other customary fees and expenses actually incurred in connection therewith; and
(b) in connection with any Asset Sale, the cash proceeds thereof (including cash
proceeds subsequently received (as and when received) in respect of noncash
consideration initially received), net of (i) selling and other expenses
(including reasonable broker’s fees or commissions, legal fees, transfer and
similar taxes, and the Borrower’s good faith estimate of income taxes actually
paid or payable in connection with such sale), (ii) amounts provided as a
reserve, in accordance with GAAP, against any liabilities under any
indemnification obligations or purchase price adjustment associated with such
Asset Sale (provided
that, to the extent and at the time any such amounts are released from such
reserve, such amounts shall constitute Net Cash Proceeds) and (iii) any amount
payable in respect of any Debt for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with such proceeds
(excluding any such Debt assumed by the purchaser of such asset).
  “New Borrowing Base
Notice” has the meaning assigned such term in Section
2.07(d).
  “Non-Defaulting
Lender” means, at any time, each Lender that is not a Defaulting Lender
at such time.
  “Notes” means the
promissory notes of the Borrower described in Section 2.02(d) and being
substantially in the form of Exhibit A, together with all amendments,
modifications, replacements, extensions and rearrangements thereof.
  “Oil and Gas
Properties” means (a) Hydrocarbon Interests; (b) the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently
existing or future unitization, pooling agreements and declarations of pooled
units and the units created thereby
  Credit
Agreement
 Houston 3931255v.7
 17
  (including
without limitation all units created under orders, regulations and rules of any
Governmental Authority) which may affect all or any portion of the Hydrocarbon
Interests; (d) all operating agreements, contracts and other agreements,
including production sharing contracts and agreements, which relate to any of
the Hydrocarbon Interests or the production, sale, purchase, exchange or
processing of Hydrocarbons from or attributable to such Hydrocarbon Interests;
(e) all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, including all oil in tanks, and all
rents, issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment, rental equipment or other personal Property which
may be on such premises for the purpose of drilling a well or for other similar
temporary uses) and including any and all oil wells, gas wells, injection wells
or other wells, buildings, structures, fuel separators, liquid extraction
plants, plant compressors, pumps, pumping units, field gathering systems, tanks
and tank batteries, fixtures, valves, fittings, machinery and parts, engines,
boilers, meters, apparatus, equipment, appliances, tools, implements, cables,
wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements
and servitudes together with all additions, substitutions, replacements,
accessions and attachments to any and all of the foregoing.
  “Other Taxes” means
any and all present or future stamp or documentary taxes or any other excise or
Property taxes, charges or similar levies arising from any payment made
hereunder or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement and any other Loan Document.
  “Participant” has the
meaning set forth in Section 12.04(c)(i).
  “PBGC” means the
Pension Benefit Guaranty Corporation, or any successor thereto.
  “Permitted Refinancing
Debt” means Debt (for purposes of this definition, “new Debt”) incurred
in exchange for, or proceeds of which are used to refinance, all of the Senior
Notes or any Permitted Refinancing Debt theretofore incurred (as applicable, the
“Refinanced
Debt”); provided
that (a) such new Debt is in an aggregate principal amount not in excess of
$255,927,000; (b) such new Debt has a stated maturity no earlier than the day
365 days after August 1, 2012; and (c) such new Debt (and any guarantees
thereof) is subordinated in right of payment to the Indebtedness (or, if
applicable, the Guaranty Agreement) to at least the same extent as the
Refinanced Debt or is otherwise subordinated on terms reasonably satisfactory to
the Administrative Agent.
  “Person” means any
natural person, corporation, limited liability company, trust, joint venture,
association, company, partnership, Governmental Authority or other
entity.
  Credit
Agreement
 Houston 3931255v.7
 18
  “Plan” means any
employee pension benefit plan, as defined in section 3(2) of ERISA, which (a) is
currently or hereafter sponsored or maintained by the Borrower, any of its
Subsidiaries or an ERISA Affiliate or (b) was at any time during the six
calendar years preceding the date hereof, sponsored or maintained by the
Borrower, any of its Subsidiaries or an ERISA Affiliate.
  “Prime Rate” means the
rate of interest per annum publicly announced from time to time by BNP Paribas
as its prime rate in effect at its principal office in New York City; each
change in the Prime Rate shall be effective from and including the date such
change is publicly announced as being effective.  Such rate is set by
BNP Paribas as a general reference rate of interest, taking into account such
factors as BNP Paribas may deem appropriate; it being understood that many of
BNP Paribas’s commercial or other loans are priced in relation to such rate,
that it is not necessarily the lowest or best rate actually charged to any
customer and that BNP Paribas may make various commercial or other loans at
rates of interest having no relationship to such rate.
  “Property” means any
interest in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, cash, securities,
accounts and contract rights.
  “Proposed Borrowing
Base” has the meaning assigned to such term in Section
2.07(c)(i).
  “Proposed Borrowing Base
Notice” has the meaning assigned to such term in Section
2.07(c)(ii).
  “Proved Developed Producing
Properties” means Oil and Gas Properties which are categorized as “Proved
Reserves” that are both “Developed” and “Producing”, as such terms are defined
in the Definitions for Oil and Gas Reserves as promulgated by the Society of
Petroleum Engineers (or any generally recognized successor) as in effect at the
time in question.
  “Proved Properties”
means Oil and Gas Properties which are identified as “Proved Reserves” on the
most recent Engineering Report.
  “Redemption” means
with respect to any Debt, the repurchase, redemption, prepayment, repayment or
defeasance or any other acquisition or retirement for value (or the segregation
of funds with respect to any of the foregoing) of any such
Debt.  “Redeem” has the
correlative meaning thereto.
  “Redetermination Date”
means, with respect to any Scheduled Redetermination or any Interim
Redetermination, the date that the redetermined Borrowing Base related thereto
becomes effective pursuant to Section 2.07(d).
  “Reference Bank Cost of Funds
Rate” means the rate determined pursuant to Section
2.04(f)(ii).
  “Register” has the
meaning assigned such term in Section 12.04(b)(iv).
  Credit
Agreement
 Houston 3931255v.7
 19
  “Related Parties”
means, with respect to any specified Person, such Person’s Affiliates and the
respective directors, officers, employees, agents and advisors (including
attorneys, accountants and experts) of such Person and such Person’s
Affiliates.
  “Release” means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, or disposing.
  “Remedial Work” has
the meaning assigned such term in Section 8.10(a).
  “Reserve Report” means
a report, in form and substance reasonably satisfactory to the Administrative
Agent, setting forth, as of each December 31st or June 30th (or such
other date in the event of an Interim Redetermination) the oil and gas reserves
attributable to the Oil and Gas Properties of the Borrower and its Subsidiaries,
together with a projection of the rate of production and future net income,
taxes, operating expenses and capital expenditures with respect thereto as of
such date, based upon the economic assumptions consistent with the
Administrative Agent’s lending requirements at the time.
  “Responsible Officer”
means, as to any Person, the Chief Executive Officer, the President, any
Financial Officer or any Vice President of such Person.  Unless
otherwise specified, all references to a Responsible Officer herein means a
Responsible Officer of the Borrower.
  “Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
Property) with respect to any Equity Interests in the Borrower or any of its
Subsidiaries, or any payment (whether in cash, securities or other Property),
including any sinking fund or similar deposit, on account of the purchase,
redemption, retirement, acquisition, cancellation or termination of any such
Equity Interests in the Borrower or any of its Subsidiaries or any option,
warrant or other right to acquire any such Equity Interests in the Borrower or
any of its Subsidiaries.
  “Revolving Credit
Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Loans and its LC Exposure at such
time.
  “Scheduled
Redetermination” has the meaning assigned such term in Section
2.07(b).
  “Scheduled Redetermination
Date” means the date on which a Borrowing Base that has been redetermined
pursuant to a Scheduled Redetermination becomes effective as provided in Section
2.07(d).
  “SEC” means the
Securities and Exchange Commission or any successor Governmental
Authority.
  “Security Instruments”
means the Guaranty Agreement, if any, mortgages, deeds of trust and other
agreements, instruments or certificates described or referred to in Exhibit C,
and any and all other agreements, instruments, consents or certificates now or
hereafter executed and delivered by the Borrower or any other Person (other than
Swap Agreements with the Lenders or any Affiliate of a Lender or participation
or similar agreements between any Lender and any
   Credit
Agreement
 Houston 3931255v.7
 20
  other
lender or creditor with respect to any Indebtedness pursuant to this Agreement)
in connection with, or as security for the payment or performance of the
Indebtedness, the Notes, this Agreement, or reimbursement obligations under the
Letters of Credit, as such agreements may be amended, modified, supplemented or
restated from time to time.
  “Senior Notes” means
the $255,927,000, 9-7/8% Senior Notes due 2018 and any Permitted Refinancing
Debt in respect thereof.
  “S&P” means
Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies,
Inc., and any successor thereto that is a nationally recognized rating
agency.
  “Subsidiary”
means:  (a) any Person of which at least a majority of the outstanding
Equity Interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors, manager or other governing body of such
Person (irrespective of whether or not at the time Equity Interests of any other
class or classes of such Person shall have or might have voting power by reason
of the happening of any contingency) is at the time directly or indirectly owned
or controlled by the Borrower or one or more of its Subsidiaries or by the
Borrower and one or more of its Subsidiaries and (b) any partnership of which
the Borrower or any of its Subsidiaries is a general partner.  Unless
otherwise indicated herein, each reference to the term “Subsidiary” means a
Subsidiary of the Borrower.
  “Super-Majority
Lenders” means, at any time while no Loans or LC Exposure is outstanding,
Lenders having at least sixty-six and two-thirds percent (66-2⁄3%) of the
Aggregate Maximum Credit Amounts; and at any time while any Loans or LC Exposure
is outstanding, Lenders holding at least sixty-six and two-thirds percent
(66-2⁄3%) of the outstanding aggregate principal amount of the Loans and
participation interests in Letters of Credit (without regard to any sale by a
Lender of a participation in any Loan under Section 12.04(c)).
  “Swap Agreement” means
any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided
that no phantom stock or similar plan providing for payments only on account of
services provided by current or former directors, officers, employees or
consultants of the Borrower or any of its Subsidiaries shall be a Swap
Agreement.
  “Swap PV” means, with
respect to any Swap Agreement, the present value, discounted at 9% per annum, of
the future receipts expected to be paid to the Borrower under such Swap
Agreement netted against the Bank Price Deck in effect as of the most recent
Proposed Borrowing Base Notice, provided however, that the “Swap PV” shall never
be less than $0.00.
  “Synthetic Leases”
means, in respect of any Person, all leases which shall have been, or should
have been, in accordance with GAAP, treated as operating leases on the financial
statements of the Person liable (whether contingently or otherwise) for the
payment of rent thereunder and which were properly treated as indebtedness for
borrowed money for purposes of
  Credit
Agreement
 Houston 3931255v.7
 21
  U.S.
federal income taxes, if the lessee in respect thereof is obligated to either
purchase for an amount in excess of, or pay upon early termination an amount in
excess of, 80% of the residual value of the Property subject to such operating
lease upon expiration or early termination of such lease.
  “Taxes” means any and
all present or future taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority.
  “Termination Date”
means the earlier of the Maturity Date and the date of termination of the
Commitments.
  “Transactions” means,
with respect to (a) the Borrower, the execution, delivery and performance by the
Borrower of this Agreement and each other Loan Document to which it is a party,
the borrowing of Loans, the use of the proceeds thereof and the issuance of
Letters of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged
Properties and other Properties pursuant to the Security Instruments and (b)
each Guarantor, the execution, delivery and performance by such Guarantor of
each Loan Document to which it is a party, the guaranteeing of the Indebtedness
and the other obligations under the Guaranty Agreement by such Guarantor and
such Guarantor’s grant of the security interests and provision of collateral
under the Security Instruments, and the grant of Liens by such Guarantor on
Mortgaged Properties and other Properties pursuant to the Security
Instruments.
  “Type”, when used in
reference to any Loan or Borrowing, refers to whether the rate of interest on
such Loan, or on the Loans comprising such Borrowing, is determined by reference
to the Alternate Base Rate or the LIBO Rate.
  “Wholly-Owned
Subsidiary” means any Subsidiary of which all of the outstanding Equity
Interests (other than any directors’ qualifying shares mandated by applicable
law), on a fully-diluted basis, are owned by the Borrower or one or more of the
Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the
Wholly-Owned Subsidiaries.
  Section
1.03            Types of Loans and
Borrowings.  For purposes of this Agreement, Loans and
Borrowings, respectively, may be classified and referred to by Type (e.g., a “Eurodollar Loan” or a
“Eurodollar
Borrowing”).
  Section
1.04            Terms
Generally.  The definitions of terms herein shall apply equally
to the singular and plural forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without
limitation”.  The word “will” shall be construed to have the same
meaning and effect as the word “shall”.  Unless the context requires
otherwise (a) any definition of or reference to any agreement, instrument or
other document herein shall be construed as referring to such agreement,
instrument or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth in the Loan Documents), (b) any reference herein to
any law shall be construed as referring to such law as amended, modified,
codified or reenacted, in whole or in
  Credit
Agreement
 Houston 3931255v.7
 22
  part, and
in effect from time to time, (c) any reference herein to any Person shall be
construed to include such Person’s successors and assigns (subject to the
restrictions contained in the Loan Documents), (d) the words “herein”, “hereof”
and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (e)
with respect to the determination of any time period, the word “from” means
“from and including” and the word “to” means “to and including” and (f) any
reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Annexes, Exhibits and
Schedules to, this Agreement.  No provision of this Agreement or any
other Loan Document shall be interpreted or construed against any Person solely
because such Person or its legal representative drafted such
provision.
  Section
1.05            Accounting Terms and
Determinations; GAAP.  Unless otherwise specified herein, all
terms of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Majority Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision  amended in accordance
herewith.
  ARTICLE
II
 The
Credits
  Section
2.01            Commitments.  Subject
to the terms and conditions set forth herein, each Lender agrees to make Loans
to the Borrower during the Availability Period in an aggregate principal amount
that will not result in (a) such Lender’s Revolving Credit Exposure exceeding
such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding
the total Commitments.  Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, repay and
reborrow the Loans.
  Section
2.02             Loans and
Borrowings.
  (a)        Borrowings; Several
Obligations.  Each Loan shall be made as part of a Borrowing
consisting of Loans made by the Lenders ratably in accordance with their
respective Commitments.  The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided
that the Commitments are several and no Lender shall be responsible for any
other Lender’s failure to make Loans as required.
  (b)        Types of
Loans.  Subject to Section 3.03, each Borrowing shall be
comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request
in accordance herewith.  Each Lender at its option may make any
Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that
any
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 Houston 3931255v.7
 23
  exercise
of such option shall not affect the obligation of the Borrower to repay such
Loan in accordance with the terms of this Agreement.
  (c)        Minimum Amounts; Limitation
on Number of Borrowings.  At the commencement of each Interest
Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate
amount that is an integral multiple of $500,000 and not less than
$1,000,000.  At the time that each ABR Borrowing is made, such
Borrowing shall be in an aggregate amount that is an integral multiple of
$250,000 and not less than $1,000,000; provided that an ABR
Borrowing may be in an aggregate amount that is equal to the entire unused
balance of the total Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section
2.08(e).  Borrowings of more than one Type may be outstanding at the
same time; provided
that there shall not at any time be more than a total of twelve (12) Eurodollar
Borrowings outstanding.  Notwithstanding any other provision of this
Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Borrowing if the Interest Period requested with respect thereto
would end after the Maturity Date.
  (d)        Notes.  Upon
the request of a Lender, the Loans made by such Lender shall be evidenced by a
single promissory note of the Borrower in substantially the form of Exhibit A,
dated, (i) as of the date of this Agreement in the case of any Lender party
hereto as of the date of this Agreement or (ii) as of the effective date of the
Assignment and Assumption in the case of any Lender that becomes a party hereto
pursuant to an Assignment and Assumption, payable to the order of such Lender in
a principal amount equal to its Maximum Credit Amount as in effect on such date,
and otherwise duly completed.  In the event that any Lender’s Maximum
Credit Amount increases or decreases for any reason (whether pursuant to Section
2.06, Section 12.04(b) or otherwise), the Borrower shall, upon the request of
such Lender, deliver or cause to be delivered on the effective date of such
increase or decrease, a new Note payable to the order of such Lender in a
principal amount equal to its Maximum Credit Amount after giving effect to such
increase or decrease, and otherwise duly completed, and such Lender shall
promptly return to the Borrower the previously issued Note held by such
Lender.  The date, amount, Type, interest rate and, if applicable,
Interest Period of each Loan made by each Lender, and all payments made on
account of the principal thereof, shall be recorded by such Lender on its books
for its Note, and, prior to any transfer, may be endorsed by such Lender on a
schedule attached to such Note or any continuation thereof or on any separate
record maintained by such Lender.  Failure to make any such notation
or to attach a schedule shall not affect any Lender’s or the Borrower’s rights
or obligations in respect of such Loans or affect the validity of such transfer
by any Lender of its Note.
  (e)        Loans and Borrowings under
the Existing Credit Agreement.  On the Effective Date (or as
soon as practicable with respect to (iii)):
  (i)           the
Borrower shall pay all accrued and unpaid commitment fees, break funding fees
under Section 5.02 and all other fees that are outstanding under the Existing
Credit Agreement for the account of each “Lender” under the Existing Credit
Agreement;
  (ii)          each
“ABR Loan” and “Eurodollar Loan” outstanding under the Existing Credit Agreement
shall be deemed to be amended and restated with the proceeds of a
  Credit
Agreement
 Houston 3931255v.7
 24
  new ABR
Loan or Eurodollar Loan, as applicable, and continued as existing Loans under
this Agreement and not as a novation;
  (iii)         the
Administrative Agent shall use reasonable efforts to cause each “Lender” under
the Existing Credit Agreement to deliver to the Borrower as soon as practicable
after the Effective Date the Note issued by the Borrower to it under the
Existing Credit Agreement, marked “canceled” or otherwise similarly
defaced;
  (iv)         any
letters of credit outstanding under the Existing Credit Agreement shall be
deemed issued under this Agreement; and
  (v)          the
Existing Credit Agreement and the commitments thereunder shall be superceded by
this Agreement and such commitments shall terminate.
  It is the
intent of the parties hereto that this Agreement not constitute a novation of
the obligations and liabilities existing under the Existing Credit Agreement or
evidence repayment of any such obligations and liabilities and that this
Agreement amend and restate in its entirety the Existing Credit Agreement and
re-evidence the obligations of the Borrower outstanding thereunder.
  Section
2.03            Requests for
Borrowings.  To request a Borrowing, the Borrower shall notify
the Administrative Agent of such request by telephone (a) in the case of a
Eurodollar Borrowing, not later than 11:00 a.m., Houston time, three Business
Days before the date of the proposed Borrowing or (b) in the case of an ABR
Borrowing, not later than 12:00 noon, Houston time, on the date of the proposed
Borrowing; provided
that no such notice shall be required for any deemed request of an ABR Borrowing
to finance the reimbursement of an LC Disbursement as provided in Section
2.08(e).  Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request signed by the
Borrower.  Each such telephonic and written Borrowing Request shall
specify the following information in compliance with Section 2.02:
  (i)           the
aggregate amount of the requested Borrowing;
  (ii)          the
date of such Borrowing, which shall be a Business Day;
  (iii)         whether
such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
  (iv)         in
the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term
“Interest Period”;
  (v)          the
amount of the then effective Borrowing Base, the current total Revolving Credit
Exposures (without regard to the requested Borrowing) and the pro forma total
Revolving Credit Exposures (giving effect to the requested Borrowing);
and
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 Houston 3931255v.7
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  (vi)         the
location and number of the Borrower’s account to which funds are to be
disbursed, which shall comply with the requirements of Section
2.05.
  If no
election as to the Type of Borrowing is specified, then the requested Borrowing
shall be a Eurodollar Loan having an Interest Period of one month.  If
no Interest Period is specified with respect to any requested Eurodollar
Borrowing, then the Borrower shall be deemed to have selected an Interest Period
of one month’s duration.  Each Borrowing Request shall constitute a
representation that the amount of the requested Borrowing shall not cause the
total Revolving Credit Exposures to exceed the total Commitments (i.e., the lesser of the
Aggregate Maximum Credit Amounts and the then effective Borrowing
Base).
  Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03,
the Administrative Agent shall advise each Lender of the details thereof and of
the amount of such Lender’s Loan to be made as part of the requested
Borrowing.
  Section
2.04             Interest
Elections.
  (a)        Conversion and
Continuance.  Each Borrowing initially shall be of the Type
specified in the applicable Borrowing Request and, in the case of a Eurodollar
Borrowing, shall have an initial Interest Period as specified in such Borrowing
Request.  Thereafter, the Borrower may elect to convert such Borrowing
to a different Type or to continue such Borrowing and, in the case of a
Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in
this Section 2.04.  The Borrower may elect different options with
respect to different portions of the affected Borrowing, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Borrowing, and the Loans comprising each such portion shall be
considered a separate Borrowing.
  (b)        Interest Election
Requests.  To make an election pursuant to this Section 2.04,
the Borrower shall notify the Administrative Agent of such election by telephone
by the time that a Borrowing Request would be required under Section 2.03 if the
Borrower were requesting a Borrowing of the Type resulting from such election to
be made on the effective date of such election.  Each such telephonic
Interest Election Request shall be irrevocable and shall be confirmed promptly
by hand delivery or telecopy to the Administrative Agent of a written Interest
Election Request signed by the Borrower.
  (c)        Information in Interest
Election Requests.  Each telephonic and written Interest
Election Request shall specify the following information:
  (i)           the
Borrowing to which such Interest Election Request applies and, if different
options are being elected with respect to different portions thereof, the
portions thereof to be allocated to each resulting Borrowing (in which case the
information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be
specified for each resulting Borrowing);
  (ii)           the
effective date of the election made pursuant to such Interest Election Request,
which shall be a Business Day;
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 Houston 3931255v.7
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  (iii)          whether
the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;
and
  (iv)          if
the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be
applicable thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.
  If any
such Interest Election Request requests a Eurodollar Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month’s duration.
  (d)        Notice to Lenders by the
Administrative Agent.  Promptly following receipt of an
Interest Election Request, the Administrative Agent shall advise each Lender of
the details thereof and of such Lender’s portion of each resulting
Borrowing.
  (e)        Effect of Failure to Deliver
Timely Interest Election Request and Events of Default and Borrowing Base
Deficiencies on Interest Election.  If the Borrower fails to
deliver a timely Interest Election Request with respect to a Eurodollar
Borrowing prior to the end of the Interest Period applicable thereto, then,
unless such Borrowing is repaid as provided herein, at the end of such Interest
Period such Borrowing shall be continued as a Eurodollar Loan having an Interest
Period of one-month.  Notwithstanding any contrary provision hereof,
(i) if an Event of Default has occurred and is continuing:  (A) no
outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing
(and any Interest Election Request that requests the conversion of any Borrowing
to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be
ineffective) and (B) unless repaid, each Eurodollar Borrowing shall be converted
to an ABR Borrowing at the end of the Interest Period applicable thereto and
(ii) if a Borrowing Base Deficiency exists:  (A) outstanding
Borrowings may not be converted or continued as Eurodollar Borrowings unless,
after giving effect thereto and to the conversion or continuation of Borrowings
to ABR Borrowings, there are ABR Borrowings in an amount no less than the amount
of such Borrowing Base Deficiency and (B) unless sooner repaid, any Eurodollar
Borrowing in excess of the Borrowing Base shall be converted to an ABR Borrowing
at the end of the Interest Period applicable thereto.
  (f)         Reference Bank Cost of Funds
Rate.
  (i)           For
each Business Day (A) that the Administrative Agent receives a Borrowing Request
or an Interest Election Request for an ABR Loan (including any request for a
Eurodollar Borrowing converted to an ABR Borrowing pursuant to Section 3.03 or
as a result of illegality pursuant to Section 5.05) (each individually, an
“ABR Request”),
on or prior to 1:00 p.m., New York City time on such Business Day and (B) that
an ABR Loan is outstanding under this Agreement and the Alternate Base Rate
(without reference to the Reference Bank Cost of Funds Rate) communicated by the
Administrative Agent on the previous Business Day has changed, on or prior to
10:00 a.m., New York City time, on each such Business Day, the Administrative
Agent shall communicate the Alternate Base Rate on such Business Day (without
reference to the Reference Bank Cost of Funds Rate (as defined below)) to each
Lender.  Each Lender shall notify the Administrative Agent no later
than 2:00 p.m., New York City time, on
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 Houston 3931255v.7
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  such
Business Day an ABR Request is received by the Administrative Agent, and 11:00
a.m., New York City time, on each Business Day that an ABR Loan is outstanding
(in each instance, a “Determination Date”),
whether such Lender’s Cost of Funds exceeds the Alternate Base Rate for such
Business Day (without reference to the Reference Bank Cost of Funds Rate (as
defined below)).   Any Lender that does not provide notice to the
Administrative Agent with respect to its Cost of Funds prior to 2:00 p.m. or
11:00 a.m., New York City time, on such Business Day, as applicable, shall be
deemed to have confirmed to the Administrative Agent that such Lender’s Cost of
Funds does not exceed the Alternate Base Rate without reference to the Reference
Bank Cost of Funds Rate.
