EX-10.2



 







EXHIBIT 10.2




Execution Version




Second Lien Bridge Loan Agreement




Dated as of




August 1, 2006




among




Linn Energy, LLC,




as Borrower,




BNP Paribas,




as Administrative Agent,




Royal Bank of Canada,




as Syndication Agent,




Societe Generale,

Citicorp North America, Inc. and

McDonald Investments Inc.,




as Co-Documentation Agents




and




The Lenders Party Hereto




Joint Lead Arrangers and Joint Book Runners




					
	BNP Paribas
	 	 
	 	RBC Capital Markets






 









 






TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I

DEFINITIONS AND ACCOUNTING MATTERS
	 	 	 	 
	 
	 	 	 	 
	Section 1.01 Terms Defined Above
	 	 	1	 
	Section 1.02 Certain Defined Terms
	 	 	1	 
	Section 1.03 Types of Loans and Tranches
	 	 	18	 
	Section 1.04 Terms Generally
	 	 	18	 
	Section 1.05 Accounting Terms and Determinations; GAAP
	 	 	18	 
	 
	 	 	 	 
	ARTICLE II

THE CREDITS
	 	 	 	 
	 
	 	 	 	 
	Section 2.01 Term Loans
	 	 	18	 
	Section 2.02 Loans and Tranches
	 	 	19	 
	Section 2.03 Requests for the Loans
	 	 	20	 
	Section 2.04 Interest Elections
	 	 	20	 
	Section 2.05 Funding of Tranches
	 	 	22	 
	Section 2.06 Termination
	 	 	22	 
	Section 2.07 Subordination of Loans
	 	 	22	 
	 
	 	 	 	 
	ARTICLE III

PAYMENTS OF PRINCIPAL AND INTEREST; PREPAYMENTS; FEES
	 	 	 	 
	 
	 	 	 	 
	Section 3.01 Repayment of Loans
	 	 	23	 
	Section 3.02 Interest
	 	 	23	 
	Section 3.03 Alternate Rate of Interest
	 	 	23	 
	Section 3.04 Optional Prepayments
	 	 	24	 
	Section 3.05 Mandatory Prepayments
	 	 	24	 
	Section 3.06 Fees
	 	 	25	 
	 
	 	 	 	 
	ARTICLE IV

PAYMENTS; PRO RATA TREATMENT; SHARING OF SET-OFFS
	 	 	 	 
	 
	 	 	 	 
	Section 4.01 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
	 	 	25	 
	Section 4.02 Presumption of Payment by the Borrower
	 	 	26	 
	Section 4.03 Certain Deductions by the Administrative Agent
	 	 	26	 
	 
	 	 	 	 
	ARTICLE V

INCREASED COSTS; BREAK FUNDING PAYMENTS; TAXES; ILLEGALITY
	 	 	 	 
	 
	 	 	 	 
	Section 5.01 Increased Costs
	 	 	27	 
	Section 5.02 Break Funding Payments
	 	 	28	 
	Section 5.03 Taxes
	 	 	28	 
	Section 5.04 Designation of Different Lending Office
	 	 	29	 
	Section 5.05 Illegality
	 	 	29	 
	 
	 	 	 	 
	ARTICLE VI

CONDITIONS PRECEDENT
	 	 	 	 






i









 






	 	 	 	 	 
	 	 	Page
	Section 6.01 Effective Date
	 	 	30	 
	Section 6.02 Additional Conditions
	 	 	32	 
	Section 6.03 Kaiser Francis
	 	 	32	 
	Section 6.04 Blacksand
	 	 	34	 
	 
	 	 	 	 
	ARTICLE VII

REPRESENTATIONS AND WARRANTIES
	 	 	 	 
	 
	 	 	 	 
	Section 7.01 Organization; Powers
	 	 	37	 
	Section 7.02 Authority; Enforceability
	 	 	37	 
	Section 7.03 Approvals; No Conflicts
	 	 	37	 
	Section 7.04 Financial Position; No Material Adverse Change
	 	 	37	 
	Section 7.05 Litigation
	 	 	38	 
	Section 7.06 Environmental Matters
	 	 	38	 
	Section 7.07 Compliance with the Laws and Agreements; No Defaults
	 	 	39	 
	Section 7.08 Investment Company Act
	 	 	39	 
	Section 7.09 Taxes
	 	 	40	 
	Section 7.10 ERISA
	 	 	40	 
	Section 7.11 Disclosure; No Material Misstatements
	 	 	41	 
	Section 7.12 Insurance
	 	 	41	 
	Section 7.13 Restriction on Liens
	 	 	42	 
	Section 7.14 Subsidiaries
	 	 	42	 
	Section 7.15 Location of Business and Offices
	 	 	42	 
	Section 7.16 Properties; Titles, Etc
	 	 	42	 
	Section 7.17 Maintenance of Properties
	 	 	43	 
	Section 7.18 Gas Imbalances, Prepayments
	 	 	43	 
	Section 7.19 Marketing of Production
	 	 	44	 
	Section 7.20 Swap Agreements
	 	 	44	 
	Section 7.21 Use of Loans
	 	 	44	 
	Section 7.22 Solvency
	 	 	44	 
	Section 7.23 Acquisitions
	 	 	45	 
	 
	 	 	 	 
	ARTICLE VIII

AFFIRMATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 8.01 Financial Statements; Ratings Change; Other Information
	 	 	45	 
	Section 8.02 Notices of Material Events
	 	 	48	 
	Section 8.03 Existence; Conduct of Business
	 	 	48	 
	Section 8.04 Payment of Obligations
	 	 	48	 
	Section 8.05 Performance of Obligations under Loan Documents
	 	 	48	 
	Section 8.06 Operation and Maintenance of Properties
	 	 	49	 
	Section 8.07 Insurance
	 	 	49	 
	Section 8.08 Books and Records; Inspection Rights
	 	 	50	 
	Section 8.09 Compliance with Laws
	 	 	50	 
	Section 8.10 Environmental Matters
	 	 	50	 
	Section 8.11 Further Assurances
	 	 	51	 
	Section 8.12 Reserve Reports
	 	 	52	 
	Section 8.13 Title Information
	 	 	52	 
	Section 8.14 Additional Collateral; Additional Guarantors
	 	 	53	 






ii









 






	 	 	 	 	 
	 	 	Page
	Section 8.15 ERISA Compliance
	 	 	54	 
	Section 8.16 Marketing Activities
	 	 	55	 
	Section 8.17 Permanent Securities
	 	 	55	 
	 
	 	 	 	 
	ARTICLE IX

NEGATIVE COVENANTS
	 	 	 	 
	 
	 	 	 	 
	Section 9.01 Financial Covenants
	 	 	55	 
	Section 9.02 Debt
	 	 	56	 
	Section 9.03 Liens
	 	 	56	 
	Section 9.04 Dividends, Distributions and Redemptions
	 	 	57	 
	Section 9.05 Investments, Loans and Advances
	 	 	57	 
	Section 9.06 Nature of Business
	 	 	58	 
	Section 9.07 Limitation on Leases
	 	 	58	 
	Section 9.08 Proceeds of Notes
	 	 	59	 
	Section 9.09 ERISA Compliance
	 	 	59	 
	Section 9.10 Sale or Discount of Receivables
	 	 	60	 
	Section 9.11 Mergers, Etc.
	 	 	60	 
	Section 9.12 Sale of Properties
	 	 	60	 
	Section 9.13 Environmental Matters
	 	 	61	 
	Section 9.14 Transactions with Affiliates
	 	 	61	 
	Section 9.15 Subsidiaries
	 	 	61	 
	Section 9.16 Negative Pledge Agreements; Dividend Restrictions
	 	 	61	 
	Section 9.17 Gas Imbalances, Take-or-Pay or Other Prepayments
	 	 	61	 
	Section 9.18 Swap Agreements
	 	 	61	 
	Section 9.19 Tax Status as Partnership; Operating Agreements
	 	 	62	 
	Section 9.20 Anti-Layering
	 	 	62	 
	 
	 	 	 	 
	ARTICLE X

EVENTS OF DEFAULT; REMEDIES
	 	 	 	 
	 
	 	 	 	 
	Section 10.01 Events of Default
	 	 	62	 
	Section 10.02 Remedies
	 	 	64	 
	Section 10.03 Disposition of Proceeds
	 	 	65	 
	 
	 	 	 	 
	ARTICLE XI

THE ADMINISTRATIVE AGENT
	 	 	 	 
	 
	 	 	 	 
	Section 11.01 Appointment; Powers
	 	 	65	 
	Section 11.02 Duties and Obligations of Administrative Agent
	 	 	65	 
	Section 11.03 Action by Agent
	 	 	66	 
	Section 11.04 Reliance by Agent
	 	 	67	 
	Section 11.05 Subagents
	 	 	67	 
	Section 11.06 Resignation or Removal of Agents
	 	 	67	 
	Section 11.07 Agents and Lenders
	 	 	68	 
	Section 11.08 No Reliance
	 	 	68	 
	Section 11.09 Administrative Agent May File Proofs of Claim
	 	 	69	 
	Section 11.10 Authority of Administrative Agent to Release Collateral and Liens
	 	 	69	 
	Section 11.11 The Arrangers and the Agents
	 	 	70	 






iii









 






	 	 	 	 	 
	 	 	Page
	ARTICLE XII

MISCELLANEOUS
	 	 	 	 
	 
	 	 	 	 
	Section 12.01 Notices
	 	 	70	 
	Section 12.02 Waivers; Amendments
	 	 	71	 
	Section 12.03 Expenses, Indemnity; Damage Waiver
	 	 	72	 
	Section 12.04 Successors and Assigns
	 	 	74	 
	Section 12.05 Survival; Revival; Reinstatement
	 	 	77	 
	Section 12.06 Counterparts; Integration; Effectiveness
	 	 	78	 
	Section 12.07 Severability
	 	 	78	 
	Section 12.08 Right of Setoff
	 	 	78	 
	Section 12.09 GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS
	 	 	78	 
	Section 12.10 Headings
	 	 	80	 
	Section 12.11 Confidentiality
	 	 	80	 
	Section 12.12 Interest Rate Limitation
	 	 	80	 
	Section 12.13 EXCULPATION PROVISIONS
	 	 	81	 
	Section 12.14 No Third Party Beneficiaries
	 	 	82	 
	Section 12.15 USA Patriot Act Notice
	 	 	82	 






iv









 






ANNEXES, EXHIBITS AND SCHEDULES




	 	 	 
	Annex I
	 	Commitments
	Annex II
	 	Terms of Subordination
	 
	 	 
	Exhibit A
	 	Form of Note
	Exhibit B
	 	Form of Compliance Certificate
	Exhibit C-1
	 	Security Instruments
	Exhibit C-2
	 	Kaiser Francis Security Instruments
	Exhibit C-3
	 	Blacksand Security Instruments
	Exhibit D
	 	Form of Assignment and Assumption
	 
	 	 
	Schedule 7.05
	 	Litigation
	Schedule 7.11
	 	Material Agreements
	Schedule 7.14
	 	Subsidiaries and Partnerships
	Schedule 7.18
	 	Gas Imbalances
	Schedule 7.19
	 	Marketing Contracts
	Schedule 7.20
	 	Swap Agreements






v









 






     THIS SECOND LIEN BRIDGE LOAN AGREEMENT dated as of August 1, 2006, 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 Societe Generale, Citicorp North America, Inc. and McDonald Investments Inc., a
subsidiary of KeyCorp, as co-documentation agents (in such capacities, together with its successors
in such capacity, the “Co-Documentation Agents”) for the Lenders.



R E C I T A L S




     A. The Borrower has requested that the Lenders provide a $250,000,000 second lien multiple
advance bridge loan facility to the Borrower.



     B. Each Lender has severally agreed to make its ratable portion of such loans subject to the
terms and conditions of this Agreement.



     C. Now, therefore, in consideration of the mutual covenants and agreements herein contained
and of the loans and commitments hereinafter referred to, the parties hereto agree as follows:



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 Tranche, refers to whether such Loan, or the
Loans comprising such Tranche, 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 Portions” 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 Agent, any Co-Documentation
Agent or any combination of them as the context requires.



     “Agreement” means this Second Lien Bridge Loan Agreement, as the same may from time to
time be amended, modified, supplemented or restated.



     “Alternate Base Rate” means, for any day, a rate per annum equal to the greatest of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such
day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the
Federal Funds Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.



     “Applicable Margin” means (a) with respect to each Eurodollar Tranche, a rate per
annum equal to 4.00%; and (b) with respect to each ABR Tranche, a rate per annum equal to 2.50%.



     “Approved Counterparty” means (a) any “Lender” as such term is defined under the
Senior Revolving Credit Agreement or any Affiliate of such Lender or (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.



     “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 and
including the date that is the earlier of (a) 60 days from the Effective Date or (b) the date that
the Commitments are terminated or cancelled.



     “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 on hand at the end of
such fiscal quarter; and (ii) all additional cash and cash equivalents of the Borrower on hand on
the date of determination of Available Cash with respect to 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 (including reserves for
future capital expenditures including drilling and acquisitions and for anticipated future credit
needs of the Borrower), (ii) comply with applicable law or any loan agreement, security agreement,
mortgage, debt instrument or other agreement or obligation to which the Borrower or an Affiliate 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.



Second Lien Bridge Loan Agreement - 2






 









 








     “Blacksand Acquisition” means the acquisition of 100% of the Equity Interests of
certain Wholly-Owned Subsidiaries of Blacksand Energy, LLC, which include certain oil, gas and
mineral Properties pursuant to the terms and conditions of the Blacksand Acquisition Documents.



     “Blacksand Acquisition Documents” means (a) the Purchase and Sale Agreement between
Blacksand Energy, LLC, as Seller, and Borrower, as Buyer, dated July 19, 2006, and (b) all bills of
sale, assignments, agreements, instruments and documents executed and delivered in connection
therewith, as amended.



     “Blacksand Acquisition Properties” means the Oil and Gas Properties and other
properties owned by Blacksand Energy, LLC through its Wholly-Owned Subsidiaries acquired by the
Borrower or any Guarantor pursuant to the Blacksand Acquisition Documents.



