Document:

Exhibit 10.53

 

 

 

$80,000,000

 

SECOND AMENDED AND
RESTATED CREDIT AGREEMENT

 

Among

 

BRIGHAM OIL
& GAS, L.P.,

 

as Borrower,

 

BRIGHAM EXPLORATION COMPANY,

and

BRIGHAM, INC.,

 

as Guarantors,

 

THE LENDERS PARTY
HERETO FROM TIME TO TIME

 

as Lenders,

 

SOCIÉTÉ GÉNÉRALE,

 

as Lead Arranger, Administrative Agent and as Issuing Lender,

 

THE ROYAL BANK OF SCOTLAND plc,

 

as Co-Arranger and Documentation Agent,

 

and

 

BANK OF AMERICA, N.A.,

 

as Syndication Agent

 

 

March 21, 2003

 

 

 

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I         DEFINITIONS AND ACCOUNTING TERMS

  
	
  Section 1.01

  	
  Certain
  Defined Terms

  
	
  Section 1.02

  	
  Computation
  of Time Periods

  
	
  Section 1.03

  	
  Accounting
  Terms; Changes in GAAP

  
	
  Section 1.04

  	
  Types of
  Advances

  
	
  Section 1.05

  	
  Miscellaneous

  
	
  ARTICLE II        CREDIT FACILITIES

  
	
  Section 2.01

  	
  Revolving
  Credit Facility

  
	
  Section 2.02

  	
  Borrowing
  Base

  
	
  Section 2.03

  	
  Method of
  Borrowing

  
	
  Section 2.04

  	
  Reduction
  of the Commitments

  
	
  Section 2.05

  	
  Prepayment
  of Advances

  
	
  Section 2.06

  	
  Repayment
  of Advances

  
	
  Section 2.07

  	
  Letters of
  Credit

  
	
  Section 2.08

  	
  Fees

  
	
  Section 2.09

  	
  Interest

  
	
  Section 2.10

  	
  Payments
  and Computations

  
	
  Section 2.11

  	
  Sharing of
  Payments, Etc

  
	
  Section 2.12

  	
  Breakage
  Costs

  
	
  Section 2.13

  	
  Increased
  Costs

  
	
  Section 2.14

  	
  Taxes

  
	
  ARTICLE III       CONDITIONS OF LENDING

  
	
  Section 3.01

  	
  Conditions
  Precedent to Closing Date

  
	
  Section 3.02

  	
  Conditions
  Precedent to All Borrowings

  
	
  ARTICLE IV       REPRESENTATIONS AND WARRANTIES

  
	
  Section 4.01

  	
  Corporate
  Existence; Subsidiaries

  
	
  Section 4.02

  	
  Corporate
  Power

  
	
  Section 4.03

  	
  Authorization
  and Approvals

  
	
  Section 4.04

  	
  Enforceable Obligations

  
	
  Section 4.05

  	
  Financial
  Statements

  

 

 

	
  Section 4.06

  	
  True and
  Complete Disclosure

  
	
  Section 4.07

  	
  Litigation

  
	
  Section 4.08

  	
  Taxes

  
	
  Section 4.09

  	
  Pension
  Plans

  
	
  Section 4.10

  	
  Condition
  of Property; Casualties

  
	
  Section 4.11

  	
  Security
  Instruments

  
	
  Section 4.12

  	
  No
  Burdensome Restrictions; No Defaults

  
	
  Section 4.13

  	
  Environmental Condition

  
	
  Section 4.14

  	
  Gas
  Contracts

  
	
  Section 4.15

  	
  Compliance
  with Laws

  
	
  Section 4.16

  	
  Hedging
  Agreements

  
	
  Section 4.17

  	
  Material
  Agreements

  
	
  Section 4.18

  	
  Organizational
  Documents

  
	
  Section 4.19

  	
  Guarantors

  
	
  Section 4.20

  	
  Insurance

  
	
  Section 4.21

  	
  Use of
  Proceeds

  
	
  Section 4.22

  	
  Investment
  Company Act

  
	
  Section 4.23

  	
  Public
  Utility Holding Company Act

  
	
  Section 4.24

  	
  Transmitting
  Utility

  
	
  ARTICLE V        AFFIRMATIVE COVENANTS

  
	
  Section 5.01

  	
  Compliance
  with Laws, Etc

  
	
  Section 5.02

  	
  Maintenance
  of Insurance

  
	
  Section 5.03

  	
  Preservation
  of Corporate Existence, Etc

  
	
  Section 5.04

  	
  Payment of
  Taxes, Etc

  
	
  Section 5.05

  	
  Inspection;
  Books and Records

  
	
  Section 5.06

  	
  Reporting
  Requirements

  
	
  Section 5.07

  	
  Maintenance
  of Property

  
	
  Section 5.08

  	
  Environmental
  Laws

  
	
  Section 5.09

  	
  Payment of
  Trade Payables

  
	
  Section 5.10

  	
  Use of
  Proceeds

  
	
  Section 5.11

  	
  Additional
  Collateral

  
	
  Section 5.12

  	
  New
  Subsidiaries

  
	
  Section 5.13

  	
  Title

  

 

ii

 

	
  Section 5.14

  	
  Further
  Assurances

  
	
  Section 5.15

  	
  Operating
  Accounts

  
	
  Section 5.16

  	
  Post-Closing
  Requirements

  
	
  ARTICLE VI       NEGATIVE COVENANTS

  
	
  Section 6.01

  	
  Liens, Etc

  
	
  Section 6.02

  	
  Debts,
  Guaranties, and Other Obligations

  
	
  Section 6.03

  	
  Agreements
  Restricting Liens and Distributions

  
	
  Section 6.04

  	
  Merger or
  Consolidation

  
	
  Section 6.05

  	
  Sales of
  Assets

  
	
  Section 6.06

  	
  Restricted
  Payments

  
	
  Section 6.07

  	
  Investments
  and Acquisitions

  
	
  Section 6.08

  	
  Affiliate
  Transactions

  
	
  Section 6.09

  	
  Compliance
  with ERISA

  
	
  Section 6.10

  	
  Sales and
  Leasebacks

  
	
  Section 6.11

  	
  Change of
  Business

  
	
  Section 6.12

  	
  Use of
  Proceeds

  
	
  Section 6.13

  	
  Gas
  Imbalances, Take-or-Pay or Other Prepayments

  
	
  Section 6.14

  	
  Additional
  Subsidiaries

  
	
  Section 6.15

  	
  Limitation
  on Leases

  
	
  Section 6.16

  	
  Environmental
  Matters

  
	
  Section 6.17

  	
  Borrower as
  Operator

  
	
  Section 6.18

  	
  Equity
  Interests of Partners

  
	
  Section 6.19

  	
  Speculative
  Trading

  
	
  Section 6.20

  	
  Change of
  Name; Fiscal Year; Accounting Method

  
	
  Section 6.21

  	
  Current
  Ratio

  
	
  Section 6.22

  	
  Interest
  Coverage Ratio

  
	
  Section 6.23

  	
  Restrictions
  on Limited Partners

  
	
  Section 6.24

  	
  Subordinated
  Debt

  
	
  Section 6.25

  	
  Advance
  Payment Contracts

  
	
  ARTICLE VII     EVENTS OF DEFAULT; REMEDIES

  
	
  Section 7.01

  	
  Events of
  Default

  
	
  Section 7.02

  	
  Optional
  Acceleration of Maturity

  
	
  Section 7.03

  	
  Automatic
  Acceleration of Maturity

  

 

iii

 

	
  Section 7.04

  	
  Right of Set-off

  
	
  Section 7.05

  	
  Non-exclusivity
  of Remedies

  
	
  Section 7.06

  	
  Application
  of Proceeds

  
	
  ARTICLE VIII    THE GUARANTY

  
	
  Section 8.01

  	
  Liabilities
  Guaranteed

  
	
  Section 8.02

  	
  Nature of
  Guaranty

  
	
  Section 8.03

  	
  Agent’s
  Rights

  
	
  Section 8.04

  	
  Guarantor’s
  Waivers

  
	
  Section 8.05

  	
  Maturity of
  Obligations, Payment

  
	
  Section 8.06

  	
  Agent’s
  Expenses

  
	
  Section 8.07

  	
  Liability

  
	
  Section 8.08

  	
  Events and
  Circumstances Not Reducing or Discharging any Guarantor’s Obligations

  
	
  Section 8.09

  	
  Subordination
  of All Guarantor Claims

  
	
  Section 8.10

  	
  Claims in
  Bankruptcy

  
	
  Section 8.11

  	
  Payments
  Held in Trust

  
	
  Section 8.12

  	
  Liens Subordinate

  
	
  Section 8.13

  	
  Guarantor’s
  Enforcement Rights

  
	
  ARTICLE
  IX      THE ADMINISTRATIVE AGENT AND THE
  ISSUING LENDER

  
	
  Section 9.01

  	
  Authorization
  and Action

  
	
  Section 9.02

  	
  Administrative Agent’s Reliance, Etc

  
	
  Section 9.03

  	
  The
  Administrative Agent and Its Affiliates

  
	
  Section 9.04

  	
  Lender
  Credit Decision

  
	
  Section 9.05

  	
  Indemnification

  
	
  Section 9.06

  	
  Successor
  Administrative Agent and Issuing Lender

  
	
  Section 9.07

  	
  Other
  Agents

  
	
  Section 9.08

  	
  Collateral Matters

  
	
  ARTICLE
  X        MISCELLANEOUS

  
	
  Section 10.01

  	
  Amendments, Etc

  
	
  Section 10.02

  	
  Notices, Etc

  
	
  Section 10.03

  	
  No
  Waiver; Remedies

  
	
  Section 10.04

  	
  Costs and
  Expenses

  
	
  Section 10.05

  	
  Binding
  Effect

  

 

iv

 

	
  Section 10.06

  	
  Lender
  Assignments and Participations

  
	
  Section 10.07

  	
  Indemnification

  
	
  Section 10.08

  	
  Execution
  in Counterparts

  
	
  Section 10.09

  	
  Survival
  of Representations, Etc

  
	
  Section 10.10

  	
  Severability

  
	
  Section 10.11

  	
  Governing
  Law

  
	
  Section 10.12

  	
  Submission
  To Jurisdiction; Waivers

  
	
  Section 10.13

  	
  Waiver of
  Jury Trial

  
	
  Section 10.14

  	
  Oral
  Agreements

  
	
  Section 10.15

  	
  Dissemination
  of Information

  
	
  Section 10.16

  	
  Production
  Proceeds

  
	
  Section 10.17

  	
  Amendment
  and Restatement

  
	
   

  	
   

  
	
  EXHIBITS:

  
	
   

  	
   

  
	
  Exhibit A

  	
  -

  	
  Form of
  Assignment and Acceptance

  
	
  Exhibit B

  	
  -

  	
  Form of
  Compliance Certificate

  
	
  Exhibit C

  	
  -

  	
  Form of
  Notice of Borrowing

  
	
  Exhibit D

  	
  -

  	
  Form of
  Notice of Conversion or Continuation

  
	
  Exhibit E

  	
  -

  	
  Form of Note

  
	
  Exhibit F

  	
  -

  	
  Form of
  Mortgage Amendment

  
	
  Exhibit G

  	
  -

  	
  Form of
  Pledge Agreement

  
	
  Exhibit H

  	
  -

  	
  Form of
  Security Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES:

  
	
   

  	
   

  	
   

  
	
  Schedule 1

  	
  -

  	
  Notice
  Information, Commitments

  
	
  Schedule 1.01

  	
  -

  	
  Preferred
  Shareholders

  
	
  Schedule 4.01

  	
  -

  	
  Subsidiaries

  
	
  Schedule 4.07

  	
  -

  	
  Litigation

  
	
  Schedule 4.10

  	
  -

  	
  Title

  
	
  Schedule 4.14

  	
  -

  	
  Gas
  Contracts

  
	
  Schedule 4.16

  	
  -

  	
  Hedging
  Agreements

  
	
  Schedule 4.17

  	
  -

  	
  Material
  Agreements

  
	
  Schedule 6.01

  	
  -

  	
  Permitted
  Liens

  
	
  Schedule 6.02

  	
  -

  	
  Permitted
  Debt

  
	
  Schedule 6.02(i)

  	
  -

  	
  Additional
  Permitted Debt

  
	
  Schedule 6.07

  	
  -

  	
  Permitted
  Investments

  
							

 

v

 

SECOND AMENDED AND RESTATED
CREDIT AGREEMENT

 

This Second
Amended and Restated Credit Agreement dated as of March 21, 2003 is among
Brigham Oil & Gas, L.P., a Delaware limited partnership (“Borrower”),
Brigham Exploration Company, a Delaware corporation (“Brigham Exploration”),
Brigham, Inc., a Nevada corporation (the “General Partner”), the lenders
party hereto from time to time (“Lenders”), Société Générale, as lead
arranger (in such capacity, the “Lead Arranger”), as administrative
agent for such Lenders (in such capacity, the “Administrative Agent”)
and as issuing lender for such Lenders (in such capacity, the “Issuing
Lender”), The Royal Bank of Scotland plc, as co-arranger (in such capacity,
the “Co-Arranger”) and as documentation agent (the “Documentation
Agent”), and Bank of America, N.A., as Syndication Agent (the “Syndication
Agent”).

 

INTRODUCTION

 

A.            The Borrower, the lenders party
thereto, and Société Générale, as agent, are parties to that certain Amended
and Restated Credit Agreement dated February 17, 2000, as amended on or before
the date hereof (the “Existing Senior Credit Agreement”).

 

B.            The Borrower, the Lenders and the
Administrative Agent desire to refinance the indebtedness and obligations
arising under the Existing Senior Credit Agreement, and the indebtedness and
liens arising under the Existing Senior Credit Agreement shall be assigned to
the Administrative Agent and the Lenders pursuant hereto, so that all
indebtedness and obligations arising hereunder shall be secured by such liens
and security interests as were created pursuant to the Existing Senior Credit
Agreement and such other liens as provided for herein, and the terms of
Borrower’s financing shall hereafter be amended and restated in its entirety as
set forth herein.

 

Therefore, the
Borrower, the Guarantors (as defined below), the Lenders, the Issuing Lender
and the Administrative Agent agree as follows:

 

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

 

Section 1.01       Certain
Defined Terms.  As used in this
Agreement, the terms defined above shall have the meanings set forth therein
and the following terms shall have the following meanings (unless otherwise
indicated, such meanings to be equally applicable to both the singular and
plural forms of the terms defined):

 

“Acceptable
Security Interest” in any Property means a Lien which (a) exists in favor
of the Administrative Agent for the benefit of the Administrative Agent, the
Issuing Lender, the Lenders, and any Swap Counterparty, (b) is superior to all
Liens or rights of any other Person in the Property encumbered thereby, other
than Permitted Liens, (c) secures the Obligations, and (d) is perfected and
enforceable.

 

 

“Adjusted
Base Rate” means, for any day, the fluctuating rate per annum of interest
equal to the greater of (a) the Base Rate in effect on such day and (b) the
Federal Funds Rate in effect on such day plus 1⁄2 of 1%.

 

“Administrative
Agent” means Société Générale, in its capacity as agent pursuant to Article
IX, and any successor agent pursuant to Section 9.06.

 

“Advance”
means any advance hereunder of monies by a Lender to the Borrower as part of a
Borrowing and refers to a Base Rate Advance or a Eurodollar Rate Advance.

 

“Advance
Payment Contract” means any contract whereby any Person either receives or
becomes entitled to receive (either directly or indirectly through a third
party for such Person’s account or benefit) any payment (an “Advance Payment”)
to be applied toward the payment of the purchase price of Hydrocarbons produced
or to be produced from any Oil and Gas Properties owned by such Person and
which Advance Payment is paid or to be paid more than 90 days in advance of
actual delivery of such production to or for the account of the purchaser
regardless of such production, and the Advance Payment is, or is to be, applied
as payment in full for such production when sold and delivered or is, or is to
become applied as payment for a portion only of the purchase price thereof or
for a percentage or a share of such production.

 

“Affiliate”
of any Person shall mean (a) any Person directly or indirectly controlled by,
controlling or under common control with such first Person, (b) any director or
officer of such first Person or of any Person referred to in clause (a) above
and (c) if any Person in clause (a) above is an individual, any member of the
immediate family (including parents, spouse and children) of such individual
and any trust whose principal beneficiary is such individual or one or more
members of such immediate family and any Person who is controlled by any such
member or trust. For purposes of this definition, any Person which owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
20% or more of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be deemed to
“control” (including, with its correlative meanings, “controlled by” and “under
common control with”) such corporation or other Person; provided, however, that
“Affiliate” shall not include any Affiliates of the Preferred Shareholders or
GA Partners.

 

“Affiliated
Fund” means, with respect to GA Partners or any Preferred Shareholder, any
other fund that is managed or advised by the same manager, general partner or
investment advisor as GA Partners or such Preferred Shareholder or by an
Affiliate of such manager, general partner or investment advisor.

 

“Agent’s
Fee Letter” means the letter dated March 21, 2003 among the Borrower, the
Lead Arranger, the Administrative Agent and the Documentation Agent.

 

“Agents”
means the Administrative Agent, the Documentation Agent and the Syndication
Agent.

 

“Agreement”
means this Credit Agreement, as the same may be amended, supplemented, and
otherwise modified from time to time.

 

2

 

“Applicable
Lending Office” means, with respect to each Lender, such Lender’s Domestic
Lending Office in the case of a Base Rate Advance and such Lender’s Eurodollar
Lending Office in the case of a Eurodollar Rate Advance.

 

“Applicable
Margin” means, as of any date of determination, the following percentages
determined as a function of the Borrower’s Utilization Percentage:

 

	
  Utilization Percentage

  	
   

  	
  Eurodollar Rate

  Advances

  	
   

  	
  Base Rate 

  Advances

  	
   

  	
  Commitment Fees

  	
   

  
	
  > 90%

  	
   

  	
  2.50

  	
  %

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  
	
  >
  75% and < 90%

  	
   

  	
  2.25

  	
  %

  	
  1.25

  	
  %

  	
  0.50

  	
  %

  
	
  >
  50% and < 75%

  	
   

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  0.50

  	
  %

  
	
  >
  25% and < 50%

  	
   

  	
  1.75

  	
  %

  	
  0.75

  	
  %

  	
  0.50

  	
  %

  
	
  < 25%

  	
   

  	
  1.50

  	
  %

  	
  0.50

  	
  %

  	
  0.50

  	
  %

  

 

“Arrangers”
means the Lead Arranger and the Co-Arranger.

 

“Assignment
and Acceptance” means an assignment and acceptance entered into by a Lender
and an Eligible Assignee, and accepted by the Administrative Agent, in
substantially the form of the attached Exhibit A.

 

“Base Rate”
means a fluctuating interest rate per annum as shall be in effect from time to
time equal to the rate of interest publicly announced by Société Générale, as
its Base Rate, whether or not the Borrower has notice thereof.

 

“Base Rate
Advance” means an Advance which bears interest as provided in Section
2.09(a).

 

“Borrowing”
means a borrowing consisting of simultaneous Advances of the same Type made by
each Lender pursuant to Section 2.03(a), continued by each Lender pursuant to
Section 2.03(b), or Converted by each Lender to Advances of a different Type
pursuant to Section 2.03(b).

 

“Borrowing
Base” means at any particular time, the Dollar amount determined in
accordance with Section 2.02 on account of Proven Reserves attributable to Oil
and Gas Properties of the Borrower and its Subsidiaries described in the most
recent Independent Engineering Report or Internal Engineering Report, as
applicable, delivered to the Administrative Agent and the Lenders pursuant to
Section 2.02.

 

“Borrowing
Base Deficiency” means the aggregate outstanding amount, if any, by which
the sum of the Advances plus the Letter of Credit Exposure exceeds the
lesser of the (i) Borrowing Base and (ii) the aggregate Commitments.

 

“Business
Day” means a day of the year on which banks are not required or authorized
to close in New York, New York and, if the applicable Business Day relates to
any Eurodollar Rate Advances, on which dealings are carried on by banks in the
London interbank market.

 

3

 

“Capital
Leases” means, as applied to any Person, any lease of any Property by such
Person as lessee which would, in accordance with GAAP, be required to be
classified and accounted for as a capital lease on the balance sheet of such
Person.

 

“Capital
Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the foregoing.

 

“Cash
Collateral Account” means a special interest bearing cash collateral
account pledged by the Borrower to the Issuing Lender containing cash deposited
pursuant to Sections 2.05(b), 7.02(b), or 7.03(b) to be maintained with the
Issuing Lender in accordance with Section 2.07(g) and bear interest or be
invested in the Issuing Lender’s reasonable discretion.

 

“Cash
Equivalents” means (a) 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 or less from the date of
creation thereof, (b) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by Standard and Poor’s Ratings
Group (“S&P”) and by Moody’s Investors Service, Inc. (“Moody’s”),
(c) 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, Canada or England or any other bank or trust company
which is organized under the laws of the United States, Canada or England or
any state or province thereof, has capital, surplus and undivided profits
aggregating at least $100,000,000.00 (as of the date of such Lender’s or bank or
trust company’s most recent financial reports) and has a short term deposit
rating of not lower than A2 or P2, as such rating is set forth from time to
time by S&P or Moody’s, respectively, and (d) deposits in money market
funds investing exclusively in investments described in clauses (a) through (c)
of this definition.

 

“CERCLA”
means the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended, state and local analogs, and all rules and regulations and
requirements thereunder in each case as now or hereafter in effect.

 

“Change of
Control” means any of the following: 
(a) any acquisition pursuant to which any Person or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (other than the Preferred
Shareholders) has become the direct or indirect beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of more than 35% of the Voting Stock of
Brigham Exploration; (b) any transaction or acquisition pursuant to which any
one or more of the Preferred Shareholders has or have become (whether pursuant
to any Preferred Shareholder Transaction or otherwise) the direct or indirect
beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than
47% of the Voting Stock of Brigham Exploration; (c)  Brigham Exploration is merged with or into or consolidated with
another Person except as otherwise permitted by Section 6.04; (d)  Brigham Exploration, either individually or
in conjunction with one or more of its Subsidiaries, sells, conveys, transfers
or leases, or its Subsidiaries sell, convey, transfer or lease, all or
substantially all of the assets of Brigham Exploration and its Subsidiaries,
taken as a whole (either in one transaction or a series of related
transactions), including Capital Stock of its Subsidiaries, to any Person
except as otherwise permitted by Section 6.04; (e)  the

 

4

 

first day on which a majority
of the individuals who constitute the Board of Directors of Brigham Exploration
are not Continuing Directors or (f) 
Brigham Exploration shall cease to own, directly or indirectly, 100% of
the Capital Stock of the Borrower.

 

“Closing
Date” means the date on which the conditions set forth in Section 3.01 are
satisfied, which date shall not be later than March 31, 2003.

 

“Code”
means the Internal Revenue Code of 1986, as amended, and any successor statute.

 

“Collateral”
means Property of the Credit Parties, now owned or hereafter acquired, that is
subject to any Lien in favor of the Administrative Agent, the Lenders, the
Issuing Bank or any Swap Counterparty to secure, directly or indirectly, the
Obligations of the Credit Parties under the Loan Documents.

 

“Commitment”
means, for any Lender, the amount set opposite such Lender’s name on Schedule
1 as its “Commitment”, or if such Lender has entered into any Assignment
and Acceptance, as set forth for such Lender as its Commitment in the Register
maintained by the Administrative Agent pursuant to Section 10.06(c), as such
amount may be reduced or terminated pursuant to Section 2.04 or Article VII or
otherwise under this Agreement.  The
original aggregate amount of the Commitments is $80,000,000.

 

“Commitment
Termination Date” means the earlier of (a) the Maturity Date and (b) the
earlier termination in whole of the Commitments pursuant to Section 2.04 or
Article VII.

 

“Compliance
Certificate” means a compliance certificate in the form of the attached Exhibit
B signed by a Responsible Officer of Brigham Exploration.

 

“Consolidated
Net Income” means, with respect to Brigham Exploration and its consolidated
Subsidiaries, for any period, the aggregate of the net income (or loss) of
Brigham Exploration and its consolidated Subsidiaries after allowances for
taxes for such period as determined on a consolidated basis in accordance with
GAAP; provided, that there shall be excluded from the calculation of
such net income (to the extent otherwise included therein) the following: (a)
the net income of any Person in which Brigham Exploration or any 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 Brigham Exploration
and its consolidated Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions actually paid in such period
by such other Person to Brigham Exploration or to a consolidated Subsidiary, as
the case may be; (b) the net income (but not loss) 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 Legal 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, including gains or losses
attributable to Property sales not in the ordinary course of business; and (e)
the cumulative effect

 

5

 

of a change in accounting
principles and any gains or losses attributable to writeups or writedowns of
assets.

 

“Continuing
Director” means an individual who (a) is a member of the full Board of
Directors of Brigham Exploration and (b) either (i) was a member of the Board
of Directors of Brigham Exploration on the Closing Date or (ii) whose
nomination for election or election to the Board of Directors of Brigham
Exploration was approved by vote of at least two-thirds of the directors then
still in office who were either directors on the Closing Date or whose election
or nomination for election was previously so approved.

 

“Controlled
Group” means all members of a controlled group of corporations and all
businesses (whether or not incorporated) under common control which, together
with the Borrower, are treated as a single employer under Section 414 of the
Code.

 

“Convert,”
“Conversion,” and “Converted” each refers to a conversion of
Advances of one Type into Advances of another Type pursuant to Section 2.03(b).

 

“Credit
Parties” means the Borrower and the Guarantors.

 

“Debt,”
for any Person, means without duplication:

 

(a)           indebtedness of such Person for
borrowed money;

 

(b)           obligations of such Person evidenced
by bonds, debentures, notes or other similar instruments;

 

(c)           obligations of such Person (whether contingent
or otherwise) in respect to letters of credit, bankers’ acceptances, surety or
other bonds and similar instruments, and agreements relating to the issuance of
letters of credit or acceptance financing;

 

(d)           obligations of such Person to pay the
deferred purchase price of Property or services (other than current trade
liabilities incurred in the ordinary course of business and payable in
accordance with customary practices and accrued current liabilities incurred in
the ordinary course of business);

 

(e)           all obligations of such Person under
Capital Leases;

 

(f)            all indebtedness created or arising
under any conditional-sale or other title-retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of the seller
or lender under such agreement in the event of default are limited to
repossession or sale of such Property);

 

(g)           obligations of such Person under any
Interest Hedge Agreement or Hydrocarbon Hedge Agreement;

 

(h)           obligations of such Person under any
Advance Payment Contract;

 

6

 

(i)            obligations of such Person owing in
respect of redeemable preferred stock of such Person;

 

(j)            any obligations in connection with
any volumetric or production payments;

 

(k)           obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) of such Person to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (a) through (j) above; and

 

(l)            indebtedness or obligations of
others of the kinds referred to in clauses (a) through (k) secured by any Lien
on or in respect of any Property of such Person.

 

“Default”
means (a) an Event of Default or (b) any event or condition which with notice
or lapse of time or both would become an Event of Default.

 

“Deposit
Control Agreement” has the meaning set forth in Section 5.16.

 

“Dollars”
and “$” means lawful money of the United States of America.

 

“Domestic
Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Domestic Lending Office” opposite its name on Schedule
1 or such other office of such Lender as such Lender may from time to time
specify to the Borrower and the Administrative Agent.

 

“EBITDA”
means, without duplication, for Brigham Exploration and its consolidated
Subsidiaries for any period, (a) Consolidated Net Income for such period plus
(b) to the extent deducted in determining Consolidated Net Income for such
period, Interest Expense, taxes, depreciation, depletion, amortization and
other non-cash charges for such period, minus (c) to the extent added in
determining Consolidated Net Income for such period, all non-cash income during
such period, in each case determined in accordance with GAAP and without
duplication of amounts.

 

“Eligible
Assignee” means (a) any Lender or any Affiliate of any Lender and (b) any
commercial bank or other financial institution approved by (i) the
Administrative Agent in its reasonable discretion and (ii) provided no Default
or Event of Default has occurred and is continuing, the Borrower (which consent
shall not be unreasonably withheld or delayed).

 

“Engineering
Report” means either an Independent Engineering Report or an Internal
Engineering Report.

 

“Environment”
or “Environmental” shall have the meanings set forth in 43 U.S.C.
9601(8) (1988).

 

“Environmental
Claim” means any third party (including governmental agencies and
employees) action, lawsuit, claim, demand, regulatory action or proceeding,
order, decree, consent agreement or notice of potential or actual
responsibility or violation (including claims or proceedings under the
Occupational Safety and Health Acts or similar laws or requirements

 

7

 

relating to health or safety of
employees) which seeks to impose liability under any Environmental Law.

 

“Environmental
Law” means, as to any Credit Party, all Legal Requirements or common law
theories applicable to any Credit Party arising from, relating to, or in
connection with the Environment, including without limitation CERCLA, relating
to (a) pollution, contamination, injury, destruction, loss, protection,
cleanup, reclamation or restoration of the air, surface water, groundwater,
land surface or subsurface strata, or other natural resources; (b) solid,
gaseous or liquid waste generation, treatment, processing, recycling,
reclamation, cleanup, storage, disposal or transportation; (c) exposure to
pollutants, contaminants, hazardous, medical infections, or toxic substances,
materials or wastes; or (d) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or disposal of hazardous
or toxic substances, materials or wastes.

 

“Environmental
Permit” means any permit, license, order, approval, registration or other
authorization under Environmental Law.

 

“Equity
Interest” means with respect to any Person, any shares, interests,
participation, or other equivalents (however designated) of corporate stock,
membership interests or partnership interests (or any other ownership
interests) of such Person.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

 

“Eurocurrency
Liabilities” has the meaning assigned to that term in Regulation D of the
Federal Reserve Board (or any successor), as in effect from time to time.

 

“Eurodollar
Lending Office” means, with respect to any Lender, the office of such
Lender specified as its “Eurodollar Lending Office” opposite its name on Schedule
1 (or, if no such office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may from time to time specify
to the Borrower and the Administrative Agent.

 

“Eurodollar
Rate” means, for the Interest Period for each Eurodollar Rate Advance
comprising the same Borrowing, the interest rate per annum (rounded upward to
the nearest whole multiple of 1/100 of 1% per annum) set forth on the
applicable Telerate Page as the London Interbank Offered Rate, for deposits in
Dollars at 11:00 a.m. (London, England time) two Business Days before the first
day of such Interest Period and for a period equal to such Interest Period; provided
that, if no such quotation appears on the applicable Telerate Page, the
Eurodollar Rate shall be an interest rate per annum equal to the rate per annum
at which deposits in Dollars are offered by the principal office of Société
Générale in London, England to prime banks in the London interbank market at
11:00 a.m. (London, England time) two Business Days before the first day of
such Interest Period in an amount substantially equal to the Eurodollar Rate
Advance to be maintained by the Lender that is the Administrative Agent in
respect of such Borrowing and for a period equal to such Interest Period.

 

“Eurodollar
Rate Advance” means an Advance which bears interest as provided in Section
2.09(b).

 

8

 

“Eurodollar
Rate Reserve Percentage” of any Lender for the Interest Period for any
Eurodollar Rate Advance means the reserve percentage applicable during such
Interest Period (or if more than one such percentage shall be so applicable,
the daily average of such percentages for those days in such Interest Period during
which any such percentage shall be so applicable) under regulations issued from
time to time by the Federal Reserve Board for determining the maximum reserve
requirement (including, without limitation, any emergency, supplemental, or
other marginal reserve requirement) for such Lender with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities having a term
equal to such Interest Period.

 

“Event of
Default” has the meaning specified in Section 7.01.

 

“Excepted
Liens” means (a) Liens for taxes, assessments or other governmental charges
or levies not yet due 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 workmen’s compensation, unemployment
insurance or other social security, old age pension or public liability
obligations not yet due or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in accordance
with GAAP; (c) operators’, vendors’, carriers’, warehousemen’s, repairmen’s,
mechanics’, workmen’s, materialmen’s, construction or other like Liens arising
in the ordinary course of business or incident to the exploration, development,
operation and maintenance of Oil and Gas Properties or customary landlord’s
liens, each of which is in respect of obligations that have not been
outstanding more than 90 days or which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been maintained in
accordance with GAAP; (d) any Liens reserved in leases, farmout agreements,
exploration agreements, operating agreements or participation agreements for
rent or royalties and for compliance with the terms of such agreements or
leases in the case of leasehold estates, to the extent 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 or
materially impair the value of such Property subject thereto; (e) encumbrances
(other than to secure the payment of borrowed money or the deferred purchase
price of Property or services), easements, restrictions, servitudes, permits,
conditions, covenants, exceptions or reservations in any rights of way or other
Property 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, and defects,
irregularities, zoning restrictions and deficiencies in the title of any rights
of way or other Property which in the aggregate do not materially impair the
use of such rights of way or other Property for the purposes of which such
rights of way and other Property are held or materially impair the value of
such Property subject thereto; (f) deposits of cash or securities to secure the
performance of bids, trade contracts, leases, statutory obligations and other
obligations of a like nature incurred in the ordinary course of business; and
(g) minor defects in the chain of title to the Oil and Gas Properties that are
customarily accepted in the oil and gas industry, provided, however,
that none of such defects interfere with the ordinary conduct of the business
of any of the Credit Parties or materially detract from the value or use of the
Property to which such defects apply.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended.

 

“Existing
Letters of Credit” means the letters of credit described on Schedule
2.07.

 

9

 

“Existing
Mortgages” means the collective reference to every Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement from the
Borrower to the Trustee named therein and Bank of Montreal (or any successor
thereto), covering the assets of the Borrower located in the continental United
States, as amended prior to the Closing Date.

 

“Expiration
Date” means, with respect to any Letter of Credit, the date on which such
Letter of Credit will expire or terminate in accordance with its terms.

 

“Federal
Funds Rate” means, for any period, a fluctuating interest rate per annum
equal for each day during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for any such day on such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

 

“Federal
Reserve Board” means the Board of Governors of the Federal Reserve System
or any of its successors.

 

“Financial
Letter of Credit” means a Letter of Credit qualifying as a “financial
standby letter of credit” under 12 CFR Part 3, Appendix A, Section 4(a)(8) or
any successor U.S. Comptroller of the Currency regulation and issued by an
Issuing Bank under the terms of this Agreement.

 

“Financial
Statements” means the audited consolidated balance sheet of Brigham
Exploration and its consolidated Subsidiaries as at December 31, 2002 and the
related consolidated statement of income, stockholders’ equity and cash flow of
Brigham Exploration and its consolidated Subsidiaries for the fiscal year ended
on such date.

 

“GA
Partners” means General Atlantic Partners III, L.P., together with its
successors, assigns and transferees of its shares of Capital Stock of Brigham
Exploration that are an Affiliated Fund of GA Partners.

 

“GAAP”
means United States generally accepted accounting principles as in effect from
time to time, applied on a basis consistent with the requirements of Section
1.03.

 

“Governmental
Authority” means, as to any Person in connection with any subject, any
foreign, national, state or provincial governmental authority, or any political
subdivision of any state thereof, or any agency, department, commission, board,
authority or instrumentality, bureau or court, in each case having jurisdiction
over such Person or such Person’s Property in connection with such subject.

 

“Guarantor”
means Brigham Exploration, the General Partner, and each Subsidiary of the
Borrower.

 

“Hazardous
Substance” means the substances identified as such pursuant to CERCLA and
those regulated under any other Environmental Law, including without limitation
pollutants,

 

10

 

contaminants, petroleum,
petroleum products, radionuclides, radioactive materials, and medical and
infectious waste.

 

“Hazardous
Waste” means the substances regulated as such pursuant to any Environmental
Law.

 

“Hydrocarbon
Hedge Agreement” means a swap, collar, floor, cap, option, forward sale or
purchase or other contract (excluding sales contracts with fixed or floating
prices for Hydrocarbons sold) that is intended to reduce or eliminate the risk
of fluctuations in the price of Hydrocarbons.

 

“Hydrocarbon
Interests” means (a) all oil and gas and/or oil, gas and mineral leases and
leasehold interests, fee mineral interests, term mineral interests, subleases,
farmouts, royalties, overriding royalties, net profits interests, production
payments and similar interests or estates including any reversionary or carried
interests relating to any of the foregoing and interests under any exploration
agreements, operating agreements and participation agreements, and (b) all
production units and drilling and spacing units (and the Properties covered
thereby) which may affect all or any portion of such interests including those
units and any units created by agreement or designation or under orders,
regulations, rules or other official acts of any Federal, state or other
governmental body or agency having jurisdiction.

 

“Hydrocarbons”
means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, and all other liquid and gaseous hydrocarbons produced
or to be produced in conjunction therewith from a well bore and all products,
by-products, and other substances derived therefrom or the processing thereof,
and all other minerals and substances produced in conjunction with such
substances, including, but not limited to, sulfur, geothermal steam, water,
carbon dioxide, helium, and any and all minerals, ores, or substances of value
and the products and proceeds therefrom.

 

“Independent
Engineer” means Cawley, Gillespie & Associates or any other engineering
firm reasonably acceptable to either the Administrative Agent or the Majority
Lenders.

 

“Independent
Engineering Report” means a report, in form and substance satisfactory to
the Administrative Agent and each of the Lenders, prepared by an Independent
Engineer, addressed to the Administrative Agent and the Lenders with respect to
the Oil and Gas Properties owned by the Borrower or its Subsidiaries (or to be
acquired by the Borrower or any of its Subsidiaries, as applicable) which are
or are to be included in the Borrowing Base, which report shall (a) specify the
location, quantity, and type of the estimated Proven Reserves attributable to
such Oil and Gas Properties, (b) contain a projection of the rate of production
of such Oil and Gas Properties, (c) contain an estimate of the associated
capital expenditures and net operating revenues to be derived from the
production and sale of Hydrocarbons from such Proven Reserves based on product
price and cost escalation assumptions specified by the Administrative Agent and
the Lenders, and (d) contain such other information as is customarily obtained
from and provided in such reports or is otherwise reasonably requested by the
Administrative Agent or any Lender.

 

11

 

“Intercreditor
and Subordination Agreement” means that certain Amended and Restated
Intercreditor and Subordination Agreement, which shall be in a form acceptable
to the Administrative Agent and the Lenders, 
dated as of the Closing Date among the Administrative Agent, certain of
the Credit Parties, and The Royal Bank of Scotland plc, as agent for the
lenders party to the Subordinated Credit Agreement.

 

“Interest
Coverage Ratio” means, for Brigham Exploration and its consolidated
Subsidiaries, as of the end of any fiscal quarter, the ratio of (a) EBITDA
calculated for the four fiscal quarters then ended, to (b) Interest Expense for
such period.

 

“Interest
Expense” means, for Brigham Exploration and its consolidated Subsidiaries
for any period, total interest, letter of credit fees, and other fees and
expenses incurred in connection with any Debt for such period, whether paid or
accrued, including, without limitation, all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers’ acceptance
financing and net costs under Interest Hedge Agreements and Hydrocarbon Hedge
Agreements, all as determined in conformity with GAAP.

 

“Interest
Hedge Agreement” means an interest hedge, rate swap, cap or collar, or
similar arrangement between the Borrower and one or more financial institutions
providing for the exchange of nominal interest obligations between the Borrower
and such financial institution.

 

“Interest
Period” means, for each Eurodollar Rate Advance comprising part of the same
Borrowing, the period commencing on the date of such Eurodollar Rate Advance or
the date of the Conversion of any Base Rate Advance into a Eurodollar Rate
Advance and ending on the last day of the period selected by the Borrower
pursuant to the provisions below and Section 2.03 and, thereafter, each
subsequent period commencing on the last day of the immediately preceding
Interest Period and ending on the last day of the period selected by the
Borrower pursuant to the provisions below and Section 2.03.  The duration of each such Interest Period
shall be one, two, three, or six months, in each case as the Borrower may, upon
notice received by the Administrative Agent not later than 12:00 p.m. (New York
time) on the third Business Day prior to the first day of such Interest Period,
select; provided, however, that:

 

(a)           the Borrower may not select any
Interest Period for any Advance which ends after the Maturity Date;

 

(b)           Interest Periods commencing on the
same date for Advances comprising part of the same Borrowing shall be of the
same duration;

 

(c)           whenever the last day of any Interest
Period would otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next succeeding
Business Day, provided that if such extension would cause the last day
of such Interest Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding Business Day; and

 

(d)           any Interest Period which begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month in which it
would have ended if there were a numerically corresponding day in such calendar
month.

 

12

 

“Internal
Engineering Report” means a report, in form and substance reasonably
satisfactory to the Administrative Agent and each Lender, prepared by the
Borrower and certified by a Responsible Officer of the General Partner,
addressed to the Administrative Agent and the Lenders with respect to the Oil
and Gas Properties owned by the Borrower or any of its Subsidiaries (or to be
acquired by the Borrower or any of its Subsidiaries, as applicable) which are
or are to be included in the Borrowing Base, which report shall (a) specify the
location, quantity, and type of the estimated Proven Reserves attributable to
such Oil and Gas Properties, (b) contain a projection of the rate of production
of such Oil and Gas Properties, (c) contain an estimate of the associated
capital expenditures and net operating revenues to be derived from the
production and sale of Hydrocarbons from such Proven Reserves based on product
price and cost escalation assumptions specified by the Administrative Agent and
the Lenders, and (d) contain such other information as is customarily obtained
from and provided in such reports or is otherwise reasonably requested by the
Administrative Agent or any Lender.

 

“Investment”
means any investment, made directly or indirectly, in any Person, whether by
acquisition of Equity Interests, indebtedness or other obligations or
securities or by loan, advance, capital contribution or otherwise.

 

“Issuing
Lender” means Société Générale, and any successor issuing bank pursuant to
Section 9.06.

 

“Legal
Requirement” means, as to any Person, any law, statute, ordinance, decree,
requirement, order, judgment, rule, regulation (or official interpretation of
any of the foregoing) of, and the terms of any license or permit issued by, any
Governmental Authority, including, but not limited to, Regulations D, T, U, and
X, which is applicable to such Person.

 

“Lender”
means each Lender that has a Commitment hereunder or is the holder of an
Advance.

 

“Letter of
Credit” means, individually, any standby letter of credit issued by the
Issuing Lender for the account of the Borrower in connection with the
Commitments and which is subject to this Agreement, and “Letters of Credit”
means all such letters of credit collectively.

 

“Letter of
Credit Application” means the Issuing Lender’s standard form letter of
credit application for standby letters of credit that has been executed by the
Borrower and accepted by the Issuing Lender in connection with the issuance of
a Letter of Credit.

 

“Letter of
Credit Documents” means all Letters of Credit, Letter of Credit
Applications, and any other agreements, documents, and instruments entered into
in connection with or relating thereto.

 

“Letter of
Credit Exposure” means, at any time, the sum of (a) the aggregate undrawn
maximum face amount of each Letter of Credit at such time plus (b) the
aggregate unpaid amount of all Reimbursement Obligations at such time.

 

“Letter of
Credit Obligations” means any obligations of the Borrower under this
Agreement in connection with the Letters of Credit, including the Reimbursement
Obligations.

 

13

 

“Lien”
means any mortgage, lien, pledge, assignment, charge, deed of trust, security
interest, hypothecation, preference, deposit arrangement or encumbrance (or
other type of arrangement having the practical effect of the foregoing) to
secure or provide for the payment of any obligation of any Person, whether
arising by contract, operation of law, or otherwise (including, without
limitation, the interest of a vendor or lessor under any conditional sale
agreement, synthetic lease, Capital Lease, or other title retention agreement).

 

“Limited
Partners” means Brigham Holdings I, LLC, a Nevada limited liability
company, and Brigham Holdings II, LLC, a Nevada limited liability company.

 

“Loan
Documents” means this Agreement, the Notes, the Administrative Agent’s Fee
Letter, the Letter of Credit Documents, the Security Instruments, the
Intercreditor and Subordination Agreement, the Side Letter Agreement, any
Interest Hedge Agreements with a Swap Counterparty, any Hydrocarbon Hedge Agreements
with a Swap Counterparty, and each other agreement, instrument, or document
executed by any Credit Party or any of their officers at any time in connection
with this Agreement.

 

“Majority
Lenders” means, at any time, the Administrative Agent and Lenders holding
at least 66-2/3% of the then aggregate unpaid principal amount of the Notes
held by the Lenders and the Letter of Credit Exposure of the Lenders at such
time; provided that, if no Advances or Letter of Credit Exposure is then
outstanding, “Majority Lenders” shall mean the Administrative Agent and Lenders
having at least 66-2/3% of the aggregate amount of the Commitments at such
time.

 

“Material
Adverse Change” means (a) a material adverse change in the business,
Property (including the Oil and Gas Properties), assets, liabilities,
conditions (financial or otherwise) or prospects of the Borrower and its
Subsidiaries, taken as a whole, (b) a material adverse effect on any Credit
Party’s ability to perform its obligations under this Agreement, any Note, or
any other Loan Document and (c) a material adverse effect on the validity or
enforceability against any Credit Party of any of the Loan Documents or the
rights or remedies of the Administrative Agent or the Lenders thereunder.

 

“Maturity
Date” means March 21, 2006; provided, however, that if on or before July
31, 2005 (a) the Subordinated Debt has not been repaid, (b) the Subordinated
Debt Maturity Date has not been extended to at least April 30, 2006 or (c) the
Subordinated Debt has not been refinanced with Debt subordinated to the
Obligations on substantially the same terms and conditions as set forth in the
Intercreditor and Subordination Agreement (or terms otherwise acceptable to all
of the Lenders) the maturity date of which is not earlier than 60 days after
the Maturity Date, then the “Maturity Date” shall be August 31, 2005.

 

 “Maximum Rate” means the maximum
nonusurious interest rate under applicable law (determined under such laws
after giving effect to any items which are required by such laws to be
construed as interest in making such determination, including without
limitation if required by such laws, certain fees and other costs).

 

14

 

“Mortgage
Amendments” means each of the amended and restated mortgages or deeds of
trust to be entered into on or before the Closing Date to amend and restate in
their entirety the Existing Mortgages in substantially the form of the attached
Exhibit F.

 

“Mortgages”
means, collectively, each Mortgage Amendment or any other mortgage or deed of
trust executed by any one or more of the Borrower and its Subsidiaries in favor
of the Administrative Agent for the ratable benefit of the Administrative
Agent, the Issuing Lender, the Lenders, and any Swap Counterparty, as the same
may be amended, modified, restated or supplemented from time-to-time, and “Mortgages”
shall mean all of such Mortgages collectively.

 

“Multiemployer
Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of
ERISA.

 

“Note”
means a promissory note of the Borrower payable to the order of any Lender, in
substantially the form of the attached Exhibit E, evidencing
indebtedness of the Borrower to such Lender resulting from Advances owing to
such Lender.

 

“Notice of
Borrowing” means a notice of borrowing in the form of the attached Exhibit
C signed by a Responsible Officer of the General Partner.

 

“Notice of
Conversion or Continuation” means a notice of conversion or continuation in
the form of the attached Exhibit D signed by a Responsible Officer of
the General Partner.

 

“Obligations”
means (a) all principal, interest, fees, reimbursements, indemnifications, and
other amounts payable by any Credit Party to the Administrative Agent, the
Issuing Lender or the Lenders under the Loan Documents, including without
limitation, the Letter of Credit Obligations and (b) all obligations of any
Credit Party owing to any Swap Counterparty under any Interest Hedge Agreement
or Hydrocarbon Hedge Agreement.

 

“Oil and
Gas Properties” means (a) all Hydrocarbon Interests; (b) all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; (c) all
Hydrocarbons in and under and which may be produced, saved, processed or
attributable to the Hydrocarbon Interests, including all oil in tanks, the
lands covered thereby and all rents, issues, profits, proceeds, products,
revenues and other incomes from or attributable to the Hydrocarbon Interests;
(d) all accounts (including accounts resulting from the sale of Hydrocarbons at
the wellhead), contract rights and general intangibles, including all accounts,
contract rights and general intangibles now or hereafter arising regardless of whether any of the
foregoing is in connection with the sale or other disposition of any
Hydrocarbons or otherwise, including all Liens securing the same; (e) all
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or hereafter
acquired, used or held for use in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property 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,

 

15

 

appliances, tools, implements,
cables, wires, towers, casing, tubing and rods, and similar equipment; and (f)
all additions, substitutions, replacements, accessions and attachments to any
and all of the foregoing.

 

“Partners”
means the General Partner and the Limited Partners.

 

“Partnership
Agreement” means the Agreement of Limited Partnership of the Borrower among
the Partners dated as of December 30, 1997, as heretofore or hereafter amended,
supplemented or restated from time to time.

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any entity succeeding to any
or all of its functions under ERISA.

 

“Performance
Letter of Credit” means a Letter of Credit qualifying as a
“performance-based standby letter of credit” under 12 CFR Part 3, Appendix A,
Section 3(b)(2)(i) or any successor U.S. Comptroller of the Currency regulation
and issued by an Issuing Bank under the terms of this Agreement.

 

“Permit”
means any approval, certificate of occupancy, consent, waiver, exemption,
variance, franchise, order, permit, authorization, right or license of or from
any Governmental Authority, including without limitation, an Environmental
Permit.

 

“Permitted
Liens” has the meaning ascribed to such term in Section 6.01.

 

“Person”
means an individual, partnership, corporation (including a business trust),
joint stock company, limited liability corporation or company, limited
liability partnership, trust, unincorporated association, joint venture or
other entity, or a government or any political subdivision or agency thereof or
any trustee, receiver, custodian or similar official.

 

“Plan”
means an employee benefit plan (other than a Multiemployer Plan) maintained for
employees of the Borrower or any member of the Controlled Group and covered by
Title IV of ERISA or subject to the minimum funding standards under Section 412
of the Code.

 

“Pledge
Agreements” means each of the Amended and Restated Pledge Agreements, in
substantially the form of the attached Exhibit G, executed by each of
Brigham Exploration, the General Partner and the Borrower, as the same may be
amended, modified, restated or supplemented from time to time.

 

“Preferred
Shareholders” means each of the Persons listed on Schedule 1.01 who hold
Capital Stock in Brigham Exploration, together with its successors, assigns and
transferees of its shares of Capital Stock of Brigham Exploration that are
Affiliated Funds of such Preferred Shareholders.

 

“Preferred
Shareholder Transaction” means any transaction in which any of the
Preferred Shareholders exercises (whether voluntarily or as required by Brigham
Exploration) its warrants to purchase common stock issued by Brigham
Exploration pursuant to the terms of such warrants or the applicable
certificate of designations of Brigham Exploration.

 

16

 

“Property”
of any Person means any property or assets (whether real, personal, or mixed,
tangible or intangible) of such Person.

 

“Pro Rata
Share” means, with respect to any Lender, either (a) the ratio (expressed
as a percentage) of such Lender’s Commitment at such time to the aggregate
Commitments at such time or (b) if the Commitments have been terminated, the
ratio (expressed as a percentage) of such Lender’s aggregate outstanding
Advances and Letter of Credit Exposure at such time to the aggregate
outstanding Advances and Letter of Credit Exposure of all the Lenders at such
time.

 

“Proven
Reserves” means, at any particular time, the estimated quantities of
Hydrocarbons which geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs attributable
to Oil and Gas Properties under then existing economic and operating conditions
(i.e., prices and costs as of the date the estimate is made).

 

“Register”
has the meaning set forth in paragraph (c) of Section 10.06.

 

“Regulations
D, T, U, and X” mean Regulations D, T, U, and X of the Federal Reserve
Board, as the same are from time to time in effect, and all official rulings
and interpretations thereunder or thereof.

 

“Reimbursement
Obligations” means all of the obligations of the Borrower to reimburse the
Issuing Lender for amounts paid by the Issuing Lender under Letters of Credit as
established by the Letter of Credit Applications and Section 2.07(d).

 

“Release”
shall have the meaning set forth in CERCLA or under any other Environmental
Law.

 

“Response”
shall have the meaning set forth in CERCLA or under any other Environmental Law.

 

“Responsible
Officer” means (a) with respect to any Person that is a corporation, such
Person’s Chief Executive Officer, President, Executive Vice President, Chief
Financial Officer, or Vice President—Controller (b) with respect to any Person
that is a limited liability company, a manager (or such Person’s Chief
Executive Officer, President, Executive Vice President, Chief Financial
Officer, or Vice President—Controller, if any) or the Responsible Officer of
such Person’s managing member or manager, and (c) with respect to any Person
that is a general partnership or a limited liability partnership, the
Responsible Officer of such Person’s general partner or partners.