  (ii)           If
sixty-five percent (65%) or more of the Lenders with a Commitment as of an
applicable Determination Date (the “Cost of Funds Calculation
Threshold”) notify the Administrative Agent that their Cost of Funds
exceeds the Alternate Base Rate (without reference to the Reference Bank Cost of
Funds Rate) communicated by the Administrative Agent, then the Administrative
Agent shall calculate the “Reference Bank Cost of Funds Rate” which shall be
calculated as the simple average of the Cost of Funds of the Lenders; provided
that, in no instance shall the Cost of Funds for any Lender exceed the Alternate
Base Rate for such Business Day (without reference to the Reference Bank Cost of
Funds Rate) quoted by the Administrative Agent by more than one and a half
percent (1.5%); and provided further that, any Lender which does not submit a
Cost of Funds Rate shall be deemed to have confirmed to the Administrative Agent
that such Lender’s Cost of Funds does not exceed the Alternate Base Rate without
reference to the Reference Bank Cost of Funds Rate. The Alternate Base Rate
communicated by the Administrative Agent as of such Determination Date (without
reference to the Reference Bank Cost of Funds) shall be used for each such
Lender which does not submit a Cost of Funds Rate to calculate the Reference
Bank Cost of Funds Rate.  If the Cost of Funds Calculation Threshold
is not met, then the Reference Bank Cost of Funds Rate shall not be calculated
and shall be disregarded for the purposes of calculating the Alternate Base Rate
as of such Determination Date. For purposes of determining the Reference Bank
Cost of Funds Rate, each Lender and the Administrative Agent may provide notice
by electronic communications pursuant to procedures approved by the
Administrative Agent.
  (iii)          On
any Determination Date that a Reference Bank Cost of Funds Rate is calculated,
the Administrative Agent shall calculate the Reference Bank Cost of Funds Rate
in accordance with the procedures set forth in subsection (ii) above and shall
provide such rate to the Borrower and the Lenders no later than 3:00 pm, New
York City time for a ABR Request and 12:00 noon, New York City time on each
Business Day that an ABR Loan is outstanding, which rate shall be provided as a
simple average rate, without identifying the underlying rates submitted by the
Lenders.
  Section
2.05             Funding of
Borrowings.
  (a)        Funding by
Lenders.  Each Lender shall make each Loan to be made by it
hereunder on the proposed date thereof by wire transfer of immediately available
funds by 1:00 p.m., Houston time, to the account of the Administrative Agent
most recently designated by it for such purpose by notice to the
Lenders.  The Administrative Agent will make such Loans available to
the Borrower by promptly crediting the amounts so received, in like funds, to
an
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Agreement
 Houston 3931255v.7
 28
  account
of the Borrower designated by the Borrower in the applicable Borrowing Request;
provided that ABR Loans
made to finance the reimbursement of an LC Disbursement as provided in Section
2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank that
made such LC Disbursement.  Nothing herein shall be deemed to obligate
any Lender to obtain the funds for its Loan in any particular place or manner or
to constitute a representation by any Lender that it has obtained or will obtain
the funds for its Loan in any particular place or manner.
  (b)        Presumption of Funding by
the Lenders.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing that
such Lender will not make available to the Administrative Agent such Lender’s
share of such Borrowing, the Administrative Agent may assume that such Lender
has made such share available on such date in accordance with Section 2.05(a)
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans.  If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender’s Loan included in such Borrowing.
  Section
2.06             Termination and Reduction of
Aggregate Maximum Credit Amounts.
  (a)        Scheduled Termination of
Commitments.  Unless previously terminated, the Commitments
shall terminate on the Maturity Date.  If at any time the Aggregate
Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero,
then the Commitments shall terminate on the effective date of such termination
or reduction.
  (b)        Optional Termination and
Reduction of Aggregate Credit Amounts.
  (i)           The
Borrower may at any time terminate, or from time to time reduce, the Aggregate
Maximum Credit Amounts; provided that (A) each
reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is
an integral multiple of $500,000 and not less than $1,000,000 and (B) the
Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if,
after giving effect to any concurrent prepayment of the Loans in accordance with
Section 3.04(c), the total Revolving Credit Exposures would exceed the total
Commitments.
  (ii)           The
Borrower shall notify the Administrative Agent of any election to terminate or
reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at least
three Business Days prior to the effective date of such termination or
reduction, specifying such election and the effective date
thereof.  Promptly following receipt of any notice, the Administrative
Agent shall advise the Lenders of the contents
thereof.  Each
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 Houston 3931255v.7
 29
  notice
delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be
irrevocable.  Any termination or reduction of the Aggregate Maximum
Credit Amounts shall be permanent and may not be reinstated.  Each
reduction of the Aggregate Maximum Credit Amounts shall be made ratably among
the Lenders in accordance with each Lender’s Applicable Percentage.
  Section
2.07             Borrowing
Base.
  (a)        Initial Borrowing
Base.  For the period from and including the Effective Date to
but excluding October 1, 2009, the amount of the Borrowing Base shall be
$1,750,000,000.  Notwithstanding the foregoing, the Borrowing Base may
be subject to further adjustments from time to time pursuant to Section 2.07(e),
Section 2.07(f), Section 8.13(c), Section 9.02(g) or Section
9.12(d).  The Borrowing Base shall, under no circumstances, exceed the
Aggregate Maximum Credit Amounts.
  (b)       
Scheduled and Interim
Redeterminations.  Subject to Section 2.07(d), the Borrowing
Base shall be redetermined (a “Scheduled
Redetermination”) on April 1st and October 1st of each year,
commencing October 1, 2009.  In addition, either the Borrower or
the Administrative Agent, at the direction of the Majority Lenders, may, once
during each calendar year, each elect to cause the Borrowing Base to be
redetermined between Scheduled Redeterminations (an “Interim
Redetermination”) in accordance with this Section 2.07.  The
Borrower shall have the right, once during each calendar year, to initiate an
Interim Redetermination in addition to the one otherwise provided in this
Section 2.07(b) upon the proposed acquisition of Proved Developed Producing
Properties whose purchase price is greater than 10% of the Borrowing Base, provided such Interim
Redetermination is in accordance with this Section 2.07.
  (c)        Scheduled and Interim
Redetermination Procedure.
  (i)           Each
Scheduled Redetermination and each Interim Redetermination shall be effectuated
as follows:  Upon receipt by the Administrative Agent of (A) the
Reserve Report and the certificate required to be delivered by the Borrower to
the Administrative Agent, in the case of a Scheduled Redetermination, pursuant
to Sections 8.12(a) and (c), and, in the case of an Interim Redetermination,
pursuant to Sections 8.12(b) and (c), and (B) such other reports, data and
supplemental information, including, without limitation, the information
provided pursuant to Section 8.12(c) and the list of Swap Agreements per Section
8.01(d), as may, from time to time, be reasonably requested by the Majority
Lenders (the Reserve Report, such certificate and such other reports, data and
supplemental information being the “Engineering
Reports”), the Administrative Agent shall evaluate the information
contained in the Engineering Reports and shall, in good faith, propose a new
Borrowing Base (the “Proposed Borrowing
Base”) based upon such information and such other information (including,
without limitation, the status of title information with respect to the Oil and
Gas Properties as described in the Engineering Reports and the existence of any
other Debt) as the Administrative Agent, in good faith, deems appropriate and
consistent with its normal oil and gas lending criteria as it exists at the
particular time.  In addition, the Administrative Agent will summarize
the Swap PV of such Swap Agreements as of the date of the Proposed Borrowing
Base Notice.  In no event shall the Proposed Borrowing Base exceed the
Aggregate Maximum Credit Amounts.
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 Houston 3931255v.7
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  (ii)           The
Administrative Agent shall notify the Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base
Notice”):
  (A)         in
the case of a Scheduled Redetermination (1) if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or
before the March 15th and September 15th of such year following the
date of delivery of such Engineering Report or (2) if the Administrative Agent
shall not have received the Engineering Reports required to be delivered by the
Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner,
then promptly after the Administrative Agent has received complete Engineering
Reports from the Borrower and has had a reasonable opportunity to determine the
Proposed Borrowing Base in accordance with Section 2.07(c)(i) and in any event,
within fifteen (15) days after the Administrative Agent has received the
required Engineering Report; and
  (B)          in
the case of an Interim Redetermination, promptly, and in any event, within
fifteen (15) days after the Administrative Agent has received the required
Engineering Reports.
  (iii)          Any
Proposed Borrowing Base that would increase the Borrowing Base then in effect
must be approved or deemed to have been approved by all of the Lenders as
provided in this Section 2.07(c)(iii); and any Proposed Borrowing Base that
would decrease or maintain the Borrowing Base then in effect must be approved or
be deemed to have been approved by the Super-Majority Lenders as provided in
this Section 2.07(c)(iii).  Upon receipt of the Proposed Borrowing
Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base.  If at the end of such fifteen (15) days,
any Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base.  If, at the end of such 15-day period, all of
the Lenders, in the case of a Proposed Borrowing Base that would increase the
Borrowing Base then in effect, or the Super-Majority Lenders, in the case of a
Proposed Borrowing Base that would decrease or maintain the Borrowing Base then
in effect, have approved or deemed to have approved, as aforesaid, then the
Proposed Borrowing Base shall become the new Borrowing Base effective on the
date specified in Section 2.07(d).  If, however, at the end of such
15-day period, all of the Lenders or the Super-Majority Lenders, as applicable,
have not approved or deemed to have approved, as aforesaid, then the
Administrative Agent shall poll the Lenders to ascertain the highest Borrowing
Base then acceptable to a number of Lenders sufficient to constitute the
Super-Majority Lenders and, so long as such amount does not increase the
Borrowing Base then in effect, such amount shall become the new Borrowing Base
effective on the date specified in Section 2.07(d).
  (d)        Effectiveness of a
Redetermined Borrowing Base.  After a redetermined Borrowing
Base is approved or is deemed to have been approved by all of the Lenders or the
Super-Majority Lenders, as applicable, pursuant to Section 2.07(c)(iii), the
Administrative Agent shall notify the Borrower and the Lenders (the “New Borrowing Base
Notice”) of the amount of the redetermined Borrowing Base, and such
amount shall become the new Borrowing Base
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 Houston 3931255v.7
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  effective
and applicable to the Borrower, the Administrative Agent, each Issuing Bank and
the Lenders:
  (i)           in
the case of a Scheduled Redetermination, (A) if the Administrative Agent shall
have received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the
April 1st or October 1st, as applicable, following delivery of the New
Borrowing Base Notice, or (B) if the Administrative Agent shall not have
received the Engineering Reports required to be delivered by the Borrower
pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the
Business Day next succeeding delivery of the New Borrowing Base Notice;
and
  (ii)           in
the case of an Interim Redetermination, on the Business Day next succeeding
delivery of the New Borrowing Base Notice.
  Such
amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination date or the next
adjustment to the Borrowing Base under Section 2.07(e), Section 2.07(f), Section
8.13(c), Section 9.02(g) or Section 9.12(d), whichever occurs
first.
  (e)        Reduction of the Borrowing
Base Upon Issuance of Funded Debt.  Notwithstanding anything to
the contrary contained herein, upon the issuance of any Funded Debt (excluding
Permitted Refinancing Debt), the Borrowing Base then in effect shall be reduced
by an amount equal to the product of 0.25 multiplied by the stated principal
amount of such Debt (excluding any original issue discount), and the Borrowing
Base as so reduced shall become the new Borrowing Base immediately upon the date
of such issuance, effective and applicable to the Borrower, the Agents, each
Issuing Bank and the Lenders on such date until the next redetermination or
modification thereof hereunder.
  (f)         Reduction of Borrowing Base
Upon Termination of Hedge Positions.  If the Borrower or any
Subsidiary shall terminate or create any off-setting positions in respect of any
hedge positions upon which the Lenders relied in determining the most recent
Borrowing Base, and the aggregate Swap PV of all such terminations and/or
offsetting positions exceeds, during any period between redeterminations of the
Borrowing Base, the lesser of (a) $50,000,000 or (b) 3% of the then effective
Borrowing Base, then the Borrowing Base shall be simultaneously reduced in an
amount equal to 65% of such aggregate Swap PV.
  Section
2.08             Letters of
Credit.
  (a)        General.  Subject
to the terms and conditions set forth herein, the Borrower may request any
Issuing Bank to issue Letters of Credit for its own account or for the account
of the Borrower or any of its Subsidiaries, in a form reasonably acceptable to
the Administrative Agent and such Issuing Bank, at any time and from time to
time during the Availability Period; provided that the Borrower
may not request the issuance, amendment, renewal or extension of Letters of
Credit hereunder if a Borrowing Base Deficiency exists at such time or would
exist as a result thereof.  In the event of any inconsistency between
the terms and conditions of this Agreement and the terms and conditions of any
form of letter of credit
  Credit
Agreement
 Houston 3931255v.7
 32
  application
or other agreement submitted by the Borrower to, or entered into by the Borrower
with, an Issuing Bank relating to any Letter of Credit, the terms and conditions
of this Agreement shall control.
  (b)       Notice of Issuance,
Amendment, Renewal, Extension; Certain Conditions.  To request
the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall deliver as permitted by
Section 12.01(a) (or transmit by electronic communication, if arrangements for
doing so have been approved by the Issuing Bank) to any Issuing Bank and the
Administrative Agent (not less than three (3) Business Days in advance of the
requested date of issuance, amendment, renewal or extension) a
notice:
  (i)           requesting
the issuance of a Letter of Credit or identifying the Letter of Credit issued by
such Issuing Bank to be amended, renewed or extended;
  (ii)          specifying
the date of issuance, amendment, renewal or extension (which shall be a Business
Day);
  (iii)         specifying
the date on which such Letter of Credit is to expire (which shall comply with
Section 2.08(c));
  (iv)         specifying
the amount of such Letter of Credit;
  (v)          specifying
the name and address of the beneficiary thereof and such other information as
shall be necessary to prepare, amend, renew or extend such Letter of Credit;
and
  (vi)         specifying
the amount of the then effective Borrowing Base and whether a Borrowing Base
Deficiency exists at such time, the current total Revolving Credit Exposures
(without regard to the requested Letter of Credit or the requested amendment,
renewal or extension of an outstanding Letter of Credit) and the pro forma total
Revolving Credit Exposures (giving effect to the requested Letter of Credit or
the requested amendment, renewal or extension of an outstanding Letter of
Credit).
  Each
notice shall constitute a representation that after giving effect to the
requested issuance, amendment, renewal or extension, as applicable, (i) the LC
Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit
Exposures shall not exceed the lesser of the Aggregate Maximum Credit Amounts
and the then effective Borrowing Base.
  If
requested by any Issuing Bank, the Borrower also shall submit a letter of credit
application on such Issuing Bank’s standard form in connection with any request
for a Letter of Credit.
  (c)        Expiration
Date.  Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date eighteen months after the date
of the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
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 Houston 3931255v.7
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  (d)        Participations.  By
the issuance of a Letter of Credit (or an amendment to a Letter of Credit
increasing the amount thereof) and without any further action on the part of the
Issuing Bank that issues such Letter of Credit or the Lenders, each Issuing Bank
that issues a Letter of Credit hereunder hereby grants to each Lender, and each
Lender hereby acquires from such Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Applicable Percentage of the aggregate amount
available to be drawn under such Letter of Credit.  In consideration
and in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account of
any Issuing Bank that issues a Letter of Credit hereunder, such Lender’s
Applicable Percentage of each LC Disbursement made by such Issuing Bank and not
reimbursed by the Borrower on the date due as provided in Section 2.08(e), or of
any reimbursement payment required to be refunded to the Borrower for any
reason.  Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this Section 2.08(d) in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default, the existence
of a Borrowing Base Deficiency or reduction or termination of the Commitments,
and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
  (e)        Reimbursement.  If
any Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit
issued by such Issuing Bank, the Borrower shall reimburse such LC Disbursement
by paying to the Administrative Agent an amount equal to such LC Disbursement
not later than 1:00 p.m., Houston time, on the third day after such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 9:00 a.m., Houston time, on such date, or, if such notice
has not been received by the Borrower prior to such time on such date, then not
later than 1:00 p.m., Houston time, on (i) the third day after the Borrower
receives such notice, if such notice is received prior to 9:00 a.m., Houston
time, on the day of receipt, or (ii) the Business Day immediately following the
third day after the Borrower receives such notice, if such notice is not
received prior to such time on the day of receipt; provided that if such LC
Disbursement is not less than $1,000,000, the Borrower shall, subject to the
conditions to Borrowing set forth herein, be deemed to have requested, and the
Borrower does hereby request under such circumstances, that such payment be
financed with a Eurodollar Borrowing with an Interest Period of one month in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting Eurodollar
Borrowing.  If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Applicable Percentage thereof.  Promptly following receipt of such
notice, each Lender shall pay to the Administrative Agent its Applicable
Percentage of the payment then due from the Borrower, in the same manner as
provided in Section 2.05 with respect to Loans made by such Lender (and Section
2.05 shall apply, mutatis
mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the Issuing Bank that issued such
Letter of Credit the amounts so received by it from the
Lenders.  Promptly following receipt by the Administrative Agent of
any payment from the Borrower pursuant to this Section 2.08(e), the
Administrative Agent shall distribute such payment to the Issuing Bank that
issued such Letter of Credit or, to the extent that
  Credit
Agreement
 Houston 3931255v.7
 34
  Lenders
have made payments pursuant to this Section 2.08(e) to reimburse such Issuing
Bank, then to such Lenders and such Issuing Bank as their interests may
appear.  Any payment made by a Lender pursuant to this Section 2.08(e)
to reimburse any Issuing Bank for any LC Disbursement (other than the funding of
ABR Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Borrower of its obligation to reimburse such LC
Disbursement.  Any LC Disbursement not reimbursed by the Borrower or
funded as a Loan prior to 1:00 p.m., Houston time, shall bear interest for such
day at the Alternate Base Rate plus the Applicable Margin.
  (f)        Obligations
Absolute.  The Borrower’s obligation to reimburse LC
Disbursements as provided in Section 2.08(e) shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Agreement under any and all circumstances whatsoever and irrespective of
(i) any lack of validity or enforceability of any Letter of Credit, any Letter
of Credit Agreement or this Agreement, or any term or provision therein, (ii)
any draft or other document presented under a Letter of Credit proving to be
forged, fraudulent or invalid in any respect or any statement therein being
untrue or inaccurate in any respect, (iii) payment by any Issuing Bank under a
Letter of Credit issued by such Issuing Bank against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit or
any Letter of Credit Agreement, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section 2.08(f), constitute a legal or equitable
discharge of, or provide a right of setoff against, the Borrower’s obligations
hereunder.  Neither the Administrative Agent, the Lenders nor any
Issuing Bank, nor any of their Related Parties shall have any liability or
responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of any Issuing Bank; provided that the foregoing
shall not be construed to excuse any Issuing Bank from liability to the Borrower
to the extent of any direct damages (as opposed to consequential damages, claims
in respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by such Issuing Bank’s
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof.  The
parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of any Issuing Bank (as finally determined by a
court of competent jurisdiction), such Issuing Bank shall be deemed to have
exercised all requisite care in each such determination.  In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank that issued such Letter of Credit may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
  Credit
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 Houston 3931255v.7
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  (g)       Disbursement
Procedures.  Each Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit issued by such Issuing Bank.  Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to
give or delay in giving such notice shall not relieve the Borrower of its
obligation to reimburse such Issuing Bank and the Lenders with respect to any
such LC Disbursement.
  (h)       Interim
Interest.  If any Issuing Bank shall make any LC Disbursement,
then, until the Borrower shall have reimbursed such Issuing Bank for such LC
Disbursement (either with its own funds or a Borrowing under Section 2.08(e)),
the unpaid amount thereof shall bear interest, for each day from and including
the date such LC Disbursement is made to but excluding the date that the
Borrower reimburses such LC Disbursement, at the rate per annum then applicable
to ABR Loans.  Interest accrued pursuant to this Section 2.08(h) shall
be for the account of such Issuing Bank, except that interest accrued on and
after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse
such Issuing Bank shall be for the account of such Lender to the extent of such
payment.
  (i)         Replacement of an Issuing
Bank.  Any Issuing Bank may be replaced or resign at any time
by written agreement among the Borrower, the Administrative Agent, such
resigning or replaced Issuing Bank and, in the case of a replacement, the
successor Issuing Bank.  The Administrative Agent shall notify the
Lenders of any such resignation or replacement of an Issuing Bank.  At
the time any such resignation or replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the resigning or
replaced Issuing Bank pursuant to Section 3.05(b).  In the case of the
replacement of an Issuing Bank, from and after the effective date of such
replacement, (i) the successor Issuing Bank shall have all the rights and
obligations of the replaced Issuing Bank under this Agreement with respect to
Letters of Credit to be issued thereafter and (ii) references herein to “Issuing
Bank” shall be deemed to refer to such successor or to any previous Issuing
Bank, or to such successor and all previous Issuing Banks, as the context shall
require.  After the resignation or replacement of an Issuing Bank
hereunder, the resigning or replaced Issuing Bank shall remain a party hereto
and shall continue to have all the rights and obligations of an Issuing Bank
under this Agreement with respect to Letters of Credit issued by it prior to
such resignation or replacement, but shall not be required to issue additional
Letters of Credit.
  (j)         Cash
Collateralization.  If (i) any Event of Default shall occur and
be continuing and the Borrower receives notice from the Administrative Agent or
the Majority Lenders demanding the deposit of cash collateral pursuant to this
Section 2.08(j), or (ii) the Borrower is required to pay to the Administrative
Agent the excess attributable to an LC Exposure in connection with any
prepayment pursuant to Section 3.04(c), then the Borrower shall deposit, in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to, in the case of
an Event of Default, the LC Exposure, and in the case of a payment required by
Section 3.04(c), the amount of such excess as provided in Section 3.04(c), as of
such date plus any accrued and unpaid interest thereon; provided that the obligation
to deposit such cash collateral shall become
  Credit
Agreement
 Houston 3931255v.7
 36
 effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower or any of its Subsidiaries described in Section
10.01(h) or Section 10.01(i).  The Borrower hereby grants to the
Administrative Agent, for the benefit of each Issuing Bank and the Lenders, an
exclusive first priority and continuing perfected security interest in and Lien
on such account and all cash, checks, drafts, certificates and instruments, if
any, from time to time deposited or held in such account, all deposits or wire
transfers made thereto, any and all investments purchased with funds deposited
in such account, all interest, dividends, cash, instruments, financial assets
and other Property from time to time received, receivable or otherwise payable
in respect of, or in exchange for, any or all of the foregoing, and all
proceeds, products, accessions, rents, profits, income and benefits therefrom,
and any substitutions and replacements therefor.  The Borrower’s
obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute
and unconditional, without regard to whether any beneficiary of any such Letter
of Credit has attempted to draw down all or a portion of such amount under the
terms of a Letter of Credit, and, to the fullest extent permitted by applicable
law, shall not be subject to any defense or be affected by a right of set-off,
counterclaim or recoupment which the Borrower or any of its Subsidiaries may now
or hereafter have against any such beneficiary, any Issuing Bank, the
Administrative Agent, the Lenders or any other Person for any reason
whatsoever.  Such deposit shall be held as collateral securing the
payment and performance of the Borrower’s and any Guarantor’s obligations under
this Agreement and the other Loan Documents.  The Administrative Agent
shall have exclusive dominion and control, including the exclusive right of
withdrawal, over such account; provided
that investments of funds in such account in investments permitted by Section
9.05(c) or (e) may be made at the option of the Borrower at its direction, risk
and expense.  Interest or profits, if any, on such investments shall
accumulate in such account.  Moneys in such account shall be applied
by the Administrative Agent to reimburse, on a pro rata basis, each Issuing Bank
for LC Disbursements for which it has not been reimbursed and, to the extent not
so applied, shall be held for the satisfaction of the reimbursement obligations
of the Borrower for the LC Exposure at such time or, if the maturity of the
Loans has been accelerated, be applied to satisfy other obligations of the
Borrower and the Guarantors, if any, under this Agreement or the other Loan
Documents.  If the Borrower is required to provide an amount of cash
collateral hereunder as a result of the occurrence of an Event of Default, and
the Borrower is not otherwise required to pay to the Administrative Agent the
excess attributable to an LC Exposure in connection with any prepayment pursuant
to Section 3.04(c), then such amount (to the extent not applied as aforesaid)
shall be returned to the Borrower within three Business Days after all Events of
Default have been cured or waived.