     “Blacksand Commitment” means that portion of the Commitments attributable to the
Blacksand Acquisition, as set forth on Annex I.



     “Board” means the Board of Governors of the Federal Reserve System of the United
States of America or any successor Governmental Authority.



     “Borrowing Request” means a request by the Borrower for the Loans in accordance with
Section 2.03.



     “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 Tranche 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
Tranche or a notice by the Borrower with respect to any such Tranche 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
$100,000 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”), other than one or more of the Permitted Holders, 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



Second Lien Bridge Loan Agreement - 3





 









 







(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, for purposes of Section 5.01(b), by any lending office of such Lender
or by such Lender’s holding company, if any) with any request, guideline or directive (whether or
not having the force of law) of any Governmental Authority made or issued after the date of this
Agreement.



     “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
its Loans during the Availability Period hereunder and “Commitments” means the aggregate amount of
the Commitments of all Lenders. The amount of each Lender’s Commitment is set forth on Annex I.



     “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) the net income (or loss) of any Person acquired
in a pooling-of-interests transaction for any period prior to the date of such transaction; (d) any
extraordinary gains or losses during such period; (e) non-cash gains, losses or adjustments under
FASB Statement No. 133 as a result of changes in the fair market value of derivatives; (f) any
gains or losses attributable to writeups or writedowns of assets, including ceiling test
writedowns; (g) the one-time bonuses paid by the Borrower to employees in connection with its
initial public offering and (h) 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.



Second Lien Bridge Loan Agreement - 4





 









 








     “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.



     “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 in 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;
(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.



     “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



Second Lien Bridge Loan Agreement - 5




 









 







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 or
other obligations hereunder outstanding.




     “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.



     “Effective Date” means the date on which the conditions specified in Section 6.01 are
satisfied (or waived in accordance with Section 12.02).



     “Environmental Laws” means any and all Governmental Requirements pertaining in any way
to health, safety the environment or the preservation or reclamation of natural resources, in
effect in any and all jurisdictions in which the Borrower or any of its Subsidiaries is conducting
or at any time has conducted business, or where any Property of the Borrower or any of its
Subsidiaries 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, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection Governmental Requirements. 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 have the meaning specified in Section 91.1011 of the
Texas Natural Resources Code (“Section 91.1011”); provided, however, that (a) in the event
either OPA, CERCLA, RCRA or Section 91.1011 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 of its Subsidiaries 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 91.1011, such broader meaning shall apply.



     “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



Second Lien Bridge Loan Agreement - 6





 









 







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) 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 of a notice of withdrawal liability
pursuant to Section 4202 of ERISA 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.



     “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



Second Lien Bridge Loan Agreement - 7





 









 







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 such 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) 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 such 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 and (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; 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 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), except to the extent that 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 or Section 5.03(c).



Second Lien Bridge Loan Agreement - 8





 









 








     “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
necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received
by the Administrative Agent from three Federal funds brokers of recognized standing selected by it.



     “Financial Officer” means, for any Person, the chief financial officer, principal
accounting officer, treasurer or controller of such Person. Unless otherwise specified, all
references herein to a Financial Officer 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.



     “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 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 (a) Linn Energy Holdings, LLC, (b) Linn Operating, Inc., (c) Mid
Atlantic Well Services Inc., (d) Penn West Pipeline, LLC, (e) Linn Energy Western Holdings, LLC,
(f) Linn Energy Mid-Continent Holdings, LLC, (g) Linn Western Operating, Inc., (h) Linn Western
Processing, LLC and, after the Blacksand Acquisition, the entities currently known as (i) Blacksand
Acquisition, LLC, (j) Blacksand GP, LLC, (k) Blacksand Brea, LLC, (l) Blacksand Partners, LP and
(m) each other Material Domestic Subsidiary or other Domestic Subsidiary that guarantees the
Indebtedness pursuant to Section 8.14(b).



Second Lien Bridge Loan Agreement - 9





 









 








     “Guaranty Agreement” means an agreement executed by the Guarantors in form and
substance reasonably satisfactory to the Administrative Agent 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.



     “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 any and all amounts owing or to be owing by the Borrower, any of
its Subsidiaries 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 or any Lender under any Loan Document and (b) all renewals, extensions
and/or rearrangements of any of the above.



     “Indemnified Taxes” means Taxes other than Excluded Taxes.



     “Intercreditor Agreement” means in respect of this Agreement, the terms of
subordination as attached as Annex II hereto, as the same may from time to time be amended,
modified, supplemented or restated.



     “Interest Election Request” means a request by the Borrower to convert or continue a
Tranche in accordance with Section 2.04.



     “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
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.



Second Lien Bridge Loan Agreement - 10





 









 







     “Interest Period” means with respect to any Eurodollar Tranche, the period commencing
on the date of such Tranche 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 Tranche 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 Tranche initially
shall be the date on which such Loans comprising such Tranche are made and thereafter shall be the
effective date of the most recent conversion or continuation of such Tranche.



     “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 agreement to
make any such acquisition (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); (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.



     “Investment Bank” means one or more investment banks engaged by the Borrower and
satisfactory to the Arrangers to assist in issuing the Permanent Securities.



     “Kaiser Francis Acquisition” means the acquisition of certain oil, gas and mineral
Properties pursuant to the terms and conditions of the Kaiser Francis Acquisition Documents.



     “Kaiser Francis Acquisition Documents” means (a) the Purchase and Sale Agreement
between Kaiser-Francis Oil Company, as Seller, and Linn Energy Mid-Continent Holdings, LLC, as
Buyer, dated July 21, 2006, and (b) all bills of sale, assignments, agreements, instruments and
documents executed and delivered in connection therewith, as amended.



     “Kaiser Francis Acquisition Properties” means the Oil and Gas Properties and other
properties acquired by the Borrower or any Guarantor pursuant to the Kaiser Francis Acquisition
Documents.



     “Kaiser Francis Commitment” means that portion of the Commitments attributable to the
Kaiser Francis Acquisition, as set forth on Annex I.



Second Lien Bridge Loan Agreement - 11









 





     “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.



     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period,
the rate appearing on Page BBAM of Bloomberg (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate quotations comparable
to those currently provided on such page of such Service, as determined by the Administrative Agent
from time to time for purposes of providing quotations of interest rates applicable to dollar
deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not available at such
time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/16th of 1%) at
which dollar deposits of $1,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in immediately available funds
in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to
the commencement of such Interest Period.



     “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
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, Security Instruments and the
Intercreditor Agreement.



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



     “Majority Lenders” means, at any time while no Loans are outstanding, Lenders having
at least sixty-six and two-thirds percent (66-2/3%) of the Commitments; and at any time while any
Loans are outstanding, Lenders holding at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding principal amount of the Loans (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.



Second Lien Bridge Loan Agreement - 12









 





     “Material Adverse Effect” means a material adverse change in, or material adverse
effect on (a) the business, operations, Property, liabilities (actual or contingent) or condition
(financial or otherwise) of the Borrower and its 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
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 $1,000,000 or more.



     “Material Indebtedness” means Debt (other than the Loans), 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 $1,000,000. 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, 2007.



     “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 Plan which is a multiemployer plan as defined in section
3(37) or 4001 (a)(3) of ERISA.



     “Net Cash Proceeds” means in connection with any issuance or sale of Equity Interests,
Debt securities, Casualty Events or the incurrence of loans, 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.



     “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
(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,



Second Lien Bridge Loan Agreement - 13









 




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.



     “Permanent Securities” means senior subordinated unsecured notes or any Equity
Interests of the Borrower which are issued after the Effective Date for the purpose of refinancing
all or a portion of the Loans outstanding under this Agreement.



     “Permitted Holders” means Quantum Energy Partners II, LP, a Delaware limited
partnership (“QEP II”), and the management and board of directors of Linn Energy, LLC on
the date hereof, provided, that if QEP II dissolve or otherwise distribute their ownership
interests in the Borrower to their respective partners or members, the term Permitted Holders shall
include each of those partners or members of QEP II who were partners or members, or affiliates of
such partners or members, of QEP II, as the case may be, on the date hereof; provided that, with
respect to the board of directors of the Borrower, the board of directors shall continue to include
future boards of the Borrower so long as occupation of the majority of the seats (other than vacant
seats) on the board of directors (or board of managers) of the Borrower are by Persons who were
either (i) nominated by the board of directors of the Borrower as of the Effective Date or (ii)
appointed by directors a majority of whom were so nominated.



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



Second Lien Bridge Loan Agreement - 14









 





     “Plan” means any employee pension benefit plan, as defined in section 3(2) of ERISA,
which (a) is currently or hereafter sponsored, maintained or contributed to 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, maintained or contributed to 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.



     “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.



     “Register” has the meaning assigned such term in Section 12.04(b)(iv).



     “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.



     “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 January 1st or July 1st (or any other specified “as
of” date), 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.



Second Lien Bridge Loan Agreement - 15









 





     “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.



     “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 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 Revolving Credit Agreement” means that certain Second Amended and Restated
Credit Agreement dated as of August 1, 2006 among the Borrower, as borrower, BNP Paribas, as
administrative agent and the other agents and lenders from time to time parties thereto, as
hereafter amended, supplemented, modified, restated, refinanced or replaced from time to time.



     “Senior Revolving Credit Documents” means the Senior Revolving Credit Agreement, the
Senior Notes and any “Loan Documents” (as defined therein), in each case, together with all
amendments, modifications and supplements thereto.



     “Senior Revolving Credit Notes” means the Notes from time to time issued under the
Senior Revolving Credit Agreement.



     “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



Second Lien Bridge Loan Agreement - 16









 




is a general partner. Unless otherwise indicated herein, each reference to the term
“Subsidiary” means a Subsidiary of the Borrower.




     “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.



     “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 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.



     “Tranche” means a division or portion of the Loans.



     “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 grant of Liens by the Borrower on
Mortgaged Properties and other Properties pursuant to the Security Instruments and (b) any
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 Tranche, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Tranche 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.



Second Lien Bridge Loan Agreement - 17









 





     Section 1.03 Types of Loans and Tranches
For purposes of this Agreement, Loans and Tranches, respectively, may be classified and referred
to by Type (e.g., a “Eurodollar Tranche” or a “Eurodollar Tranche”).



     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 herein), (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 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 herein), (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 accounting terms used herein shall be interpreted, all determinations with respect to
accounting matters hereunder shall be made, and all financial statements and certificates and
reports as to financial matters required to be furnished to the Administrative Agent or the Lenders
hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the
Financial Statements except for changes in which the Borrower’s independent certified public
accountants concur and which are disclosed to Administrative Agent on the next date on which
financial statements are required to be delivered to the Lenders pursuant to Section 8.01(a);
provided that, unless the Borrower and the Majority Lenders shall otherwise agree in writing, no
such change shall modify or affect the manner in which compliance with the covenants contained
herein is computed such that all such computations shall be conducted utilizing financial
information presented consistently with prior periods.



ARTICLE II

The Credits




     Section 2.01 Term Loans



          (a) Kaiser Francis. Subject to the terms and conditions set forth herein, each Lender
agrees to make a Loan during the Availability Period in dollars to the Borrower to fund




Second Lien Bridge Loan Agreement - 18









 







the Kaiser
Francis Acquisition in an aggregate principal amount equal to such Lender’s Kaiser Francis
Commitment.




          (b) Blacksand. Subject to the terms and conditions set forth herein, each Lender
agrees to make a Loan during the Availability Period in dollars to the Borrower to fund the
Blacksand Acquisition in an aggregate principal amount equal to such Lender’s Blacksand Commitment.




          (c) Generally. The Commitments are not revolving and amounts repaid or prepaid may
not be re-borrowed under any circumstance. Any portion of the Commitments not utilized by the
Borrower on or prior to the end of the Availability Period shall be permanently cancelled.




     Section 2.02 Loans and Tranches.



          (a) Loans; Several Obligations. Each Loan shall be made as part of a Tranche
consisting of Loans by the Lenders ratably in accordance with their respective Commitments. The
failure of any Lender to fund its Loans 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 fund its Loans as required.




          (b) Types of Loans. Subject to Section 3.03, each Tranche shall be comprised entirely
of ABR Tranches or Eurodollar Tranches as the Borrower may request in accordance herewith. Each
Lender at its option may fund any Eurodollar Tranches by causing any domestic or foreign branch or
Affiliate of such Lender to fund such Loan; provided that any exercise of such option shall not
affect the obligation of the Borrower to repay such Loan in accordance with the terms of this
Agreement.




          (c) Minimum Amounts. At the commencement of each Interest Period for any Eurodollar
Tranche, such Tranche 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 Tranche is made, such Tranche shall be in an
aggregate amount that is an integral multiple of $250,000 and not less than $1,000,000. Tranches
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 four (4) Eurodollar Tranches outstanding. Notwithstanding any other
provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert
or continue, any Tranche if the Interest Period requested with respect thereto would end after the
Maturity Date.




          (d) Notes. The Loans made by each Lender shall be evidenced by a single promissory
note of the Borrower in substantially the form of Exhibit A, dated, in the case of (i) any Lender
party hereto as of the date of this Agreement, as of the date of this Agreement, or (ii) any Lender
that becomes a party hereto pursuant to an Assignment and Assumption, as of the
effective date of the Assignment and Assumption, payable to the order of such Lender in a
principal amount equal to such Lender’s Commitment and otherwise duly completed. The date, amount,
Type, interest rate and, if applicable, Interest Period of each Tranche consisting of a portion of
the 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,




Second Lien Bridge Loan Agreement - 19









 







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 its Loan or affect
the validity of such transfer by any Lender of its Note.




     Section 2.03 Requests for the Loans To request a Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (a) in the case of a Eurodollar Tranche, not
later than 11:00 a.m., Houston time, three Business Days before the date of the proposed Loan or
(b) in the case of an ABR Tranche, not later than 12:00 noon, Houston time, on the date of the
proposed Loan. 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 in
a form approved by the Administrative Agent and 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 Loans;




               (ii) the date of such Loan, which shall be a Business Day;




               (iii) whether any portion of such Loans is to be an ABR Tranche or a Eurodollar Tranche;




               (iv) whether such Loan is made pursuant to the Kaiser Francis Acquisition or the Blacksand
Acquisition;




               (v) in the case of a Eurodollar Tranche, the initial Interest Period to be applicable thereto,
which shall be a period contemplated by the definition of the term “Interest Period”; and




               (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 is specified, then the entire portion of the Loans shall be a
Eurodollar Tranche having an Interest Period of one month. If no Interest Period is specified with
respect to any requested Eurodollar Tranche, then the Borrower shall be deemed to have selected an
Interest Period of one month’s duration.