 

“Restricted
Payment” means, with respect to any Person, any direct or indirect dividend
or distribution (whether in cash, securities or other property) or any direct
or indirect payment of any kind or character (whether in cash, securities or
other property) in consideration for or otherwise in connection with any
retirement, purchase, redemption or other acquisition of any Equity Interest of
such Person, or any options, warrants or rights to purchase or acquire any such
Equity Interest of such Person; provided that the term “Restricted
Payment” shall not include any dividend or distribution payable solely in
Equity Interests of Brigham Exploration or warrants, options or other rights to
purchase such Equity Interests.

 

17

 

“SEC”
means the U.S. Securities and Exchange Commission.

 

“Security
Agreements” means each of the Amended and Restated Security Agreements, in
substantially the form of the attached Exhibit H, executed by each of
the Borrower and its Subsidiaries, as the same may be amended, modified, or
supplemented from time to time.

 

“Security
Instruments” means, collectively, (a) the Mortgages, (b) the Pledge
Agreements, (c) the Security Agreements, (d) the Deposit Control Agreements,
(e) each other agreement, instrument or document executed at any time in
connection with the Pledge Agreements, the Security Agreements and the
Mortgages, (f) each agreement, instrument or document executed in connection
with the Cash Collateral Account; and (g) each other agreement, instrument or
document executed at any time in connection with securing the Obligations.

 

“Side
Letter Agreement” means the letter agreement dated as of the Closing Date
among the Borrower, the Guarantors, the Administrative Agent and The Royal Bank
of Scotland plc, as agent under the Subordinated Credit Agreement.

 

“Significant
PUD Location” means a particular drilling location or proven, undeveloped
reserve prospect identified or designated as “PUD” or “proven undeveloped”
reserves in the applicable Engineering Report, that has been assigned a
discounted present value equal to or in excess of $2,000,000.00 in such
Engineering Report.

 

“Solvent”
means, with respect to any Person as of the date of any determination, that on
such date (a) the fair value of the Property of such Person (both at fair
valuation and at present fair saleable value) is greater than the total
liabilities, including contingent liabilities, of such Person, (b) the present
fair saleable value of the assets of such Person is not less than the amount
that will be required to pay the probable liability of such Person on its debts
as they become absolute and matured, (c) such Person is able to realize upon
its assets and pay its debts and other liabilities, contingent obligations, and
other commitments as they mature in the normal course of business, (d) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay as such debts and liabilities
mature, and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person’s
Property would constitute unreasonably small capital after giving due
consideration to current and anticipated future capital requirements and
current and anticipated future business conduct and the prevailing practice in
the industry in which such Person is engaged. 
In computing the amount of contingent liabilities at any time, such
liabilities shall be computed at the amount that, in light of the facts and
circumstances existing at such time, represents the amount that can reasonably
be expected to become an actual or matured liability.

 

“Subordinated
Credit Agreement” means the Subordinated Amended and Restated Credit
Agreement dated as of the date hereof among the Borrower, the lenders party
thereto, and The Royal Bank of Scotland plc, as administrative agent for such
lenders.

 

“Subordinated
Debt” means the “Obligations” as defined in the Subordinated Credit
Agreement.

 

18

 

“Subordinated
Debt Maturity Date” means the “Maturity Date” as defined in the
Subordinated Credit Agreement.

 

“Subordinated
Loan Documents” means the Subordinated Credit Agreement, the promissory
notes executed and delivered pursuant to the Subordinated Credit Agreement, all
agreements, instruments, or documents executed at any time in connection with
securing the Subordinated Debt, and each other agreement, instrument, or
document executed by any Credit Party or any of their Responsible Officers in
connection with the Subordinated Credit Agreement.

 

“Subsidiary”
of a Person means any corporation or other entity of which more than 50% of the
outstanding Equity Interests having ordinary voting power under ordinary
circumstances to elect a majority of the board of directors or similar
governing body of such corporation or other entity (irrespective of whether at
such time Equity Interests of any other class or classes of such corporation or
other entity shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person. 
Unless otherwise indicated herein, each reference to the term
“Subsidiary” shall mean a Subsidiary of the Borrower.

 

“Swap
Counterparty” means any Lender (or Affiliate of a Lender) that is party to
a Hydrocarbon Hedge Agreement or Interest Hedge Agreement with the Borrower or
any of its Subsidiaries.

 

“Termination
Event” means (a) a Reportable Event described in Section 4043 of ERISA and
the regulations issued thereunder (other than a Reportable Event not subject to
the provision for 30-day notice to the PBGC under such regulations), (b) the
withdrawal of the Borrower or any of its Affiliates 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, or (e) any
other event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Plan.

 

“Type”
has the meaning set forth in Section 1.04.

 

“Unused
Commitment Amount” means, with respect to a Lender at any time, the lesser
of (a) such Lender’s Commitment at such time and (b) such Lender’s Pro Rata
Share of the Borrowing Base then in effect at such time minus, in each
case the sum of (i) the aggregate outstanding principal amount of all Advances
owed to such Lender at such time plus (ii) such Lender’s Share of the
aggregate Letter of Credit Exposure at such time.

 

“Utilization
Percentage” means, at any time, the ratio (expressed as a percentage) at
such time of (a) the sum of the aggregate outstanding principal amount of the
Advances and the aggregate Letter of Credit Exposure at such time to (b) the
lesser of (i) the Commitments or (ii) the Borrowing Base, as applicable, in
effect at such time.

 

19

 

“Voting
Stock” means, with respect to any Person, securities of any class or
classes of Capital Stock or other interests (including partnership interests)
in such Person entitling the holders thereof (whether at all times or at the
time that such class of Capital Stock has voting power by reason of the
happening of any contingency) to vote in the election of members of the board
of directors or comparable body of such Person.

 

Section 1.02       Computation
of Time Periods.  In this Agreement,
with respect to the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including” and the words
“to” and “until” each means “to but excluding”.

 

Section 1.03       Accounting
Terms; Changes in GAAP.  Except as
otherwise expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to the Lenders hereunder shall
(unless otherwise disclosed to the Lenders in writing at the time of delivery
thereof) be prepared, in accordance with GAAP applied on a basis consistent
with those used in the preparation of the Financial Statements.  In addition, all calculations and defined
accounting terms used herein shall, unless expressly provided otherwise, when
referring to any Person, refer to such Person on a consolidated basis and mean
such Person and its consolidated subsidiaries.

 

Section 1.04       Types
of Advances.  Advances are
distinguished by “Type.”  The “Type” of
an Advance refers to the determination whether such Advance is a Eurodollar
Rate Advance or Base Rate Advance.

 

Section 1.05       Miscellaneous.  Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this
Agreement, unless otherwise specified. 
All references to instruments, documents, contracts, and agreements are
references to such instruments, documents, contracts, and agreements as the
same may be amended, supplemented, and otherwise modified from time to time,
unless otherwise specified.  The words
“hereof”, “herein”, and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. 
The term “including” means “including, without limitation,”.  Paragraph headings have been inserted in
this Agreement as a matter of convenience for reference only and it is agreed
that such paragraph headings are not a part of this Agreement and shall not be
used in the interpretation of any provision of this Agreement.  All Exhibits and Schedules attached to this
Agreement are a part hereof for all purposes. 
Pronouns in masculine, feminine and neuter genders shall be construed to
include any other gender, and words in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise requires.

 

ARTICLE II

CREDIT FACILITIES

 

Section 2.01       Revolving
Credit Facility.

 

(a)           Each Lender severally agrees, on the
terms and conditions set forth in this Agreement, to make Advances to the
Borrower from time to time on any Business Day during

 

20

 

the period from the date of
this Agreement until the Commitment Termination Date in an amount for each
Lender not to exceed such Lender’s Unused Commitment Amount.  Each Borrowing shall, in the case of
Borrowings consisting of Base Rate Advances, be in an aggregate amount not less
than $1,000,000 and in integral multiples of $500,000 in excess thereof, and in
the case of Borrowings consisting of Eurodollar Rate Advances, be in an
aggregate amount not less than $2,000,000 and in integral multiples of
$1,000,000 in excess thereof, and in each case shall consist of Advances of the
same Type made on the same day by the Lenders ratably according to their
respective Commitments.  Within the
limits of each Lender’s Commitment, and subject to the terms of this Agreement,
the Borrower may from time to time borrow, prepay, and reborrow Advances.

 

(b)           The indebtedness of the Borrower to
each Lender resulting from the Advances owing to such Lender shall be evidenced
by a Note of the Borrower payable to the order of such Lender in an amount equal
to such Lender’s Commitment.

 

Section 2.02       Borrowing
Base.

 

(a)           Borrowing Base.  The Borrowing Base as of the Closing Date
has been set by the Administrative Agent and the Lenders and acknowledged by
the Borrower as $70,000,000.  Such
Borrowing Base shall remain in effect until the next redetermination made
pursuant to this Section 2.02.  The
Borrowing Base shall be determined in accordance with the standards set forth
in Section 2.02(d) and is subject to periodic redetermination pursuant to
Sections 2.02(b) and 2.02(c).

 

(b)           Calculation of Borrowing Base.

 

(i)            The Borrower shall deliver to the
Administrative Agent and each of the Lenders on or before April 1, 2003, and
thereafter on or before each February 15, beginning February 15, 2004, an
Independent Engineering Report dated effective as of the immediately preceding
December 31, and such other information as may be reasonably requested by any
Lender with respect to the Oil and Gas Properties included or to be included in
the Borrowing Base.  Within 20 days
after the Administrative Agent and the Lenders’ receipt of such Independent
Engineering Report and other information, the Administrative Agent shall
deliver to each Lender the Administrative Agent’s recommendation for the
redetermined Borrowing Base.  Within 20
days after the Lenders’ receipt of the Administrative Agent’s recommendation,
each Lender shall advise the Administrative Agent whether or not such Lender
agrees with the Administrative Agent’s recommendation and the Borrowing Base
shall be redetermined upon the approval of Majority Lenders (or all of the
Lenders in case of an increase in the Borrowing Base); provided, however,
the failure of any Lender to give such notice within such period of time shall
be deemed to constitute an acceptance of such redetermination. The
Administrative Agent shall promptly notify the Borrower in writing of the
amount of the Borrowing Base as so redetermined; provided, however that the
failure to give such notice shall not affect the validity of any such redetermination.

 

(ii)           The Borrower shall deliver to the
Administrative Agent and each Lender on or before October 1, 2003, and
thereafter on or before each August 15, beginning August 15, 2004, an Internal
Engineering Report dated effective as of the immediately preceding June 30,

 

21

 

and such other information as
may be reasonably requested by the Administrative Agent or any Lender with
respect to the Oil and Gas Properties included or to be included in the
Borrowing Base.  Within 20 days after
the Administrative Agent and the Lenders’ receipt of such Internal Engineering
Report and other information, the Administrative Agent shall deliver to each
Lender the Administrative Agent’s recommendation for the redetermined Borrowing
Base.  Within 20 days after the Lenders’
receipt of the Administrative Agent’s recommendation, each Lender shall advise
the Administrative Agent whether or not such Lender agrees with the
Administrative Agent’s recommendation and the Borrowing Base shall be
redetermined upon the approval of Majority Lenders (or all of the Lenders in
case of an increase in the Borrowing Base); provided, however,
the failure of any Lender to give such notice within such period of time shall
be deemed to constitute an acceptance of such redetermination. The
Administrative Agent shall promptly notify the Borrower in writing of the
amount of the Borrowing Base as so redetermined.

 

(iii)          In the event that the Borrower does
not furnish to the Administrative Agent and the Lenders the Independent
Engineering Report, Internal Engineering Report or other information specified
in clauses (i) and (ii) above by the date specified therein, the Administrative
Agent and the Majority Lenders (or all the Lenders in case of an increase in
the Borrowing Base) may nonetheless redetermine the Borrowing Base and
redesignate the Borrowing Base from time-to-time thereafter in their sole
discretion until the Administrative Agent and the Lenders receive the relevant
Independent Engineering Report, Internal Engineering Report, as applicable, or
other information whereupon the Administrative Agent and the Majority Lenders
(or all the Lenders in case of an increase in the Borrowing Base) shall
redetermine the Borrowing Base as otherwise specified in this Section
2.02.  The failure of the Administrative
Agent and the Lenders to redetermine the Borrowing Base and redesignate the
Borrowing Base by the dates specified above shall not affect the validity of
any redetermination and redesignation conducted from time-to-time hereafter.

 

(iv)          Each delivery of an Engineering Report
by the Borrower to the Administrative Agent and the Lenders shall constitute a
representation and warranty by the Borrower to the Administrative Agent and the
Lenders that (A) the Borrower and its Subsidiaries, as applicable, own the Oil
and Gas Properties specified therein free and clear of any Liens (except
Permitted Liens), and (B) on and as of the date of such Engineering Report each
Oil and Gas Property described as “proved developed” therein was developed for
oil and gas, and the wells pertaining to such Oil and Gas Properties that are
described therein as producing wells (“Wells”) were each producing oil
and gas in paying quantities, except for Wells that were utilized as water or
gas injection wells or as water disposal wells.

 

(c)           Interim Redetermination.  In addition to the Borrowing Base
redeterminations provided for in Section 2.02(b), the Majority Lenders (except
that any increase in the Borrowing Base shall require the consent of all the
Lenders) may, either in their sole discretion or at the request of the Borrower
and based on such information as the Administrative Agent and the Lenders deem
relevant (but in accordance with Section 2.02(d)), make additional redeterminations
of the Borrowing Base.  The parties
requesting the redetermination shall give the other parties at least 10 days’
prior written notice that a redetermination of the Borrowing Base pursuant to
this paragraph (c) is to be performed. 
In connection with any redetermination of the Borrowing Base under this
Section 2.02(c), the Borrower shall provide the Administrative

 

22

 

Agent and the Lenders with such
information regarding the Credit Parties’ business (including, without
limitation, its Oil and Gas Properties, the Proven Reserves, and production
relating thereto) as the Administrative Agent or any Lender may request,
including, in the case of requests for an increase to the Borrowing Base of
$1,000,000 or more, an updated Independent Engineering Report.  The Administrative Agent shall promptly
notify the Borrower in writing of each redetermination of the Borrowing Base
pursuant to this Section 2.02(c) and the amount of the Borrowing Base as so
redetermined.

 

(d)           Standards for Redetermination.  Each redetermination of the Borrowing Base
by the Administrative Agent and the Lenders pursuant to this Section 2.02 shall
be made (i) in the sole discretion of the Administrative Agent and the Lenders
(but in accordance with the other provisions of this Section 2.02(d)), (ii) in
accordance with the Administrative Agent’s and the Lenders’ customary internal
standards and practices for valuing and redetermining the value of Oil and Gas
Properties in connection with reserve based oil and gas loan transactions,
(iii) in conjunction with the most recent Independent Engineering Report or
Internal Engineering Report, as applicable, or other information received by
the Administrative Agent and the Lenders relating to the Proven Reserves of the
Borrower and its Subsidiaries, and (iv) based upon the estimated value of the
Proven Reserves owned by the Borrower and its Subsidiaries as determined by the
Administrative Agent and the Lenders. 
In valuing and redetermining the Borrowing Base, the Administrative
Agent and the Lenders may also consider the business, financial condition, and
Debt obligations of the Borrower and its Subsidiaries and such other factors as
the Administrative Agent and the Lenders customarily deem appropriate.  In that regard, the Borrower acknowledges
that the determination of the Borrowing Base contains an equity cushion (market
value in excess of loan value), which is essential for the adequate protection
of the Administrative Agent and the Lenders. 
No Proven Reserves shall be included or considered for inclusion in the
Borrowing Base unless the Administrative Agent and the Lenders shall have
received, at the Borrower’s expense, evidence of title satisfactory in form and
substance to the Administrative Agent that the Administrative Agent has an
Acceptable Security Interest in the Oil and Gas Properties relating thereto
pursuant to the Security Instruments. 
At all times after the Administrative Agent has given the Borrower
notification of a redetermination of the Borrowing Base under this Section
2.02, the Borrowing Base shall be equal to the redetermined amount or such
lesser amount designated by the Borrower and disclosed in writing to the
Administrative Agent and the Lenders until the Borrowing Base is subsequently
redetermined in accordance with this Section 2.02.

 

Section 2.03       Method
of Borrowing.

 

(a)           Notice.  Each Borrowing shall be made pursuant
to a Notice of Borrowing (or by telephone notice promptly confirmed in writing
by a Notice of Borrowing), given not later than 12:00 p.m. (New York time) (i)
on the third Business Day before the date of the proposed Borrowing, in the
case of a Borrowing consisting of Eurodollar Rate Advances or (ii) on the
Business Day of the proposed Borrowing, in the case of a Borrowing consisting
of Base Rate Advances, by the Borrower to the Administrative Agent, which shall
in turn give to each applicable Lender prompt notice of such proposed Borrowing
by telecopier or telex.  Each Notice of
a Borrowing shall be given by telecopier or telex, confirmed immediately in
writing, specifying the information required therein.  In the case of a proposed Borrowing comprised of Eurodollar Rate
Advances, the Administrative Agent shall promptly notify each applicable

 

23

 

Lender of the applicable
interest rate under Section 2.09(b). 
Each applicable Lender shall, before 2:00 p.m. (New York time) on the
date of such Borrowing, make available for the account of its Applicable
Lending Office to the Administrative Agent at its address referred to in
Section 10.02, or such other location as the Administrative Agent may specify
by notice to the Lenders, in same day funds, in the case of a Borrowing, such
Lender’s Pro Rata Share of such Borrowing. 
After the Administrative Agent’s receipt of such funds and upon
fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent shall make such funds available to the Borrower at its
account with the Administrative Agent.

 

(b)           Conversions and Continuations.  The Borrower may elect to Convert or
continue any Borrowing by delivering an irrevocable Notice of Conversion or
Continuation to the Administrative Agent at the Administrative Agent’s office
no later than 12:00 p.m. (New York time) (i) on the date which is at least
three Business Days in advance of the proposed Conversion or continuation date
in the case of a Conversion to or a continuation of a Borrowing comprised of
Eurodollar Rate Advances and (ii) on the Business Day of the proposed
Conversion in the case of a Conversion to a Borrowing comprised of Base Rate
Advances.  Each such Notice of
Conversion or Continuation shall be in writing or by telex or telecopier
confirmed immediately in writing specifying the information required
therein.  Promptly after receipt of a
Notice of Conversion or Continuation under this Section, the Administrative
Agent shall provide each Lender with a copy thereof and, in the case of a
Conversion to or a continuation of a Borrowing comprised of Eurodollar Rate
Advances, notify each Lender of the applicable interest rate under Section
2.09(b).

 

(c)           Certain Limitations.  Notwithstanding anything to the contrary
contained in paragraphs (a) and (b) above:

 

(i)            at no time shall there be more than
six Interest Periods applicable to outstanding Eurodollar Rate Advances and the
Borrower may not select Eurodollar Rate Advances for any Borrowing at any time
that a Default has occurred and is continuing;

 

(ii)           if any Lender shall, at least one
Business Day before the date of any requested Borrowing, Conversion, or
continuation, notify the Administrative Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or that any central bank or other Governmental Authority asserts that it is
unlawful, for such Lender or its Eurodollar Lending Office to perform its
obligations under this Agreement to make Eurodollar Rate Advances or to fund or
maintain Eurodollar Rate Advances, the right of the Borrower to select Eurodollar
Rate Advances from such Lender shall be suspended until such Lender shall
notify the Administrative Agent that the circumstances causing such suspension
no longer exist, and the Advance made by such Lender in respect of such
Borrowing, Conversion, or continuation shall be a Base Rate Advance;

 

(iii)          if the Administrative Agent is unable
to determine the Eurodollar Rate for Eurodollar Rate Advances comprising any
requested Borrowing, the right of the Borrower to select Eurodollar Rate
Advances for such Borrowing or for any subsequent Borrowing shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance;

 

24

 

(iv)          if the Majority Lenders shall, at
least one Business Day before the date of any requested Borrowing, notify the
Administrative Agent that the Eurodollar Rate for Eurodollar Rate Advances
comprising such Borrowing will not adequately reflect the cost to such Lenders
of making or funding their respective Eurodollar Rate Advances, as the case may
be, for such Borrowing, the right of the Borrower to select Eurodollar Rate
Advances for such Borrowing or for any subsequent Borrowing shall be suspended
until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist, and each Advance
comprising such Borrowing shall be a Base Rate Advance; and

 

(v)           if the Borrower shall fail to select
the duration or continuation of any Interest Period for any Eurodollar Rate
Advances in accordance with the provisions contained in the definition of
“Interest Period” in Section 1.01 and paragraph (b) above, the Administrative
Agent shall forthwith so notify the Borrower and the Lenders and such Advances
shall be made available to the Borrower on the date of such Borrowing as Base
Rate Advances or, if an existing Advance, Convert into Base Rate Advances.

 

(d)           Notices Irrevocable.  Each Notice of Borrowing and Notice of
Conversion or Continuation shall be irrevocable and binding on the Borrower.

 

(e)           Administrative Agent Reliance.  Unless the Administrative Agent shall have
received notice from a Lender before the date of any Borrowing that such Lender
shall not make available to the Administrative Agent such Lender’s Pro Rata
Share of a Borrowing, the Administrative Agent may assume that such Lender has
made its Pro Rata Share of such Borrowing available to the Administrative Agent
on the date of such Borrowing in accordance with this Agreement and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount.  If and to the extent that such Lender shall not have so made its
Pro Rata Share of such Borrowing available to the Administrative Agent, such
Lender and the Borrower severally agree to immediately repay to the
Administrative Agent on demand such corresponding amount, together with
interest on such amount, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent, at (i) in the case of the Borrower, the interest rate
applicable on such day to Advances comprising such Borrowing and (ii) in the
case of such Lender, the Federal Funds Rate for such day.  If such Lender shall repay to the
Administrative Agent such corresponding amount and interest as provided above,
such corresponding amount so repaid shall constitute such Lender’s Advance as
part of such Borrowing for purposes of this Agreement even though not made on
the same day as the other Advances comprising such Borrowing.

 

(f)            Lender Obligations Several.  The failure of any Lender to make the
Advance to be made by it as part of any Borrowing shall not relieve any other
Lender of its obligation, if any, to make its Advance on the date of such
Borrowing.  No Lender shall be
responsible for the failure of any other Lender to make the Advance to be made
by such other Lender on the date of any Borrowing.

 

25

 

Section 2.04       Reduction
of the Commitments.

 

(a)           The Borrower shall have the right,
upon at least five Business Days’ irrevocable notice to the Administrative
Agent, to terminate in whole or reduce ratably in part the unused portion of
the Commitments; provided that each partial reduction shall be in the
aggregate amount of $1,000,000 or in integral multiples of $1,000,000 in excess
thereof.

 

(b)           Any reduction and termination of the
Commitments pursuant to this Section 2.04 shall be applied ratably to each
Lender’s Commitment and shall be permanent, with no obligation of the Lenders
to reinstate such Commitments.

 

Section 2.05       Prepayment
of Advances.

 

(a)           Optional.  The Borrower may prepay the Advances,
without premium or penalty, after giving by 12:00 p.m. (New York time) (i) in
the case of Eurodollar Rate Advances, at least three Business Days’ or (ii) in
the case of Base Rate Advances, on the same Business Day, irrevocable prior
written notice to the Administrative Agent stating the proposed date and
aggregate principal amount of such prepayment. 
If any such notice is given, the Borrower shall prepay the Advances in
an aggregate principal amount equal to the amount specified in such notice,
together with accrued interest to the date of such prepayment on the principal
amount prepaid and amounts, if any, required to be paid pursuant to Section
2.12 as a result of such prepayment being made on such date; provided,
however, that each partial prepayment with respect to:  (A) any Eurodollar Rate Advances shall be
applied to Eurodollar Rate Advances comprising part of the same Borrowing; and
(B) any Type of Advances shall be made in $2,500,000 and in integral multiples
of $500,000 in excess thereof (or the remaining aggregate principal balance
outstanding).  Full prepayments of any
Borrowing are permitted without restriction of amounts.

 

(b)           Borrowing Base Deficiency.  If a Borrowing Base Deficiency exists, then
the Administrative Agent shall give the Borrower and the Lenders prompt written
notice thereof.  The Borrower shall
prepay the Advances or, if the Advances have been repaid in full, make deposits
into the Cash Collateral Account to provide cash collateral for the Letter of
Credit Exposure, such that the Borrowing Base deficiency is cured within ninety
(90) days after the date a deficiency notice regarding the Borrowing Base is
received by the Borrower from the Administrative Agent.  Each prepayment pursuant to this Section
2.05(b) shall be accompanied by accrued interest on the amount prepaid to the
date of such prepayment and amounts, if any, required to be paid pursuant to
Section 2.12 as a result of such prepayment being made on such date.  Each prepayment under this Section 2.05(b)
shall be applied to the Advances in accordance with Section 2.10.

 

(c)           Reduction of Commitments.  On the date of each reduction of the
aggregate Commitments pursuant to Section 2.04, the Borrower agrees to make a
prepayment in respect of the outstanding amount of the Advances to the extent,
if any, that the aggregate unpaid principal amount of all Advances plus
the Revolving Letter of Credit Exposure exceeds the lesser of (A) the aggregate
Commitments, as so reduced and (B) the Borrowing Base.  Each prepayment pursuant to this Section
2.05(c) shall be accompanied by accrued interest on the amount prepaid to the
date of such prepayment and amounts, if any, required to be paid pursuant to
Section 2.12

 

26

 

as a result of such prepayment
being made on such date.  Each
prepayment under this Section 2.05(c) shall be applied to the Advances as
provided in Section 2.10(a).

 

(d)           Illegality.  If any Lender shall notify the Administrative
Agent and the Borrower that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful for such
Lender or its Eurodollar Lending Office to perform its obligations under this
Agreement to maintain any Eurodollar Rate Advances of such Lender then
outstanding hereunder, (i) the Borrower shall, no later than 12:00 p.m. (New
York time) (A) if not prohibited by law, on the last day of the Interest Period
for each outstanding Eurodollar Rate Advance made by such Lender or (B) if
required by such notice, on the second Business Day following its receipt of
such notice, prepay all of the Eurodollar Rate Advances made by such Lender then
outstanding, together with accrued interest on the principal amount prepaid to
the date of such prepayment and amounts, if any, required to be paid pursuant
to Section 2.12 as a result of such prepayment being made on such date, (ii)
such Lender shall simultaneously make a Base Rate Advance to the Borrower on
such date in an amount equal to the aggregate principal amount of the
Eurodollar Rate Advances prepaid to such Lender, and (iii) the right of the
Borrower to select Eurodollar Rate Advances from such Lender for any subsequent
Borrowing shall be suspended until such Lender gives notice referred to above
shall notify the Administrative Agent that the circumstances causing such
suspension no longer exist.

 

(e)           No Additional Right; Ratable
Prepayment.  The Borrower shall have
no right to prepay any principal amount of any Advance except as provided in
this Section 2.05, and all notices given pursuant to this Section 2.05 shall be
irrevocable and binding upon the Borrower. 
Each payment of any Advance pursuant to this Section 2.05 shall be made
in a manner such that all Advances comprising part of the same Borrowing are
paid in whole or ratably in part.

 

Section 2.06       Repayment
of Advances.  The Borrower shall
repay to the Administrative Agent for the ratable benefit of the Lenders the
outstanding principal amount of each Advance, together with any accrued
interest on the Maturity Date or such earlier date pursuant to Section 7.02 or
Section 7.03.

 

Section 2.07       Letters
of Credit.

 

(a)           Issuance.  From time to time from the date of this
Agreement until 30 days prior to the Commitment Termination Date, at the
request of the Borrower, the Issuing Lender shall, on the terms and conditions
hereinafter set forth, issue, increase, or extend the Expiration Date of, Letters
of Credit for the account of the Borrower on any Business Day.  No Letter of Credit will be issued,
increased, or extended:

 

(i)            if such issuance, increase, or
extension would cause the Letter of Credit Exposure to exceed the lesser of (A)
$5,000,000 and (B) the Unused Commitment Amount;

 

(ii)           unless such Letter of Credit has an
Expiration Date not later than the earlier of (A) 12 months after the date of
issuance thereof (or, if extendable beyond such period, unless such Letter of
Credit is cancelable upon not more than 30 days’ notice given by the Issuing
Lender to the beneficiary of such Letter of Credit) and (B) the Maturity Date;

 

27

 

(iii)          unless such Letter of Credit Documents
are in form and substance acceptable to the Issuing Lender in its sole
discretion;

 

(iv)          unless such Letter of Credit is a
standby letter of credit not supporting the repayment of indebtedness for
borrowed money of any Person;

 

(v)           unless the Borrower has delivered to
the Issuing Lender a completed and executed Letter of Credit Application; and

 

(vi)          unless such Letter of Credit is
governed by either (B) the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No.  500 (or any successor to such publication)
or (A) the International Standby Practices 1998, Institute of International
Banking Law & Practice (or any successor to such publication).

 

If the terms of any Letter of Credit Application
referred to in the foregoing clause (v) conflicts with the terms of this
Agreement, the terms of this Agreement shall control.

 

(b)           Participations.  Upon the date of the issuance or increase of
a Letter of Credit, the Issuing Lender shall be deemed to have sold to each
Lender and each Lender shall be deemed to have purchased from the Issuing
Lender a participation in the related Letter of Credit Obligations equal to
such Lender’s Pro Rata Share at such date and such sale and purchase shall
otherwise be in accordance with the terms of this Agreement.  The Issuing Lender shall promptly notify
each Lender by telex, telephone, or telecopy of each Letter of Credit issued,
increased, or extended or converted and the actual dollar amount of such Lender’s
participation in such Letter of Credit; provided, however that the failure to
give such notice shall not affect the validity of any such participation.

 

(c)           Issuing.  Each Letter of Credit shall be issued,
increased, or extended pursuant to a Letter of Credit Application (or by
telephone notice promptly confirmed in writing by a Letter of Credit
Application), given not later than 12:00 p.m. (New York time) on the fifth
Business Day before the date of the proposed issuance, increase, or extension
of the Letter of Credit, and the Issuing Lender shall give to each other Lender
prompt notice thereof by telex, telephone, or telecopy.  Each Letter of Credit Application shall be
given by telecopier or telex, confirmed immediately in writing, specifying the
information required therein.  After the
Issuing Lender’s receipt of such Letter of Credit Application and upon
fulfillment of the applicable conditions set forth in Article III, the Issuing
Lender shall issue, increase, or extend such Letter of Credit for the account
of the Borrower.  Each Letter of Credit
Application shall be irrevocable and binding on the Borrower.

 

(d)           Reimbursement.  The Borrower hereby agrees to pay on demand
to the Issuing Lender an amount equal to any amount paid by the Issuing Lender
under any Letter of Credit; provided that, subject to the terms and conditions
of this Agreement, the Borrower may request a Advance hereunder for the purpose
of satisfying any such reimbursement obligation.  In the event the Issuing Lender makes a payment pursuant to a
request for draw presented under a Letter of Credit and such payment is not
promptly reimbursed by the Borrower pursuant to the preceding sentence, the
Issuing Lender shall give the Administrative Agent notice of the 

 

28

 

Borrower’s failure to make such
reimbursement and the Administrative Agent shall promptly notify each Lender of
the amount necessary to reimburse the Issuing Lender.  Upon such notice from the Administrative Agent, each Lender shall
promptly reimburse the Issuing Lender for such Lender’s Pro Rata Share of such
amount, and such reimbursement shall be deemed for all purposes of this
Agreement to be a Advance to the Borrower transferred at the Borrower’s request
to the Issuing Lender.  If such
reimbursement is not made by any Lender to the Issuing Lender on the same day
on which the Administrative Agent notifies such Lender to make reimbursement to
the Issuing Lender hereunder, such Lender shall pay interest on its Pro Rata
Share thereof to the Issuing Lender at a rate per annum equal to the Federal
Funds Rate.  The Borrower hereby
unconditionally and irrevocably authorizes, empowers, and directs the
Administrative Agent and the Lenders to record and otherwise treat such
reimbursements to the Issuing Lender as Base Rate Advances under a Borrowing
requested by the Borrower to reimburse the Issuing Lender which have been
transferred to the Issuing Lender at the Borrower’s request.

 

(e)           Obligations Unconditional.  The obligations of the Borrower under this
Agreement in respect of each Letter of Credit shall be unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances, including, without limitation, the following
circumstances:

 

(i)            any lack of validity or
enforceability of any Letter of Credit Documents;

 

(ii)           any amendment or waiver of, or any
consent to or departure from, any Letter of Credit Documents;

 

(iii)          the existence of any claim, set-off,
defense, or other right which the Borrower may have at any time against any
beneficiary or transferee of such Letter of Credit (or any Persons for whom any
such beneficiary or any such transferee may be acting), the Issuing Lender, or
any other person or entity, whether in connection with this Agreement, the transactions
contemplated in this Agreement or in any Letter of Credit Documents, or any
unrelated transaction;

 

(iv)          any statement or any other document
presented under such Letter of Credit proving to be forged, fraudulent,
invalid, or insufficient in any respect or any statement therein being untrue
or inaccurate in any respect;

 

(v)           payment by the Issuing Lender under
such Letter of Credit against presentation of a draft or certificate which does
not comply with the terms of such Letter of Credit; or

 

(vi)          any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.

 

provided,
however, that nothing contained in this paragraph (e) shall be deemed to
constitute a waiver of any remedies of the Borrower in connection with the Letters
of Credit or the Borrower’s rights under Section 2.07(f) below.

 

29

 

 

(f)            Liability of Issuing Lender.  The Borrower assumes all risks of the acts
or omissions of any beneficiary or transferee of any Letter of Credit with
respect to its use of such Letter of Credit. 
Neither the Issuing Lender nor any of its officers or directors shall be
liable or responsible for:

 

(i)            the use which may be made of any
Letter of Credit or any acts or omissions of any beneficiary or transferee in
connection therewith;

 

(ii)           the validity, sufficiency, or
genuineness of documents, or of any endorsement thereon, even if such documents
should prove to be in any or all respects invalid, insufficient, fraudulent, or
forged;

 

(iii)          payment by the Issuing Lender against
presentation of documents which do not comply with the terms of a Letter of
Credit, including failure of any documents to bear any reference or adequate
reference to the relevant Letter of Credit; or

 

(iv)          any other circumstances whatsoever in
making or failing to make payment under any Letter of Credit (including the Issuing Lender’s own negligence),

 

except
that the Borrower shall have a claim against the Issuing Lender, and the
Issuing Lender shall be liable to the Borrower, to the extent of any direct, as
opposed to consequential, damages suffered by the Borrower which the Borrower
proves were caused by the Issuing Lender’s willful misconduct or gross
negligence in determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit.  In furtherance and not in limitation of the foregoing, the
Issuing Lender may accept documents that appear on their face to be in order,
without responsibility for further investigation, regardless of any notice or
information to the contrary.

 

(g)           Cash Collateral Account.

 

(i)            If the Borrower is required to
deposit funds in the Cash Collateral Account pursuant to Sections 2.05(b),
7.02(b), or 7.03(b), then the Borrower and the Issuing Lender shall establish
the Cash Collateral Account and the Borrower shall execute any documents and
agreements, including the Issuing Lender’s standard form assignment of deposit
accounts, that the Issuing Lender requests in connection therewith to establish
the Cash Collateral Account and grant the Issuing Lender a first priority
security interest in such account and the funds therein.  The Borrower hereby pledges to the Issuing
Lender and grants the Issuing Lender a security interest in the Cash Collateral
Account, whenever established, all funds held in the Cash Collateral Account
from time to time, and all proceeds thereof as security for the payment of the
Obligations.

 

(ii)           So long as no Event of Default
Exists, (A) the Issuing Lender may apply the funds held in the Cash Collateral
Account only to the reimbursement of any Letter of Credit Obligations, and (B)
the Issuing Lender shall release to the Borrower at the Borrower’s written
request any funds held in the Cash Collateral Account in an amount up to but
not exceeding the excess, if any (immediately prior to the release of any such
funds), of the total amount of funds held in the Cash Collateral Account over
the Letter of Credit Exposure.  During
the existence of

 

30

 

any Event of Default, the
Issuing Lender may apply any funds held in the Cash Collateral Account to the
Obligations in accordance with Section 7.06.

 

(iii)          The Issuing Lender shall exercise
reasonable care in the custody and preservation of any funds held in the Cash
Collateral Account and shall be deemed to have exercised such care if such
funds are accorded treatment substantially equivalent to that which the Issuing
Lender accords its own property, it being understood that the Issuing Lender shall
not have any responsibility for taking any necessary steps to preserve rights
against any parties with respect to any such funds.

 

Section 2.08       Fees.

 

(a)           Commitment Fees.  The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee at a per
annum rate equal to the Applicable Margin for commitment fees on the average
daily Unused Commitment Amount of such Lender, from the date of this Agreement
until the Commitment Termination Date. 
The commitment fees shall be due and payable quarterly in arrears on the
last day of each March, June, September, and December commencing on March 31,
2003 and continuing thereafter through and including the Commitment Termination
Date.

 

(b)           Letter of Credit Fees.  The Borrower agrees to pay (i) to the
Administrative Agent for the pro rata benefit of the Lenders a per annum letter
of credit fee for each Financial Letter of Credit issued hereunder in an amount
equal to the Applicable Margin for Eurodollar Rate Advances on the aggregate
amount available for drawing from time to time under such Letter of Credit,
(ii) to the Administrative Agent for the pro rata benefit of the Lenders a per
annum letter of credit fee for each Performance Letter of Credit issued
hereunder in an amount equal to 50% of the Applicable Margin for Eurodollar
Rate Advances on the aggregate amount available for drawing from time to
time under such Letter of Credit.  Each
such fee will be calculated based on the face amount of all Letters of Credit
outstanding on each day at the above applicable rate and will be payable
quarterly in arrears.  In addition, the
Borrower agrees to pay to the Issuing Lender, (i) a fronting fee for each
Letter of Credit equal to 0.125% of the face amount of such Letter of Credit
and (ii) such other usual and customary fees associated with any transfers,
amendments, drawings, negotiations or reissuances of any Letters of Credit.

 

(c)           Other Fees.  The Borrower agrees to pay to the Lead
Arranger, the Administrative Agent and the Documentation Agent the fees
described in the Administrative Agent’s Fee Letter.

 

Section 2.09       Interest.  The Borrower shall pay interest on the
unpaid principal amount of each Advance made by each Lender from the date of
such Advance until such principal amount shall be paid in full, at the
following rates per annum:

 

(a)           Base Rate Advances.  If such Advance is a Base Rate Advance, a
rate per annum equal at all times to the Adjusted Base Rate in effect from time
to time plus the Applicable Margin in effect from time to time, payable
quarterly in arrears on the last day of each calendar quarter and on the date
such Base Rate Advance shall be paid in full, provided that upon the
occurrence and continuance of an Event of Default, such Advances shall bear
interest from the date on which such Event of Default occurred until such Event
of Default has been cured or

 

31

 

 waived, payable on demand, at a rate per
annum equal at all times to the Adjusted Base Rate in effect from time to time plus
the Applicable Margin plus 2.00%, provided that the rate charged
pursuant to this Section 2.09(a) shall never exceed the Maximum Rate.

 

(b)           Eurodollar Rate Advances.  If such Advance is a Eurodollar Rate
Advance, a rate per annum equal at all times during the Interest Period for
such Advance to the Eurodollar Rate for such Interest Period plus the
Applicable Margin in effect from time to time, payable on the last day of such
Interest Period, and, in the case of six-month Interest Periods, on the
day which occurs during such Interest Period three months from the first day of
such Interest Period, provided that upon the occurrence and continuance
of an Event of Default, such Advance shall bear interest from the date on which
such Event of Default occurred until such Event of Default has been cured or
waived, payable on demand, at a rate per annum equal at all times to the rate
required to be paid on such Advance immediately prior to the occurrence of such
Event of Default plus 2.00%, provided  further, that any
amount of principal, interest, fees or any other amount which is not paid when
due (whether at stated maturity, by acceleration, or otherwise) shall bear
interest from the date on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all times to the Adjusted
Base Rate in effect from time to time plus the Applicable Margin plus
2.00%, provided that the rate charged pursuant to this Section 2.09(b) shall
never exceed the Maximum Rate.

 

(c)           Additional Interest on Eurodollar
Rate Advances.  The Borrower shall
pay to each Lender, so long as any such Lender shall be required under
regulations of the Federal Reserve Board to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency Liabilities,
additional interest on the unpaid principal amount of each Eurodollar Rate
Advance of such Lender, from the effective date of such Advance until such
principal amount is paid in full, at an interest rate per annum equal at all
times to the remainder obtained by subtracting (i) the Eurodollar Rate for the
Interest Period for such Advance from (ii) the rate obtained by dividing such
Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Lender for such Interest Period, payable on each date on
which interest is payable on such Advance. 
Such additional interest payable to any Lender shall be determined by
such Lender and notified to the Borrower through the Administrative Agent (such
notice to include the calculation of such additional interest, which
calculation shall be conclusive in the absence of manifest error).

 

(d)           Usury Recapture.

 

(i)            If, with respect to any Lender, the
effective rate of interest contracted for under the Loan Documents, including
the stated rates of interest and fees contracted for hereunder and any other
amounts contracted for under the Loan Documents which are deemed to be
interest, at any time exceeds the Maximum Rate, then the outstanding principal amount
of the loans made by such Lender hereunder shall bear interest at a rate which
would make the effective rate of interest for such Lender under the Loan
Documents equal the Maximum Rate until the difference between the amounts which
would have been due at the stated rates and the amounts which were due at the
Maximum Rate (the “Lost Interest”) has been recaptured by such Lender.

 

(ii)           If, when the loans made hereunder are
repaid in full, the Lost Interest has not been fully recaptured by such Lender
pursuant to the preceding subsection (i), then, to the

 

32

 

extent permitted by law, for
the loans made hereunder by such Lender the interest rates charged under this
Section 2.09 shall be retroactively increased such that the effective rate of
interest under the Loan Documents was at the Maximum Rate since the
effectiveness of this Agreement to the extent necessary to recapture the Lost
Interest not recaptured pursuant to the preceding sentence and, to the extent
allowed by law, the Borrower shall pay to such Lender the amount of the Lost
Interest remaining to be recaptured by such Lender.

 

(iii)          Notwithstanding the foregoing or any other term in this
Agreement and the Loan Documents to the contrary, it is the intention of each
Lender and the Borrower to conform strictly to any applicable usury laws.  Accordingly, if any Lender contracts for,
charges, or receives any consideration which constitutes interest in excess of
the maximum rate, then any such excess shall be canceled automatically and, if
previously paid, shall at such Lender’s option be applied to the outstanding
amount of the Advances made hereunder by such Lender or be refunded to the
Borrower.

 

Section 2.10       Payments
and Computations.

 

(a)           Payment Procedures.  The Borrower shall make each payment under
this Agreement and under the Notes not later than 12:00 p.m. (New York time) on
the day when due in Dollars to the Administrative Agent at the location
referred to in the Notes (or such other location as the Administrative Agent
shall designate in writing to the Borrower) in same day funds without
deduction, setoff, or counterclaim of any kind.  The Administrative Agent shall promptly thereafter cause to be
distributed like funds relating to the payment of principal, interest or fees
ratably (other than amounts payable solely to the Administrative Agent, the
Issuing Lender, or a specific Lender pursuant to Section 2.08(b), 2.08(c),
2.09(c), 2.12, 2.13, 2.14, 10.05, or 11.07, but after taking into account payments
effected pursuant to Section 10.04) in accordance with each Lender’s Pro Rata
Share to the Lenders for the account of their respective Applicable Lending
Offices, and like funds relating to the payment of any other amount payable to
any Lender or the Issuing Lender to such Lender for the account of its
Applicable Lending Office, in each case to be applied in accordance with the
terms of this Agreement.

 

(b)           Computations.  All computations of interest based on the
Base Rate and of fees shall be made by the Administrative Agent on the basis of
a year of 365 or 366 days, as the case may be, and all computations of interest
based on the Eurodollar Rate and the Federal Funds Rate shall be made by the
Administrative Agent, on the basis of a year of 360 days, in each case for the
actual number of days (including the first day, but excluding the last day)
occurring in the period for which such interest or fees are payable.  Each determination by the Administrative
Agent of an interest rate or fee shall be conclusive and binding for all
purposes, absent manifest error.

 

(c)           Non-Business Day Payments.  Whenever any payment shall be stated to be
due on a day other than a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
provided, however, that if such extension would cause

 

33

 

payment of interest on or
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.

 

(d)           Administrative Agent Reliance.  Unless the Administrative Agent shall have
received written notice from the Borrower prior to the date on which any
payment is due to the Lenders that the Borrower shall not make such payment in
full, the Administrative Agent may assume that the Borrower has made such
payment in full to the Administrative Agent on such date and the Administrative
Agent may, in reliance upon such assumption, cause to be distributed to each
Lender on such date an amount equal to the amount then due such Lender.  If and to the extent the Borrower shall not
have so made such payment in full to the Administrative Agent, each Lender
shall repay to the Administrative Agent forthwith on demand such amount
distributed to such Lender, together with interest, for each day from the date
such amount is distributed to such Lender until the date such Lender repays such
amount to the Administrative Agent, at the Federal Funds Rate for such day.

 

Section 2.11       Sharing
of Payments, Etc.  If any Lender
shall obtain any payment (whether voluntary, involuntary, through the exercise
of any right of set-off, or otherwise) on account of the Advances or Letter of
Credit Obligations made by it in excess of its Pro Rata Share of payments on
account of the Advances or Letter of Credit Obligations obtained by all the
Lenders, such Lender shall notify the Administrative Agent and forthwith
purchase from the other Lenders such participations in the Advances made by
them or Letter of Credit Obligations held by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided, however, that if all or any portion of such excess
payment is thereafter recovered from such purchasing Lender, such purchase from
each Lender shall be rescinded and such Lender shall repay to the purchasing
Lender the purchase price to the extent of such Lender’s ratable share
(according to the proportion of (a) the amount of the participation sold by
such Lender to the purchasing Lender as a result of such excess payment to (b)
the total amount of such excess payment) of such recovery, together with an
amount equal to such Lender’s ratable share (according to the proportion of (i)
the amount of such Lender’s required repayment to the purchasing Lender to (ii)
the total amount of all such required repayments to the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. 
The Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.11 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.

 

Section 2.12       Breakage
Costs.  If (a) any default by the
Borrower in making any borrowing of, conversion into or continuation of any
Eurodollar Rate Advance after the Borrower has given a notice requesting the
same in accordance with the provisions of this Agreement, (b) any payment of
any Eurodollar Rate Advance is made prior to the last day of the Interest
Period for such Advance, whether as a result of any payment pursuant to Section
2.05, the acceleration of the maturity of the Notes pursuant to Article VII, or
otherwise, or (c) any default by the Borrower in making any prepayment of any
Eurodollar Rate Advance after the Borrower has given notice thereof in
accordance with the provisions of this Agreement, the Borrower shall, within 10
days of any written demand sent by any Lender to the Borrower through the
Administrative Agent, pay to the Administrative Agent for the account of such

 

34

 

Lender any amounts required to
compensate such Lender for any additional losses, out-of-pocket
costs or expenses which it may reasonably incur as a result of such payment or
nonpayment, including, without limitation, any loss, cost, or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Advance.

 

Section 2.13       Increased
Costs.

 

(a)           Eurodollar Rate Advances.  If, due to either (i) the introduction of or
any change (other than any change by way of imposition or increase of reserve
requirements included in the Eurodollar Rate Reserve Percentage) in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any increase in the
cost to any Lender of agreeing to make or making, funding, or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time, upon
demand by such Lender (with a copy of such demand to the Administrative Agent),
immediately pay to the Administrative Agent for the account of such Lender
additional amounts sufficient to compensate such Lender for such increased
cost.  A certificate as to the amount of
such increased cost and detailing the calculation of such cost submitted to the
Borrower and the Administrative Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error.

 

(b)           Capital Adequacy.  If any Lender or the Issuing Lender
determines in good faith that compliance with any law or regulation or any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Lender or the Issuing
Lender or any corporation controlling such Lender or the Issuing Lender and
that the amount of such capital is increased by or based upon the existence of
such Lender’s commitment to lend or the Issuing Lender’s commitment to issue
the Letters of Credit and other commitments of this type, then, upon 30 days’
prior written notice by such Lender or the Issuing Lender (with a copy of any
such demand to the Administrative Agent), the Borrower shall immediately pay to
the Administrative Agent for the account of such Lender or to the Issuing
Lender, as the case may be, from time to time as specified by such Lender or
the Issuing Lender, additional amounts sufficient to compensate such Lender or
the Issuing Lender for the reduced rate of return on that capital of such
Lender or the Issuing Lender (but without duplication of amounts, if any, paid
by the Borrower pursuant to Section 2.13(a) above), in light of such
circumstances, (i) with respect to such Lender, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender’s commitment to lend under this Agreement and (ii) with respect
to the Issuing Lender, to the extent that the Issuing Lender reasonably
determines such increase in capital to be allocable to the issuance or
maintenance of the Letters of Credit.  A
certificate as to such amounts and detailing the calculation of such amounts
submitted to the Borrower by such Lender or the Issuing Lender shall be
conclusive and binding for all purposes, absent manifest error.

 

(c)           Letters of Credit.  If any change in any law or regulation or in
the interpretation thereof by any court or administrative or Governmental
Authority charged with the administration thereof shall either (i) impose,
modify, or deem applicable any reserve, special deposit, or similar requirement
against letters of credit issued by, or assets held by, or deposits in 

 

35

 

or for the account of, the
Issuing Lender or (ii) impose on the Issuing Lender any other condition
regarding the provisions of this Agreement relating to the Letters of Credit or
any Letter of Credit Obligations, and the result of any event referred to in
the preceding clause (i) or (ii) shall be to increase the cost to the Issuing
Lender of issuing or maintaining any Letter of Credit (which increase in cost
shall be determined by the Issuing Lender’s reasonable allocation of the
aggregate of such cost increases resulting from such event), then, upon demand
by the Issuing Lender, the Borrower shall pay to the Issuing Lender, from time
to time as specified by the Issuing Lender, additional amounts which shall be
sufficient to compensate the Issuing Lender for such increased cost.  A certificate as to such increased cost
incurred by the Issuing Lender, as a result of any event mentioned in clause
(i) or (ii) above, and detailing the calculation of such increased costs
submitted by the Issuing Lender to the Borrower, shall be conclusive and
binding for all purposes, absent manifest error.

 

Section 2.14       Taxes.

 

(a)           No Deduction for Certain Taxes.  Any and all payments by the Borrower shall
be made, in accordance with Section 2.10, free and clear of and without
deduction for any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender, the Issuing Lender, and the Administrative Agent,
taxes imposed on its net income, and franchise taxes imposed on it, by the
jurisdiction under the laws of which such Lender, the Issuing Lender, or the
Administrative Agent (as the case may be) is organized or any political
subdivision of the jurisdiction (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”) and, in the case of each Lender and the Issuing Lender,
Taxes by the jurisdiction of such Lender’s Applicable Lending Office or any
political subdivision of such jurisdiction. 
If the Borrower shall be required by law to deduct any Taxes from or in
respect of any sum payable to any Lender, the Issuing Lender, or the
Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14), such Lender,
the Issuing Lender, or the Administrative Agent (as the case may be) receives
an amount equal to the sum it would have received had no such deductions been
made; provided, however, that if the Borrower’s obligation to deduct or
withhold Taxes is caused solely by such Lender’s, the Issuing Lender’s, or the
Administrative Agent’s failure to provide the forms described in paragraph (d)
of this Section 2.14 and such Lender, the Issuing Lender, or the Administrative
Agent could have provided such forms, no such increase shall be required; (ii)
the Borrower shall make such deductions; and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

 

(b)           Other Taxes.  In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other excise or property
taxes, charges or similar levies which arise from any payment made or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the Notes, or the other Loan Documents (hereinafter referred to as “Other
Taxes”).

 

(c)           Indemnification.  THE
BORROWER INDEMNIFIES EACH LENDER, THE ISSUING LENDER, AND THE ADMINISTRATIVE
AGENT FOR THE FULL AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT
LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY

 

36

 

jurisdiction
on amounts payable under this Section 2.14) paid by such Lender, the Issuing
Lender, or the Administrative Agent (as the case may be) and any liability
(including interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
unless the payment of such Taxes or Other Taxes were not correctly or legal
asserted and such Lender’s payment of such Taxes or Other Taxes was the result
of its gross negligence or wilful misconduct. 
Each payment required to be made by the Borrower in respect of this
indemnification shall be made to the Administrative Agent for the benefit of
any party claiming such indemnification within 30 days from the date the
Borrower receives written demand therefor from the Administrative Agent on
behalf of itself as Administrative Agent, the Issuing Lender, or any such
Lender.  If any Lender, the
Administrative Agent, or the Issuing Lender receives a refund in respect of any
Taxes paid by the Borrower under this paragraph (c), such Lender, the
Administrative Agent, or the Issuing Lender, as the case may be, shall promptly
pay to the Borrower the Borrower’s share of such refund.