  ARTICLE
III
 Payments
of Principal and Interest; Prepayments; Fees
  Section
3.01             Repayment of
Loans.  The Borrower hereby unconditionally promises to pay to
the Administrative Agent for the account of each Lender the then unpaid
principal amount of each Loan on the Termination Date.
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 Houston 3931255v.7
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  Section
3.02             Interest.
  (a)        ABR
Loans.  Each ABR Loan comprising an ABR Borrowing shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event
to exceed the Highest Lawful Rate.
  (b)        Eurodollar
Loans.  Each Eurodollar Loan comprising a Eurodollar Borrowing
shall bear interest at the LIBO Rate for the Interest Period in effect for such
Eurodollar Loan plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
  (c)        Post-Default and Borrowing
Base Deficiency Rate.  Notwithstanding the foregoing, (i) if an
Event of Default has occurred and is continuing, or if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower or any
Guarantor hereunder or under any other Loan Document is not paid when due,
whether at stated maturity, upon acceleration or otherwise, and including any
payments in respect of a Borrowing Base Deficiency under Section 3.04(c), then
all Loans outstanding, in the case of an Event of Default, and such overdue
amount, in the case of a failure to pay amounts when due, shall bear interest,
after as well as before judgment, at a rate per annum equal to two percent (2%)
plus the rate applicable to ABR Loans as provided in Section 3.02(a), but in no
event to exceed the Highest Lawful Rate, and (ii) during any Borrowing Base
Deficiency, the amount of such Borrowing Base Deficiency shall bear interest,
after as well as before judgment, at the rate then applicable to such Loans,
plus the Applicable Margin, if any, plus an additional two percent (2%), but in
no event to exceed the Highest Lawful Rate.
  (d)        Interest Payment
Dates.  Accrued interest on each Loan shall be payable in
arrears on:  (i) with respect to any ABR Loan, the last day of each
March, June, September and December; (ii) with respect to any Eurodollar Loan,
the last day of the Interest Period applicable to the Borrowing of which such
Loan is a part but in all cases to be paid at least every three months and (iii)
in any case, on the Termination Date; provided that (A) interest
accrued pursuant to Section 3.02(c)(i) shall be payable on demand, (B) in the
event of any repayment or prepayment of any Loan (other than an optional
prepayment of an ABR Loan prior to the Termination Date), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, and (C) in the event of any conversion of any
Eurodollar Loan prior to the end of the current Interest Period therefor,
accrued interest on such Loan shall be payable on the effective date of such
conversion.
  (e)        Interest Rate
Computations.  All interest hereunder shall be computed on the
basis of a year of 360 days, unless such computation would exceed the Highest
Lawful Rate, in which case interest shall be computed on the basis of a year of
365 days (or 366 days in a leap year), except that interest computed by
reference to the Alternate Base Rate shall be computed on the basis of a year of
365 days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day).  The applicable Alternate Base Rate or LIBO Rate shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error, and be binding upon the parties
hereto.
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  Section
3.03             Altnerate Rate of Interest.  If
prior to the commencement of any Interest Period for a Eurodollar
Borrowing:
 (a)        the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for ascertaining
the LIBO Rate for such Interest Period; or
  (b)        the
Administrative Agent is advised by the Majority Lenders that the LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining their Loans included in such Borrowing for such
Interest Period;
  then the
Administrative Agent shall give notice thereof to the Borrower and the Lenders
by telephone or telecopy as promptly as practicable thereafter and, until the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective,
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
  Section
3.04             Prepayments.
  (a)        Optional
Prepayments.  The Borrower shall have the right at any time and
from time to time to prepay any Borrowing in whole or in part, subject to prior
notice in accordance with Section 3.04(b) and payment of applicable breakage
costs, if any, under Section 5.02.
  (b)        Notice and Terms of Optional
Prepayment.  The Borrower shall notify the Administrative Agent
by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case
of prepayment of a Eurodollar Borrowing, not later than 12:00 noon, Houston
time, three Business Days before the date of prepayment, or (ii) in the case of
prepayment of an ABR Borrowing, not later than 12:00 noon, Houston time, one
Business Day before the date of prepayment.  Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid.  Promptly following
receipt of any such notice relating to a Borrowing, the Administrative Agent
shall advise the Lenders of the contents thereof.  Each partial
prepayment of any Borrowing shall be in an amount that would be permitted in the
case of an advance of a Borrowing of the same Type as provided in Section
2.02.  Each prepayment of a Borrowing shall be applied ratably to the
Loans included in the prepaid Borrowing.  Prepayments shall be
accompanied by accrued interest to the extent required by Section
3.02.
  (c)        Mandatory
Prepayments.
  (i)           If,
after giving effect to any termination or reduction of the Aggregate Maximum
Credit Amounts pursuant to Section 2.06(b), the total Revolving Credit Exposures
exceeds the total Commitments, then the Borrower shall, on the same Business
Day, (A) prepay the Borrowings on the date of such termination or reduction in
an aggregate principal
  Credit
Agreement
 Houston 3931255v.7
 39
  amount
equal to such excess, and (B) if any excess remains after prepaying all of the
Borrowings as a result of an LC Exposure, pay to the Administrative Agent on
behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(j).
  (ii)           Upon
any redetermination of or adjustment to the amount of the Borrowing Base in
accordance with Section 2.07(a) through (d) or Section 8.13(c), if the total
Revolving Credit Exposures exceeds the redetermined or adjusted Borrowing Base,
then the Borrower shall (A) prepay the Borrowings in an aggregate principal
amount equal to such excess, and (B) if any excess remains after prepaying all
of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent
on behalf of the Lenders an amount equal to such excess to be held as cash
collateral as provided in Section 2.08(j).  The Borrower shall be
obligated to make such prepayment and/or deposit of cash collateral within
ninety days (90) following the later of its receipt of the New Borrowing Base
Notice in accordance with Section 2.07(d) or the date the adjustment occurs;
provided that all
payments required to be made pursuant to this Section 3.04(c)(ii) must be made
on or prior to the Termination Date.
  (iii)          Upon
any adjustments to the Borrowing Base pursuant to Section 2.07(e), Section
2.07(f) or Section 9.12(d), if the total Revolving Credit Exposures exceed the
Borrowing Base as adjusted, then the Borrower shall (A) prepay the Borrowings in
an aggregate principal amount equal to such excess, and (B) if any excess
remains after prepaying all of the Borrowings as a result of an LC Exposure, pay
to the Administrative Agent on behalf of the Lenders an amount equal to such
excess to be held as cash collateral as provided in Section
2.08(j).  The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral on the date it or any Subsidiary receives cash
proceeds as a result of such termination, creation of offsetting positions or
disposition, as applicable; provided that all payments
required to be made pursuant to this Section 3.04(c)(iii) must be made on or
prior to the Termination Date.
  (iv)         If,
at any time after the Effective Date, the Borrower issues additional Funded Debt
and any Borrowing Base Deficiency exists, then the Borrower shall (a) use 100%
of the Net Cash Proceeds from the issuance of such Funded Debt to prepay the
Borrowings in an aggregate principal amount equal to such excess, and (b) if, as
a result of an LC Exposure, any Borrowing Base Deficiency remains after
prepaying all of the Borrowings, deposit with the Administrative Agent on behalf
of the Lenders an amount equal to the lesser of such LC Exposure and any
remaining Net Cash Proceeds to be held as cash collateral as provided in Section
2.08(j).  The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral as soon as practical, and in any event no
later than the Business Day after it or any Subsidiary receives such Net Cash
Proceeds as a result of such issuance of Funded Debt.
  (v)          Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied,
first, ratably to any ABR Borrowings then outstanding, and, second, to any
Eurodollar Borrowings then outstanding, and if more than one Eurodollar
Borrowing is then outstanding, to each such Eurodollar Borrowing in order of
priority beginning with the Eurodollar Borrowing with the least number of days
remaining in the Interest Period applicable
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 Houston 3931255v.7
 40
  thereto
and ending with the Eurodollar Borrowing with the most number of days remaining
in the Interest Period applicable thereto.
  (vi)         Each
prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied
ratably to the Loans included in the prepaid Borrowings.  Prepayments
pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the
extent required by Section 3.02.
  (vii)        If
there is less than $350,000,000 in availability under this Agreement after
giving effect to any adjustment to the Borrowing Base pursuant to Section 9.12,
then the Borrower shall (A) use 100% of the Net Cash Proceeds from any Asset
Sale to prepay the Borrowings until there is at least $350,000,000 in
availability under this Agreement after giving effect to any adjustments to the
Borrowing Base pursuant to Section 9.12 and (B) if, as a result of an LC
Exposure, any Borrowing Base Deficiency remains after prepaying all of the
Borrowings, deposit with the Administrative Agent on behalf of the Lenders an
amount equal to the lesser of such LC Exposure and any remaining Net Cash
Proceeds to be held as cash collateral as provided in Section
2.08(j).  The Borrower shall be obligated to make such prepayment
and/or deposit of cash collateral as soon as practicable and in any event no
later than the Business Day after it or any Subsidiary receives such Net Cash
Proceeds as a result of such Asset Sale.
  (d)        No
Premium or Penalty.  Prepayments permitted or required under this
Section 3.04 shall be without premium or penalty, except as required under
Section 5.02.
  Section
3.05             Fees.
  (a)        Commitment
Fees.  The Borrower agrees to pay to the Administrative Agent
for the account of each Lender (subject to Section 4.04(c)(i)) a commitment fee,
which shall accrue at a rate per annum equal to 0.50% on the average daily
amount of the unused amount of the Commitment of such Lender during the period
from and including the date of this Agreement to but excluding the Termination
Date.  Accrued commitment fees shall be payable in arrears on the last
day of March, June, September and December of each year and on the Termination
Date, commencing on the first such date to occur after the date
hereof.  All commitment fees shall be computed on the basis of a year
of 360 days, unless such computation would cause interest on the Notes or on
other Indebtedness hereunder to exceed the Highest Lawful Rate, in which case
interest shall be computed on the basis of a year of 365 days (or 366 days in a
leap year), and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
  (b)        Letter of Credit
Fees.  The Borrower agrees to pay (i) to the Administrative
Agent for the account of each Lender (subject to Section 4.04(c)(iii)) a
participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Margin used to determine the interest rate
applicable to Eurodollar Loans on the average daily amount of such Lender’s LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the date of this Agreement
to but excluding the later of the date on which such Lender’s Commitment
terminates
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 Houston 3931255v.7
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  and the
date on which such Lender ceases to have any LC Exposure, (ii) to each Issuing
Bank a fronting fee equal to 0.50% per annum on the face amount of each Letter
of Credit issued by such Issuing Bank hereunder, provided that in no event
shall such fee be less than $500 and (iii) to each Issuing Bank, for its own
account, its standard fees with respect to the amendment, renewal or extension
of any Letter of Credit issued by such Issuing Bank or processing of drawings
thereunder.  Participation fees accrued through and including the last
day of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the date of this Agreement and fronting fees with respect to any
Letter of Credit shall be payable at the time of issuance of such Letter of
Credit; provided that
all such fees shall be payable on the Termination Date and any such fees
accruing after the Termination Date shall be payable on demand.  Any
other fees payable to an Issuing Bank pursuant to this Section 3.05(b) shall be
payable within 10 days after demand.  All participation fees and
fronting fees shall be computed on the basis of a year of 360 days, unless such
computation would exceed the Highest Lawful Rate, in which case such fees shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
shall be payable for the actual number of days elapsed (including the first day
but excluding the last day).
  (c)        Administrative Agent
Fees.  The Borrower agrees to pay to the Administrative Agent,
for its own account, fees payable in the amounts and at the times separately
agreed upon between the Borrower and the Administrative Agent.
  ARTICLE
IV
 Payments;
Pro Rata Treatment; Sharing of Set-offs.
  Section
4.01             Payments Generally; Pro Rata
Treatment; Sharing of Set-offs.
  (a)        Payments by the
Borrower.  Subject to Section 4.04(a), the Borrower shall make
each payment required to be made by it hereunder (whether of principal,
interest, fees or reimbursement of LC Disbursements, or of amounts payable under
Section 5.01, Section 5.02, Section 5.03 or otherwise) prior to 1:00 p.m.,
Houston time, on the date when due, in immediately available funds, without
defense, deduction, recoupment, set-off or counterclaim (except as provided in
Section 4.04(a)).  Fees, once paid, shall be fully earned and shall
not be refundable under any circumstances, absent manifest error.  Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon.  All such
payments shall be made to the Administrative Agent at its offices specified in
Section 12.01, except payments to be made directly to an Issuing Bank as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made directly to the
Persons entitled thereto.  The Administrative Agent shall distribute
any such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension.  All payments hereunder shall be made in
dollars.
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 Houston 3931255v.7
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  (b)        Application of Insufficient
Payments.  If at any time insufficient funds are received by
and available to the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such funds
shall be applied (i) first, towards payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second, towards
payment of principal and unreimbursed LC Disbursements then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal and unreimbursed LC Disbursements then due to such
parties.
  (c)        Sharing of Payments by
Lenders.  If any Lender shall, by exercising any right of
set-off or counterclaim or otherwise, obtain payment in respect of any principal
of or interest on any of its Loans or participations in LC Disbursements
resulting in such Lender receiving payment of a greater proportion of the
aggregate amount of its Loans and participations in LC Disbursements and accrued
interest thereon than the proportion received by any other Lender, then the
Lender receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans and participations in LC Disbursements of other
Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of
principal of and accrued interest on their respective Loans and participations
in LC Disbursements; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans or
participations in LC Disbursements to any assignee or participant, other than to
the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions
of this Section 4.01(c) shall apply).  The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such
participation.
  Section
4.02             Presumption of Payment by
the Borrower.  Unless the Administrative Agent shall have
received notice from the Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or any Issuing Bank
that the Borrower will not make such payment, the Administrative Agent may
assume that the Borrower has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders or
such Issuing Bank, as the case may be, the amount due.  In such event,
if the Borrower has not in fact made such payment, then each of the Lenders or
such Issuing Bank, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or such Issuing Bank with interest thereon, for each day from and
including the date such amount is distributed to it to but excluding the date of
payment to the Administrative Agent, at the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.
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  Section
4.03             Certain Deductions by the
Administrative Agent.  If any Lender shall fail to make any
payment required to be made by it pursuant to Section 2.05(b), Section 2.08(d),
Section 2.08(e), Section 4.01(c) or Section 4.02 then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), apply
any amounts thereafter received by the Administrative Agent for the account of
such Lender to satisfy such Lender’s obligations under such Sections until all
such unsatisfied obligations are fully paid.
  Section
4.04             Payments and Deductions to a
Defaulting Lender.
  (a)        If
any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05(b), Section 2.08(d), Section 2.08(e) or Section 4.02 then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid in
cash.
  (b)        If
a Defaulting Lender (or a Lender who would be a Defaulting Lender but for the
expiration of the relevant grace period) as a result of the exercise of a
set-off shall have received a payment in respect of its Revolving Credit
Exposure which results in its Revolving Credit Exposure being less than its
Applicable Percentage of the aggregate Revolving Credit Exposures, then no
payments will be made to such Defaulting Lender until such time as all amounts
due and owing to the Lenders have been equalized in accordance with each
Lender’s respective pro rata share of the Indebtedness.  Further, if
at any time prior to the acceleration or maturity of the Loans, the
Administrative Agent shall receive any payment in respect of principal of a Loan
or a reimbursement of an LC Disbursement while one or more Defaulting Lenders
shall be party to this Agreement, the Administrative Agent shall apply such
payment first to the Borrowing(s) for which such Defaulting Lender(s) shall have
failed to fund its pro rata share until such time as such Borrowing(s) are paid
in full or each Lender (including each Defaulting Lender) is owed its Applicable
Percentage of all Loans then outstanding.  After acceleration or
maturity of the Loans, subject to the first sentence of this Section 4.04(b),
all principal will be paid ratably as provided in Section 10.02(c).
  (c)        Notwithstanding
any provision of this Agreement to the contrary, if any Lender becomes a
Defaulting Lender, then the following provisions shall apply for so long as such
Lender is a Defaulting Lender:
  (i)           Fees
shall cease to accrue on the unfunded portion of the Commitment of such
Defaulting Lender pursuant to Section 3.05.
  (ii)          The
Commitment, the Maximum Credit Amount, the outstanding principal balance of the
Loans and participation interests in Letters of Credit of such Defaulting Lender
shall not be included in determining whether all Lenders, the Majority Lenders
or the Super-Majority Lenders have taken or may take any action hereunder
(including any consent to any amendment or waiver pursuant to Section 12.02),
provided that any
waiver, amendment or modification requiring (A) the consent of all Lenders or
(B) the consent of each affected Lender and which affects such Defaulting
Lender, shall require the consent of such Defaulting Lender;
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  and
provided further that any redetermination or affirmation of the Borrowing Base
shall occur without participation of a Defaulting Lender, but the Commitments
(i.e., the Applicable Percentage of the Borrowing Base of a Defaulting Lender)
may not be increased without the consent of such Defaulting Lender.
  (iii)         If
any LC Exposure exists at the time a Lender becomes a Defaulting Lender
then:
  (A)         all
or any part of such LC Exposure shall be reallocated among the Non-Defaulting
Lenders in accordance with their respective Applicable Percentages but only to
the extent (1) the sum of all Non-Defaulting Lenders’ Revolving Credit Exposures
plus such Defaulting Lender’s LC Exposure does not exceed the total of all
Non-Defaulting Lenders’ Commitments and (2) the conditions set forth in Section
6.02 are satisfied at such time;
  (B)          if
the reallocation described in clause (A) above cannot, or can only partially, be
effected, then the Borrower shall within one Business Day following notice by
the Administrative Agent cash collateralize such Defaulting Lender’s LC Exposure
(after giving effect to any partial reallocation pursuant to clause (A) above)
in accordance with the procedures set forth in Section 2.08(e) for so long as
such LC Exposure is outstanding;
  (C)          if
the Borrower cash collateralizes any portion of such Defaulting Lender’s LC
Exposure pursuant to this Section 4.04 then the Borrower shall not be required
to pay any fees to such Defaulting Lender pursuant to Section 3.05(b) with
respect to such Defaulting Lender’s LC Exposure during the period such
Defaulting Lender’s LC Exposure is cash collateralized;
  (D)          if
the LC Exposure of the Non-Defaulting Lenders is reallocated pursuant to Section
4.04(c), then the fees payable to the Lenders pursuant to Section 3.05(a) and
Section 3.05(b) shall be adjusted in accordance with such Non-Defaulting
Lenders’ Applicable Percentages; or
  (E)          if
any Defaulting Lender’s LC Exposure is neither cash collateralized nor
reallocated pursuant to Section 4.04(c)(iii), then, without prejudice to any
rights or remedies of the Issuing Bank or any Lender hereunder, all commitment
fees that otherwise would have been payable to such Defaulting Lender (solely
with respect to the portion of such Defaulting Lender’s Commitment that was
utilized by such LC Exposure) and letter of credit fees payable under Section
3.05(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to
the Issuing Bank until such LC Exposure is cash collateralized and/or
reallocated.
  (d)        So
long as any Lender is a Defaulting Lender, the Issuing Bank shall not be
required to issue, amend or increase any Letter of Credit, unless it is
satisfied that the related exposure will be 100% covered by the Commitments of
the Non-Defaulting Lenders and/or cash collateral will be provided by the
Borrower in accordance with Section 4.04(c), and participating interests in any
such newly issued or increased Letter of Credit shall be allocated among
Non
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  Defaulting
Lenders in a manner consistent with Section 2.08(d) (and Defaulting Lenders
shall not participate therein).
  (e)        In
the event that the Administrative Agent, the Borrower and the Issuing Bank each
agrees that a Defaulting Lender has adequately remedied all matters that caused
such Lender to be a Defaulting Lender, then the LC Exposure of the Lenders shall
be readjusted to reflect the inclusion of such Lender’s Commitment and on such
date such Lender shall purchase at par such of the Loans or participations in
Letters of Credit of the other Lenders as the Administrative shall determine may
be necessary in order for such Lender to hold such Loans in accordance with its
Applicable Percentage.
  ARTICLE
V
 Increased
Costs; Break Funding Payments; Taxes; Illegality
  Section
5.01             Increased
Costs.
  (a)        Eurodollar
Changes in Law.  If any Change in Law shall:
  (b)        (i)           impose,
modify or deem applicable any reserve (including marginal, special, emergency or
supplemental reserves), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any Lender for
Eurocurrency liabilities under Regulation D of the Board (as the same may be
amended, supplemented or replaced from time to time) or otherwise;
or
  (ii)           impose
on any Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender;
  and the
result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Loan (or of maintaining its obligation to
make any such Loan) or to reduce the amount of any sum received or receivable by
such Lender (whether of principal, interest or otherwise), then the Borrower
will pay to such Lender such additional amount or amounts as will compensate
such Lender for such additional costs incurred or reduction
suffered.
  (c)        Capital
Requirements.  If any Lender or any Issuing Bank determines
that any Change in Law regarding capital requirements has or would have the
effect of reducing the rate of return on such Lender’s or such Issuing Bank’s
capital or on the capital of such Lender’s or such Issuing Bank’s holding
company, if any, as a consequence of this Agreement or the Loans made by, or
participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by such Issuing Bank, to a level below that which such Lender or
such Issuing Bank or such Lender’s or such Issuing Bank’s holding company could
have achieved but for such Change in Law (taking into consideration such
Lender’s or such Issuing Bank’s policies and the policies of such Lender’s or
such Issuing Bank’s holding company with respect to capital adequacy), then from
time to time the Borrower will pay to such Lender or such Issuing Bank, as the
case may be, such additional amount or amounts as will compensate such Lender or
such Issuing Bank or such Lender’s or such Issuing Bank’s holding company for
any such reduction suffered.
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  (d)        Certificates.  A
certificate of a Lender or any Issuing Bank setting forth in reasonable detail
the basis of its request and the amount or amounts necessary to compensate such
Lender or such Issuing Bank or its holding company, as the case may be, as
specified in Section 5.01(a) or (b) shall be delivered to the Borrower and shall
be conclusive absent manifest error.  The Borrower shall pay such
Lender or such Issuing Bank, as the case may be, the amount shown as due on any
such certificate within 10 days after receipt thereof.
  (e)        Effect of Failure or Delay
in Requesting Compensation.  Failure or delay on the part of
any Lender or any Issuing Bank to demand compensation pursuant to this Section
5.01 shall not constitute a waiver of such Lender’s or such Issuing Bank’s right
to demand such compensation; provided that the Borrower
shall not be required to compensate a Lender or any Issuing Bank pursuant to
this Section 5.01 for any increased costs or reductions incurred more than 180
days prior to the date that such Lender or such Issuing Bank, as the case may
be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or such Issuing Bank’s intention to
claim compensation therefor; provided further that, if the Change
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.  No Lender or Issuing Bank may make any
demand pursuant to this Section 5.01 more than 180 days after the Termination
Date.
  Section
5.02            
Break Funding
Payments.  In the event of (a) the payment of any principal of
any Eurodollar Loan other than on the last day of an Interest Period applicable
thereto (including as a result of an Event of Default), (b) the conversion of
any Eurodollar Loan into an ABR Loan other than on the last day of the Interest
Period applicable thereto, or (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event.  In
the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be
deemed to include an amount determined by such Lender to be the excess, if any,
of (i) the amount of interest which would have accrued on the principal amount
of such Loan had such event not occurred, at the LIBO Rate that would have been
applicable to such Loan, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the Interest
Period for such Loan), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such Lender
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the eurodollar
market.