Promptly following receipt of a Borrowing Request in accordance with this Section 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.




     Section 2.04 Interest Elections



          (a) Conversion and Continuance. Each Tranche initially shall be of the Type specified
in the applicable Borrowing Request and, in the case of a Eurodollar Tranche, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to
convert such Tranche to a different Type or to continue such Tranche and, in the case of a
Eurodollar Tranche, may elect Interest Periods therefor, all as provided in this Section




Second Lien Bridge Loan Agreement - 20









 







2.04. The
Borrower may elect different options with respect to different portions of the affected Tranche, in
which case each such portion shall be allocated ratably among the Lenders holding the Loans
comprising such Tranche, and the Loans comprising each such portion shall be considered a separate
Tranche.




          (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 in a
form approved by the Administrative Agent and signed by the Borrower.




          (c) Information in Interest Election Requests. Each telephonic and written Interest
Election Request shall specify the following information in compliance with Section 2.02:




               (i) the Tranche 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 Tranche (in which case the information to be specified pursuant to Section
2.04(c)(iii) and (iv) shall be specified for each resulting Tranche);




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




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




               (iv) if the resulting Tranche is a Eurodollar Tranche, 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”.




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




          (e) 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 Tranche.




          (f) Effect of Failure to Deliver Timely Interest Election Request and Events of Default on
Interest Election. If the Borrower fails to deliver a timely Interest Election Request with
respect to a Eurodollar Tranche prior to the end of the Interest Period applicable thereto, then,
unless such Tranche is repaid as provided herein, at the end of such Interest Period such Tranche
shall be continued as a Eurodollar Tranche having an Interest Period of one month. Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is continuing: (i) no
outstanding Tranche may be converted to or continued as a Eurodollar




Second Lien Bridge Loan Agreement - 21









 







Tranche (and any Interest
Election Request that requests the conversion of any Tranche to, or continuation of any Tranche as,
a Eurodollar Tranche shall be ineffective) and (ii) unless repaid, each Eurodollar Tranche shall be
converted to an ABR Tranche at the end of the Interest Period applicable thereto.




     Section 2.05 Funding of Tranches.



          (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 account of the Borrower and
designated by the Borrower in such Borrowing Request. 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 Loan that such Lender will not make
available to the Administrative Agent such Lender’s Loan, the Administrative Agent may assume that
such Lender has made its Loan 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 Loan 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
Tranches. If such Lender pays such amount to the Administrative Agent, then such amount shall
constitute such Lender’s Loan.




     Section 2.06 Termination. The Commitments shall terminate after the Availability Period.
Any portion of the Kaiser Francis Commitment not borrowed on the date that the Kaiser Francis
Acquisition Loan is made shall terminate on such date. Any portion of the Blacksand Commitment not
borrowed on the date that the Blacksand Acquisition Loan is made shall terminate on such date.



     Section 2.07 Subordination of Loans. The Loans, the Notes, this Agreement and the other
Loan Documents; the rights and remedies of the Lenders and the Administrative Agent hereunder and
thereunder and the Liens created thereby are subject to the Intercreditor Agreement.



ARTICLE III

Payments of Principal and Interest; Prepayments; Fees





Second Lien Bridge Loan Agreement - 22









 








     Section 3.01 Repayment of Loans. On the Maturity Date, the Borrower shall repay the
outstanding principal balance of the Loans in full.



     Section 3.02 Interest.



          (a) ABR Tranches. The portion of the Loans comprising each ABR Tranche shall bear
interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.




          (b) Eurodollar Tranches. The portion of the Loans comprising each Eurodollar Tranche
shall bear interest at the LIBO Rate for the Interest Period in effect for such Tranche plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate.




          (c) Post-Default Rate. Notwithstanding the foregoing, 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, 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 Tranches as provided in Section 3.02(a),
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 Tranche, the last day of each March, June, September and December;
(ii) with respect to any Eurodollar Tranche, 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 (i) interest accrued pursuant to Section
3.02(c) shall be payable on demand, (ii) in the event of any prepayment of principal of any Loan,
accrued interest on the principal amount prepaid shall be payable on the date of such prepayment,
and (iii) in the event of any conversion of any Eurodollar Tranche 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.




     Section 3.03 Alternate Rate of Interest. If prior to the commencement of any Interest
Period for a Eurodollar Tranche:



Second Lien Bridge Loan Agreement - 23









 





          (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 or
the LIBO Rate for such Interest Period; or




          (b) the Administrative Agent is advised by the Majority Lenders that the LIBO Rate or LIBO
Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to
such Lenders of making or maintaining a portion of their Loans included in such Tranche 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 Tranche to, or
continuation of any Tranche as, a Eurodollar Tranche shall be ineffective, and (ii) if any
Borrowing Request requests a Eurodollar Tranche, such Tranche shall be made as an ABR Tranche.




     Section 3.04 Optional Prepayments.



          (a) 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).




          (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 Tranche, 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 Tranche, 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 the Loans or
portion thereof to be prepaid. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each
prepayment of a Tranche shall be applied ratably to the Loans of all Lenders. Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.




     Section 3.05 Mandatory Prepayments



          (a) The Borrower shall prepay the Notes in amounts equal to:




               (i) 100% of the Net Cash Proceeds of any Debt incurrence of the Borrower or any of its
Subsidiaries or of the sale or issuance of any Equity Interests of the Borrower, excluding Debt
permitted by Section 9.02. Such prepayment shall be made no later than the next Business Day after
the receipt of such proceeds.




               (ii) 100% of the Net Cash Proceeds of any Casualty Event related to the Borrower or any of its
Subsidiaries.




          (b) Notwithstanding anything herein to the contrary, (x) any Net Cash Proceeds received from
the issuance of the Permanent Securities shall first be applied to prepay




Second Lien Bridge Loan Agreement - 24









 







the Loans, and (y) if the
amount of any Net Cash Proceeds referred to in Section 3.05(a)(i) through (ii) would otherwise be
payable under the terms of the Senior Revolving Credit Agreement but such payment is waived, such
amount shall be payable to the Borrower pursuant to this Section 3.05.




     Section 3.06 Fees.



          (a) 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.




          (b) Commitment Fees. The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a commitment fee, which shall accrue at a rate per annum equal to .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 earliest of the date (i) on
which the Commitments are fully funded, (ii) on which the Borrower cancels the unfunded portion of
the Commitments or such Commitments are terminated, and (iii) the end of the Availability Period.
Accrued commitment fees shall be payable in arrears on the date on which the Commitments are fully
funded, cancelled or terminated, 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 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).




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. The Borrower shall make each payment required to be
made by it hereunder (whether of principal, interest or fees, 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. Fees, once paid, shall be fully earned and shall not be refundable under any
circumstances. 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, 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.




Second Lien Bridge Loan Agreement - 25









 








          (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,
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 then due hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal 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
its Loan resulting in such Lender receiving payment of a greater proportion of the aggregate amount
of its Loan and accrued interest thereon than the proportion received by any other Lender, then the
Lender receiving such greater proportion shall purchase (for cash at face value) participations in
the Loans of other Lenders to the extent necessary so that the benefit of all such payments shall
be shared by the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this 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 its Loan 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 that the Borrower will not make such payment,
the Administrative Agent may assume that the Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the Lenders the amount
due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed
to such Lender with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative Agent, at the greater
of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.



     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(a) 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



Second Lien Bridge Loan Agreement - 26









 




Lender to
satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are
fully paid.




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:




               (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 any Eurodollar Tranche consisting of any portion of the Loan of 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 Tranche (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.



          (b) Capital Requirements. If any Lender 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
capital or on the capital of such Lender’s holding company, if any, as a consequence of this
Agreement or the Loan made by such Lender, to a level below that which such Lender or the or such
Lender’s holding company could have achieved but for such Change in Law (taking into consideration
such Lender’s policies and the policies of such Lender’s holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender or such Lender’s holding company for any such reduction
suffered.




          (c) Certificates. A certificate of a Lender setting forth in reasonable detail the
basis of its request and the amount or amounts necessary to compensate such Lender 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 the
amount shown as due on any such certificate within 10 days after receipt thereof.




          (d) Effect of Failure or Delay in Requesting Compensation. Failure or delay on the
part of any Lender to demand compensation pursuant to this Section 5.01 shall not constitute a
waiver of such Lender’s right to demand such compensation, provided that no Lender may make any
such demand more than 180 days after the Termination Date, nor for any




Second Lien Bridge Loan Agreement - 27









 







amount which has accrued
more than 270 days prior to such Lender delivering the certificate required in Section 5.01(c).




     Section 5.02 Break Funding Payments. In the event of (a) the payment of any principal of
any Eurodollar Tranche 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 Tranche into
an ABR Tranche other than on the last day of the Interest Period applicable thereto or (c) the
failure to borrow, convert, continue or prepay any Eurodollar Tranche 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
Tranche, 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 its 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 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.




     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 or Lender (as the case may be) receives an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower 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 and each Lender, within 10 days after written demand therefor, for the full amount of any
Indemnified Taxes or Other Taxes paid by the Administrative Agent or such Lender on or with respect
to any payment by or on account of any obligation of the Borrower hereunder (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to




Second Lien Bridge Loan Agreement - 28









 







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 or a
Lender as to the basis of such Indemnified Taxes and 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.




     Section 5.04 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
Loan 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.



     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 any portion of its Loan as part of any Eurodollar Tranche 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
portion of its Loan as part of such Eurodollar Tranche shall be suspended (the “Affected
Portion”) until such time as such Lender may again make and maintain such portion of its Loan
as part of such Eurodollar Tranche and (b) all Affected Portion which would otherwise be made by
such Lender shall be made instead as ABR Portion (and, if such Lender so requests by notice to the
Borrower and the Administrative Agent, all Affected Portion of such Lender then outstanding shall
be automatically converted into ABR Tranches on the date specified by such Lender in such notice)
and, to the extent that Affected Portion are so made as (or converted into)



Second Lien Bridge Loan Agreement - 29









 




ABR Tranches, all
payments of principal which would otherwise be applied to such Lender’s Affected Portion shall be
applied instead to its ABR Tranches.




ARTICLE VI

Conditions Precedent




     Section 6.01 Effective Date. The obligations of each Lender to make its Loan 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 (y) who are authorized to sign the Loan Documents to which the
Borrower or such Guarantor is a party and (z) 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.




          (f) The Administrative Agent shall have received duly executed Notes payable to the order of
each Lender in a principal amount equal to its Commitment 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




Second Lien Bridge Loan Agreement - 30









 







the Security
Instruments, including the Guaranty Agreement and the other Security Instruments described on
Exhibit C-1. In connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall be reasonably satisfied that:





          (i) the Security Instruments create priority, perfected Liens (subject only to Liens
existing under the Senior Revolving Credit Documents and 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 most recently delivered 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.




          (iii) be reasonably satisfied that it has a Lien on all Property constituting security
for the Senior Revolving Credit Agreement.



          (h) The Administrative Agent shall have received an opinion of (i) Andrews Kurth, 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, (ii) the
general counsel of 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 and
(iii) local counsel in each of the following states: West Virginia and Pennsylvania and any other
jurisdictions requested by the Administrative Agent, in form and substance satisfactory to the
Administrative Agent.




          (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).




          (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: Pennsylvania, West Virginia, New York, Delaware 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 engaged one or
more Investment Banks for the purpose of assisting the Borrower to issue, sell or place the
Permanent Securities, the Net Cash Proceeds of which shall be equal to or exceed amounts due under
this Agreement and be available to repay this Agreement before the Maturity Date.




Second Lien Bridge Loan Agreement - 31









 








          (n) 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.




          (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
each Lender to make its Loan 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 August 15, 2006 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).



     Section 6.02 Additional Conditions. The obligation of each Lender to fund its Loan
(including the initial funding) is subject to the satisfaction of the following additional
conditions:



          (a) At the time of and immediately after giving effect to the funding of the Loans, no Default
shall have occurred and be continuing.




          (b) At the time of and immediately after giving effect to such Loans, 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 Effective
Date, except to the extent any such representations and warranties are expressly limited to an
earlier date, in which case, on and as of the Effective Date, such representations and warranties
shall continue to be true and correct as of such specified earlier date.




          (d) The making of such Loan would not conflict with, or cause any Lender ank 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 Senior
Revolving Credit Agreement or the consummation of the transactions contemplated by this Agreement
or any other Loan Document.




          (e) The receipt by the Administrative Agent of a Borrowing Request in accordance with Section
2.03.




     Section 6.03 Kaiser Francis. Within the Availability Period, the obligations
of each Lender to fund its Kaiser Francis Commitment 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 Administrative Agent shall have received (i) a certificate of a Responsible Officer of
the Borrower certifying: (A) that the Borrower is concurrently consummating the Kaiser Francis
Acquisition in accordance with the terms of the Kaiser Francis Acquisition Documents (with all of
the material conditions precedent thereto having been




Second Lien Bridge Loan Agreement - 32









 







satisfied in all material respects by the
parties thereto) and acquiring substantially all of the Kaiser Francis Acquisition Properties
contemplated by the Kaiser Francis Acquisition Documents; (B) as to the final purchase price for
the Kaiser Francis Acquisition Properties after giving effect to all adjustments as of the closing
date contemplated by the Kaiser Francis Acquisition Documents and specifying, by category, the
amount of such adjustment; (C) that attached thereto is a true and complete list of the Kaiser
Francis Acquisition Properties which have been excluded from the Acquisition pursuant to the terms
of the Acquisition Documents, specifying with respect thereto the basis of exclusion as (1) title
defect, (2) preferential purchase right, (3) environmental or (4) casualty loss; (D) that attached
thereto is a true and complete list of all Kaiser Francis Acquisition Properties for which any
seller has elected to cure a title defect, (E) that attached thereto is a true and complete list of
all Kaiser Francis Acquisition Properties
for which any seller has elected to remediate an adverse environmental condition, and (F) that
attached thereto is a true and complete list of all Kaiser Francis Acquisition Properties which are
currently pending final decision by a third party regarding purchase of such property in accordance
with any preferential right; (ii) a true and complete executed copy of each of the Kaiser Francis
Acquisition Documents; (iii) original counterparts or copies, certified as true and complete, of
the assignments, deeds and leases for all of the Kaiser Francis Acquisition Properties; and (iv)
such other related documents and information as the Administrative Agent shall have reasonably
requested.