 

(d)           Foreign Lender Withholding
Exemption.  Each Lender and Issuing
Lender that is not incorporated under the laws of the United States of America
or a state thereof agrees that upon the request of the Borrower it shall
deliver to the Borrower and the Administrative Agent (i) two duly completed
copies of United States Internal Revenue Service Form W8-ECI, W8-IMY or W8-BEN
or successor applicable form, as the case may be, certifying in each case that
such Lender is entitled to receive payments under this Agreement and the Notes
payable to it, without deduction or withholding of any United States federal
income taxes, (ii) if applicable, an Internal Revenue Service Form W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding tax, and (iii) any other governmental forms
which are necessary or required under an applicable tax treaty or otherwise by
law to reduce or eliminate any withholding tax, which have been reasonably
requested by the Borrower.  If an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any delivery required by the preceding
sentence would otherwise be required which renders all such forms inapplicable
or which would prevent any Lender from duly completing and delivering any such
form with respect to it and such Lender advises the Borrower and the
Administrative Agent that it is not capable of receiving payments without any
deduction or withholding of United States federal income tax, and in the case
of a Form W-9 establishing an exemption from United States backup
withholding tax, such Lender shall not be required to deliver such form.  The Borrower shall withhold tax at the rate
and in the manner required by the laws of the United States with respect to
payments made to a Lender failing to timely provide the requisite Internal
Revenue Service forms.  For any period
with respect to which a Lender or the Issuing Lender has failed to provide the
Borrower and the Administrative Agent with the appropriate form pursuant to
this Section 2.14(d) (unless such failure is due to a change in treaty or Legal
Requirement occurring subsequent to the date on which a form originally was
required to be provided), such Lender or the Issuing Lender, as applicable,
shall not be entitled to indemnification under Section 2.14(c) with respect to
Taxes imposed by the United States which taxes would not have been imposed but for
such failure to provide such forms; provided, however that should
a Lender, which is otherwise exempt from or subject to a reduced rate of
withholding tax becomes subject to Taxes because of its failure to

 

37

 

deliver a form required
hereunder, the Borrower shall take such steps as such Lender shall reasonable
request to assist such Lender to recover such Taxes.

 

ARTICLE III

CONDITIONS OF LENDING

 

Section 3.01       Conditions
Precedent to Closing Date.  The Closing
Date shall occur upon the satisfaction of the following conditions precedent
that:

 

(a)           Documentation.  The Administrative Agent shall have received
the following duly executed by all the parties thereto, in form and substance
satisfactory to the Administrative Agent, the Issuing Lender and the Lenders,
and, where applicable, in sufficient copies for each Lender:

 

(i)            this Agreement;

 

(ii)           a Note payable to the order of each
Lender in the amount of its Commitment;

 

(iii)          a Security Agreement executed by the
Borrower and each of its Subsidiaries;

 

(iv)          a Pledge Agreement executed by Brigham
Exploration and the General Partner;

 

(v)           stock certificates required in
connection with the Pledge Agreements and stock powers executed in blank for
each such stock certificate;

 

(vi)          the Mortgage Amendments and any
additional Mortgages that may be required pursuant to Section 5.11;

 

(vii)         copies of insurance policies or
certificates thereof naming the Administrative Agent loss payee or additional
insured, as applicable, certified by the Borrower’s insurance broker as true
and correct copies thereof, and which are otherwise satisfactory to the
Administrative Agent;

 

(viii)        a favorable opinion dated as of the
Closing Date of Thompson & Knight L.L.P., counsel to the Credit Parties, in
form and substance satisfactory to the Administrative Agent covering such
matters as any Lender through the Administrative Agent may reasonably request;

 

(ix)           a favorable opinion dated as of the
Closing Date of Mahaffey & Gore, P.C., Oklahoma counsel to the Credit
Parties, in form and substance reasonably satisfactory to the Administrative
Agent;

 

(x)            copies, certified as of the date of
this Agreement by a Responsible Officer or the secretary or an assistant
secretary of the General Partner of (A) the resolutions of the

 

38

 

applicable governing body of
the Borrower approving the Loan Documents to which the Borrower is a party, (B)
the organizational documents of the Borrower, and (C) all other documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement, the Notes, the Security Instruments and the
other Loan Documents to which the Borrower is a party;

 

(xi)           certificates of a Responsible Officer
or the secretary or an assistant secretary of the General Partner certifying
the names and true signatures of the officers of the General Partner authorized
to sign on behalf of the Borrower this Agreement, the Notes, Notices of
Borrowing, Notices of Conversion or Continuation, the Security Instruments and
the other Loan Documents to which the Borrower is a party;

 

(xii)          copies, certified as of the date of
this Agreement by a Responsible Officer or the secretary or an assistant
secretary of each Guarantor of (A) the resolutions of the applicable governing
body of such Guarantor approving the Loan Documents to which it is a party, (B)
the organizational documents of such Guarantor, and (C) all other documents
evidencing other necessary corporate action and governmental approvals, if any,
with respect to this Agreement, the Security Instruments, and the other Loan
Documents to which such Guarantor is a party;

 

(xiii)         a certificate of the secretary or an
assistant secretary of each Guarantor certifying the names and true signatures
of officers of such Guarantor authorized to sign this Agreement, the Security
Instruments and the other Loan Documents to which such Guarantor is a party;

 

(xiv)        certificates from the appropriate
Governmental Authority certifying as to the good standing, existence and
authority of each of the Credit Parties in all jurisdictions where required by
the Administrative Agent;

 

(xv)         a certificate dated as of the date of
this Agreement from the Responsible Officer of the General Partner stating that
(A) all representations and warranties of the Borrower set forth in this
Agreement are true and correct in all material respects; (B) no Default has
occurred and is continuing; and (C) the conditions in this Section 3.01 have
been met;

 

(xvi)        the Intercreditor and Subordination
Agreement;

 

(xvii)       results of lien, tax and judgment
searches of the UCC Records of the Secretary of State and applicable counties
of the States of Delaware, Oklahoma and Texas from a source acceptable to the
Administrative Agent and reflecting no Liens against any of the Collateral as
to which perfection of a Lien is accomplished by the filing of a financing
statement other than in favor of the Administrative Agent, other than Permitted
Liens;

 

(xviii)      appropriate UCC-1 Financing
Statements covering the Collateral for filing with the appropriate authorities
and any other documents, agreements or instruments necessary to create an
Acceptable Security Interest in such Collateral;

 

(xix)         the Side Letter Agreement; and

 

39

 

(xx)          such other documents, governmental
certificates, agreements and lien searches as the Administrative Agent or any
Lender may reasonably request.

 

(b)           Due Diligence.  The Administrative Agent and the Lenders
shall have completed satisfactory due diligence review of the assets,
liabilities, business, operations and condition (financial or otherwise) of the
Borrower and its Subsidiaries, including, but not limited, to a review of their
Oil and Gas Properties, Subordinated Debt, and all legal, financial,
accounting, governmental, environmental, tax and regulatory matters, and
fiduciary aspects of the proposed financing.

 

(c)           Payment of Fees.  On the date of this Agreement, the Borrower
shall have paid the fees required by Section 2.08(c) and all costs and expenses
that have been invoiced and are payable pursuant to Section 10.04.

 

(d)           Delivery of Financial Statements.  The Administrative Agent and the Lenders
shall have received true and correct copies of (i) the Financial Statements,
and (ii) such other financial information as the Administrative Agent or any
Lender may reasonably request.

 

(e)           No Default.  No Default shall have occurred and be
continuing.

 

(f)            Representations and Warranties.  The representations and warranties contained
in Article IV hereof and in each other Loan Document shall be true and correct
in all respects.

 

(g)           Material Adverse Change.  No event or circumstance that could cause a
Material Adverse Change shall have occurred.

 

(h)           No Proceeding or Litigation; No
Injunctive Relief.  Except as
described in Schedule 4.07, no action, suit, investigation or other proceeding
(including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be
threatened or pending and no preliminary or permanent injunction or order by a
state or federal court shall have been entered against the Borrower or any of
its Subsidiaries.

 

(i)            Consents, Licenses, Approvals, etc.  The
Administrative Agent shall have received true copies (certified to be such by a
Responsible Officer the Borrower or other appropriate Credit Party) of all
consents, licenses and approvals required in accordance with applicable Legal
Requirements, or in accordance with any document, agreement, instrument or
arrangement to which any Credit Party is a party, in connection with the
execution, delivery, performance, validity and enforceability of this Agreement
and the other Loan Documents.  In
addition, the Credit Parties shall have all such material consents, licenses
and approvals required in connection with the continued operation of the Credit
Parties, and such approvals shall be in full force and effect, and all
applicable waiting periods shall have expired without any action being taken or
threatened by any competent authority which would restrain, prevent or
otherwise impose adverse conditions on this Agreement and the actions
contemplated hereby.

 

(j)            Subordinated Debt.  The Borrower shall have entered into the
Subordinated Credit Agreement, the terms and conditions thereof shall be
reasonably satisfactory to the Administrative Agent and the Lenders and the
conditions precedent set forth in Section 3.01 of 

 

40

 

the Subordinated Credit
Agreement shall contemporaneously herewith have been satisfied or waived as of
the date of the Closing Date.  The
Borrower shall have delivered copies of the Subordinated Credit Agreement and
each other agreement, instrument, or document executed by any Credit Party or
any of their officers at any time in connection with the Subordinated Credit
Agreement on or before the Closing Date.

 

(k)           Security Instruments.  The Administrative Agent shall have received
all appropriate evidence required by the Administrative Agent and the Lenders
in their sole discretion necessary to determine that arrangements have been
made for the Administrative Agent (for its benefit and the benefit of the
Lenders) to have an Acceptable Security Interest in the Collateral and that all
actions or filings necessary to protect, preserve and validly perfect such
Liens have been made, taken or obtained (or will be upon the filing and
recording of the appropriate Security Instruments), as the case may be, and are
in full force and effect.

 

(l)            Title.  The Administrative Agent shall be satisfied
in its sole discretion with the title to the Oil and Gas Properties included in
the Borrowing Base and that such Oil and Gas Properties constitute a percentage
of such Collateral reasonably satisfactory to the Administrative Agent.

 

(m)          Assignment of Existing Senior
Credit Agreement.  The
Administrative Agent and the Lenders shall have received sufficient evidence
indicating that simultaneously with the making of the initial Advances
hereunder, the obligations of the Credit Parties under the Existing Senior
Credit Agreement (including, without limitation, any obligations of any Credit
Party in respect of guaranties and security agreements executed in connection
with such Existing Credit Agreements) and the Liens securing the same shall
have been assigned to the Administrative Agent for the benefit of the Lenders
and encumbering the same Property.

 

(n)           Notice of Borrowing.  The Administrative Agent shall have received
a Notice of Borrowing with appropriate insertions and executed by a duly
authorized Responsible Officer of the General Partner.

 

Section 3.02       Conditions
Precedent to All Borrowings.  The
obligation of each Lender to make an Advance on the occasion of each Borrowing
and of the Issuing Lender to issue, increase, or extend any Letter of Credit
shall be subject to the further conditions precedent that on the date of such
Borrowing or the date of the issuance, increase, or extension of such Letter of
Credit:

 

(a)           the following statements shall be
true (and each of the giving of the applicable Notice of Borrowing, Notice of
Conversion or Continuation, or Letter of Credit Application and the acceptance
by the Borrower of the proceeds of such Borrowing or the issuance, increase, or
extension of such Letter of Credit shall constitute a representation and
warranty by the Borrower that on the date of such Borrowing, the issuance,
increase, or extension of such Letter of Credit, such statements are true):

 

(i)            the representations and warranties
contained in Article IV of this Agreement and the representations and
warranties contained in the Security Instruments, the Guaranties, and each of
the other Loan Documents are true and correct in all material respects on 

 

41

 

and as of the date of such
Borrowing or the date of the issuance, increase, or extension of such Letter of
Credit, before and after giving effect to such Borrowing or to the issuance,
increase, or extension of such Letter of Credit and to the application of the
proceeds from such Borrowing, as though made on and as of such date (unless
such representations and warranties are stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and
correct in all material respect as of such earlier date);

 

(ii)           no Default has occurred and is
continuing or would result from such Borrowing or from the application of the
proceeds therefrom, or would result from the issuance, increase, or extension
of such Letter of Credit; and

 

(iii)          after giving effect to the such
proposed Borrowing, no Borrowing Base Deficiency exists; and

 

(b)           the Administrative Agent shall have
received such other approvals, opinions, or documents reasonably deemed necessary
or desirable by any Lender as a result of circumstances occurring after the
date of this Agreement, as any Lender through the Administrative Agent may
reasonably request.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

 

Each Credit Party
jointly and severally represents and warrants as follows:

 

Section 4.01       Corporate
Existence; Subsidiaries.  Each of
the Credit Parties is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and in good standing and
qualified to do business in each jurisdiction where its ownership or lease of
Property or conduct of its business requires such qualification and where the
failure to so qualify could reasonably be expected to cause a Material Adverse
Change.  As of the Closing Date, the
Credit Parties have no Subsidiaries other than those listed on Schedule 4.01.

 

Section 4.02       Corporate
Power.  The execution, delivery, and
performance by each Credit Party of this Agreement, the Notes, and the other
Loan Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby (a) are within such Credit Party’s powers, (b)
have been duly authorized by all necessary governing action, (c) do not
contravene (i) such Credit Party’s governance documents or (ii) any Legal
Requirement or any material contractual restriction binding on or affecting
such Credit Party, and (d) will not result in or require the creation or
imposition of any Lien upon any of the material Property of any Credit Party
prohibited by this Agreement.  At the
time of each Advance, such Advance and the use of the proceeds of such Advance
will (A) be within the Borrower’s limited partnership powers, (B) have been
duly authorized by all necessary partnership action, (C) not contravene (i) the
Borrower’s limited partnership agreement or other organizational documents or
(ii) any Legal Requirement or any material contractual restriction of any
material agreement binding on or affecting the Borrower and (D) not result in
or require the creation or imposition of any Lien upon any of the material
Property of any Credit Party prohibited by this Agreement.

 

42

 

Section 4.03       Authorization
and Approvals.  No consent, order,
authorization, or approval or other action by, and no notice to or filing with,
any Governmental Authority or any other Person is required for the due
execution, delivery, and performance by any Credit Party of this Agreement, the
Notes, or the other Loan Documents to which such Credit Party is a party or the
consummation of the transactions contemplated hereby or thereby.  At the time of each Borrowing and each
issuance, increase or extension of a Letter of Credit, no authorization or
approval or other action by, and no notice to or filing with, any Governmental
Authority will be required for such Borrowing or such issuance, increase or
extension of such Letter of Credit or the use of the proceeds of such Borrowing
or such Letter of Credit.

 

Section 4.04       Enforceable
Obligations.  This Agreement, the
Notes, and the other Loan Documents to which each Credit Party is a party have
been duly executed and delivered by such Credit Party.  Each Loan Document to which each Credit
Party is a party is the legal, valid, and binding obligation of such Credit
Party enforceable against such Credit Party in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors’
rights generally and by general principles of equity.

 

Section 4.05       Financial
Statements.

 

(a)           The Borrower has delivered to the
Administrative Agent and the Lenders the Financial Statements, and the
Financial Statements are correct and complete in all material respects and
present fairly the consolidated financial condition of the Credit Parties as of
their respective dates and for their respective periods in accordance with
GAAP, applied on a consistent basis.  As
of the date of the Financial Statements, there were no material Debt, trade
payables, contingent obligations, liabilities for taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses of any Credit
Party, except as disclosed therein and adequate reserves for such items have
been made in accordance with GAAP.

 

(b)           Since December 31, 2002, no event or
circumstance that could reasonably be expected to cause a Material Adverse
Change has occurred.

 

(c)           Each of the Credit Parties is
Solvent.

 

Section 4.06       True
and Complete Disclosure.  All written
information (whether delivered before or after the Closing Date) furnished by
or on behalf of any Credit Party to any Lender or the Administrative Agent for
purposes of or in connection with this Agreement, any other Loan Document or
any transaction contemplated hereby or thereby, when taken as a whole, is true
and accurate in all material respects on the date as of which such information
is dated or certified (or, if not dated and certified, as of the date as of
which such information is provided) and does not contain any untrue statement
of a material fact or omit to state any material fact necessary to make the
statements contained therein not materially misleading at such time.  All projections, estimates, and pro forma
financial information furnished by the Borrower were prepared on the basis of
assumptions, data, information, tests, or conditions believed to be reasonable
at the time such projections, estimates, and pro forma financial information
were furnished, but the Credit Parties do not represent and warrant that such
projections, estimates or pro forma information is (or will ultimately prove to
have been) accurate.

 

43

 

Section 4.07       Litigation.  There is no pending or, to the knowledge of
any Responsible Officer of any Credit Party, threatened action or proceeding
affecting any of the Credit Parties before any court, Governmental Authority or
arbitrator which (a) both (i) involves the possibility of any judgment or
liability against any Credit Party not fully covered by insurance (except for
normal deductibles) and (ii) could reasonably be expected to be cause a
Material Adverse Change or (b) purports to affect the legality, validity,
binding effect or enforceability of this Agreement, any Note, or any other Loan
Document.  Additionally, there is no
pending or, to the knowledge of any Responsible Officer of any Credit Party,
threatened action or proceeding instituted against any Credit Party which seeks
to adjudicate such Credit Party as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee or other similar
official for it or for any substantial part of its Property.

 

Section 4.08       Taxes.

 

(a)           Reports and Payments.  All Returns (as defined below in clause (c)
of this Section) required to be filed by or on behalf of any Credit Party or
any member of the Controlled Group (hereafter collectively called the “Tax
Group”) have been duly filed on a timely basis or appropriate extensions
have been obtained and such Returns are and will be true, complete and correct
in all material respects; and all Taxes shown to be payable on the Returns or
on subsequent assessments with respect thereto will have been paid in full on a
timely basis, and no other Taxes will be payable by the Tax Group with respect
to items or periods covered by such Returns, except where any obligation is
being contested in good faith and by appropriate proceedings and after adequate
reserves for such items have been made in accordance with GAAP.  The reserves for accrued Taxes reflected in
the financial statements delivered to the Lenders under this Agreement are
adequate in the aggregate for the payment of all unpaid Taxes, whether or not
disputed, for the period ended as of the date thereof and for any period prior
thereto, and for which the Tax Group may be liable in its own right, as
withholding agent or as a transferee of the assets of, or successor to, any
Person.

 

(b)           Taxes Definition.  “Taxes” in this Section 4.08 shall
mean all taxes, charges, fees, levies, or other assessments imposed by any
federal, state, local, or foreign taxing authority, including without
limitation, income, gross receipts, excise, real or personal property, sales,
occupation, use, service, leasing, environmental, value added, transfer, payroll,
and franchise taxes (and including any interest, penalties, or additions to tax
attributable to or imposed on with respect to any such assessment).

 

(c)           Returns Definition.  “Returns” in this Section 4.08 shall
mean any federal, state, local, or foreign report, estimate, declaration of
estimated Tax, information statement or return relating to, or required to be
filed in connection with, any Taxes, including any information return or report
with respect to backup withholding or other payments of third parties.

 

Section 4.09       Pension
Plans.  All Plans are in compliance
in all material respects with all applicable provisions of ERISA.  No Termination Event has occurred with
respect to any Plan, and each Plan has complied with and been administered in
all material respects in accordance

 

44

 

with applicable provisions of
ERISA and the Code.  No “accumulated
funding deficiency” (as defined in Section 302 of ERISA) has occurred and there
has been no excise tax imposed under Section 4971 of the Code.  No Reportable Event has occurred with
respect to any Multiemployer Plan, and each Multiemployer Plan has complied
with and been administered in all material respects with applicable provisions
of ERISA and the Code.  The present
value of all benefits vested under each Plan (based on the assumptions used to
fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed the value of the assets of such Plan allocable to such vested
benefits.  None of the Credit Parties or
any member of the Controlled Group has had a complete or partial withdrawal
from any Multiemployer Plan for which there is any withdrawal liability.  As of the most recent valuation date applicable
thereto, none of the Credit Parties or any member of the Controlled Group would
become subject to any liability under ERISA if any Credit Party or any member
of the Controlled Group received notice that any Multiemployer Plan is
insolvent or in reorganization.  Based
upon GAAP existing as of the date of this Agreement and current factual
circumstances, no Credit Party has reason to believe that the annual cost
during the term of this Agreement to any Credit Party or any other member of
the Controlled Group for post-retirement benefits to be provided to the current
and former employees of the Borrower or any member of the Controlled Group
under welfare benefit plans (as defined in Section 3(1) of ERISA) could, in the
aggregate, reasonably be expected to cause a Material Adverse Change.

 

Section 4.10       Condition
of Property; Casualties.

 

(a)           Subject to the matters set forth in Schedule
4.10, each of the Borrower and its Subsidiaries has good and indefeasible
title to all of its Oil and Gas Properties evaluated in any Engineering Report,
free and clear of all Liens except for Permitted Liens.  Brigham Exploration has good and defensible
title to all of the Equity Interests in the General Partner and, directly and
indirectly, all of the ownership interests in the Limited Partners, except for
Permitted Liens.  Each of the General
Partner and the Limited Partners has good and defensible title to all of the
Equity Interests in the Borrower, except for Permitted Liens.

 

(b)           The quantum and nature of the
interest of the Borrower and its Subsidiaries in and to its Hydrocarbon
Interests as set forth in each Engineering Report includes the entire interest
of the Borrower and its Subsidiaries in such Hydrocarbon Interests as of the
date of such Engineering Report and are complete and accurate in all material
respects as of the date of such Engineering Report; and there are no “back-in”
or “reversionary” interests held by third parties which could materially reduce
the interest of the Borrower and its Subsidiaries in such Hydrocarbon Interests
except as taken into account in such Engineering Report.  The ownership of the Hydrocarbon Interests
held by the Borrower and its Subsidiaries shall not in any material respect
obligate any such Person to bear the costs and expenses relating to the
maintenance, development or operations of such Hydrocarbon Interests in an
amount in excess of the working interest of such Person in each such
Hydrocarbon Interest set forth in the most recent Engineering Report.

 

(c)           All leases and agreements comprising
the Borrower’s and its Subsidiaries’ Oil and Gas Properties necessary for the
conduct of business of the Borrower and its Subsidiaries are valid and
subsisting, in full force and effect and there exists no default or event of
default or circumstance which with the giving of notice or lapse of time or
both would give rise to a default

 

45

 

under any such leases,
instruments or agreements which would affect in any material respect the
conduct of the business of the Borrower and its Subsidiaries.  Neither Borrower or any of its Subsidiaries
nor, to the knowledge of Borrower, any other party to any leases, instruments
or agreements comprising its Oil and Gas Properties evaluated in any Engineering
Report, has given or threatened to give notice of any default under or inquiry
into any possible default under, or action to alter, terminate, rescind or
procure a judicial reformation of, any such lease, instrument or
agreement.  Except as set forth on Schedule
4.10 or as otherwise disclosed in writing to the Administrative Agent,
neither the Borrower nor any of its Subsidiaries is subject to any obligation
to drill additional wells, finance the drilling of additional wells, or conduct
additional operations in order to earn or continue to own any Significant PUD
Location or any other proved developed producing reserves or proved developed
nonproducing reserves evaluated in any Engineering Report.

 

(d)           The Properties presently owned,
leased or licensed by the Borrower and its Subsidiaries, including, without
limitation, all leases, easements, rights of way, and contractual rights,
include all Properties necessary to permit the Borrower and its Subsidiaries to
conduct their business in all material respects in the same manner as its
business has been conducted prior to the Closing Date.

 

(e)           All of the Properties of the Borrower
and its Subsidiaries that are reasonably necessary for the operation of their
business are in good repair, working order and condition in all material
respects and are maintained in accordance with prudent business standards.  Since the date of the most recent financial
statements delivered pursuant to Section 5.06(a), neither the business nor the
Properties of the Credit Parties, taken as a whole, has been materially and adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property or cancellation of contracts, Permits, or concessions by a
Governmental Authority, riot, activities of armed forces, or acts of God or of
any public enemy.

 

(f)            Except as set forth on Schedule 4.10
or as otherwise disclosed in writing to the Administrative Agent:

 

(i)            In each case only with respect to
any of the Borrower’s and its Subsidiaries’ Oil and Gas Properties that have
been assigned a discounted present value equal to or in excess of $2,000,000 in
any Engineering Report, (A) all rentals, royalties, overriding royalties,
shut-in royalties and other payments due under or with respect to any such
Hydrocarbon Interests evaluated in any Engineering Report have been properly
and timely paid in the ordinary course of business and (B) all material
expenses payable under the terms of the contracts and agreements comprising
such Oil and Gas Properties (other than those described above in clause (A))
have been properly and timely paid in the ordinary course of business except in
each case (1) where such payments are being contested in good faith by
appropriate proceedings and for which adequate reserves complying with GAAP
have been made or (2) for payments the late payment of which could not
reasonably be expected to cause a termination or forfeiture of any of the
Borrower’s or its Subsidiaries’ rights under any such leases, instruments or
agreements comprising any such Oil and Gas Properties or otherwise,
individually or in the aggregate, cause a Material Adverse Change;

 

46

 

(ii)           All of the proceeds from the sale of
Hydrocarbons produced from the Borrower’s and its Subsidiaries’ Hydrocarbon
Interests are being properly and timely paid to the Borrower without suspense,
other than any such proceeds the late payment or non-payment of which could not
reasonably be expected to cause a Material Adverse Change or materially
adversely affect the value of the Collateral taken as a whole; and

 

(iii)          No material amount of proceeds that
has been received by any Credit Party from the sale of Hydrocarbons produced
from the Oil and Gas Properties evaluated in any Engineering Report is subject
to any claim for any refund or refund obligation, except as permitted under
Section 4.14 or Section 6.13.

 

Section 4.11       Security
Instruments.

 

(a)           The provisions of each of the Pledge
Agreements delivered to the Administrative Agent are effective to create in
favor of the Administrative Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Collateral (as
defined therein) and proceeds thereof and when (i) certificates, if any,
representing or constituting the Pledged Collateral are delivered to the
Administrative Agent, the Pledge Agreement shall constitute a first priority
Acceptable Security Interest in, all right, title and interest of the pledgor
party thereto in such Pledged Collateral and the proceeds thereof, subject to
Permitted Liens or and (ii) upon the filing of UCC-1 Financing Statements with
the secretary of state of each jurisdiction of formation for each of the
grantors party thereto, the Pledge Agreements shall constitute a first priority
Acceptable Security Interest in, all right, title and interest of the
applicable Credit Party in such Pledged Collateral and the proceeds thereof,
subject to Permitted Liens.

 

(b)           On the Closing Date, the Equity Interests
listed on Schedule I to each of the Pledge Agreements will constitute
all the issued and outstanding Equity Interests in the Borrower, the General
Partner, the Limited Partners, and the direct and indirect Subsidiaries of the
Borrower; all such Equity Interests have been duly and validly issued and are
fully paid and nonassessable; and the relevant pledgor of said shares is the
record and beneficial owner of said shares.

 

(c)           The provisions of the Mortgages will
be effective to grant to the Administrative Agent, for the ratable benefit of
the Lenders, legal, valid and enforceable mortgage liens on all of the right,
title and interest of the Borrower and its Subsidiaries in the mortgaged
property described therein.  Once such
Mortgages have been recorded in the appropriate recording office, the Mortgages
will constitute perfected first liens on, and security interest in, such
mortgaged property, subject to Permitted Liens.

 

(d)           The provisions of each of the
Security Agreements delivered to the Administrative Agent are effective to
create in favor of the Administrative Agent, for the ratable benefit of the
Lenders, a legal, valid and enforceable security interest in the collateral
described therein and proceeds thereof and, upon the filing of UCC-1 Financing
Statements with the secretary of state of each jurisdiction of formation for
each of the grantors party thereto, the Security Agreement shall constitute a
first priority Acceptable Security Interest in, all right, title

 

47

 

and interest of the applicable
Credit Party in such collateral and the proceeds thereof, subject to Permitted
Liens.

 

(e)           Once the Deposit Control Agreements
have been executed, the provisions of each of the Deposit Control Agreements will
be effective to create in favor of the Administrative Agent, for the ratable
benefit of the Lenders, a legal, valid and enforceable security interest in the
collateral described therein and proceeds thereof and shall constitute a first
priority Acceptable Security Interest in, all right, title and interest of the
applicable Credit Party in such collateral and the proceeds thereof, subject to
Permitted Liens.

 

(f)            On the Closing Date and except with
respect to the Deposit Control Agreements until such Deposit Control Agreements
have been executed, all governmental actions and all other filings, recordings,
registrations, third party consents and other actions which are necessary to
create and perfect the Liens provided for in the Security Instruments will have
been made, obtained and taken in all relevant jurisdictions (or are the subject
of arrangements, satisfactory to the Administrative Agent, to be made, obtained
or taken on or promptly after the Closing Date).  No other filings or recordings are required in order to perfect
the security interests created under any Security Instruments.

 

Section 4.12       No
Burdensome Restrictions; No Defaults.

 

(a)           Neither the Borrower nor any of its
Subsidiaries is a party to any indenture, loan, or credit agreement or any
lease or other agreement or instrument or subject to any charter or corporate
restriction or provision of applicable law or governmental regulation that
could reasonably be expected to cause a Material Adverse Change.  Neither the Borrower nor any of its
Subsidiaries is in default nor has any event or circumstance occurred which,
but the expiration of any grace period or the giving of notice, or both, would
constitute a default under (i) the Subordinated Credit Agreement or (ii) any
other material contract, agreement, lease, or other instrument to which such
Credit Party is a party which default could reasonably be expected to cause a
Material Adverse Change.  None of the
Credit Parties has received any notice of default under any material contract,
agreement, lease, or other instrument to which such Credit Party is a party.

 

(b)           No Default has occurred and is
continuing.

 

Section 4.13       Environmental
Condition.  Other than exceptions to
any of the following that would not reasonably be expected to cause a Material
Adverse Change or materially adversely affect the value of the Collateral taken
as a whole:

 

(a)           Permits, Etc.  With respect to its Oil and Gas Properties
for which such Credit Party is the operator and with respect to its Oil and Gas
Properties that are operated by operators other than the Borrower or a
Subsidiary, to the best of its knowledge, in all material respects, each of the
Credit Parties (i) has obtained all Environmental Permits necessary for the
ownership and operation of any and all of their respective Properties and the
conduct of their respective businesses; (ii) have at all times been and are in
compliance with all terms and conditions of such Permits and with all other
requirements of applicable Environmental Laws and other Legal Requirements;
(iii) have not received notice of any violation or alleged violation of any

 

48

 

Environmental Law or any such
Permit; and (iv) are not subject to any actual or contingent Environmental
Claim with respect to such Properties.

 

(b)           Certain Liabilities.  None of the present or, to the best
knowledge of any Credit Party, previously owned or operated Property of any of
the Credit Parties, wherever located, (i) has been placed on or proposed to be
placed on the National Priorities List, the Comprehensive Environmental
Response Compensation Liability Information System list, or their state or
local analogs, or have been otherwise investigated, designated, listed, or
identified as a potential site for removal, remediation, cleanup, closure,
restoration, reclamation, or other response activity under any Environmental
Laws; (ii) is subject to a Lien other than a Permitted Lien, arising under or
in connection with any Environmental Laws, that attaches to any revenues or to
any Property owned or operated by the Borrower or any of its Subsidiaries,
wherever located; or (iii) has been the site of any Release of Hazardous
Substances or Hazardous Wastes from present or past operations that has caused
at the site or at any third-party site any condition that has resulted in
or could reasonably be expected to result in the need for Response.

 

(c)           Certain Actions.  Without limiting the foregoing, (i) all
necessary notices have been properly filed, and no further action is required
under current Environmental Law as to each Response or other restoration or
remedial project undertaken by the Borrower or its Subsidiaries or any of their
former Subsidiaries on any of their presently or formerly owned or operated
Property and (ii) there is no present and, to the Borrower’s knowledge, future
liability, if any, of the Borrower and its Subsidiaries which could reasonably
be expected to arise in connection with requirements under Environmental Laws.

 

Section 4.14       Gas
Contracts.  Except as set forth in
the most recent Engineering Report or in Schedule 4.14, on a net basis
there are no material gas imbalances, material take-or-pay or other prepayments
with respect to the Oil and Gas Properties of the Borrower and its Subsidiaries
(or, in the case of Oil and Gas Properties operated by operators other than the
Borrower or its Subsidiaries, to the Borrower’s knowledge after reasonable
investigation) that would require the Borrower and its Subsidiaries to deliver
2.5% or more of the aggregate calendar quarter production from the Borrower’s
and its Subsidiaries’ Hydrocarbons produced on a calendar quarter basis from
their Hydrocarbon Interests at some future time without then or thereafter
receiving full payment therefor.

 

Section 4.15       Compliance
with Laws.  Except for any failure
to comply with any of the foregoing which would not reasonably be expected to
cause a Material Adverse Change, each of the Credit Parties has (a) complied
with all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the conduct of their respective businesses or the ownership
of their respective Property and (b) obtained all Permits that are necessary
for the ownership of any of its Properties or the conduct of their business.  Other than immaterial exceptions to any of
the following: (i) the prices being received by the Borrower and its
Subsidiaries for the production of Hydrocarbons do not violate any material
provision of any contract or agreement comprising the Oil and Gas Properties of
the Borrower and its Subsidiaries or any Legal Requirement, (ii)   where applicable, all of the wells located
on the Borrower’s and its Subsidiaries’ Hydrocarbon Interests and production of
Hydrocarbons therefrom have been properly classified under appropriate
governmental regulations, (iii) all necessary regulatory filings have been
properly made in connection with the drilling, completion and operation of the
wells on or attributable to 

 

49

 

the Borrower’s and its
Subsidiaries’ Hydrocarbon Interests and all other operations related thereto
and (iv) all production and sales of the Borrower’s and its Subsidiaries’
Hydrocarbons produced or sold from the Borrower’s and its Subsidiaries’
Hydrocarbon Interests have been made in accordance with any applicable
allowables (plus permitted tolerances) imposed by any Governmental Authorities.

 

Section 4.16       Hedging
Agreements.  Schedule 4.16
sets forth, as of the Closing Date, a true and complete list of all Interest
Hedge Agreements and Hydrocarbon Hedge Agreements of the Borrower and each of
its Subsidiaries, setting forth the type, term, effective date, termination
date and notional amounts or volumes, and the counterparty to each such
agreement.

 

Section 4.17       Material
Agreements.  Schedule 4.17
sets forth a complete and correct list of all material agreements, leases,
indentures, purchase agreements, obligations in respect of letters of credit,
guarantees, joint venture agreements, and other instruments in effect or to be
in effect as of the Closing Date (other than the agreements set forth in Schedule
4.16) providing for, evidencing, securing or otherwise relating to any
material Debt of the Borrower or any of its Subsidiaries, and all obligations
of the Borrower or any of its Subsidiaries to issuers of surety or appeal bonds
(other than operator’s bonds, plugging and abandonment bonds, and similar
surety obligations obtained in the ordinary course of business) issued for the
account of the Borrower or any of its Subsidiaries, and such list correctly
sets forth the names of the debtor or lessee and creditor or lessor with
respect to the Debt or lease obligations outstanding or to be outstanding and
the Property subject to any Lien securing such Debt or lease obligation.

 

Section 4.18       Organizational
Documents.  The Partnership
Agreement has not been terminated, is in full force and effect as of the
Closing Date and no default has occurred and is continuing thereunder that
could reasonably be expected to cause a Material Adverse Change.

 

Section 4.19       Guarantors.  All of the Borrower’s Subsidiaries are
Guarantors under Article VIII.

 

Section 4.20       Insurance.  Each of the Borrower and its Subsidiaries
carry insurance required under Section 5.02.

 

Section 4.21       Use
of Proceeds.  The proceeds of the
Advances will be used by the Borrower for the purposes described in Section
5.10.  The Borrower is not engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulation U).  No proceeds of any Advance will be used to purchase or carry any
margin stock in violation of Regulation T, U or X.

 

Section 4.22       Investment
Company Act.  Neither Brigham
Exploration nor any of its Subsidiaries is an “investment company” or a company
“controlled” by an “investment company” within the meaning of the Investment
Company Act of 1940, as amended.

 

Section 4.23       Public
Utility Holding Company Act. 
Neither Brigham Exploration nor any of its Subsidiaries is a “holding
company,” or a “subsidiary company” of a “holding company,” or an “affiliate”
of a “holding company” or of a “subsidiary company” of a “holding company,” or
a “public utility” within the meaning of the Public Utility Holding Company Act
of 1935, as amended.

 

50

 

Section 4.24       Transmitting
Utility.  Neither Brigham
Exploration nor any of its Subsidiaries is a “transmitting utility” or an
“interstate gas pipeline company” or a “public service corporation” within the
meaning of the laws currently in effect for the States of Texas and/or
Oklahoma.

 

ARTICLE V

AFFIRMATIVE COVENANTS

 

So long as any Note or any amount under any
Loan Document shall remain unpaid, any Letter of Credit shall remain
outstanding, or any Lender shall have any Commitment hereunder, each of the
Credit Parties agrees to comply with the following covenants.

 

Section 5.01       Compliance
with Laws, Etc.  The Borrower shall
comply, and cause each of its Subsidiaries to comply, in all material respects
with all Legal Requirements; provided, however, that this Section 5.01
shall not prevent the Borrower or any of its Subsidiaries from, in good faith
and with reasonable diligence, contesting the validity or application of any
such laws or regulations by appropriate legal proceedings.  Without limitation of the foregoing, the
Borrower shall use commercially reasonable efforts to obtain, and shall cause
each of its Subsidiaries to use commercially reasonable efforts to obtain, as
soon as practicable, all consents or approvals required from any states of the
United States (or other Governmental Authorities) necessary to grant the
Administrative Agent an Acceptable Security Interest in the Borrower’s and its
Subsidiaries’ Oil and Gas Properties.

 

Section 5.02       Maintenance
of Insurance.

 

(a)           The Borrower shall, and shall cause
each of its Subsidiaries to, maintain with financially sound and reputable
insurance companies insurance of such types, in such amounts and against such
risks as is customary to be maintained by companies engaged in the same or a
similar business in the same general area; and furnish to the Administrative
Agent, upon written request, full information as to the insurance carried.  In addition, the Borrower shall, and shall cause
each of its Subsidiaries to, comply with all requirements regarding insurance
contained in the Security Instruments.

 

(b)           All certified copies of policies or
certificates thereof, and endorsements and renewals thereof shall be delivered
to and retained by the Administrative Agent. 
All policies of insurance shall either have attached thereto a Lender’s
loss payable endorsement for the benefit of the Administrative Agent, as loss
payee in form reasonably satisfactory to the Administrative Agent or shall name
the Administrative Agent as an additional insured, as applicable.  All policies or certificates of insurance
shall set forth the coverage, the limits of liability, the name of the carrier,
the policy number, and the period of coverage. 
In addition, all policies of insurance required under the terms hereof
shall contain an endorsement or agreement by the insurer that any loss shall be
payable in accordance with the terms of such policy notwithstanding any act of
negligence of the Borrower, or a Subsidiary or any party holding under the Borrower
or a Subsidiary which might otherwise result in a forfeiture of the insurance
and the further agreement of the insurer waiving all rights of setoff,
counterclaim or deductions against the Borrower and its Subsidiaries.  All such policies shall contain a provision
that notwithstanding

 

51

 

any contrary agreements between
the Borrower, its Subsidiaries, and the applicable insurance company, such
policies will not be canceled, allowed to lapse without renewal, surrendered or
amended (which provision shall include any reduction in the scope or limits of
coverage) without at least 10 days’ prior written notice to the Administrative
Agent in the event of the Borrower’s failure to pay any premiums and in all other
cases, 30 days’ prior written notice to the Administrative Agent.  In the event that, notwithstanding the
“lender’s loss payable endorsement” requirement of this Section 5.02, the
proceeds of any insurance policy described above are paid to the Borrower or a
Subsidiary of the Borrower, the Borrower shall deliver such proceeds to the
Administrative Agent immediately upon receipt.

 

Section 5.03       Preservation
of Corporate Existence, Etc.  Each
of the Credit Parties shall preserve and maintain its corporate, limited
partnership or limited liability company, as applicable, existence, and all of
its material rights, franchises, and privileges in the jurisdiction of its
formation, and qualify and remain qualified as a foreign entity in each
jurisdiction in which qualification is necessary or desirable in view of its
business and operations or the ownership of its Properties to the extent the
failure to qualify could reasonably be expected to cause a Material Adverse
Change.

 

Section 5.04       Payment
of Taxes, Etc.  The Borrower shall,
and shall cause each of its Subsidiaries to, pay and discharge, before the same
shall become delinquent, (a) all taxes, assessments, and governmental charges
or levies imposed upon it or upon its income or profits or Property prior to the
date on which penalties attach thereto and (b) all lawful claims that are
material in amount which, if unpaid, could by law become a Lien upon its
Property; provided, however, that neither the Borrower nor any such
Subsidiary shall be required to pay or discharge any such tax, assessment,
charge, levy, or claim which is being contested in good faith and by
appropriate proceedings, and with respect to which reserves in conformity with
GAAP have been provided.

 

Section 5.05       Inspection;
Books and Records.  Upon reasonable
notice, each Credit Party shall permit the Administrative Agent and any Lender
or any of their respective agents or representatives thereof, during normal
business hours, to (a) examine and make copies of and abstracts from the
records and books of account of, and visit and inspect at their reasonable
discretion the Properties of, such Credit Party, and (b) discuss the affairs,
finances and accounts of such Credit Party with any of their respective
officers or directors, all to the extent reasonably requested by the
Administrative Agent or such Lender, as the case may be.  Each Credit Party shall keep proper books of
records and account in which full, true and correct entries in conformity with
GAAP and all Legal Requirements shall be made of all dealings and transactions
in relation to its business and activities.

 

Section 5.06       Reporting
Requirements.  The Borrower shall
furnish, or shall cause the applicable Credit Party to furnish, to the
Administrative Agent and each Lender:

 

(a)           Annual Financials of Brigham
Exploration.  As soon as available,
but in any event within 90 days after the end of each fiscal year of Brigham
Exploration or sooner if required by the SEC, the audited consolidated
statements of income, stockholders’ equity, changes in financial position and
cash flow of Brigham Exploration and its consolidated Subsidiaries for such
fiscal year, and the related consolidated and unaudited consolidating balance
sheets of

 

52

 

Brigham Exploration and its
consolidated Subsidiaries as at the end of such fiscal year, and setting forth
in each case in comparative form the corresponding figures for the preceding
fiscal year, together with a certification by its Chief Executive Officer and
its Chief Financial Officer in accordance with the Sarbanes-Oxley Act of 2002
and accompanied by the related opinion of independent public accountants of
recognized national standing reasonably acceptable to the Administrative Agent
which opinion shall state that such financial statements fairly present the
consolidated financial position and results of operations of Brigham
Exploration and its consolidated Subsidiaries as at the end of, and for, such
fiscal year and that such financial statements have been prepared in accordance
with GAAP except for such changes in such principles with which the independent
public accountants shall have concurred and such opinion shall not contain a
“going concern” or like qualification or exception;

 

(b)           Quarterly Financials of Brigham
Exploration.  As soon as available,
but in any event not later than 45 days after the end of each of the first
three quarterly fiscal periods of each fiscal year of Brigham Exploration and
its consolidated Subsidiaries (or sooner if required by the SEC), consolidated
statements of income, stockholders’ equity, changes in financial position and
cash flow of Brigham Exploration and its consolidated Subsidiaries for such
period and for the period from the beginning of the respective fiscal year to
the end of such period, and the related consolidated and consolidating balance
sheets of Brigham Exploration and its consolidated Subsidiaries as at the end
of such period, and setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding fiscal
year, together with a certification by its Chief Executive Officer and its
Chief Financial Officer in accordance with the Sarbanes-Oxley Act of 2002 and
accompanied by the certificate of  a
Responsible Officer of Brigham Exploration, which certificate shall state that
such financial statements fairly present the consolidated financial position
and results of operations of Brigham Exploration and its consolidated
Subsidiaries in accordance with GAAP, as at the end of, and for such period
(subject to normal year-end audit adjustments);

 

(c)           Compliance Certificates.  Concurrently with the delivery of each of
the financial statements referred to in subsections 5.06(a) and (b), a
Compliance Certificated executed by a Responsible Officer of Brigham
Exploration;

 

(d)           Insurance Certificates.  Concurrently with the delivery of each of
the financial statements referred to in subsection 5.06(a), insurance
certificates naming the Administrative Agent loss payee or additional insured,
as applicable, and evidencing insurance which meets the requirements of this
Agreement and the Security Instruments;

 

(e)           Notice of Defaults.  As soon as possible after the occurrence of
a Default known to any Responsible Officer of any Credit Party which is
continuing on the date of such statement, a statement of a Responsible Officer
setting forth the details of such Default and the actions which the Credit
Parties have taken and propose to take with respect thereto;

 

(f)            Material Changes.  Prompt written notice of any condition or
event of which any Responsible Officer of any Credit Party has knowledge, which
condition or event has resulted or could reasonably be expected to cause a
Material Adverse Change;

 

53

 

(g)           Annual Budget.  As soon as available and in any event prior
to January 31, a one- year financial projection for Brigham Exploration and its
Subsidiaries in form and substance acceptable to the Administrative Agent,
which projection shall include revenues, expenses and capital expenditures
(detailing the projected capital expenditures with respect to drilling (both
development and exploration), leasehold, geological and geophysical,
capitalized general and administrative expenses, and capitalized interest) for
the following fiscal year;

 

(h)           Hedging Agreements.  Concurrently with the delivery of each of
the financial statements referred to in subsections 5.06(a) and (b), a true and
complete list of all Interest Hedge Agreements and Hydrocarbon Hedge Agreements
of the Borrower and each of its Subsidiaries, setting forth the type, term,
effective date, termination date and notional amounts or volumes and the
counterparty to each such agreement;

 

(i)            Litigation.  Prompt written notice of (i) any claims,
legal or arbitration proceedings, proceedings before any Governmental
Authority, or disputes, or to the knowledge of the Borrower threatened, or
affecting any Credit Party which, if adversely determined, could reasonably be
expected to cause a Material Adverse Change, (ii) any material litigation or
proceeding against the Borrower or any of its Subsidiaries in which the amount
involved is not covered in full by insurance (subject to normal and customary
deductibles), or in which injunctive or similar relief is sought or (iii) any
claim, judgment, Lien or other encumbrance (other than a Permitted Lien)
affecting any Property of the Borrower or any of its Subsidiaries if the value
of such claim, judgment, Lien, or other encumbrance affecting such Property
shall exceed $1,000,000 (excluding liabilities to the extent covered by
insurance if the insurer has confirmed that such insurance covers such
liabilities);

 

(j)            Environmental.  Prompt written notice of any threatened
action, investigation or inquiry by any Governmental Authority of which any
Responsible Officer of any Credit Party has knowledge in connection with any
Environmental Laws with respect to the Property of the Borrower or any of its
Subsidiaries, excluding routine testing, compliance and corrective action;

 

(k)           Other Accounting Reports.  Promptly upon receipt thereof, a copy of
each other report or letter (excluding routine correspondence) submitted to any
Credit Party by independent accountants in connection with any annual, interim
or special audit made by them of the books of any Credit Party, and a copy of
any response by any Credit Party to such letter or report;

 

(l)            Securities Law Filings and other
Public Information.  Promptly, upon
its becoming available, each financial statement, notice, proxy material,
reports and other information which any Credit Party sends to the holders of
its respective public securities generally, files with or received from the SEC
(excluding correspondence and other information received from the SEC concerning
draft registration statements), or otherwise makes available to the public or
the financial community generally;

 

(m)          Notices Under Other Loan Agreements.  Promptly after the furnishing thereof,
copies of any statement, report or notice furnished to any Person pursuant to
the terms of any 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 5.06;

 

54

 

(n)           ERISA Information and Compliance.  Promptly furnish, and will cause any ERISA
Affiliate to promptly furnish, (i) if requested by the Administrative Agent
promptly after the filing thereof with the United States Secretary of Labor,
the Interest Revenue Service or the PBGC, copies of each annual and other
report with respect to each Plan or any trust created thereunder, (ii)
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 a Responsible Officer of the General Partner or such
ERISA Affiliate specifying the nature thereof, what action the borrower 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 (iii) 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;

 

(o)           Acquisition Information.  Concurrently with the delivery of each of
the financial statements referred to in subsections 5.06(a) and (b), a list of
any Oil and Gas Properties purchased by the Borrower or any of its Subsidiaries
during the previous twelve consecutive calendar months for a price equal to or
greater than $1,000,000 for any single transaction or group of related
transactions or $5,000,000 in the aggregate, together with such other
information regarding such Oil and Gas Properties as Administrative Agent or
any Lender may reasonably request; and

 

(p)           Other Information.  Subject to any applicable restrictions on
disclosure, such other information respecting the business or Properties, or
the condition or operations, financial or otherwise, of the Credit Parties
(including, without limitation, any Plan or Multiemployer Plan and any reports
or other information required to be filed under ERISA), as any Lender through
the Administrative Agent may from time to time reasonably request.  The Administrative Agent agrees to provide
the Lenders with copies of any material notices and information delivered
solely to the Administrative Agent pursuant to the terms of this Agreement.

 

Section 5.07       Maintenance
of Property.  The Borrower shall,
and shall cause each of its Subsidiaries to, (a) develop and operate its Oil
and Gas Properties in a good and workmanlike manner as is customary in the oil
and gas industry, and observe and comply in all material respects with all of
the terms and provisions, express or implied, of all oil and gas leases
relating to such Properties so long as the oil and gas leases are capable of
producing Hydrocarbons in quantities and at prices providing for continued
efficient and profitable operation of business; (b) comply in all material
respects with all contracts and agreements applicable to or relating to its Oil
and Gas Properties or the production and sale of Hydrocarbons and accompanying
elements therefrom; (c) maintain, preserve, and keep all operating equipment
used with respect to its Oil and Gas Properties in proper repair, working order
and condition, and make all necessary or appropriate repairs, renewals,
replacements, additions and improvements thereto so that the efficiency of the
operating equipment shall at all times be properly preserved and maintained,
provided that no item of operating equipment need be so repaired, renewed,
replaced, added to or improved, if the Borrower or its Subsidiaries shall in
good faith determine that the action is not necessary or desirable for such
Person’s continued efficient and profitable operation of business, and (d) with
respect to its Oil and Gas Properties that are operated by operators other than
the Borrower or a Subsidiary, (i) seek to enforce the operators’ contractual
obligations to maintain,

 

55

 

develop, and operate such
Properties subject to the applicable operating agreements and (ii) cause or
make reasonable and customary efforts to cause such Oil and Gas Properties to
be operated in a good and workmanlike manner as is customary in the oil and gas
industry.

 

Section 5.08       Environmental
Laws.  To the extent that a
reasonably prudent owner or operator would do so under the same or similar
circumstances, the Borrower shall, and shall cause each of its Subsidiaries to
establish and implement such procedures as may be reasonably necessary to
periodically determine and assure that any failure of the following does not
cause a Material Adverse Change: (i) all Property of the Borrower and its
Subsidiaries and the operations conducted thereon and other activities of the
Borrower and the Subsidiaries are in compliance with and do not violate the
requirements of any Environmental Laws; (ii) no Hazardous Substances or
Hazardous Wastes are disposed of or otherwise releases on or to any Property
owned by any such party except in compliance with Environmental Laws, (iii) no
Hazardous Substance will be released on or to any such Property in a quantity
equal to or exceeding that quantity that requires reporting under CERCLA, and
(iv) no Hazardous Substances or Hazardous Wastes is released on or to any such
Property so as to pose an imminent and substantial endangerment to public
health or welfare or the environment.

 

Section 5.09       Payment
of Trade Payables.  Each of the
Credit Parties shall pay, and shall cause each of its Subsidiaries to pay, all
of their customary trade payables incurred in the ordinary course of business
now or hereafter incurred within 90 days of the date the invoice is received by
such Credit Party, unless subject to legal offset or unless being contested in
good faith by appropriate proceedings and reserves adequate under GAAP shall
have been established therefore.

 

Section 5.10       Use
of Proceeds.  The Borrower shall use
the proceeds of the Advances and Letters of Credit (a) to refinance Debt under
the Existing Credit Agreements and (b) for other general corporate purposes,
other than for acquisitions of seismic data, land or oil, gas and mineral
leases other than in the ordinary course of the Borrower’s business as of the
Closing Date.