  A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 and reasonably detailed
calculations therefor, upon request of the Borrower, shall be delivered to the
Borrower and shall be conclusive absent manifest error.  The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
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  Section
5.03              Taxes.
  (a)        Payments Free of
Taxes.  Any and all payments by or on account of any obligation
of the Borrower or any Guarantor under any Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes; provided that if the Borrower
or any Guarantor shall be required to deduct any Indemnified Taxes or Other
Taxes from such payments, then (i) the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 5.03(a)), the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower or such Guarantor shall make such deductions and (iii) the
Borrower or such Guarantor shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
  (b)       
Payment of Other Taxes
by the Borrower.  The Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
  (c)        Indemnification by the
Borrower.  The Borrower shall indemnify the Administrative
Agent, each Lender and each Issuing Bank, within 10 days after written demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by
the Administrative Agent, such Lender or such Issuing Bank, as the case may be,
on or with respect to any payment by or on account of any obligation of the
Borrower hereunder (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section 5.03) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A
certificate of the Administrative Agent, a Lender or an Issuing Bank as to the
basis of such Indemnified Taxes or Other Taxes and the amount of such payment or
liability under this Section 5.03 shall be delivered to the Borrower and shall
be conclusive absent manifest error.
  (d)        Evidence of
Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return reporting such payment
or other evidence of such payment reasonably satisfactory to the Administrative
Agent.
  (e)        Foreign
Lenders.  Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which
the Borrower is located, or any treaty to which such jurisdiction is a party,
with respect to payments under this Agreement or any other Loan Document shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
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  (a)        Designation of Different
Lending Office.  If any Lender requests compensation under
Section 5.01, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 5.03, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 5.01 or
Section 5.03, as the case may be, in the future and (ii) would not subject such
Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender.  The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
  (b)        Replacement of
Lenders.  If (i) any Lender requests compensation under Section
5.01, (ii) the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section
5.03, (iii) the obligation of any Lender to make Eurodollar Loans or continue
Loans as Eurodollar Loans has been suspended pursuant to Section 5.05, (iv) any
Lender becomes a Defaulting Lender or (v) any Lender has voted against an
amendment, modification or waiver of any provision of this Agreement proposed by
the Borrower, which proposed amendment, modification or waiver (A) was approved
by Lenders representing no less than 90% of the aggregate Commitments but (B)
required the approval of all of the Lenders and did not get such approval, then
the Borrower may, at its sole expense and effort, upon notice to such Lender and
the Administrative Agent, require such Lender to assign and delegate, without
recourse (in accordance with and subject to the restrictions contained in
Section 12.04(b)), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (1) the
Borrower shall have received the prior written consent of the Administrative
Agent, which consent shall not unreasonably be withheld, (2) such Lender shall
have received payment of an amount equal to the outstanding principal of its
Loans and participations in LC Disbursements, accrued interest thereon, accrued
fees and all other amounts payable to it hereunder, from the assignee (to the
extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts) and (3) in the case of any such
assignment resulting from a claim for compensation under Section 5.01 or
payments required to be made pursuant to Section 5.03, such assignment will
result in a reduction in such compensation or payments.  A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to
apply.
  Section
5.05             Illegality.  Notwithstanding
any other provision of this Agreement, in the event that it becomes unlawful for
any Lender or its applicable lending office to honor its obligation to make or
maintain Eurodollar Loans either generally or having a particular Interest
Period hereunder, then (a) such Lender shall promptly notify the Borrower and
the Administrative Agent thereof and such Lender’s obligation to make such
Eurodollar Loans shall be suspended (the “Affected Loans”)
until such time as such Lender may again make and
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  maintain
such Eurodollar Loans and (b) all Affected Loans which would otherwise be made
by such Lender shall be made instead as ABR Loans (and, if such Lender so
requests by notice to the Borrower and the Administrative Agent, all Affected
Loans of such Lender then outstanding shall be automatically converted into ABR
Loans on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) ABR Loans, all payments
of principal which would otherwise be applied to such Lender’s Affected Loans
shall be applied instead to its ABR Loans.
  ARTICLE
VI
 Conditions
Precedent
  Section
6.01             Effective
Date.  The obligations of the Lenders to make Loans and of any
Issuing Bank to issue Letters of Credit hereunder shall not become effective
until the date on which each of the following conditions is satisfied (or waived
in accordance with Section 12.02):
  (a)        The
Arrangers, the Administrative Agent and the Lenders shall have received all fees
and other amounts due and payable on or prior to the Effective Date, including,
to the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.
  (b)        The
Administrative Agent shall have received a certificate of the Borrower and of
each Guarantor setting forth (i) resolutions of the Managers, board of directors
or other managing body with respect to the authorization of the Borrower or such
Guarantor to execute and deliver the Loan Documents to which it is a party and
to enter into the transactions contemplated in those documents, (ii) the
individuals (A) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (B) who will, until replaced by
another individual duly authorized for that purpose, act as its representative
for the purposes of signing documents and giving notices and other
communications in connection with this Agreement and the other Loan Documents to
which it is a party, (iii) specimen signatures of such authorized individuals,
and (iv) the articles or certificate of incorporation or formation and bylaws,
operating agreement or partnership agreement, as applicable, of the Borrower and
each Guarantor, in each case, certified as being true and
complete.  The Administrative Agent and the Lenders may conclusively
rely on such certificate until the Administrative Agent receives notice in
writing from the Borrower to the contrary.
  (c)        The
Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of the
Borrower and each Guarantor.
  (d)        The
Administrative Agent shall have received a compliance certificate which shall be
substantially in the form of Exhibit B, duly and properly executed by a
Responsible Officer and dated as of the Effective Date.
  (e)        The
Administrative Agent shall have received from each party hereto counterparts (in
such number as may be requested by the Administrative Agent) of this Agreement
signed on behalf of such party.
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  (f)         To
the extent requested by a Lender, the Administrative Agent shall have received
duly executed Notes payable to the order of each such Lender in a principal
amount equal to its Maximum Credit Amount dated as of the date
hereof.
  (g)        The
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent) of
the Security Instruments, including the Guaranty Agreement and the other
Security Instruments described on Exhibit C.  In connection with the
execution and delivery of the Security Instruments, the Administrative Agent
shall
  (i)           be
reasonably satisfied that the Security Instruments create first priority,
perfected Liens (subject only to Excepted Liens identified in clauses (a) to (d)
and (f) of the definition thereof, but subject to the provisos at the end of
such definition) on at least 80% of the total value of the Oil and Gas
Properties evaluated in the Initial Reserve Report.
  (ii)           have
received certificates, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
each of the Guarantors, to the extent such Equity Interests are
certificated.
  (h)        The
Administrative Agent shall have received an opinion of Baker Hostetler LLP,
special counsel to the Borrower, in form and substance satisfactory to the
Administrative Agent, as to such matters incident to the Transactions as the
Administrative Agent may reasonably request.
  (i)         The
Administrative Agent shall have received a certificate of insurance coverage of
the Borrower evidencing that the Borrower is carrying insurance in accordance
with Section 7.12.
  (j)         The
Administrative Agent shall have received a certificate of a Responsible Officer
certifying that the Borrower has received all consents and approvals required by
Section 7.03.
  (k)        The
Administrative Agent shall have received the financial statements referred to in
Section 7.04(a) and the Initial Reserve Report accompanied by a Reserve Report
Certificate.
  (l)         The
Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties the Borrower, and its
Subsidiaries for each of the following jurisdictions: Delaware and Oklahoma and
any other jurisdiction requested by the Administrative Agent; other than those
being assigned or released on or prior to the Effective Date or Liens permitted
by Section 9.03.
  (m)       The
Administrative Agent shall have received evidence that the Borrower has entered
into Swap Agreements, the prices, volumes and terms of which are satisfactory to
the Arrangers.
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  (n)        The
Administrative Agent shall have received such information as the Administrative
Agent may reasonably require, all of which shall be reasonably satisfactory to
the Administrative Agent in form and substance, on the title to not less than
80% of the Oil and Gas Properties evaluated in the Initial Reserve
Report.
  (o)        The
Administrative Agent shall have received such other documents as the
Administrative Agent or special counsel to the Administrative Agent may
reasonably request.
  The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and
binding.  Notwithstanding the foregoing, the obligations of the
Lenders to make Loans and of each Issuing Bank to issue Letters of Credit
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 12.02) at or prior to 1:00 p.m.,
Houston time, on April 28, 2009 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).
  Section
6.02            
Each Credit
Event.  The obligation of each Lender to make a Loan on the
occasion of any Borrowing (including the initial funding), and of each Issuing
Bank to issue, amend, renew or extend any Letter of Credit, is subject to the
satisfaction of the following conditions:
  (a)        At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default shall have occurred and be continuing.
  (b)        At
the time of and immediately after giving effect to such Borrowing or the
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Material Adverse Effect shall have occurred.
  (c)        The
representations and warranties of the Borrower and the Guarantors, set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable, except to the extent any such
representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Borrowing or the date of issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, such
representations and warranties shall continue to be true and correct as of such
specified earlier date.
  (d)        The
making of such Loan or the issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, would not conflict with, or cause any Lender or
any Issuing Bank to violate or exceed, any applicable Governmental Requirement,
and no Change in Law shall have occurred, and no litigation shall be pending or
threatened, which does or, with respect to any threatened litigation, seeks to,
enjoin, prohibit or restrain, the making or repayment of any Loan, the issuance,
amendment, renewal, extension or repayment of any Letter of Credit or any
participations therein or the consummation of the transactions contemplated by
this Agreement or any other Loan Document.
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  (e)        The
receipt by the Administrative Agent of a Borrowing Request in accordance with
Section 2.03 or a request for a Letter of Credit in accordance with Section
2.08(b), as applicable.
  Each
request for a Borrowing and each request for the issuance, amendment, renewal or
extension of any Letter of Credit shall be deemed to constitute a representation
and warranty by the Borrower on the date thereof as to the matters specified in
Section 6.02(a) through (e).
  ARTICLE
VII
 Representations
and Warranties
  The
Borrower represents and warrants to the Lenders that:
  Section
7.01             Organization;
Powers.  Each of the Borrower and its Subsidiaries is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, has all requisite power and authority, and has
all material governmental licenses, authorizations, consents and approvals
necessary, to own its assets and to carry on its business as now conducted, and
is qualified to do business in, and is in good standing in or has applied to
qualify to do business in, every jurisdiction where such qualification is
required, except where failure to have such power, authority, licenses,
authorizations, consents, approvals and qualifications could not reasonably be
expected to have a Material Adverse Effect.
  Section
7.02            Authority;
Enforceability.  The Transactions are within the Borrower’s and
each Guarantor’s corporate powers and have been duly authorized by all necessary
corporate and, if required, member action (including, without limitation, any
action required to be taken by any class of directors of the Borrower or any
other Person, whether interested or disinterested, in order to ensure the due
authorization of the Transactions).  When executed and delivered, each
Loan Document to which the Borrower and any Guarantor is a party will have been
duly executed and delivered by the Borrower and such Guarantor and will
constitute a legal, valid and binding obligation of the Borrower and such
Guarantor, as applicable, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at
law.
  Section
7.03            Approvals; No
Conflicts.  The Transactions (a) do not require any consent or
approval of, registration or filing with, or any other action by, any
Governmental Authority or any other third Person (including the members or any
class of directors of the Borrower or any other Person, whether interested or
disinterested), nor is any such consent, approval, registration, filing or other
action necessary for the validity or enforceability of any Loan Document or the
consummation of the transactions contemplated thereby, except (i) such as have
been obtained or made and are in full force and effect and (ii) for the filing
and recording of Security Instruments to perfect the Liens created hereby and by
Security Instruments, (b) will not violate any applicable law or regulation or
the charter, by-laws or other organizational documents of the Borrower or any of
its Subsidiaries or any order of any Governmental Authority, (c) will not
violate or result in a default under any indenture, agreement or other
instrument binding upon the Borrower or any of its Subsidiaries or their
Properties, or give rise to a right thereunder to require
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  any
payment to be made by the Borrower or such Subsidiary and (d) will not result in
the creation or imposition of any Lien on any Property of the Borrower or any of
its Subsidiaries (other than the Liens created by the Loan
Documents).
  Section
7.04             Financial Position; No
Material Adverse Change.
  (a)        The
Borrower has heretofore furnished to the Lenders the audited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of
December 31, 2008, and related audited consolidated statements of income,
cash flows and changes in members’ equity for the fiscal year ending
December 31, 2008.  The financial statements present fairly, in
all material respects, the financial position and results of operations and cash
flows of the Borrower and its consolidated subsidiaries as of such date and for
such period in accordance with GAAP.
  (b)        Since
December 31, 2008, (i) there has been no event, development or circumstance
that has had or could reasonably be expected to have a Material Adverse Effect
and (ii) the business of the Borrower and its Subsidiaries has been conducted
only in the ordinary course consistent with past business
practices.
  (c)        Neither
the Borrower nor any of its Subsidiaries has on the date hereof any material
Debt (including Disqualified Capital Stock), or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except for the (i) Indebtedness or (ii) as referred to
or reflected or provided for in the Financial Statements.
  Section
7.05             Litigation.  Except
as set forth on Schedule 7.05 there are no actions, suits, investigations or
proceedings by or before any arbitrator or Governmental Authority pending
against or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries (a) as to which there is a reasonable
possibility of an adverse determination that, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect or (b) that involve any Loan Document.  Since
the date of this Agreement, there has been no change in the status of the
matters disclosed in Schedule 7.05 that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
  Section
7.06             Environmental
Matters.  Except for such matters that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Borrower:
  (a)        the
Borrower and its Subsidiaries and each of their respective Properties and
operations thereon are, and within all applicable statute of limitation periods
have been, in compliance with all applicable Environmental Laws;
  (b)        the
Borrower and its Subsidiaries have obtained all Environmental Permits required
for their respective operations and each of their Properties, with all such
Environmental Permits being currently in full force and effect, and none of
Borrower or its Subsidiaries has
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  received
any written notice or otherwise has knowledge that any such existing
Environmental Permit will be revoked or that any application for any new
Environmental Permit or renewal of any existing Environmental Permit will be
protested or denied;
  (c)        there
are no claims, demands, suits, orders, inquiries, or proceedings concerning any
violation of, or any liability (including as a potentially responsible party)
under, any applicable Environmental Laws that is pending or threatened against
the Borrower or its Subsidiaries or any of their respective Properties or as a
result of any operations at the Properties;
  (d)        none
of the Properties contain or have contained any:  (i) underground
storage tanks; (ii) asbestos containing materials in a friable condition or
otherwise requiring abatement under Environmental Laws; or (iii) landfills or
dumps; (iv) hazardous waste management units as defined pursuant to RCRA or any
comparable state law; or (v) sites on or nominated for the National Priority
List promulgated pursuant to CERCLA or any similar state remedial priority list
promulgated or published pursuant to any comparable state law;
  (e)        there
is no Release or threatened Release, of Hazardous Materials at, on, under or
from any of Borrower’s or its Subsidiaries’ Properties, there are no
investigations, remediations, abatements, removals, or monitorings of Hazardous
Materials required under applicable Environmental Laws at such Properties and
none of such Properties are adversely affected by any Release or threatened
Release of a Hazardous Material originating or emanating from any other real
property,
  (f)        
neither the Borrower nor its Subsidiaries has received any written notice
asserting an alleged liability or obligation under any applicable Environmental
Laws with respect to the investigation, remediation, abatement, removal, or
monitoring of any Hazardous Materials at, under, or Released or threatened to be
Released from any real properties offsite the Borrower’s or its Subsidiaries’
Properties and there are no conditions or circumstances that would reasonably be
expected to result in the receipt of such written notice.
  (g)        there
has been no exposure of any Person or property to any Hazardous Materials as a
result of or in connection with the operations and businesses of any of the
Borrower’s or its Subsidiaries’ Properties that would reasonably be expected to
form the basis for a material claim for damages or compensation and there are no
conditions or circumstances that would reasonably be expected to result in the
receipt of notice regarding such exposure; and
  (h)        the
Borrower and its Subsidiaries have made available to Lenders copies of all
material environmental site assessment reports and other material documents
relating to any alleged non-compliance with or liability under Environmental
Laws that are in any of the Borrower’s or its Subsidiaries’ possession or
control and relating to their respective Properties or operations
thereon.
  Section
7.07             Compliance with the Laws and
Agreements; No Defaults.
  (a)        Each
of the Borrower and its Subsidiaries is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and
other
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  instruments
binding upon it or its Property, and possesses all licenses, permits,
franchises, exemptions, approvals and other authorizations granted by
Governmental Authorities necessary for the ownership of its Property and the
present conduct of its business, except where the failure to do so, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
  (b)        Neither
the Borrower nor any of its Subsidiaries is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require the Borrower or any of its Subsidiaries to Redeem or make any offer to
Redeem all or any portion of any Debt outstanding under any indenture, note,
credit agreement or instrument pursuant to which any Material Indebtedness is
outstanding or by which the Borrower or any of its Subsidiaries or any of their
Properties is bound.
  (c)        No
Default has occurred and is continuing.
  Section
7.08             Investment Company
Act.  Neither the Borrower nor any of its Subsidiaries is an
“investment company” or a company “controlled” by an “investment company,”
within the meaning of, or subject to regulation under, the Investment Company
Act of 1940, as amended.
  Section
7.09            Taxes.  Each
of the Borrower and its Subsidiaries has timely filed or caused to be filed all
Tax returns (including extensions) and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the Borrower or such Subsidiary, as applicable, has set aside on its
books adequate reserves in accordance with GAAP or (b) to the extent that the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.  The charges, accruals and reserves on the books of
the Borrower and its Subsidiaries in respect of Taxes and other governmental
charges are, in the reasonable opinion of the Borrower, adequate.  No
Tax Lien has been filed and, to the knowledge of the Borrower, no claim is being
asserted with respect to any such Tax or other such governmental
charge.
  Section
7.10             ERISA.  Except
as would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect:
  (a)        The
Borrower, its Subsidiaries and each ERISA Affiliate have complied in all
material respects with ERISA and, where applicable, the Code regarding each
Plan, if any.
  (b)        Each
Plan, if any, is, and has been, maintained in substantial compliance with ERISA
and, where applicable, the Code.
  (c)        No
act, omission or transaction has occurred that could result in imposition on the
Borrower, any of its Subsidiaries or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections (c),
(i) or (l) of section
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  502 of
ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii)
breach of fiduciary duty liability damages under section 409 of
ERISA.
  (d)        No
liability to the PBGC (other than for the payment of current premiums which are
not past due) by the Borrower, any of its Subsidiaries or any ERISA Affiliate
has been or is expected by the Borrower, any of its Subsidiaries or any ERISA
Affiliate to be incurred with respect to any Plan.  No ERISA Event
with respect to any Plan has occurred.
  (e)        No
accumulated funding deficiency (as defined in section 302 of ERISA and section
412 of the Code), whether or not waived, exists with respect to any
Plan.
  (f)        Neither
the Borrower, its Subsidiaries nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any Multiemployer
Plan.
  (g)        Neither
the Borrower, its Subsidiaries nor any ERISA Affiliate is required to provide
security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.
  Section
7.11             Disclosure; No Material
Misstatements.  None of the reports, financial statements,
certificates or other information furnished by or on behalf of the Borrower or
any of its Subsidiaries to the Administrative Agent, any other Agent or any
Lender or any of their Affiliates in connection with the negotiation of this
Agreement or any other Loan Document or delivered hereunder or under any other
Loan Document (as modified or supplemented by other information so furnished)
contains any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect
to projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.  There is no fact peculiar to the Borrower or
any of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect or in the future is reasonably likely to have a Material Adverse
Effect and which has not been set forth in this Agreement or the Loan Documents
or the other documents, certificates and statements furnished to the
Administrative Agent, any other Agent or the Lenders by or on behalf of the
Borrower or any of its Subsidiaries prior to, or on, the date hereof in
connection with the transactions contemplated hereby.  There are no
statements or conclusions in any Reserve Report which are based upon or include
misleading information or fail to take into account material information
regarding the matters reported therein, it being understood that projections
concerning volumes attributable to the Oil and Gas Properties and production and
cost estimates contained in each Reserve Report are necessarily based upon
professional opinions, estimates and projections and that the Borrower and the
Subsidiaries do not warrant that such opinions, estimates and projections will
ultimately prove to have been accurate.
  Section
7.12            Insurance.  The
Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance
policies sufficient for the compliance by each of them with all material
Governmental Requirements and all material agreements and (b) insurance coverage
in at least amounts and against such risk (including, without limitation, public
liability) that are usually
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  insured
against by companies similarly situated and engaged in the same or a similar
business for the assets and operations of the Borrower and its
Subsidiaries.  The Administrative Agent and the Lenders have been
named as additional insureds in respect of such liability insurance policies and
the Administrative Agent has been named as loss payee with respect to property
loss insurance.
  Section
7.13            Restriction on
Liens.  Neither the Borrower nor any of its Subsidiaries is a
party to any material agreement or arrangement (other than Capital Leases
creating Liens to the extent permitted by Section 9.03(c), but then only on the
Property subject to such Capital Leases), or subject to any order, judgment,
writ or decree, which either restricts or purports to restrict its ability to
grant Liens to the Administrative Agent and the Lenders on or in respect of
their Properties to secure the Indebtedness and the Loan Documents.
  Section
7.14            Subsidiaries.  Except
as set forth on Schedule 7.14 or as disclosed in writing to the Administrative
Agent (which shall promptly furnish a copy to the Lenders), and which disclosure
shall be a supplement to Schedule 7.14, the Borrower has no Subsidiaries or
foreign operations.
  Section
7.15            Location of Business and
Offices.  The Borrower’s jurisdiction of organization is
Delaware; the name of the Borrower as listed in the public records of its
jurisdiction of organization is Linn Energy, LLC, and the organizational
identification number of the Borrower in its jurisdiction of organization is
3951040 (or, in each case, as set forth in a notice delivered to the
Administrative Agent pursuant to Section 8.01(l) in accordance with Section
12.01).  The Borrower’s principal place of business and chief
executive offices are located at the address specified in Section 12.01 (or as
set forth in a notice delivered pursuant to Section 8.01(l) and Section
12.01(c)).  Each Subsidiary’s jurisdiction of organization, name as
listed in the public records of its jurisdiction of organization, organizational
identification number in its jurisdiction of organization, and the location of
its principal place of business and chief executive office is stated on Schedule
7.14 (or as set forth in a notice delivered pursuant to Section
8.01(l)).
  Section
7.16             Properties; Titles,
Etc.
  (a)        Each
of the Borrower and its Subsidiaries has good and defensible title to its Oil
and Gas Properties evaluated in the most recently delivered Reserve Report and
good title to all its personal Properties, in each case, free and clear of all
Liens except Liens permitted by Section 9.03.  After giving full
effect to the Excepted Liens, the Borrower or any of its Subsidiaries specified
as the owner owns the net interests in production attributable to the
Hydrocarbon Interests as reflected in the most recently delivered Reserve
Report, and the ownership of such Properties shall not in any material respect
obligate the Borrower or any of its Subsidiaries to bear the costs and expenses
relating to the maintenance, development and operations of each such Property in
an amount in excess of the working interest of each Property set forth in the
most recently delivered Reserve Report that is not offset by a corresponding
proportionate increase in the Borrower’s or any of its Subsidiaries’ net revenue
interest in such Property.
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  (b)        All
material leases and agreements necessary for the present conduct of the business
of the Borrower and its Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.
  (c)        The
rights and Properties presently owned, leased or licensed by the Borrower and
its Subsidiaries including, without limitation, all easements and rights of way,
include all rights and Properties necessary to permit the Borrower and its
Subsidiaries to conduct their business in all material respects as conducted on
the date hereof.
  (d)        All
of the material Properties of the Borrower and each of its Subsidiaries that are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business
standards.
  (e)        The
Borrower and each of its Subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual Property
material to its business, and the use thereof by the Borrower and such
Subsidiary does not infringe upon the rights of any other Person, except for any
such infringements that, individually or in the aggregate, could not reasonably
be expected to result in a Material Adverse Effect.  The Borrower and
its Subsidiaries either own or have valid licenses or other rights to use all
databases, geological data, geophysical data, engineering data, seismic data,
maps, interpretations and other technical information used in their businesses
as presently conducted, subject to the limitations contained in the agreements
governing the use of the same, which limitations are customary for companies
engaged in the business of the exploration and production of Hydrocarbons, with
such exceptions as could not reasonably be expected to have a Material Adverse
Effect.