     The Borrower recognizes and agrees that it shall have delivered to the Administrative Agent a
preliminary draft of the certificate described herein not less than three (3) days prior to the
Effective Date identifying which Kaiser Francis Acquisition Properties will be excluded from the
Kaiser Francis Acquisition on the Effective Date.



          (b) 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-2. In connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall





          (i) be reasonably satisfied that the Security Instruments create priority, perfected
Liens (subject only to Liens existing under the Senior Revolving Credit Documents and
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 most recently delivered 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.



          (c) The Administrative Agent shall have received an opinion of local counsel in each of the
following states: Oklahoma and any other jurisdictions requested by the Administrative Agent, in
form and substance satisfactory to the Administrative Agent.




Second Lien Bridge Loan Agreement - 33









 








          (d) The Administrative Agent shall have received title information as the Administrative Agent
may reasonably require satisfactory to the Administrative Agent setting forth the status of title
to at least 80% of the total value of the Oil and Gas Properties evaluated in the Reserve Report of
Kaiser Francis Acquisition Properties.




          (e) The Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries for each
of the following jurisdictions: Oklahoma and any other jurisdiction requested by the
Administrative Agent; other than those being assigned or released on or prior to the
consummation of the Kaiser Francis Acquisition or Liens permitted by Section 9.03.




          (f) The Administrative Agent shall be reasonably satisfied with the environmental condition of
the Kaiser Francis Acquisition Properties.




          (g) The Administrative Agent shall have received a Reserve Report covering the Kaiser Francis
Acquisition Properties accompanied by a certificate covering the matters described in Section
8.12(b).




          (h) 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 in
connection with the Kaiser Francis Acquisition.




          (i) The Administrative Agent shall have received evidence satisfactory to it that all Liens
associated with the Kaiser Francis Acquisition Properties have been released or terminated
contemporaneously with the Kaiser Francis Acquisition and that arrangements satisfactory to the
Administrative Agent have been made for recording and filing of such releases.




          (j) The Administrative Agent shall have received such other documents as the Administrative
Agent or special counsel to the Administrative Agent may reasonably request.




     Section 6.04 Blacksand. Within the Availability Period, the
obligations of each Lender to fund its Blacksand Commitment 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 Administrative Agent shall have received (i) a certificate of a Responsible Officer of
the Borrower certifying: (A) that the Borrower is concurrently consummating the Blacksand
Acquisition in accordance with the terms of the Blacksand Acquisition Documents (with all of the
material conditions precedent thereto having been satisfied in all material respects by the parties
thereto) and acquiring substantially all of the Blacksand Acquisition Properties contemplated by
the Blacksand Acquisition Documents; and (B) as to the final purchase price for the Blacksand
Acquisition Properties after giving effect to all adjustments as of the closing date contemplated
by the Blacksand Acquisition Documents and specifying, by category, the amount of such adjustment.




          (b) 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




Second Lien Bridge Loan Agreement - 34









 







described on
Exhibit C-3. In connection with the execution and delivery of the Security Instruments, the
Administrative Agent shall





          (i) be reasonably satisfied that the Security Instruments create priority, perfected
Liens (subject only to Liens existing under the Senior Revolving Credit Documents and
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 most recently delivered 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.



          (c) The Administrative Agent shall have received an opinion of local counsel in each of the
following states: California and any other jurisdictions requested by the Administrative Agent, in
form and substance satisfactory to the Administrative Agent.




          (d) The Administrative Agent shall have received title information as the Administrative Agent
may reasonably require satisfactory to the Administrative Agent setting forth the status of title
to at least 80% of the total value of the Oil and Gas Properties evaluated in the Reserve Report of
Blacksand Acquisition Properties.




          (e) The Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries for each
of the following jurisdictions: California and any other jurisdiction requested by the
Administrative Agent; other than those being assigned or released on or prior to the
consummation of the Blacksand Acquisition or Liens permitted by Section 9.03.




          (f) The Administrative Agent shall be reasonably satisfied with the environmental condition of
the Blacksand Acquisition Properties.




          (g) The Administrative Agent shall have received a Reserve Report covering the Blacksand
Acquisition Properties accompanied by a certificate covering the matters described in Section
8.12(b).




          (h) The Borrower shall have provided to the Administrative Agent at least 5 days prior to the
date that the Blacksand Acquisition Loan is to be requested, the following: (i) the name of the
Person (“Target”) whose assets are to be acquired (such acquisition, whether acquired from
the Target or pursuant to a Capital Expenditure, the “Target Acquisition”); (ii) a
description of the Target’s business in which such assets are employed; (iii) copies of
documentation (or substantially final drafts of the documentation) intended to effect the proposed
Target Acquisition (the “Target Acquisition Agreements”); (iv) a summary of the terms and
conditions of the proposed Target Acquisition; (v) a certificate of the chief financial officer of
the Borrower that no Default or Event of Default exists or could reasonably be expected to occur as
a result of the proposed Target Acquisition; (vi) the details of computations proposed by the
Borrower to determine compliance with the financial covenants as set forth in Section 6.04(i)
below; (vii) copies of such due diligence materials the Administrative Agent deems reasonably




Second Lien Bridge Loan Agreement - 35









 







necessary to complete its evaluation, and (viii) any other information the Administrative Agent may
reasonably request.




          (i) The Borrower shall provide to the Administrative Agent evidence that:




               (i) Neither the Target nor its assets shall be subject to any contingent obligations
(including contingent obligations arising from any environmental liabilities), environmental
liabilities, unsatisfied judgments or any pending action, charge, claim, demand, suit, proceeding,
petition, governmental investigation or arbitration that could reasonably be expected to have a
Material Adverse Effect; and




               (ii) The following criteria are satisfied:




               (A) The Borrower shall have provided the Administrative Agent (I) copies of the pro forma
financial statements of the Target for the period of the three fiscal quarters recently ended prior
to the closing of the proposed Target Acquisition for which financial statements are available and
(II) a pro forma financial projection of the Borrower and its Subsidiaries (including the Target
Acquisition) following the date of the consummation of the proposed Target Acquisition to the
Maturity Date which reflects compliance with the financial covenants set forth in Section 9.01; and



               (B) The Borrower shall have provided to the Administrative Agent a certificate executed by the
chief financial officer of the Borrower which certifies compliance with the criteria set forth in
this Section 6.04(i)(ii).



     The Administrative Agent, in its sole judgment, shall be satisfied with the results of each of
the foregoing



          (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 in
connection with the Blacksand Acquisition.




          (k) The Administrative Agent shall have received evidence satisfactory to it that all Liens
associated with the Blacksand Acquisition Properties have been released or terminated
contemporaneously with the Blacksand Acquisition and that arrangements satisfactory to the
Administrative Agent has been made for recording and filing of such releases.




          (l) The Administrative Agent shall have received such other documents as the Administrative
Agent or special counsel to the Administrative Agent may reasonably request.




ARTICLE VII

Representations and Warranties




     The Borrower represents and warrants to the Lenders that:



Second Lien Bridge Loan Agreement - 36









 





     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, 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 such as have been obtained or made
and are in full force and effect, and except for the filing and recording of Security Instruments
to perfect the Liens created hereby, (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 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 (i) the audited consolidated balance
sheet of the Borrower and its Consolidated Subsidiaries as of December 31, 2005, and related
audited consolidated statements of income, cash flows and changes in members’ equity for the fiscal
year ending December 31, 2005 and (ii) the unaudited consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of and for the fiscal quarter and the portion of the fiscal year
ended March 31, 2006, certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial




Second Lien Bridge Loan Agreement - 37









 







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, 2005, (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 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 or the Transactions.
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 as could not be reasonably expected to have a
Material Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to take such
actions could not be reasonably expected to have a Material Adverse Effect):



          (a) neither any Property of the Borrower or any of its Subsidiaries nor the operations
conducted thereon violate any order or requirement of any court or Governmental Authority or any
Environmental Laws.




          (b) no Property of the Borrower or any of its Subsidiaries nor the operations currently
conducted thereon or, to the knowledge of the Borrower, by any prior owner or operator of such
Property or operation, are in violation of or subject to any existing, pending or threatened
action, suit, investigation, inquiry or proceeding by or before any court or Governmental Authority
or to any remedial obligations under Environmental Laws.




          (c) all notices, permits, licenses, exemptions, approvals or similar authorizations, if any,
required to be obtained or filed in connection with the operation or use of any and all Property of
the Borrower and each of its Subsidiaries, including, without limitation, past or present
treatment, storage, disposal or release of a hazardous substance, oil and gas waste or solid waste
into the environment, have been duly obtained or filed or requested, and the Borrower and each of
its Subsidiaries are in compliance with the terms and conditions of all such notices, permits,
licenses and similar authorizations.




          (d) all hazardous substances, solid waste and oil and gas waste, if any, generated at any and
all Property of the Borrower or any of its Subsidiaries have in the past been





Second Lien Bridge Loan Agreement - 38









 







transported, treated
and disposed of in accordance with Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the environment, and, to the knowledge of
the Borrower, all such transport carriers and treatment and disposal facilities have been and are
operating in compliance with Environmental Laws and so as not to
pose an imminent and substantial endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened action, investigation or inquiry by
any Governmental Authority in connection with any Environmental Laws.




          (e) the Borrower has taken all steps reasonably necessary to determine and has determined that
no oil, hazardous substances, solid waste or oil and gas waste, have been disposed of or otherwise
released and there has been no threatened release of any oil, hazardous substances, solid waste or
oil and gas waste on or to any Property of the Borrower or any of its Subsidiaries except in
compliance with Environmental Laws and so as not to pose an imminent and substantial endangerment
to public health or welfare or the environment.




          (f) to the extent applicable, all Property of the Borrower and each of its Subsidiaries
currently satisfies all design, operation, and equipment requirements imposed by the OPA, and the
Borrower does not have any reason to believe that such Property, to the extent subject to the OPA,
will not be able to maintain compliance with the OPA requirements during the term of this
Agreement.




          (g) neither the Borrower nor any of its Subsidiaries has any known contingent liability or
Remedial Work in connection with any release or threatened release of any oil, hazardous substance,
solid waste or oil and gas waste into the environment.




     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 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



Second Lien Bridge Loan Agreement - 39









 




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 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.



          (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 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 Plan (other than a defined contribution plan) or any trust created under any such Plan
has been terminated since September 2, 1974. 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) Full payment when due has been made of all amounts which the Borrower, any of its
Subsidiaries or any ERISA Affiliate is required under the terms of each Plan, if any, or applicable
law to have paid as contributions to such Plan as of the date hereof, and 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) The actuarial present value of the benefit liabilities under each Plan, if any, which is
subject to Title IV of ERISA does not, as of the end of the Borrower’s most recently ended fiscal
year, exceed 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. The term “actuarial
present value of the benefit liabilities” shall have the meaning specified in section 4041 of
ERISA.




Second Lien Bridge Loan Agreement - 40









 








          (g) Neither the Borrower, its Subsidiaries nor any ERISA Affiliate sponsors, maintains, or
contributes to an employee welfare benefit plan, as defined in section 3(1) of ERISA, including,
without limitation, any such plan maintained to provide benefits to former employees of such
entities, that may not be terminated by the Borrower, any of its Subsidiaries or any ERISA
Affiliate in its sole discretion at any time without any material liability.




          (h) 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.




          (i) 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. As set forth on Schedule 7.11, the
Borrower has disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it,
that, individually or in the aggregate, could reasonably be expected to result in a Material
Adverse Effect. 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.



     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
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.



Second Lien Bridge Loan Agreement - 41









 





     Section 7.13 Restriction on Liens. Neither the Borrower nor any of its Subsidiaries is a
party to any material agreement or arrangement, 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 part 1 of Schedule 7.14 or as disclosed
in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which
shall be a supplement to Schedule 7.14, the Borrower has no Subsidiaries. After the Blacksand
Acquisition, the Borrower’s Subsidiaries shall include those Subsidiaries listed on part 2 of
Schedule 7.14. The Borrower has no Foreign Subsidiaries.



     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.




          (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.




Second Lien Bridge Loan Agreement - 42









 








          (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 of 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 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 certificate delivered pursuant to Section 8.12(b), on a net



Second Lien Bridge Loan Agreement - 43









 




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 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 the date hereof, and after the date
hereof, each report required to be delivered by the Borrower pursuant to Section 8.01(d), 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. The proceeds of the Loans shall be used to finance the Kaiser
Francis Acquisition and the Blacksand Acquisition and to pay related fees and expenses. 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 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 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.



Second Lien Bridge Loan Agreement - 44









 





     Section 7.23 Acquisitions. The copies of the Kaiser Francis Acquisition Documents and
Blacksand Acquisition Documents previously delivered by the Borrower to the Administrative Agent
are true, accurate and complete and have not been amended or modified in any manner, other than
pursuant to amendments or modifications previously delivered to the Administrative Agent. No party
to any Kaiser Francis Acquisition Document or Blacksand Acquisition Document is in default in
respect of any material term or obligation thereunder.



ARTICLE VIII

Affirmative Covenants




     Until 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, the Borrower covenants and
agrees with the Lenders that:



     Section 8.01 Financial Statements; Ratings Change; 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 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
position 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.




          (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




Second Lien Bridge Loan Agreement - 45









 







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 calendar month 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.




          (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 all Persons purchasing Hydrocarbons from
the Borrower or any of its Subsidiaries.




          (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 $250,000, prior written notice of such disposition, the price thereof, the
anticipated date of closing, and any other details thereof requested by the Administrative Agent or
any Lender.