 

Section 5.11       Additional
Collateral.  The Borrower will
grant, and will cause each of its Subsidiaries to grant, to the Administrative
Agent an Acceptable Security Interest in such Oil and Gas Properties of the
Borrower and its Subsidiaries, constituting at least 90% of the discounted net
present value of the Proven Reserves of the Borrower and its Subsidiaries as
determined by the Administrative Agent.

 

Section 5.12       New
Subsidiaries.  Within 10 days after (a) the date of the
creation of any new Subsidiary of Brigham Exploration or the Borrower, or (b)
the purchase by Brigham Exploration, the Borrower, or any of its other
Subsidiaries of the Equity Interests of any Person, which purchase results in
such Person becoming a Subsidiary of Brigham Exploration or of the Borrower
permitted by this Agreement, Brigham Exploration or the Borrower, as
applicable, shall, in each case, cause (i) such Person to execute and deliver
to the Administrative Agent (with sufficient originals for each applicable
Lender) a joinder agreement to this Agreement in form and substance acceptable
to the Administrative Agent, a Pledge Agreement (if such new Subsidiary owns
one or more Subsidiaries), one or more Mortgages (if such new Subsidiary owns
Oil and Gas Properties), a Security Agreement, and such other Security
Instruments as the

 

56

 

Administrative Agent or any
Lender may reasonably request, in each case to secure the Obligations together
with evidence of corporate authority to enter into and such legal opinions in
relation to such joinder agreement, Pledge Agreement, Mortgages, Security
Agreement and other Security Instruments as the Administrative Agent may
reasonably request, and (ii) the stockholder of such new Subsidiary to execute
a Pledge Agreement pledging its interests in the Equity Interests of such new
Subsidiary to secure the Obligations and such evidence of corporate authority
to enter into and such legal opinions in relation to such Pledge Agreement as
the Administrative Agent may reasonably request, along with share certificates,
if any, pledged thereby and appropriately executed stock powers in blank.

 

Section 5.13       Title.  As of the Closing Date, the Administrative
Agent shall have received title opinions reflecting that the Borrower has title
reasonably satisfactory to the Administrative Agent in such Oil and Gas
Properties of the Borrower and its Subsidiaries constituting at least 50% of
the Borrower’s and its Subsidiaries’ proved, developed, producing Hydrocarbon
reserves and proved, developed, nonproducing Hydrocarbon reserves (each as
determined in conformity with the guidelines in effect from time to time as
promulgated by the Society of Petroleum Engineers or its successor association)
as determined by the Administrative Agent. 
In addition, the Borrower shall from time to time upon the reasonably
request of the Administrative Agent or the Majority Lenders, provide evidence
of title reasonably satisfactory to the Administrative Agent constituting an
additional 30% of the Borrower’s and its Subsidiaries’ proved, developed,
producing Hydrocarbon reserves and proved, developed, nonproducing Hydrocarbon
reserves as determined by the Administrative Agent with respect to the Oil and
Gas Properties of the Borrower and its Subsidiaries as of the Closing
Date.  Thereafter, with respect to Oil
and Gas Properties acquired after the Closing Date or not previously included
in the Borrowing Base, the Borrower shall from time to time upon the reasonable
request of the Administrative Agent, take such actions and execute and deliver
such documents and instruments as the Administrative Agent shall require to
ensure that the Administrative Agent shall, at all times, have received
satisfactory title opinions (including, if requested, supplemental or new title
opinions addressed to it), which title opinions shall be in form and substance
acceptable to the Administrative Agent in its sole discretion and shall include
opinions regarding the before payout and after payout ownership interests held
by the Borrower and its Subsidiaries, for all wells located on the Oil and Gas
Properties covered thereby as to the ownership of Oil and Gas Properties of the
Borrower and its Subsidiaries, and reflecting that the Administrative Agent has
an Acceptable Security Interest in such Oil and Gas Properties of the Borrower
and its Subsidiaries.

 

Section 5.14       Further
Assurances.  The Borrower shall, and
shall cause each of its Subsidiaries to, cure promptly any defects in the
execution and delivery of the Loan Documents, including, without limitation,
the Security Instruments and this Agreement. 
The Borrower hereby authorizes the Administrative Agent to file any
financing statements without the signature of the Borrower to the extent
permitted by applicable law in order to perfect or maintain the perfection of
any security interest granted under any of the Loan Documents.  The Borrower at its expense will, and will
cause each of its Subsidiaries to, promptly execute and deliver to the
Administrative Agent upon request all such other documents, agreements and
instruments to comply with or accomplish the covenants and agreements of the
Borrower or any Subsidiary of the Borrower, as the case may be, in the Security
Instruments and this Agreement, or to further evidence and more fully describe
the collateral intended as security for the Notes, or to correct

 

57

 

any omissions in the Loan
Documents, or to state more fully the security obligations set out herein or in
any of the Loan Documents, or to perfect, protect or preserve any Liens created
pursuant to any of the Loan Documents, or to make any recordings, to file any
notices or obtain any consents, all as may be necessary or appropriate in
connection therewith or to enable the Administrative Agent to exercise and
enforce its rights and remedies with respect to any Collateral.

 

Section 5.15       Operating
Accounts.  Within 120 days after the
Closing Date, the Borrower shall maintain its primary operating accounts with
one or more of the Lenders (the “Operating Accounts”) and agrees to
deposit therein all proceeds of any sales of Hydrocarbons attributable to its
and its Subsidiaries’ Oil and Gas Properties unless and until the
Administrative Agent directs it to act otherwise.  The Borrower may, prior to the occurrence and continuance of an
Event of Default and the delivery of a notice of exclusive control or any other
similar instruction under any Deposit Control Agreement, make withdrawals from
such Operating Accounts to pay operating costs and expenses.  After the occurrence and continuance of an
Event of Default, all amounts deposited in such Operating Accounts, may, at the
option of the Administrative Agent or Majority Lenders, be retained by the
Administrative Agent as collateral for the Obligations.  Neither the Administrative Agent nor any
Lender waives or relinquishes any of its rights or interests arising under the
Credit Documents by permitting the Borrower and its Subsidiaries to collect and
deposit the proceeds of sales of Hydrocarbons attributable to its and its
Subsidiaries’ Oil and Gas Properties.

 

Section 5.16       Post-Closing
Requirements.  Within 120 days after
the Closing Date, the Borrower shall deliver to the Administrative Agent duly
executed tri-party deposit account control agreements, in each case
satisfactory to Administrative Agent, with each of the lenders at which the
Borrower’s and its Subsidiaries’ bank accounts are located (“Deposit Control
Agreements”).

 

ARTICLE VI

NEGATIVE COVENANTS

 

So long as any Note or any amount under any
Loan Document shall remain unpaid, any Letter of Credit shall remain
outstanding, or any Lender shall have any Commitment, each of the Credit
Parties agrees to comply with the following covenants.

 

Section 6.01       Liens,
Etc.  None of the Credit Parties
shall create, assume, incur, or suffer to exist, or permit any of their
Subsidiaries to create, assume, incur, or suffer to exist, any Lien on or in
respect of any of its Property whether now owned or hereafter acquired, or assign
any right to receive income, except that the Credit Parties may create, incur,
assume, or suffer to exist the following (collectively, the “Permitted Liens”):

 

(a)           Liens securing the Obligations;

 

(b)           Liens securing the Subordinated Debt;

 

(c)           Excepted Liens;

 

58

 

(d)           Liens securing leases allowed under
Section 6.02(f) but only on the Property under lease;

 

(e)           Liens disclosed on Schedule 6.01;
and

 

(f)            any encumbrances permitted under the
terms of any Mortgage.

 

Section 6.02       Debts,
Guaranties, and Other Obligations. 
None of the Credit Parties shall, and none of the Credit Parties shall
permit any of their Subsidiaries to, create, assume, suffer to exist, or in any
manner become or be liable in respect of, any Debt except:

 

(a)           Debt of the Borrower and its
Subsidiaries under the Loan Documents;

 

(b)           Debt of the Borrower and its
Subsidiaries under the Subordinated Loan Documents;

 

(c)           Debt existing on the Closing Date
that is reflected in the Financial Statements or is disclosed on Schedule
6.02, and any renewals or extensions (but not increases) thereof;

 

(d)           Accounts payable for the deferred
purchase price of Property or services (other than customary trade payables
incurred in the ordinary course of business) from time to time incurred in the
ordinary course of business which, if greater than 90 days past the date the
invoice is received by such Credit Party, are being contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with GAAP
have been established;

 

(e)           Debt owing by a Credit Party to any
other Credit Party which is subordinated to the Obligations pursuant to
subordination provisions in form and substance acceptable to the Administrative
Agent;

 

(f)            Debt of the Borrower under Capital
Leases not to exceed $2,000,000 at any one time outstanding;

 

(g)           Debt of the Borrower under
Hydrocarbon Hedge Agreements or Interest Hedge Agreements that is made (i) with
a Person that is, at the time such Hydrocarbon Hedge Agreement or Interest
Hedge Agreement is made, either a Lender or an Affiliate of a Lender, or (ii)
with another counterparty rated at least A- or better by S&P or A3 or
better by Moody’s, provided that the aggregate notional amounts under all such
Hydrocarbon Hedge Agreements (other than Hydrocarbon Hedge Agreement that are
floors) do not exceed 75% of the Borrower’s proved, developed, producing
Hydrocarbon reserves (as determined in conformity with the guidelines in effect
from time to time as promulgated by the Society of Petroleum Engineers or its
successor association) to be produced during the term of such Hydrocarbon Hedge
Agreements and that such Hydrocarbon Hedge Agreements are entered into as a
part of its normal business operations as risk management strategy and/or hedge
against changes resulting from market conditions related to the Borrower’s and
its Subsidiaries’ operations;

 

(h)           Debt of the Borrower and its
Subsidiaries (i) associated with bonds or surety obligations required by Legal
Requirements in connection with the operation of the Oil and Gas Properties and
(ii) associated with the financing of insurance premiums;

 

59

 

(i)            Debt of the Borrower described in Schedule
6.02(i) and such other Debt of the Borrower related to the acquisition of
software and licensing rights related thereto that does not exceed $100,000 at
any one time outstanding; and

 

(j)            Debt that is not described in
subsections (a) through (i) above and that together with all Debt of the
Borrower allowed under subsection (i) above does not exceed $1,000,000 at any
one time outstanding.

 

Section 6.03       Agreements
Restricting Liens and Distributions. 
None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, create, incur, assume or permit to exist
any contract, agreement or understanding (other than the Loan Documents and the
Subordinated Loan Documents) that in any way prohibits or restricts (a) the
granting, conveying, creation or imposition of any Lien on any of its Property,
whether now owned or hereafter acquired, to secure the Obligations, except for
customary limitations and restrictions contained in, and limited to, specific
leases, licenses, conveyances, partnership agreements and co-owners’
agreements, and similar conveyances and agreements or (b) any Subsidiary from
paying dividends or making any other distribution to the Borrower, or otherwise
transferring assets to the Borrower, or which requires the consent of or notice
to other Persons in connection therewith.

 

Section 6.04       Merger
or Consolidation.  None of the
Credit Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to (a) merge or consolidate with or into any other Person, or (b)
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 (i) if either Brigham Exploration or the Borrower is a party to
such merger or consolidation, then Brigham Exploration or the Borrower, as the
case may be, shall be the continuing Person, (ii) a Subsidiary of the Borrower
may merge with or into the Borrower or a wholly owned Subsidiary of the
Borrower (provided that if either of such Subsidiaries is a Guarantor, the
surviving entity shall be a Guarantor), (iii) a Subsidiary of the Borrower may
transfer all or substantially all of its assets (upon voluntary liquidation or
otherwise) to the Borrower or to another wholly-owned Subsidiary of the Borrower
(provided that if the transferor in such a transaction is a Guarantor, then the
transferee must either be the Borrower or a Guarantor), and (iv) a Subsidiary
of Brigham Exploration (other than the Borrower and its Subsidiaries) may merge
with or into Brigham Exploration or a wholly owned Subsidiary of Brigham
Exploration (provided that if either of such Subsidiaries is a Guarantor, the
surviving entity shall be a Guarantor), provided in each case that (A) no Event
of Default exists or no Default would be caused thereby, and (B) if any
Collateral is transferred pursuant to this Section 6.04, the Borrower shall
provide the Administrative Agent with ten Business Days’ written notice prior
to such transfer, and the Borrower or such Guarantor, as the case may be,
owning the Collateral after such transfer shall ratify and confirm the Lien on
such Collateral and shall take all action reasonably requested by the
Administrative Agent in respect of the continued priority and perfection of the
Lien over such Collateral.

 

Section 6.05       Sales
of Assets.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of its
Subsidiaries to, discount or sell (with or without recourse) any of their notes
receivable or accounts receivable.  The
Borrower shall not, nor shall it permit any of its Subsidiaries to sell,
assign, farm-out, convey or otherwise transfer any Hydrocarbon Interests

 

60

 

except for (a) the sale of
Hydrocarbons in the ordinary course of business, (b) the sale or transfer of
equipment that is no longer necessary for the business of such Person or
contemporaneously replaced by equipment of at least comparable value and use,
or (c) sales of Oil and Gas Properties made in arm’s length transactions for
fair market value, not exceeding $3,000,000 in any period of twelve consecutive
calendar months in the aggregate, provided that no Default or Event of Default
has occurred and is continuing or would result from such sale.

 

Section 6.06       Restricted
Payments.  Neither Brigham
Exploration nor the Borrower shall make any Restricted Payments except (a) as
permitted under Section 6.07(a)(iii) or (b) any Preferred Shareholder
Transaction.

 

Section 6.07       Investments
and Acquisitions.

 

(a)           None of the Credit Parties shall, nor
shall any of the Credit Parties permit any of their Subsidiaries to, make or
permit to exist any Investment, except:

 

(i)            Investments, loans or advances
reflected in the Financial Statements or that are disclosed to the Lenders in Schedule
6.07;

 

(ii)           Investments in Cash Equivalents; and

 

(iii)          Investments by any Credit Party in the
Borrower or a Person that is or will become within 10 Business Days after the
making of such Investment a Guarantor in accordance with Section 5.12 or that
will, within ten (10) Business Days after the making of any such Investment
merge or consolidate into such Credit Party, provided, however, that the
Borrower may only make Investments to Brigham Exploration or any Partner to pay
federal or state taxes owing by any of them, payroll and payroll related taxes
and other reasonable general and administrative expenses, or consisting of
forgiveness of indebtedness;

 

(b)           None of the Credit Parties shall, nor
shall any of the Credit Parties permit any of their Subsidiaries to, purchase
any Hydrocarbon Interests not evaluated in any Engineering Report or any
pipelines, gas gathering systems, gas plants, and similar assets related
thereto in an aggregate amount in excess of $5,000,000 in any period of twelve
consecutive calendar months.

 

Section 6.08       Affiliate
Transactions.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction or series of transactions (including, but not limited to, the
purchase, sale, lease or exchange of Property, the making of any investment,
the giving of any guaranty, the assumption of any obligation or the rendering
of any service) with any of their Affiliates (other than any transaction
between the Borrower, any Credit Party, or any Subsidiary of the Borrower)
unless such transaction or series of transactions is not in violation of this
Agreement and upon fair and reasonable terms no less favorable to it than it
would obtain in a comparable arm’s length transaction with a Person that is not
such an Affiliate.

 

Section 6.09       Compliance
with ERISA.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to, directly or indirectly, (a) engage in, or permit any ERISA
Affiliate to engage in, any transaction in connection with which any Credit
Party or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to

 

61

 

section 502(c), (i) or (l) of
ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code in excess of
$500,000; (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 reasonably be expected to result in any liability to any Credit Party or
any ERISA Affiliate to the PBGC in excess of $500,000; (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, any Credit Party 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 in excess of $500,000
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 (as
“actuarial present value of the benefit liabilities” shall have the meaning
specified in section 4041 of ERISA) under any Plan maintained by any Credit
Party 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 by an amount in excess of $500,000; (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 any Credit Party or
any ERISA Affiliate 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 which in the aggregate
for all such liabilities exceeds $500,000; (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; or (j) amend or permit any ERISA Affiliate to amend, a
Plan resulting in an increase in current liability such that any Credit Party
or any ERISA Affiliate is required to provide security to such Plan under
section 401(a)(29) of the Code.

 

Section 6.10       Sales
and Leasebacks.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to, enter into any arrangement, directly or indirectly, with any
Person whereby such Credit Party shall sell or transfer any of its Property,
whether now owned or hereafter acquired, and whereby such Credit Party shall then
or thereafter rent or lease as lessee such Property or any part thereof or
other Property which such Credit Party intends to use for substantially the
same purpose or purposes as the Property sold or transferred.

 

Section 6.11       Change
of Business.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to, allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company.

 

62

 

Section 6.12       Use
of Proceeds.  The Borrower will not
permit the proceeds of any Advance or Letters of Credit to be used for any
purpose other than those permitted by Section 5.09.  Neither the Borrower nor any Person acting on behalf of the
Borrower has taken or shall take, any action which might cause any of the Loan
Documents to violate Regulation T, U or X or any other regulation of the Board
of Governors of the Federal Reserve System 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.

 

Section 6.13       Gas
Imbalances, Take-or-Pay or Other Prepayments.  Except as set forth in Schedule 4.14, the Borrower shall
not allow gas imbalances, take-or-pay or other prepayments with respect to the
Oil and Gas Properties of the Borrower and its Subsidiaries that would require
the Borrower and its Subsidiaries to deliver 2.5% or more of the aggregate
calendar quarter production from the Borrower’s and its Subsidiaries’
Hydrocarbons produced on a calendar quarter basis from such Hydrocarbon
Interests at some future time without then or thereafter receiving full payment
therefor.

 

Section 6.14       Additional
Subsidiaries.  Except as otherwise
permitted by Section 6.07, none of the Credit Parties shall, nor shall any of
the Credit Parties permit any of their Subsidiaries to, create any additional
Subsidiaries or make any additional Investment in a Subsidiary unless such Credit
Party has complied with Section 5.12. 
All Subsidiaries of the Borrower together at no time shall own or hold
Oil and Gas Properties having Proven Reserves with a net discounted present
value calculated in the same manner as in the most recent Engineering Report in
excess of 10% of the total net discounted present value of Proven Reserves of
the Borrower and its Subsidiaries as reflected in such Engineering Report (plus
such Subsidiaries’ Proven Reserved not included in such Engineering Report).  Except as otherwise permitted by Section
6.07(a)(iii), no assets may be transferred to a Subsidiary that is not a
Guarantor.

 

Section 6.15       Limitation
on Leases.  None of the Credit
Parties shall, nor shall any of the Credit Parties permit any of their
Subsidiaries to, 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 including Capital Leases but excluding leases of Hydrocarbon Interests
and the equipment used thereon), under leases or lease agreements that would
cause the aggregate amount of all payments made by the Credit Parties and their
Subsidiaries pursuant to all such leases or lease agreements to exceed
$1,500,000 in any period of twelve consecutive calendar months during the life
of such leases.

 

Section 6.16       Environmental
Matters.  None of the Credit Parties
shall, nor shall any of the Credit Parties permit any of their Subsidiaries to,
cause or permit any of its Property to be in violation of, or do anything to
permit anything to be done that will subject any such Property to any remedial
obligations 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
would cause a Material Adverse Change.

 

Section 6.17       Borrower
as Operator.  Except for any Oil and
Gas Properties sold in accordance with Section 6.05, the Borrower shall not,
and shall not permit any of its Subsidiaries

 

63

 

to, during any calendar year,
voluntarily resign as the operator of Oil and Gas Properties constituting more
than twenty-five percent (25%) of the value of the proved developed producing
reserves evaluated in the Independent Engineering Report applicable to such
calendar year unless the Majority Lenders deliver prior written approval of
such resignations to the Borrower.  

 

Section 6.18       Equity
Interests of Partners.  Brigham
Exploration will not permit any of Equity Interests of any of the Partners to
be owned or controlled by any Person other than Brigham Exploration or another
Partner.

 

Section 6.19       Speculative
Trading.  The Borrower shall not,
nor shall it permit any of its Subsidiaries to, purchase, assume, or hold a
speculative position in any commodities market or futures market or enter into
any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge
arrangements for speculative purposes; provided that any hedge arrangements
which cover anticipated production volumes attributable to Proven Reserves of
the Borrower and its Subsidiaries within the limits set forth in Section
6.02(g) shall not be considered “speculative”.

 

Section 6.20       Change
of Name; Fiscal Year; Accounting Method. 
None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, change its name, fiscal year or method of
accounting except as required by GAAP; provided, however, any Credit Party may
change its name if such Credit Party has given the Administrative Agent at
least 30 days’ (unless otherwise consented to by the Administrative Agent)
prior written notice of such name change and taken such action as the
Administrative Agent deems reasonably necessary to continue the perfection of
the Liens securing payment of the Obligations.

 

Section 6.21       Current
Ratio.  Brigham Exploration shall
not permit the ratio of (a) its consolidated current assets (including the
Unused Commitment Amount) of Brigham Exploration and its consolidated
Subsidiaries to (b) their consolidated current liabilities to be less than 1.00
to 1.00 at any time.

 

Section 6.22       Interest
Coverage Ratio.  Brigham Exploration
shall not permit the Interest Coverage Ratio as of the end of any fiscal
quarter (calculated quarterly at the end of each fiscal quarter) to be less
than 2.75 to 1.0 for the twelve month period ending March 31, 2003; and
thereafter, not less than 3.25 to 1.0 for the twelve month period ending June
30, 2003, and each twelve month period ending at the end of each such fiscal
quarter.

 

Section 6.23       Restrictions
on Limited Partners.  Brigham
Exploration shall not permit either of the Limited Partners to hold any
Properties other than the limited partner interests in the Borrower.

 

Section 6.24       Subordinated
Debt.  None of the Credit Parties
may make any optional, mandatory or scheduled payments on account of principal
(whether by redemption, purchase, retirement, defeasance, set-off or otherwise)
in respect of the Subordinated Debt. 
None of the Credit Parties may make any scheduled payments on account of
interest on and fees in respect of the Subordinated Debt if a Default or an
Event of Default would result or has occurred and is continuing.  None of the Credit Parties may amend, supplement
or otherwise modify the terms of 

 

64

 

the Subordinated Debt,
(including, without limitation, the Subordinated Credit Agreement) without the
express written consent of the Majority Lenders, which consent will not be
unreasonably withheld, which has the effect of (a) increasing the outstanding
principal amount of the Subordinated Debt above $20,000,000, provided that the
foregoing shall not affect the Borrower’s right to make payment in kind of accrued
interest or the ability of the lenders thereunder to accept payment in kind as
provided in the Subordinated Credit Agreement, thereby increasing the principal
amount of the Subordinated Debt or (b) increasing the rate of interest except
with respect to imposing the default rate as provided for in the Subordinated
Credit Agreement on the date hereof or any fees charged on the Subordinated
Debt.

 

Section 6.25       Advance
Payment Contracts.  None of the
Credit Parties will enter into or be a party to any Advance Payment Contract
with respect to any Oil and Gas Properties that are Collateral.

 

ARTICLE VII

EVENTS OF DEFAULT; REMEDIES

 

Section 7.01       Events
of Default.  The occurrence of any
of the following events shall constitute an “Event of Default” under any Loan
Document:

 

(a)           Payment.  The Borrower shall fail to (i) pay any
principal of any Advance or reimburse any drawing under any Letter of Credit
when the same becomes due and payable, or (ii) pay any interest on any Note,
any fees, reimbursements, indemnifications, or other amounts payable in
connection with the Obligations, this Agreement or any of the other Loan
Documents within three Business Days after the same becomes due and payable;

 

(b)           Representation and Warranties.  Any representation or warranty made or
deemed to be made (i) by any Credit Party in this Agreement or in any other
Loan Document, or (ii) by any Credit Party in connection with this Agreement or
any other Loan Document, shall prove to have been incorrect in any material and
adverse respect when made or deemed to be made;

 

(c)           Covenant Breaches.  Any Credit Party shall fail to perform or
observe (i) any covenant contained in Section 2.05(b), Section 5.02(a), Section
5.06(e), Section 5.12, or Article VI of this Agreement or (ii) any other term
or covenant set forth in this Agreement or in any other Loan Document which is
not covered by clause (i) above or any other provision of this Section 7.01 if
such failure shall remain unremedied for 30 days after notice of such breach or
failure has been given to the Borrower by the Administrative Agent or any of
the Lenders (through the Administrative Agent);

 

(d)           Cross-Defaults.  (i) Any Credit Party shall fail to pay any
principal of or premium or interest on its Debt which is outstanding in a
principal amount of at least $1,000,000 individually or when aggregated with
all such Debt of the Credit Parties so in default (but excluding Debt evidenced
by the Notes) when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; (ii) any other event shall
occur or condition shall exist under any 

 

65

 

agreement or instrument
(including, without limitation, the Subordinated Credit Agreement) relating to
Debt which is outstanding in a principal amount of at least $1,000,000
individually or when aggregated with all such Debt of the Credit Parties so in
default, and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or (iii) any such Debt shall be declared to be due and payable, or
required to be prepaid (other than by a regularly scheduled required prepayment
or optional prepayment), prior to the stated maturity thereof;

 

(e)           Insolvency.  Any Credit Party shall generally not pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any Credit Party
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order for
relief or the appointment of a receiver, trustee or other similar official for
it or for any substantial part of its property and, in the case of any such
proceeding instituted against any Credit Party either such proceeding shall
remain undismissed for a period of 60 days or any of the actions sought in such
proceeding shall occur; or any Credit Party shall take any corporate action to
authorize any of the actions set forth above in this paragraph (e);

 

(f)            Judgments.  Any judgment or order for the payment of
money in excess of $1,000,000 (excluding liabilities to the extent covered by
insurance if the insurer has confirmed that such insurance covers such
liabilities) shall be rendered against any Credit Party and either (i)
enforcement proceedings shall have been commenced by any creditor upon such
judgment or order or (ii) there shall be any period of 30 consecutive days
during which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect;

 

(g)           Loan Documents.  Any provision of any Loan Document shall for
any reason cease to be in full force and effect and valid, binding and
enforceable in all material respects in accordance with their terms or cease in
any material respect 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 otherwise permitted by this Agreement, or any Credit Party
shall so state in writing;

 

(h)           Brigham Exploration.  Any Change of Control shall occur; or 

 

(i)            Operator.  The Borrower ceases to be the primary
operating entity for Brigham Exploration and its Subsidiaries and the Borrower
and its Subsidiaries cease to be the only Brigham Exploration entities owning
Oil and Gas Properties.  

 

Section 7.02       Optional
Acceleration of Maturity.  If any
Event of Default (other than an Event of Default pursuant to paragraph (e) of
Section 7.01) shall have occurred and be continuing, then, and in any such
event,

 

(a)           the Administrative Agent (i) shall at
the request, or may with the consent, of the Majority Lenders, by notice to the
Borrower, declare the Commitments and the obligation of each Lender and the
Issuing Lender to make extensions of credit hereunder, including making

 

66

 

Advances and issuing Letters of
Credit, to be terminated, whereupon the same shall forthwith terminate, and
(ii) shall at the request, or may with the consent, of the Majority Lenders, by
notice to the Borrower, declare all principal, interest, fees, reimbursements,
indemnifications, and all other amounts payable under this Agreement, the
Notes, and the other Loan Documents to be forthwith due and payable, whereupon
all such amounts shall become and be forthwith due and payable in full, without
notice of intent to demand, demand, presentment for payment, notice of
nonpayment, protest, notice of protest, grace, notice of dishonor, notice of
intent to accelerate, notice of acceleration, and all other notices, all of
which are hereby expressly waived by the Borrower;

 

(b)           the Borrower shall, on demand of the
Administrative Agent at the request or with the consent of the Majority
Lenders, deposit with the Administrative Agent into the Cash Collateral Account
an amount of cash equal to the Letter of Credit Exposure as security for the
Obligations; and

 

(c)           the Administrative Agent shall at the
request of, or may with the consent of, the Majority Lenders proceed to enforce
its rights and remedies under the Security Instruments, this Agreement, and any
other Loan Document for the ratable benefit of the Lenders by appropriate
proceedings.

 

Section 7.03       Automatic
Acceleration of Maturity.  If any
Event of Default pursuant to paragraph (e) of Section 7.01 shall occur,

 

(a)           (i) the Commitments and the
obligation of each Lender and the Issuing Lender to make extensions of credit
hereunder, including making Advances and issuing Letters of Credit, shall
terminate, and (ii) all principal, interest, fees, reimbursements,
indemnifications, and all other amounts payable under this Agreement, the
Notes, and the other Loan Documents shall become and be forthwith due and
payable in full, without notice of intent to demand, demand, presentment for
payment, notice of nonpayment, protest, notice of protest, grace, notice of
dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices, all of which are hereby expressly waived by the Borrower;

 

(b)           the Borrower shall deposit with the
Administrative Agent into the Cash Collateral Account an amount of cash equal
to the outstanding Letter of Credit Exposure as security for the Obligations;
and

 

(c)           the Administrative Agent shall at the
request of, or may with the consent of, the Majority Lenders proceed to enforce
its rights and remedies under the Security Instruments, this Agreement, and any
other Loan Document for the ratable benefit of the Lenders by appropriate
proceedings.

 

Section 7.04       Right
of Set-off.  Upon the occurrence and
during the continuance of any Event of Default, the Administrative Agent, the
Issuing Lender and each Lender 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 indebtedness at any time owing by the Administrative Agent,
the Issuing Lender or such Lender to or for the credit or the account of the
Borrower against any and all of the

 

67

 

obligations of the Borrower now
or hereafter existing under this Agreement, the Notes held by the
Administrative Agent, the Issuing Lender or such Lender, and the other Loan
Documents, irrespective of whether or not the Administrative Agent, the Issuing
Lender or such Lender shall have made any demand under this Agreement, such
Notes, or such other Loan Documents, and although such obligations may be
unmatured.  The Administrative Agent,
the Issuing Lender and each Lender agrees to promptly notify the Borrower after
any such set-off and application made by the Administrative Agent, the
Issuing Lender or such Lender, provided that the failure to give such notice
shall not affect the validity of such set-off and application.  The rights of the Administrative Agent, the
Issuing Lender and each Lender under this Section 7.04 are in addition to any
other rights and remedies (including, without limitation, other rights of
set-off) that the Administrative Agent, the Issuing Lender or such Lender may
have.

 

Section 7.05       Non-exclusivity
of Remedies.  No remedy conferred
upon the Administrative Agent, the Issuing Lender and the Lenders is intended
to be exclusive of any other remedy, and each remedy shall be cumulative of all
other remedies existing by contract, at law, in equity, by statute or
otherwise.

 

Section 7.06       Application
of Proceeds.  From and during the
continuance of any Event of Default, any monies or property actually received
by the Administrative Agent pursuant to this Agreement or any other Loan
Document, the exercise of any rights or remedies under any Security Instrument
or any other agreement with the Borrower, any Guarantor or any of the
Borrower’s Subsidiaries which secures any of the Obligations, shall be applied
in the following order:

 

(a)           First, to the payment of all amounts,
including without limitation costs and expenses incurred in connection with the
collection of such proceeds and the payment of any part of the Obligations, due
to the Administrative Agent under any of the expense reimbursement or indemnity
provisions of this Agreement or any other Loan Document, any Security
Instrument or other collateral documents, and any applicable law;

 

(b)           Second, to the ratable payment of
accrued but unpaid fees of the Administrative Agent, commitment fees, letter of
credit fees, and fronting fees owing to the Administrative Agent, the Issuing
Lender, and the Lenders in respect of the Advances and Letters of Credit under
this Agreement and the Notes;

 

(c)           Third, to the ratable payment of
accrued but unpaid interest on the Advances owing under this Agreement and the
Notes;

 

(d)           Fourth, ratably, according to the
then unpaid amounts thereof, without preference or priority of any kind among
them, to the ratable payment of all other Obligations then due and payable
which relate to Advances and Letters of Credit and which are owing to the
Administrative Agent and the Lenders and to the payment of all obligations of
the Borrower or its Subsidiaries owing to any Swap Counterparty under any
Interest Hedge Agreement or Hydrocarbon Hedge Agreement, if any, then due and
payable; and

 

68

 

(e)           Fifth, the remainder, if any, to the
Borrower or its Subsidiaries, or its respective successors or assigns, or such
other Person as may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct.

 

ARTICLE
VIII

THE GUARANTY

 

Section 8.01       Liabilities
Guaranteed. Each Guarantor hereby, joint and severally, irrevocably and
unconditionally guarantees the prompt payment at maturity of the Obligations.

 

Section 8.02       Nature
of Guaranty. This guaranty is an absolute, irrevocable, completed and
continuing guaranty of payment and not a guaranty of collection, and no notice
of the Obligations or any extension of credit already or hereafter contracted
by or extended to the Borrower need be given to any Guarantor. This guaranty
may not be revoked by any Guarantor and shall continue to be effective with
respect to the Obligations arising or created after any attempted revocation by
such Guarantor and shall remain in full force and effect until the Obligations
are paid in full and the Commitments are terminated, notwithstanding that from
time to time prior thereto no Obligations may be outstanding. The Borrower and
the Lenders may modify, alter, rearrange, extend for any period and/or renew
from time to time, the Obligations, and the Lenders may waive any Default or
Events of Default without notice to any Guarantor and in such event each
Guarantor will remain fully bound hereunder on the Obligations. This guaranty
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of the Obligations is rescinded or must otherwise be returned
by any of the Lenders upon the insolvency, bankruptcy or reorganization of the
Borrower or otherwise, all as though such payment had not been made. This
guaranty may be enforced by the Administrative Agent and any subsequent holder
of any of the Obligations and shall not be discharged by the assignment or
negotiation of all or part of the Obligations. Each Guarantor hereby expressly
waives presentment, demand, notice of non-payment, protest and notice of
protest and dishonor, notice of Default or Event of Default, and also notice of
acceptance of this guaranty, acceptance on the part of the Lenders being
conclusively presumed by the Lenders’ request for this guaranty and the
Guarantors’ being party to this Agreement.

 

Section 8.03       Agent’s
Rights. Each Guarantor authorizes the Administrative Agent, without notice
or demand and without affecting any Guarantor’s liability hereunder, to take
and hold security for the payment of its obligations under this Article VIII
and/or the Obligations, and exchange, enforce, waive and release any such
security; and to apply such security and direct the order or manner of sale
thereof as the Administrative Agent in its discretion may determine, and to
obtain a guaranty of the Obligations from any one or more Persons and at any
time or times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties.

 

Section 8.04       Guarantor’s
Waivers.

 

(a)           General. Each Guarantor waives
any right to require any of the Lenders to (i) proceed against the Borrower or
any other person liable on the Obligations, (ii) enforce any of their rights
against any other guarantor of the Obligations, (iii) proceed or enforce any of
their

 

69

 

rights against or exhaust any
security given to secure the Obligations, (iv) have the Borrower joined with
any Guarantor in any suit arising out of this Article VIII and/or the
Obligations, or (v) pursue any other remedy in the Lenders’ powers whatsoever.
The Lenders shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Obligations. Guarantor waives any defense
arising by reason of any disability, lack of corporate authority or power, or
other defense of the Borrower or any other guarantor of the Obligations, and
shall remain liable hereon regardless of whether the Borrower or any other
guarantor be found not liable thereon for any reason. Whether and when to
exercise any of the remedies of the Lenders under any of the Loan Documents
shall be in the sole and absolute discretion of the Administrative Agent, and
no delay by the Administrative Agent in enforcing any remedy, including delay
in conducting a foreclosure sale, shall be a defense to any Guarantor’s
liability under this Article VIII.

 

(b)           Subrogation. Until the
Obligations have been paid in full, each Guarantor waives all rights of
subrogation or reimbursement against the Borrower, whether arising by contract
or operation of law (including, without limitation, any such right arising
under any federal or state bankruptcy or insolvency laws) and waives any right
to enforce any remedy which the Lenders now have or may hereafter have against
the Borrower, and waives any benefit or any right to participate in any security
now or hereafter held by the Administrative Agent or any Lender.

 

Section 8.05       Maturity
of Obligations, Payment. Each Guarantor agrees that if the maturity of any
of the Obligations is accelerated by bankruptcy or otherwise, such maturity
shall also be deemed accelerated for the purpose of this Article VIII without
demand or notice to any Guarantor. Each Guarantor will, forthwith upon notice
from the Administrative Agent, jointly and severally pay to the Administrative
Agent the amount due and unpaid by the Borrower and guaranteed hereby. The
failure of the Administrative Agent to give this notice shall not in any way
release any Guarantor hereunder.

 

Section 8.06       Agent’s
Expenses. If any Guarantor fails to pay the Obligations after notice from
the Administrative Agent of the Borrower’s failure to pay any Obligations at
maturity, and if the Administrative Agent obtains the services of an attorney
for collection of amounts owing by any Guarantor hereunder, or obtaining advice
of counsel in respect of any of their rights under this Article VIII, or if
suit is filed to enforce this Article VIII, or if proceedings are had in any
bankruptcy, probate, receivership or other judicial proceedings for the
establishment or collection of any amount owing by any Guarantor hereunder, or
if any amount owing by any Guarantor hereunder is collected through such
proceedings, each Guarantor jointly and severally agrees to pay to the
Administrative Agent the Administrative Agent’s reasonable attorneys’ fees.

 

Section 8.07       Liability.  It is expressly agreed that the liability of
each Guarantor for the payment of the Obligations guaranteed hereby shall be
primary and not secondary.

 

Section 8.08       Events
and Circumstances Not Reducing or Discharging any Guarantor’s Obligations.
Each Guarantor hereby consents and agrees to each of the following to the
fullest extent permitted by law, and agrees that each Guarantor’s obligations
under this Article VIII shall not be released, diminished, impaired, reduced or
adversely affected by any of the

 

70

 

following, and waives any
rights (including without limitation rights to notice) which each Guarantor
might otherwise have as a result of or in connection with any of the following:

 

(a)           Modifications, etc. Any
renewal, extension, modification, increase, decrease, alteration or
rearrangement of all or any part of the Obligations, or of the Notes, or this
Agreement or any instrument executed in connection therewith, or any contract
or understanding between the Borrower and any of the Lenders, or any other
Person, pertaining to the Obligations;

 

(b)           Adjustment, etc. Any
adjustment, indulgence, forbearance or compromise that might be granted or
given by any of the Lenders to the Borrower or any Guarantor or any Person
liable on the Obligations;

 

(c)           Condition of the Borrower or any
Guarantor. The insolvency, bankruptcy arrangement, adjustment, composition,
liquidation, disability, dissolution, death or lack of power of the Borrower or
any Guarantor or any other Person at any time liable for the payment of all or
part of the Obligations; or any dissolution of the Borrower or any Guarantor,
or any sale, lease or transfer of any or all of the assets of the Borrower or
any Guarantor, or any changes in the shareholders, partners, or members of the
Borrower or any Guarantor; or any reorganization of the Borrower or any
Guarantor;

 

(d)           Invalidity of Obligations. The
invalidity, illegality or unenforceability of all or any part of the
Obligations, or any document or agreement executed in connection with the
Obligations, for any reason whatsoever, including without limitation the fact
that the Obligations, or any part thereof, exceed the amount permitted by law,
the act of creating the Obligations or any part thereof is ultra vires, the
officers or representatives executing the documents or otherwise creating the
Obligations acted in excess of their authority, the Obligations violate
applicable usury laws, the Borrower has valid defenses, claims or offsets (whether
at law, in equity or by agreement) which render the Obligations wholly or
partially uncollectible from the Borrower, the creation, performance or
repayment of the Obligations (or the execution, delivery and performance of any
document or instrument representing part of the Obligations or executed in
connection with the Obligations, or given to secure the repayment of the
Obligations) is illegal, uncollectible, legally impossible or unenforceable, or
this Agreement or other documents or instruments pertaining to the Obligations
have been forged or otherwise are irregular or not genuine or authentic;

 

(e)           Release of Obligors. Any full
or partial release of the liability of the Borrower on the Obligations or any
part thereof, of any co-guarantors, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the Obligations
or any part thereof, it being recognized, acknowledged and agreed by any Guarantor
that such Guarantor may be required to pay the Obligations in full without
assistance or support of any other Person, and no Guarantor has been induced to
enter into this Article VIII on the basis of a contemplation, belief,
understanding or agreement that other parties other than the Borrower will be
liable to perform the Obligations, or the Lenders will look to other parties to
perform the Obligations.

 

(f)            Other Security. The taking or
accepting of any other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Obligations;

 

71

 

(g)           Release of Collateral etc. Any
release, surrender, exchange, subordination, deterioration, waste, loss or
impairment (including without limitation negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or security, at any time
existing in connection with, or assuring or securing payment of, all or any
part of the Obligations;

 

(h)           Care and Diligence. The
failure of the Lenders or any other Person to exercise diligence or reasonable
care in the preservation, protection, enforcement, sale or other handling or
treatment of all or any part of such collateral, property or security;

 

(i)            Status of Liens. The fact
that any collateral, security, security interest or lien contemplated or
intended to be given, created or granted as security for the repayment of the
Obligations shall not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other security interest or lien, it being
recognized and agreed by each Guarantor that no Guarantor is entering into this
Article VIII in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the collateral for
the Obligations;

 

(j)            Payments Rescinded. Any
payment by the Borrower to the Lenders is held to constitute a preference under
the bankruptcy laws, or for any reason the Lenders are required to refund such
payment or pay such amount to the Borrower or someone else; or

 

(k)           Other Actions Taken or Omitted.  Any other action taken or omitted to be
taken with respect to this Agreement, the Obligations, or the security and
collateral therefor, whether or not such action or omission prejudices any
Guarantor or increases the likelihood that any Guarantor will be required to
pay the Obligations pursuant to the terms hereof, it being the unambiguous and
unequivocal intention of each Guarantor that each Guarantor shall be obligated
to joint and severally pay the Obligations when due, notwithstanding any
occurrence, circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise or particularly
described herein, except for the full and final payment and satisfaction of the
Obligations.

 

Section 8.09       Subordination
of All Guarantor Claims. As used herein, the term “Guarantor Claims” shall
mean all debts and liabilities of the Borrower or any Subsidiary of the
Borrower to any Guarantor, whether such debts and liabilities now exist or are
hereafter incurred or arise, or whether the obligation of the Borrower or such
Subsidiary thereon be direct, contingent, primary, secondary, several, joint
and several, or otherwise, and irrespective of whether such debts or
liabilities be evidenced by note, contract, open account, or otherwise, and
irrespective of the person or persons in whose favor such debts or liabilities
may, at their inception, have been, or may hereafter be created, or the manner in
which they have been or may hereafter be acquired by any Guarantor. The
Guarantor Claims shall include without limitation all rights and claims of any
Guarantor against the Borrower or any Subsidiary of the Borrower arising as a
result of subrogation or otherwise as a result of such Guarantor’s payment of
all or a portion of the Obligations. Until the Obligations shall be paid and
satisfied in full and each Guarantor shall have performed all of its
obligations hereunder, no Guarantor shall receive or collect, directly or
indirectly, from the Borrower or any Subsidiary of the Borrower or any other

 

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party any amount upon the
Guarantor Claims during the occurrence and continuance of an Event of Default.

 

Section 8.10       Claims
in Bankruptcy. In the event of receivership, bankruptcy, reorganization,
arrangement, debtor’s relief, or other insolvency proceedings involving the
Borrower or any Subsidiary of the Borrower, as debtor, the Lenders shall have
the right to prove their claim in any proceeding, so as to establish their
rights hereunder and receive directly from the receiver, trustee or other court
custodian, dividends and payments which would otherwise be payable upon
Guarantor Claims.  Each Guarantor hereby
assigns such dividends and payments to the Lenders. Should the Administrative
Agent or any Lender receive, for application upon the Obligations, any such
dividend or payment which is otherwise payable to any Guarantor, and which, as
between the Borrower or any Subsidiary of the Borrower and any Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment in full of the
Obligations, such Guarantor shall become subrogated to the rights of the
Lenders to the extent that such payments to the Lenders on the Guarantor Claims
have contributed toward the liquidation of the Obligations, and such
subrogation shall be with respect to that proportion of the Obligations which
would have been unpaid if the Administrative Agent or a Lender had not received
dividends or payments upon the Guarantor Claims.

 

Section 8.11       Payments
Held in Trust.  In the event that
notwithstanding Sections 8.09 and 8.10 above, any Guarantor should receive any
funds, payments, claims or distributions which is prohibited by such Sections,
such Guarantor agrees to hold in trust for the Lenders an amount equal to the
amount of all funds, payments, claims or distributions so received, and agrees
that it shall have absolutely no dominion over the amount of such funds,
payments, claims or distributions except to pay them promptly to the
Administrative Agent, and each Guarantor covenants promptly to pay the same to
the Administrative Agent.

 

Section 8.12       Liens
Subordinate. Each Guarantor agrees that any liens, security interests, judgment
liens, charges or other encumbrances upon the Borrower’s or any Subsidiary of
the Borrower’s assets securing payment of the Guarantor Claims shall be and
remain inferior and subordinate to any liens, security interests, judgment
liens, charges or other encumbrances upon the Borrower’s or any Subsidiary of
the Borrower’s assets securing payment of the Obligations, regardless of
whether such encumbrances in favor of any Guarantor, the Administrative Agent
or the Lenders presently exist or are hereafter created or attach.

 

Section 8.13       Guarantor’s
Enforcement Rights. Without the prior written consent of the Lenders, no
Guarantor shall (a) exercise or enforce any creditor’s right it may have
against the Borrower or any Subsidiary of the Borrower, or (b) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceeding (judicial or otherwise, including without limitation the
commencement of or joinder in any liquidation, bankruptcy, rearrangement,
debtor’s relief or insolvency proceeding) to enforce any lien, mortgages, deeds
of trust, security interest, collateral rights, judgments or other encumbrances
on assets of the Borrower or any Subsidiary of the Borrower held by Guarantor.

 

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ARTICLE IX

THE ADMINISTRATIVE AGENT AND THE ISSUING LENDER

 

Section 9.01       Authorization
and Action.  Each Lender hereby
appoints and authorizes the Administrative Agent to take such action as agent
on its behalf and to exercise such powers under this Agreement as are delegated
to the Administrative Agent by the terms hereof and of the other Loan
Documents, together with such powers as are reasonably incidental thereto.  As to any matters not expressly provided for
by this Agreement or any other Loan Document (including, without limitation,
enforcement or collection of the Notes), the Administrative Agent shall not be
required to exercise any discretion or take any action, but shall be required
to act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes; provided,
however, that the Administrative Agent shall not be required to take any action
which exposes the Administrative Agent to personal liability or which is
contrary to this Agreement, any other Loan Document, or applicable law.

 

Section 9.02       Administrative Agent’s Reliance, Etc.  Neither
the Administrative Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or omitted to be taken (including the Administrative Agent’s own
negligence) by it or them under or in connection with this
Agreement or the other Loan Documents, except for its or their own gross
negligence or willful misconduct. 
Without limitation of the generality of the foregoing, the
Administrative Agent:  (a) may treat the
payee of any Note as the holder thereof until the Administrative Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to the Administrative Agent; (b) may consult with legal
counsel (including counsel for any Credit Party), independent public
accountants, and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants, or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties, or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not, except with respect to
Administrative Agent’s receipt of payments due hereunder, have any duty to
ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Agreement or any other Loan Document on
the part of any Credit Party or to inspect the property (including the books
and records) of any Credit Party; (e) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency, or value of this Agreement or any other Loan Document; and (f)
shall incur no liability under or in respect of this Agreement or any other
Loan Document by acting upon any notice, consent, certificate, or other
instrument or writing (which may be by telecopier or telex) believed by it to
be genuine and signed or sent by the proper party or parties.

 

Section 9.03       The
Administrative Agent and Its Affiliates. 
With respect to its Commitments, the Advances made by it and the Notes
issued to it, the Administrative Agent shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Administrative Agent.  The
term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include
the Administrative Agent in its individual capacity.  The Administrative Agent and its Affiliates may accept deposits
from, lend

 

74

 

money to, act as trustee under
indentures of, and generally engage in any kind of business with, any Credit
Party, and any Person who may do business with or own securities of any Credit
Party, all as if the Administrative Agent were not an agent hereunder and
without any duty to account therefor to the Lenders.

 

Section 9.04          Lender
Credit Decision.  Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on the Financial Statements
and such other documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it shall,
independently and without reliance upon the Administrative Agent or any other
Lender and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under this Agreement.

 

Section 9.05          Indemnification.  The Lenders severally agree
to indemnify the Administrative Agent and the Issuing Lender and each Affiliate
thereof and their respective directors, officers, employees, and agents (to the
extent not reimbursed by the Credit Parties), according to their respective Pro
Rata Shares from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrative Agent and the Issuing
Lender in any way relating to or arising out of this Agreement or any action
taken or omitted by the Administrative Agent or the Issuing Lender under this
Agreement or any other Loan Document (including the Administrative Agent’s and
the Issuing Lender’s own negligence), and including, without limitation,
environmental liabilities, provided that no Lender shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses, or disbursements resulting from the
Administrative Agent’s or the Issuing Lender’s gross negligence or willful
misconduct.  Without limitation of the
foregoing, each Lender agrees to reimburse the Administrative Agent and the
Issuing Lender promptly upon demand for its ratable share of any out-of-pocket
expenses (including counsel fees) incurred by the Administrative Agent or the
Issuing Lender in connection with the preparation, execution, delivery,
administration, modification, amendment, or enforcement (whether through
negotiations, legal proceedings, or otherwise) of, or legal advice in respect
of rights or responsibilities under, this Agreement or any other Loan Document,
to the extent that the Administrative Agent or the Issuing Lender is not
reimbursed for such by the Credit Parties, provided that no Lender shall be
liable for any portion of such out-of-pocket expenses (including counsel fees)
incurred by the Administrative Agent or the Issuing Bank as a result of the Administrative
Agent’s or the Issuing Lender’s gross negligence or willful misconduct.

 

Section 9.06          Successor
Administrative Agent and Issuing Lender. 
The Administrative Agent or the Issuing Lender may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be
removed at any time with or without cause by the Majority Lenders upon receipt
of written notice from the Majority Lenders to such effect.  Upon

 

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receipt of notice of any such
resignation or removal, the Majority Lenders shall have the right to appoint a
successor Administrative Agent or Issuing Lender with, if any Event of Default
has not occurred and is not continuing, the consent of the Borrower, which
consent shall not be unreasonably withheld. 
If no successor Administrative Agent or Issuing Lender shall have been
so appointed by the Majority Lenders with the consent of the Borrower, and
shall have accepted such appointment, within 30 days after the resigning Administrative
Agent’s or Issuing Lender’s giving of notice of resignation or the Majority
Lenders’ removal of the resigning Administrative Agent or Issuing Lender, then
the resigning Administrative Agent or Issuing Lender may, on behalf of the
Lenders and the Borrower, appoint a successor Administrative Agent or Issuing
Lender, which shall be, in the case of a successor agent, a Lender or any other
commercial bank organized under the laws of the United States of America or of
any State thereof and having a combined capital and surplus of at least
$500,000,000.00 and, in the case of the Issuing Lender, a Lender.  Upon the acceptance of any appointment as
Administrative Agent or Issuing Lender by a successor Administrative Agent or
Issuing Lender, such successor Administrative Agent or Issuing Lender shall
thereupon succeed to and become vested with all the rights, powers, privileges,
and duties of the resigning Administrative Agent or Issuing Lender, and the
resigning Administrative Agent or Issuing Lender shall be discharged from its
duties and obligations under this Agreement and the other Loan Documents,
except that the resigning Issuing Lender shall remain the Issuing Lender with
respect to any Letters of Credit outstanding on the Closing Date of its resignation
or removal and the provisions affecting the Issuing Lender with respect to such
Letters of Credit shall inure to the benefit of the resigning Issuing Lender
until the termination of all such Letters of Credit.  After any resigning Administrative Agent’s or Issuing Lender’s
resignation or removal hereunder as Administrative Agent or Issuing Lender, the
provisions of this Article IX shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent or Issuing
Lender under this Agreement and the other Loan Documents.

 

Section 9.07          Other
Agents.  None of the Lead Arranger,
the Co-Arranger, the Documentation Agent or the Syndication Agent, in such
respective capacities, shall have any duties or responsibilities, or incur any
liabilities, under this Agreement or the other Loan Documents.

 

Section 9.08          Collateral
Matters.

 

(a)           The Administrative Agent is
authorized on behalf of the Lenders, without the necessity of any notice to or
further consent from the Lenders, from time to time, to take any actions with
respect to any Collateral or Security Instruments which may be necessary to
perfect and maintain Acceptable Security Interests in and Liens upon the
Collateral granted pursuant to the Security Instruments.  The Administrative Agent is further
authorized on behalf of the Lenders, without the necessity of any notice to or
further consent from the Lenders, from time to time, to take any action in
exigent circumstances as may be reasonably necessary to preserve any rights or
privileges of the Lenders under the Loan Documents or applicable Legal
Requirements.