  Section
7.17            Maintenance of
Properties.  Except for such acts or failures to act as could
not be reasonably expected to have a Material Adverse Effect, the Oil and Gas
Properties (and Properties unitized therewith) have been maintained, operated
and developed in a good and workmanlike manner and in conformity with all
Government Requirements and in conformity with the provisions of all leases,
subleases or other contracts comprising a part of the Hydrocarbon Interests and
other contracts and agreements forming a part of the Oil and Gas
Properties.  Specifically in connection with the foregoing, except as
could not reasonably be expected to have a Material Adverse Effect, (a) no Oil
and Gas Property is subject to having allowable production reduced below the
full and regular allowable (including the maximum permissible tolerance) because
of any overproduction (whether or not the same was permissible at the time) and
(b) none of the wells comprising a part of the Oil and Gas Properties (or
Properties unitized therewith) is deviated from the vertical more than the
maximum permitted by Government Requirements, and such wells are, in fact,
bottomed under and are producing from, and the well bores are wholly within, the
Oil and Gas Properties (or in the case of wells located on Properties unitized
therewith, such unitized Properties).  All pipelines, wells, gas
processing plants, platforms and other material improvements, fixtures and
equipment owned in whole or in part by the Borrower or any of its Subsidiaries
that are necessary to conduct normal operations are being maintained in a state
adequate to conduct normal operations, and with respect to such
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  of the
foregoing which are operated by the Borrower or any of its Subsidiaries, in a
manner consistent with the Borrower’s or its Subsidiaries’ past practices (other
than those the failure of which to maintain in accordance with this Section 7.17
could not reasonably be expect to have a Material Adverse Effect).
  Section
7.18             Gas Imbalances,
Prepayments.  As of the date hereof, except as set forth on
Schedule 7.18 or on the most recent Reserve Report Certificate, on a net basis
there are no gas imbalances, take or pay or other prepayments which would
require the Borrower or any of its Subsidiaries to deliver, in the aggregate,
two percent (2%) or more of the monthly production from Hydrocarbons produced
from the Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor.
  Section
7.19             Marketing of
Production.  Except for contracts listed and in effect on the
date hereof on Schedule 7.19, and thereafter either disclosed in writing to the
Administrative Agent or included in the most recently delivered Reserve Report
(with respect to all of which contracts the Borrower represents that it or its
Subsidiaries are receiving a price for all production sold thereunder which is
computed substantially in accordance with the terms of the relevant contract and
are not having deliveries curtailed substantially below the subject Property’s
delivery capacity), no material agreements exist which are not cancelable on
sixty (60) days notice or less without penalty or detriment for the sale of
production from the Borrower’s or its Subsidiaries’ Hydrocarbons (including,
without limitation, calls on or other rights to purchase, production, whether or
not the same are currently being exercised) that (a) pertain to the sale of
production at a fixed price and (b) have a maturity or expiry date of more than
six (6) months from the date hereof.
  Section
7.20             Swap
Agreements.  Schedule 7.20, as of March 31, 2009, and after the
date hereof, each report required to be delivered by the Borrower pursuant to
Section 8.01(d) (as of the relevant period end), sets forth, a true and complete
list of all Swap Agreements of the Borrower and each of its Subsidiaries, the
material terms thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net marked-to-market value thereof,
all credit support agreements relating thereto (including any margin required or
supplied) and the counterparty to each such agreement.
  Section
7.21             Use of Loans and Letters of
Credit.  The proceeds of the Loans and the Letters of Credit
shall be used (a) to provide working capital, (b) to amend and restate existing
indebtedness (including the Existing Credit Agreement), (c) for the acquisition,
exploration and development of oil and gas properties, (d) for the issuance of
Letters of Credit, and (e) for general corporate purposes, including Restricted
Payments.  The Borrower and its Subsidiaries are not engaged
principally, or as one of its or their important activities, in the business of
extending credit for the purpose, whether immediate, incidental or ultimate, of
buying or carrying margin stock (within the meaning of Regulation T, U or X of
the Board).  No part of the proceeds of any Loan or Letter of Credit
will be used for any purpose which violates the provisions of Regulations T, U
or X of the Board.
  Section
7.22             Solvency.  After
giving effect to the transactions contemplated hereby, (a) the aggregate assets
(after giving effect to amounts that could reasonably be received by
reason
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  of
indemnity, offset, insurance or any similar arrangement), at a fair valuation,
of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate
Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt
becomes absolute and matures, (b) each of the Borrower and the Guarantors will
not have incurred or intended to incur, and will not believe that it will incur,
Debt beyond its ability to pay such Debt (after taking into account the timing
and amounts of cash to be received by each of the Borrower and the Guarantors
and the amounts to be payable on or in respect of its liabilities, and giving
effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement) as such Debt becomes absolute and
matures and (c) each of the Borrower and the Guarantors will not have (and will
have no reason to believe that it will have thereafter) unreasonably small
capital for the conduct of its business.
  ARTICLE
VIII
 Affirmative
Covenants
  Until the
Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder and all other amounts payable under the
Loan Documents shall have been paid in full and all Letters of Credit shall have
expired or terminated and all LC Disbursements shall have been reimbursed, the
Borrower covenants and agrees with the Lenders that:
  Section
8.01             Financial Statements; Other
Information.  The Borrower will furnish to the Administrative
Agent and each Lender:
  (a)        Annual Financial
Statements.  As soon as available, but in any event not later
than 90 days after the end of each fiscal year, Borrower’s audited consolidated
balance sheet and related statements of operations, members’ equity and cash
flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all reported on by
KPMG, LLP or independent public accountants of recognized national standing and
reasonably acceptable to the Administrative Agent (without a “going concern” or
like qualification or exception and without any qualification or exception as to
the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition and
results of operations of the Borrower and its Consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied.
  (b)        Quarterly Financial
Statements.  As soon as available, but in any event not later
than 45 days after the end of each of the first three fiscal quarters of each
fiscal year of the Borrower, its consolidated balance sheet and related
statements of operations, members’ equity and cash flows as of the end of and
for such quarter and the then elapsed portion of the fiscal year, setting forth
in each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by a Financial Officer as presenting fairly in all
material respects the financial position and results of operations of the
Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes.
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  (c)        Certificate of Financial
Officer -- Compliance.  Concurrently with any delivery of
financial statements under Section 8.01(a) or Section 8.01(b), a certificate of
a Financial Officer in substantially the form of Exhibit B hereto (i) certifying
as to whether a Default has occurred and, if a Default has occurred, specifying
the details thereof and any action taken or proposed to be taken with respect
thereto, (ii) setting forth reasonably detailed calculations demonstrating
compliance with Section 9.01 and (iii) stating whether any change in GAAP or in
the application thereof has occurred since the Effective Date and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.
  (d)        Swap
Agreements.  Concurrently with any delivery of financial
statements under Section 8.01(a) and Section 8.01(b), a true and complete list
of all Swap Agreements, as of the last Business Day of such fiscal quarter or
fiscal year, of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination date and notional
amounts or volumes), the net mark-to-market value therefor, any new credit
support agreements relating thereto not listed on Schedule 7.20, any margin
required or supplied under any credit support document, and the counterparty to
each such agreement.
  (e)        Certificate of Insurer –
Insurance Coverage.  Concurrently with any delivery of
financial statements under Section 8.01(a), a certificate of insurance coverage
from each insurer with respect to the insurance required by Section 8.07, in
form and substance satisfactory to the Administrative Agent, and, if requested
by the Administrative Agent or any Lender, all copies of the applicable
policies.
  (f)         Other Accounting
Reports.  Promptly upon receipt thereof, a copy of each other
report or letter submitted to the Borrower or any of its Subsidiaries by
independent accountants in connection with any annual, interim or special audit
made by them of the books of the Borrower or any such Subsidiary, and a copy of
any response by the Borrower or any such Subsidiary to such letter or
report.
  (g)        SEC and Other Filings;
Reports to shareholders.  Promptly after the same become
publicly available, copies of all periodic and other reports, proxy statements
and other materials filed by the Borrower or any Subsidiary with the SEC, or
with any national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; provided, however, that the Borrower
shall be deemed to have furnished the information required by this Section
8.01(g) if it shall have timely made the same available on “EDGAR” and/or on its
home page on the worldwide web (at the date of this Agreement located at
http://www.linnenergy.com); provided further, however, that if any Lender
is unable to access EDGAR or the Borrower’s home page on the worldwide web, the
Borrower agrees to provide such Lender with paper copies of the information
required to be furnished pursuant to this Section 8.01(g) promptly following
notice from the Administrative Agent that such Lender has requested
same.  Information required to be delivered pursuant to this Section
8.01(g) shall be deemed to have been delivered on the date on which the Borrower
provides notice to the Administrative Agent that such information has been
posted on “EDGAR” or the Borrower’s website or another website identified in
such notice and accessible by the Administrative Agent without charge (and the
Borrower hereby agrees to provide such notice).
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  (h)        Notices Under Material
Instruments.  Promptly after the furnishing thereof, copies of
any financial statement, report or notice furnished to or by any Person pursuant
to the terms of any preferred stock designation, indenture, loan or credit or
other similar agreement, other than this Agreement and not otherwise required to
be furnished to the Lenders pursuant to any other provision of this Section
8.01.
  (i)         Lists of
Purchasers.  Concurrently with the delivery of any Reserve
Report to the Administrative Agent pursuant to Section 8.12, a list of Persons
purchasing Hydrocarbons from the Borrower and its Subsidiaries reasonably
expected to account for at least 80% of the revenues resulting from the sale of
Hydrocarbons produced from the Mortgaged Properties in the quarter following the
“as of” date of such Reserve Report.
  (j)         Notice of Sales of Oil and
Gas Properties.  In the event the Borrower or any of its
Subsidiaries intends to sell, transfer, assign or otherwise dispose of any Oil
or Gas Properties included in the most recently delivered Reserve Report (or any
Equity Interests in any Subsidiary owning interests in such Oil and Gas
Properties) during any period between two successive Scheduled Redetermination
Dates having a fair market value, individually or in the aggregate, in excess of
$10,000,000, prior written notice of such disposition, the price thereof, the
anticipated date of closing, and any other details thereof reasonably requested
by the Administrative Agent or any Lender.
  (k)        Notice of Casualty
Events.  Prompt written notice, and in any event within three
Business Days, of the occurrence of any Casualty Event or the commencement of
any action or proceeding that could reasonably be expected to result in a
Casualty Event.
  (l)         Information Regarding
Borrower and Guarantors.  Prompt written notice of (and in any
event within ten (10) days after) any change (i) in the Borrower or any
Guarantor’s corporate name or in any trade name used to identify such Person in
the conduct of its business or in the ownership of its Properties, (ii) in the
location of the Borrower or any Guarantor’s chief executive office or principal
place of business, (iii) in the Borrower or any Guarantor’s identity or
corporate structure or in the jurisdiction in which such Person is incorporated
or formed, (iv) in the Borrower or any Guarantor’s jurisdiction of organization
or such Person’s organizational identification number in such jurisdiction of
organization, and (v) in the Borrower or any Guarantor’s federal taxpayer
identification number, if any.
  (m)       Production Report and Lease
Operating Statements.  Within 45 days after the end of each
fiscal quarter, a report setting forth, for each calendar month during the
then-current fiscal year to date, the volume of production and sales
attributable to production (and the prices at which such sales were made and the
revenues derived from such sales) for each such calendar month from the Oil and
Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.
  (n)        Notices of Certain
Changes.  Promptly, but in any event within five (5) Business
Days after the execution thereof, copies of any amendment, modification or
supplement
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  to the
certificate or articles of incorporation, by-laws, any preferred stock
designation or any other organic document of the Borrower or any of its
Subsidiaries.
  (o)        EDGAR
Postings.  In lieu of delivery of paper counterparts of
financial statements or other information required to be delivered to the
Administrative Agent and each Lender pursuant to this Section 8.01, to the
extent such financial statements or other information has been published on
EDGAR, Barrower may send to the Administrative Agent and each Lender notice that
such financial statements or other information is available on EDGAR and
delivery of such notice shall satisfy the Borrower’s requirements under this
Section 8.01 to deliver to the Administrative Agent and each Lender paper
counterparts of such financial statements and other information.
  (p)        Other Requested
Information.  Promptly following any request therefor, such
other information regarding the operations, business affairs and financial
condition of the Borrower or any of its Subsidiaries (including, without
limitation, any Plan and any reports or other information required to be filed
under ERISA), or compliance with the terms of this Agreement or any other Loan
Document, as the Administrative Agent or any Lender may reasonably
request.
  Section
8.02            Notices of Material
Events.  The Borrower will furnish to the Administrative Agent
and each Lender, promptly after the Borrower obtains knowledge thereof, written
notice of the following:
  (a)        the
occurrence of any Default;
  (b)        the
filing or commencement of, or the threat in writing of, any action, suit,
investigation, arbitration or proceeding by or before any arbitrator or
Governmental Authority against or affecting the Borrower or any Subsidiary
thereof, or any material adverse development in any action, suit, proceeding,
investigation or arbitration (whether or not previously disclosed to the
Lenders), that, in either case, if adversely determined, could reasonably be
expected to result in liability in excess of $10,000,000;
  (c)        the
occurrence of any ERISA Event that, alone or together with any other ERISA
Events that have occurred, could reasonably be expected to result in liability
of the Borrower and its Subsidiaries in an aggregate amount exceeding
$3,000,000; and
  (d)        any
other development that results in, or could reasonably be expected to result in,
a Material Adverse Effect.
  Each
notice delivered under this Section 8.02 shall be accompanied by a statement of
a Responsible Officer setting forth the details of the event or development
requiring such notice and any action taken or proposed to be taken with respect
thereto.
  Section
8.03            Existence; Conduct of
Business.  The Borrower will, and will cause each of its
Subsidiaries to, do or cause to be done all things necessary to preserve, renew
and keep in full force and effect its legal existence and the rights, licenses,
permits, privileges and franchises
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  material
to the conduct of its business and maintain, if necessary, its qualification to
do business in each other jurisdiction in which any of its Oil and Gas
Properties is located or the ownership of its Properties requires such
qualification, except where the failure to so qualify could not reasonably be
expected to have a Material Adverse Effect; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 9.11.
  Section
8.04            Payment of
Obligations.  The Borrower will, and will cause each of its
Subsidiaries to, pay its obligations, including Tax liabilities of the Borrower
and all of its Subsidiaries before the same shall become delinquent or in
default, except where (a) the validity or amount thereof is being contested in
good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has
set aside on its books adequate reserves with respect thereto in accordance with
GAAP and (c) the failure to make payment pending such contest could not
reasonably be expected to result in a Material Adverse Effect or result in the
seizure or levy of any material Property of the Borrower or any of its
Subsidiaries.
  Section
8.05            Performance of Obligations
under Loan Documents.  The Borrower will pay the Notes
according to the reading, tenor and effect thereof, and the Borrower will, and
the Borrower will cause each of its Subsidiaries to do and perform every act and
discharge all of the obligations to be performed and discharged by them under
the Loan Documents, including, without limitation, this Agreement, at the time
or times and in the manner specified.
  Section
8.06             Operation and Maintenance of
Properties.  The Borrower will, and will cause each of its
Subsidiaries to:
  (a)        operate
its Oil and Gas Properties and other material Properties or cause such Oil and
Gas Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all Governmental Requirements, including, without limitation, applicable
proration requirements and Environmental Laws, and all applicable laws, rules
and regulations of every other Governmental Authority from time to time
constituted to regulate the development and operation of its Oil and Gas
Properties and the production and sale of Hydrocarbons and other minerals
therefrom, except, in each case, where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
  (b)        keep
and maintain all Property material to the conduct of its business in good
working order and condition, ordinary wear and tear excepted, and preserve,
maintain and keep in good repair, working order and efficiency (ordinary wear
and tear excepted) all of its material Oil and Gas Properties and other material
Properties, including, without limitation, all material equipment, machinery and
facilities.
  (c)        promptly
pay and discharge, or make reasonable and customary efforts to cause to be paid
and discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its material Oil
and Gas Properties and will do all other things necessary to keep unimpaired
their material rights with respect thereto and prevent any forfeiture thereof or
material default thereunder.
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  (d)        promptly
perform or make reasonable and customary efforts to cause to be performed, in
accordance with industry standards and in all material respects, the obligations
required by each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its material Oil and Gas
Properties and other material Properties.
  (e)        to
the extent the Borrower or one of its Subsidiaries is not the operator of any
Property, the Borrower shall use reasonable efforts to cause the operator to
comply with this Section 8.06.
  Section
8.07            Insurance.  The
Borrower will, and will cause each of its Subsidiaries to, maintain, with
financially sound and reputable insurance companies, insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or similar businesses operating in the same or similar
locations.  The loss payable clauses or provisions in said insurance
policy or policies insuring any of the collateral for the Loans shall be
endorsed in favor of and made payable to the Administrative Agent as its
interests may appear and such policies shall name the Administrative Agent and
the Lenders as “additional insureds” and provide that the insurer will give at
least 30 days prior notice of any cancellation to the Administrative
Agent.
  Section
8.08            Books and Records;
Inspection Rights.  The Borrower will, and will cause each of
its Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to its
business and activities.  The Borrower will, and will cause each of
its Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
Properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably
requested.
  Section
8.09            Compliance with
Laws.  The Borrower will, and will cause each of its
Subsidiaries to, comply with all laws, rules, regulations and orders of any
Governmental Authority applicable to them or their Property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
  Section
8.10             Environmental
Matters.
  (a)        The
Borrower shall at its sole expense (including such contribution from third
parties as may be available):  (i) comply, and shall cause its
Properties and operations and each Subsidiary and each Subsidiary’s Properties
and operations to comply, with all applicable Environmental Laws, the breach of
which could be reasonably expected to have a Material Adverse Effect; (ii) not
dispose of or otherwise release, and shall cause each Subsidiary not to dispose
of or otherwise release, any oil, oil and gas waste, hazardous substance, or
solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’
Properties or any other Property to the extent caused by the Borrower’s or any
of its Subsidiaries’ operations except in compliance with applicable
Environmental Laws, the disposal or release of which could reasonably be
expected to have a Material Adverse Effect; (iii) timely obtain or file, and
shall cause each Subsidiary to timely obtain or file, all notices, permits,
licenses, exemptions,
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  approvals,
registrations or other authorizations, if any, required under applicable
Environmental Laws to be obtained or filed in connection with the operation or
use of the Borrower’s or its Subsidiaries’ Properties, which failure to obtain
or file could reasonably be expected to have a Material Adverse Effect; (iv)
promptly commence and diligently prosecute to completion, and shall cause each
Subsidiary to promptly commence and diligently prosecute to completion, any
assessment, evaluation, investigation, monitoring, containment, cleanup,
removal, repair, restoration, remediation or other remedial obligations
(collectively, the “Remedial Work”) in
the event any Remedial Work is required or reasonably necessary under applicable
Environmental Laws because of or in connection with the actual or suspected
past, present or future disposal or other release of any oil, oil and gas waste,
hazardous substance or solid waste on, under, about or from any of the
Borrower’s or its Subsidiaries’ Properties, which failure to commence and
diligently prosecute to completion could reasonably be expected to have a
Material Adverse Effect; and (v) establish and implement, and shall cause each
Subsidiary to establish and implement, such reasonable policies of environmental
audit and compliance as may be reasonably necessary to continuously determine
and assure that the Borrower’s and its Subsidiaries’ obligations under this
Section 8.10(a) are timely and fully satisfied, which failure to establish and
implement could reasonably be expected to have a Material Adverse
Effect.
  (b)        The
Borrower will promptly, but in any event within five (5) days thereof, notify
the Administrative Agent and the Lenders in writing of any threatened action,
investigation or inquiry by any Governmental Authority or any threatened demand
or lawsuit by any landowner or other third party against the Borrower or its
Subsidiaries or their Properties of which the Borrower has knowledge in
connection with any Environmental Laws (excluding routine testing and corrective
action) if the Borrower reasonably anticipates that such action will result in
liability (whether individually or in the aggregate) in excess of $10,000,000,
not fully covered by insurance, subject to normal deductibles.
  (c)        The
Borrower will, and will cause each Subsidiary to, provide environmental audits
and tests in accordance with American Society of Testing Materials standards
upon request by the Administrative Agent and the Lenders and no more than once
per year in the absence of any Event of Default (or as otherwise reasonably
required to be obtained by the Administrative Agent or the Lenders by any
Governmental Authority), in connection with any future acquisitions of material
Oil and Gas Properties or other material Properties.
  Section
8.11             Further
Assurances.
  (a)        The
Borrower at its sole expense will, and will cause each of its Subsidiaries to,
promptly execute and deliver to the Administrative Agent all such other
documents, agreements and instruments reasonably requested by the Administrative
Agent to comply with, cure any defects or accomplish the conditions precedent,
covenants and agreements of the Borrower or any of its Subsidiaries, as the case
may be, in the Loan Documents, including the Notes, or to further evidence and
more fully describe the collateral intended as security for the Indebtedness, or
to correct any omissions in this Agreement or the Security Instruments, or to
state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement or any of the Security
Instruments or the priority thereof, or to make any recordings, file any notices
or obtain any consents, all as may be reasonably
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  necessary
or appropriate, in the sole discretion of the Administrative Agent, in
connection therewith.
  (b)        The
Borrower hereby authorizes the Administrative Agent to file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Mortgaged Property without the signature of the Borrower or any
other Guarantor where permitted by law.  A carbon, photographic or
other reproduction of the Security Instruments or any financing statement
covering the Mortgaged Property or any part thereof shall be sufficient as a
financing statement where permitted by law.  The Administrative Agent
will promptly send the Borrower any financing or continuation statements it
files without the signature of the Borrower or any other Guarantor and the
Administrative Agent will promptly send the Borrower the filing or recordation
information with respect thereto.
  Section
8.12             Reserve
Reports.
  (a)        On
or before March 1st and September 1st of each year, the Borrower shall
furnish to the Administrative Agent and the Lenders a Reserve Report as of the
immediately preceding December 31 or June 30, as
applicable.  The Reserve Report as of December 31 of each year
shall be prepared by one or more petroleum engineers reasonably acceptable to
the Administrative Agent and the June 30 Reserve Report of each year shall
be prepared by or under the supervision of the chief engineer of the Borrower
who shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the immediately preceding
December 31 Reserve Report.
  (b)        In
the event of an Interim Redetermination, the Borrower shall furnish to the
Administrative Agent and the Lenders a Reserve Report prepared by or under the
supervision of the chief engineer of the Borrower who shall certify such Reserve
Report to be true and accurate in all material respects and to have been
prepared in accordance with the procedures used in the immediately preceding
December 31 Reserve Report.  For any Interim Redetermination
requested by the Administrative Agent or the Borrower pursuant to Section
2.07(b), the Borrower shall provide such Reserve Report with an “as of” date as
required by the Administrative Agent as soon as possible, but in any event no
later than thirty (30) days following the receipt of such request.
  (c)        With
the delivery of each Reserve Report, the Borrower shall provide to the
Administrative Agent and the Lenders a certificate from a Responsible Officer,
in substantially the form of Exhibit G hereto (the “Reserve Report
Certificate”), certifying that in all material respects:  (i)
the information provided by the Borrower in connection with the preparation of
such Reserve Report and any other information delivered in connection therewith
by the Borrower is true and correct, and any projections based upon such
information have been prepared in good faith based upon assumptions believed by
the Borrower to be reasonable, subject to uncertainties inherent in all
projections, (ii) the Borrower or its Subsidiaries owns good and defensible
title to the Oil and Gas Properties evaluated in such Reserve Report and such
Properties are free of all Liens except for Liens permitted by Section 9.03,
(iii) except as set forth on an exhibit to the certificate, on a net basis there
are no gas imbalances, take or pay or other prepayments in excess of the volume
specified in Section 7.18 with respect to their Oil and
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  Gas
Properties evaluated in such Reserve Report that would require the Borrower or
any of its Subsidiaries to deliver Hydrocarbons either generally or produced
from such Oil and Gas Properties at some future time without then or thereafter
receiving full payment therefor, (iv) none of their Oil and Gas Properties have
been sold since the date of the last Borrowing Base determination except as set
forth on an exhibit to the certificate, which certificate shall list all of its
Oil and Gas Properties sold and in such detail as reasonably required by the
Administrative Agent, (v) attached to the certificate is a list of all marketing
agreements entered into subsequent to the later of the date hereof or the most
recently delivered Reserve Report that the Borrower could reasonably be expected
to have been obligated to list on Schedule 7.19 had such agreement been in
effect on the date hereof and (vi) attached thereto is a schedule of the Oil and
Gas Properties evaluated by such Reserve Report that are Mortgaged Properties
and demonstrating the percentage of the present value that such Mortgaged
Properties represent.
  Section
8.13             Title
Information.