Second Lien Bridge Loan Agreement - 46









 








          (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 (and in any
event within thirty (30) days prior thereto) of 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 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) Annual Budget. Promptly, but in any event within 90 days after the end of each
fiscal year, a budget for the then current fiscal year, including a pro forma balance sheet and
income and cash flow projections.




          (p) Kaiser Francis Acquisition Notices. In the event that (i) the Borrower (or one of
its Subsidiaries) is required or decides to purchase any of the Properties which had previously
been excluded from the Kaiser Francis Acquisition Properties, (ii) the Borrower (or one of its
Subsidiaries) is required to honor any preferential purchase right in respect of any Kaiser Francis
Acquisition Property which has not been waived, (iii) any matter is disputed in accordance with the
terms of the Kaiser Francis Acquisition Documents or any such disputed matter is resolved, (iv) any
material notices are received or delivered by the Borrower (or one of its Subsidiaries) pursuant to
either the Kaiser Francis Acquisition Documents, or (v) the Borrower (or one of its Subsidiaries)
and the sellers calculate and agree upon the Final Settlement Statement, pursuant to Section 10.5
of the Kaiser Francis Acquisition Documents, then, in each such case, the Borrower shall promptly
give the Administrative Agent notice in reasonable detail of such circumstances.




          (q) 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 or Multiemployer




Second Lien Bridge Loan Agreement - 47









 







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 $3,000,000;




          (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 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 9.12.



     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 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




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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 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 Oil and Gas Properties and will do all other
things necessary to keep unimpaired their rights with respect thereto and prevent any forfeiture
thereof or default thereunder.




          (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 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.



Second Lien Bridge Loan Agreement - 49









 





     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, and shall cause each of its Subsidiaries to: (i) comply, and shall
cause its Properties and operations and each of its Subsidiaries 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 of its Subsidiaries to timely obtain or file, all notices,
permits, licenses, exemptions, 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 of its Subsidiaries 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 of its Subsidiaries
to establish and implement, such procedures 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 no event later than five days after the occurrence
thereof, notify the Administrative Agent and the Lenders in writing of any threatened




Second Lien Bridge Loan Agreement - 50









 








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 $500,000, not fully covered by
insurance, subject to normal deductibles.



          (c) The Borrower will, and will cause each of its Subsidiaries to, provide environmental
audits and tests in accordance with American Society of Testing Materials standards upon request by
the Administrative Agent and the Lenders (or as otherwise required to be obtained by the
Administrative Agent or the Lenders by any Governmental Authority), in connection with any future
acquisitions of 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 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.




Second Lien Bridge Loan Agreement - 51









 








     Section 8.12 Reserve Reports.



          (a) On or before March 1st and September 1st of each year, commencing September 1st, 2006, the
Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report as of the
immediately preceding January 1 or July 1, as applicable. The Reserve Report as of January 1 of
each year shall be prepared by one or more petroleum engineers reasonably acceptable to the
Administrative Agent and the July 1 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 January 1 Reserve Report.




          (b) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative
Agent and the Lenders a certificate from a Responsible Officer 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
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 Reserve Report 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 7.20 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) and in connection with the Blacksand Acquisition and the Kaiser
Francis Acquisition, to the extent requested by the Administrative Agent, the Borrower will deliver
title information in form and substance 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, satisfactory title
information on at least 80% of the total value of the Oil and Gas Properties evaluated by such
Reserve Report.




Second Lien Bridge Loan Agreement - 52









 








          (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, satisfactory title information on at least 80% of the value
of the Oil and Gas Properties evaluated by such Reserve Report.




     Section 8.14 Additional Collateral; Additional Guarantors.



          (a) In connection with each of the Kaiser Francis Acquisition and the Blacksand Acquisition
and otherwise, with each redetermination of the Borrowing Base (as defined in the Senior Revolving
Credit Agreement), the Borrower shall review the Reserve Report and the list of current Mortgaged
Properties (as described in Section 8.12(b)(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 to the Administrative Agent or its designee as
security for the Indebtedness a first-priority Lien interest (subject to a Lien under the Senior
Revolving Credit Documents and 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) In the event that (i) the Borrower determines that any Subsidiary is a Material Domestic
Subsidiary or (ii) any Domestic Subsidiary incurs or guarantees any Debt, 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.





Second Lien Bridge Loan Agreement - 53









 








          (c) Prior to or contemporaneously with the granting of any Lien on any Property to or for the
benefit of any agent or lender under the Senior Revolving Credit Agreement pursuant to any Senior
Revolving Credit Document or otherwise, the Borrower or applicable Subsidiary shall grant to the
Administrative Agent a priority Lien interest (subject only to Liens under the Senior Revolving
Credit Documents and Excepted Liens of the type described in clauses (a) to (d) and (f) in the
definition thereof, but subject to the provisos at the end of such definition) on such Property for
the benefit of the Lenders to secure the Indebtedness. 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 and in a sufficient number of 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).




          (d) The Borrower agrees that it will not, and will not permit any Subsidiary to, grant a Lien
on any Property to secure the Senior Revolving Credit Notes without first (i) giving
fifteen (15) days’ prior written notice to the Administrative Agent thereof and (ii) granting
to the Administrative Agent to secure the Indebtedness a priority, perfected Lien (subject to Liens
under the Senior Revolving Credit Documents and Excepted Liens of the type described in clauses (a)
to (d) and (f) in the definition thereof, but subject to the provisos at the end of such
definition) on this same Property pursuant to Security Instruments in form and substance
satisfactory to the Administrative Agent. In connection therewith, the Borrower shall, or shall
cause its Subsidiaries to, execute and deliver such other additional closing documents,
certificates and legal opinions as shall reasonably be requested by the Administrative Agent.




     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) promptly
after the filing thereof with the United States Secretary of Labor, the Internal Revenue Service or
the PBGC, copies of each annual and other report with respect to each Plan, if any, or any trust
created thereunder, (b) immediately upon becoming aware of the occurrence of any ERISA Event or of
any “prohibited transaction,” as described in section 406 of ERISA or in section 4975 of the Code,
in connection with any Plan or any trust created thereunder, 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, when
known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto, and (c) 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. With respect
to each Plan, if any (other than a Multiemployer Plan), the Borrower will, and the Borrower will
cause each of its Subsidiaries and ERISA Affiliates to, (i) satisfy in full and in a timely manner,
without incurring any late payment or underpayment charge or penalty and without giving rise to any
lien, all of the contribution and funding requirements of section 412 of the Code (determined
without regard to subsections (d), (e), (f) and (k) thereof) and of section 302 of ERISA
(determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be
paid, to the PBGC in a timely manner, without



Second Lien Bridge Loan Agreement - 54









 





incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.



     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 Permanent Securities. The Borrower shall promptly commence the preparation of
a registration statement or a Rule 144A offering memorandum relating to the Permanent Securities
and will use reasonable commercial efforts to provide to the Arrangers, no later than 120 days
after the Effective Date, a complete initial draft of such document (including the financial
statements to be included therein). The Borrower shall engage and at all times retain an
Investment Bank (or promptly engage another Investment Bank if either party disengages from such
relationship) for the purpose of assisting the Borrower in issuing, selling or placing the
Permanent Securities, the Net Cash Proceeds of which shall equal or exceed amounts due under this
Agreement and be available to repay this Agreement on or before the Maturity Date.



ARTICLE IX

Negative Covenants




     Until the principal and interest on each Loan and all fees payable hereunder and all other
amounts payable under the Loan Documents have been paid in full, the Borrower covenants and agrees
with the Lenders that:



     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 September 30, 2006, permit its ratio
of EBITDA for the period of four fiscal quarters then ended to Interest Expense for such period to
be less than 2.0 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




Second Lien Bridge Loan Agreement - 55









 








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 arising under the Loan Documents or any guaranty of or
suretyship arrangement for the Notes or other Indebtedness arising under the Loan Documents.




          (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 now or hereafter outstanding under the Senior Revolving Credit Agreement (and any
guarantees thereof by the Guarantors), provided that (i) the aggregate principal amount of the
Senior Revolving Credit Agreement shall not exceed $800,000,000, (ii) no part of the Debt for
principal owing under the Senior Revolving Credit Agreement is subordinated in right of payment to
any other Debt for principal owing under the Senior Revolving Credit Agreement, (iii) such Debt is
comprised of a single facility with no differentiation among lenders in the revolving character,
pricing or maturity thereof and (iv) after giving effect to the incurrence of such Debt, no Default
or Event of Default exists under Section 9.01.




          (f) other Debt not to exceed $10,000,000 in the aggregate at any one time outstanding.




     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.





Second Lien Bridge Loan Agreement - 56









 








          (c) Liens securing the obligations of the Borrower and the Guarantors under the Senior
Revolving Credit Agreement and the other Senior Revolving Credit Documents; provided that,
such Liens shall not encumber any Property that is not subject to a second priority Lien in favor
of, or for the benefit of, the Lenders to secure the Indebtedness.




          (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 $100,000 at any time.




     Section 9.04 Dividends, Distributions and Redemptions. 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 and (iii) so long as no Default or Event of Default has occurred and is continuing or
would result therefrom, and subject to the proviso in Section 7.21(e) of the Senior Revolving
Credit Agreement, the Borrower may declare and pay quarterly cash dividends to its members of
Available Cash.



     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 in the
highest grade 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 exclusively in Investments described in Section
9.05(c), Section 9.05(d) or Section 9.05(e).




Second Lien Bridge Loan Agreement - 57









 








          (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, and (iii) made by the Borrower or any Guarantor in
Subsidiaries that are not Guarantors, provided 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
$2,000,000 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, (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 $2,000,000.




          (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 $250,000 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(i) exceeds
$250,000.




     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 leases of Hydrocarbon Interests), 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
limitation, any residual payments at the end of any lease, to



Second Lien Bridge Loan Agreement - 58









 





exceed $2,000,000 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. The Borrower and its Subsidiaries will not at any time:



          (a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with
which the Borrower any of its Subsidiaries or any ERISA Affiliate could be subjected to either a
civil penalty assessed pursuant to subsections (c), (i) or (l) of section 502 of ERISA or a tax
imposed by Chapter 43 of Subtitle D of the Code.




          (b) 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.




          (c) fail to make, or permit any ERISA Affiliate to fail to make, full payment when due of all
amounts which, under the provisions of any Plan, agreement relating thereto or applicable law, the
Borrower, any of its Subsidiaries or any ERISA Affiliate is required to pay as contributions
thereto.




          (d) permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding
deficiency within the meaning of section 302 of ERISA or section 412 of the Code, whether or not
waived, with respect to any Plan.




          (e) permit, or allow any ERISA Affiliate to permit, the actuarial present value of the benefit
liabilities under any Plan maintained by the Borrower, any of its Subsidiaries or any ERISA
Affiliate which is regulated under Title IV of ERISA to exceed 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. The term “actuarial present value of the benefit liabilities” shall
have the meaning specified in section 4041 of ERISA.




          (f) 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.




          (g) 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




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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.



          (h) incur, or permit any ERISA Affiliate to incur, a liability to or on account of a Plan
under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.




          (i) 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 employee welfare benefit plan, as
defined in section 3(1) of ERISA, including, without limitation, any such plan maintained to
provide benefits to former employees of such entities, that may not be terminated by such entities
in their sole discretion at any time without any material liability.




          (j) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current
liability such that the Borrower, any of its Subsidiaries or any ERISA Affiliate is required to
provide security to such Plan under section 401(a)(29) of the Code.




     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
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; and (d) sales and other dispositions of Properties not regulated
by Section 9.12(a) to (c) having a fair market value not to exceed $250,000 during any 12-month
period.



Second Lien Bridge Loan Agreement - 60









 





     Section 9.13 Environmental Matters. The Borrower will not, and will not permit any Subsidiary to, violate 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.



     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.



     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.



     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



Second Lien Bridge Loan Agreement - 61









 





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 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 75% of the then outstanding principal amount of the Borrower’s
Debt for borrowed money which bears interest at a floating rate. In no event shall any Swap
Agreement contain any requirement, agreement or covenant for the Borrower or any of its
Subsidiaries to post collateral or margin to secure their obligations under such Swap Agreement or
to cover market exposures. Notwithstanding anything to the contrary in this Section 9.18, there
shall be no prohibition against the Borrower entering into any “put” 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; Operating Agreements. The Borrower shall not alter
its status as a partnership for purposes of United States Federal Income taxes. The Borrower shall
not, and shall not permit any Subsidiary to, amend or modify any provision of its articles, bylaws,
or partnership or limited liability company organization or operating documents or agreements, or
any agreements with Affiliates of the type referred to in Section 9.14, if such amendment or
modification could reasonably be expected to have a Material Adverse Effect.



     Section 9.20 Anti-Layering. The Borrower will not, and will not permit any Subsidiary to,
incur, create, assume or suffer to exist any Debt if such Debt is subordinate or junior in ranking
in right of payment to the Senior Revolving Credit Agreement, unless such Debt is expressly
subordinated in right of payment to the obligations under this Agreement.



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 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




Second Lien Bridge Loan Agreement - 62









 








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,
Section 8.13, Section 8.17 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 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




Second Lien Bridge Loan Agreement - 63









 








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) (i) one or more judgments for the payment of money in an aggregate amount in excess of
$3,000,000 (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 (ii) any one or more non monetary
judgments that have, or could reasonably be expected to have, 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, in the opinion of the Majority Lenders, when
taken together with all 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 in any year.




          (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, shall become due and payable
immediately, without presentment,




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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, 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.