 

(b)           Each of the Lenders irrevocably
authorizes the Administrative Agent to release any Lien granted to or held by
the Administrative Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all outstanding Advances and all other
Obligations payable under this Agreement and under any other Loan Document;
(ii) constituting property

 

76

 

sold or to be sold or disposed
of as part of or in connection with any disposition permitted under this
Agreement or the other Loan Documents; (iii) constituting property in which any
Credit Party owned no interest at the time the Lien was granted or at any time
thereafter; (iv) constituting Oil and Gas Properties to which no Proven
Reserves are attributed that currently encumbered under the Mortgage
Amendments; (v) if approved, authorized or ratified in writing by the Majority
Lenders or all the Lenders, as the case may be, as required by Section 10.01 or
(vi) as otherwise permitted by this Agreement. 
Upon the request of the Administrative Agent at any time, the Lenders
will confirm in writing the Administrative Agent’s authority to release
particular types or items of Collateral pursuant to this Section 9.08.  The Administrative Agent hereby agrees, from
time to time upon the prior written request of the Borrower, to execute and
deliver such releases and/or termination documents as may be necessary to effectively
release any and all of the Liens granted to or held by the Administrative Agent
upon any Collateral described in this Section 9.08(b).

 

(c)           The powers conferred on the
Administrative Agent under this Agreement and the other Security Instruments are
solely to protect its interest in the Collateral and shall not impose any duty
upon it to exercise any such powers. 
Except for the reasonable care of any Collateral in its possession and
the accounting for monies or other property actually received by it hereunder,
the Administrative Agent shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior parties or any
other rights pertaining to any Collateral. 
The Administrative Agent shall be deemed to have exercised reasonable
care as to the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which the
Administrative Agent accords its own property, provided that the Administrative
Agent shall have no responsibility for taking any necessary steps to preserve
rights against any parties with respect to any Collateral.

 

ARTICLE X

MISCELLANEOUS

 

Section 10.01        Amendments, Etc.  No
amendment or waiver of any provision of this Agreement, the Notes, or any other
Loan Document, nor consent to any departure by any Credit Party therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Majority Lenders and the Borrower, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided, however, that:

 

(a)           no amendment, waiver, or consent
shall, unless in writing and signed by all of the Lenders and the Borrower, do
any of the following:

 

(i)            waive any of the conditions
specified in Section 3.01 or 3.02;

 

(ii)           increase the Commitments of the
Lenders;

 

(iii)          change the percentage of Lenders which
shall be required for the Lenders or any of them to take any action hereunder
or under any other Loan Document;

 

(iv)          amend Section 2.11 or this Section
10.01;

 

77

 

(v)           amend the definition of “Majority
Lenders”;

 

(vi)          release any Guarantor from its
obligations under Article VIII of this Agreement;

 

(vii)         permit any Credit Party to enter into
any merger or consolidation with or into any other Person, except as permitted
by Section 6.04, or amend Section 6.04;

 

(viii)        release any Collateral, except for
releases of Collateral in connection with dispositions permitted by this
Agreement;

 

(ix)           increase the Borrowing Base;

 

(x)            reduce the principal of, or interest
on, the Notes or any fees or other amounts payable hereunder or under any other
Loan Document to or for the benefit of the Lenders;

 

(xi)           postpone any date fixed for any
payment of principal of, or interest on, the Notes or any fees or other amounts
payable hereunder or extend the Maturity Date or the Commitment Termination
Date; or

 

(xii)          amend or waive any provision of, nor
consent to any departure by any party thereto from, the Intercreditor and
Subordination Agreement;

 

(b)           no amendment, waiver, or consent
shall, unless in writing and signed by the Majority Lenders, decrease the
Borrowing Base; and

 

(c)           no amendment, waiver or consent
shall, unless in writing and signed by the Administrative Agent or the Issuing
Lender in addition to the Lenders required above to take such action, affect
the rights or duties of the Administrative Agent or the Issuing Lender, as the
case may be, under this Agreement or any other Loan Document.

Notwithstanding any of the
foregoing provisions of this Section 10.01, the Administrative Agent may
release Collateral relating to sales or transfers of property permitted under
this Agreement or any other Loan Document; provided,
however, in no event shall Administrative Agent release all or
substantially all of the Collateral without the prior written consent of each
of the Lenders.

 

Section 10.02        Notices,
Etc.  All notices and other
communications shall be in writing (including, without limitation, telecopy or
telex) and mailed by certified mail, return receipt requested, telecopied,
telexed, hand delivered, or delivered by a nationally recognized overnight
courier, at the address for the appropriate party specified in Schedule 1
or at such other address as shall be designated by such party in a written
notice to the other parties.  All such
notices and communications shall, when so mailed, telecopied, telexed, or hand
delivered or delivered by a nationally recognized overnight courier, be
effective when received if mailed, when telecopy transmission is completed,
when confirmed by telex answer-back, or when delivered by such messenger or
courier, respectively, except that notices and communications to the
Administrative Agent pursuant to Article II, IX or X shall not be effective
until received by the Administrative Agent.

 

78

 

Section 10.03        No
Waiver; Remedies.  No failure on the
part of any Lender, the Administrative Agent, or the Issuing Lender to
exercise, and no delay in exercising, any right hereunder or under any Note
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise
of any other right.  The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

 

Section 10.04        Costs
and Expenses.  The Borrower agrees
to pay on demand (a) all reasonable out-of-pocket costs and expenses of the
Arrangers and the Agents in connection with the preparation, execution,
delivery, administration, modification, and amendment of this Agreement, the
Notes, and the other Loan Documents including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent with respect to advising the Administrative Agent as to its rights and
responsibilities under this Agreement, and (b) all out-of-pocket
costs and expenses, if any, of the Administrative Agent, the Issuing Lender, and
each Lender (including, without limitation, reasonable counsel fees and
expenses of the Administrative Agent, the Issuing Lender, and each Lender) in
connection with the enforcement (whether through negotiations, legal
proceedings, or otherwise) of this Agreement, the Notes, and the other Loan
Documents.

 

Section 10.05        Binding
Effect.  This Agreement shall become
effective when it shall have been executed by each of the Credit Parties and
the Administrative Agent, and when the Administrative Agent shall have, as to
each Lender, either received a counterpart hereof executed by such Lender or
been notified by such Lender that such Lender has executed it and thereafter
shall be binding upon and inure to the benefit of the Credit Parties, the
Administrative Agent, the Issuing Lender, and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights or delegate its duties under this Agreement or any interest
in this Agreement without the prior written consent of each Lender.

 

Section 10.06        Lender
Assignments and Participations.

 

(a)           Assignments.  Any Lender may assign to one or more banks
or other entities all or any portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments,
the Advances owing to it, the Notes held by it, and the participation interest
in the Letter of Credit Obligations held by it); provided, however, that
(i) the amount of the Commitments and Advances of such Lender being assigned
pursuant to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment) shall be, if to an entity other
than a Lender, not less than $5,000,000.00, (ii) each such assignment shall be to
an Eligible Assignee, (iii) the parties to each such assignment shall execute
and deliver to the Administrative Agent, for its acceptance and recording in
the Register, an Assignment and Acceptance, together with the Notes subject to
such assignment, and (iv) each Eligible Assignee (other than an Eligible
Assignee that is a Lender or an Affiliate of a Lender) shall pay to the
Administrative Agent a $3,500 administrative fee.  Any such assignment need not be ratable as among the
Facilities.  Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof unless otherwise waived by the
Administrative Agent in its sole discretion, (A) the assignee thereunder shall
be a party hereto for all purposes and, to the extent that rights and
obligations

 

79

 

hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and obligations
of a Lender hereunder and (B) such Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of such Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).

 

(b)           Term of Assignments.  By executing and delivering an Assignment
and Acceptance, the Lender thereunder and the assignee thereunder confirm to
and agree with each other and the other parties hereto as follows:  (i) other than as provided in such Assignment
and Acceptance, such Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency of value of this Agreement
or any other instrument or document furnished pursuant hereto; (ii) such Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Credit Party or the performance or observance
by the Borrower or its Subsidiaries of any of their obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii)
such assignee confirms that it has received a copy of this Agreement, together
with copies of the most recently delivered financial statements pursuant to
Section 5.06 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon the Administrative Agent, such Lender or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Administrative Agent
by the terms hereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.

 

(c)           The Register.  The Administrative Agent shall maintain at
its address referred to in Section 10.02 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the recordation
of the names and addresses of the Lenders and the Commitments of, and principal
amount of the Advances owing to, each Lender from time to time (the “Register”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and each of the
Credit Parties, the Administrative Agent, the Issuing Lender, and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes of this Agreement. 
The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.

 

(d)           Procedures.  Upon its receipt of an Assignment and
Acceptance executed by a Lender and an Eligible Assignee, together with the
Notes subject to such assignment, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form
of the attached Exhibit A, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Register, and (iii) give
prompt notice thereof to 

 

80

 

the Borrower.  Within five Business Days after its receipt
of such notice, the Borrower shall execute and deliver to the Administrative
Agent in exchange for the surrendered Notes (A) if such Eligible Assignee has
acquired a Commitment, a new Note to the order of such Eligible Assignee in an
amount equal to such Commitment assumed by it pursuant to such Assignment and
Acceptance and (B) if such Lender has retained any Commitment hereunder, a new
Note to the order of such Lender in an amount equal to the Commitment retained
by it hereunder.  Such new Note shall be
dated the effective date of such Assignment and Acceptance and shall otherwise
be in substantially the form of the attached Exhibit E.

 

(e)           Participations.  Each Lender may sell participations to one
or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitments, the Advances owing to it, its participation
interest in the Letter of Credit Obligations, and the Notes held by it); provided,
however, that (i) such Lender’s obligations under this Agreement (including,
without limitation, its Commitments to the Borrower hereunder) shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) such Lender shall
remain the holder of any such Notes for all purposes of this Agreement, (iv)
the Credit Parties, the Administrative Agent, and the Issuing Lender 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, and
(v) such Lender shall not require the participant’s consent to any matter under
this Agreement, except for change in the principal amount of the Notes,
reductions in fees or interest, releasing all or substantially all of any
Collateral or Brigham Exploration or the General Partner as a Guarantor,
permitting any Credit Party to enter into any merger or consolidation with or
into any other (except as permitted hereby), 
postponement of any date fixed for any payment of principal of, or
interest on, the Notes or any fees or other amounts payable hereunder, or
extensions of either the Maturity Date or the Commitment Termination Date.  The Borrower hereby agrees that participants
shall have the same rights under Sections 2.12, 2.13, 2.14, and 11.07 as a
Lender to the extent of their respective participations.

 

Section 10.07        Indemnification.  The Borrower shall indemnify
the Arrangers, the Agents, the Lenders, the Issuing Lender, and each Affiliate
thereof and their respective directors, officers, employees, and agents from,
and discharge, release, and hold each of them harmless against, any and all
losses, liabilities, claims, or damages which may be imposed on, incurred by,
or asserted against them in any way relating to or arising out of this
Agreement or any action taken or omitted by them under this Agreement or any
other Loan Document (including any such losses, liabilities, claims, damages,
or expense incurred by reason of the person being indemnified’s own negligence
or strict liability) and including without limitation Environmental
Liabilities, but excluding any such losses, liabilities, claims, damages, or
expenses incurred by reason of the gross negligence or willful misconduct of
the person to be indemnified.

 

Section 10.08        Execution
in Counterparts.  This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.

 

81

 

Section 10.09        Survival
of Representations, Etc.  All
representations and warranties contained in this Agreement or made in writing
by or on behalf of the Borrower in connection herewith shall survive the
execution and delivery of this Agreement and the Loan Documents, the making of
the Advances and any investigation made by or on behalf of the Lenders, none of
which investigations shall diminish any Lender’s right to rely on such
representations and warranties.  All
obligations of the Borrower provided for in Sections 2.12, 2.13, 2.14(c),
10.04, and 10.07 and all of the obligations of the Lenders in Section 10.05
shall survive any termination of this Agreement and repayment in full of the
Obligations.

 

Section 10.10        Severability.  In case one or more provisions of this
Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality,
and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby.

 

Section 10.11        Governing
Law.  Except as otherwise
expressly stated in any Security Instrument, this Agreement, the Notes and the
other Loan Documents shall be governed by, and construed and enforced in
accordance with, the laws of the State of New York.  Each Letter of Credit shall be governed by either (a) the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No.  500
(or any successor to such publication) or (b) the International Standby
Practices 1998, Institute of International Banking Law & Practice (or any
successor to such publication).

 

Section 10.12        Submission
To Jurisdiction; Waivers. 
The Borrower hereby irrevocably and unconditionally:

 

(A)          submits for
itself and its Property in any legal action or proceeding relating to this
Agreement and the other Loan Documents to which it is a party, or for
recognition and enforcement of any judgment in respect thereof, to the
non-exclusive general jurisdiction of the Courts of the State of New York, the
courts of the United States of America for the Southern District of New York,
and appellate courts from any thereof;

 

(b)          consents
that any such action or proceeding may be brought in such courts and waives any
objection that it may now or hereafter have to the venue of any such action or
proceeding in any such court or that such action or proceeding was brought in
an inconvenient court and agrees not to plead or claim the same;

 

(c)          agrees that
service of process in any such action or proceeding may be effected by mailing
a copy thereof by registered or certified mail (or any substantially similar
form of mail), postage prepaid, to the Borrower at its address set forth in subsection
10.02 or at such other address of which the Administrative Agent shall have
been notified pursuant thereto;

 

82

 

(d)          agrees that
nothing herein shall affect the right to effect service of process in any other
manner permitted by law or shall limit the right to sue in any other
jurisdiction; and

 

(e)           waives, to
the maximum extent not prohibited by law, any right it may have to claim or
recover in any legal action or proceeding referred to in this subsection any
special, exemplary, punitive or consequential damages.

 

Section 10.13 WAIVER OF
JURY TRIAL.  EACH OF THE
CREDIT PARTIES, THE LENDERS, THE ISSUING LENDER, THE ARRANGERS AND THE AGENTS
HEREBY ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY AND HAS CONSULTED WITH
COUNSEL OF ITS CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN RESPECT OF ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

 

Section 10.14 ORAL
AGREEMENTS.  THIS AGREEMENT
AND THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.

 

Section 10.15 Dissemination
of Information.  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 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 Governmental
Authority in connection with banking regulations or supervision; (c) to the
extent required by applicable Legal Requirements or by any subpoena or similar
legal process; (d) to any other party to this Agreement; (e) to the extent
required, in connection with the exercise of any remedies hereunder or any suit,
action or proceeding relating to this Agreement or the enforcement of rights
hereunder; (f) subject to an agreement for the benefit of the Credit Parties
containing provisions substantially the same as those of this Section 10.15 or
any other confidentiality obligation referred to herein, to (i) any participant
or Eligible Assignee or any other Person acquiring an interest in the Loan
Documents (each a “Transferee”) and any prospective Transferee or (ii)
any direct or indirect contractual counterparty or prospective counterparty (or
such contractual counterparty’s or prospective counterparty’s professional
advisor) to any credit derivative transaction relating to obligations of Credit
Parties; (g) with the prior written 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 or (ii) becomes available to any Agent or Lender on
a nonconfidential basis from a source other than any Credit Party.  In addition, any Agent or any Lender may
disclose the existence of this Agreement and information about this Agreement
to market data collectors, similar service providers to the lending industry,
and service providers to the Agents and the Lenders in connection with the
administration and management of this Agreement, the other Loan Documents, and
the Advances.  For the purposes of this
Section, “Information” means all information received from, or on behalf of,
any Credit Parties relating to any Credit Party or their business, other than
any such information that is 

 

83

 

available to any Agent or any
Lender on a nonconfidential basis prior to disclosure by any Credit Party;
provided that, in the case of information received from any Credit Party after
the date hereof, such information is clearly identified in writing at the time
of delivery as confidential; provided, however, that
notwithstanding the foregoing, each Engineering Report shall be deemed to be
confidential regardless of whether such Engineering Report is identified in
writing at the time of delivery as confidential.  Any Person required to maintain the confidentiality of
Information as provided in this Section 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 10.16        Production
Proceeds.  Notwithstanding that, by
the terms of the various Security Instruments, the Credit Parties are and will
be assigning to the Administrative Agent and the Lenders all of the “Production
Proceeds” (as defined therein) accruing to the Property covered thereby, so
long as no Event of Default has occurred the Credit Parties may continue to
receive from the purchasers of production all such Production Proceeds,
subject, however, to the Liens created under the Security Instruments, which
Liens are hereby affirmed and ratified. 
Upon the occurrence of an Event of Default, the Administrative Agent and
the Lenders may exercise all rights and remedies granted under the Security
Instruments, including the right to obtain possession of all Production
Proceeds then held by the Credit Parties or to receive directly from the
purchasers of production all other Production Proceeds.  In no case shall any failure, whether
intentional or inadvertent, by the Administrative Agent or the Lenders to
collect directly any such Production Proceeds constitute in any way a waiver,
remission or release of any of their rights under the Security Instruments, nor
shall any release of any Production Proceeds by the Administrative Agent or the
Lenders to the Credit Parties constitute a waiver, remission, or release of any
other Production Proceeds or of any rights of the Administrative Agent or the
Lenders to collect other Production Proceeds thereafter.

 

Section 10.17        Amendment
and Restatement.  The Borrower, the
Agents and the Lenders have agreed that this Agreement is an amendment and
restatement of the Existing Senior Credit Agreement in its entirety and the
terms and provisions hereof supersede the terms and provisions thereof, and
this Agreement is not a new or substitute credit agreement or novation of the
Existing Senior Credit Agreement.

 

84

 

EXECUTED as of
the date first above written.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BRIGHAM OIL
  & GAS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:   Brigham,
  Inc., its General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Warren
  J. Ludlow

  	
   

  
	
   

  	
   

  	
  Warren J.
  Ludlow

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  BRIGHAM
  EXPLORATION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Warren
  J. Ludlow

  	
   

  
	
   

  	
   

  	
  Warren J.
  Ludlow

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIGHAM,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Warren
  J. Ludlow

  	
   

  
	
   

  	
   

  	
  Warren J.
  Ludlow

  	
   

  
	
   

  	
   

  	
  Secretary

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  SOCIETE
  GENERALE

  
	
   

  	
  as Lead Arranger, Administrative Agent and as Issuing Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Cary
  Hughes

  	
   

  
	
   

  	
   

  	
  Cary Hughes

  	
   

  
	
   

  	
   

  	
  Director

  	
   

  

 

85

 

 

	
   

  	
   

  	
  LENDERS:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  SOCIETE
  GENERALE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Cary Hughes

  	
   

  
	
   

  	
   

  	
   

  	
  Cary Hughes

  	
   

  
	
   

  	
   

  	
   

  	
  Director

  	
   

  

 

 

	
   

  	
  THE ROYAL
  BANK OF SCOTLAND plc

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Phillip
  Ballard

  	
   

  
	
   

  	
   

  	
  Phillip
  Ballard

  	
   

  
	
   

  	
   

  	
  Senior Vice
  President

  	
   

  

 

 

	
   

  	
   

  	
  BANK OF
  AMERICA, N.A.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Steven A. Mackenzie

  
	
   

  	
   

  	
   

  	
  Steven A. Mackenzie

  
	
   

  	
   

  	
   

  	
  Vice President

  
					

 

 

	
   

  	
   

  	
  HIBERNIA
  NATIONAL BANK

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ David R. Reid

  
	
   

  	
   

  	
   

  	
  David R. Reid

  
	
   

  	
   

  	
   

  	
  Senior Vice President

  
					

 

 

	
   

  	
   

  	
  NATEXIS BANQUE POPULAIRES

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Donovan C. Broussard

  
	
   

  	
   

  	
   

  	
  Donovan C. Broussard

  
	
   

  	
   

  	
   

  	
  Vice President and Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Louis P. Laville, III

  
	
   

  	
   

  	
   

  	
  Louis P. Laville, III

  
	
   

  	
   

  	
   

  	
  Vice President and Manager

  
					

 

EXHIBIT A

 

ASSIGNMENT AND ACCEPTANCE

 

Dated               ,        

 

Reference is
made to the Second Amended and Restated Credit Agreement dated as of March 21,
2003 (as the same may be amended or modified from time-to-time, the “Credit
Agreement”) among Brigham Oil & Gas, L.P., a Delaware limited partnership
(the “Borrower”), Brigham Exploration Company, a Delaware corporation, Brigham,
Inc., a Nevada corporation, the lenders party thereto (the “Lenders”), and
Société Générale, as administrative agent (“Administrative Agent”) and as
issuing lender (“Issuing Lender”) for the Lenders.  Capitalized terms not otherwise defined in this Assignment and
Acceptance shall have the meanings assigned to them in the Credit Agreement.

 

Pursuant to
the terms of the Credit Agreement,
                       
wishes to assign and delegate        %(1) of
its rights and obligations under the Credit Agreement.  Therefore,
                       
(“Assignor”),                        
(“Assignee”), and the Administrative Agent agree as follows:

 

1.             The Assignor hereby sells and
assigns and delegates to the Assignee, and the Assignee hereby purchases and
assumes from the Assignor, without recourse to the Assignor and without
representation or warranty except for the representations and warranties
specifically set forth in clauses (i) and (ii) of Section 2, a
        % interest in and to all of the
Assignor’s rights and obligations under the Credit Agreement as of the
Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor’s Commitment, the Advances owing to the
Assignor, the Assignor’s Letter of Credit Exposure, and the Note held by the
Assignor.

 

2.             The Assignor (i) represents and
warrants that, prior to executing this Assignment and Acceptance, its
Commitment is
$                       ,
the aggregate outstanding principal amount of Advances owed to it by the
Borrower is
$                       ,
and its Pro Rata Share of the Letter of Credit Exposure is
$                       ;
(ii) represents and warrants that it is the legal and beneficial owner of the
interest being assigned by it hereunder and that such interest is free and
clear of any adverse claim; (iii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties, or
representations made in, or in connection with, the Credit Agreement or any
other Loan Document or the execution, legality, validity, enforceability,
genuineness, sufficiency, or value of the Credit Agreement or any other Loan
Document or any other instrument or document furnished pursuant thereto; (iv)
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Credit Party or the performance or observance
by any Credit Party of any of its respective obligations under the Credit
Agreement or any other Loan Document or any other instrument or document
furnished pursuant thereto; and (v) attaches the Note referred to in paragraph
1 above and requests that the Administrative Agent exchange such Note for a new
Note dated

 

(1)  Specify percentage in no more than 5 decimal points.

 

1

 

                       ,
        in the principal amount of
$                       
payable to the order of the Assignee and [a new Note dated
                       ,            in
the principal amount of
$                       payable
to the order of the Assignor.]

 

3.             The Assignee (i) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements referred to in Section 5.06 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Administrative Agent,
the Assignor, or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit decisions
in taking or not taking action under the Credit Agreement or any other Loan
Document; (iii) appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers under the Credit
Agreement and any other Loan Document as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; (iv) agrees that it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Agreement or any
other Loan Document are required to be performed by it as a Lender; (v)
specifies as its Lending Office (and address for notices) the office set forth
beneath its name on the signature pages hereof; (vi) attaches the forms prescribed
by the Internal Revenue Service of the United States certifying as to the
Assignee’s status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the Assignee under
the Credit Agreement and the Notes or such other documents as are necessary to
indicate that all such payments are subject to such rates at a rate reduced by
an applicable tax treaty(2), and (vii) represents that it is an Eligible
Assignee.

 

4.             The effective date for this Assignment
and Acceptance shall be
                       
(the “Effective Date”)(3) and following the execution of this Assignment and
Acceptance, the Administrative Agent will record it.

 

5.             Upon such recording, and as of the
Effective Date, (i) the Assignee shall be a party to the Credit Agreement for
all purposes, and, to the extent provided in this Assignment and Acceptance,
have the rights and obligations of a Lender thereunder and (ii) the Assignor
shall, to the extent provided in this Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Credit Agreement.

 

6.             Upon such recording, from and after
the Effective Date, the Administrative Agent shall make all payments under the
Credit Agreement and the Note in respect of the interest assigned hereby
(including, without limitation, all payments of principal, interest, letter of
credit fees and commitment fees) to the Assignee.  The Assignor and Assignee shall make all

 

(2)  If the Assignee is organized under the laws of a jurisdiction
outside the United States.

 

(3) 
See Section 11.06 of the Credit Agreement.  Such date shall be at least three Business Days after the date of
this Assignment and Acceptance, unless otherwise waived by the Administrative
Agent in its sole discretion.

 

2

 

appropriate adjustments in
payments under the Credit Agreement and the Note for periods prior to the
Effective Date directly between themselves.

 

7.             This Assignment and Acceptance
shall be governed by, and construed and enforced in accordance with, the laws
of the State of New York.

 

The parties
hereto have caused this Assignment and Acceptance to be duly executed as of the
date first above written.

 

	
   

  	
  [ASSIGNOR]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention: 

  	
   

  	
   

  
	
   

  	
  Telecopy No: (XXX) XXX-XXXX

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  [ASSIGNEE]

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Lending Office

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Address: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telecopy No: (XXX) XXX-XXXX

  	
   

  
										

 

3

 

Acknowledged [and approved](4) this
         day of
                 ,

200   :

 

SOCIÉTÉ GÉNÉRALE,

as Administrative Agent

 

 

	
  By:

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
					

 

[Approved this        day of
                  ,
200   :

 

 

	
  BRIGHAM OIL & GAS, L.P.

  	
   

  
	
   

  	
   

  
	
  By:

  	
  Brigham, Inc., its general partner

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
  ](5)

  
						

 

(4) 
Approval of Administrative Agent required if Assignee is not a Lender or
an Affiliate of a Lender.

(5) 
Provided no Default or Event of Default has occurred and is continuing,
the consent of the Borrower is required if Assignee is not a Lender or an
Affiliate of a Lender.

 

4

 

EXHIBIT B

 

COMPLIANCE CERTIFICATE

 

FOR THE
PERIOD
FROM             ,
200    TO          ,
200

 

This
certificate dated as of
                           ,
                 
is prepared pursuant to the Second Amended and Restated Credit Agreement dated
as of March 21, 2003 (as amended, supplemented or otherwise modified from time
to time, the “Credit Agreement”) among Brigham Oil & Gas, L.P., a Delaware
limited partnership (“Borrower”), Brigham Exploration Company, a Delaware
corporation, Brigham, Inc., a Nevada corpration, the lenders party thereto (the
“Lenders”), and Société Générale, as administrative agent for such Lenders (in
such capacity, the “Administrative Agent”). 
Unless otherwise defined in this certificate, capitalized terms that are
defined in the Credit Agreement shall have the meanings assigned to them by the
Credit Agreement.

 

Brigham
Exploration hereby certifies (a) that no Default or Event of Default has
occurred or is continuing, (b) that all of the representations and warranties
made by each of the Credit Parties in the Credit Agreement and the other Loan
Documents are true and correct in all material respects as if made on this date
(unless such representations and warranties are stated to relate to a specific
earlier date, in which case such representations and warranties shall be true
and correct in all material respect as of such earlier date), and (c) that as
of the date hereof, the following amounts and calculations were true and
correct:

 

	
  1.

  	
   

  	
  Section 6.22  Current Ratio.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
   

  	
  consolidated current assets

  of Brigham Exploration and its

  consolidated Subsidiaries

  (including the Unused Revolving

  Commitment Amount as

  of the date of calculation)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (b)

  	
   

  	
  consolidated current liabilities of

  Brigham Exploration and its

  consolidated Subsidiaries

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Current Ratio = (a) divided by (b)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Current Ratio

  	
   

  	
  1.00 to 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance

  	
   

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Section 6.23   Interest Coverage Ratio.

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (a)

  	
   

  	
  Consolidated Net Income

  	
   

  	
  $

  	
   

  
									

 

1

 

	
   

  	
   

  	
  (b)

  	
   

  	
  Interest Expense

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (c)

  	
   

  	
  taxes, depreciation, amortization,

  depletion, and other non-cash

  charges

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (d)

  	
   

  	
  all non-cash income

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (e)

  	
   

  	
  EBITDA = (a) + (b) + (c)

  – (d)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Interest Coverage Ratio = (e) divided by (b)

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Minimum Current Ratio for twelve-

  month period ending March 31, 2003

  	
   

  	
  2.75 to 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  For twelve-month period ending

  June 30, 2003 and each twelve-month

  period ending at the end of each fiscal

  quarter thereafter

  	
   

  	
  3.25 to 1.00

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance

  	
   

  	
  Yes

  	
  No

  
												

 

IN WITNESS
THEREOF, I have hereto signed my name to this Compliance Certificate as an
officer of Brigham Exploration and not in my individual capacity as
of                                ,                      .

 

	
   

  	
  BRIGHAM EXPLORATION COMPANY

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

EXHIBIT C

 

NOTICE OF BORROWING

 

[Date]

 

 

Société Générale, as Administrative
Agent

560 Lexington Avenue

New York, New York  10022

 

Attention:                                

 

Ladies and Gentlemen:

 

The undersigned, Brigham Oil & Gas, L.P., a Delaware limited
partnership (“Borrower”), refers to the Second Amended and Restated Credit
Agreement dated as of March 21, 2003 (as the same may be amended or modified from
time-to-time, the “Credit Agreement,” the defined terms of which are used in
this Notice of Borrowing unless otherwise defined in this Notice of Borrowing)
among the Borrower, Brigham Exploration Company, a Delaware corporation,
Brigham, Inc., a Nevada corporation, the lenders party thereto (the “Lenders”),
and Société Générale, as administrative agent (the “Administrative Agent”), and
hereby gives you irrevocable notice pursuant to Section 2.03(a) of the Credit
Agreement that the undersigned hereby requests a Borrowing, and in connection
with that request sets forth below the information relating to such Borrowing
(the “Proposed Borrowing”) as required by Section 2.03(a) of the Credit
Agreement:

 

(a)           The Business Day of the Proposed
Borrowing is                                      ,
         .

 

(b)           The aggregate amount of the Proposed
Borrowing is
$                          .

 

(c)           [The Interest Period
for each Eurodollar Rate Advance made as part of the Proposed Borrowing is
          month[s].]

 

The Borrower hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed Borrowing:

 

(i)                                     the
representations and warranties contained in the Credit Agreement and each of
the other Loan Documents are true and correct in all material respects, on and
as of the date of the Proposed Borrowing, before and after giving effect to
such Proposed Borrowing and to the application of the proceeds therefrom, as
though made on the date of the Proposed Borrowing (unless such representations
and warranties are stated to relate to a specific earlier date, in which case
such

 

1

 

representations and warranties shall be true and correct in all
material respect as of such earlier date);

 

(ii)                                  no
Default has occurred and is continuing, or would result from such Proposed
Borrowing or from the application of the proceeds therefrom; and

 

(iii)                               after
giving effect to such Proposed Borrowing, no Borrowing Base Deficiency exists.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  BRIGHAM OIL & GAS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brigham, Inc., its general partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

2

 

EXHIBIT D

 

NOTICE OF CONVERSION OR CONTINUATION

 

[Date]

 

 

Société Générale

560 Lexington Avenue

New
York, New York  10022

 

Attention:                                           

 

Ladies and Gentlemen:

 

The undersigned, Brigham Oil & Gas, L.P., a Delaware limited
partnership (the “Borrower”), refers to the Second Amended and Restated Credit
Agreement dated as of March 21, 2003 (as the same may be amended, modified, or
supplemented from time-to-time, the “Credit Agreement”, the defined terms of
which are used in this Notice of Conversion or Continuation unless otherwise
defined in this Notice of Conversion or Continuation) by and among the
Borrower, Brigham Exploration Company, a Delaware corporation, Brigham, Inc., a
Nevada corporation, the lenders party thereto (“Lenders”), and Société
Générale, as administrative agent (“Administrative Agent”) for the Lenders, and
hereby gives you irrevocable notice pursuant to Section 2.03(b) of the Credit
Agreement that the undersigned hereby requests a [Conversion] [Continuation] of
outstanding Revolving Advances, and in connection with that request sets forth
below the information relating to such [Conversion][Continuation] (the
“Proposed [Conversion][Continuation]”) as required by Section 2.03(b) of the
Credit Agreement:

 

(a)           The Business Day of
the Proposed [Conversion][Continuation] is
                                ,
      .

 

(b)           The aggregate amount of the existing
Advance to be Converted or Continued is $
                
(“Existing Advance”).

 

(c)           The Proposed
[Conversion][Continuation] consists of [a Conversion of the Existing Advance to
a [Base Rate Advance] [Eurodollar Rate Advance]] [a Continuation of the
Existing Advance as a Eurodollar Rate Advance].

 

[(d)          The Interest Period for the Proposed
[Conversion][Continuation] is        
month[s].]

 

The Borrower hereby certifies that the following statements are true on
the date hereof, and will be true on the date of the Proposed
[Conversion][Continuation]:

 

1

 

(i)            the representations and warranties
contained in the Credit Agreement and each of the other Loan Documents are true
and correct in all material respects on and as of the requested funding date of
this Proposed [Conversion][Continuation], before and after giving effect to
such Proposed [Conversion][Continuation] and to the application of the proceeds
from such Proposed [Conversion][Continuation], as though made on and as of such
date (unless such representations and warranties are stated to relate to a
specific earlier date, in which case such representations and warranties shall
be true and correct in all material respect as of such earlier date);

 

(ii)           no Default has occurred and is
continuing or would result from such Proposed [Conversion][Continuation] or
from the application of the proceeds therefrom; and

 

(iii)          after giving effect to such Proposed
[Conversion][Continuation], no Borrowing Base Deficiency exists.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIGHAM OIL & GAS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brigham, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

2

 

EXHIBIT E

 

NOTE

 

	
  $                                            

  	
                                     ,      

  

 

For value
received, the undersigned BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership (“Borrower”), hereby promises to pay to the order of
                
(“Payee”) the principal amount of
                                 
No/100 Dollars
($                           )
or, if less, the aggregate outstanding principal amount of the Advances (as
defined in the Credit Agreement referred to below) made by the Payee to the
Borrower, together with interest on the unpaid principal amount of the Advances
from the date of such Advances until such principal amount is paid in full, at
such interest rates, and at such times, as are specified in the Credit
Agreement.  The Borrower may make
prepayments on this Note in accordance with the terms of the Credit Agreement.

 

This Note is
one of the Revolving Notes referred to in, and is entitled to the benefits of,
and is subject to the terms of, the Second Amended and Restated Credit
Agreement dated as of March 21, 2003, (as the same may be amended or modified
from time to time, the “Credit Agreement”), among the Borrower, Brigham
Exploration Company, a Delaware corporation, Brigham, Inc., a Nevada corporation,
the lenders party thereto (the “Lenders”), and Société Générale, as
administrative agent (the “Administrative Agent”) for the Lenders. Capitalized
terms used in this Note that are defined in the Credit Agreement and not
otherwise defined in this Note have the meanings assigned to such terms in the
Credit Agreement.  The Credit Agreement,
among other things, (a) provides for the making of the Advances by the Payee to
the Borrower in an aggregate amount not to exceed at any time outstanding the
Dollar amount first above mentioned, the indebtedness of the Borrower resulting
from each such Advance being evidenced by this Note, and (b) contains
provisions for acceleration of the maturity of this Note upon the happening of
certain events stated in the Credit Agreement and for prepayments of principal
prior to the maturity of this Note upon the terms and conditions specified in
the Credit Agreement.

 

Both principal
and interest are payable in lawful money of the United States of America to the
Administrative Agent at 560 Lexington Avenue, New York, New York 10022 or such
other location or address specified by the Administrative Agent to the Borrower
in same day funds.  The Payee shall
record payments of principal made under this Note, but no failure of the Payee
to make such recordings shall affect the Borrower’s repayment obligations under
this Note.

 

This Note is
secured by the Security Instruments and guaranteed pursuant to Article VIII of
the Credit Agreement.

 

Except as
specifically provided in the Credit Agreement, the Borrower hereby waives
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration, and any other notice of any kind.  No failure to exercise, and no delay in exercising, any

 

1

 

rights hereunder on the part of
the holder of this Note shall operate as a waiver of such rights.

 

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

THIS NOTE AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
THE PARTIES.

 

 

	
   

  	
  BRIGHAM OIL & GAS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brigham, Inc., its general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

2

 

EXHIBIT F

 

AMENDED AND RESTATED MORTGAGE, DEED OF TRUST,

ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, 

FIXTURE FILING, AND FINANCING STATEMENT

 

FROM

 

BRIGHAM OIL & GAS, L.P.
a Delaware limited partnership,

as grantor and mortgagor,

 

TO

 

CARY HUGHES, 
as Trustee

 

FOR THE BENEFIT OF

 

SOCIÉTÉ GÉNÉRALE,
as Administrative Agent,

as beneficiary,

 

AND TO

 

SOCIÉTÉ GÉNÉRALE,
as Administrative Agent,

as Mortgagee

 

NOTICE
TO MORTGAGOR:

 

A
POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  WITH RESPECT TO PORTIONS OF THE MORTGAGED PROPERTY LOCATED IN THE
STATE OF OKLAHOMA, SUCH POWER OF SALE IS GRANTED PURSUANT TO THE OKLAHOMA
MORTGAGE FORECLOSURE ACT (AS DEFINED BELOW). IN CERTAIN STATES, A POWER OF SALE
MAY ALLOW TRUSTEE OR MORTGAGEE, AS APPLICABLE, TO TAKE THE MORTGAGED PROPERTY
AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE
OF AN EVENT OF DEFAULT BY MORTGAGOR UNDER THIS INSTRUMENT. THIS INSTRUMENT
CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS. THIS INSTRUMENT SECURES PAYMENT OF
FUTURE ADVANCES.  THIS INSTRUMENT COVERS
ALL PRODUCTS AND PROCEEDS OF THE MORTGAGED PROPERTY.  

 

THIS
INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN MINERALS OR THE LIKE (INCLUDING
OIL AND GAS) BEFORE EXTRACTION AND THE SECURITY INTEREST CREATED BY THIS
INSTRUMENT ATTACHES TO SUCH MINERALS AS EXTRACTED AND TO ACCOUNTS RESULTING
FROM THE SALE THEREOF AT THE WELLHEAD. THIS INSTRUMENT COVERS MORTGAGOR’S
INTEREST IN FIXTURES.  THIS
FINANCING STATEMENT IS TO BE FILED FOR RECORD, AMONG OTHER PLACES, IN THE REAL
ESTATE RECORDS.

 

1

 

AMENDED AND RESTATED MORTGAGE, DEED OF TRUST,

ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, 

FIXTURE FILING, AND FINANCING STATEMENT

 

THIS AMENDED
AND RESTATED MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY
AGREEMENT, FIXTURE FILING, AND FINANCING STATEMENT (this ”Mortgage”)
is made effective as of March          ,
2003 (the “Effective Date”) by BRIGHAM
OIL & GAS, L.P., a Delaware limited partnership, whose address
for notice is 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas
78730, as grantor and mortgagor (“Mortgagor”) to:

 

•                                          CARY HUGHES, as Trustee, whose address for
notice is 1221 Avenue of the Americas , New York, New York 10020 (“Trustee”)
for the benefit of SOCIÉTÉ GÉNÉRALE,
as beneficiary, whose address for notice is 1221 Avenue of the Americas ,
New York, New York 10020, as Administrative Agent (together with any successor
administrative agents, “Administrative Agent”); and

 

•              Administrative
Agent, as mortgagee (“Mortgagee”),

 

in each case for the benefit of
the Administrative Agent and the Lenders.

 

RECITALS:

 

A.            Mortgagor, Administrative Agent (as
Lead Arranger, Administrative Agent and Issuing Lender), The Royal Bank of
Scotland plc (“RBS”) (as Co-Arranger and Documentation Agent), Bank of
America, N.A. (“BOA”) (as Syndication Agent), and certain other lenders
are parties to that certain Second Amended and Restated Credit Agreement dated
effective as of March
             ,
2003, and all supplements thereto and amendments or modifications thereof, and
all agreements, given in substitution therefore or in restatement, renewal or
extension thereof, in whole or in part (the “Second Amended and Restated
Credit Agreement”).  Administrative
Agent, RBS, BOA and the other lenders party to the Second Amended and Restated
Credit Agreement from time to time may be referred to periodically herein as,
individually, a “Lender” and, collectively, as the “Lenders.”

 

B.            Mortgagor, the Lenders and the
Administrative Agent entered into the Second Amended and Restated Credit
Agreement to refinance the indebtedness and obligations arising under that
certain Amended and Restated Credit Agreement dated February 17, 2000 among
Mortgagor, Bank of Montreal (as agent) (“BMO”), and certain other lending
institutions (as lenders thereunder) as amended by that certain First
Amendment to Amended and Restated Credit Agreement dated as of October 31, 2000
and that certain Second Amendment to Amended and Restated Credit Agreement
dated as of December 31, 2001 (the “First Amended and Restated Credit
Agreement”).  In connection with
that refinancing, all of the indebtedness and liens arising under the First
Amended and Restated Credit Agreement were or will be assigned to
Administrative Agent and the Lenders under the Second Amended and Restated
Credit Agreement, so that all indebtedness and obligations arising under the Second
Amended and Restated Credit Agreement shall be secured by such liens and
security interests as were created pursuant to the First Amended and Restated
Credit Agreement and such other liens as provided for herein.  The Second Amended and Restated Credit
Agreement constitutes for all
purposes an

 

2

 

amendment and restatement of the First Amended and Restated Credit
Agreement and not a new or substitute agreement.

 

C.            Pursuant to the Second Amended and Restated
Credit Agreement, Mortgagor has agreed to enter into this Mortgage.  In addition, it is a condition to the
obligation of each Lender to make such Lender’s initial Advance as part of the
initial Borrowing and the obligation of the Issuing Lender to issue the initial
Letter of Credit that this Mortgage be executed and delivered to Trustee and to
Mortgagee.

 

D.            This Mortgage constitutes for all
purposes an amendment and restatement of the security instruments more
particularly described on Schedule I attached hereto and made a part
hereof (collectively, the “Original Mortgages”) and not a new or substitute
security instrument.

 

NOW,
THEREFORE, in consideration of the foregoing, in order to comply with the
terms, provisions, and conditions of the Second Amended and Restated Credit
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor hereby enters into this
Mortgage on the following terms and conditions:

 

ARTICLE I

 

Granting Clause; Description of Indebtedness Secured

 

Section 1.01           Granting Clause.  In order to secure the payment of the
Indebtedness (as hereinafter defined in Section 1.03) and in order to secure
the performance of the covenants, obligations, agreements, warranties, and
undertakings herein contained, (x) with respect to any portion of the
Mortgaged Property (as hereinafter defined) that is located in or is subject to
the laws of the State of Texas or any other state pursuant to the law of which
a deed of trust is a lawful security instrument, Mortgagor does hereby GRANT,
BARGAIN, SELL, ASSIGN, PLEDGE, GIVE, MORTGAGE, WARRANT, SET OVER, TRANSFER,
HYPOTHECATE, and CONVEY unto Trustee and Trustee’s successors and substitutes
in trust hereunder IN TRUST WITH POWER OF SALE, for the use and benefit of
Administrative Agent and the Lenders, all of Mortgagor’s right, title, and
interest, whether now owned or hereafter acquired, in the real and personal
property, rights, titles, interests and estates described hereinafter (the “Trust
Estate Property”) and (y) with respect to any portion of the Mortgaged
Property (as hereinafter defined) that is located in or is subject to the laws
of the State of Oklahoma or any state pursuant to the law of which a deed of
trust is not a lawful security instrument, Mortgagor does hereby GRANT,
BARGAIN, SELL, ASSIGN, PLEDGE, GIVE, MORTGAGE, WARRANT, SET OVER, TRANSFER,
HYPOTHECATE, and CONVEY to Mortgagee for the use and benefit of Administrative
Agent and the Lenders all of Mortgagor’s right, title, and interest, whether
now owned or hereafter acquired, in the real and personal property, rights,
titles, interests and estates described hereinafter (the “Non-Trust Estate
Property”) (the Trust Estate Property and the Non-Trust Estate Property are
herein collectively called the “Mortgaged Property”):

 

(a)           All oil and gas
and/or oil, gas and mineral leases and leasehold interests, fee mineral
interests, term mineral interests, subleases, farmouts, royalties, overriding
royalties, net profits interests, production payments and similar interests or
estates

 

3

 

described on Exhibit
A attached hereto or constituting interests in the lands described on Exhibit
A attached hereto, including, without limitation, any reversionary or
carried interests relating to any of the foregoing, together with any
instrument executed in amendment, correction, modification, confirmation,
renewal or extension of the same (collectively, the “Hydrocarbon Property”),
and including specifically, but without limitation, the undivided interests of
Mortgagor which are represented, warranted, and more particularly described on Exhibit
A hereto;

 

(b)           All rights, titles,
interests, estates, tenements, hereditaments, and appurtenances now owned or
existing or hereafter acquired by Mortgagor in and to:  (i) all production units and drilling
and spacing units (and the property covered thereby) which may affect all or
any portion of the Hydrocarbon Property including those units now or hereafter
pooled or unitized with the Hydrocarbon Property; (ii) all presently
existing or future unitization, communitization, pooling agreements and
declarations of pooled units and the units created thereby, including, but not
limited to, pooling orders of the Oklahoma Corporation Commission (together
with all other units created under orders, regulations, rules or other official
acts of any Governmental Authority having jurisdiction over any of the
Mortgaged Property and any units created solely among working interest owners
pursuant to operating agreements or otherwise) which may affect all or any
portion of the Hydrocarbon Property including, without limitation, those units,
if any, which may be described or referred to on attached Exhibit A;
(iii) all operating agreements, production sales or other contracts,
farmout agreements, farm-in agreements, area of mutual interest agreements,
joint development agreements, joint exploration agreements, equipment leases
and other agreements described or referred to in this Mortgage or which cover,
affect or relate to any of the Hydrocarbon Property or interests in the
Hydrocarbon Property described or referred to herein or on Exhibit A or
to the production, sale, purchase, exchange, processing, handling, storage,
transporting or marketing of the Hydrocarbons (hereinafter defined) from or
attributable to such Hydrocarbon Property or interests; and (iv) subject to
applicable restrictions on disclosure and/or transfer, all geological,
geophysical, engineering, accounting, title, legal, and other technical or
business data concerning the Mortgaged Property, the Hydrocarbons in which
Mortgagor can otherwise grant a security interest, and all books, files,
records, magnetic media, computer records, and other forms of recording or obtaining
access to such data;

 

(c)           All rights, titles,
interests and estates now owned or hereafter acquired by Mortgagor in and to
all oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline,
condensate, distillate, and all other liquid and gaseous hydrocarbons produced
or to be produced in conjunction therewith from a well bore and all products,
by-products, and other substances derived therefrom or the processing thereof,
and all other minerals and substances produced in conjunction with such
substances, including, but not limited to, sulfur, geothermal steam, water,
carbon dioxide, helium, and any and all minerals, ores, or substances of value
and the products and proceeds therefrom (collectively called the “Hydrocarbons”)
in and under and which may be produced and saved from or attributable to the
Hydrocarbon Property, the lands pooled or unitized therewith and Mortgagor’s
interests therein, including all oil in tanks, gas in storage, and all rents,
issues, profits, proceeds, products, revenues and other income from or

 

4

 

attributable
to the Hydrocarbon Property, the lands pooled or unitized therewith and
Mortgagor’s interests therein which are subjected to the liens and security
interests of this Mortgage;

 

(d)           All tenements,
hereditaments, appurtenances and properties in anywise appertaining, belonging,
affixed or incidental to the Hydrocarbon Property or the rights, titles,
interests and estates described or referred to in paragraphs (a) and (b) above,
which are now owned or which may hereafter be acquired by Mortgagor, including,
without limitation, any and all property, real or personal, now owned or
hereafter acquired and situated upon, used, held for use, or useful in
connection with the operating, working or development of any of such
Hydrocarbon Property or the lands pooled or unitized therewith (excluding
drilling rigs, trucks, automotive equipment or other personal property which
may be taken to the 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, field separators, liquid
extraction plants, plant compressors, pumps, pumping units, pipelines, sales and
flow lines, gathering systems, field gathering systems, salt water disposal
facilities, 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, servitudes, licenses and other surface and subsurface
rights together with all additions, substitutions, replacements, accessions and
attachments to any and all of the foregoing properties;

 

(e)           Any property that
may from time to time hereafter, by delivery or by writing of any kind, be
subjected to the lien and security interest hereof by Mortgagor or by anyone on
Mortgagor’s behalf; and Trustee is hereby authorized to receive the same at any
time as additional security hereunder;

 

(f)            All of the rights,
titles, interests and estates of every nature whatsoever now owned or hereafter
acquired by Mortgagor in and to the Hydrocarbon Property, including, without
limitation, all such rights, titles, interests and estates as the same may be
enlarged by the discharge of any payments out of production or by the removal
of any charges or Permitted Encumbrances (as hereinafter defined in Section
3.01) to which any of such rights, titles, interests or estates are subject, or
otherwise; all rights of Mortgagor to liens and security interests securing
payment of proceeds from the sale of production from the Mortgaged Property,
including, but not limited to, those liens and security interests provided for
in Section 9.343 of the Texas Business and Commerce Code, as amended from time
to time; together with any and all renewals and extensions of any of such liens
and security interests; all contracts and agreements supplemental to or
amendatory of or in substitution for the contracts and agreements described or
mentioned above, including, without limitation, any such contracts and
agreements comprising or giving rise to any portion of the Hydrocarbon
Property; and any and all additional interests of any kind hereafter acquired
by Mortgagor in and to such rights, titles, interests or estates;

 

(g)           All accounts,
contract rights, inventory, general intangibles, insurance contracts and
insurance proceeds constituting a part of, relating to or arising out of those

 

5

 

portions of
the Mortgaged Property which are described in paragraphs (a) through (f) above
and all proceeds and products of all such portions of the Mortgaged Property
and payments in lieu of production (such as “take or pay” payments), whether
such proceeds or payments are goods, money, documents, instruments, chattel
paper, securities, accounts, general intangibles, fixtures, real property, or
other assets;

 

(h)           All payments
received in lieu of production from the Mortgaged Property (regardless of
whether such payments accrued, and/or the events which gave rise to such
payments occurred, on, before, or after the Effective Date), including, without
limitation, “take or pay” payments and similar payments, payments received in
settlement of or pursuant to a judgment rendered with respect to take or pay or
similar obligations or other obligations under a production sales contract,
payments received in buyout or buydown or other settlement of a production
sales contract, and payments received under a gas balancing or similar
agreement as a result of (or received otherwise in settlement of or pursuant to
a judgment rendered with respect to) rights held by Mortgagor as a result of
Mortgagor (and/or its predecessors in title) taking or having taken less
Hydrocarbons from lands covered by the Mortgaged Property (or lands pooled or
unitized therewith) than their ownership of the Mortgaged Property would
entitle Mortgagor to receive; and

 

(i)             Any rights or interests
of Mortgagor under any present or future hedge or swap agreements, cap, floor,
collar, exchange, forward or other hedge or protection agreements or
transactions relating to Hydrocarbons, or any option with respect to such
agreement or transaction now existing or hereafter entered into by or on behalf
of Mortgagor.

 

TO HAVE AND TO HOLD the Trust
Estate Property unto Trustee for the benefit of Administrative Agent and the
Lenders, and Trustee’s successors in trust and assigns forever, and the
Non-Trust Estate Property unto Mortgagee for the benefit of the Administrative
Agent and the Lenders, and Mortgagee’s successors and assigns forever, in each
case upon the terms, provisions, and conditions set forth herein.  Mortgagor does hereby bind itself, and its
successors and permitted assigns, to warrant and forever defend all and
singular the Mortgaged Property unto Trustee and Mortgagee against every Person
whomsoever lawfully claiming or to claim the same, or any part thereof.

 

With respect to any Mortgaged Property
located in the state of Oklahoma, Mortgagor hereby grants to Mortgagee the
right and power to foreclose this Mortgage pursuant to the Oklahoma Power of
Sale Mortgage Foreclosure Act, 46 Oklahoma Statutes, §40, et. seq.
(the “Oklahoma Mortgage Foreclosure Act”) as presently in force and as may be
amended from time to time.