  (a)        On
or before the delivery to the Administrative Agent and the Lenders of each
Reserve Report required by Section 8.12(a), to the extent requested by the
Administrative Agent, the Borrower will deliver title information in form and
substance reasonably acceptable to the Administrative Agent covering enough of
the Oil and Gas Properties evaluated by such Reserve Report that were not
included in the immediately preceding Reserve Report, so that the Administrative
Agent shall have received together with title information previously delivered
to the Administrative Agent, reasonably satisfactory title information on such
portion of Oil and Gas Properties evaluated by such Reserve Report, not to
exceed 80% of the total value thereof, as may be reasonably requested by the
Administrative Agent.
  (b)        If
the Borrower has provided title information for additional Properties under
Section 8.13(a), the Borrower shall, within 60 days of notice from the
Administrative Agent that title defects or exceptions exist with respect to such
additional Properties, either (i) cure any such title defects or exceptions
(including defects or exceptions as to priority) which are not permitted by
Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged
Properties with no title defects or exceptions except for Excepted Liens (other
than Excepted Liens described in clauses (e), (g) and (h) of such definition)
having an equivalent value or (iii) deliver title information in form and
substance reasonably acceptable to the Administrative Agent so that the
Administrative Agent shall have received, together with title information
previously delivered to the Administrative Agent, reasonably satisfactory title
information on such portion of Oil and Gas Properties evaluated by such Reserve
Report, not to exceed 80% of the total value thereof, as may be reasonably
requested by the Administrative Agent.
  (c)        If
the Borrower is unable to cure any title defect requested by the Administrative
Agent or the Lenders to be cured within the 60-day period or the Borrower does
not comply with the requirements to provide acceptable title information as
required by Section 8.13(a) and Section 8.13(b), such default shall not be a
Default, but instead the Administrative Agent and/or the Majority Lenders shall
have the right to exercise the following remedy in their sole discretion from
time to time, and any failure to so exercise this remedy at any time shall not
be a waiver as to future exercise of the remedy by the Administrative Agent or
the Lenders.  To the extent that the Administrative Agent or the
Majority Lenders are not reasonably satisfied
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  with
title to any Mortgaged Property after the 60-day period has elapsed, such
unacceptable Mortgaged Property shall not count towards the requirements of
Section 8.13(a) and Section 8.13(b), and the Administrative Agent may send a
notice to the Borrower and the Lenders that the then outstanding Borrowing Base
shall be reduced by an amount as determined by the Majority Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information pursuant to Section 8.13(a) and Section 8.13(b).  This new
Borrowing Base shall become effective immediately after receipt of such
notice.
  Section
8.14             Additional Collateral;
Additional Guarantors.
  (a)        In
connection with each redetermination of the Borrowing Base, the Borrower shall
review the Reserve Report and the list of current Mortgaged Properties (as
described in Section 8.12(c)(vi)) to ascertain whether the Mortgaged Properties
represent at least 80% of the total value of the Oil and Gas Properties
evaluated in the most recently completed Reserve Report after giving effect to
exploration and production activities, acquisitions, dispositions and
production.  In the event that the Mortgaged Properties do not
represent at least 80% of such total value, then the Borrower shall, and shall
cause its Subsidiaries to, grant, within sixty (60) days of the delivery of the
certificate contemplated by Section 8.12(c), to the Administrative Agent or its
designee as security for the Indebtedness a first-priority Lien interest (provided the Excepted Liens
of the type described in clauses (a) to (d) and (f) of the definition thereof
may exist, but subject to the provisos at the end of such definition) on
additional Oil and Gas Properties not already subject to a Lien of the Security
Instruments such that after giving effect thereto, the Mortgaged Properties will
represent at least 80% of such total value.  All such Liens will be
created and perfected by and in accordance with the provisions of deeds of
trust, security agreements and financing statements or other Security
Instruments, all in form and substance reasonably satisfactory to the
Administrative Agent or its designee and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for recording
purposes.  In order to comply with the foregoing, if any Subsidiary
places a Lien on its Oil and Gas Properties and such Subsidiary is not a
Guarantor, then it shall become a Guarantor and comply with Section
8.14(b).
  (b)        If
(i) the Borrower determines that any Subsidiary is a Material Domestic
Subsidiary or (ii) any Domestic Subsidiary incurs or guarantees any Debt other
than the Indebtedness, and in either case, such Subsidiary is not already a
Guarantor, then the Borrower shall promptly cause such Subsidiary to guarantee
the Indebtedness pursuant to the Guaranty Agreement.  In connection
with any such guaranty, the Borrower shall, or shall cause such Subsidiary to,
(A) execute and deliver a supplement to the Guaranty Agreement executed by such
Subsidiary, (B) pledge all of the Equity Interests of such Subsidiary
(including, without limitation, delivery of original stock certificates
evidencing the Equity Interests of such Subsidiary, together with an appropriate
undated stock powers for each certificate duly executed in blank by the
registered owner thereof) and (C) execute and deliver such other additional
closing documents, certificates and legal opinions as shall reasonably be
requested by the Administrative Agent or its designee.
  Section
8.15             ERISA
Compliance.  The Borrower will promptly furnish, and will cause
its Subsidiaries and any ERISA Affiliate to promptly furnish, to the
Administrative Agent (a)
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  immediately
upon becoming aware of the occurrence of any ERISA Event, a written notice
signed by the President or the principal Financial Officer of the Borrower, its
Subsidiaries or the ERISA Affiliate, as the case may be, specifying the nature
thereof, what action the Borrower, its Subsidiaries or the ERISA Affiliate is
taking or proposes to take with respect thereto, and, if then known, any action
taken or proposed by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto, and (b) immediately upon receipt thereof, copies
of any notice of the PBGC’s intention to terminate or to have a trustee
appointed to administer any Plan.
  Section
8.16            Marketing
Activities.  The Borrower will not, and will not permit any of
its Subsidiaries to, engage in marketing activities for any Hydrocarbons or
enter into any contracts related thereto other than (a) contracts for the sale
of Hydrocarbons scheduled or reasonably estimated to be produced from their
proved Oil and Gas Properties during the period of such contract, (b) contracts
for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and
(c) other contracts for the purchase and/or sale of Hydrocarbons of third
parties (i) which have generally offsetting provisions (i.e., corresponding pricing
mechanics, delivery dates and points and volumes) such that no “position” is
taken and (ii) for which appropriate credit support has been taken to alleviate
the material credit risks of the counterparty thereto.
  Section
8.17            Swap
Agreements.  To the extent the Borrower or a Subsidiary changes
the material terms of any Swap Agreement, terminates any Swap Agreement or
enters into a new Swap Agreement which has the effect of creating an off-setting
position that individually, or together with all other such changes,
terminations and/or new Swap Agreements within the preceding 12 months results
in an aggregate Swap PV greater than $10,000,000, the Borrower will give the
Lenders prompt written notice of such event.
  Section
8.18            Clean Down
Period.  During each calendar year during the term of this
Agreement, the Borrower shall cause there to be a period of ten (10) consecutive
days (the “Clean Down
Period”) during which (a) there are no Distribution Borrowings
outstanding and (b) no Distribution Borrowings shall be made.
  ARTICLE
IX
 Negative
Covenants
  Until the
Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder and all other amounts payable under the
Loan Documents have been paid in full and all Letters of Credit have expired or
terminated and all LC Disbursements shall have been reimbursed, the Borrower
covenants and agrees with the Lenders that:
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  Section
9.01             Financial
Covenants.
  (a)        Ratio of EBITDA to Interest
Expense.  The Borrower will not, as of the last day of any
fiscal quarter, commencing with the fiscal quarter ending June 30, 2009 and
as of the end of each fiscal quarter thereafter, permit its ratio of EBITDA for
the period of four fiscal quarters then ending to Interest Expense for such
period to be less than 2.5 to 1.0.
  (b)        Current
Ratio.  The Borrower will not permit, as of the last day of any
fiscal quarter, its ratio of (i) consolidated current assets (including the
unused amount of the total Commitments, but excluding non-cash assets under FAS
133) to (ii) consolidated current liabilities (excluding non-cash obligations
under FAS 133 and current maturities under this Agreement) to be less than 1.0
to 1.0.
  Section
9.02             Debt.  Neither
the Borrower nor any of its Subsidiaries will incur, create, assume or suffer to
exist any Debt, except:
  (a)        the
Notes or other Indebtedness or any guaranty of or suretyship arrangement for the
Notes or other Indebtedness.
  (b)        accounts
payable and other accrued expenses, liabilities or other obligations to pay (for
the deferred purchase price of Property or services) from time to time incurred
in the ordinary course of business which are not greater than ninety (90) days
past the date of invoice or delinquent or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP.
  (c)        intercompany
Debt between the Borrower and any of its Subsidiaries or between Subsidiaries to
the extent permitted by Section 9.05(g); provided that such Debt is
not held, assigned, transferred, negotiated or pledged to any Person other than
the Borrower or one of their Wholly-Owned Subsidiaries, and, provided further, that any
such Debt owed by either the Borrower or a Guarantor shall be subordinated to
the Indebtedness on terms set forth in the Guaranty Agreement.
  (d)        endorsements
of negotiable instruments for collection in the ordinary course of
business.
  (e)        Debt
(i) associated with bonds or surety obligations required by Governmental
Requirements in connection with the operation of Oil and Gas Properties in the
ordinary course of business and (ii) comprised of guarantees of obligations of
Subsidiaries under marketing agreements entered into in the ordinary course of
business.
  (f)         Capital
Leases not to exceed $25,000,000 in the aggregate at any one time.
  (g)        Funded
Debt and any guarantees thereof, provided that (i)(A) at the
time such Funded Debt is incurred, no Default has occurred and is then
continuing and (B) no Default would result from the incurrence of such Funded
Debt after giving effect to the incurrence of such Funded Debt (and any
concurrent repayment of Debt with the proceeds of such incurrence), (ii)
immediately after the incurrence of such Funded Debt, the Borrowing Base shall
be adjusted
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  in
accordance with Section 2.07(e) and the incurrence of such Funded Debt (and any
concurrent repayment of Debt with the proceeds of such incurrence) would not
result in the total Revolving Credit Exposure exceeding such adjusted Borrowing
Base, (iii) such Funded Debt does not have any scheduled amortization prior to
four years after the Maturity Date, (iv) such Funded Debt does not mature sooner
than four years after the Maturity Date, (v) such Funded Debt and any guarantees
thereof are on market terms for issuers of similar size and credit quality given
the then prevailing market conditions and (vi) such Funded Debt does not have
any mandatory prepayment or redemption provisions (other than customary change
of control or asset sale tender offer provisions) which would require a
mandatory prepayment or redemption in priority to the Indebtedness.
  (h)        other
Debt not to exceed $40,000,000 in the aggregate at any one time
outstanding.
  (i)         Debt
incurred by the Borrower pursuant to the Senior Notes and any Permitted
Refinancing Debt in respect thereof.
  (j)         Extensions,
renewals or replacements of any Debt (for purposes of this paragraph (j), “refinancing debt”)
permitted in clauses (a) through (h) so long as (i) the principal amount (or
accreted value, if applicable) of such refinancing debt does not exceed the
principal amount (or accreted value, if applicable) of the Debt extended,
renewed or replaced (plus all accrued interest on the Debt and the amount of all
expenses and premiums incurred in connection therewith), (ii) such refinancing
debt has a final maturity date later than the final maturity date of the Debt
being extended, renewed or replaced, (iii) if the Debt being extended, renewed
or replaced is subordinated in right of payment to the obligations under this
Agreement, such refinancing debt has a final maturity date equal to or later
than the final maturity date of, and is subordinated in right of payment to, the
obligations under this Agreement on terms at least as favorable to the Lenders
as those contained in the documentation governing the Debt being extended,
renewed or replaced, (iv) such refinancing debt is incurred either by the
Borrower or by a Subsidiary who is the obligor on the Debt being extended,
renewed or replaced, and (v) if incurred by the Borrower, such refinancing debt
may be guaranteed by the Guarantors.
  Section
9.03             Liens.  Neither
the Borrower nor any of its Subsidiaries will create, incur, assume or permit to
exist any Lien on any of its Properties (now owned or hereafter acquired),
except:
  (a)        Liens
securing the payment of any Indebtedness.
  (b)        Excepted
Liens.
  (c)        Liens
in connection with Capital Leases permitted under Section 9.02(f).
  (d)        Liens
on Property not constituting collateral for the Indebtedness and not otherwise
permitted by the foregoing clauses of this Section 9.03; provided that the aggregate
principal or face amount of all Debt secured under this Section 9.03(d) shall
not exceed $10,000,000 at any time.
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  (e)        Extensions,
renewals or replacements of any of the Liens permitted in clauses (a) through
(e) so long as (i) the principal amount of the Debt or obligation secured
thereby is no greater than the principal amount of such Debt or obligation at
the time such Lien was permitted hereunder except for increases in an amount
equal to a reasonable premium or other reasonable amount paid, and fees and
expenses reasonably incurred, in connection with such extension, renewal,
refinancing, or replacement and in an amount equal to any existing commitments
unutilized thereunder, (ii) any such extension, renewal or replacement Lien is
limited to the property originally encumbered thereby, and (iii) any renewal or
extension of the Debt or obligations secured or benefited thereby is permitted
by Section 9.02.
  Section
9.04             Dividends, Distributions and
Redemptions.
  (a)        Restricted
Payments.  The Borrower will not, and will not permit any of
its Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any Restricted Payment, return any capital to its stockholders or
make any distribution of their Property to their respective Equity Interest
holders, except (i) the Borrower may declare and pay dividends or distributions
with respect to its Equity Interests payable solely in additional shares of its
Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries may
declare and pay dividends or distributions ratably with respect to their Equity
Interests, (iii) so long as no Borrowing Base Deficiency, Default or Event of
Default has occurred and is continuing or would result therefrom, the Borrower
may declare and pay quarterly cash dividends to its members out of Available
Cash for the preceding quarter (including amounts borrowed as contemplated under
clause (a)(ii) of the definition of Available Cash subsequent to the end of such
quarter) and (iv) so long as (A) no Borrowing Base Deficiency, Default or Event
of Default has occurred and is continuing or would result therefrom and (B)
after giving effect thereto, there exists as least $400,000,000 of unused
Borrowing Base availability, the Borrower may repurchase or retire Equity
Interests of the Borrower in an aggregate amount not to exceed $100,000,000
since November 2, 2007.
  (b)        Redemption or Repayment of
Senior Notes.  The Borrower will not, and will not permit any
Subsidiary to:  (i) call, make or offer to make any optional
Redemption of or otherwise optionally Redeem (and in the case of any
subordinated Debt, call, make or offer to make any mandatory or optional
Redemption) whether in whole or in part or repay any Debt permitted to be
incurred hereunder, including the Senior Notes or any Permitted Refinancing
Debt, except with the proceeds of Asset Sales, Casualty Events or Funded Debt,
or the proceeds of the sale or issuance of Equity Interests or Permitted
Refinancing Debt, in each case, in accordance with Section 3.04; (ii) amend,
modify, waive or otherwise change, consent or agree to any amendment,
modification, waiver or other change to, any of the terms of any notes
evidencing any Debt permitted hereunder, including the Senior Notes or any
Permitted Refinancing Debt, or any indenture, agreement, instrument, certificate
or other document relating to any Debt permitted hereunder if (A) the effect of
such amendment, modification or waiver is to shorten the final maturity, except
as permitted under Section 9.02(g) or in accordance with the definition of
Permitted Refinancing Debt, or increase the amount of any payment of principal
thereof or increase the rate or shorten any period for payment of interest
thereon or modify the method of calculating the interest rate, (B) such action
adds covenants, events of default or other agreements to the extent more
restrictive, taken as a whole, than those contained in this
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  Agreement,
as determined by the Board of Directors of the Borrower in its reasonable and
good faith judgment, or (C) such action adds collateral unless the Loan
Documents are being amended at the same time to reflect such new collateral,
provided that the
foregoing shall not prohibit the execution of supplemental agreements in
connection with the issuance of Permitted Refinancing Debt or the addition of
guarantors if required by the terms thereof; and (iii) if the Senior Notes are
contractually subordinated in right of payment, designate any Debt (other than
obligations of the Borrower and the Subsidiaries pursuant to the Loan Documents)
as “Specified Senior Indebtedness” or “Specified Guarantor Senior Indebtedness”
or give any such other Debt any other similar designation for the purposes of
any indentures or other documents relating to any subordinated Debt permitted
hereunder.
  Section
9.05            Investments, Loans and
Advances.  Neither the Borrower nor any of its Subsidiaries
will make or permit to remain outstanding any Investments in or to any Person,
except that the foregoing restriction shall not apply to:
  (a)        Investments
reflected in the Financial Statements.
  (b)        accounts
receivable arising in the ordinary course of business.
  (c)        direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of creation thereof.
  (d)        commercial
paper maturing within one year from the date of creation thereof rated A2 or P2
by S&P or Moody’s.
  (e)        deposits
maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office located in the
United States of any other bank or trust company which is organized under the
laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $250,000,000 (as of the date of such bank
or trust company’s most recent financial reports) and has a short term deposit
rating of no lower than A2 or P2, as such rating is set forth from time to time,
by S&P or Moody’s, respectively.
  (f)         deposits
in money market funds investing primarily in Investments described in Section
9.05(c), Section 9.05(d) or Section 9.05(e).
  (g)        Investments
(i) made by the Borrower in or to the Guarantors, (ii) made by any Subsidiary in
or to the Borrower or any Guarantor, (iii) made by the Borrower or any Guarantor
in any Person that owns Oil and Gas Properties which are overriding royalty,
royalty interests or other similar non-cost bearing interests and which do not
own other material Properties, provided, that after the
consummation of such Investment (A) the Borrower and its Subsidiaries are in
compliance with all covenants under this Agreement and (B) such Person promptly
becomes a Guarantor or is promptly dissolved into a Guarantor or the Borrower
and (iv) made by the Borrower or any Guarantor in Subsidiaries that are not
Guarantors, provided
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  that the
aggregate of all Investments made by the Borrower and the Guarantors in or to
all Subsidiaries that are not Guarantors shall not exceed $10,000,000 at any
time.
  (h)        Investments
(including, without limitation, capital contributions) in general or limited
partnerships or other types of entities (each a “venture”) entered
into by the Borrower or any of its Subsidiaries with others in the ordinary
course of business; provided that (i) any such
venture is engaged exclusively in oil and gas exploration, development,
production, processing and related activities, including transportation,
treatment and storage (ii) the interest in such venture is acquired in the
ordinary course of business and on fair and reasonable terms and (iii) such
venture interests acquired and capital contributions made (valued as of the date
such interest was acquired or the contribution made) do not exceed, in the
aggregate at any time outstanding an amount equal to $10,000,000.
  (i)         subject
to the limits in Section 9.06, Investments in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual
interest agreements, gathering systems, pipelines or other similar arrangements
which are usual and customary in the oil and gas exploration and production
business located within the geographic boundaries of the United States of
America.
  (j)         loans
or advances to employees, officers or directors in the ordinary course of
business of the Borrower or any of its Subsidiaries, in each case only as
permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of
2002, but in any event not to exceed $1,000,000 in the aggregate at any
time.
  (k)        Investments
in stock, obligations or securities received in settlement of debts arising from
Investments permitted under this Section 9.05 owing to the Borrower or any of
its Subsidiaries as a result of a bankruptcy or other insolvency proceeding of
the obligor in respect of such debts or upon the enforcement of any Lien in
favor of the Borrower or any of its Subsidiaries, provided that the Borrower
shall give the Administrative Agent prompt written notice in the event that the
aggregate amount of all Investments held at any one time under this Section
9.05(k) exceeds $1,000,000.
  (l)         Any
guarantee permitted under Section 9.02.
  Section
9.06            Nature of
Business.  Neither the Borrower nor any of its Subsidiaries
will allow any material change to be made in the character of its business as an
independent oil and gas exploration and production company.  The
Borrower will not, and will not permit any of its Subsidiaries to, operate its
business outside the geographical boundaries of the United States.
  Section
9.07            Limitation on
Leases.  Neither the Borrower nor any of its Subsidiaries will
create, incur, assume or suffer to exist any obligation for the payment of rent
or hire of Property of any kind whatsoever (real or personal but excluding
Capital Leases permitted by Section 9.02(f), leases of Hydrocarbon Interests and
drilling and other similar contracts), under leases or lease agreements which
would cause the aggregate amount of all payments made by the Borrower and its
Subsidiaries pursuant to all such leases or lease agreements, including,
without
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  limitation,
any residual payments at the end of any lease, to exceed $10,000,000 in any
period of twelve consecutive calendar months during the life of such
leases.
  Section
9.08            Proceeds of
Notes.  The Borrower will not permit the proceeds of the Notes
to be used for any purpose other than those permitted by Section
7.21.  Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or will take any action which might cause any of the Loan
Documents to violate Regulations T, U or X or any other regulation of the Board
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.  If requested by the Administrative Agent,
the Borrower will furnish to the Administrative Agent and each Lender a
statement to the foregoing effect in conformity with the requirements of FR Form
U-1 or such other form referred to in Regulation U, Regulation T or Regulation X
of the Board, as the case may be.
  Section
9.09            ERISA
Compliance.  Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, the
Borrower and its Subsidiaries will not at any time:
  (a)        terminate,
or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability of
the Borrower, any of its Subsidiaries or any ERISA Affiliate to the
PBGC.
  (b)        contribute
to or assume an obligation to contribute to, or permit any ERISA Affiliate to
contribute to or assume an obligation to contribute to, any Multiemployer
Plan.
  (c)        acquire,
or permit any ERISA Affiliate to acquire, an interest in any Person that causes
such Person to become an ERISA Affiliate with respect to the Borrower or any of
its Subsidiaries or with respect to any ERISA Affiliate of the Borrower or any
of its Subsidiaries if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any other
Plan that is subject to Title IV of ERISA under which the actuarial present
value of the benefit liabilities under such Plan exceeds the current value of
the assets (computed on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities.
  Section
9.10            Sale or Discount of
Receivables.  Except for receivables obtained by the Borrower
or any of its Subsidiaries out of the ordinary course of business or the
settlement of joint interest billing accounts in the ordinary course of business
or discounts granted to settle collection of accounts receivable or the sale of
defaulted accounts arising in the ordinary course of business in connection with
the compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor any of its Subsidiaries will discount or
sell (with or without recourse) any of its notes receivable or accounts
receivable.
  Section
9.11             Mergers,
Etc.  Neither the Borrower nor any of its Subsidiaries will
merge into or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether
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  in one
transaction or in a series of transactions) all or substantially all of its
Property to any other Person, except that any Wholly-Owned Subsidiary may merge
with any other Wholly-Owned Subsidiary so long as in the case of any merger
involving a Guarantor, a Guarantor is the surviving entity, and that the
Borrower may merge with any Wholly-Owned Subsidiary so long as the Borrower is
the survivor.
  Section
9.12            Sale of
Properties.  The Borrower will not, and will not permit any of
its Subsidiaries to, sell, assign, farm-out, convey or otherwise transfer any
Property except for:  (a) the sale of Hydrocarbons in the
ordinary course of business; (b) farmouts of undeveloped acreage and assignments
in connection with such farmouts; (c) the sale or transfer of equipment that is
no longer necessary for the business of the Borrower or such Subsidiary or is
replaced by equipment of at least comparable value and use; (d) other sales or
dispositions (including Casualty Events) of Oil and Gas Properties or any
interest therein or Subsidiaries owning Oil and Gas Properties; provided that (i) 100% of the
consideration received in respect of such other sale or disposition shall be
cash, (ii) the consideration received in respect of such other sale or
disposition shall be equal to or greater than the fair market value of the Oil
and Gas Property, interest therein or Subsidiary subject of such other sale or
disposition (as reasonably determined by the board of directors of the Borrower
and, if requested by the Administrative Agent, the Borrower shall deliver a
certificate of a Responsible Officer of the Borrower certifying to that effect),
(iii) if such other sale or disposition of Oil and Gas Property or Subsidiary
owning Oil and Gas Properties included in the most recently delivered Reserve
Report during any period between two successive Scheduled Redetermination Dates
has a fair market value (as determined by the Administrative Agent),
individually or in the aggregate, in excess of $50,000,000, the Borrowing Base
shall be reduced, effective immediately upon such sale or disposition, by an
amount equal to the value, if any, assigned such Property as determined in good
faith by the Super-Majority Lenders assigned such Property in the most recently
delivered Reserve Report and (iv) if any such other sale or disposition is of a
Subsidiary owning Oil and Gas Properties, such other sale or disposition shall
include all the Equity Interests of such Subsidiary; and (e) sales and other
dispositions of Properties not regulated by Section 9.12(a) to (d) having a fair
market value not to exceed $10,000,000 during any 12-month period.
  Section
9.13            Environmental
Matters.  The Borrower will not, and will not permit any
Subsidiary to, cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such Property to
any Remedial Work under any Environmental Laws, assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.