          (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; 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 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



Second Lien Bridge Loan Agreement - 65









 





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 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



Second Lien Bridge Loan Agreement - 66









 





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 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 Agent 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 and the Lenders 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 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



Second Lien Bridge Loan Agreement - 67









 





removal of the retiring Agent,
then the retiring Agent may, on behalf of the Lenders, appoint a successor Agent. Upon the
acceptance of its appointment as Agent hereunder by a successor, such successor shall succeed to
and become 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 and arranger of the Senior Revolving Credit Agreement only in respect of the
Senior Revolving Credit Agreement, 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




Second Lien Bridge Loan Agreement - 68









 








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, the Senior Revolving Credit Notes, other loans or other
securities and waives any existing or future conflicts of interest associated with the 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 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 hereby authorizes the
Administrative Agent to execute and deliver to the Borrower, at the Borrower’s sole cost and



Second Lien Bridge Loan Agreement - 69









 





expense, any and all releases of Liens, 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 Agent 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 its
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 6910

Houston, TX 77002
	 
	 	 	 	Attention: Kolja Rockov

Telephone: 713-223-0880 x1101

Fax: 713-223-0888

E-Mail: kr@linnenergy.com
	 
	 	 	 	with a copy to:
	 
	 	 	 	Linn Energy, LLC

650 Washington Road, 8th Floor

Pittsburgh, Pennsylvania 15228
	 
	 	 	 	Attention: Michael Linn/Chip Keddie

Telephone: 412-440-1400

Fax: 412-440-1499

E-mail: mcl@linnenergy.com; rpk@linnenergy.com




Second Lien Bridge Loan Agreement - 70









 






	 	(ii)	 	if to the Administrative Agent, to it at
	 
	 	 	 	JQV919 Third Avenue 

New York, New York 10022

Attention: Dina Wilson, Loan Assistant

Telecopy: 212-841-2683
	 
	 	 	 	with a copy to the Administrative Agent at:
	 
	 	 	 	JQV1200 Smith Street, Suite 3100

Houston, Texas 77002

Attention: Betsy Jocher

Telecopy: 713-659-6915





               (iii) if to any other Lender, in their capacity as such, 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 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 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
shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent
or any Lender may have had notice or knowledge of such Default at the time.




Second Lien Bridge Loan Agreement - 71









 








          (b) 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 Commitment of any Lender without the written consent
of such Lender, (ii) reduce the principal amount of any Loan 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, (iii)
postpone the scheduled date of payment or prepayment of the principal amount of any Loan, 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 Maturity Date without the written consent of each Lender affected thereby, (iv) 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, (v) waive or amend Section 6.01,
Section 8.14 or Section 10.02(c) change the definition of the terms “Domestic Subsidiary”, “Foreign
Subsidiary”, “Material Domestic Subsidiary” or “Subsidiary”, without the written consent of each
Lender, (vi) release any Guarantor (except as set forth in the Guaranty Agreement), release all or
substantially all of the collateral (other than as provided in Section 11.09), or reduce the
percentage set forth in Section 8.14(a) to less than 80%, without the written consent of each
Lender, or (vii) change any of the provisions of this Section 12.02(b) or the definition of
“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 hereunder or under any other Loan Document
without the prior written consent of the Administrative Agent. 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 and its 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 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 the Administrative Agent or any Lender in connection with any filing, registration, recording or
perfection of any security interest contemplated by this Agreement or





Second Lien Bridge Loan Agreement - 72









 








any Security Instrument or
any other document referred to therein, (iii) all out-of-pocket expenses incurred by the
Administrative Agent or any Lender, including the fees, charges and disbursements of any counsel
for the Administrative Agent or any Lender, 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, including, without limitation, all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
such Loans.



          (b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT, THE ARRANGERS 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 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 THE USE OF THE PROCEEDS THEREFROM, (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





Second Lien Bridge Loan Agreement - 73









 








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 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 the
Administrative Agent or the Arrangers under Section 12.03(a) or (b), each Lender severally agrees
to pay to the Administrative Agent or the Arrangers, as the case may be, such Lender’s ratable
share (determined as of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent or the Arrangers 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 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, except that (i) the
Borrower may not assign or otherwise transfer any of its rights or obligations




Second Lien Bridge Loan Agreement - 74









 








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, 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 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:




                    (A) the Borrower, provided that no consent of the Borrower shall be required if such
assignment is to a Lender, an Affiliate of a Lender or, if an Event of Default has occurred and is
continuing, is to any other assignee; and



                    (B) 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.



               (ii) 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 or Loans, the amount
of the Commitment or Loans 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.



               (iii) 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,



Second Lien Bridge Loan Agreement - 75









 





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).



               (iv) 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 Commitment of, and
principal amount of the Loans, 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 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 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 and each Lender.



               (v) 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, 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 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




Second Lien Bridge Loan Agreement - 76









 








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 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,
regardless of any investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent 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. The
provisions of Section 5.01, Section 5.02, Section 5.03 and Section 12.03 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 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.




Second Lien Bridge Loan Agreement - 77









 








     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.




          (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.



Second Lien Bridge Loan Agreement - 78









 





          (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 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




Second Lien Bridge Loan Agreement - 79









 








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
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 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, (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 or (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 or any Lender on a nonconfidential basis from a
source other than the Borrower. 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 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.



     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: (i) the aggregate of all consideration which constitutes interest
under law



Second Lien Bridge Loan Agreement - 80









 





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 (ii) 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 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



Second Lien Bridge Loan Agreement - 81









 





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 No Third Party Beneficiaries. This Agreement, the other Loan Documents, and
the agreement of the Lenders to make Loans 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 or any
Lender for any reason whatsoever. There are no third party beneficiaries.



     Section 12.15 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.



[SIGNATURES BEGIN NEXT PAGE]





Second Lien Bridge Loan Agreement - 82










 







     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
	 

	 	 	 	 
	 

	 	 	 	Kolja Rockov
	 

	 	 	 	Executive Vice President and Chief
	 

	 	 	 	Financial Officer






Signature Page to Second Lien Bridge Loan Agreement - 1






 









 








	 	 	 	 	 
	 	 	BNP PARIBAS, as Administrative Agent and a
	 	 	Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Douglas R. Liftman
	 

	 	 	 	 
	 

	 	Name:	 	Douglas R. Liftman
	 

	 	Title:
	 	Managing Director
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Betsy Jocher
	 

	 	 	 	 
	 

	 	Name:
	 	Betsy Jocher
	 

	 	Title:
	 	Director






Signature Page to Second Lien Bridge Loan Agreement - 2






 









 








	 	 	 	 	 
	 	 	ROYAL BANK OF CANADA, as Syndication
	 	 	Agent and a Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Don  J. McKinnerney
	 

	 	 	 	 
	 

	 	Name:
	 	 Don J. McKinnerney
	 

	 	Title:
	 	Authorized Signatory






Signature Page to Second Lien Bridge Loan Agreement - 3






 









 








	 	 	 	 	 
	 	 	SOCIETE GENERALE, as a Co-Documentation
	 	 	Agent and a Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Graeme R. Bullen
	 

	 	 	 	 
	 

	 	Name:
	 	Graeme R. Bullen
	 

	 	Title:
	 	Director






Signature Page to Second Lien Bridge Loan Agreement - 4






 









 








	 	 	 	 	 
	 	 	COMERICA BANK, as a Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Huma Vadgama
	 

	 	 	 	 
	 

	 	Name:
	 	Huma Vadgama
	 

	 	Title:
	 	Vice President






Signature Page to Second Lien Bridge Loan Agreement - 5




 









 








	 	 	 	 	 
	 	 	CITICORP NORTH AMERICA, INC., as a Co-
	 	 	Documentation Agent and a Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Ross MacIntyre
	 

	 	 	 	 
	 

	 	Name:
	 	Ross MacIntyre
	 

	 	Title:
	 	Managing Director and Vice President






Signature Page to Second Lien Bridge Loan Agreement - 6




 









 








	 	 	 	 	 
	 	 	LEHMAN COMMERICAL PAPER INC., as a
	 	 	Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Maria M. Lund
	 

	 	 	 	 
	 

	 	Name:
	 	Maria M. Lund
	 

	 	Title:
	 	Authorized Signatory






Signature Page to Second Lien Bridge Loan Agreement - 7





 









 








	 	 	 	 	 
	 	 	MCDONALD INVESTMENTS INC., a
	 	 	subsidiary of KeyCorp, as a Co-Documentation
	 	 	Agent and a Lender
	 
	 	 	 	 
	 

	 	By:
	 	/s/ JA Chinnici III
	 

	 	 	 	 
	 

	 	Name:
	 	JA Chinnici III
	 

	 	Title:
	 	Managing Director






Signature Page to Second Lien Bridge Loan Agreement - 8





 









 








ANNEX II

TERMS OF SUBORDINATION




     Section 1.1 Subordination of Obligations. The Borrower and each Subsidiary covenant
and agree, and each Term Lender by its acceptance of a Term Note covenants and agrees, that the
payment of the Subordinated Obligations shall, to the extent set forth in this Annex II, be
subordinate and junior and subject in right of payment to the prior payment in full in cash of all
Senior Indebtedness, whether outstanding on the date hereof or hereafter created, incurred, assumed
or guaranteed.



     Section 1.2 Payment Default or Acceleration. Except under circumstances when the
terms of Section 1.5 of this Annex II are applicable, if (a) a Payment Default or Senior
Indebtedness Acceleration shall have occurred and be continuing and (b) the Term Lenders or the
Term Administrative Agent or other representative shall have received a Payment Default Notice,
then neither the Borrower nor any Subsidiary may make, and no Term Lender shall accept, receive or
collect, any direct or indirect payment or distribution of any kind or character (in cash,
securities, other Property, by setoff, or otherwise other than Reorganization Securities) of any
properties or assets of the Borrower or any Subsidiary on account of the Subordinated Obligations
during the Payment Blockage Period; provided, however, that in the case of any payment on or in
respect of any Subordinated Obligation that would (in the absence of any such Payment Default
Notice) have been due and payable on any date (a “Scheduled Payment Date”) during such
Payment Blockage Period pursuant to the terms of the Term Notes as in effect on the date hereof or
as amended consistent with the provisions of Section 1.12 of this Annex II, the provisions of this
Section 1.2 shall not prevent the making and acceptance of such payment (a “Scheduled
Payment”), together with any additional default interest as is due on the Term Notes, on or
after the date immediately following the termination of such Payment Blockage Period. In the event
that, notwithstanding the foregoing, either the Borrower or any Subsidiary shall make any payment
or distribution to any Term Lender prohibited by the foregoing provisions of this Section 1.2, then
and in such event such payment or distribution shall be held in trust for the benefit of and
immediately shall be paid over to the holders of the Senior Indebtedness or the Senior Indebtedness
Representative for application against the Senior Indebtedness remaining unpaid until such Senior
Indebtedness are paid in full in cash. Any Payment Default Notice shall be deemed received by the
Term Lenders upon the date of actual receipt by the Term Lenders or the Term Administrative Agent
or other representative of such Payment Default Notice in writing.



     Section 1.3 Non-Payment Default. Except under circumstances when the terms of Section
1.2 of this Annex II or Section 1.5 of this Annex II are applicable, if (a) a Non-Payment Default
shall have occurred and be continuing, (b) the Term Lenders or the Term Administrative Agent or
other representative shall have received a Non-Payment Default Notice, and (c) no Non-Payment
Default Notice shall have been given within the 360 day period immediately preceding the giving of
such Non-Payment Default Notice, then neither the Borrower nor any Subsidiary may make, and no Term
Lender shall accept, receive or collect, any direct or indirect payment or distribution of any kind
or character (in cash, securities, other Property, by setoff, or otherwise other than
Reorganization Securities) of any properties or assets of the Borrower or any Subsidiary on account
of the Subordinated Obligations during the Non-Payment Blockage



 ANNEX II - 1









 




Period; provided, however, that in the case of any Scheduled Payment on or in respect of any
Subordinated Obligation that would (in the absence of any such Non-Payment Default Notice) have
been due and payable on any Scheduled Payment Date during such Non-Payment Blockage Period pursuant
to the terms of the Term Notes as in effect on the date hereof or as amended consistent with the
requirements of Section 1.12 of this Annex II, the provisions of this Section 1.3 shall not prevent
the making and acceptance of such Scheduled Payment, together with any additional default interest
as is due on the Term Notes, on or after the date immediately following the termination of such
Non-Payment Blockage Period. In the event that, notwithstanding the foregoing, the Borrower or any
Subsidiary shall make any payment or distribution to any Term Lender prohibited by the foregoing
provisions of this Section 1.3, then and in such event such payment or distribution shall be held
in trust for the benefit of and immediately shall be paid over to the holders of the Senior
Indebtedness or the Senior Indebtedness Representative for application against the Senior
Indebtedness remaining unpaid until such Senior Indebtedness are paid in full in cash. Any
Non-Payment Default Notice shall be deemed received by the Term Lenders upon the date of actual
receipt by the Term Lenders or the Term Administrative Agent or other representative of such
Non-Payment Default Notice in writing.




     Section 1.4 Standstill. At any time that the Term Lenders are not permitted to
receive payments on the Subordinated Obligations pursuant to either Section 1.2 or 1.3 of this
Annex II, the Term Lenders and the Term Administrative Agent or other representative of the Term
Lenders will not commence any Enforcement Action relative to the Borrower or any Subsidiary during
the Standstill Period. Upon the termination of the Standstill Period, the Term Lenders may
exercise all rights or remedies they may have in law or equity; provided, however, that if a
Standstill Period terminates pursuant to clause (e) thereof, no Term Lender and no agent or
representative thereof shall exercise any remedies against, or attempt to foreclose upon, garnish,
sequester or execute upon, any Property known to it as constituting collateral for the Senior
Indebtedness (other than to file or record any judgment Liens it may have obtained against such
collateral) during the period that such Standstill Period would have been in effect but for
termination pursuant to clause (e) of the definition of “Standstill Period;” provided further, that
the Payment Blockage Period or the Non-Payment Blockage Period, as the case may be, if not also
terminated, shall continue for its full period notwithstanding the termination of the Standstill
Period. Notwithstanding the foregoing, no Standstill Period may be commenced while any other
Standstill Period exists or within 180 days following the termination of any prior Standstill
Period (provided that this sentence shall not relieve any Term Lender of its obligation to provide
notice under Section 1.9 of this Annex II).



     Section 1.5 Insolvency; Bankruptcy; Etc. In the event of the institution of any
Insolvency Proceeding relative to the Borrower or any Subsidiary, then:



     (a) The holders of the Senior Indebtedness shall be entitled to receive payment in full in
cash of the Senior Indebtedness before the Term Lenders are entitled to receive any direct or
indirect payment or distribution of any kind or character, whether in cash, Property or securities
(other than Reorganization Securities) on account of the Subordinated Obligations.