 

Section 1.02           Grant of Security Interest.  To further secure the Indebtedness (as
hereinafter defined in Section 1.03), Mortgagor hereby grants to Mortgagee for
the benefit of the Administrative Agent and the Lenders, subject to the
reservations and restrictions set forth herein below, a security interest in
and to the Mortgaged Property (whether now or hereafter acquired by operation
of law or otherwise) insofar as the Mortgaged Property consists of equipment,
accounts, contract rights, general intangibles (subject in the case of
geological and geophysical data (including without limitation raw data and
interpretations) contract rights and general

 

6

 

intangibles to any existing
restrictions on disclosure and/or transfer), insurance contracts, insurance
proceeds, inventory, Hydrocarbons, fixtures and any and all other personal
property of any kind or character defined in and subject to the provisions of
the Uniform Commercial Code presently in effect in the jurisdiction in which
the Mortgaged Property is situated (“Applicable UCC”), including the
proceeds and products from any and all of such personal property, whether such
proceed or products are goods, money, documents, instruments, chattel paper,
securities, accounts, general intangibles, fixtures, real or immovable
property, personal or movable property, or other assets.  In addition to all other rights and remedies
afforded to Mortgagee pursuant to this Mortgage, upon the happening of any
Event of Default, Mortgagee is and shall be entitled to all of the rights,
powers and remedies afforded a secured party by the Applicable UCC with
reference to the personal property and fixtures in which Mortgagee has been
granted a security interest herein, or Trustee or Mortgagee may proceed as to
both the real and personal property covered hereby in accordance with the
rights and remedies granted under this Mortgage in respect of the real property
covered hereby.  Such rights, powers and
remedies shall be cumulative and in addition to those granted to Trustee or
Mortgagee under any other provision of this Mortgage or under any other
Security Instrument.  Written notice
mailed to Mortgagor as provided herein at least ten (10) days prior to the date
of public sale of any part of the Mortgaged Property which is personal property
subject to the provisions of the Applicable UCC, or prior to the date after
which private sale of any such part of the Mortgaged Property will be made,
shall constitute reasonable notice.  It
is Mortgagor’s intention that the security interest granted pursuant to this
Mortgage encumber Mortgagor’s interest in As-Extracted Collateral (as hereinafter
defined).  For purposes of this
Mortgage, the term “As-Extracted Collateral” shall have the meaning ascribed to
such term in the Applicable UCC.

 

Section 1.03           Indebtedness Secured.  This Mortgage is executed and delivered by
Mortgagor to secure and enforce the following (collectively, the “Indebtedness”):

 

(a)           Full payment and
performance of all indebtedness and other obligations now or hereafter incurred
or arising pursuant to the provisions of the Second Amended and Restated Credit
Agreement;

 

(b)           Full payment and
performance of all promissory notes, letters of credit, or other evidences of
indebtedness issued from time to time pursuant to the Second Amended and
Restated Credit Agreement, including, without limitation, those certain
promissory notes having a maturity date of                             ,
2006;

 

(c)           All indebtedness and
other obligations now or hereafter incurred or arising pursuant to the
guarantee by the Guarantors in favor of Administrative Agent and the Lenders
pursuant to the Second Amended and Restated Credit Agreement, pursuant to which
guarantee the Guarantors have guaranteed the prompt payment at maturity of the
Obligations (as defined in the Second Amended and Restated Credit Agreement).

 

(d)           Payment of and
performance of any and all present or future obligations of Mortgagor or any
Credit Party according to the terms of any present or future interest or
currency rate swap, rate cap, rate floor, rate collar, exchange transaction,
forward rate agreement, or other exchange or rate protection agreements or any
option with respect to any such transaction now existing or hereafter entered
into between Mortgagor or any

 

7

 

Credit Party,
on the one hand, and any party that was a Lender (or any Affiliate of a Lender)
at the time such transaction was entered into, on the other;

 

(e)           Payment of and
performance of any and all present or future obligations of Mortgagor or any
Credit Party according to the terms of any present or future swap agreements,
cap, floor, collar, exchange transaction, forward agreement, or other exchange
or protection agreements relating to Hydrocarbons, or any option with respect
to any such transaction now existing or hereafter entered into between
Mortgagor or any Credit Party, on the one hand, and any party that was a Lender
(or any Affiliate of a Lender) at the time such transaction was entered into,
on the other; and

 

(f)            Without limiting
the generality of the foregoing, all post-petition interest, expenses, and
other duties and liabilities with respect to indebtedness or other obligations
described in the foregoing subsections (a) through (f) of this Section 1.03,
which would be owed but for the fact that such duties and liabilities are
unenforceable or not allowable due to the existence of a bankruptcy,
reorganization, or similar proceeding.

 

Section 1.04           Fixture Filing, Etc.  Without in any manner limiting the
generality of any of the other provisions of this Mortgage: (i) some
portions of the goods described or to which reference is made herein are or are
to become fixtures on the land described or to which reference is made herein
or on attached Exhibit A; (ii) the security interests created
hereby under applicable provisions of the Applicable UCC will attach to
Hydrocarbons (minerals including oil and gas) or the accounts resulting from
the sale thereof at the wellhead or minehead located on the land described or
to which reference is made herein; and (iii) this Mortgage is to be filed
of record in the real estate records as a fixture filing with respect to all
fixtures comprising any part of the Mortgaged Property and as a financing
statement pursuant to the Applicable UCC with respect to any As-Extracted
Collateral and any other personal property comprising any part of the Mortgaged
Property.  Mortgagor is the record owner
of the real estate or interests in the real estate comprised of the Mortgaged
Property.

 

Section 1.05           Defined Terms; Interpretation.  Initially-capitalized terms not otherwise
specifically defined herein shall have the meaning ascribed to such terms in
the Second Amended and Restated Credit Agreement.  All other rules of interpretation set forth in Section 1.05 of
the Second Amended and Restated Credit Agreement shall apply to this Mortgage
and are hereby incorporated herein by reference.

 

ARTICLE II

 

Assignment of Production

 

Section 2.01           Assignment.  Mortgagor has hereby absolutely and
unconditionally assigned, transferred, set over, and conveyed, and does hereby
absolutely and unconditionally assign, transfer, set over, and convey unto
Mortgagee, its successors and assigns, all of the Hydrocarbons and all products
obtained or processed therefrom, and the revenues and proceeds now and
hereafter attributable to the Hydrocarbons and said products and all payments
in lieu of the Hydrocarbons such as “take or pay” payments or settlements,
together with the immediate and continuing right to collect and receive all of
the foregoing (the “Production Proceeds”). 
The

 

8

 

Hydrocarbons and products are
to be delivered into pipelines connected with the Mortgaged Property, or to the
purchaser thereof, to the credit of Mortgagee, free and clear of all taxes,
charges, costs, and expenses; and all such revenues and proceeds shall be paid
directly to Mortgagee, at its banking quarters in New York, New York with no
duty or obligation of any party paying the same to inquire into the rights of
Mortgagee to receive the same, what application is made thereof, or as to any
other matter.  Mortgagor agrees to
perform all such acts, and to execute all such further assignments, transfers
and division orders, and other instruments as may be required or desired by
Mortgagee or any party in order to have said proceeds and revenues so paid to
Mortgagee.  Mortgagee is fully
authorized to receive and receipt for said revenues and proceeds; to endorse
and cash any and all checks and drafts payable to the order of Mortgagor or
Mortgagee for the account of Mortgagor received from or in connection with said
revenues or proceeds and to hold the proceeds thereof in a bank account as
additional collateral securing the Indebtedness; and to execute transfer and
division orders in the name of Mortgagor, or otherwise, with warranties binding
Mortgagor.  All proceeds received by
Mortgagee pursuant to this assignment shall be applied as provided in the other
Loan Documents.  Mortgagee shall not be
liable for any delay, neglect, or failure to effect collection of any proceeds
or to take any other action in connection therewith or hereunder; but Mortgagee
shall have the right, at its election, in the name of Mortgagor or otherwise,
to prosecute and defend any and all actions or legal proceedings deemed
advisable by Mortgagee in order to collect such funds and to protect the interests
of Mortgagee, and/or Mortgagor, with all costs, expenses and attorneys’ fees
incurred in connection therewith being paid by Mortgagor.  Mortgagor hereby appoints Mortgagee as its
attorney-in-fact to pursue any and all rights of Mortgagor to liens on and
security interests in the Hydrocarbons securing payment of proceeds of runs
attributable to the Hydrocarbons.  In
addition to the rights granted to Trustee and/or Mortgagee in this Mortgage,
Mortgagor hereby further transfers and assigns to Mortgagee any and all such
liens, security interests, financing statements or similar interests of
Mortgagor attributable to its interest in the Hydrocarbons and proceeds of runs
therefrom arising under or created by said statutory provision, judicial
decision or otherwise.  The power of
attorney granted to Mortgagee in this Section 2.01, being coupled with an
interest, shall be irrevocable so long as the Indebtedness or any part thereof
remains unpaid.

 

Section 2.02           Rights Under Texas Act.  Mortgagor hereby grants, sells, assigns,
sets over and mortgages unto Mortgagee during the term hereof, all of
Mortgagor’s rights and interests pursuant to the provisions of Section 9.343 of
the Texas Business and Commerce Code, hereby vesting in Mortgagee all of
Mortgagor’s rights as an interest owner to the continuing security interest in
and lien upon the Mortgaged Property.

 

Section 2.03           No Modification of Payment
Obligations.  Nothing herein
contained shall modify or otherwise alter the obligation of Mortgagor to make
prompt payment of all principal and interest owing on the Indebtedness when and
as the same become due regardless of whether the proceeds of the Hydrocarbons
are sufficient to pay the same and the rights provided in accordance with the
foregoing assignment provision shall be cumulative of all other security of any
and every character now or hereafter existing to secure payment of the
Indebtedness.

 

Section 2.04           Release from Liability;
Indemnification.  Administrative
Agent and its successors and assigns are hereby absolutely absolved from all
liability for failure to enforce collection of the proceeds from runs
attributable to the Hydrocarbons and from all other

 

9

 

responsibility in connection
therewith, except the responsibility to account to Mortgagor for funds actually
received by Administrative Agent. 
Mortgagor agrees to indemnify and hold harmless Administrative Agent,
including, for purposes of this paragraph, Administrative Agent’s directors,
officers, partners, employees, and agents and any persons owned or controlled
by any affiliate of Administrative Agent, from and against all claims, demands,
liabilities, losses, damages (including, without limitation, consequential,
punitive, and special damages), causes of action, judgments, penalties, costs
and reasonable out-of-pocket expenses (including, without limitation,
reasonable attorneys’ fees and expenses) imposed upon, asserted against, or
incurred or paid by Administrative Agent by reason of the assertion that Administrative
Agent has received, either before or after payment in full of the Indebtedness,
funds from the production of Hydrocarbons. 
The foregoing indemnities shall not terminate upon the expiration,
termination, or cancellation of the Second Amended and Restated Credit
Agreement or this Mortgage, but shall survive such expiration, termination, or
cancellation, as well as any foreclosure of this Mortgage or any conveyance in
lieu of foreclosure, and the repayment of the Indebtedness and the discharge and
release of this Mortgage and any other documents evidencing and/or securing the
Indebtedness.  Without limiting the generality of the foregoing, it is the
intention of Mortgagor and Mortgagor hereby agrees that the foregoing
indemnities shall apply to each indemnified party with respect to all claims,
demands, liabilities, losses, damages (including, without limitation,
consequential, punitive, and special damages), causes of action, judgments,
penalties, costs, and expenses (including, without limitation, reasonable
attorneys’ fees and expenses) which in whole or in part are caused by or arise
out of the negligence of any indemnified party.  Notwithstanding the foregoing, however, the indemnities
set forth in this Section 2.04 shall not apply to any particular indemnified
party (but shall apply to the other indemnified parties) to the extent the
subject of the indemnification is caused by or arises out of the gross
negligence or willful misconduct of such pericular indemnified party.

 

Section 2.05           Absolute Obligation of Credit
Parties.  Nothing herein contained
shall detract from or limit the obligations of any Mortgagor or any other
Credit Party to make payment as required pursuant to the terms of the Loan
Documents, regardless of whether the assignment of production described in this
Article II is sufficient to pay same, and the rights under this Article II
shall be cumulative of all other rights of Administrative Agent and any other
Lender under the Loan Documents.

 

ARTICLE III

 

Representations, Warranties and Covenants

 

In order to
induce Administrative Agent and the Lenders to enter into the transactions
described in the Second Amended and Restated Credit Agreement, Mortgagor hereby
represents, warrants and covenants, to Trustee, Administrative Agent, each of
the Lenders, and to Mortgagee as follows:

 

Section 3.01           Title.  To the extent of the undivided interests in
the wells specified on attached Exhibit A, Mortgagor is possessed of
such interests in the Mortgaged Property, and Mortgagor has, and Mortgagor
covenants to maintain, good and indefeasible title to the Mortgaged
Property.  The Mortgaged Property is
free of any and all Liens (as defined in the

 

10

 

Second Amended and Restated
Credit Agreement) except Permitted Liens (as defined in the Second Amended and
Restated Credit Agreement) and Liens, if any, described in Exhibit A
(collectively, the “Permitted Encumbrances”).

 

Section 3.02           Defend Title.  This Mortgage is, and always will be kept, a
direct first lien and security interest upon the Mortgaged Property subject
only to the Permitted Encumbrances, and, except for Permitted Encumbrances,
Mortgagor will not create or suffer to be created or permit to exist any lien,
security interest or charge prior or junior to or on a parity with the lien and
security interest of this Mortgage upon the Mortgaged Property or any part
thereof or upon the rents, issues, revenues, profits and other income
therefrom.  Mortgagor hereby warrants
and Mortgagor does by these presents agree to forever defend the Mortgaged
Property against the claims and demands of all other persons whomsoever and to
maintain and preserve the lien created hereby so long as any of the
Indebtedness secured hereby remains unpaid. 
Should an adverse claim be made against or a cloud develop upon the
title to any part of the Mortgaged Property, Mortgagor agrees it will
immediately defend against such adverse claim or take appropriate action to
remove such cloud at Mortgagor’s cost and expense, and Mortgagor further agrees
that Trustee and/or Mortgagee may take such other action as they deem advisable
to protect and preserve their interests in the Mortgaged Property, and in such
event Mortgagor will indemnify Trustee and Mortgagee against any and all cost,
attorney’s fees and other expenses which they may incur in defending against
any such adverse claim or taking action to remove any such cloud.

 

Section 3.03           Not a Foreign Person.  Mortgagor is not a “foreign person” within
the meaning of the Internal Revenue Code of 1986, as amended (hereinafter
called the “Code”), Sections 1445 and 7701 (i.e. Mortgagor is not a
non-resident alien, foreign corporation, foreign partnership, foreign trust or
foreign estate as those terms are defined in the Code and any regulations
promulgated thereunder).

 

Section 3.04           Existence; Power to Create Lien
and Security; Enforceable Obligations.

 

(a)           Mortgagor is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation and in good standing and qualified to do business
in each jurisdiction where its ownership or lease of any of the Mortgaged
Property or conduct of its business requires such qualification and where the
failure to so qualify could reasonably be expected to cause a Material Adverse
Change.

 

(b)           The execution,
delivery, and performance by Mortgagor of this Mortgage and the consummation of
the transactions contemplated hereby and thereby (i) are within such
Mortgagor’s powers, (ii) have been duly authorized by all necessary governing
action, (iii) do not contravene (A) Mortgagor’s governance documents or (B) any
Legal Requirement or any material contractual restriction binding on or
affecting Mortgagor, and (iv) will not result in or require the creation or
imposition of any Lien upon any of the material Property of any Credit Party
prohibited by the Second Amended and Restated Credit Agreement.

 

(c)           This Mortgage has
been duly executed and delivered by Mortgagor. 
This Mortgage is the legal, valid, and binding obligation of Mortgagor
enforceable against

 

11

 

Mortgagor in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors’ rights generally and by general principles of equity.

 

Section 3.05           Net Revenue and Cost Bearing
Interest.  With respect to each well
listed on Exhibit A hereto which comprises a part of the Mortgaged
Property, Mortgagor’s ownership of such Mortgaged Property does and will, with
respect to each such well (whether such well is presently unitized or is
presently producing on a lease basis) (a) entitle Mortgagor to receive (subject
to the terms and conditions of this Mortgage) a decimal share of the
Hydrocarbons produced from, or allocated to, such well equal to not less than
the decimal share set forth on Exhibit A in connection with such well
under the column on Exhibit A designated by the words “Net Revenue
Interest”, the abbreviation “NRI”, or words or abbreviations of similar import,
and (b) cause Mortgagor to be obligated to bear a decimal share of the cost of
exploration, development, and operation of such well not greater than the
decimal share set forth in Exhibit A in connection with such well under
the column on Exhibit A designated by the words “Operating Interest” or
“Working Interest”, the abbreviation “WI”, or words or abbreviations of similar
import (unless there is a corresponding increase in the Net Revenue
Interest).  The shares of production
which Mortgagor is entitled to receive and the shares of expenses which
Mortgagor is obligated to bear are not, and will not be, subject to change
other than changes which (i) arise pursuant to non-consent provisions of
operating agreements in connection with operations proposed after the effective
date of this Mortgage, or (ii) are expressly described on Exhibit A.

 

Section 3.06           Rentals Paid; Leases in Effect.  Mortgagor shall maintain all leases and
agreements comprising or relating to the Mortgaged Property in compliance with
the requirements of the Second Amended and Restated Credit Agreement.

 

Section 3.07           Operation of Mortgaged Property.

 

(a)           The Mortgaged
Property (and properties unitized therewith) is, and hereafter will be, maintained,
operated, and developed in compliance with the requirements of the Second
Amended and Restated Credit Agreement.

 

(b)           To the extent any
interest owned by Mortgagor in the Mortgaged Property is not a working
interest, Mortgagor covenants and agrees to take all reasonable action and to
exercise all reasonable rights and remedies as are available to Mortgagor to
cause the owner or owners of the working interest in such properties to comply
with the covenants and agreements set forth in this Mortgage.

 

(c)           To the extent
Mortgagor’s ownership of any particular well constituting the Mortgaged
Property is a working interest but such well is operated by a party other than
Mortgagor, Mortgagor agrees to take all such action and to exercise all rights
and remedies as are reasonably available to Mortgagor (including, without
limitation, all rights under any operating agreement) to cause the party who is
the operator of such well to comply with the covenants and agreements set forth
in this Mortgage.

 

12

 

Section 3.08           Abandonment, Sales.  Mortgagor will not sell, lease, assign,
transfer or otherwise dispose of or abandon any of the Mortgaged Property
except in compliance with the requirements of the Second Amended and Restated
Credit Agreement.

 

Section 3.09           Agreement.  In the event of foreclosure of this Mortgage, or other transfer
of title to the Mortgaged Property in extinguishment in whole or in part of the
Indebtedness, all right, title, and interest of Mortgagor in and to such
policies then in force concerning the Mortgaged Property and all proceeds
payable thereunder shall thereupon vest in the purchaser at such foreclosure or
Administrative Agent or other transferee in the event of such other transfer of
title.

 

Section 3.10           Further Assurances.  Mortgagor shall, and shall cause each of its
Subsidiaries to, cure promptly any defects in the execution and delivery of
this Mortgage or any of the other Loan Documents.  Mortgagor hereby authorizes the Administrative Agent to file any
financing statements without Mortgagor’s signature to the extent permitted by
applicable law in order to perfect or maintain the perfection of any security
interest granted under any of the Loan Documents.  Mortgagor at its expense will, and will cause each of its
Subsidiaries to, promptly execute and deliver to the Administrative Agent upon
request all such other documents, agreements and instruments to comply with or
accomplish the covenants and agreements of Mortgagor or any other Credit Party
in this Mortgage or any other Loan Document, or to further evidence and more
fully describe the collateral intended as security for Obligations, or to
correct any omissions in the Loan Documents, or to state more fully the
security obligations set out in this Mortgage or in any of the other Loan
Documents, or to perfect, protect or preserve any Liens created pursuant to any
of the Loan Documents, or to make any recordings, to file any notices or obtain
any consents, all as may be necessary or appropriate in connection therewith or
to enable the Administrative Agent to exercise and enforce its rights and
remedies with respect to the Mortgaged Property.

 

Section 3.11           Taxes.  Mortgagor shall do or cause to be done
everything necessary to preserve the lien hereof without expense to Trustee or
Mortgagee, including, without limitation, paying and discharging or causing to
be paid and discharged all taxes, charges, filing, registration and recording
fees relating to the recording of this Mortgage, including but not limited to
any mortgage tax payable in connection herewith.

 

Section 3.12           Failure to Perform.  Mortgagor agrees that if Mortgagor, after
receipt from Mortgagee of written notice and demand,  fails to perform any act or to take any action which Mortgagor is
required to perform or take hereunder or pay any money which Mortgagor is
required to pay hereunder, each of Mortgagee and Trustee in Mortgagor’s name or
its or their own name may, but shall not be obligated to, perform or cause to
perform such act or take such action or pay such money, and any expenses so
incurred by either of them and any money so paid by either of them shall be a
demand obligation owing by Mortgagor to Mortgagee or Trustee, as the case may
be, and each of Mortgagee and Trustee, upon making such payment, shall be
subrogated to all of the rights of the Person receiving such payment.  Each amount due and owing by Mortgagor to
each of Mortgagee and Trustee pursuant to this Mortgage shall bear interest
from the date of such expenditure or payment or other occurrence which gives
rise to such amount being owed to such Person until paid at post-default
interest rate described in the

 

13

 

Second Amended and Restated
Credit Agreement, and all such amounts together with such interest thereon
shall be a part of the Indebtedness described in Section 1.03 hereof.

 

Section 3.13           Waste.  Mortgagor shall not commit or permit any
waste, impairment, or deterioration of the Mortgaged Property or any part thereof.

 

ARTICLE IV

 

Rights and Remedies

 

Section 4.01           Event of Default.  An “Event of Default” under the
Second Amended and Restated Credit Agreement shall be an Event of Default under
this Mortgage.

 

Section 4.02           Foreclosure and Sale.

 

(a)           If an Event of Default
shall occur and be continuing, Mortgagee shall have the right and option to
proceed with foreclosure by proceeding or by directing Trustee, or his
successors or substitutes in trust, to proceed with foreclosure and to sell, to
the extent permitted by law, all or any portion of the Mortgaged Property at
one or more sales, as an entirety or in parcels, at such place or places in
otherwise such manner and upon such notice as may be required by law, or, in
the absence of any such requirement, as Mortgagee may deem appropriate, and to
make conveyance to the purchaser or purchasers.  Where the Mortgaged Property is situated in more than one county,
notice as above provided shall be posted and filed in all such counties (if
such notices are required by law), and all such Mortgaged Property may be sold
in any such county and any such notice shall designate the county where such
Mortgaged Property is to be sold. 
Nothing contained in this Section 4.02 shall be construed so as to limit
in any way Mortgagee’s or Trustee’s rights to sell the Mortgaged Property, or
any portion thereof, by private sale if, and to the extent that, such private
sale is permitted under the laws of the applicable jurisdiction or by public or
private sale after entry of a judgment by any court of competent jurisdiction
so ordering.  Mortgagor hereby
irrevocably appoints Trustee to be the attorney of Mortgagor and in the name
and on behalf of Mortgagor to execute and deliver any deeds, transfers, conveyances,
assignments, assurances and notices which Mortgagor ought to execute and
deliver and do and perform any and all such acts and things which Mortgagor
ought to do and perform under the covenants herein contained and generally, to
use the name of Mortgagor in the exercise of all or any of the powers hereby
conferred on Trustee.  At any such sale:
(i) whether made under the power herein contained or any other legal
enactment, or by virtue of any judicial proceedings or any other legal right,
remedy or recourse, it shall not be necessary for Mortgagee or Trustee to have
physically present, or to have constructive possession of, the Mortgaged
Property (Mortgagor hereby covenanting and agreeing to deliver to Mortgagee or
Trustee any portion of the Mortgaged Property not actually or constructively
possessed by Mortgagee or Trustee immediately upon demand by Mortgagee or
Trustee) and the title to and right of possession of any such property shall
pass to the purchaser thereof as completely as if the same had been actually
present and delivered to purchaser at such sale, (ii) each instrument of
conveyance executed by Mortgagee or Trustee shall contain a general warranty of
title, binding upon Mortgagor and its successors and assigns, (iii) each
and

 

14

 

every recital
contained in any instrument of conveyance made by Mortgagee or Trustee shall
conclusively establish the truth and accuracy of the matters recited therein,
including, without limitation, nonpayment of the Indebtedness, advertisement
and conduct of such sale in the manner provided herein and otherwise by law and
appointment of any successor Trustee hereunder, (iv) any and all
prerequisites to the validity thereof shall be conclusively presumed to have
been performed, (v) the receipt of Mortgagee or Trustee or of such other
party or officer making the sale shall be a sufficient discharge to the
purchaser or purchasers for its purchase money and no such purchaser or
purchasers, or its assigns or personal representatives, shall thereafter be obligated
to see to the application of such purchase money, or be in any way answerable
for any loss, misapplication or nonapplication thereof, (vi) to the
fullest extent permitted by law, Mortgagor shall be completely and irrevocably
divested of all of its right, title, interest, claim and demand whatsoever,
either at law or in equity, in and to the property sold and such sale shall be
a perpetual bar both at law and in equity against Mortgagor, and against any
and all other persons claiming or to claim the property sold or any part
thereof, by, through or under Mortgagor, and (vii) to the extent and under
such circumstances as are permitted by law, Trustee, Mortgagee, or any Lender
may be a purchaser at any such sale, and shall have the right, after paying or accounting
for all costs of said sale or sales, to credit the amount of the bid upon the
amount of the Indebtedness held by such purchaser, if any (in the order of
priority set forth in Section 4.13 hereof) in lieu of cash payment.

 

(b)           With respect to any
portion of the Mortgaged Property located in the state of Oklahoma and with
respect any foreclosure by Mortgagor pursuant to the power of sale granted to
Mortgagor in this Mortgage the following provisions of this Mortgage shall
apply:

 

(i)            The notices described
in Section 40 and certain following sections of the Oklahoma Mortgage
Foreclosure Act, shall be given as and when required therein;

 

(ii)           All notices which
are required to be given to Mortgagor under the Oklahoma Mortgage Foreclosure
Act may be given to Mortgagor at the address which is set forth in the first
paragraph of this Mortgage, or if such address has been changed in accordance
with the express requirements of this Mortgage related to such a change of
address, to that changed address;

 

(iii)          Mortgagee may
purchase part or all of the Mortgaged Property at any such sale;

 

(iv)          Mortgagor stipulates
that the total amounts owing under this Mortgage benefit, have benefited, and
will benefit Mortgagor substantially and are not unconscionable in amount, and
therefore the total amount of the Indebtedness, less the fair market value of
the Mortgaged Property sold pursuant to the Oklahoma Mortgage Foreclosure Act,
and any prior indebtedness, shall be available as a deficiency judgment against
Mortgagor;

 

15

 

(v)           The purchaser under
any sale of the Mortgaged Property conducted pursuant to the Oklahoma Mortgage
Foreclosure Act may seek and obtain a writ of assistance by application to the
District Court in the county in Oklahoma in which the portion of the Mortgaged
Property to be foreclosed upon is located, or the United States District Court
having venue for actions arising in such county;

 

(vi)          Mortgagee may, at
its option, proceed with foreclosure under judicial proceedings instead of
exercising the rights of the power of sale granted by Mortgagor to Mortgagee in
this Mortgage;

 

(vii)         All other terms,
conditions, procedures, and requirements of the Oklahoma Mortgage Foreclosure
Act shall be followed;

 

(viii)        After the completion
of the sale as contemplated by the Oklahoma Mortgage Foreclosure Act, the
purchaser shall have all of Mortgagor’s right, title and interest in and to
Mortgaged Property sold pursuant to such sale, free and clear of all rights of
Mortgagor, and free and clear of all rights of any person with a priority which
is subordinate to the lien of this Mortgage, except any right which may be
reserved under the Oklahoma Mortgage Foreclosure Act;

 

(ix)           Any recitation in
any notice, publication thereof, recordation thereof, or deed, of the existence
of an Event of Default, giving, publication, service and recordation of notice,
occurrence of the sale at the time and place set forth in such notice or any
postponement authorized and effective under the Oklahoma Mortgage Foreclosure
Act, circumstances of sale and bidding, and compliance with the terms of the
Oklahoma Mortgage Foreclosure Act, shall be presumed to be statements of fact
and no person shall be required to investigate the truthfulness or accuracy of
any such recitation; and

 

(x)            The proceeds of any
such sale shall be applied first to the costs, attorney fees, and expenses of
such sale, next to the payment of the Indebtedness; except that if such
application of proceeds conflicts with the requirements of the Oklahoma
Mortgage Foreclosure Act, the proceeds of such sale shall be applied as
provided under the Oklahoma Mortgage Foreclosure Act, but in such event, only
to the extent of any such conflict.

 

Section 4.03           Substitute Trustees and Agents.  Trustee or his successor or substitute may
appoint or delegate any one or more persons as agent to perform any act or acts
necessary or incident to any sale held by Trustee, including the posting of
notices and the conduct of sale, but in the name and on behalf of Trustee, his
successor or substitute.  If Trustee or
his successor or substitute shall have given notice of sale hereunder, any
successor or substitute trustee thereafter appointed may complete the sale and
the conveyance of the property pursuant thereto as if such notice had been
given by the successor or substitute trustee conducting the sale.

 

Section 4.04           Judicial Foreclosure; Receivership.

 

(a)           If any of the
Indebtedness shall become due and payable and shall not be promptly paid,
Trustee or Mortgagee shall have the right and power to proceed by a suit

 

16

 

or suits in
equity or at law, whether for the specific performance of any covenant or
agreement herein contained or in aid of the execution of any power herein
granted, or for any foreclosure hereunder or for the sale of the Mortgaged
Property under the judgment or decree of any court or courts of competent
jurisdiction, or for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Mortgaged Property under the order of a court or
courts of competent jurisdiction or under executory or other legal process, or
for the enforcement of any other appropriate legal or equitable remedy.  Any money advanced by Trustee and/or
Mortgagee in connection with any such receivership shall be a demand obligation
(which obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to Trustee and/or Mortgagee and shall bear interest from the date of
making such advance by Trustee and/or Mortgagee until paid at the interest rate
applicable to periods following an Event of Default in the Second Amended and
Restated Credit Agreement.

 

(b)           If an action is
filed to foreclose this Mortgage, or if Mortgagee or Trustee seeks to foreclose
this Mortgage by power of sale under the Oklahoma Power of Sale Mortgage
Foreclosure Act, Mortgagee or Trustee, as applicable, shall be entitled to the
immediate appointment of a receiver pursuant to 12 Oklahoma Statutes
§1551(2)(c) without the necessity of further proof.

 

Section 4.05           Foreclosure for Installments.  Mortgagee shall also have the option to
proceed with foreclosure in satisfaction of any installments of the
Indebtedness which have not been paid when due either through the courts or by
directing Trustee or his successors in trust to proceed with foreclosure in
satisfaction of the matured but unpaid portion of the Indebtedness as if under
a full foreclosure, conducting the sale as herein provided and without
declaring the entire principal balance and accrued interest due; such sale may
be made subject to the unmatured portion of the Indebtedness, and any such sale
shall not in any manner affect the unmatured portion of the Indebtedness, but
as to such unmatured portion of the Indebtedness this Mortgage shall remain in
full force and effect just as though no sale had been made hereunder.  It is further agreed that several sales may
be made hereunder without exhausting the right of sale for any unmatured part
of the Indebtedness, it being the purpose hereof to provide for a foreclosure
and sale of the security for any matured portion of the Indebtedness without
exhausting the power to foreclose and sell the Mortgaged Property for any
subsequently maturing portion of the Indebtedness.

 

Section 4.06           Separate Sales.  The Mortgaged Property may be sold in one or
more parcels and in such manner and order as Mortgagee, in its sole discretion,
may elect, it being expressly understood and agreed that the right of sale
arising out of any Event of Default shall not be exhausted by any one or more
sales.

 

Section 4.07           Occupancy After Foreclosure.  In the event there is a foreclosure sale
hereunder and at the time of such sale Mortgagor or Mortgagor’s heirs,
devisees, representatives, successors or assigns or any other person claiming
any interest in the Mortgaged Property by, through or under Mortgagor, are
occupying or using the Mortgaged Property or any part thereof, each and all
shall immediately become the tenant of the purchaser at such sale, which tenancy
shall be a tenancy from day to day, terminable at the will of either the
landlord or tenant, or at a reasonable rental per day based upon the value of
the property occupied, such rental to be due

 

17

 

daily to the purchaser; to the
extent permitted by applicable law, the purchaser at such sale shall,
notwithstanding any language herein apparently to the contrary, have the sole
option to demand immediate possession following the sale or to permit the occupants
to remain as tenants at will.  In the
event the tenant fails to surrender possession of said property upon demand,
the purchaser shall be entitled to institute and maintain a summary action for
possession of the Mortgaged Property (such as an action for forcible entry and
detainer) in any court having jurisdiction.

 

Section 4.08           Remedies Cumulative, Concurrent
and Nonexclusive.  Every right,
power and remedy herein given to Trustee or Mortgagee shall be cumulative and
in addition to every other right, power and remedy herein specifically given or
now or hereafter existing in equity, at law or by statute (including
specifically those granted by the Applicable UCC in effect and applicable to
the Mortgaged Property or any portion thereof) each and every right, power and
remedy whether specifically herein given or otherwise existing may be exercised
from time to time and so often and in such order as may be deemed expedient by
Trustee or Mortgagee, and the exercise, or the beginning of the exercise, of
any such right, power or remedy shall not be deemed a waiver of the right to
exercise, at the same time or thereafter any other right, power or remedy.  No delay or omission by Trustee or Mortgagee
in the exercise of any right, power or remedy shall impair any such right,
power or remedy or operate as a waiver thereof or of any other right, power or
remedy then or thereafter existing.

 

Section 4.09           No Release of Obligations.  Neither Mortgagor, any Guarantor, any other
guarantor of the Indebtedness, nor any other person hereafter obligated for
payment of all or any part of the Indebtedness shall be relieved of such
obligation by reason of (a) the failure of Trustee or Mortgagee to comply with
any request of Mortgagor, or any guarantor or any other person so obligated to
foreclose the lien of this Mortgage or to enforce any provision hereunder or
under the Second Amended and Restated Credit Agreement; (b) the release,
regardless of consideration, of the Mortgaged Property or any portion thereof
or interest therein or the addition of any other property to the Mortgaged
Property; (c) any agreement or stipulation between any subsequent owner of the
Mortgaged Property and Mortgagee extending, renewing, rearranging or in any
other way modifying the terms of this Mortgage without first having obtained
the consent of, given notice to or paid any consideration to Mortgagor, any
guarantor or such other person, and in such event Mortgagor, guarantor and all
such other persons shall continue to be liable to make payment according to the
terms of any such extension or modification agreement unless expressly released
and discharged in writing by Mortgagee; or (d) by any other act or occurrence
save and except the complete payment of the Indebtedness and the complete
fulfillment of all obligations hereunder or under the Second Amended and
Restated Credit Agreement.

 

Section 4.10           Release of and Resort to Mortgaged
Property.  Mortgagee may release,
regardless of consideration, any part of the Mortgaged Property without, as to
the remainder, in any way impairing, affecting, subordinating or releasing the
lien or security interest created in or evidenced by this Mortgage or its
stature as a first and prior lien and security interest in and to the Mortgaged
Property, and without in any way releasing or diminishing the liability of any
person or entity liable for the repayment of the Indebtedness.  For payment of the Indebtedness, Mortgagee
may resort to any other security therefor held by Mortgagee or Trustee in such
order and manner as Mortgagee may elect.

 

18

 

Section 4.11           Waiver of Redemption, Notice and
Marshalling of Assets, Etc.  To the
fullest extent permitted by law, Mortgagor hereby irrevocably and
unconditionally waives and releases (a) all benefits that might accrue to
Mortgagor by virtue of any present or future moratorium law or other law
exempting the Mortgaged Property from attachment, levy or sale on execution or
providing for any appraisement, valuation, stay of execution, exemption from
civil process, redemption or extension of time for payment and (b) any right to
a marshalling of assets or a sale in inverse order of alienation.  If any law referred to in this Mortgage and
now in force, of which Mortgagor or its successor or successors might take
advantage despite the provisions hereof, shall hereafter be repealed or cease
to be in force, such law shall thereafter be deemed not to constitute any part
of the contract herein contained or to preclude the operation or application of
the provisions hereof.  Provided,
however, that if the laws of any state do not permit the redemption period to
be waived, the redemption period is specifically reduced to the minimum amount
of time allowable by statute.  With
respect to any portion of the Mortgaged Property located in the state of
Oklahoma, Mortgagee and Trustee hereby waive or do not waive appraisement, such
election to be made at or before entry of judgment in any action to foreclose
this Mortgage; provided, however,
such waiver or non-waiver shall not affect Mortgagor’s waiver of such rights,
which shall be absolute.

 

Section 4.12           Discontinuance of Proceedings  In case Mortgagee shall have proceeded to
invoke any right, remedy or recourse permitted hereunder or under the Second
Amended and Restated Credit Agreement and shall thereafter elect to discontinue
or abandon same for any reason, Mortgagee shall have the unqualified right so
to do and, in such an event, Mortgagor and Mortgagee shall be restored to their
former positions with respect to the Indebtedness, this Mortgage, the Second
Amended and Restated Credit Agreement, the Mortgaged Property and otherwise,
and the rights, remedies, recourses and powers of Mortgagee shall continue as
if same had never been invoked.

 

Section 4.13           Application of Proceeds.  The proceeds of any sale of the Mortgaged
Property or any part thereof and all other monies received by Trustee or
Mortgagee in any proceedings for the enforcement hereof or otherwise, whose
application has not elsewhere herein been specifically provided for, shall be
applied:

 

(a)           first, to the
payment of all reasonable expenses incurred by Trustee or Mortgagee incident to
the enforcement of this Mortgage, the Second Amended and Restated Credit
Agreement or any of the Indebtedness (including, without limiting the
generality of the foregoing, expenses of any entry or taking of possession, of
any sale, of advertisement thereof, and of conveyances, and court costs,
compensation of agents and employees, legal fees and a reasonable commission to
Trustee acting), and to the payment of all other charges, reasonable expenses,
liabilities and advances incurred or made by Trustee or Mortgagee under this
Mortgage or in executing any trust or power hereunder;

 

(b)           second to payment of
the Indebtedness in the order and manner required in the Second Amended and
Restated Credit Agreement; and

 

(c)           third, to Mortgagor
or as otherwise required by any Governmental Requirement.

 

19

 

Section 4.14           Resignation of Operator.  In addition to all rights and remedies under
this Mortgage, at law and in equity, if any Event of Default shall occur and
Trustee or Mortgagee shall exercise any possessory remedies under this Mortgage
with respect to any portion of the Hydrocarbon Property (or Mortgagor shall
transfer any Mortgaged Property “in lieu of” foreclosure), Mortgagee or Trustee
shall have the right to request that any operator of any Hydrocarbon Property
which is either Mortgagor or any Affiliate of Mortgagor to resign as operator
under the joint operating agreement applicable thereto, and no later than 60
days after receipt by Mortgagor of any such request, Mortgagor shall resign (or
cause such other party to resign) as operator of such Hydrocarbon Property.

 

Section 4.15           Indemnity.  In connection with any action taken by
Trustee and/or Mortgagee pursuant to this Mortgage, Trustee and/or Mortgagee
and their officers, directors, employees, representatives, agents, attorneys,
accountants and experts (“Indemnified Parties”) shall not be liable for
any loss sustained by Mortgagor resulting from an assertion that Mortgagee has
received funds from the production of Hydrocarbons claimed by third persons or
any act or omission of any Indemnified Party in administering, managing,
operating or controlling the Mortgaged Property INCLUDING SUCH LOSS WHICH MAY RESULT FROM THE NEGLIGENCE OF AN INDEMNIFIED
PARTY  unless such
loss is caused by the gross negligence or willful misconduct of an Indemnified
Party, nor shall Trustee and/or Mortgagee be obligated to perform or discharge
any obligation, duty or liability of Mortgagor. Mortgagor shall and does hereby
agree to indemnify each Indemnified Party for, and to hold each Indemnified
Party harmless from, any and all liability, loss or damage which may or might
be incurred by any Indemnified Party by reason of this Mortgage or the exercise
of rights or remedies hereunder INCLUDING
SUCH LIABILITY, LOSS, OR DAMAGE WHICH MAY RESULT FROM THE NEGLIGENCE OF AN
INDEMNIFIED PARTY unless such liability, loss, or damage is
caused by the gross negligence or willful misconduct of an Indemnified Party;
should Trustee and/or Mortgagee make any expenditure on account of any such
liability, loss or damage, the amount thereof, including costs, expenses and
reasonable attorneys’ fees, shall be a demand obligation (which obligation
Mortgagor hereby expressly promises to pay) owing by Mortgagor to Trustee
and/or Mortgagee and shall bear interest from the date expended until paid at
the Post-Default Rate, shall be a part of the Indebtedness and shall be secured
by this Mortgage and any other Security Instrument.  Mortgagor hereby assents to, ratifies and confirms any and all
actions of Trustee and/or Mortgagee with respect to the Mortgaged Property
taken under, and in compliance with the terms of, this Mortgage.  The liabilities of Mortgagor as set forth in
this Section 4.15 shall survive the termination of this Mortgage.

 

ARTICLE V

 

Trustee

 

Section 5.01           Duties, Rights, and Powers of
Trustee.  It shall be no part of the
duty of Trustee to see to any recording, filing or registration of this
Mortgage or any other instrument in addition or supplemental thereto, or to
give any notice thereof, or to see to the payment of or be under any duty in
respect of any tax or assessment or other governmental charge which may be
levied or assessed on the Mortgaged Property, or any part thereof, or against
Mortgagor, or to see to the performance or observance by Mortgagor of any of
the covenants and agreements

 

20

 

contained herein.  Trustee shall not be responsible for the
execution, acknowledgment or validity of this Mortgage or of any instrument in
addition or supplemental hereto or for the sufficiency of the security purported
to be created hereby, and makes no representation in respect thereof or in
respect of the rights of Mortgagee. 
Trustee shall have the right to advise with counsel upon any matters
arising hereunder and shall be fully protected in relying as to legal matters
on the advice of counsel.  Trustee shall
not incur any personal liability hereunder except for Trustee’s own gross
negligence, bad faith and/or willful misconduct; and Trustee shall have the
right to rely on any instrument, document or signature authorizing or
supporting any action taken or proposed to be taken by him hereunder, believed
by him in good faith to be genuine.

 

Section 5.02           Successor Trustee; Resignation by
Trustee.  Trustee may resign by
written notice addressed to Mortgagee or be removed at any time with or without
cause by an instrument in writing duly executed on behalf of Mortgagee.  In case of the death, resignation or removal
of Trustee, a successor trustee may be appointed by Mortgagee by instrument of
substitution complying with any applicable requirements of law, or, in the
absence of any such requirement, without other formality than appointment and
designation in writing.  Written notice
of such appointment and designation shall be given by Mortgagee to Mortgagor,
but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein.  Such appointment and designation shall be full evidence of the
right and authority to make the same and of all the facts therein recited, and,
upon the making of any such appointment and designation, this Mortgage shall
vest in the successor trustee all the estate and title in and to all of the
Mortgaged Property, and the successor trustee shall thereupon succeed to all of
the rights, powers, privileges, immunities and duties hereby conferred upon
Trustee named herein, and one such appointment and designation shall not
exhaust the right to appoint and designate a successor trustee hereunder but
such right may be exercised repeatedly as long as any Indebtedness remains
unpaid hereunder.  To facilitate the
administration of the duties hereunder, Mortgagee may appoint multiple trustees
to serve in such capacity or in such jurisdictions as Mortgagee may designate.

 

Section 5.03           Retention of Moneys.  All moneys received by Trustee shall, until
used or applied as herein provided, be held in trust for the purposes for which
they were received, but need not be segregated in any manner from any other
moneys (except to the extent required by law), and Trustee shall be under no
liability for interest on any moneys received by him hereunder.

 

ARTICLE VI

 

Miscellaneous

 

Section 6.01           Instrument Construed as Mortgage,
Etc.  With respect to any portions
of the Mortgaged Property located in any state or other jurisdiction the laws
of which do not provide for the use or enforcement of a deed of trust or the
office, rights and authority of Trustee as herein provided, the general
language of conveyance hereof to Trustee is intended and the same shall be
construed as words of mortgage unto and in favor of Mortgagee and the rights
and authority granted to Trustee herein may be enforced and asserted by
Mortgagee in accordance with the laws of the jurisdiction in which such portion
of the Mortgaged Property is located and the same may be foreclosed at the
option of Mortgagee as to any or all such portions of the Mortgaged Property in
any manner permitted by the laws of the jurisdiction in which such 

 

21

 

portions of the Mortgaged
Property is situated.  This Mortgage may
be construed as a mortgage, deed of trust, chattel mortgage, conveyance,
assignment, security agreement, pledge, financing statement, hypothecation or
contract, or any one or more of them, in order fully to effectuate the lien
hereof and the purposes and agreements herein set forth.

 

Section 6.02           Release of Mortgage.  If all Indebtedness secured hereby shall be
paid and the Second Amended and Restated Credit Agreement terminated, Mortgagee
shall forthwith cause satisfaction and discharge of this Mortgage to be entered
upon the record at the expense of Mortgagor and shall execute and deliver or
cause to be executed and delivered such instruments of satisfaction and
reassignment as Mortgagor may reasonably request.  Otherwise, this Mortgage shall remain and continue in full force
and effect.

 

Section 6.03           Severability.  If any provision hereof is invalid or
unenforceable in any jurisdiction, the other provisions hereof shall remain in
full force and effect in such jurisdiction and the remaining provisions hereof
shall be liberally construed in favor of Trustee and Mortgagee in order to
effectuate the provisions hereof, and the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of any such provision in any other jurisdiction.

 

Section 6.04           Successors and Assigns of Parties.  The term “Lender” as used herein shall mean
and include any legal owner, holder, assignee or pledgee of any of the
Indebtedness secured hereby.  The terms
used to designate Trustee, Mortgagee and Mortgagor shall be deemed to include
the respective heirs, legal representatives, successors and assigns of such
parties.

 

Section 6.05           Satisfaction of Prior Encumbrance.  To the extent that proceeds of the Second
Amended and Restated Credit Agreement are used to pay indebtedness secured by
any outstanding lien, security interest, charge or prior encumbrance against
the Mortgaged Property, such proceeds have been advanced by Mortgagee or any of
the other Lenders at Mortgagor’s request, and Mortgagee shall be subrogated to
any and all rights, security interests and liens owned by any owner or holder
of such outstanding liens, security interests, charges or encumbrances, and it
is expressly understood that, in consideration of the payment of such other
indebtedness by Mortgagee or any of the other Lenders, Mortgagor hereby waives
and releases all demands and causes of action against Mortgagee or any of the
other Lenders for offsets and payments to, upon and in connection with the said
indebtedness.

 

Section 6.06           Subrogation of Trustee.  This Mortgage is made with full substitution
and subrogation of Trustee and his successors in this trust and his and their
assigns in and to all covenants and warranties by others heretofore given or
made in respect of the Mortgaged Property or any part thereof.

 

Section 6.07           Nature of Covenants.  The covenants and agreements herein
contained shall constitute covenants running with the land and interests covered
or affected hereby and shall be binding upon the heirs, legal representatives,
successors and assigns 

 

Section 6.08           Notices.  All notices and other communications shall
be in writing (including, without limitation, telecopy or telex) and mailed by
certified mail, return receipt

 

22

 

requested, telecopied, telexed,
hand delivered, or delivered by a nationally recognized overnight courier, at
the address for the appropriate party specified in the first paragraph of this
Mortgage or at such other address as shall be designated by such party in a
written notice to the other parties. 
All such notices and communications shall, when so mailed, telecopied,
telexed, or hand delivered or delivered by a nationally recognized overnight
courier, be effective when received if mailed, when telecopy transmission is
completed, when confirmed by telex answer-back, or when delivered by such
messenger or courier, respectively.

 

Section 6.09           Counterparts.  This Mortgage is being executed in several
counterparts, all of which are identical, except that to facilitate
recordation, if the Mortgaged Property is situated in more than one county,
descriptions of only those portions of the Mortgaged Property located in the
county in which a particular counterpart is recorded shall be attached as Exhibit
A thereto. A complete Exhibit A will be attached to that certain
counterpart that is filed in the real property records of
                             County,
Texas.  Each of such counterparts shall
for all purposes be deemed to be an original and all such counterparts shall
together constitute but one and the same instrument.

 

Section 6.10           Exculpation Provisions.  Each of the parties hereto specifically
agrees that it has a duty to read this Mortgage; and agrees that it is charged
with notice and knowledge of the terms of this Mortgage; that it has in fact
read this Mortgage and is fully informed and has full notice and knowledge of
the terms, conditions and effects of this Mortgage; that it has been
represented by independent legal counsel of its choice throughout the
negotiations preceding its execution of this Mortgage; and has received the
advice of its attorney in entering into this Mortgage; and that it recognizes
that certain of the terms of this Mortgage 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 Mortgage on
the basis that the party had no notice or knowledge of such provision or that
the provision is not “conspicuous.”

 

Section 6.11           Security Agreement.  With respect to any portion of the Mortgaged
Property which constitutes fixtures or other property governed by the
Applicable UCC, this Mortgage shall constitute a security agreement between
Mortgagor, as the debtor, and Mortgagee, as the secured party.  Cumulative of all other rights of Mortgagee
hereunder, Mortgagee shall have all of the rights conferred upon secured
parties by the Applicable UCC.

 

Section 6.12           Ratification of Original
Mortgages; Effect of Mortgage.  The
conveyance and the granting of liens in the Original Mortgages is hereby
ratified, adopted, confirmed, and renewed. 
In addition, as stated in the Recitals to this Mortgage, this Mortgage
constitutes for all purposes an amendment and restatement of the Original
Mortgages and not a new or substitute security instrument.

 

Section 6.13           Time of the Essence.  Time is of the essence in the performance of
each and every obligation under this Mortgage.

 

Section 6.14           Authority of Administrative Agent.  The Lenders may, by agreement among them,
provide for and regulate the exercise of rights and remedies hereunder, but,
unless

 

23

 

and until modified to the
contrary in a writing signed by all such persons and recorded in the same
counties and parishes as this Mortgage is recorded, (i) all persons other than
Mortgagor and its affiliates shall be entitled to rely on the releases,
waivers, consents, approvals, notifications and other acts (including, without
limitation, appointment of substitute or successor trustee, or trustees,
hereunder and the bidding in of all or any part of the secured indebtedness
held by any one or more Lenders, whether the same be conducted under the
provisions hereof or otherwise) of Administrative Agent, without inquiry into
any such agreements or the existence of required consent or approval of any
Lender and without the joinder of any party other than Administrative Agent in
such releases, waivers, consents, approvals, notifications or other acts and
(ii) all notices, requests, consents, demands and other communications required
or permitted to be given hereunder may be given to Administrative Agent.

 

Section 6.15           Waivers.  Subject to the Second Amended and Restated
Credit Agreement, Administrative Agent may at any time and from time to time in
writing waive compliance by Mortgagor with any covenant herein made by
Mortgagor to the extent and in the manner specified in such writing, or consent
to Mortgagor’s doing any act which hereunder Mortgagor is prohibited from
doing, or to Mortgagor’s failing to do any act which hereunder Mortgagor is
required to do, to the extent and in the manner specified in such writing, or
release any part of the Mortgaged Property or any interest therein or any
Production Proceeds from the lien and security interest of this Mortgage, without
the joinder of Trustee.  Any party
liable, either directly or indirectly, for the secured indebtedness or for any
covenant herein or in any other Loan Document may be released from all or any
part of such obligations without impairing or releasing the liability of any
other party.  No such act shall in any
way impair any rights or powers hereunder except to the extent specifically
agreed to in such writing.

 

Section 6.16           Compliance With Usury Laws.  It is the intent of Mortgagor, Trustee,
Mortgagee and all other parties to any of the Loan Documents to contract in
strict compliance with applicable usury law from time to time in effect.  In furtherance thereof, it is stipulated and
agreed that none of the terms and provisions contained herein or in the other
Loan Documents shall ever be construed to create a contract to pay, for the
use, forbearance or detention of money, interest in excess of the maximum
amount of interest permitted to be collected, charged, taken, reserved, or
received by applicable law from time to time in effect.

 

Section 6.17           GOVERNING LAW.  This
Mortgage shall be governed by and construed in accordance with the laws of the
State of Texas, without giving effect to its laws relating to conflicts of
laws, except to the extent that the laws of any other jurisdiction mandatorily
govern the creation of, or the manner or procedure for enforcement of the lien
created by this Mortgage, provided that any rights or remedies herein provided
that shall be valid under the laws of the jurisdiction where proceedings for
the enforcement hereof shall be taken shall not be affected by the invalidity,
if any, of such rights or remedies under the laws of the State of Texas.