  Section
9.14            Transactions with
Affiliates.  The Borrower will not, and will not permit any
Subsidiary to, enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate (other than the Guarantors and Wholly-Owned Subsidiaries of
the Borrower) unless such transactions are otherwise permitted under this
Agreement and are upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm’s length transaction with a Person not an
Affiliate.
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  Section
9.15            Subsidiaries.  The
Borrower shall have no Subsidiaries other than Wholly-Owned
Subsidiaries.  The Borrower shall not, and shall not permit its
Subsidiaries to, create or acquire any additional Subsidiary unless the Borrower
gives written notice to the Administrative Agent of such creation or acquisition
and complies with Section 8.14(b).  The Borrower shall not, and shall
not permit any of its Subsidiaries to, sell, assign or otherwise dispose of any
Equity Interests in any of its Subsidiaries.  The Borrower shall have
no Foreign Subsidiaries or foreign operations.
  Section
9.16            Negative Pledge Agreements;
Dividend Restrictions.  Neither the Borrower nor any of its
Subsidiaries will create, incur, assume or suffer to exist any contract,
agreement or understanding (other than this Agreement or the Security
Instruments) that in any way prohibits or restricts the granting, conveying,
creation or imposition of any Lien on any of its Property in favor of the
Administrative Agent and the Lenders or restricts any Subsidiary from paying
dividends or making distributions to the Borrower or any Guarantor, or which
requires the consent of or notice to other Persons in connection therewith;
provided, however, that the
preceding  restrictions will not apply to encumbrances or restrictions
arising under or by reason of (a) any leases (other than leases of Oil and Gas
Properties) or licenses or similar contracts as they affect any Property or Lien
subject to such lease or license, (b) any restriction with respect to a
Subsidiary imposed pursuant to an agreement entered into for the direct or
indirect sale or disposition of all or substantially all the equity or Property
of such Subsidiary (or the Property that is subject to such restriction) pending
the closing of such sale or disposition, (c) customary provisions with respect
to the distribution of Property in joint venture agreements or (d) Capital
Leases permitted under Section 9.02(f), but then only on the Property subject of
such Capital Leases.
  Section
9.17            Gas Imbalances, Take-or-Pay
or Other Prepayments.  The Borrower will not, and will not
permit any of its Subsidiaries to, allow gas imbalances, take-or-pay or other
prepayments with respect to the Oil and Gas Properties of the Borrower or any of
its Subsidiaries that would require the Borrower or such Subsidiary to deliver,
in the aggregate, two percent (2%) or more of the monthly production of
Hydrocarbons at some future time without then or thereafter receiving full
payment therefor.
  Section
9.18            Swap
Agreements.  Neither the Borrower nor any of its Subsidiaries
will enter into any Swap Agreements with any Person other than (a) Swap
Agreements in respect of commodities (i) with an Approved Counterparty, (ii) the
notional volumes for which (when aggregated with other commodity Swap Agreements
then in effect other than basis differential swaps on volumes already hedged
pursuant to other Swap Agreements) do not exceed, as of the date such Swap
Agreement is executed, 85% of the reasonably anticipated projected production
from Proved Properties for each month during the period during which such Swap
Agreement is in effect for each of crude oil and natural gas, calculated
separately, for the remainder of the calendar year plus the next two full
calendar years succeeding the execution of such Swap Agreement and 70% of the
reasonably anticipated projected production from Proved Properties for each
month during the period during which such Swap Agreement is in effect for each
of crude oil and natural gas, calculated separately, for each month thereafter,
and (iii) the notional volumes for which do not exceed the current net monthly
production (regardless of projected production levels) at the time such Swap
Agreement is executed, calculated separately for each
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  of crude
oil and natural gas, and (b) Swap Agreements in respect of interest rates with
an Approved Counterparty, which effectively convert interest rates from floating
to fixed, the notional amounts of which (when aggregated with all other Swap
Agreements of the Borrower and its Subsidiaries then in effect effectively
converting interest rates from floating to fixed) do not exceed 90% of the then
outstanding principal amount of the Borrower’s Debt for borrowed money which
bears interest at a floating rate.  Notwithstanding anything to the
contrary in this Section 9.18, there shall be no prohibition against the
Borrower entering into any “put” or “call spread option” contracts or commodity
price floors so long as such agreements are entered into for non-speculative
purposes and in the ordinary course of business for the purpose of hedging
against fluctuations of commodity prices.
  Section
9.19             Tax Status as
Partnership.  The Borrower shall not alter its status as a
partnership for purposes of United States Federal Income taxes.
  ARTICLE
X
 Events
of Default; Remedies
  Section
10.01           Events of
Default.  One or more of the following events shall constitute
an “Event of
Default”:
  (a)        the
Borrower shall fail to pay any principal of any Loan or any reimbursement
obligation in respect of any LC Disbursement when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise.
  (b)        the
Borrower shall fail to pay any interest on any Loan or any fee or any other
amount (other than an amount referred to in Section 10.01(a)) payable under any
Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business
Days.
  (c)        any
representation or warranty made or deemed made by or on behalf of the Borrower
or any of its Subsidiaries in or in connection with any Loan Document or any
amendment or modification of any Loan Document or waiver under such Loan
Document, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been incorrect
when made or deemed made.
  (d)        the
Borrower or any of its Subsidiaries shall fail to observe or perform any
covenant, condition or agreement contained in, Section 8.01(l), Section 8.01(m),
Section 8.02 Section 8.03 or in Article IX.
  (e)        the
Borrower or any of its Subsidiaries shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement (other than those
specified in Section 10.01(a), Section 10.01(b) or Section 10.01(d)) or any
other Loan Document, and such failure shall continue unremedied for a period of
30 days after the earlier to occur of (i) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request
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  of any
Lender) or (ii) a Responsible Officer of the Borrower or any of its Subsidiaries
otherwise becoming aware of such default.
  (f)         the
Borrower or any of its Subsidiaries shall fail to make any payment (whether of
principal or interest and regardless of amount) in respect of any Material
Indebtedness, when and as the same shall become due and payable (after giving
effect to any applicable notice and cure period).
  (g)        any
event or condition occurs (after giving effect to any notice or cure period)
that results in any Material Indebtedness becoming due prior to its scheduled
maturity or that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to
become due, or to require the Redemption thereof or any offer to Redeem to be
made in respect thereof, prior to its scheduled maturity or require the Borrower
or any of its Subsidiaries to make an offer in respect thereof.
  (h)        an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of the
Borrower or any of its Subsidiaries or its debts, or of a substantial part of
its assets, under any federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect or (ii) the appointment
of a receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any of its Subsidiaries or for a substantial part of its
assets, and, in any such case, such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered.
  (i)         the
Borrower or any of its Subsidiaries shall (i) voluntarily commence any
proceeding or file any petition seeking liquidation, reorganization or other
relief under any federal, state or foreign bankruptcy, insolvency, receivership
or similar law now or hereafter in effect, (ii) consent to the institution of,
or fail to contest in a timely and appropriate manner, any proceeding or
petition described in Section 10.01(h), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing; or any member of the Borrower shall
make any request or take any action for the purpose of calling a meeting of the
members of the Borrower to consider a resolution to dissolve and wind-up the
Borrower’s affairs.
  (j)         the
Borrower or any of its Subsidiaries shall become unable, admit in writing its
inability or fail generally to pay its debts as they become due.
  (k)        ii)
one or more judgments for the payment of money in an aggregate amount in excess
of $10,000,000 (to the extent not covered by independent third party insurance
provided by insurers of the highest claims paying rating or financial strength
as to which the insurer does not dispute coverage and is not subject to an
insolvency proceeding) or (1) any one or more non monetary judgments that have,
or could reasonably be expected to have,
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  individually
or in the aggregate, a Material Adverse Effect, shall be rendered against the
Borrower, any of its Subsidiaries or any combination thereof and the same shall
remain undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any of
its Subsidiaries to enforce any such judgment.
  (l)         the
Loan Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms against the Borrower or a
Guarantor party thereto or shall be repudiated by them, or cease to create a
valid and perfected Lien of the priority required thereby on any of the
collateral purported to be covered thereby, except to the extent permitted by
the terms of this Agreement, or the Borrower or any of its Subsidiaries shall so
state in writing.
  (m)       an
ERISA Event shall have occurred that, when taken together with all other ERISA
Events that have occurred, could reasonably be expected to have a Material
Adverse Effect.
  (n)        a
Change in Control shall occur.
  Section
10.02           Remedies.
  (a)        In
the case of an Event of Default other than one described in Section 10.01(h),
Section 10.01(i) or Section 10.01(j), at any time thereafter during the
continuance of such Event of Default, the Administrative Agent, at the request
of the Majority Lenders, shall, by notice to the Borrower, take either or both
of the following actions, at the same or different times:  (i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Notes and the Loans then outstanding to be due
and payable in whole (or in part, in which case any principal not so declared to
be due and payable may thereafter be declared to be due and payable), and
thereupon the principal of the Loans so declared to be due and payable, together
with accrued interest thereon and all fees and other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents (including, without limitation, the payment of cash collateral to
secure the LC Exposure as provided in Section 2.08(j)), shall become due and
payable immediately, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other notice of any kind, all of which are
hereby waived by the Borrower and each Guarantor; and in case of an Event of
Default described in Section 10.01(h), Section 10.01(i) or Section 10.01(j), the
Commitments shall automatically terminate and the Notes and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
the other obligations of the Borrower and the Guarantors accrued hereunder and
under the Notes and the other Loan Documents (including, without limitation, the
payment of cash collateral to secure the LC Exposure as provided in Section
2.08(j)), shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor.
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  (b)        In
the case of the occurrence of an Event of Default, the Administrative Agent and
the Lenders will have all other rights and remedies available at law and
equity.
  (c)        All
proceeds realized from the liquidation or other disposition of collateral or
otherwise received after maturity of the Notes, whether by acceleration or
otherwise, shall be applied:  first, to reimbursement of expenses and
indemnities provided for in this Agreement and the Security Instruments; second,
to accrued interest on the Notes; third, to fees; fourth, pro rata to principal
outstanding on the Notes, to Indebtedness referred to in Clause (b) of the
definition of Indebtedness and to serve as cash collateral to be held by the
Administrative Agent to secure the LC Exposure, in each case, owing to a Lender
or an Affiliate of a Lender; fifth, to any other Indebtedness; and any excess
shall be paid to the Borrower or as otherwise required by any Governmental
Requirement.
  Section
10.03          Disposition of
Proceeds.  The Security Instruments contain an assignment by
the Borrower and/or the Guarantors unto and in favor of the Administrative Agent
for the benefit of the Lenders of all of the Borrower’s or each Guarantor’s
interest in and to production and all proceeds attributable thereto which may be
produced from or allocated to the Mortgaged Property.  The Security
Instruments further provide in general for the application of such proceeds to
the satisfaction of the Indebtedness and other obligations described therein and
secured thereby.  Notwithstanding the assignment contained in such
Security Instruments, except after the occurrence and during the continuance of
an Event of Default, (a) the Administrative Agent and the Lenders agree that
they will neither notify the purchaser or purchasers of such production nor take
any other action to cause such proceeds to be remitted to the Administrative
Agent or the Lenders, but the Lenders will instead permit such proceeds to be
paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize
the Administrative Agent to take such actions as may be necessary to cause such
proceeds to be paid to the Borrower and/or its Subsidiaries.
  ARTICLE
XI
 The
Administrative Agent
  Section
11.01           Appointment;
Powers.  Each of the Lenders and each Issuing Bank hereby
irrevocably appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
  Section
11.02          Duties and Obligations of
Administrative Agent.  The Administrative Agent shall have no
duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the generality of the foregoing, (a) the
Administrative Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing (the use
of the term “agent” herein and in the other Loan Documents with reference to the
Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law;
rather, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties), (b) the Administrative
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  Agent
shall have no duty to take any discretionary action or exercise any
discretionary powers, except as provided in Section 11.03, and (c) except as
expressly set forth herein, the Administrative Agent shall have no duty to
disclose, and shall not be liable for the failure to disclose, any information
relating to the Borrower or any of its Subsidiaries that is communicated to or
obtained by the bank serving as Administrative Agent or any of its Affiliates in
any capacity.  The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by the Borrower or a Lender, and shall not be responsible
for or have any duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with this Agreement or any other Loan
Document, (ii) the contents of any certificate, report or other document
delivered hereunder or under any other Loan Document or in connection herewith
or therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or in any other Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of
this Agreement, any other Loan Document or any other agreement, instrument or
document, (v) the satisfaction of any condition set forth in Article VI or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent, (vi) the existence, value, perfection
or priority of any collateral security or the financial or other condition of
the Borrower and its Subsidiaries or any other obligor or guarantor, or (vii)
any failure by the Borrower or any other Person (other than itself) to perform
any of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein.  For purposes of determining
compliance with the conditions specified in Article VI, each Lender shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document or other matter required thereunder to be consented to or approved
by or acceptable or satisfactory to a Lender unless the Administrative Agent
shall have received written notice from such Lender prior to the proposed
closing date specifying its objection thereto.
  Section
11.03          Action by
Agent.  The Administrative Agent shall have no duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby or by the other Loan Documents
that the Administrative Agent is required to exercise in writing as directed by
the Majority Lenders (or such other number or percentage of the Lenders as shall
be necessary under the circumstances as provided in Section 12.02) and in all
cases the Administrative Agent shall be fully justified in failing or refusing
to act hereunder or under any other Loan Documents unless it shall (a) receive
written instructions from the Majority Lenders or the Lenders, as applicable,
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.02) specifying the action to be
taken and (b) be indemnified to its satisfaction by the Lenders against any and
all liability and expenses which may be incurred by it by reason of taking or
continuing to take any such action.  The instructions as aforesaid and
any action taken or failure to act pursuant thereto by the Administrative Agent
shall be binding on all of the Lenders.  If a Default has occurred and
is continuing, then the Administrative Agent shall take such action with respect
to such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Section 11.03, provided that, unless and
until the Administrative Agent shall have received such directions, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to
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  such
Default as it shall deem advisable in the best interests of the
Lenders.  In no event, however, shall the Administrative Agent be
required to take any action which exposes the Administrative Agent to personal
liability or which is contrary to this Agreement, the Loan Documents or
applicable law.  If a Default has occurred and is continuing, the
Syndication Agents and the Co-Documentation Agents shall have no obligation to
perform any act in respect thereof.  No Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Majority Lenders or the Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
12.02), and otherwise the Administrative Agent shall not be liable for any
action taken or not taken by it hereunder or under any other Loan Document or
under any other document or instrument referred to or provided for herein or
therein or in connection herewith or therewith INCLUDING ITS OWN ORDINARY
NEGLIGENCE, except for its own gross negligence or willful
misconduct.
  Section
11.04          Reliance by
Agent.  Each Agent shall be entitled to rely upon, and shall
not incur any liability for relying upon, any notice, request, certificate,
consent, statement, instrument, document or other writing believed by it to be
genuine and to have been signed or sent by the proper Person.  Each
Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any
liability for relying thereon and each of the Borrower, the Lenders and each
Issuing Bank hereby waives the right to dispute such Agent’s record of such
statement, except in the case of gross negligence or willful misconduct by such
Agent.  Each Agent may consult with legal counsel (who may be counsel
for the Borrower), independent accountants and other experts selected by it, and
shall not be liable for any action taken or not taken by it in accordance with
the advice of any such counsel, accountants or experts.  The Agents
may deem and treat the payee of any Note as the holder thereof for all purposes
hereof unless and until a written notice of the assignment or transfer thereof
permitted hereunder shall have been filed with the Administrative
Agent.
  Section
11.05          Subagents.  The
Administrative Agent may perform any and all its duties and exercise its rights
and powers by or through any one or more sub-agents appointed by the
Administrative Agent.  The Administrative Agent and any such sub-agent
may perform any and all its duties and exercise its rights and powers through
their respective Related Parties.  The exculpatory provisions of the
preceding Sections of this Article XI shall apply to any such sub-agent and
to the Related Parties of the Administrative Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as
Agent.
  Section
11.06          Resignation or Removal of
Agents.  Subject to the appointment and acceptance of a
successor Agent as provided in this Section 11.06, any Agent may resign at any
time by notifying the Lenders, each Issuing Bank and the Borrower and any Agent
may be removed at any time with or without cause by the Majority
Lenders.  Upon any such resignation or removal, the Majority Lenders
shall have the right, in consultation with the Borrower, to appoint a
successor.  If no successor shall have been so appointed by the
Majority Lenders and shall have accepted such appointment within 30 days after
the retiring Agent gives notice of its resignation or removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders and each Issuing
Bank, appoint a successor Agent.  Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become
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  vested
with all the rights, powers, privileges and duties of the retiring Agent, and
the retiring Agent shall be discharged from its duties and obligations
hereunder.  The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor.  After the Agent’s
resignation hereunder, the provisions of this Article XI and Section 12.03
shall continue in effect for the benefit of such retiring Agent, its sub-agents
and their respective Related Parties in respect of any actions taken or omitted
to be taken by any of them while it was acting as Agent.
  Section
11.07          Agents and
Lenders.  Each bank serving as an Agent hereunder shall have
the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not an Agent, and such bank and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Borrower or any Subsidiary or other Affiliate thereof
as if it were not an Agent hereunder.
  Section
11.08           No
Reliance.
  (a)        Each
Lender acknowledges that it has, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party.  Each Lender also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender and based on such documents and information as it
shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document, any related agreement or any document furnished hereunder or
thereunder.  The Agents shall not be required to keep themselves
informed as to the performance or observance by the Borrower or any of its
Subsidiaries of this Agreement, the Loan Documents or any other document
referred to or provided for herein or to inspect the Properties or books of the
Borrower or its Subsidiaries.  Except for notices, reports and other
documents and information expressly required to be furnished to the Lenders by
the Administrative Agent hereunder, no Agent and no Arranger shall have any duty
or responsibility to provide any Lender with any credit or other information
concerning the affairs, financial condition or business of the Borrower (or any
of its Affiliates) which may come into the possession of such Agent or any of
its Affiliates.  In this regard, each Lender acknowledges that Vinson
& Elkins L.L.P. is acting in this transaction as special counsel to the
Administrative Agent only, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document.  Each other party hereto will
consult with its own legal counsel to the extent that it deems necessary in
connection with the Loan Documents and the matters contemplated
therein.
  (b)        The
Lenders acknowledge that the Administrative Agent and the Arrangers are acting
solely in administrative capacities with respect to the structuring and
syndication of this facility and have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their
administrative duties, responsibilities and liabilities specifically as set
forth in the Loan Documents and in their capacity as Lenders
hereunder.  In structuring, arranging or syndicating this facility,
each Lender acknowledges that the Administrative Agent and/or Arrangers may be
agents or lenders under these Notes, other
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  loans or
other securities and waives any existing or future conflicts of interest
associated with their role in such other debt instruments.  If in its
administration of this facility or any other debt instrument, the Administrative
Agent determines (or is given written notice by any Lender) that a conflict
exists, then it shall eliminate such conflict within 90 days or resign pursuant
to Section 11.06 and shall have no liability for action taken or not taken,
other than actions taken or not taken which represent Administrative Agent’s
gross negligence or willful misconduct, while such conflict
existed.
  Section
11.09          Administrative Agent May
File Proofs of Claim.  In case of the pendency of any
receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement,
adjustment, composition or other judicial proceeding relative to the Borrower or
any of its Subsidiaries, the Administrative Agent (irrespective of whether the
principal of any Loan shall then be due and payable as herein expressed or by
declaration or otherwise and irrespective of whether the Administrative Agent
shall have made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise:
  (a)        to
file and prove a claim for the whole amount of the principal and interest owing
and unpaid in respect of the Loans and all other Indebtedness that are owing and
unpaid and to file such other documents as may be necessary or advisable in
order to have the claims of the Lenders and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders and the Administrative Agent and their respective agents and
counsel and all other amounts due the Lenders and the Administrative Agent under
Section 12.03) allowed in such judicial proceeding; and
  (b)        to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same;
  and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.
  Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such
proceeding.
  Section
11.10           Authority of Administrative
Agent to Release Collateral and Liens.  Each Lender and each
Issuing Bank hereby authorizes the Administrative Agent to release any
collateral that is permitted to be sold or released pursuant to the terms of the
Loan Documents.  Each Lender and each Issuing Bank hereby authorizes
the Administrative Agent to execute and deliver to the Borrower, at the
Borrower’s sole cost and expense, any and all releases of Liens,
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  termination
statements, assignments or other documents reasonably requested by the Borrower
in connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.
  Section
11.11          The Arrangers and the
Agents.  The Arrangers, the Syndication Agents and the
Co-Documentation Agents shall have no duties, responsibilities or liabilities
under this Agreement and the other Loan Documents other than their duties,
responsibilities and liabilities in their individual capacity as Lenders
hereunder to the extent they are a party to this Agreement as a
Lender.
  ARTICLE
XII
 Miscellaneous
  Section
12.01           Notices.
  (a)           Except
in the case of notices and other communications expressly permitted to be given
by telephone (and subject to Section 12.01(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered by
hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:
  (i)          if to the
Borrower, to it at
 Linn Energy,
LLC
 600 Travis Street,
Suite 5100
 Houston, TX
77002
  Attention: Kolja
Rockov
 Telephone:
281-840-4169
 Fax:
281-840-4189
 E-Mail:
kr@linnenergy.com
  with a copy
to:
  Linn Energy,
LLC
 600 Travis Street,
Suite 5100
 Houston, TX
77002
  Attention:  Charlene
A. Ripley
 Telephone:
281-840-4119
 Fax:  281-840-4180
 E-mail:
cripley@linnenergy.com
  (ii)         if to the
Administrative Agent, to it at
  525 Washington Blvd.,
8th floor
 Jersey City, New
Jersey 07310
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 Attention: Dina
Wilson, Loan Assistant
 Telecopy:  201-850-4020
  with a copy to the
Administrative Agent at:
  1200 Smith Street,
Suite 3100
 Houston,
Texas  77002
 Attention:  Betsy
Jocher/Donna Verwold
 Telecopy:
713-659-6915
 
 (iii)           if
to any other Lender, in their capacity as such, or any other Lender in its
capacity as an Issuing Bank, to it at its address (or telecopy number) set forth
in its Administrative Questionnaire.
  (b)        Notices
and other communications to the Lenders hereunder may be delivered or furnished
by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing
shall not apply to notices pursuant to Article II, Article III,
Article IV and Article V unless otherwise agreed by the Administrative
Agent and the applicable Lender.  The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of
such procedures may be limited to particular notices or
communications.
  (c)        Any
party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto.  All
notices and other communications given to any party hereto in accordance with
the provisions of this Agreement shall be deemed to have been given on the date
of receipt.
  Section
12.02           Waivers;
Amendments.
  (a)        No
failure on the part of the Administrative Agent, any other Agent, any Issuing
Bank or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege, or any abandonment or
discontinuance of steps to enforce such right, power or privilege, under any of
the Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege under any of the Loan
Documents preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.  The rights and remedies of the
Administrative Agent, any other Agent, each Issuing Bank and the Lenders
hereunder and under the other Loan Documents are cumulative and are not
exclusive of any rights or remedies that they would otherwise
have.  No waiver of any provision of this Agreement or any other Loan
Document or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by Section 12.02(b), and
then such waiver or consent shall be effective only in the specific instance and
for the purpose for which given.  Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any other Agent, any Lender or any Issuing Bank may have
had notice or knowledge of such Default at the time.