 ANNEX II - 2









 





     (b) Any direct or indirect payment or distribution of any kind or character, whether in cash,
Property or securities, by setoff or otherwise, which may be payable or deliverable in such
proceedings in respect of the Subordinated Obligations but for the provisions of this Annex II
shall be paid or delivered by the Person making such payment or distribution, whether the Borrower,
a Subsidiary of the Borrower, a trustee in bankruptcy, a receiver, a liquidating trustee, or
otherwise, directly to the holders of the Senior Indebtedness or the Senior Indebtedness
Representative, to the extent necessary to make payment in full in cash of all Senior Indebtedness
remaining unpaid; provided, however, that no such delivery of any Reorganization Securities shall
be made to any holders of the Senior Indebtedness. In the event that, notwithstanding the
foregoing provisions of this Section 1.5, any Term Lender shall have received any such payment or
distribution of any kind or character, whether in cash, Property or securities, by setoff or
otherwise, before all Senior Indebtedness is paid in full in cash, which is to be paid to the
holders of the Senior Indebtedness under the foregoing provisions of this Section 1.5, then and in
such event such payment or distribution shall be held in trust for the benefit of and immediately
shall be paid over to the holders of the Senior Indebtedness or the Senior Indebtedness
Representative for application to the payment of all Senior Indebtedness remaining unpaid until all
such Senior Indebtedness shall have been paid in full in cash.



     (c) If no proof of claim is filed in any Insolvency Proceeding with respect to any
Subordinated Obligations by the tenth day prior to the bar date for any such proof of claim, the
Senior Indebtedness Representative may, after notice to the Term Lenders or the Term Administrative
Agent or other representative, file such a proof of claim on behalf of the Term Lenders, and each
Term Lender hereby irrevocably appoints the Senior Indebtedness Representative as its agent and
attorney-in-fact for such limited purpose; provided, that the foregoing shall not confer to the
holder of any Senior Indebtedness the right to vote on behalf of the Term Lenders in any Insolvency
Proceedings.



     Section 1.6 No Impairment. No right of any present or future holder of Senior
Indebtedness to enforce subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Borrower or any Subsidiary or by any
non-compliance by the Borrower or any Subsidiary with the terms, provisions, and covenants of this
Annex II, the Term Loan Agreement or the Term Notes, regardless of any knowledge thereof any such
Term Lender may have or be otherwise charged with. The provisions of this Annex II shall be
enforceable directly by any present or future holder of the Senior Indebtedness and/or the Senior
Indebtedness Representative.



     Section 1.7 Rights of Creditors; Subrogation. The provisions of this Annex II are for
the purpose of defining the relative rights of the holders of the Senior Indebtedness on the one
hand, and the Term Lenders on the other hand, and nothing herein shall impair, as between the
Borrower and the Guarantors and the Term Lenders, the obligation of the Borrower and the
Guarantors, which are unconditional and absolute, to pay to the Term Lenders the principal thereof
and interest thereon in accordance with their terms and the provisions thereof, nor shall anything
herein, except as otherwise provided in Section 1.4 of this Annex II, prevent the Term Lenders from
exercising all remedies otherwise permitted by applicable law or hereunder upon default under the
Term Loan Agreement or under the Term Notes (including the right to demand payment and sue for
performance thereof and of the Term Notes and to accelerate the maturity



 ANNEX II - 3









 







thereof as provided by the
terms of the Term Notes), subject to the rights of holders of the Senior Indebtedness under this
Annex II. Upon payment in full of the Senior Indebtedness in cash and termination of the
commitments of any holder of the Senior Indebtedness to make loans or
extensions of credit, and expiration or termination of all letters of credit issued by any
holder of the Senior Indebtedness, the Term Lenders shall, to the extent of any payments or
distributions paid or delivered to the holders of the Senior Indebtedness or otherwise applied to
the Senior Indebtedness pursuant to the provisions of this Annex II, be subrogated to the rights of
the holders of the Senior Indebtedness to receive payments or distributions of assets of the
Borrower or any Guarantor made on Senior Indebtedness (and any security therefor) until the
Subordinated Obligations shall be paid in full (and, for this purpose, no such payments or
distributions paid or delivered to the holders of the Senior Indebtedness or otherwise applied to
the Senior Indebtedness shall be deemed to have discharged the Subordinated Obligations), and, for
the purposes of such subrogation, no payments to the holders of the Senior Indebtedness of any
cash, assets, stock, or obligations to which the Term Lenders would be entitled except for the
provisions of this Annex II shall, as between the Borrower and the Guarantors, any of their
respective creditors (other than the holders of the Senior Indebtedness), and the Term Lenders, be
deemed to be a payment by the Borrower or any Guarantor to or on account of Senior Indebtedness.
The fact that failure to make any payment on account of the Subordinated Obligations is caused by
reason of the operation of any provision of this Annex II shall not be construed as preventing the
occurrence of an Event of Default.



     Section 1.8 Payments on Senior Indebtedness. In the event that any Term Lender
determines in good faith that evidence is required with respect to the right of any holder of the
Senior Indebtedness to participate in any payment or distribution pursuant to this Annex II or the
amount of such participation, such Term Lender may request such Person to furnish evidence to the
reasonable satisfaction of such Term Lender as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this Annex II, and if such
evidence is not furnished, such Term Lender may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment; provided that, upon the
written request of such Person to such Term Lender, such payment shall be made to the court having
jurisdiction over such judicial determination or to another Person mutually satisfactory to such
Person and such Term Lender, as escrowee, to be held and invested pending such judicial
determination in accordance with such instructions as shall be mutually satisfactory to such Person
and such Term Lender and upon such judicial determination becoming final and non-appealable to be
distributed in accordance therewith to the Person entitled thereto.



     Section 1.9 Notice of Acceleration, Enforcement Action.



     (a) Each Term Lender agrees that in the event any Event of Default shall occur, and as a
result thereof, any Term Lender or the Term Administrative Agent or other representative of such
Term Lender accelerates maturity of the Term Notes, then such Term Lender or the Term
Administrative Agent or other representative shall give prompt (and in any event within three (3)
Business Days) notice thereof in writing to the holders of the Senior Indebtedness or the Senior
Indebtedness Representative. Neither the Borrower nor any Subsidiary may pay the Term Notes until
ten (10) Business Days after the Senior Indebtedness Representative receives the notice



 ANNEX II - 4









 







described
above and, after that ten (10) Business Day period, may pay the Term Notes, and the Term Lenders
may receive or collect such payment, only if the provisions of this Annex II do not prohibit such
payment at that time.



     (b) Each Term Lender agrees that in the event any Event of Default shall occur, and as a
result thereof, any Term Lender or the Term Administrative Agent or other representative of such
Term Lender intends to commence any Enforcement Action, then such Term Lender or the Term
Administrative Agent or other representative shall first deliver notice thereof in writing to the
Senior Indebtedness Representative both (i) not less than ten (10) days prior to taking any such
Enforcement Action, and (ii) one (1) Business Day after such Enforcement Action is taken.



     Section 1.10 Reinstatement. The provisions of this Annex II shall remain in force and
effect until the indefeasible payment in full of all Senior Indebtedness and the termination of all
commitments of any holder of the Senior Indebtedness to make loans or extensions of credit, and
expiration or termination of all letters of credit issued by any holder of the Senior Indebtedness.
To the extent any payment of or distribution in respect of the Senior Indebtedness (whether by or
on behalf of the Borrower or any of its Subsidiaries, as proceeds of security or enforcement of any
right of set off or otherwise) is declared to be fraudulent or preferential, set aside or required
to be paid to the Borrower or any Subsidiary or any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar person under any bankruptcy, insolvency, receivership, fraudulent
conveyance or similar law, then if such payment or distribution is recovered by, or paid over to,
the Borrower or any Subsidiary or such receiver, trustee in bankruptcy, liquidating trustee, agent
or other similar Person, the Senior Indebtedness or part thereof originally intended to be
satisfied shall be deemed to be reinstated and outstanding as if such payment has not occurred and
the provisions of this Annex II shall continue to be applicable in respect of said reinstated
Senior Indebtedness.



     Section 1.11 Rights of Holders of the Senior Indebtedness. The holders of the Senior
Indebtedness may, at any time and from time to time subject to the terms of the Senior
Indebtedness, without the consent of or notice to the Term Lenders or the Term Administrative Agent
or other representative of the Term Lenders, without incurring responsibility to the Term Lenders
and without impairing or releasing the subordination or other benefits provided in this Annex II or
the obligations hereunder of the Term Lenders to the holders of the Senior Indebtedness, do any one
or more of the following: (a) change the manner, place or terms of payment or extend the time of
payment of, or renew, increase (but not in excess of the cap provided for in the definition of
“Senior Indebtedness”), alter or amend, Senior Indebtedness or any instrument evidencing the same
or any covenant or agreement under which Senior Indebtedness is outstanding or secured or any
liability of any obligor thereon; (b) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (c) settle or compromise any Senior
Indebtedness or any liability of any obligor thereon or release any Person liable in any manner for
the payment of Senior Indebtedness; and (d) waive any default under Senior Indebtedness and
exercise or refrain from exercising any rights against the Borrower, any Subsidiary or any other
Person. The foregoing provisions are not intended to permit a change to the definition of “Senior
Indebtedness”.



 ANNEX II - 5









 





     Section 1.12 Amendments. No amendment of this Annex II, or the definitions used in
this Annex II, or which would have the effect of modifying this Annex II, or the definitions used
in this Annex II, shall be effective unless it is in writing and made with the prior written
consent of each of the Required Senior Revolving Lenders or by the Senior Indebtedness
Representative acting at their written discretion on their behalf, provided, that with
respect to material
amendments relating to subordination and payment in this Annex II, the prior written consent
of each of the Senior Revolving Lenders is required.



     Section 1.13 Identity of Term Lenders for Notice Purposes. For purposes of any notice
required or permitted to be given hereunder by the holders of the Senior Indebtedness or the Senior
Indebtedness Representative to the Term Lenders, or any of them, the holders of the Senior
Indebtedness and the Senior Indebtedness Representative shall be entitled to rely, conclusively, on
the identity and address of each Term Lender as set forth in the Term Loan Agreement or as
otherwise set forth in the most recent notice received by the Senior Indebtedness Representative
from a Term Lender referring to the Term Loan Agreement for purposes of providing the identity and
address of each Term Lender. The Term Lenders agree that any notices required to be given to the
Term Lenders shall be effective if such notice is given to the Term Administrative Agent or other
representative of the Term Lenders. For so long as the Subordinated Obligations are outstanding,
the Term Lenders agree to designate and maintain an agent or other representative for such
purposes.



     Section 1.14 Liens.



     (a) All Liens granted by the Borrower, or, if applicable, any Guarantor, which at any time
secure the Term Loan Agreement, any Term Note or any other Term Loan Document are hereby made, and
will at all times prior to the full payment or discharge of the Senior Indebtedness be, subject and
subordinate to all Liens granted by the Borrower or any Guarantor which at any time secure the
Senior Indebtedness, which subordination shall be effective whether or not all such Liens securing
Senior Indebtedness have been properly recorded, filed and otherwise perfected prior to all such
Liens securing any Term Note and regardless of the relative priority of such Liens as determined
without regard to this Annex II. The mortgages included in the Senior Revolving Credit Documents
do (and other mortgages, security agreements and similar Senior Revolving Credit Documents may)
describe the indebtedness secured thereby in a manner which might include indebtedness other than
the Senior Indebtedness. For so long as any Term Note is outstanding, as between the Term Lenders
and the holders of the Senior Indebtedness, only the Senior Indebtedness shall be deemed to be
secured by any Liens granted under the Senior Revolving Credit Documents.



     (b) Each Term Lender agrees that it will not initiate, join in or prosecute any claim, action
or other proceeding challenging the validity or enforceability of the Senior Indebtedness or the
Liens securing the Senior Indebtedness.



     Section 1.15 Legend.



     (a) Each Term Note shall be conspicuously inscribed with a legend substantially in the form
and substance as follows:



 ANNEX II - 6









 





PAYMENT OF THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF THE SECOND
LIEN BRIDGE LOAN AGREEMENT DATED AUGUST 1, 2006 BY AND AMONG LINN ENERGY, LLC, BNP
PARIBAS, AS ADMINISTRATIVE AGENT AND THE TERM LENDERS PARTIES THERETO, BE
SUBORDINATE AND JUNIOR IN RIGHT OF
PAYMENT TO THE PRIOR PAYMENT IN FULL OF ALL SENIOR INDEBTEDNESS, THE PROVISIONS OF
WHICH ANNEX II OF SUCH LOAN AGREEMENT BEING INCORPORATED HEREIN AND BY THIS
REFERENCE BEING MADE A PART HEREOF.



     (b) The Borrower and each Term Lender or the Term Administrative Agent or other representative
of the Term Lenders shall cause each mortgage, security agreement and other instrument securing all
or any part of the Subordinated Obligations to be conspicuously inscribed with a legend
substantially in the form and substance as follows:



ALL LIENS GRANTED BY THIS INSTRUMENT SHALL, TO THE EXTENT SET FORTH IN ANNEX II OF
THE SECOND LIEN BRIDGE LOAN AGREEMENT DATED AUGUST 1, 2006 BY AND AMONG LINN ENERGY,
LLC, BNP PARIBAS, AS ADMINISTRATIVE AGENT AND TERM LENDERS PARTIES THERETO, BE
SUBORDINATE AND JUNIOR TO ALL LIENS GRANTED BY GRANTOR TO SECURE THE SENIOR
INDEBTEDNESS REGARDLESS OF THE RELATIVE PRIORITY OF SUCH LIENS AS DETERMINED WITHOUT
REGARD TO SUCH ANNEX II OF SUCH TERM LOAN AGREEMENT, THE PROVISIONS OF WHICH ANNEX
II OF SUCH TERM LOAN AGREEMENT BEING INCORPORATED HEREIN AND BY THIS REFERENCE BEING
MADE A PART HEREOF.