 

24

 

NOTICE
TO MORTGAGOR:

 

A
POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT.  WITH RESPECT TO PORTIONS OF THE MORTGAGED PROPERTY LOCATED IN THE
STATE OF OKLAHOMA, SUCH POWER OF SALE IS GRANTED PURSUANT TO THE OKLAHOMA
MORTGAGE FORECLOSURE ACT (AS DEFINED IN SECTION 1.01 OF THIS MORTGAGE). THIS
POWER OF SALE MAY ALLOW TRUSTEE OR MORTGAGEE, AS APPLICABLE, TO TAKE THE
MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION
UPON THE OCCURRENCE OF AN EVENT OF DEFAULT BY MORTGAGOR UNDER THIS INSTRUMENT.
THIS INSTRUMENT CONTAINS AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF
FUTURE ADVANCES, AND COVERS ALL PRODUCTS AND PROCEEDS OF MORTGAGED
PROPERTY.  

 

IN WITNESS
HEREOF, Mortgagor has executed and delivered this Mortgage as of the day and
year first above written.

 

	
   

  	
  MORTGAGOR:

  
	
   

  	
   

  
	
   

  	
  BRIGHAM OIL
  & GAS, L.P., a Delaware

  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brigham,
  Inc., a Nevada corporation,

  its General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
						

 

Prepared by and after recording
return to:

Bracewell & Patterson, L.L.P.

c/o  Garrett B.
Spear-Smith

711 Louisiana Street, Suite 2900

Houston, Texas 77002

 

25

 

	
  STATE OF
  TEXAS

  	
   

  	
  §

  
	
   

  	
   

  	
  §

  
	
  COUNTY OF

  	
   

  	
  §

  

 

TEXAS

 

This
instrument was acknowledged before me on March
       , 2003 by
                        ,
the                                of
BRIGHAM, INC., a Nevada corporation, as general partner of BRIGHAM OIL &
GAS, L.P., a Delaware limited partnership, on behalf of such corporation,
acting as general partner of the limited partnership, on behalf of the limited
partnership.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for the

  
	
   

  	
  State of
  Texas

  
	
   

  	
   

  
	
   

  	
  Notarial
  Seal:

  

 

OKLAHOMA

 

Before me, a
Notary Public in and for said county and state, on this
             day of
March, 2003, personally appeared
                                          ,
to me known to be the identical person who subscribed the name of the maker
thereof to the foregoing instrument as
                                       
of BRIGHAM, INC., a Nevada corporation, as general partner of BRIGHAM
OIL & GAS, L.P., a Delaware limited partnership, and acknowledged to
me that such person executed the same as such person’s free and voluntary act
and deed, and as the free and voluntary act and deed of such corporation for
the uses and purposes therein set forth.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary
  Public in and for the

  
	
   

  	
  State of
  Texas

  
	
   

  	
   

  
	
   

  	
  Notarial
  Seal:

  

 

26

EXHIBIT A

 

TO

 

AMENDED AND RESTATED MORTGAGE, DEED OF TRUST,

ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, 

FIXTURE FILING, AND FINANCING STATEMENT

 

This Exhibit A describes
the Hydrocarbon Property (as defined in the body of this instrument).  This Exhibit A also sets forth a list
of certain of the wells located on the Hydrocarbon Property, together with
Mortgagor’s representation as to the nature and quantum of Working Interest (as
defined below) and Net Revenue Interest (as defined below) owned by Mortgagor
with respect to those wells.

 

The designation “Working
Interest” or “WI” when used in this Exhibit A means the interest of Mortgagor
upon which is calculated Mortgagor’s proportionate share of the costs,
expenses, and liabilities attributable to the oil, gas, and mineral leases
described herein.  The designation “Net
Revenue Interest” or “NRI” or “NRIO” or “NRIG” when used in this Exhibit A
means the interest in the gross production of oil and gas and other minerals
from other properties subject to the oil, gas, and mineral leases to which
Mortgagor is entitled by virtue of its ownership of the Working Interest after
deducting all landowner royalties, overriding royalties, and similar interests
attributable to the Working Interest. 
The designation “Overriding Royalty Interest” “ORRI” means an interest
in production which is free of any obligation for the expense of exploration,
development, and production, bearing only its pro rata share of severance,
production, and other similar taxes and, in instances where the document
creating the overriding royalty interest so provides, costs associated with
compression, dehydration, other treating or processing, or transportation of
production of oil, gas, or other minerals relating to the marketing of such
production.  The designation “Royalty
Interest” or “RI” means an interest in production which results from an
ownership in the mineral fee estate or royalty estate in the relevant land and
which is free of any obligation for the expense of exploration, development,
and production, bearing only its pro rata share of severance,  production, ad valorem, and other similar
taxes and, in instances where the document creating the royalty interest so
provides, costs associated with compression, dehydration, other treating or
processing or transportation of production of oil, gas, or other minerals
relating to the marketing of such production. 
Each amount set forth as “Working Interest” or “WI” or “Net Revenue
Interest” or “NRI” or “NRIO” or “NRIG” is Mortgagor’s minimum interest after
giving full effect to, among other things, all Permitted Liens (as defined in
the Credit Agreement).

 

Any reference in this Exhibit
A to wells or units is for warranty of interest, administrative
convenience, and identification and shall not limit or restrict the right,
title, interest, or properties covered by this Deed of Trust.  All right, title, and interest of Mortgagor
in the properties described herein and in the Mortgaged Property (as defined in
the body of this instrument) is and shall be subject to this Mortgage,
regardless of the presence thereon of any interests, units, or wells not
described herein.

 

Unless otherwise expressly
provided, all recording references in this Exhibit A are references to
the official public records of real property in the county or counties (or
parish or parishes) in which the Mortgaged Property is located and in which
records documents relating to the Mortgaged Property are recorded, whether
Conveyance Records, Deed Records, Mortgage Records, Oil and Gas Records, Oil
and Gas Lease Records, or other records.

 

27

 

EXHIBIT G

 

FORM OF AMENDED
AND RESTATED PLEDGE AGREEMENT

 

This Amended
and Restated Pledge Agreement dated as of March 21, 2003 (“Pledge Agreement”)
is between [Brigham Exploration Company, a Delaware corporation][Brigham, Inc.,
a Nevada corporation][Brigham Oil & Gas, L.P., a Delaware limited
partnership] (“Pledgor”), and Société Générale, as administrative agent
for the lenders party to the Credit Agreement described below (“Secured
Party”).

 

INTRODUCTION

 

A.            [Brigham Oil & Gas, L.P., a
Delaware limited partnership (“Borrower”)] [Pledgor], the lenders party
thereto, and Bank of Montreal, as agent for such lenders (the “Existing
Agent”), were parties to that certain Amended and Restated Credit Agreement
dated February 17, 2000, as amended (the “Existing Credit Agreement”).

 

B.            In order to secure the full and
punctual payment and performance of the obligations under the Existing Credit
Agreement and the other loan documents contemplated thereby, the Pledgor
executed and delivered the security instruments described on Schedule I attached
hereto (the “Existing Security Documents”) in favor of the Existing
Agent and has granted a continuing security interest in and to the Pledged
Collateral (as hereafter defined).

 

C.            The Secured Party has replaced the
Existing Agent as the administrative agent under the Existing Credit Agreement.

 

D.            [The Borrower] [Pledgor], [Brigham
Exploration Company, a Delaware corporation], [Brigham, Inc., a Nevada
corporation], the lenders named therein (the “Lenders”) and Secured
Party, as agent for the Lenders, have entered into the Second Amended and
Restated Credit Agreement dated as of March 21, 2003 (as amended, restated or
otherwise modified from time-to-time, the “Credit Agreement”), which,
among other things, amends and restates the Existing Credit Agreement in its
entirety.

 

[E.           Pledgor has guaranteed the
Obligations of Borrower under the Credit Agreement pursuant to Article VIII
thereof (the “Guaranty”).]

 

F.             Under the Credit Agreement, it is a
condition to the making of Advances by the Lenders that [Pledgor][Borrower]
shall amend and restate the Existing Security Documents to secure its
[obligations under the Guaranty][Obligations under the Credit Agreement] by
entering into this Pledge Agreement.

 

Therefore,
Pledgor hereby agrees with Secured Party for its benefit and the ratable
benefit of the Lenders as follows:

 

Section 1.         Definitions.  All capitalized terms not otherwise defined
in this Pledge Agreement that are defined in the Credit Agreement shall have
the meaning assigned to such terms by the Credit Agreement.  Any capitalized terms used in this Pledge
Agreement that are defined in Articles 8 or 9 of the Uniform Commercial Code as
adopted in the State of New York

 

 

(“UCC”) shall have the
meanings assigned to those terms by the UCC as of the date of this Pledge
Agreement, whether specified elsewhere in this Pledge Agreement or not.  All other rules of interpretation set forth
in Section 1.05 of the Credit Agreement shall apply to this Pledge Agreement and
are hereby incorporated herein by reference.

 

Section 2.               Pledge.

 

(a)           Grant
of Pledge.  Pledgor hereby pledges
to Secured Party, and grants to Secured Party, for its benefit and the ratable
benefit of the Lenders, a continuing lien on and security interest in the
Pledged Collateral, as defined in Section 2(b) below.  This Pledge Agreement shall secure all Obligations of Pledgor now
or hereafter existing under the Guaranty and the other Loan Documents to which
it is a party, including any extensions, modification, substitutions,
amendments, and renewals thereof, whether for principal, interest, fees,
expenses, indemnifications or otherwise, in each case including the payment of
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code,
11 U.S.C. §§ 101 et seq.,
as amended.  All such obligations shall
be referred to in this Pledge Agreement as the “Secured Obligations”.

 

(b)           Pledged
Collateral.  “Pledged Collateral”
shall mean all of Pledgor’s right, title, and interest in the following,
whether now owned or hereafter acquired:

 

(i)            all
of the membership interests listed in the attached Schedule II issued to
Pledgor (the “Membership Interests”), all such additional membership
interests of any issuer of such interests hereafter acquired by Pledgor, the
certificates representing the Membership Interests, if any, and all such
additional membership interests, all of Pledgor’s rights, privileges,
authority, and powers as a member of the issuer of such Membership Interests
under the applicable [Limited Liability Company Operating Agreement][Limited
Liability Company Regulations] of such issuer and all rights to money or
Property which Pledgor now has or hereafter acquires in respect of the
Membership Interests,  including,
without limitation, (A) any Proceeds from a sale by or on behalf of Pledgor of
any of the Membership Interests, and (B) any distributions, dividends, cash,
instruments and other Property from time-to-time received or otherwise
distributed in respect of the Membership Interests, whether regular, special or
made in connection with the partial or total liquidation of the issuer and
whether attributable to profits, the return of any contribution or investment
or otherwise attributable to the Membership Interests or the ownership thereof
other than distributions received by Pledgor in compliance with the Loan
Documents (collectively, the “Membership Interests distributions”);

 

(ii)           all
of the general and limited partnership interests listed in the attached
Schedule II issued to Pledgor (the “Partnership Interests”), all such
additional limited or general partnership interests of any issuer of such
Partnership Interests hereafter acquired by Pledgor, all of Pledgor’s rights,
privileges, authority, and powers as a limited or general partner of the issuer
of such Partnership Interests under the applicable [Limited Partnership

 

2

 

Agreement][Partnership
Agreement] of such issuer, and all rights to money or Property which Pledgor
now has or hereafter acquires in respect of the Partnership Interests,  including, without limitation, (A) any
Proceeds from a sale by or on behalf of Pledgor of any of the Partnership
Interests, and (B) any distributions, dividends, cash, instruments and other
Property from time-to-time received or otherwise distributed in respect of the
Partnership Interests, whether regular, special or made in connection with the
partial or total liquidation of the issuer and whether attributable to profits,
the return of any contribution or investment or otherwise attributable to the
Partnership Interests or the ownership thereof other than distributions
received by Pledgor in compliance with the Loan Documents (collectively, the “Partnership
Interest distributions”; together with the Membership Interest
distributions, the “distributions”); and

 

(iii)          all
of the shares of stock listed in the attached Schedule II issued to Pledgor
(the “Pledged Shares”), all such additional shares of stock of any issuer of
such Pledged Shares hereafter issued to Pledgor, the certificates representing
the Pledged Shares and all such additional shares, all of Pledgor’s rights,
privileges, authority, and powers as a shareholder of the issuer of such
Pledged Shares under the applicable [Articles][Certificate] of Incorporation
and Bylaws of such issuer and all rights to money or Property which Pledgor now
has or hereafter acquires in respect of the Pledged Shares, including, without
limitation, (A) any Proceeds from a sale by or on behalf of Pledgor of any of
the Pledged Shares, and (B) any distributions, dividends, cash, instruments and
other Property from time-to-time received or otherwise distributed in respect
of the Pledged Shares, whether regular, special or made in connection with the
partial or total liquidation of the issuer and whether attributable to profits,
the return of any contribution or investment or otherwise attributable to the
Pledged Shares or the ownership thereof other than distributions received by
Pledgor in compliance with the Loan Documents (collectively, the “Pledged
Shares distributions”; together with the Membership Interest distributions and
the Partnership Interest distributions, the “distributions”); and

 

(iv)          all
additions and accessions to, substitutions and replacements of, and all
products and proceeds from the Pledged Collateral described in paragraphs (i),
(ii) and (iii) of this Section 2(b).

 

(c)           Delivery
of Pledged Collateral.  All
certificates or instruments, if any, representing the Pledged Collateral shall
be delivered to Secured Party and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance reasonably satisfactory to
Secured Party.  After the occurrence and
during the continuance of an Event of Default, Secured Party shall have the
right, upon prior written notice to Pledgor, to transfer to or to register in
the name of Secured Party or any of its nominees any of the Pledged Collateral,
subject to the rights specified in Section 2(d).  In addition, after the occurrence and during the continuance of
an Event of Default, Secured Party shall have the right at any time to exchange
the certificates or instruments representing the Pledged Collateral for
certificates or instruments of smaller or larger denominations.

 

3

 

(d)           Rights
Retained by Pledgor. 
Notwithstanding the pledge in Section 2(a), so long as no Event of
Default shall have occurred and remain uncured:

 

(i)            and,
if an Event of Default shall have occurred and remain uncured, until such time
thereafter as such voting and other consensual rights have been terminated
pursuant to Section 5 hereof, Pledgor shall be entitled to exercise any voting
and other consensual rights pertaining to the Pledged Collateral for any
purpose not inconsistent with the terms of this Pledge Agreement or the Credit
Agreement; provided, however, that Pledgor shall not exercise or shall refrain
from exercising any such right if such action would have a materially adverse
effect on the value of the Pledged Collateral;

 

(ii)           except
as otherwise provided in the Credit Agreement, Pledgor shall be entitled to
receive and retain any dividends and other distributions paid on or in respect
of the Pledged Collateral and the Proceeds of any sale of the Pledged
Collateral and all payments of principal and interest on loans and advances
made by Pledgor to the issuer of the Pledged Collateral; and

 

(iii)          at
and after such time as voting and other consensual rights have been terminated
pursuant to Section 5 hereof, Pledgor shall execute and deliver (or cause to be
executed and delivered) to Secured Party all proxies and other instruments as
Secured Party may reasonably request to (A) enable Secured Party to exercise
the voting and other rights which Pledgor is entitled to exercise pursuant to
subsection (i) of this Section 2(d), and (B) to receive the dividends or other
distributions and Proceeds of sale of the Pledged Collateral and payments of
principal and interest which Pledgor is authorized to receive and retain
pursuant to paragraph (ii) of this Section 2(d).

 

Section 3.               Pledgor’s
Representations and Warranties. 
Pledgor represents and warrants to Secured Party and the Lenders as follows:

 

(a)           The
Pledged Collateral listed on the attached Schedule II has been duly authorized
and validly issued and is fully paid and nonassessable.

 

(b)           Pledgor
is the legal and beneficial owner of the Pledged Collateral free and clear of
any Lien or option, except for (i) the security interest created by this Pledge
Agreement and (ii) other Permitted Liens.

 

(c)           No
authorization, authentication, approval, or other action by, and no notice to
or filing with, any Governmental Authority or regulatory body is required
either (i) for the pledge by Pledgor of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery, or performance of this Pledge
Agreement by Pledgor (except to the extent that financing statements are
required under the UCC to be filed in order to maintain a perfected security
interest) or (ii) for the exercise by Secured Party or any Lender of the voting
or other rights provided for in this Pledge Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Pledge Agreement (except

 

4

 

as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).

 

(d)           Pledgor
has the full right, power and authority to deliver, pledge, assign and transfer
the Pledged Collateral to Secured Party.

 

(e)           [The
[Membership Interests][Partnership Interests] listed on the attached Schedule
II constitute [100][1]% of the issued and outstanding [membership][general partnership]
interests of the respective issuer thereof and all [Membership
Interests][Partnership Interests] in which Pledgor has any ownership
interest.][The Pledged Shares listed on the attached Schedule II constitute
100% of the issued and outstanding shares of capital stock of the respective
issuer thereof and of the Pledged Shares in which Pledgor has any ownership
interests.]

 

(f)            The
name of Pledgor set forth in the first paragraph of this Pledge Agreement is
the exact legal name of Pledgor.  The
legal address of Pledgor and the address of its principal place of business and
chief executive office is 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730.  Pledgor keeps all records and documents
relating to the Pledged Collateral at such address or with Nevada Corporate
Management, Inc., 3773 Howard Hughes Parkway, Suite 300, North Las Vegas,
Nevada 89109.

 

Section 4.               Pledgor’s
Covenants.  During the term of this
Pledge Agreement and until all of the Secured Obligations have been fully and finally
paid and discharged in full, Pledgor covenants and agrees with Secured Party
that:

 

(a)           Protect
Collateral; Further Assurances. 
Pledgor will warrant and defend the rights and title herein granted unto
Secured Party in and to the Pledged Collateral (and all right, title, and
interest represented by the Pledged Collateral) against the claims and demands
of all Persons whomsoever.  Pledgor
agrees that, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action,
that may be reasonably necessary and that Secured Party or any Lender may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Secured Party or any
Lender to exercise and enforce its rights and remedies hereunder with respect
to any Pledged Collateral.

 

(b)           Transfer,
Other Liens, and Additional Shares. 
Pledgor agrees that it will not (i) sell or otherwise dispose of, or
grant any option with respect to, any of the Pledged Collateral or (ii) create
or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for (A) the Liens and security interest under this Pledge
Agreement and (B) other Permitted Liens. 
Pledgor agrees that it will (1) cause each issuer of the Pledged
Collateral not to issue any other membership interests, partnership interests,
capital stock or other securities in addition to or in substitution for the
Pledged Collateral issued by such issuer, except to Pledgor and (2) pledge
hereunder, immediately upon its acquisition (directly or indirectly) thereof,
any additional membership interests, partnership interests, capital stock or
other securities of an issuer of the Pledged

 

5

 

Collateral.  Pledgor shall not
approve any amendment or modification of any of the Pledged Collateral unless
it shall have given at least ten Business Days’ prior written notice (or such
lesser period as may be agreed by Secured Party in writing) to, and such
amendment or modification would not be materially adverse to the interests of
the Lenders.

 

(c)           Jurisdiction
of Formation; Name Change.  Pledgor
shall not (i) amend, supplement, modify or restate its articles or certificate
of incorporation, bylaws, limited liability company agreements, or other
equivalent organizational documents if such amendment, supplement, modification
or restatement would be materially adverse to the interests of the Lenders, or
(ii) unless the Pledgor shall have given Secured Party at least ten Business
Days’ prior written notice (or such lesser period as may be agreed by Secured
Party in writing), amend its name or change its jurisdiction of incorporation,
organization or formation.  Promptly
upon the request of Secured Party, Pledgor shall take all such action as
Secured Party shall reasonably request to maintain the security interest of
Secured Party in the Pledged Collateral granted hereby at all time fully
perfected and in full force and effect.

 

Section 5.               Remedies
upon Default.  If any Event of
Default shall have occurred and be continuing:

 

(a)           UCC
Remedies.  To the extent permitted
by law, Secured Party may exercise in respect of the Pledged Collateral, in
addition to other rights and remedies provided for in this Pledge Agreement or
otherwise available to it, all the rights and remedies of a secured party under
the UCC (whether or not the UCC applies to the affected Pledged
Collateral).  This Pledge Agreement shall
not be construed to authorize the Secured Party to take any action prohibited
by the UCC or to constitute a waiver by the Pledgor of any right that the UCC
does not permit the Pledgor to waive.

 

(b)           Dividends
and Other Rights.

 

(i)            All
rights of Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 2(d)(i) may be
exercised by Secured Party if Secured Party so elects and gives written notice
of such election to Pledgor and all rights of Pledgor to receive the dividends and
other distributions on or in respect of the Pledged Collateral and the proceeds
of sale of the Pledged Collateral which it would otherwise be authorized to
receive and retain pursuant to Section 2(d)(ii) shall cease at such time as
such written notice is deemed effective pursuant to the provisions of the
Credit Agreement related to effectiveness of notices.

 

(ii)           All
dividends and other distributions on or in respect of the Pledged Collateral
and the proceeds of sale of the Pledged Collateral that are thereafter received
by Pledgor shall be received in trust for the benefit of Secured Party, shall
be segregated from other funds of Pledgor, and shall be promptly paid over to
Secured Party as Pledged Collateral in the same form as so received (with any necessary
indorsement).

 

6

 

(c)           Sale
of Pledged Collateral. Secured Party may sell all or part of the Pledged
Collateral at public or private sale, at any of Secured Party’s offices or
elsewhere, for cash, on credit, or for future delivery, and upon such other
terms as Secured Party may deem commercially reasonable in accordance with
applicable laws.  Pledgor agrees that to
the extent permitted by law such sales may be made without notice.  If notice is required by law, Pledgor hereby
deems 10 days’ advance notice of the time and place of any public sale or the
time after which any private sale is to be made reasonable notification,
recognizing that if the Pledged Collateral threatens to decline speedily in value
or is of a type customarily sold on a recognized market shorter notice may be
reasonable.  Secured Party shall not be
obligated to make any sale of the Pledged Collateral regardless of notice of
sale having been given.  Secured Party
may adjourn any public or private sale from time-to-time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned.  Pledgor shall cooperate fully with Secured
Party in all respects in selling or realizing upon all or any part of the
Pledged Collateral.  In addition,
Pledgor shall fully comply with the securities laws of the United States, the
State of [Delaware][Nevada], and other states and take such actions as may be
necessary to permit Secured Party to sell or otherwise dispose of any
securities representing the Pledged Collateral in compliance with such laws.

 

(d)           Exempt
Sale.  If, in the opinion of Secured
Party, there is any question that a public or semipublic sale or distribution
of any Pledged Collateral will violate any state or federal securities law,
Secured Party in its discretion (i) may offer and sell securities privately to
purchasers who will agree to take them for investment purposes and not with a
view to distribution and who will agree to imposition of restrictive legends on
the certificates representing the security, or (ii) may sell such securities in
an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as
amended, and no sale so made in good faith by Secured Party shall be deemed to
be not “commercially reasonable” solely because so made.  Pledgor shall cooperate fully with Secured
Party in all reasonable respects in selling or realizing upon all or any part
of the Pledged Collateral.

 

(e)           Application
of Collateral. The proceeds of any sale, or other realization upon all or
any part of the Collateral pledged by Pledgor shall be applied by Secured Party
as set forth in Section 7.06 of the Credit Agreement.

 

(f)            Cumulative
Remedies.  Each right, power and
remedy herein specifically granted to Secured Party or otherwise available to
it shall be cumulative, and shall be in addition to every other right, power
and remedy herein specifically given or now or hereafter existing at law, in
equity, or otherwise, and each such right, power and remedy, whether
specifically granted herein or otherwise existing, may be exercised at any time
and from time-to-time as often and in such order as may be deemed expedient by
Secured Party in its sole discretion. 
No failure on the part of Secured Party to exercise, and no delay in
exercising, and no course of dealing with respect to, any such right, power or
remedy, shall operate as a waiver thereof, nor shall any single or partial
exercise of any such rights, power or remedy preclude any other or further
exercise thereof or the exercise of any other right.

 

7

 

Section 6.               Secured
Party as Attorney-in-Fact for Pledgor.

 

(a)           Secured
Party Appointed Attorney-in-Fact.  Pledgor
hereby irrevocably appoints Secured Party as Pledgor’s attorney-in-fact, with
full authority after the occurrence and during the continuance of an Event of
Default to act for Pledgor and in the name of Pledgor, and, in Secured Party’s
discretion, subject to Pledgor’s revocable rights specified in Section 2(d), to
take any action and to execute any instrument which Secured Party may deem
necessary or advisable to accomplish the purposes of this Pledge Agreement,
including, without limitation, to receive, indorse, and collect all instruments
made payable to Pledgor representing the proceeds of the sale of the Pledged
Collateral, or any distribution in respect of the Pledged Collateral and to
give full discharge for the same. 
Pledgor hereby acknowledges, consents and agrees that the power of
attorney granted pursuant to this Section is irrevocable and coupled with an
interest.

 

(b)           Secured
Party May Perform. Secured Party may from time-to-time, at its option and
expense, perform any act which Pledgor agrees hereunder to perform and which
Pledgor shall fail to perform after being requested in writing so to perform
(it being understood that no such request need be given after the occurrence
and during the continuance of any Event of Default and after notice thereof by
Secured Party to Pledgor) and Secured Party may from time-to-time take any
other action which Secured Party reasonably deems necessary for the
maintenance, preservation or protection of any of the Pledged Collateral or of
its security interest therein.  Secured
Party shall be obligated to provide notice to Pledgor of any action taken
hereunder by telecopy or by registered mail.

 

(c)           Secured
Party Has No Duty.  The powers
conferred on Secured Party hereunder are solely to protect its interest in the
Pledged Collateral and shall not impose any duty on it to exercise any such
powers.  Except for reasonable care of
any Pledged Collateral in its possession and the accounting for moneys actually
received by it hereunder, Secured Party shall have no duty as to any Pledged
Collateral or responsibility for taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Pledged Collateral.

 

(d)           Reasonable
Care.  Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the
Pledged Collateral in its possession if the Pledged Collateral is accorded
treatment substantially equal to that which Secured Party accords its own
property, it being understood that Secured Party shall have no responsibility
for (i) ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders, or other matters relative to any Pledged
Collateral, whether or not Secured Party has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve rights against any
parties with respect to any Pledged Collateral.

 

Section 7.               Miscellaneous.

 

(a)           Expenses.  Pledgor will upon demand pay to Secured
Party for its benefit and the benefit of the Lenders the amount of any
reasonable out-of-pocket expenses,

 

8

 

including the reasonable fees and disbursements of its counsel and of
any experts, which Secured Party and the Lenders may incur in connection with
(i) the custody, preservation, use, or operation of, or the sale, collection,
or other realization of, any of the Pledged Collateral, (ii) the exercise or
enforcement of any of the rights of Secured Party or any Lender hereunder, and
(iii) the failure by Pledgor to perform or observe any of the provisions
hereof.

 

(b)           Amendments,
Etc.  No amendment or waiver of any
provision of this Pledge Agreement nor consent to any departure by Pledgor
herefrom shall be effective unless made in writing and authenticated by Pledgor
and Secured Party.  In addition, no such
amendment or waiver shall be effective unless given or entered into with the
necessary approvals of the Lenders as required in the Credit Agreement.  Any such waiver or consent, whether by
Secured Party or Secured Party and the Lenders shall be effective only in the
specific instance and for the specific purpose for which given.

 

(c)           Addresses
for Notices.  All notices and other
communications provided for hereunder shall be in the manner and to the
addresses set forth in the Credit Agreement.

 

(d)           Continuing
Security Interest; Transfer of Interest. 
This Pledge Agreement shall create a continuing security interest in the
Pledged Collateral and, unless expressly released by Secured Party, shall (i)
remain in full force and effect until payment in full and termination of the
Secured Obligations, (ii) be binding upon Pledgor, Secured Party, the Lenders
and their successors, and assigns, and (iii) inure, together with the rights
and remedies of Secured Party hereunder, to the benefit of and be binding upon,
Secured Party, the Lenders and their respective successors, transferees, and
assigns.  Upon the payment in full and
termination of the Secured Obligations, the security interest granted hereby
shall terminate and all rights to the Pledged Collateral shall revert to
Pledgor to the extent such Pledged Collateral shall not have been sold or
otherwise applied pursuant to the terms hereof.  Without limiting the generality of the foregoing clause, when any
Lender assigns or otherwise transfers any interest held by it under the Credit
Agreement or other Loan Document to any other Person pursuant to the terms of
the Credit Agreement or other Loan Document, that other Person shall thereupon
become vested with all the benefits held by such Lender under this Pledge
Agreement.  Upon any such termination,
Secured Party will, at Pledgor’s expense, deliver all Pledged Collateral to
Pledgor, execute and deliver to Pledgor such documents as Pledgor shall
reasonably request and take any other actions reasonably requested to evidence
or effect such termination.

 

(e)           Waivers.  Pledgor hereby waives:

 

(i)            promptness,
diligence, notice of acceptance, and any other notice with respect to any of
the Secured Obligations and this Pledge Agreement;

 

(ii)           any
requirement that Secured Party or any Lender protect, secure, perfect, or
insure any Lien or any Property subject thereto or exhaust any right or

 

9

 

take any action against Pledgor, any other Guarantor, Borrower or any
other Person or any collateral; and

 

(iii)          any
duty on the part of Secured Party to disclose to Pledgor any matter, fact, or
thing relating to the business, operation, or condition of Pledgor, any other
Guarantor, Borrower and their respective assets now known or hereafter known by
such Person.

 

(f)            Severability.  Wherever possible each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Pledge Agreement shall
be prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Pledge Agreement.

 

(g)           Choice
of Law.  This Pledge Agreement shall
be governed by and construed and enforced in accordance with the laws of the
state of New York, except to the extent that the validity or perfection of the
security interests hereunder, or remedies hereunder, in respect of any
particular Collateral are governed by the laws of a jurisdiction other than the
state of New York.

 

(h)           Counterparts.  For the convenience of the parties, this
Pledge Agreement may be executed in multiple counterparts, each of which for
all purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Pledge Agreement.

 

(i)            Reinstatement.  If, at any time after payment in full by
Pledgor of all Secured Obligations and termination of Secured Party’s security
interest, any payments on the Secured Obligations previously made by Pledgor or
any other person must be disgorged by Secured Party for any reason whatsoever,
including, without limitation, the insolvency, bankruptcy or reorganization of
Pledgor or such Person, this Pledge Agreement and Secured Party’s security
interests herein shall be reinstated as to all disgorged payments as though
such payments had not been made, and Pledgor shall sign and deliver to Secured
Party all documents, and shall do such other acts and things, as may be
necessary to reinstate and perfect Secured Party’s security interest.

 

(j)            Amendment
and Restatement.  This Pledge
Agreement amends and restates in its entirety the Existing Security Documents,
and all of the terms hereof shall supersede the terms and provisions
thereof.  This Pledge Agreement renews
and extends all Liens existing by virtue of the Existing Security Documents,
but the terms, provisions and conditions of such Liens shall hereafter be
governed in all respects by this Pledge Agreement.

 

10

 

Executed as of
the date first above written.

 

	
   

  	
  BRIGHAM EXPLORATION COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIGHAM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  BRIGHAM OIL & GAS, L.P.

  
	
   

  	
   

  
	
   

  	
  By:      Bringham, Inc., its General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SOCIETE GENERALE, as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					

 

 

SCHEDULE I

 

EXISTING
SECURITY DOCUMENTS

 

 

SCHEDULE II

 

PLEDGED
COLLATERAL

 

 

EXHIBIT H

 

FORM OF AMENDED AND RESTATED SECURITY
AGREEMENT

 

This Amended
and Restated Security Agreement dated as of March 21, 2003 (“Security
Agreement”) is by and between [Brigham Oil & Gas, L.P., a Delaware
limited partnership][insert name and jurisdiction of formation of subsidiary of
other grantor] (“Grantor”), and Société Générale, as administrative agent for
the Lenders party to the Credit Agreement described below (“Secured Party”).

 

INTRODUCTION

 

A.            [Brigham Oil & Gas, L.P., a
Delaware limited partnership (“Borrower”)] [Grantor], the lenders party
thereto, and Bank of Montreal, as agent for such lenders (the “Existing
Agent”), were parties to that certain Amended and Restated Credit Agreement
dated February 17, 2000, as amended (the “Existing Credit Agreement”).

 

B.            In order to secure the full and
punctual payment and performance of the obligations under the Existing Credit
Agreement and the other loan documents contemplated thereby, the Grantor
executed and delivered the security instruments described on Schedule I
attached hereto (the “Existing Security Documents”) in favor of the
Existing Agent and has granted a continuing security interest in and to the
Collateral (as hereafter defined).

 

C.            The Secured Party has replaced the
Existing Agent as the administrative agent under the Existing Credit Agreement.

 

D.            [The Borrower] [Grantor], [Brigham
Exploration Company, a Delaware corporation], [Brigham, Inc., a Nevada
corporation], the lenders named therein (the “Lenders”) and Secured
Party, as agent for the Lenders, have entered into the Second Amended and
Restated Credit Agreement dated as of March 21, 2003 (as amended, restated or
otherwise modified from time-to-time, the “Credit Agreement”), which,
among other things, amends and restates the Existing Credit Agreement in its
entirety.

 

[E.           Grantor has guaranteed the
Obligations of Borrower under the Credit Agreement pursuant to Article VIII
thereof (the “Guaranty”).]

 

F.             Under the Credit Agreement, it is a
condition to the making of Advances by the Lenders that [Grantor][Borrower]
shall amend and restate the Existing Security Documents to secure its
[obligations under the Guaranty][Obligations under the Credit Agreement] by
entering into this Pledge Agreement.

 

Therefore,
Grantor hereby agrees with Secured Party for its benefit and the ratable
benefit of the Lenders as follows:

 

Section 1.               Definitions.  All capitalized terms not otherwise defined
in this Security Agreement that are defined in the Credit Agreement shall have
the meaning assigned to such terms by the Credit Agreement.  Any capitalized terms used in this Security
Agreement that are defined in Article 9 of the Uniform Commercial Code as
adopted in the State of New York

 

 

(“UCC”) shall have the
meanings assigned to those terms by the UCC as of the date of this Security
Agreement, whether specified elsewhere in this Security Agreement or not.  All other rules of interpretation set forth
in Section 1.05 of the Credit Agreement shall apply to this Pledge Agreement
and are hereby incorporated herein by reference.

 

Section 2.               Security Interest.

 

(a)           Grant of Security
Interest.  Grantor hereby grants to
Secured Party for its benefit and the ratable benefit of the Lenders a lien on
and security interest in the Collateral (as defined in Section 2(b) below) to
secure the performance and payment of all Obligations of Grantor now or
hereafter existing under the [Credit Agreement, the Notes][the Guaranty] and
the other Loan Documents to which it is a party, including any extensions,
modifications, substitutions, amendments and renewals thereof, whether for
principal, interest, fees, expenses, indemnification, or otherwise, in each
case including the payment of amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the United States
Bankruptcy Code, 11 U.S.C. §§ 101 et seq., as amended.. 
All such obligations shall be referred to in this Security Agreement as
the “Secured Obligations”.

 

(b)           Collateral.  “Collateral” shall mean all of Grantor’s
right, title, and interest in the following, whether now owned or hereafter
acquired:

 

(i)            Accounts.  All Accounts and all other rights to payment
owing or to be owing to Grantor, including all Instruments, Documents and
Chattel Paper that represent any right of Grantor to payment for Property sold
or leased or for services rendered, whether or not it has been earned by
performance (all such Accounts, Instruments, Documents and Chattel Paper being
the “Receivables”);

 

(ii)           Equipment.  All Equipment, and all parts thereof and all
accessions and additions thereto;

 

(iii)          General
Intangibles.  All General
Intangibles or contract rights relating to, or existing in connection with, the
other Collateral (all such General Intangibles and contract rights being the “General
Intangibles”);

 

(iv)          Inventory.  All Inventory, including, without
limitation, all Goods, whether such Goods are in possession of Grantor or of a
bailee or other Person for sale, lease, storage, transit, processing, use or
otherwise;

 

(v)           Records.  All ledger sheets, files, Records, and
documents relating to the foregoing Collateral; and

 

(vi)          Proceeds.  All Proceeds of the foregoing Collateral
and, to the extent not otherwise included, all payments under any insurance,
indemnity, warranty, or guaranty of or for the foregoing Collateral.

 

Section 3.               Representations and Warranties.  Grantor hereby represents and warrants the
following to Secured Party and the Lenders:

 

2

 

(a)           Ownership of
Collateral; Liens.  Grantor is, and
will be the record and beneficial owner of all Collateral pledged by Grantor
free and clear of any Lien, except for Liens created hereby or other Permitted
Liens.  No effective financing statement
or other instrument similar in effect covering all or any part of the
Collateral is, or will be on file in any recording office, except such as may
be filed in connection with this Security Agreement or in connection with other
Permitted Liens or for which satisfactory releases have been received by
Secured Party.  The execution, delivery
and performance by Grantor of this Security Agreement and the grant of the
security interest in the Collateral to Secured Party are within Grantor’s powers
and have been duly authorized by all necessary governing action.

 

(b)           Authorization and
Approvals.  No consent, order,
authorization, or approval or other action by, and no notice to or filing with,
any Governmental Authority (other than the filing of financing statements) or
any other Person is required for (i) the due execution, delivery and
performance by Grantor of this Security Agreement, (ii) the grant by Grantor of
the security interest in the Collateral granted by this Security Agreement,
(iii) the perfection of such security interest or (iv) the exercise by Secured
Party or any Lender of its rights and remedies under this Security Agreement
(except as may be required in connection with such disposition by laws
affecting the offering and sale of securities generally).

 

(c)           Lien Priority and
Perfection.  On the Closing Date
this Security Agreement will create valid and continuing security interests in
the Collateral, securing the payment of the Secured Obligations.  Upon the filing of financing statements in
the office(s) set forth on Schedule II attached hereto, the security interests
granted to Secured Party hereunder will constitute valid first-priority
perfected security interests in all Collateral with respect to which a security
interest can be perfected by the filing of a financing statement, subject only
to Permitted Liens.

 

(d)           Legal Name;
Address; Location of Records.  The
name of Grantor set forth in the first paragraph of this Security Agreement is
the exact legal name of Grantor.  The
legal address of Grantor and the address of Grantor’s principal place of
business and chief executive office is 6300 Bridge Point Parkway, Building 2,
Suite 500, Austin, Texas 78730.  Grantor
keeps all records and documents relating to the Collateral at such address.

 

Section 4.               Grantor Covenants.

 

(a)           Further
Assurances.  Grantor agrees that at
any time, at Grantor’s expense, Grantor will promptly execute and deliver all
further instruments and documents, and take all further action, that may be
reasonably necessary or that Secured Party or any Lender may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Secured Party or any Lender to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.  Without limiting the
generality of the foregoing, Grantor will at Secured Party’s request:

 

3

 

(i)            with respect to any
of the Collateral that is evidenced by a promissory note or other Instrument or
by Chattel Paper and if, in the case of any such instrument, its value exceeds
$100,000, deliver and pledge to the Administrative Agent such note, Instrument
or Chattel Paper, duly indorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to the
Administrative Agent; and

 

(ii)           file (or authorize
the filing of) such financing or continuation statements, or amendments
thereto, and such other instruments or notices as may be reasonably necessary,
or as Secured Party may reasonably request, in order to perfect and preserve
the security interests granted or purported to be granted hereby.

 

(b)           Insurance.

 

(i)            Grantor shall, at
its own expense, maintain, or cause to be maintained, insurance with respect to
the Collateral owned by Grantor in such amounts, against such risks, in such
form, and with such insurers, as the Credit Agreement requires.  Further, Grantor shall deliver certificates
of insurance as the Credit Agreement requires.

 

(ii)           During the
continuance of any Event of Default, all loss casualty insurance payments in
respect to such Collateral shall be paid to and applied by Secured Party as
specified in the Credit Agreement.

 

(c)           Jurisdiction of
Formation; Name Change.  Grantor
shall not (i) amend, supplement, modify or restate its articles or certificate
of incorporation, bylaws, limited liability company agreements, or other
equivalent organizational documents if such amendment, supplement, modification
or restatement would be materially adverse to the interests of the Lenders, or
(ii) unless the Grantor shall have given Secured Party at least ten Business
Days’ prior written notice (or such lesser period as may be agreed by Secured
Party in writing), amend its name or change its jurisdiction of incorporation,
organization or formation.  Promptly
upon the request of Secured Party, Grantor shall take all such action as
Secured Party shall reasonably request to maintain the security interest of
Secured Party in the Collateral granted hereby at all time fully perfected and
in full force and effect.

 

(d)           Right of
Inspection.  Grantor will hold and
preserve, at its own cost and expense satisfactory and complete records of the
Collateral, including, but not limited to, Instruments, Documents, Chattel
Paper, contracts, and Records with respect to the Receivables.

 

(e)           Liability Under
Contracts and Receivables. 
Notwithstanding anything in this Security Agreement to the contrary,

 

(i)            the execution of
this Security Agreement shall not release Grantor from its obligations and
duties under the contracts and agreements and Receivables included in the
Collateral to the extent set forth therein,

 

4

 

(ii)           the exercise by
Secured Party of any of its rights hereunder shall not release Grantor from any
of its duties or obligations under the contracts and agreements and the
Receivables included in the Collateral, and

 

(iii)          Secured Party shall
not have any obligation or liability under the contracts and agreements and the
Receivables included in the Collateral by reason of the execution and delivery
of this Security Agreement, nor shall Secured Party be obligated to perform any
of the obligations or duties of Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.

 

(f)            Transfer of
Certain Collateral; Release of Certain Security Interest.  Grantor agrees that it shall not sell,
assign, or otherwise dispose of any Collateral except as otherwise permitted
under the Credit Agreement.  Secured
Party shall promptly, at Grantor’s expense, execute and deliver all further
instruments and documents, and take all further action that Grantor may
reasonably request in order to release its security interest in any Collateral
that is disposed of in accordance with the terms of the Credit Agreement.

 

(g)           Receivables.  Grantor agrees that it will use commercially
reasonable efforts to ensure that each Receivable:

 

(i)            is and will be, in
all material respects, the genuine, legal, valid, and binding obligations of
the Account Debtor in respect thereof, representing an unsatisfied obligation
of such Account Debtor (except to the extent compromised or settled in the
ordinary course of business),

 

(ii)           is and will be, in
all material respects, enforceable in accordance with its terms, is not and
will not be subject to any setoffs, defenses, taxes, counterclaims, except in
the ordinary course of business,

 

(iii)          is and will be, in
all material respects, in compliance with all applicable Legal Requirements, whether
federal, state, local or foreign, and

 

(iv)          that if evidenced by
Chattel Paper, will not require the consent of the account debtor in respect
thereof in connection with its assignment hereunder.

 

Section 5.               Remedies.  If any Event of Default shall have occurred
and be continuing:

 

(a)           UCC Remedies.

 

(i)            To the extent
permitted by law, Secured Party may exercise in respect of the Collateral, in
addition to other rights and remedies provided for in this Security Agreement
or otherwise available to it, all the rights and remedies of a secured party
under the UCC (whether or not the UCC applies to the affected Collateral).  This Security Agreement shall not be
construed to authorize the Secured Party to take any action prohibited by the
UCC or to constitute a waiver by the Grantor of any right that the UCC does not
permit the Grantor to waive.

 

5

 

(ii)           Upon written notice
to Grantor, all payments received by Grantor under or in connection with or in
respect of the Collateral shall be deposited with Secured Party.

 

(b)           Assembly of
Collateral.  Secured Party may, in
its reasonable discretion, require Grantor to, at Grantor’s expense, promptly
assemble all or part of the Collateral in such locations as Grantor and Secured
Party may agree at such time and that is reasonably convenient to both parties,
and make it available to Secured Party at such locations.  Secured Party may occupy any premises owned
or leased by Grantor where the Collateral or any part thereof is assembled for
a reasonable period in order to effectuate its rights and remedies hereunder or
under law, without obligation to Grantor in respect of such occupation.

 

(c)           Sale of
Collateral.  Secured Party may sell
all or part of the Collateral at a public or private sale, at any of Secured
Party’s offices or elsewhere, for cash, on credit, or for future delivery, and
upon such other terms as Secured Party may deem commercially reasonable.  Secured Party shall give Grantor 10 days
advance notice of the time and place of any public sale or the time after which
any private sale is to be made reasonable notification, recognizing that if the
Collateral is perishable or threatens to decline speedily in value or is of a
type customarily sold on a recognized market shorter notice may be
reasonable.  Secured Party shall not be
obligated to make any sale of Collateral regardless of notice of sale having
been given.  Secured Party may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned.

 

(d)           Contract Rights.  Secured Party may exercise any rights and
remedies of Grantor under or in connection with the Instruments, Documents,
Chattel Paper, or contracts which represent Receivables, the General
Intangibles, or otherwise relate to the Collateral, including, without
limitation, any rights of Grantor to demand or otherwise require payment of any
amount under, or performance of any provisions of, the Instruments, Documents,
Chattel Paper, or contracts which represent Receivables or the General
Intangibles.

 

(e)           Receivables.

 

(i)            Secured Party may,
or may direct Grantor to, take any action Secured Party deems necessary or
advisable to enforce collection of the Receivables including, without
limitation, notifying the Account Debtors or obligors under any Receivables of
the assignment of such Receivables to Secured Party and directing such Account
Debtors or obligors to make payment of all amounts due or to become due
directly to Secured Party.  Upon such
notification and direction, and at the expense of Grantor, Secured Party may
enforce collection of any such Receivables, and adjust, settle, or compromise
the amount or payment thereof in the same manner and to the same extent as
Grantor might have done.

 

6

 

(ii)           After receipt by
Grantor of the notice referred to in subparagraph (i) above, all amounts and
Proceeds (including Instruments) received by Grantor in respect of the
Receivables shall be received in trust for the benefit of Secured Party
hereunder, shall be segregated from other funds of Grantor, and shall promptly
be paid over to Secured Party in the same form as so received (with any
necessary indorsement) to be held as Collateral.  Grantor shall not adjust, settle, or compromise the amount or
payment of any Receivable, or release wholly or partly any Account Debtor or
obligor thereof, or allow any credit or discount thereon other than in the
ordinary course of business and consistent with past practices.

 

Section 6.               Application of
Collateral.  The proceeds of any
sale, or other realization upon all or any part of the Collateral pledged by
Grantor shall be applied by Secured Party in the order set forth in Section
7.06 of the Credit Agreement.

 

Section 7.               Secured Party as
Attorney-in-Fact for Grantor.

 

(a)           Attorney-In-Fact.  Grantor hereby irrevocably appoints Secured
Party as Grantor’s attorney-in-fact, with full authority after the occurrence
and during the continuance of an Event of Default to act for Grantor and in the
name of Grantor to, in Secured Party’s discretion:

 

(i)            file one or more
financing or continuation statements, and amendments thereto, relative to all or
any part of the Collateral;

 

(ii)           to obtain and
adjust insurance as required pursuant to Section 5.02 of the Credit Agreement
to the extent Grantor has failed to provide such insurance;

 

(iii)          to receive,
indorse, and collect any drafts or other Instruments, Documents, and Chattel
Paper which are part of the Collateral pledged by Grantor;

 

(iv)          to take or cause to
be taken, all actions necessary to perform or comply or cause performance or
compliance with the terms of this Security Agreement, including, without
limitation, actions to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral;

 

(v)           to ask, demand,
collect, sue for, recover, compromise, receive, and give acquittance and
receipts for moneys due and to become due under or in respect of any of the
Collateral pledged by Grantor and to file any claims or take any action or
institute any proceedings which Secured Party may deem necessary or desirable
for the collection of any of such Collateral or otherwise to enforce the rights
of Secured Party with respect to any of such Collateral.

 

The power of
attorney granted hereby is coupled with an interest and is irrevocable.

 

7

 

(b)           Secured Party May
Perform.  Secured Party may from
time-to-time, at its option and expense, perform any act which Grantor agrees
hereunder to perform and which Grantor shall fail to perform after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of any Event of
Default) and Secured Party may from time-to-time take any other action which
Secured Party reasonably deems necessary for the maintenance, preservation or
protection of any of the Collateral or of its security interest therein.

 

(c)           Secured Party Has
No Duty.  The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty on it to exercise any such powers.  Except for reasonable care of any Collateral
in its possession and the accounting for moneys actually received by it
hereunder, Secured Party shall have no duty as to any Collateral or
responsibility for taking any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.

 

(d)           Reasonable Care.  Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in
its possession if the Collateral is accorded treatment substantially equal to
that which Secured Party accords its own Property, it being understood that
Secured Party shall have no responsibility for taking any necessary steps to
preserve rights against any parties with respect to any Collateral.

 

Section 8.               Miscellaneous.

 

(a)           Expenses.  Grantor will upon demand pay to Secured
Party for its benefit and the benefit of the Lenders the amount of any
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of its counsel and of any experts, which Secured Party and the
Lenders may incur in connection with:

 

(i)            the custody,
preservation, use, or operation of, or the sale, collection, or other
realization of, any of the Collateral,

 

(ii)           the exercise or
enforcement of any of the rights of Secured Party or any Lender hereunder, and

 

(iii)          the failure by
Grantor to perform or observe any of the provisions hereof.

 

(b)           Amendments; Etc.  No amendment or waiver of any provision of
this Security Agreement nor consent to any departure by Grantor herefrom shall
be effective unless made in writing and authenticated by Grantor and Secured
Party.  In addition, no such amendment
or waiver shall be effective unless given or entered into with the necessary
approvals of the Lenders as required in the Credit Agreement.  Any such waiver or consent, whether by
Secured Party or Secured Party and the Lenders shall be effective only in the
specific instance and for the specific purpose for which given.

 

8

 

(c)           Addresses for
Notices.  All notices and other
communications provided for hereunder shall be made in the manner and to the
addresses set forth in the Credit Agreement.

 

(d)           Continuing
Security Interest; Transfer of Interest. 
This Security Agreement shall create a continuing security interest in
the Collateral and, unless expressly released by Secured Party, shall:

 

(i)            remain in full
force and effect until payment in full and termination of the Secured
Obligations,

 

(ii)           be binding upon
Grantor, Secured Party, the Lenders and their successors, and assigns, and

 

(iii)          inure, together
with the rights and remedies of Secured Party, hereunder, to the benefit of
Secured Party, the Lenders and their respective successors, transferees, and
assigns.

 

Upon the
payment in full and termination of the Secured Obligations, the security
interest granted hereby shall terminate and all rights to the Collateral
pledged by Grantor shall revert to Grantor to the extent such Collateral shall
not have been sold or otherwise applied pursuant to the terms hereof.  Without limiting the generality of the
foregoing clause, when any Lender assigns or otherwise transfers any interest
held by it under the Credit Agreement or other Loan Document to any other
Person pursuant to the terms of the Credit Agreement or other Loan Document,
that other Person shall thereupon become vested with all the benefits held by
such Lender under this Security Agreement. 
Upon any such termination, Secured Party will, at Grantor’s expense, execute
and deliver to Grantor such documents as Grantor shall reasonably request and
take any other actions reasonably requested to evidence or effect such
termination.

 

(e)           Severability.  Wherever possible each provision of this
Security Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Security Agreement
shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Security Agreement.

 

(f)            Choice of Law.  This Security Agreement shall be governed by
and construed and enforced in accordance with the laws of the state of New
York, except to the extent that the validity or perfection of the security
interests hereunder, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the state of
New York.

 

(g)           Amendment and
Restatement.  This Security
Agreement amends and restates in its entirety the Existing Security Documents,
and all of the terms hereof shall supersede the terms and provisions
thereof.  This Security Agreement renews
and extends all Liens existing by virtue of the Existing Security Documents,
but the terms, provisions

 

9

 

and conditions
of such Liens shall hereafter be governed in all respects by this Security
Agreement.

 

10

 

IN WITNESS
WHEREOF, the parties hereto have caused this Security Agreement to be duly
executed as of the date first above written.