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  (b)        In
each instance subject to Section 4.04(c)(ii), neither this Agreement nor any
provision hereof nor any Security Instrument nor any other Loan Document nor any
provision thereof may be waived, amended or modified except pursuant to an
agreement or agreements in writing entered into by the Borrower and the Majority
Lenders or by the Borrower and the Administrative Agent with the written consent
of the Majority Lenders; provided that no such
agreement shall (i) increase the Maximum Credit Amount of any Lender without the
written consent of such Lender, (ii) increase the Borrowing Base without the
consent or deemed consent of each Lender, decrease or maintain the Borrowing
Base without the consent of the Super-Majority Lenders, or modify in any manner
Section 2.07 without the consent of each Lender, (iii) reduce the principal
amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or
reduce any fees payable hereunder, or reduce any other Indebtedness hereunder or
under any other Loan Document, without the written consent of each Lender
affected thereby, (iv) postpone the scheduled date of payment of the principal
amount of any Loan or LC Disbursement, or any interest thereon, or any fees
payable hereunder, or any other Indebtedness hereunder or under any other Loan
Document, or reduce the amount of, waive or excuse any such payment, or postpone
or extend the Termination Date or the Maturity Date without the written consent
of each Lender affected thereby, (v) change Section 4.01(b) or Section 4.01(c)
in a manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (vi) waive or amend Section 6.01,
Section 10.02(c) or Section 8.14 or change the definition of the terms “Domestic
Subsidiary”, “Foreign Subsidiary”, “Material Domestic Subsidiary” or
“Subsidiary”, without the written consent of each Lender, (vii) release any
Guarantor (except as set forth in the Guaranty Agreement), release all or a
substantial portion of the collateral (other than as provided in Section 11.10),
or reduce the percentage set forth in Section 8.14(a) to less than 80%, without
the written consent of each Lender, (viii) modify the terms of Section 10.02(c)
without the consent of each Lender adversely affected thereby and the consent of
each Person that is adversely affected hereby and a party to a Swap Agreement
secured by the Security Instruments which is not a Lender (or an Affiliate of a
Lender) at the time of such agreement, or (ix) change any of the provisions of
this Section 12.02(b) or the definition of “Majority Lenders” or “Super-Majority
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any
other Loan Documents or make any determination or grant any consent hereunder or
any other Loan Documents, without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the
Administrative Agent, any other Agent, or any Issuing Bank hereunder or under
any other Loan Document without the prior written consent of the Administrative
Agent, such other Agent or such Issuing Bank, as the case may
be.  Notwithstanding the foregoing, any supplement to
Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.
  Section
12.03            Expenses,
Indemnity; Damage Waiver.
  (a)        The
Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent, the Arrangers and their Affiliates, including, without
limitation, the reasonable fees, charges and disbursements of counsel and other
outside consultants for the Administrative Agent, the reasonable travel,
photocopy, mailing, courier, telephone and other
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  similar
expenses and, in connection with the syndication of the credit facilities
provided for herein, the preparation, negotiation, execution, delivery and
administration (both before and after the execution hereof and including advice
of counsel to the Administrative Agent as to the rights and duties of the
Administrative Agent and the Lenders with respect thereto) of this Agreement and
the other Loan Documents and any amendments, modifications or waivers of or
consents related to the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
out-of-pocket costs, expenses, Taxes, assessments and other charges incurred by
any Agent or any Lender in connection with any filing, registration, recording
or perfection of any security interest contemplated by this Agreement or any
Security Instrument or any other document referred to therein, (iii) all
reasonable out-of-pocket expenses incurred by each Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit
issued by such Issuing Bank or any demand for payment thereunder, (iv) all
out-of-pocket expenses incurred by any Agent, any Issuing Bank or any Lender,
including the fees, charges and disbursements of any counsel for any Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement or any other Loan Document,
including its rights under this Section 12.03, or in connection with the Loans
made or Letters of Credit issued hereunder, including, without limitation, all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
  (b)        THE
BORROWER SHALL INDEMNIFY EACH AGENT, THE ARRANGERS, EACH ISSUING BANK AND EACH
LENDER, AND EACH RELATED PARTY OF ANY OF THE FOREGOING PERSONS (EACH SUCH PERSON
BEING CALLED AN “INDEMNITEE”) AGAINST,
AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES,
LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND DISBURSEMENTS
OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED AGAINST ANY
INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN
EXPENSES IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND THE
OTHER LOAN DOCUMENTS DATED OF EVEN DATE HEREWITH, WHICH EXPENSES SHALL ONLY BE
PAID BY THE BORROWER TO THE EXTENT PROVIDED IN SECTION 12.03(a)) OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE
PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY OF ITS SUBSIDIARIES TO COMPLY WITH THE TERMS OF ANY LOAN
DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii)
ANY INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT
OF THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv)
ANY LOAN OR LETTER OF CREDIT OR THE USE OF THE PROCEEDS THEREFROM,
INCLUDING,
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  WITHOUT
LIMITATION, (A) ANY REFUSAL BY ANY ISSUING BANK TO HONOR A DEMAND FOR PAYMENT
UNDER A LETTER OF CREDIT ISSUED BY SUCH ISSUING BANK IF THE DOCUMENTS PRESENTED
IN CONNECTION WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH
LETTER OF CREDIT, OR (B) THE PAYMENT OF A DRAWING UNDER ANY LETTER OF CREDIT
NOTWITHSTANDING THE NON-COMPLIANCE, NON-DELIVERY OR OTHER IMPROPER PRESENTATION
OF THE DOCUMENTS PRESENTED IN CONNECTION THEREWITH, (v) ANY OTHER ASPECT OF THE
LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND ITS
SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION THAT THE
LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO THE
SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR
ITS SUBSIDIARIES OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT LIMITATION, THE
PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE, USE, TRANSPORT,
DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND GAS WASTES, SOLID
WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE BREACH OR
NON-COMPLIANCE BY THE BORROWER OR ANY OF ITS SUBSIDIARIES WITH ANY ENVIRONMENTAL
LAW APPLICABLE TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, (x) THE PAST
OWNERSHIP BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OF ANY OF THEIR PROPERTIES
OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND FULLY
PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE PRESENCE,
USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED RELEASE,
TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF OIL, OIL AND
GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES
OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OR ANY ACTUAL OR
ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED
OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH
THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A
PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE OR
MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY
SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE
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  EXTENT
THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED EXPENSES ARE
DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE
JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH INDEMNITEE.
  (c)        To
the extent that the Borrower fails to pay any amount required to be paid by it
to such Agent or any Issuing Bank under Section 12.03(a) or (b), each Lender
severally agrees to pay to such Agent or such Issuing Bank, as the case may be,
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that
the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against such
Agent or such Issuing Bank in its capacity as such.
  (d)        To
the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement, any other Loan Document or any agreement or instrument contemplated
hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of
the proceeds thereof.
  (e)        All
amounts due under this Section 12.03 shall be payable within ten (10) Business
Days of written demand therefor.
  Section
12.04           Successors and
Assigns.
  (a)        The
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns permitted hereby
(including any Affiliate of any Issuing Bank that issues any Letter of Credit),
except that (i)  the Borrower may not assign or otherwise transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this
Section 12.04.  Nothing in this Agreement, expressed or implied, shall
be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
any Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in Section 12.04(c)) and, to the extent expressly contemplated hereby,
the Related Parties of each of the Administrative Agent, each Issuing Bank and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.
  (b)        (i)           Subject
to the conditions set forth in Section 12.04(b)(ii), any Lender may assign to
one or more assignees all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:
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  (ii)           the
Borrower, provided that
no consent of the Borrower shall be required if such assignment is to a Lender
or an Affiliate of a Lender or, if an Event of Default has occurred and is
continuing, is to any other assignee; and
  (iii)           the
Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment to an assignee that
is a Lender or any Affiliate of a Lender, immediately prior to giving effect to
such assignment.
  (iv)           Assignments
shall be subject to the following additional conditions:
  (A)           except
in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment,
the amount of the Commitment of the assigning Lender subject to each such
assignment (determined as of the date the Assignment and Assumption with respect
to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consent, provided that no such consent
of the Borrower shall be required if an Event of Default has occurred and is
continuing;
  (B)           each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender’s rights and obligations under this Agreement;
  (C)           the
parties to each assignment shall execute and deliver to the Administrative Agent
an Assignment and Assumption, together with a processing and recordation fee of
$3,500; and
  (D)           the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
an Administrative Questionnaire.
  (v)           Subject
to Section 12.04(b)(iv) and the acceptance and recording thereof, from and after
the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Assumption, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03 and
Section 12.03).  Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 12.04
shall be treated for purposes of this Agreement as a sale by such Lender of a
participation in such rights and obligations in accordance with Section
12.04(c).
  (vi)           The
Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption
delivered to it and a register for the recordation of the names and addresses of
the Lenders, and the Maximum Credit Amount of, and principal amount of the Loans
and LC Disbursements
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  owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).  The
entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent, each Issuing Bank and the Lenders may treat each Person
whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the
contrary.  The Register shall be available for inspection by the
Borrower, any Issuing Bank and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.  In connection with any changes
to the Register, if necessary, the Administrative Agent will reflect the
revisions on Annex I and forward a copy of such revised Annex I to the Borrower,
each Issuing Bank and each Lender.
  (vii)           Upon its
receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in Section 12.04(b) and any written consent to such
assignment required by Section 12.04(b), the Administrative Agent shall accept
such Assignment and Assumption and record the information contained therein in
the Register.  No assignment shall be effective for purposes of this
Agreement unless it has been recorded in the Register as provided in this
Section 12.04(b).
  (c)        (i)           Any
Lender may, without the consent of the Borrower the Administrative Agent or any
Issuing Bank, sell participations to one or more banks or other entities (a
“Participant”)
in all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it); provided that (A) such
Lender’s obligations under this Agreement shall remain unchanged, (B) such
Lender shall remain solely responsible to the other parties hereto for the
performance of such obligations and (C) the Borrower, the Administrative Agent,
each Issuing Bank and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and
obligations under this Agreement.  Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that such agreement
or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver described in the
proviso to Section 12.02 that affects such Participant.  In addition
such agreement must provide that the Participant be bound by the provisions of
Section 12.03.  Subject to Section 12.04(c)(ii), the Borrower agrees
that each Participant shall be entitled to the benefits of Section 5.01, Section
5.02 and Section 5.03 to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 12.04(b).  To the
extent permitted by law, each Participant also shall be entitled to the benefits
of Section 12.08 as though it were a Lender, provided such Participant
agrees to be subject to Section 4.01(c) as though it were a Lender.
  (ii)           A
Participant shall not be entitled to receive any greater payment under Section
5.01 or Section 5.03 than the applicable Lender would have been entitled to
receive with respect to the participation sold to such Participant, unless the
sale of the participation to such Participant is made with the Borrower’s prior
written consent.  A Participant that would be a Foreign Lender if it
were a Lender shall not be entitled to the benefits
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  of
Section 5.03 unless the Borrower is notified of the participation sold to such
Participant and such Participant agrees, for the benefit of the Borrower, to
comply with Section 5.03(e) as though it were a Lender.
  (d)        Any
Lender may at any time pledge or assign a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Lender,
including any pledge or assignment to secure obligations to a Federal Reserve
Bank, and this Section 12.04(d) shall not apply to any such pledge or assignment
of a security interest; provided that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
  Section
12.05           Survival; Revival;
Reinstatement.
  (a)        All
covenants, agreements, representations and warranties made by the Borrower
herein and in the certificates or other instruments delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of this Agreement and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
such other party or on its behalf and notwithstanding that the Administrative
Agent, any other Agent, any Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated.  The provisions of Section 5.01, Section 5.02, Section
5.03, Section 12.03, Section 12.11 and Article XI shall survive and remain
in full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Letters of Credit and the Commitments or the termination of this
Agreement, any other Loan Document or any provision hereof or
thereof.
  (b)        To
the extent that any payments on the Indebtedness or proceeds of any collateral
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver or
other Person under any bankruptcy law, common law or equitable cause, then to
such extent, the Indebtedness so satisfied shall be revived and continue as if
such payment or proceeds had not been received and the Administrative Agent’s
and the Lenders’ Liens, security interests, rights, powers and remedies under
this Agreement and each Loan Document shall continue in full force and
effect.  In such event, each Loan Document shall be automatically
reinstated and the Borrower shall take such action as may be reasonably
requested by the Administrative Agent and the Lenders to effect such
reinstatement.
  Section
12.06            Counterparts; Integration;
Effectiveness.
  (a)        This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.
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  (b)        This
Agreement, the other Loan Documents and any separate letter agreements with
respect to fees payable to the Administrative Agent constitute the entire
contract among the parties relating to the subject matter hereof and thereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof and thereof.  THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO
AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE PARTIES.
  (c)        Except
as provided in Section 6.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.  Delivery of an executed counterpart of a
signature page of this Agreement by telecopy shall be effective as delivery of a
manually executed counterpart of this Agreement.
  Section
12.07          Severability.  Any
provision of this Agreement or any other Loan Document held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof or thereof; and the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
  Section
12.08          Right of
Setoff.  If an Event of Default shall have occurred and be
continuing, each Lender and each of its Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other obligations (of whatsoever kind, including,
without limitation, obligations under Swap Agreements) at any time owing by such
Lender or Affiliate to or for the credit or the account of the Borrower or any
of its Subsidiaries against any of and all the obligations of the Borrower or
any of its Subsidiaries owed to such Lender now or hereafter existing under this
Agreement or any other Loan Document, irrespective of whether or not such Lender
shall have made any demand under this Agreement or any other Loan Document and
although such obligations may be unmatured.  The rights of each Lender
under this Section 12.08 are in addition to other rights and remedies (including
other rights of setoff) which such Lender or its Affiliates may
have.
  Section
12.09           GOVERNING LAW; JURISDICTION;
CONSENT TO SERVICE OF PROCESS.
  (a)        THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF TEXAS EXCEPT TO THE EXTENT THAT UNITED STATES FEDERAL
LAW PERMITS ANY LENDER TO CONTRACT FOR, CHARGE, RECEIVE, RESERVE OR TAKE
INTEREST AT THE RATE ALLOWED BY THE LAWS OF THE STATE WHERE SUCH LENDER
IS
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  LOCATED.  CHAPTER
346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS AGREEMENT OR
THE NOTES.
  (b)        ANY
LEGAL ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT
IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, EACH PARTY HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT
PERMITTED BY LAW) IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE
JURISDICTION OF THE AFORESAID COURTS.  EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.  THIS SUBMISSION TO JURISDICTION IS
NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM OBTAINING JURISDICTION OVER
ANOTHER PARTY IN ANY COURT OTHERWISE HAVING JURISDICTION.
  (c)        EACH
PARTY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT THE ADDRESS
SPECIFIED IN SECTION 12.01 OR SUCH OTHER ADDRESS AS IS SPECIFIED PURSUANT TO
SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION), SUCH SERVICE TO BECOME
EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL
AFFECT THE RIGHT OF A PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST ANOTHER PARTY IN ANY OTHER JURISDICTION.
  (d)        EACH
PARTY HEREBY (i) IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii)
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT
MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO
ENTER INTO THIS AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS
CONTEMPLATED
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  HEREBY
AND THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
CONTAINED IN THIS SECTION 12.09.
  Section
12.10          Headings.  Article
and Section headings and the Table of Contents used herein are for convenience
of reference only, are not part of this Agreement and shall not affect the
construction of, or be taken into consideration in interpreting, this
Agreement.
  Section
12.11          Confidentiality.  Each
of the Agents, each Issuing Bank and the Lenders agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates’ directors, officers, employees
and agents, including accountants, legal counsel and other advisors (it being
understood that the Persons to whom such disclosure is made will be informed of
the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory
authority or self-regulatory body, (c) to the extent required by applicable laws
or regulations or by any subpoena or similar legal process, (d) to any other
party to this Agreement or any other Loan Document, (e) in connection with the
exercise of any remedies hereunder or under any other Loan Document or any suit,
action or proceeding relating to this Agreement or any other Loan Document or
the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section 12.11, to
(i) any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and their obligations, (g) with the consent of the
Borrower, (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent, any Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower, or (i) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender.  For the purposes of this Section 12.11,
“Information”
means all information received from the Borrower or any of its Subsidiaries
relating to the Borrower or any of its Subsidiaries and their businesses, other
than any such information that is available to the Administrative Agent, any
Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by the
Borrower or any of its Subsidiaries; provided that, in the case of
information received from the Borrower, or any of its Subsidiaries after the
date hereof, such information is clearly identified at the time of delivery as
confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section 12.11 shall be considered to have
complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information.
  Each
Lender acknowledges that information furnished to it pursuant to this Agreement
or the other Loan Documents may include material non-public information
concerning the Borrower and its Affiliates and their related parties or their
respective securities, and confirms that it has developed compliance procedures
regarding the use of material non-public information and agrees that it will
handle such material non-public information in accordance with those procedures
and applicable law, including federal and state securities laws.
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  All
information, including requests for waivers and amendments, furnished by the
Borrower or the Administrative Agent pursuant to, or in the course of
administering, this Agreement or the other Loan Documents will be
syndicate-level information, which may contain material non-public information
about the Borrower and its Affiliates and their related parties or their
respective securities.  Accordingly, each Lender represents to the
Borrower and the Administrative Agent that it has identified in its
Administrative Questionnaire a credit contact who may receive information that
may contain material non-public information in accordance with its compliance
procedures and applicable law, including federal and state securities
laws.
  Section
12.12          Interest Rate
Limitation.  It is the intention of the parties hereto that
each Lender shall conform strictly to usury laws applicable to
it.  Accordingly, if the transactions contemplated hereby would be
usurious as to any Lender under laws applicable to it (including the laws of the
United States of America and the State of Texas or any other jurisdiction whose
laws may be mandatorily applicable to such Lender notwithstanding the other
provisions of this Agreement), then, in that event, notwithstanding anything to
the contrary in any of the Loan Documents or any agreement entered into in
connection with or as security for the Notes, it is agreed as
follows:  (a) the aggregate of all consideration which constitutes
interest under law applicable to any Lender that is contracted for, taken,
reserved, charged or received by such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Notes shall under no
circumstances exceed the maximum amount allowed by such applicable law, and any
excess shall be canceled automatically and if theretofore paid shall be credited
by such Lender on the principal amount of the Indebtedness (or, to the extent
that the principal amount of the Indebtedness shall have been or would thereby
be paid in full, refunded by such Lender to the Borrower); and (b) in the event
that the maturity of the Notes is accelerated by reason of an election of the
holder thereof resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower).  All sums paid or agreed to
be paid to any Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by law applicable to such Lender, be
amortized, prorated, allocated and spread throughout the stated term of the
Loans evidenced by the Notes until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the maximum amount
allowed by such applicable law.  If at any time and from time to time
(i) the amount of interest payable to any Lender on any date shall be computed
at the Highest Lawful Rate applicable to such Lender pursuant to this Section
12.12 and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been
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  payable
to such Lender if the total amount of interest had been computed without giving
effect to this Section 12.12.  To the extent that Chapter 303 of the
Texas Finance Code is relevant for the purpose of determining the Highest Lawful
Rate applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in
effect.  Chapter 346 of the Texas Finance Code does not apply to the
Borrower’s obligations hereunder.
  Section
12.13          EXCULPATION
PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY AGREES
THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND
AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS
AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL
COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS
ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT
IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF
THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH
LIABILITY.  EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT
CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE
OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
“CONSPICUOUS.”
  Section
12.14          Collateral Matters; Swap
Agreements.  The benefit of the Security Instruments and of the
provisions of this Agreement relating to any collateral securing the
Indebtedness shall also extend to and be available to those Lenders or their
Affiliates which are counterparties to any Swap Agreement with the Borrower or
any of its Subsidiaries on a pro rata basis in respect of any obligations of the
Borrower or any of its Subsidiaries which arise under any such Swap Agreement,
including any Swap Agreements between such Persons in existence prior to the
date hereof.  No Lender or any Affiliate of a Lender shall have any
voting rights under any Loan Document as a result of the existence of
obligations owed to it under any such Swap Agreements.
  Section
12.15          No Third Party
Beneficiaries.  This Agreement, the other Loan Documents, and
the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend,
renew or extend Letters of Credit hereunder are solely for the benefit of the
Borrower, and no other Person (including, without limitation, any Subsidiary of
the Borrower, any obligor, contractor, subcontractor, supplier or materialsman)
shall have any rights, claims, remedies or privileges hereunder or under any
other Loan Document against the Administrative Agent, any other Agent, the
Issuing Bank or any Lender for any reason whatsoever.  There are no
third party beneficiaries.
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  Section
12.16          USA Patriot Act
Notice.  Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required
to obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender to identify the Borrower in accordance with the
Act.
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  The
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.
  BORROWER:                                          LINN
ENERGY, LLC
   By: /s/ Kolja
Rockov
 Name:
Kolja Rockov
 Title:   Executive
Vice President and Chief Financial Officer
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PAGE 1
  BNP PARIBAS, as Administrative
Agent, Syndication Agent and a Lender
   By: /s/ Doug
Liftman
 Name:
Doug Liftman
 Title:   Managing
Director
   By: /s/ Betsy
Jocher
 Name:
Betsy Jocher
 Title:   Director
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PAGE 2
  ROYAL BANK OF CANADA, as
Syndication Agent and a Lender
  By: /s/ Don J.
McKinnerney
 Name:
Don J.
McKinnerney
 Title:
Authorized
Signatory
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PAGE 3
  THE ROYAL BANK OF SCOTLAND
plc, as a Co-Documentation Agent and a Lender
  By:  /s/ Lucy
Walker
 Name:
Lucy Walker
 Title:
Vice President
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PAGE 4
  CITIBANK, NA, as a
Co-Documentation Agent and a Lender
   By:  /s/ Todd
Mogil
 Name:
Todd Mogil
 Title:
Vice President
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  CALYON NEW YORK BRANCH, as a
Co-Documentation Agent and a Lender
   By: /s/ Tom
Byargeon
 Name: Tom
Byargeon
 Title:
Managing Director
  By: /s/ Sharada
Manne
 Name:
Sharada Manne
 Title:
Director
 
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  BARCLAYS BANK plc, as a
Co-Documentation Agent and a Lender
   By: /s/ Maria
Lund
 Name:
Maria Lund
 Title:
Vice President
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PAGE 7
  THE BANK OF NOVA SCOTIA, as a
Lender
   By: /s/ David
Mills
 Name:
David Mills
 Title:
Managing Director
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PAGE 8
  BANK OF MONTREAL, as a
Lender
   By: /s/ James V.
Ducote
 Name:
James V. Ducote
 Title:
Director
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PAGE 9
  WACHOVIA BANK, N.A., as a
Lender
   By: /s/ Henry R.
Biedrzycki
 Name:
Henry R. Biedrzycki
 Title:
Director
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  SOCIETE GENERALE, as a
Lender
   By: /s/ Stephen W.
Warfel
 Name:
Stephen W. Warfel
 Title:
Managing Director
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  COMERICA BANK, as a
Lender
   By: /s/ Greg
Smith
 Name:
Greg Smith
 Title:
Senior Vice President
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PAGE 12
  ING CAPITAL LLC, as a
Lender
   By: /s/ Charles
Hall
 Name:
Charles Hall
 Title:
Managing Director
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PAGE 13
  FORTIS CAPITAL CORP., as a
Lender
   By: /s/ David
Montgomery
 Name:
David Montgomery
 Title:
Director
   By: /s/ Darrell
Holley
 Name:
Darrell Holley
 Title:
Managing Director
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PAGE 14
  KEYBANK NATIONAL ASSOCIATION,
as a Lender
   By: /s/ Todd
Coker
 Name:
Todd Coker
 Title:
AVP
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PAGE 15
  CREDIT SUISSE, CAYMAN
 ISLANDS BRANCH as a
Lender
   By: /s/ Nupur
Kumar
 Name:
Nupur
Kumar
 Title:
Vice
President
   By: /s/ Christopher Reo
Day
 Name:
Christopher Reo
Day
 Title:
Associate
 
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  COMPASS BANK, as a
Lender
   By: /s/ Greg
Determann
 Name:
Greg Determann
 Title:   Vice
President
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PAGE 17
  DnB NOR BANK ASA, as a
Lender
   By: /s/ Philip F.
Kurpiewski
 Name:
Philip F.
Kurpiewski
 Title:
Senior Vice
President
   By: /s/ Alfred C. Jones
III
 Name:
Alfred C. Jones
III
 Title:
Senior Vice
President
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  DZ
BANK AG, DEUTSCHE ZENTRAL-GENOSSENSCHAFTSBANK, FRANKFURT AM MAIN, NEW YORK
BRANCH, as a Lender
   By: /s/ Darla A.
Plahle
 Name:
Darla A.
Plahle
 Title:
First Vice
President
   By: /s/ John
Hammarskjold
 Name:
John
Hammarskjold
 Title:
Vice
President
 
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  UNION BANK OF CALIFORNIA,
N.A., as a Lender
   By: /s/ Scott
Gildea
 Name:
Scott
Gildea
 Title:
Vice
President
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  U.S. BANK NATIONAL
ASSOCIATION, as a Lender
  By: /s/ Justin M.
Alexander
 Name:
Justin M.
Alexander
 Title:
Vice
President
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  ALLIED IRISH BANKS
P.L.C., as a Lender
   By: /s/ Vaughn
Buck
 Name:
Vaughn Buck
 Title:
Executive Vice President
   By: /s/ Mark
Connelly
 Name:
Mark Connelly
 Title:
Senior Vice President
 
 
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