     Section 1.16 Successors and Assigns. Each Term Lender acknowledges and agrees that
the provisions of this Annex II are, and are intended to be, an inducement and a consideration to
each holder of the Senior Indebtedness to make, extend and continue the Senior Indebtedness; and
each holder of the Senior Indebtedness shall be deemed conclusively to have relied upon the
provisions of this Annex II in permitting the Borrower to incur the Subordinated Obligations and in
making, extending, continuing and/or acquiring such Senior Indebtedness. This Annex II shall pass
to and be fully binding upon the successors and assigns of each Term Lender and shall inure to the
benefit of the present and future holders of the Senior Indebtedness and the Senior Indebtedness
Representative and their respective successors and assigns (including without limitation any Person
refinancing any Senior Indebtedness).



     Section 1.17 Defined Terms.



          (a) Each capitalized term used in this Annex II, but not defined herein, shall have the
meaning ascribed such term in the Term Loan Agreement.




          (b) The following terms have the following meanings when used in this Annex II:

 ANNEX II - 7









 









     “Blockage Period” means a Non-Payment Blockage Period or a Payment Blockage Period.



     “Eligible Swap Agreement” means any present or future Swap Agreement between the
Borrower or any Subsidiary and any Senior Revolving Lender or any Affiliate of any Senior Revolving
Lender. For the avoidance of doubt, a Swap Agreement ceases to be an Eligible Swap Agreement if
the Person that is the counterparty to the Borrower under a Swap Agreement ceases
to be a Senior Revolving Lender under the Senior Revolving Credit Agreement (or, in the case
of an affiliate of a Senior Revolving Lender, the Person affiliated therewith ceases to be a Senior
Revolving Lender under the Senior Revolving Credit Agreement).



     “Enforcement Action” means, with respect to any Subordinated Obligations: any
enforcement of any right or remedy including any enforcement or foreclosure of Liens granted by the
Borrower or any Subsidiary to secure any or all of such Subordinated Obligations, any enforcement
or foreclosure of Liens on any capital stock or other equity interests in the Borrower or any
Subsidiary which may be granted by the Borrower or its Subsidiaries or any holder of equity in the
Borrower to secure any or all of such Subordinated Obligations, or any other efforts to collect
proceeds from the Borrower’s or any of its Subsidiary’s assets or properties (including proceeds of
production) to satisfy the Subordinated Obligations, including, without limitation, the
commencement, or the joining with any other creditor of the Borrower or any Subsidiary in the
commencement of any Insolvency Proceeding against the Borrower or any Subsidiary; provided, that
none of the following shall constitute an Enforcement Action: (a) acceleration of any of the
Subordinated Obligations following acceleration of any of the Senior Indebtedness (provided that
such acceleration of Senior Indebtedness has not previously been rescinded), (b) acceleration of
any of the Senior Indebtedness following acceleration of any of the Subordinated Obligations
(provided that such acceleration of the Subordinated Obligations has not previously been
rescinded), (c) actions by any Term Lender to obtain possession of or receive Reorganization
Securities, or (d) taking any action described above during the existence of any Insolvency
Proceeding subject to the jurisdiction of a court of competent authority.



     “Insolvency Proceeding” means (a) any voluntary or involuntary case, action, or
proceeding before any Governmental Authority having jurisdiction over the applicable Person or its
assets relating to bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding-up, or relief of debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in each case whether undertaken
under U.S. Federal, state, or foreign law.



     “Non-Payment Blockage Period” means, with respect to any Non-Payment Default, the
period from and including the date of receipt by the Term Lenders or the Term Administrative Agent
or other representative of a Non-Payment Default Notice relating thereto until the first to occur
of (a) the date upon which the Senior Indebtedness have been paid in full in cash, all commitments
of any holder of Senior Indebtedness to make loans or extensions of credit have terminated, and all
letters of credit issued by any holder of Senior Indebtedness have expired, terminated or fully
collateralized in cash, (b) the 179th day after receipt of such Non-Payment Default Notice, (c) the
date on which the Non-Payment Default which is the subject of such



 ANNEX II - 8









 







Non-Payment Default Notice has
been waived in writing by the applicable holder or holders of the Senior Indebtedness or an agent
or representative on their behalf, cured, or ceased to exist, or (d) the date upon which the
Person(s) giving such Non-Payment Default Notice notify the Term Lenders or the Term Administrative
Agent or other representative in writing of the termination of such Non-Payment Blockage Period.



     “Non-Payment Default” means the occurrence of any event under any Senior Revolving
Document evidencing Senior Indebtedness, not constituting a Payment Default, which gives the
holder(s) of such Senior Indebtedness, or an agent or representative acting on behalf of such
holder(s), the right to cause the maturity of such Senior Indebtedness to be accelerated
immediately without any further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace period.



     “Non-Payment Default Notice” means a written notice from or on behalf of the Senior
Indebtedness Representative that a Non-Payment Default has occurred and is continuing which
identifies such Non-Payment Default and specifically designates such notice as a “Non-Payment
Default Notice”.



     “Payment Blockage Period” means, with respect to any Payment Default or Senior
Indebtedness Acceleration, the period from and including the date of receipt by the Term Lenders or
the Term Administrative Agent or other representative of a Payment Default Notice relating thereto
until the first to occur of (a) the date upon which the Senior Indebtedness have been paid in full
in cash, all commitments of any holder of Senior Indebtedness to make loans or extensions of credit
have terminated, and all letters of credit issued by any holder of Senior Indebtedness have
expired, terminated or fully collateralized in cash, (b) if such Payment Default Notice relates to
a Payment Default, the date on which the Payment Default which is the subject of such Payment
Default Notice has been waived in writing by the applicable holder or holders of the Senior
Indebtedness or an agent or representative on their behalf, cured or ceased to exist, or if such
Payment Default Notice relates to a Senior Indebtedness Acceleration, the date on which such
acceleration is rescinded, annulled or ceased to exist, or (c) the day upon which the Person(s)
giving such Payment Default Notice notify the Term Lenders or the Term Administrative Agent or
other representative in writing of the termination of such Payment Blockage Period.



     “Payment Default” means a default by the Borrower or any Guarantor in the payment of
any amount owing with respect to the Senior Indebtedness, whether with respect to principal,
interest, premium, letter of credit reimbursement obligations, commitment fees or letter of credit
fees or otherwise when the same becomes due and payable, whether at maturity or at a date fixed for
payment of an installment or prepayment or by declaration or acceleration or otherwise.



     “Payment Default Notice” means a written notice from or on behalf of the Senior
Indebtedness Representative that either (i) a Payment Default with respect to such Senior
Indebtedness has occurred and is continuing, or (ii) a Senior Indebtedness Acceleration with
respect to such Senior Indebtedness has occurred and is continuing.



 ANNEX II - 9









 





     “Reorganization Securities” means (a) debt securities that are issued pursuant to an
Insolvency Proceeding the payment of which is subordinate and junior at least to the extent
provided in this Annex II to the payment of the Senior Indebtedness outstanding at the time of the
issuance thereof (including any refinancing of Senior Indebtedness pursuant to an Insolvency
Proceeding) and to the payment of all debt securities issued in exchange for such Senior
Indebtedness in such Insolvency Proceeding (whether such subordination is effected by the terms of
such securities, an order or decree issued in such Insolvency Proceeding, by agreement of the Term
Lenders or otherwise), or (b) equity securities that are issued pursuant to an Insolvency
Proceeding; provided, in either case, that such securities are authorized by an order or decree
made by a court of competent jurisdiction in such Insolvency Proceeding.



     “Required Senior Revolving Lenders” means Senior Revolving Lenders holding at least
sixty-six and two-thirds percent (66-2/3%) of the outstanding Senior Indebtedness, or if no
principal amount of Loans or letters of credit is then outstanding, Senior Revolving Lenders
holding at least sixty-six and two-thirds percent (66-2/3%) of the total Commitments.



     “Senior Indebtedness” means and includes (a) all principal indebtedness for loans now
outstanding or hereafter incurred, and all letter of credit reimbursement obligations now existing
or hereafter arising, under the Senior Revolving Credit Agreement, provided that the aggregate
outstanding principal amount of Senior Indebtedness under this clause (a) shall not exceed
$800,000,000 at any time, and provided further, that if the aggregate principal amount of Senior
Indebtedness (constituting principal and letter of credit reimbursement obligations) shall exceed
$800,000,000, then the subordination of the Term Notes as contemplated by Annex II to the Senior
Indebtedness of $800,000,000 or less shall not be impaired, (b) all amounts now or hereafter owing
to any of the Senior Revolving Lenders or any of their Affiliates under any Eligible Swap
Agreement, (c) all interest accruing on the Senior Indebtedness described in the preceding clauses
(a) and (b), and (d) all other monetary obligations (whether now outstanding or hereafter incurred)
for which the Borrower or any Guarantor is responsible or liable as obligor, guarantor or otherwise
under or pursuant to any of the Senior Revolving Credit Documents including, without limitation,
all fees, penalties, yield protections, breakage costs, damages, indemnification obligations,
reimbursement obligations, and expenses (including, without limitation, fees and expenses of
counsel to the Senior Indebtedness Representative and the Senior Revolving Lenders) together with
interest on the foregoing to the extent provided for in the Senior Revolving Credit Documents. The
interest described in the preceding clause (c) and the premiums and penalties described in the
preceding clause (d) include, without limitation, all interest accruing after the commencement of
any Insolvency Proceeding under the terms of the Senior Revolving Credit Documents whether or not
such interest constitutes an allowed claim in any such Insolvency Proceeding.



     “Senior Indebtedness Acceleration” means with respect to the Senior Indebtedness that
the holder or holders of such Senior Indebtedness, or an agent or representative on behalf of such
holder or holders, have caused the maturity of such Senior Indebtedness to be accelerated.



     “Senior Indebtedness Default” means a Payment Default or a Non-Payment Default.




 ANNEX II - 10









 







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



     “Senior Revolving Credit Agreement” means that certain $800,000,000 Second Amended and
Restated Credit Agreement dated as of the August 1, 2006 among the Borrower, BNP Paribas, as
Administrative Agent and the financial institutions listed therein from time to time as Senior
Revolving Lenders, as from time to time renewed, extended, amended, supplemented, or restated, and
any agreements representing the refinancing, replacement, or substitution in whole or in part of
the revolving credit loans and letter of credit liabilities made or incurred under such Senior
Revolving Credit Agreement.



     “Senior Revolving Credit Documents” means, collectively, (a) the Senior Revolving
Credit Agreement and the Eligible Swap Agreements, (b) any note, bond or other instrument
evidencing Senior Indebtedness, (c) all mortgages, security agreements, pledge agreements or
financing statements evidencing, creating or perfecting any Lien to secure the Senior Indebtedness
in any way, (d) all guarantees of the Senior Indebtedness, (d) all other documents, instruments or
agreements relating to the Senior Indebtedness now or hereafter executed or delivered by and among
the Borrower, any Subsidiary, the Senior Indebtedness Representative or any Senior Revolving
Lender, including without limitation each of the other the “Loan Documents” as such term is defined
in the Senior Revolving Credit Agreement, and (e) all renewals, extensions, amendments,
modifications or restatements of the foregoing.



     “Senior Revolving Lenders” means all Persons which now or hereafter constitute a
“Lender” under the Senior Revolving Credit Agreement and their respective successors and assigns,
and all Person refinancing any Senior Indebtedness and their respective successors and assigns.



     “Standstill Period” means the period beginning with the commencement of a Blockage
Period and ending on the earliest of (a) the date when the Senior Indebtedness Default giving rise
to such Blockage Period has been cured or waived in writing, (b) the date of the repayment in full
in cash of the Senior Indebtedness, (c) the date that is 90 days after the commencement of a
Blockage Period, (d) the end of the Non-Payment Blockage Period applicable to such Senior
Indebtedness Default, (e) the date on which the Senior Indebtedness shall have been declared due
and payable prior to its stated maturity or any holder of Senior Indebtedness commences proceedings
to collect any Senior Indebtedness or realize upon any material part of the collateral for any
Senior Indebtedness and (f) the date upon which any Insolvency Proceeding is commenced.



     “Subordinated Obligations” means any and all indebtedness (whether for principal,
interest, fees, indemnifications or otherwise, but not expenses) now or hereafter owing by the
Borrower or any Subsidiary under or in connection with the Term Loan Agreement, the Term Notes, any
mortgage, guaranty or other security instrument given in connection therewith, and any letter
agreement or other agreement providing for payment of fees in connection therewith.



ANNEX II - 11









 








     “Term Administrative Agent” means BNP Paribas, in its capacity as Administrative Agent
for the Term Lenders under the Term Loan Agreement, together with any successors in such capacity.



     “Term Lenders” means all Persons which now or hereafter constitute a “Lender” under
the Term Loan Agreement and their respective successors and assigns, and all Person refinancing any
Senior Indebtedness and their respective successors and assigns.



     “Term Loan Agreement” means that certain $250,000,000 Second Lien Bridge Loan
Agreement dated as of the August 1, 2006 among the Borrower, BNP Paribas, as Administrative Agent
and the financial institutions listed therein from time to time as Term Lenders, as from time to
time renewed, extended, amended, supplemented, or restated, and any agreements representing the
refinancing, replacement, or substitution in whole or in part of the loans made or incurred under
such Term Loan Agreement.



     “Term Loan Documents” means, collectively, (a) the Term Loan Agreement, (b) the Term
Notes and any other note, bond or other instrument evidencing Senior Indebtedness, (c) all
mortgages, security agreements, pledge agreements or financing statements evidencing, creating or
perfecting any Lien to secure the Term Loan Agreement and the Term Notes in any way, (d) all
guarantees thereof, (d) all other documents, instruments or agreements relating to the Term Loan
Agreement or the Term Note now or hereafter executed or delivered by and among the Borrower, any
Subsidiary, the Term Administrative Agent or any Term Lender, including without limitation each of
the other the “Loan Documents” as such term is defined in the Term Loan Agreement, and (e) all
renewals, extensions, amendments, modifications or restatements of the foregoing.



     “Term Notes” means each promissory note issued under the Term Loan Agreement
evidencing the term loans made pursuant to the term thereof, as from time to time renewed,
extended, amended, supplemented, or restated, and any agreements representing the refinancing,
replacement, or substitution in whole or in part thereof.




ANNEX II - 12