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  [BRIGHAM OIL
  & GAS, L.P., a Delaware

  limited partnership

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Brigham,
  Inc., its general partner]

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  
	
   

  	
  SOCIÉTÉ
  GÉNÉRALE, as Administrative

  Agent for the ratable benefit of the Lenders

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
								

 

11

 

SCHEDULE I

 

EXISTING SECURITY DOCUMENTS

 

 

SCHEDULE II

 

UCC FILING LOCATIONSQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.54    
  

$20,000,000 

AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT  

among 

BRIGHAM OIL & GAS, L.P.,
  

as the Borrower, 

BRIGHAM EXPLORATION COMPANY,

and
 BRIGHAM, INC.,

as
Guarantors, 

THE LENDERS PARTY HERETO FROM TIME TO TIME
  

as Lenders, 

and

THE ROYAL BANK OF SCOTLAND plc,  

as Agent, 

March 21,
2003 

  

 
 

TABLE OF CONTENTS    
  

	 
	 	Page

	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS	 	1
	 	

Section 1.01 Certain Defined Terms	
 	

1
	 	Section 1.02 Computation of Time Periods	 	13
	 	Section 1.03 Accounting Terms; Changes in GAAP	 	13
	 	Section 1.04 Miscellaneous	 	13
	

ARTICLE II CREDIT FACILITIES	
 	

14
	 	

Section 2.01 Advances.	
 	

14
	 	Section 2.02 Intentionally Omitted.	 	14
	 	Section 2.03 Intentionally Omitted.	 	14
	 	Section 2.04 Reduction of the Commitments.	 	14
	 	Section 2.05 Prepayment of Advances.	 	15
	 	Section 2.06 Repayment of Advances	 	15
	 	Section 2.07 Intentionally Omitted.	 	15
	 	Section 2.08 Intentionally Omitted.	 	15
	 	Section 2.09 Interest.	 	15
	 	Section 2.10 Payments and Computations.	 	16
	 	Section 2.11 Sharing of Payments, Etc	 	17
	 	Section 2.12 Intentionally Omitted.	 	17
	 	Section 2.13 Increased Costs	 	17
	 	Section 2.14 Taxes.	 	18
	

ARTICLE III CONDITIONS OF LENDING	
 	

19
	 	

Section 3.01 Conditions Precedent to Closing Date	
 	

19
	 	Section 3.02 Conditions Precedent to All Borrowings	 	22
	

ARTICLE IV REPRESENTATIONS AND WARRANTIES	
 	

22
	 	

Section 4.01 Corporate Existence; Subsidiaries	
 	

22
	 	Section 4.02 Corporate Power	 	22
	 	Section 4.03 Authorization and Approvals	 	23
	 	Section 4.04 Enforceable Obligations	 	23
	 	Section 4.05 Financial Statements.	 	23
	 	Section 4.06 True and Complete Disclosure	 	23
	 	Section 4.07 Litigation	 	23
	 	Section 4.08 Taxes.	 	24
	 	Section 4.09 Pension Plans	 	24
	 	Section 4.10 Condition of Property; Casualties.	 	25
	 	Section 4.11 Security Instruments.	 	26
	 	Section 4.12 No Burdensome Restrictions; No Defaults.	 	27
	 	Section 4.13 Environmental Condition	 	27
	 	Section 4.14 Gas Contracts	 	28
	 	Section 4.15 Compliance with Laws	 	28
	 	Section 4.16 Hedging Agreements	 	28
	 	Section 4.17 Material Agreements	 	28
	 	Section 4.18 Organizational Documents	 	29
	 	Section 4.19 Guarantors	 	29
	 	Section 4.20 Insurance	 	29

i

 

	 	Section 4.21 Use of Proceeds	 	29
	 	Section 4.22 Investment Company Act	 	29
	 	Section 4.23 Public Utility Holding Company Act	 	29
	 	Section 4.24 Transmitting Utility	 	29
	

ARTICLE V AFFIRMATIVE COVENANTS	
 	

29
	 	

Section 5.01 Compliance with Laws, Etc	
 	

29
	 	Section 5.02 Maintenance of Insurance.	 	29
	 	Section 5.03 Preservation of Corporate Existence, Etc	 	30
	 	Section 5.04 Payment of Taxes, Etc	 	30
	 	Section 5.05 Inspection; Books and Records	 	30
	 	Section 5.06 Reporting Requirements	 	30
	 	Section 5.07 Maintenance of Property	 	33
	 	Section 5.08 Environmental Laws	 	33
	 	Section 5.09 Payment of Trade Payables	 	33
	 	Section 5.10 Use of Proceeds	 	33
	 	Section 5.11 Additional Collateral	 	33
	 	Section 5.12 New Subsidiaries	 	34
	 	Section 5.13 Title	 	34
	 	Section 5.14 Further Assurances	 	34
	

ARTICLE VI NEGATIVE COVENANTS	
 	

35
	 	

Section 6.01 Liens, Etc	
 	

35
	 	Section 6.02 Debts, Guaranties, and Other Obligations	 	35
	 	Section 6.03 Agreements Restricting Liens and Distributions	 	36
	 	Section 6.04 Merger or Consolidation	 	36
	 	Section 6.05 Sales of Assets	 	37
	 	Section 6.06 Restricted Payments	 	37
	 	Section 6.07 Investments and Acquisitions.	 	37
	 	Section 6.08 Affiliate Transactions	 	37
	 	Section 6.09 Compliance with ERISA	 	37
	 	Section 6.10 Sales and Leasebacks	 	38
	 	Section 6.11 Change of Business	 	38
	 	Section 6.12 Use of Proceeds	 	38
	 	Section 6.13 Gas Imbalances, Take-or-Pay or Other Prepayments	 	38
	 	Section 6.14 Additional Subsidiaries	 	39
	 	Section 6.15 Limitation on Leases	 	39
	 	Section 6.16 Environmental Matters	 	39
	 	Section 6.17 Borrower as Operator	 	39
	 	Section 6.18 Equity Interests of Partners	 	39
	 	Section 6.19 Speculative Trading	 	39
	 	Section 6.20 Change of Name; Fiscal Year; Accounting Method	 	39
	 	Section 6.21 Current Ratio	 	40
	 	Section 6.22 Interest Coverage Ratio	 	40
	 	Section 6.23 Restrictions on Limited Partners	 	40
	 	Section 6.24 Advance Payment Contracts	 	40
	

ARTICLE VII EVENTS OF DEFAULT; REMEDIES	
 	

40
	 	

Section 7.01 Events of Default	
 	

40
	 	Section 7.02 Optional Acceleration of Maturity	 	41
	 	Section 7.03 Automatic Acceleration of Maturity	 	42

ii

 

	 	Section 7.04 Right of Set off	 	42
	 	Section 7.05 Non-exclusivity of Remedies	 	42
	 	Section 7.06 Application of Proceeds	 	42
	

ARTICLE VIII THE GUARANTY	
 	

43
	 	

Section 8.01 Liabilities Guaranteed	
 	

43
	 	Section 8.02 Nature of Guaranty	 	43
	 	Section 8.03 Agent's Rights	 	43
	 	Section 8.04 Guarantor's Waivers.	 	43
	 	Section 8.05 Maturity of Obligations, Payment	 	44
	 	Section 8.06 Agent's Expenses	 	44
	 	Section 8.07 Liability	 	44
	 	Section 8.08 Events and Circumstances Not Reducing or Discharging any Guarantor's Obligations	 	44
	 	Section 8.09 Subordination of All Guarantor Claims	 	46
	 	Section 8.10 Claims in Bankruptcy	 	46
	 	Section 8.11 Payments Held in Trust	 	47
	 	Section 8.12 Liens Subordinate	 	47
	 	Section 8.13 Guarantor's Enforcement Rights	 	47
	

ARTICLE IX THE AGENT	
 	

47
	 	

Section 9.01 Authorization and Action	
 	

47
	 	Section 9.02 Agent's Reliance, Etc	 	47
	 	Section 9.03 The Agent and Its Affiliates	 	48
	 	Section 9.04 Lender Credit Decision	 	48
	 	Section 9.05 Indemnification	 	48
	 	Section 9.06 Successor Agent	 	49
	 	Section 9.07 Collateral Matters.	 	49
	

ARTICLE X MISCELLANEOUS	
 	

50
	 	

Section 10.01 Amendments, Etc	
 	

50
	 	Section 10.02 Notices, Etc	 	50
	 	Section 10.03 No Waiver; Remedies	 	51
	 	Section 10.04 Costs and Expenses	 	51
	 	Section 10.05 Binding Effect	 	51
	 	Section 10.06 Lender Assignments and Participations	 	51
	 	Section 10.07 Indemnification	 	53
	 	Section 10.08 Execution in Counterparts	 	53
	 	Section 10.09 Survival of Representations, Etc	 	53
	 	Section 10.10 Severability	 	53
	 	Section 10.11 Governing Law	 	53
	 	Section 10.12 Submission To Jurisdiction; Waivers	 	54
	 	Section 10.13 Waiver of Jury Trial	 	54
	 	Section 10.14 Oral Agreements	 	54
	 	Section 10.15 Dissemination of Information	 	55
	 	Section 10.16 Production Proceeds	 	55
	 	Section 10.17 Amendment and Restatement	 	55
	 	 	

EXHIBITS	
 	

 
	 	 	

EXHIBIT A Form of Assignment and Acceptance	
 	

 
	 	 	EXHIBIT B Form of Compliance Certificate	 	 

iii

 

	 	 	EXHIBIT C [Reserved]	 	 
	 	 	EXHIBIT D [Reserved]	 	 
	 	 	EXHIBIT E Form of Subordinated Note	 	 
	 	 	EXHIBIT F Form of Second Mortgage Amendment	 	 
	 	 	EXHIBIT G Form of Second Pledge Agreement	 	 
	 	 	EXHIBIT H Form of Second Security Agreement	 	 
	 	 	

SCHEDULES	
 	

 
	 	 	

SCHEDULE 1 Notice Information, Commitments	
 	

 
	 	 	SCHEDULE 1.01 Preferred Shareholders	 	 
	 	 	SCHEDULE 4.01 Subsidiaries	 	 
	 	 	SCHEDULE 4.07 Litigation	 	 
	 	 	SCHEDULE 4.10 Title	 	 
	 	 	SCHEDULE 4.14 Gas Contracts	 	 
	 	 	SCHEDULE 4.16 Hedging Agreements	 	 
	 	 	SCHEDULE 4.17 Material Agreements	 	 
	 	 	SCHEDULE 6.01 Permitted Liens	 	 
	 	 	SCHEDULE 6.02 Debt	 	 
	 	 	SCHEDULE 6.02(i) Additional Permitted Debt	 	 
	 	 	SCHEDULE 6.07 Permitted Investments	 	 

iv

 
 

AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT    
  

        THIS
AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT dated as of March 21, 2003 is among BRIGHAM OIL & GAS, L.P., a Delaware limited partnership (the
"Borrower"), BRIGHAM EXPLORATION COMPANY, a Delaware corporation ("Brigham Exploration"),
BRIGHAM, INC., a Nevada corporation (the "General Partner"), the lenders party hereto from time to time (the
"Lenders"), and THE ROYAL BANK OF SCOTLAND plc, as agent (in such capacity, the "Agent"). 

 
 

INTRODUCTION    
  

        A.    The
Borrower, the lenders party thereto, and The Royal Bank of Scotland plc, as agent, are parties to that certain Subordinated Credit Agreement dated October 31,
2000, as amended on or before the date hereof (the "Existing Subordinated Credit Agreement"). 

        B.    The
Borrower, the Lenders and the Agent desire to refinance the indebtedness and obligations arising under the Existing Subordinated Credit Agreement, and the
indebtedness and liens arising under the Existing Subordinated Credit Agreement shall be assigned to the Agent and the Lenders pursuant hereto, so that all indebtedness and obligations arising
hereunder shall be secured by such liens and security interests as were created pursuant to the Existing Subordinated Credit Agreement and such other liens as provided for herein, and the terms of the
Borrower's financing shall hereafter be amended and restated in its entirety as set forth herein. 

        C.    Reference
is made to that certain Second Amended and Restated Credit Agreement dated as of the date hereof (the "Senior Credit
Agreement") among the Borrower, Brigham Exploration, the General Partner, the lenders party thereto from time to time (the "Senior
Lenders"), Société Générale, as lead arranger (the "Lead Arranger"),
as administrative agent for the Senior Lenders (the "Senior Agent") and as issuing lender for the Senior Lenders (the "Issuing
Lender"), The Royal Bank of Scotland plc, as co-arranger (the "Co-Arranger") and as documentation agent
(the "Documentation Agent"), and Bank of America, N.A., as Syndication Agent (the "Syndication Agent"). 

        D.    Pursuant
to that certain Amended and Restated Intercreditor and Subordination Agreement dated as of the date hereof (the "Intercreditor and
Subordination Agreement") among the Senior Agent, the Agent, the Borrower and the Guarantors, the Subordinated Obligations (as hereinafter defined) are expressly subordinated
to the Senior Obligations (as hereinafter defined). 

        Therefore,
the Borrower, the Guarantors (as defined below), the Lenders and the Agent agree as follows: 

 
 

ARTICLE I    
    
    DEFINITIONS AND ACCOUNTING TERMS    
  

        Section 1.01    Certain Defined Terms.    As used in this Agreement, the terms defined above shall have the
meanings set forth therein and the following terms shall have the following meanings (unless otherwise indicated, such meanings to be equally applicable to both the singular and plural forms of the
terms defined): 

        "Acceptable Security Interest" in any Property means a Lien which (a) exists in favor of the Agent for the benefit of the Agent and
the Lenders, (b) is superior to all Liens or rights of any other Person in the Property encumbered thereby, other than Permitted Liens, (c) secures the Subordinated Obligations, and
(d) is perfected and enforceable. 

        "Advance" means any advance hereunder of monies by a Lender to the Borrower as part of a Borrowing. 

        "Advance Payment Contract" means any contract whereby any Person either receives or becomes entitled to receive (either directly or
indirectly through a third party for such Person's 

 

account or benefit) any payment (an "Advance Payment") to be applied toward the payment of the purchase price of Hydrocarbons produced or to be
produced from any Oil and Gas Properties owned by such Person and which Advance Payment is paid or to be paid more than 90 days in advance of actual delivery of such production to or for the
account of the purchaser regardless of such production, and the Advance Payment is, or is to be, applied as payment in full for such production when sold and delivered or is, or is to become applied
as payment for a portion only of the purchase price thereof or for a percentage or a share of such production. 

        "Affiliate" of any Person shall mean (a) any Person directly or indirectly controlled by, controlling or under common control with
such first Person, (b) any director or officer of such first Person or of any Person referred to in clause (a) above and (c) if any Person in clause (a) above is an
individual, any member of the immediate family (including parents, spouse and children) of such individual and any trust whose principal beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member or trust. For purposes of this definition, any Person which owns directly or indirectly 20% or more of the securities having
ordinary voting power for the election of directors or other governing body of a corporation or 20% or more of the partnership or other ownership interests of any other Person (other than as a limited
partner of such other Person) will be deemed to "control" (including, with its correlative meanings, "controlled by" and "under common control with") such corporation or other Person;  provided,
however, that "Affiliate" shall not include any Affiliates of the Preferred Shareholders or GA
Partners. 

        "Affiliated Fund" means with respect to GA Partners or any Preferred Shareholder, any other fund that is managed or advised by the same
manager, general partner or investment advisor as GA Partners or such Preferred Shareholder or by an Affiliate of such manager, general partner or investment advisor. 

        "Agent" means The Royal Bank of Scotland plc, in its capacity as agent pursuant to Article IX and any successor agent pursuant to
Section 9.06. 

        "Agreement" means this Amended and Restated Subordinated Credit Agreement, as the same may be amended, supplemented, and otherwise
modified from time to time. 

        "Applicable Lending Office" means, with respect to any Lender, the office of such Lender specified as its "Lending Office" opposite its
name on Schedule 1 or such other office of such Lender as such Lender may from time to time specify to the Borrower and the Agent. 

        "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Eligible Assignee, and accepted by the
Agent, in substantially the form of the attached Exhibit A. 

        "Borrower" has the meaning given thereto in the Preamble. 

        "Borrowing" means a borrowing of Advances renewed and extended by each Lender pursuant to Section 2.01. 

        "Borrowing Base" has the meaning assigned to it now and from time to time hereafter in the Senior Credit Agreement. 

        "Brigham Exploration" has the meaning given thereto in the Preamble. 

        "Business Day" means a day of the year on which banks are not required or authorized to close in New York, New York. 

        "Capital Leases" means, as applied to any Person, any lease of any Property by such Person as lessee which would, in accordance with GAAP,
be required to be classified and accounted for as a capital lease on the balance sheet of such Person. 

2

 

        "Capital Stock" means any and all shares, interest, participations or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interest in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. 

        "Cash Equivalents" means (a) 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 or less from the date of creation thereof, (b) commercial paper maturing within one year from the date of creation thereof
rated in the highest grade by Standard and Poor's Ratings Group ("S&P") and by Moody's Investors Service, Inc.
("Moody's"), (c) 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, Canada or England or any other bank or trust company which is organized under the laws of the United States, Canada or England or any state or
province thereof, has capital, surplus and undivided profits aggregating at least $100,000,000.00 (as of the date of such Lender's or bank or trust company's most recent financial reports) and has a
short term deposit rating of not lower than A2 or P2, as such rating is set forth from time to time by S&P or Moody's, respectively, and (d) deposits in money market funds investing exclusively
in investments described in clauses (a) through (c) of this definition. 

        "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, state and local analogs, and
all rules and regulations and requirements thereunder in each case as now or hereafter in effect. 

        "Change of Control" means any of the following: (a) any acquisition pursuant to which any Person or group (as defined in
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (other than the Preferred Shareholders) has become the direct or indirect beneficial owner (as defined in Rule 13d-3 under
the Exchange Act) of more than 35% of the Voting Stock of Brigham Exploration; (b) any transaction or acquisition pursuant to which any one or more of the Preferred Shareholders have become
(whether pursuant to any Preferred Shareholder Transaction or otherwise) the direct or indirect beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of more than 47%
of the Voting Stock of Brigham Exploration; (c) Brigham Exploration is merged with or into or consolidated with another Person except as otherwise permitted by Section 6.04;
(d) Brigham Exploration, either individually or in conjunction with one or more of its Subsidiaries, sells, conveys, transfers or leases, or its Subsidiaries sell, convey, transfer or lease,
all or substantially all of the assets of Brigham Exploration and its Subsidiaries, taken as a whole (either in one transaction or a series of related transactions), including Capital Stock of its
Subsidiaries, to any Person except as otherwise permitted by Section 6.04; (e) the first day on which a majority of the individuals who constitute the Board of Directors of Brigham
Exploration are not Continuing Directors or (f) Brigham Exploration shall cease to own, directly or indirectly, 100% of the Capital Stock of the Borrower. 

        "Closing Date" means the date on which the conditions set forth in Section 3.01 are satisfied, which date shall not be later than
March 31, 2003. 

        "Code" means the Internal Revenue Code of 1986, as amended, and any successor statute. 

        "Collateral" means Property of the Credit Parties, now owned or hereafter acquired, that is subject to any Lien in favor of the Agent, or
the Lenders, to secure, directly or indirectly, the Subordinated Obligations. 

        "Commitment" means, for any Lender, the amount set opposite such Lender's name on  Schedule 1 as its "Commitment", or if such Lender has entered into any Assignment
and Acceptance, as set forth for such Lender as its Commitment
in the Register maintained by the Agent pursuant to Section 10.06(c), as such amount may be reduced or terminated pursuant to 

3

 

Section 2.04 or Article VII or otherwise under this Agreement. The original aggregate amount of the Commitments is $20,000,000 (plus an amount equal to $3,000,000 to reflect any
interest paid in kind pursuant to Section 2.09(a)). 

        "Compliance Certificate" means a compliance certificate in the form of the attached  Exhibit B signed by a Responsible Officer of Brigham Exploration. 

        "Consolidated Net Income" means, with respect to Brigham Exploration and its consolidated Subsidiaries, for any period, the aggregate of
the net income (or loss) of Brigham Exploration and its consolidated Subsidiaries after allowances for taxes for such period as determined on a consolidated basis in accordance with GAAP;  provided that
there shall be excluded from the calculation of such net income (to the extent otherwise included therein) the following: (a) the
net income of any Person in which Brigham Exploration or any 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 Brigham Exploration and its consolidated Subsidiaries in accordance with GAAP), except to the extent of the amount of dividends or distributions actually paid in such period by such other
Person to Brigham Exploration or to a consolidated Subsidiary, as the case may be; (b) the net income (but not loss) 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 Legal
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, including gains or losses
attributable to Property sales not in the ordinary course of business; and (e) the cumulative effect of a change in accounting principles and any gains or losses attributable to writeups or
writedowns of assets. 

        "Continuing Director" means an individual who (a) is a member of the full Board of Directors of Brigham Exploration and
(b) either (i) was a member of the Board of Directors of Brigham Exploration on the Closing Date or (ii) whose nomination for election or election to the Board of Directors of
Brigham Exploration was approved by vote of at least two-thirds of the directors then still in office who were either directors on the Closing Date or whose election or nomination for
election was previously so approved. 

        "Controlled Group" means all members of a controlled group of corporations and all businesses (whether or not incorporated) under common
control which, together with the Borrower, are treated as a single employer under Section 414 of the Code. 

        "Credit Parties" means the Borrower and the Guarantors. 

        "Debt" means, for any Person, without duplication: 

        (a)  indebtedness
of such Person for borrowed money; 

        (b)  obligations
of such Person evidenced by bonds, debentures, notes or other similar instruments; 

        (c)  obligations
of such Person (whether contingent or otherwise) in respect to letters of credit, bankers' acceptances, surety or other bonds and similar instruments, and
agreements relating to the issuance of letters of credit or acceptance financing; 

        (d)  obligations
of such Person to pay the deferred purchase price of Property or services (other than current trade liabilities incurred in the ordinary course of business
and payable in accordance with customary practices and accrued current liabilities incurred in the ordinary course of business); 

4

 

        (e)  all
obligations of such Person under Capital Leases; 

        (f)    all
indebtedness created or arising under any conditional-sale or other title-retention agreement with respect to Property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such Property); 

        (g)  obligations
of such Person under any Interest Hedge Agreement or Hydrocarbon Hedge Agreement; 

        (h)  obligations
of such Person under any Advance Payment Contract; 

        (i)    obligations
of such Person owing in respect of redeemable preferred stock of such Person; 

        (j)    any
obligations in connection with any volumetric or production payments; 

        (k)  obligations
of such Person under direct or indirect guaranties in respect of, and obligations (contingent or otherwise) of such Person to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of, indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above; and 

        (l)    indebtedness
or obligations of others of the kinds referred to in clauses (a) through (k) above secured by any Lien on or in respect of any Property of
such Person. 

        "Default" means (a) an Event of Default or (b) any event or condition which with notice or lapse of time or both would
become an Event of Default. 

        "Dollars" and "$" means lawful money of the United States of America. 

        "EBITDA" means, without duplication, for Brigham Exploration and its consolidated Subsidiaries for any period, (a) Consolidated Net
Income for such period plus (b) to the extent deducted in determining Consolidated Net Income for such period, Interest Expense, taxes, depreciation, depletion, amortization and other
non-cash charges for such period, minus (c) to the extent added in determining Consolidated Net Income for such period, all non-cash income during such period, in each
case determined in accordance with GAAP and without duplication of amounts. 

        "Eligible Assignee" means (a) any Lender or any Affiliate of any Lender and (b) any commercial bank or other financial
institution approved by (i) the Agent in its reasonable discretion and (ii) provided that no Default or Event of Default has occurred and
is continuing, the Borrower (which consent shall not be unreasonably withheld or delayed). 

        "Engineering Report" means any "Engineering Report" as such term is defined in the Senior Credit Agreement. 

        "Environment" or "Environmental" shall have the meanings set forth in 43 U.S.C. 9601(8)
(1988). 

        "Environmental Claim" means any third party (including governmental agencies and employees) action, lawsuit, claim, demand, regulatory
action or proceeding, order, decree, consent agreement or notice of potential or actual responsibility or violation (including claims or proceedings under the Occupational Safety and Health Acts or
similar laws or requirements relating to health or safety of employees) which seeks to impose liability under any Environmental Law. 

        "Environmental Law" means, as to any Credit Party, all Legal Requirements or common law theories applicable to any Credit Party arising
from, relating to, or in connection with the 

5

 

Environment, including without limitation CERCLA, relating to (a) pollution, contamination, injury, destruction, loss, protection, cleanup, reclamation or restoration of the air, surface
water, groundwater,
land surface or subsurface strata, or other natural resources; (b) solid, gaseous or liquid waste generation, treatment, processing, recycling, reclamation, cleanup, storage, disposal or
transportation; (c) exposure to pollutants, contaminants, hazardous, medical infections, or toxic substances, materials or wastes; or (d) the manufacture, processing, handling,
transportation, distribution in commerce, use, storage or disposal of hazardous or toxic substances, materials or wastes. 

        "Environmental Permit" means any permit, license, order, approval, registration or other authorization under Environmental Law. 

        "Equity Interest" means with respect to any Person, any shares, interests, participation, or other equivalents (however designated) of
corporate stock, membership interests or partnership interests (or any other ownership interests) of such Person. 

        "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. 

        "Event of Default" has the meaning specified in Section 7.01. 

        "Excepted Liens" means (a) Liens for taxes, assessments or other governmental charges or levies not yet due 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 workmen's compensation, unemployment
insurance or other social security, old age pension or public liability obligations not yet due or which are being contested in good faith by appropriate action and for which adequate reserves have
been maintained in accordance with GAAP; (c) operators', vendors', carriers', warehousemen's, repairmen's, mechanics', workmen's, materialmen's, construction or other like Liens arising in the
ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties or customary landlord's liens, each of which is in respect of obligations
that have not been outstanding more than 90 days or which are being contested in good faith by appropriate proceedings and for which adequate reserves have been maintained in accordance with
GAAP; (d) any Liens reserved in leases, farmout agreements, exploration agreements, operating agreements or participation agreements for rent or royalties and for compliance with the terms of
such agreements or leases in the case of leasehold estates, to the extent 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 or materially impair the value of such Property subject thereto; (e) encumbrances (other than to secure the payment of borrowed money or the deferred
purchase price of Property or services), easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any rights of way or other Property 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, and defects, irregularities, zoning restrictions and deficiencies in the title of any rights of way or other Property which in the aggregate do
not materially impair the use of such rights of way or other Property for the purposes of which such rights of way and other Property are held or materially impair the value of such Property subject
thereto; (f) deposits of cash or securities to secure the performance of bids, trade contracts, leases, statutory obligations and other obligations of a like nature
incurred in the ordinary course of business; and (g) minor defects in the chain of title to the Oil and Gas Properties that are customarily accepted in the oil and gas industry;  provided that none
of such defects interfere with the ordinary conduct of the business of any of the Credit Parties or materially detract from the value
or use of the Property to which such defects apply. 

6

 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Existing Second Mortgages" means the collective reference to every Second Mortgage, Deed of Trust, Assignment of Production, Second
Security Agreement and Financing Statement from the Borrower to the Trustee named therein and Bank of Montreal (or any successor thereto), covering the assets of the Borrower located in the
continental United States, as amended prior to the Closing Date. 

        "Existing Subordinated Credit Agreement" has the meaning given thereto in the Recitals. 

        "Federal Funds Rate" means, for any period, a fluctuating interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for any such
day on such transactions received by the Agent from three Federal funds brokers of recognized standing selected by it. 

        "Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any of its successors. 

        "Financial Statements" means the audited consolidated balance sheet of Brigham Exploration and its consolidated Subsidiaries as at
December 31, 2002 and the related consolidated statement of income, stockholders' equity and cash flow of Brigham Exploration and its consolidated Subsidiaries for the fiscal year ended on such
date. 

        "Fixed Rate" has the meaning given thereto in Section 2.09(a) 

        "GA Partners" means General Atlantic Partners III, L.P., together with its successors, assigns and transferees of its shares of Capital
Stock of Brigham Exploration that are an Affiliated Fund of GA Partners. 

        "GAAP" means United States generally accepted accounting principles as in effect from time to time, applied on a basis consistent with the
requirements of Section 1.03. 

        "General Partner" has the meaning given thereto in the Preamble. 

        "Governmental Authority" means, as to any Person in connection with any subject, any foreign, national, state or provincial governmental
authority, or any political subdivision of any state thereof, or any agency, department, commission, board, authority or instrumentality, bureau or court, in each case having jurisdiction over such
Person or such Person's Property in connection with such subject. 

        "Guarantor" means Brigham Exploration, the General Partner, and each Subsidiary of the Borrower. 

        "Hazardous Substance" means the substances identified as such pursuant to CERCLA and those regulated under any other Environmental Law,
including without limitation pollutants, contaminants, petroleum, petroleum products, radionuclides, radioactive materials, and medical and infectious waste. 

        "Hazardous Waste" means the substances regulated as such pursuant to any Environmental Law. 

        "Hydrocarbon Hedge Agreement" means a swap, collar, floor, cap, option, forward sale or purchase or other contract (excluding sales
contracts with fixed or floating prices for Hydrocarbons sold) that is intended to reduce or eliminate the risk of fluctuations in the price of Hydrocarbons. 

7

 

        "Hydrocarbon Interests" means (a) all oil and gas and/or oil, gas and mineral leases and leasehold interests, fee mineral
interests, term mineral interests, subleases, farmouts, royalties, overriding royalties, net profits interests, production payments and similar interests or estates including any reversionary or
carried interests relating to any of the foregoing and interests under any exploration agreements, operating agreements and participation agreements, and (b) all production units and drilling
and spacing units (and the Properties covered thereby) which may affect all or any portion of such interests including those units and any units created by agreement or designation or under orders,
regulations, rules or other official acts of any Federal, state or other governmental body or agency having jurisdiction. 

        "Hydrocarbons" means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other
liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and other substances derived therefrom or the processing
thereof, and all other minerals and substances produced in conjunction with such substances, including, but not limited to, sulfur, geothermal steam, water, carbon dioxide, helium, and any and all
minerals, ores, or substances of value and the products and proceeds therefrom. 

        "Independent Engineer" means Cawley, Gillespie & Associates or any other engineering firm reasonably acceptable to either the Agent
or the Majority Lenders. 

        "Intercreditor and Subordination Agreement" has the meaning given thereto in the Recitals. 

        "Interest Coverage Ratio" means, for Brigham Exploration and its consolidated Subsidiaries, as of the end of any fiscal quarter, the ratio
of (a) EBITDA calculated for the four fiscal quarters then ended, to (b) Interest Expense for such period. 

        "Interest Expense" means, for Brigham Exploration and its consolidated Subsidiaries for any period, total interest, letter of credit fees,
and other fees and expenses incurred in connection with any Debt for such period, whether paid or accrued, including, without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing and net costs under Interest Hedge Agreements and Hydrocarbon Hedge Agreements, all as determined in conformity with GAAP. 

        "Interest Hedge Agreement" means an interest hedge, rate swap, cap or collar, or similar arrangement between the Borrower and one or more
financial institutions providing for the exchange of nominal interest obligations between the Borrower and such financial institution. 

        "Interest Payment Date" has the meaning given thereto in Section 2.09(a). 

8

  

        "Investment" means any investment, made directly or indirectly, in any Person, whether by acquisition of Equity Interests, indebtedness or
other obligations or securities or by loan, advance, capital contribution or otherwise. 

        "Legal Requirement" means, as to any Person, any law, statute, ordinance, decree, requirement, order, judgment, rule, regulation (or
official interpretation of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental Authority, including, but not limited to, Regulations D, T, U, and X, which is
applicable to such Person. 

        "Lenders" has the meaning given thereto in the Preamble. 

        "Lien" means any mortgage, lien, pledge, assignment, charge, deed of trust, security interest, hypothecation, preference, deposit
arrangement or encumbrance (or other type of arrangement having the practical effect of the foregoing) to secure or provide for the payment of any obligation of any Person, whether arising by
contract, operation of law, or otherwise (including, without limitation, the interest of a vendor or lessor under any conditional sale agreement, synthetic lease, Capital Lease, or other title
retention agreement). 

        "Limited Partners" means Brigham Holdings I, LLC, a Nevada limited liability company, and Brigham Holdings II, LLC, a Nevada limited
liability company. 

        "Majority Lenders" means, at any time, the Agent and Lenders holding at least 75% of the then aggregate unpaid principal amount of the
Subordinated Notes held by the Lenders. 

        "Material Adverse Change" means (a) a material adverse change in the business, Property (including the Oil and Gas Properties),
assets, liabilities, conditions (financial or otherwise) or prospects of the Borrower and its Subsidiaries, taken as a whole, (b) a material adverse effect on any Credit Party's ability to
perform its obligations under this Agreement, any Subordinated Note, or any other Subordinated Loan Document and (c) a material adverse effect on the validity or enforceability against any
Credit Party of any of the Subordinated Loan Documents or the rights or remedies of the Agent or the Lenders thereunder. 

        "Maturity Date" means October 31, 2005. 

        "Maximum Rate" means the maximum nonusurious interest rate under applicable law (determined under such laws after giving effect to any
items which are required by such laws to be construed as interest in making such determination, including without limitation if required by such laws, certain fees and other costs). 

        "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA. 

        "Oil and Gas Properties" means (a) all Hydrocarbon Interests; (b) all operating agreements, contracts and other agreements
which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (c) all
Hydrocarbons in and under and which may be produced, saved, processed or attributable to the Hydrocarbon Interests, including all oil in tanks, the lands covered thereby and all rents, issues,
profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (d) all accounts (including accounts resulting from the sale of Hydrocarbons at the
wellhead), contract rights and general intangibles, including all accounts, contract rights and general intangibles now or hereafter arising regardless of whether any of the foregoing is in connection
with the sale or other disposition of any Hydrocarbons or otherwise, including all Liens securing the same; (e) all Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or hereafter acquired, used or held for use in connection with the operating, working or development of any of such Hydrocarbon
Interests or Property and including any and all oil wells, 

9

 

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, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, and similar equipment;
and (f) all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing. 

        "Partners" means the General Partner and the Limited Partners. 

        "Partnership Agreement" means the Agreement of Limited Partnership of the Borrower among the Partners dated as of December 30,
1997, as heretofore or hereafter amended, supplemented or restated from time to time. 

        "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. 

        "Permit" means any approval, certificate of occupancy, consent, waiver, exemption, variance, franchise, order, permit, authorization,
right or license of or from any Governmental Authority, including without limitation, an Environmental Permit. 

        "Permitted Liens" has the meaning given in Section 6.01. 

        "Person" means an individual, partnership, corporation (including a business trust), joint stock company, limited liability corporation or
company, limited liability partnership, trust, unincorporated association, joint venture or other entity, or a government or any political subdivision or agency thereof or any trustee, receiver,
custodian or similar official. 

        "Plan" means an employee benefit plan (other than a Multiemployer Plan) maintained for employees of the Borrower or any member of the
Controlled Group and covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code. 

        "Preferred Shareholders" means each of the Persons listed on Schedule 1.01 who hold
preferred shares in Brigham Exploration (or common shares in Brigham Exploration following consummation of Preferred Shareholder Transactions), together with its successors, assigns and transferees of
its shares of Capital Stock of Brigham Exploration that are Affiliated Funds of such Preferred Shareholders. 

        "Preferred Shareholder Transaction" means any transaction in which any of the Preferred Shareholders exercises (whether voluntarily or as
required by Brigham Exploration) its warrants to purchase common stock issued by Brigham Exploration pursuant to the terms of such warrants or the applicable certificate of designations of Brigham
Exploration. 

        "Property" of any Person means any property or assets (whether real, personal, or mixed, tangible or intangible) of such Person. 

        "Pro Rata Share" means, with respect to any Lender, either (a) the ratio (expressed as a percentage) of such Lender's Commitment at
such time to the aggregate Commitments at such time or (b) if the Commitments have been terminated, the ratio (expressed as a percentage) of such Lender's aggregate outstanding Advances at such
time to the aggregate outstanding Advances of all the Lenders at such time. 

        "Proven Reserves" means, at any particular time, the estimated quantities of Hydrocarbons which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs attributable to Oil and Gas Properties under then existing economic and operating conditions (i.e., prices and costs as of the date the estimate is made). 

        "Register" has the meaning set forth in of Section 10.06(c). 

10

 

        "Regulations D, T, U, and X" mean Regulations D, T, U, and X of the Federal Reserve Board, as the same are from time to time in effect,
and all official rulings and interpretations thereunder or thereof. 

        "Release" shall have the meaning set forth in CERCLA or under any other Environmental Law. 

        "Response" shall have the meaning set forth in CERCLA or under any other Environmental Law. 

        "Responsible Officer" means (a) with respect to any Person that is a corporation, such Person's Chief Executive Officer, President,
Executive Vice President, Chief Financial Officer, or Vice President-Controller, (b) with respect to any Person that is a limited liability company, a manager (or such Person's Chief Executive
Officer, President, Executive Vice President, Chief Financial Officer, or Vice President-Controller, if any) or the Responsible Officer of such Person's managing member or manager, and (c) with
respect to any Person that is a general partnership or a limited liability partnership, the Responsible Officer of such Person's general partner or partners. 

        "Restricted Payment" means, with respect to any Person, any direct or indirect dividend or distribution (whether in cash, securities or
other property) or any direct or indirect payment of any kind or character (whether in cash, securities or other property) in consideration for or otherwise in connection with any retirement,
purchase, redemption or other acquisition of any Equity Interest of such Person, or any options, warrants or rights to purchase or acquire any such Equity Interest of such Person;  provided that the term
"Restricted Payment" shall not include any dividend or distribution payable solely in Equity Interests of Brigham Exploration or
warrants, options or other rights to purchase such Equity Interests. 

        "SEC "means the U.S. Securities and Exchange Commission. 

        "Second Mortgage" means each Second Mortgage Amendment or any other mortgage or deed of trust executed by any one or more of the Borrower
and its Subsidiaries in favor of the Agent for the ratable benefit of the Agent and the Lenders, as the same may be amended, modified, restated or
supplemented from time to time and "Second Mortgages" shall mean all of such Second Mortgage Amendments, mortgages and deeds of trust collectively. 

        "Second Mortgage Amendment" means each of the amended and restated mortgages or deeds of trust to be entered into on or before the Closing
Date to amend and restate in their entirety the Existing Second Mortgages, in substantially the form of the attached Exhibit F. 

        "Second Pledge Agreements" means each of the Amended and Restated Second Pledge Agreements substantially in the form of  Exhibit G, executed by each of Brigham
Exploration, the General Partner and the Borrower, as the same may be amended, modified, restated or
supplemented from time to time. 

        "Second Security Agreements" means each of the Amended and Restated Second Security Agreements, in substantially the form of the attached  Exhibit H, executed by
each of the Borrower and its Subsidiaries, as the same may be amended, modified, or supplemented from time to time. 

        "Senior Credit Agreement" has the meaning given thereto in the Recitals. 

        "Senior Agent" has the meaning given thereto in the Recitals. 

        "Senior Lenders" has the meaning given thereto in the Recitals. 

        "Senior Loan Documents" means the Senior Credit Agreement, the notes executed and delivered pursuant to agreements, instruments or
documents executed at any time in connection with securing the Senior Obligations, and each other agreement, instrument, or document executed 

11

 

by any Credit Party or any of their officers at any time in connection with the Senior Credit Agreement. 

        "Senior Obligations" means the "Obligations" as defined in the Senior Credit Agreement. 

        "Side Letter Agreement" means the letter agreement dated as of the Closing Date among the Borrower, the Guarantors, the Senior Agent and
the Agent. 

        "Significant PUD Location" means a particular drilling location or proven, undeveloped reserve prospect identified or designated as "PUD"
or "proven undeveloped" reserves in the applicable Engineering Report, that has been assigned a discounted present value equal to or in excess of $2,000,000.00 in such Engineering Report. 

        "Solvent" means, with respect to any Person as of the date of any determination, that on such date (a) the fair value of the
Property of such Person (both at fair valuation and at present fair saleable value) is greater than the total liabilities, including contingent liabilities, of such Person, (b) the present fair
saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured,
(c) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations, and other commitments as they mature in the normal course of business,
(d) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's Property would constitute unreasonably small capital after giving
due consideration to current and anticipated future capital requirements and current and anticipated future business conduct and the prevailing practice in the industry in which such Person is
engaged. In computing the amount of contingent liabilities at any time, such liabilities shall be computed at the amount that, in light of the facts and circumstances existing at such time, represents
the amount that can reasonably be expected to become an actual or matured liability. 

        "Subordinated Loan Documents" means this Agreement, the Subordinated Notes, the Subordinated Security Instruments, the Intercreditor and
Subordination Agreement, the Side Letter Agreement and each other agreement, instrument, or document executed by any Credit Party or any of their officers at any time in connection with this
Agreement. 

        "Subordinated Note" means a promissory note of the Borrower payable to the order of any Lender, in substantially the form of the attached  Exhibit E, evidencing
indebtedness of the Borrower to such Lender resulting from Advances owing to such Lender. 

        "Subordinated Obligations" means all principal, interest, fees, reimbursements, indemnifications, and other amounts payable by any Credit
Party to the Agent or the Lenders under the Subordinated Loan Documents. 

        "Subordinated Security Instruments" means, collectively, (a) the Second Mortgages, (b) the Second Pledge Agreements,
(c) the Second Security Agreements, (d) each other agreement, instrument or document executed at any time in connection with the Second Pledge Agreements, the Second Security Agreements
and the Second Mortgages, and (e) each other agreement, instrument or document executed at any time in connection with securing the Subordinated Obligations. 

        "Subsidiary" of a Person means any corporation or other entity of which more than 50% of the outstanding Equity Interests having ordinary
voting power under ordinary circumstances to elect a majority of the board of directors or similar governing body of such corporation or other entity (irrespective of whether at such time Equity
Interests of any other class or classes of such corporation or other entity shall or might have voting power upon the occurrence of any 

12

 

contingency) is at the time directly or indirectly owned or controlled by such Person, by such Person and one or more Subsidiaries of such Person or by one or more Subsidiaries of such Person. Unless
otherwise indicated herein, each reference to the term "Subsidiary" shall mean a Subsidiary of the Borrower. 

        "Termination Event" means (a) a Reportable Event described in Section 4043 of ERISA and the regulations issued thereunder
(other than a Reportable Event not subject to the provision for 30-day notice to the PBGC under such regulations), (b) the withdrawal of the Borrower or any of its Affiliates 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, or (e) any other event or condition which
constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan. 

        "Voting Stock" means, with respect to any Person, securities of any class or classes of Capital Stock or other interests (including
partnership interests) in such Person entitling the holders thereof (whether at all times or at the time that such class of Capital Stock) has voting power by reason of the happening of any
contingency to vote in the election of members of the board of directors or comparable body of such Person. 

        Section 1.02    Computation of Time Periods.    In this Agreement, with respect to the computation of periods
of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each means "to but excluding". 

        Section 1.03    Accounting Terms; Changes in GAAP.    Except as otherwise expressly provided herein, all
accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall (unless
otherwise disclosed to the Lenders in writing at the time of delivery thereof) be prepared, in accordance with GAAP applied on a basis consistent with those used in the preparation of the Financial
Statements. In addition, all calculations and defined accounting terms used herein shall, unless expressly provided otherwise, when referring to any Person, refer to such Person on a consolidated
basis and mean such Person and its consolidated subsidiaries. 

        Section 1.04    Miscellaneous.    Article, Section, Schedule, and Exhibit references are to Articles and
Sections of and Schedules and Exhibits to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents,
contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The words "hereof", "herein", and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The term "including" means "including, without limitation,".
Paragraph headings have been inserted in this Agreement as a matter of convenience for reference only and it is agreed that such paragraph headings are not a part of this Agreement and shall not be
used in the interpretation of any provision of this Agreement. All Exhibits and Schedules attached to this Agreement are a part hereof for all purposes. Pronouns in masculine, feminine and neuter
genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. 

13

 

 
 

ARTICLE II    
    
    CREDIT FACILITIES    
  

        Section 2.01    Advances.    

        (a)  Each
Lender severally agrees, on the terms and conditions set forth in this Agreement (i) to renew and extend the Advance outstanding under the Existing
Subordinated Credit Agreement on the Closing Date in a ratable amount for each Lender not to exceed such Lender's Commitment and (ii) to make Advances of the amounts of interest paid in kind
pursuant to Section 2.09(a), the aggregate of which amounts shall not exceed such Lender's Pro Rata Share of $3,000,000. Principal payments made after the Closing Date may not be reborrowed. 

        (b)    Subordinated Notes.    The indebtedness of the Borrower to each Lender resulting from the Advances owing to
such Lender shall be evidenced by a Subordinated Note of the Borrower payable to the order of such Lender in an amount equal to such Lender's Commitment plus such Lender's Pro Rata Share of $3,000,000
(to accommodate deemed Advances through payment in kind pursuant to Section 2.09(a)). 

        (c)    Agent Reliance.    Unless the Agent shall have received notice from a Lender before the date of any Borrowing
that such Lender shall not make available to the Agent such Lender's Pro Rata Share of a Borrowing, the Agent may assume that such Lender has made its Pro Rata Share of such Borrowing available to the
Agent on the date of such Borrowing in accordance with this Agreement and the Agent may, in reliance upon such assumption, make available to the Borrower on such date a corresponding amount. If and to
the extent that such Lender shall not have so made its Pro Rata Share
of such Borrowing available to the Agent, such Lender and the Borrower severally agree to immediately repay to the Agent on demand such corresponding amount, together with interest on such amount, for
each day from the date such amount is made available to the Borrower until the date such amount is repaid to the Agent, at (i) in the case of the Borrower, the interest rate applicable on such
day to Advances comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds Rate for such day. If such Lender shall repay to the Agent such corresponding amount and
interest as provided above, such corresponding amount so repaid shall constitute such Lender's Advance as part of such Borrowing for purposes of this Agreement even though not made on the same day as
the other Advances comprising such Borrowing. 

        (d)    Lender Obligations Several.    The failure of any Lender to make the Advance to be made by it as part of any
Borrowing shall not relieve any other Lender of its obligation, if any, to make its Advance on the date of such Borrowing. No Lender shall be responsible for the failure of any other Lender to make
the Advance to be made by such other Lender on the date of any Borrowing. 

        Section 2.02    Intentionally Omitted.    

        Section 2.03    Intentionally Omitted.    

        Section 2.04    Reduction of the Commitments.    

        (a)  The
Borrower shall have the right, upon at least five Business Days' irrevocable notice to the Agent, to terminate in whole or reduce ratably in part the unused portion
of the Commitments; provided that each partial reduction shall be in the aggregate amount of $1,000,000 or in integral multiples of $1,000,000 in excess
thereof. 

        (b)  Any
reduction and termination of the Commitments pursuant to this Section 2.04 shall be applied ratably to each Lender's Commitment and shall be permanent, with
no obligation of the Lenders to reinstate such Commitments. 

14

 

        Section 2.05    Prepayment of Advances.    

        (a)    Optional.    The Borrower may prepay the Advances, without premium or penalty, after giving, by
12:00 p.m. (New York time) on the same Business Day, irrevocable prior written notice to the Agent
stating the proposed date and aggregate principal amount of such prepayment. If any such notice is given, the Borrower shall prepay the Advances in an aggregate principal amount equal to the amount
specified in such notice, together with accrued interest to the date of such prepayment on the principal amount prepaid; provided that each partial
prepayment shall be made in an amount not less than $1,000,000 and in integral multiples of $500,000 in excess thereof (or the remaining aggregate principal balance outstanding). Full prepayments of
the Subordinated Obligations are permitted without restriction of amounts. Notwithstanding the foregoing, no prepayment of the Subordinated Obligations that is inconsistent with the rights and
obligations of the Senior Agent and the Senior Lenders under the Intercreditor and Subordinate Agreement shall be permitted. 

        (b)    Reduction of Commitments.    On the date of each reduction of the aggregate Commitments pursuant to
Section 2.04, the Borrower agrees to make a prepayment in respect of the outstanding amount of the Advances to the extent, if any, that the aggregate unpaid principal amount of all Advances
exceeds the aggregate Commitments, as so reduced. Each prepayment pursuant to this Section 2.05(b) shall be accompanied by accrued interest on the amount prepaid to the date of such prepayment.
Each prepayment under this Section 2.05(b) shall be applied to the Advances as provided in Section 2.10(a). 

        (c)    No Additional Right.    The Borrower shall have no right to prepay any principal amount of any Advance except
as provided in this Section 2.05, and all notices given pursuant to this Section 2.05 shall be irrevocable and binding upon the Borrower. 

        Section 2.06    Repayment of Advances.    The Borrower shall repay to the Agent for the ratable benefit of the
Lenders the outstanding principal amount of each Advance, together with any accrued interest on the Maturity Date or such earlier date pursuant to Section 7.02 or Section 7.03. 

        Section 2.07    Intentionally Omitted.    

        Section 2.08    Intentionally Omitted.    

        Section 2.09    Interest.    

        (a)  The
Borrower shall pay interest on the unpaid principal amount of each Advance made by each Lender from the date of such Advance until such principal amount shall be
paid in full, at a rate per annum equal at all times to 10.75% (the "Fixed Rate"), payable quarterly in arrears on the last day of each January, April,
July and October, beginning April 30, 2003 (each an "Interest Payment Date") and on the Maturity Date,  provided that upon the occurrence and
continuance of an Event of Default, such Advances shall bear interest from the date on which such Event of Default
occurred until such Event of Default has been cured or waived, payable on demand, at a rate per annum equal at all times to the Fixed Rate plus 2.00%. On any Interest Payment Date occurring on or
before October 2004, the Borrower shall have the absolute right to pay 50% of all accrued interest on the Advances in kind,
instead of in cash. In the event any accrued interest due on any particular Interest Payment Date is paid in kind, it shall be deemed an advance of principal under the Subordinated Notes and, as of
the Interest Payment Date, shall be added to the outstanding principal balance of the Subordinated Notes (notwithstanding that the outstanding principal balance may exceed, in the aggregate, the face
amount of the Subordinated Notes). In order to exercise its option to pay interest in kind under this Section 2.09(a), the Borrower shall, on or at any time before the applicable Interest
Payment Date, deliver written notice to the Agent, executed by a Responsible Officer of the Borrower, specifying its election to pay interest in kind. Should the Borrower fail to deliver such written
notice in a timely fashion, the Borrower shall be deemed to have irrevocably elected to make payment of such accrued 

15

 

interest in cash. In the event that the Borrower elects to pay interest in kind, such interest shall be calculated at the Fixed Rate. 

        (b)    Usury Recapture.    

          (i)  If,
with respect to any Lender, the effective rate of interest contracted for under the Subordinated Loan Documents, including the stated rates of interest and fees
contracted for hereunder and any other amounts contracted for under the Subordinated Loan Documents which are deemed to be interest, at any time exceeds the Maximum Rate, then the outstanding
principal amount of the loans made by such Lender hereunder shall bear interest at a rate which would make the effective rate of interest for such Lender under the Subordinated Loan Documents equal
the Maximum Rate until the difference between the amounts which would have been due at the stated rates and the amounts which were due at the Maximum Rate (the "Lost
Interest") has been recaptured by such Lender. 

        (ii)  If,
when the loans made hereunder are repaid in full, the Lost Interest has not been fully recaptured by such Lender pursuant to the preceding paragraph (i),
then, to the extent permitted by law, for the loans made hereunder by such Lender the interest rates charged under this Section 2.09 shall be retroactively increased such that the effective
rate of interest under the Subordinated Loan Documents was at the Maximum Rate since the effectiveness of this Agreement to the extent necessary to recapture the Lost Interest not recaptured pursuant
to the preceding sentence and, to the extent allowed by law, the Borrower shall pay to such Lender the amount of the Lost Interest remaining to be recaptured by such Lender. 

        (iii)  NOTWITHSTANDING THE FOREGOING OR ANY OTHER TERM IN THIS AGREEMENT AND THE SUBORDINATED LOAN DOCUMENTS TO THE CONTRARY, IT IS THE INTENTION OF
EACH LENDER AND THE BORROWER TO CONFORM STRICTLY TO ANY APPLICABLE USURY LAWS. ACCORDINGLY, IF ANY LENDER CONTRACTS FOR, CHARGES, OR RECEIVES ANY CONSIDERATION WHICH CONSTITUTES INTEREST IN EXCESS OF
THE MAXIMUM RATE, THEN ANY SUCH EXCESS SHALL BE CANCELED AUTOMATICALLY AND, IF PREVIOUSLY PAID, SHALL AT SUCH LENDER'S OPTION BE APPLIED TO THE OUTSTANDING AMOUNT OF THE ADVANCES MADE HEREUNDER BY
SUCH LENDER OR BE REFUNDED TO THE BORROWER.

        Section 2.10    Payments and Computations.    

        (a)    Payment Procedures.    The Borrower shall make each payment under this Agreement and under the Subordinated
Notes not later than 12:00 p.m. (New York time) on the day when due in Dollars to the Agent at the location referred to in the Subordinated Notes (or such other location as the Agent shall
designate in writing to the Borrower) in same day funds without deduction, setoff, or counterclaim of any kind. The Agent shall promptly thereafter cause to be distributed like funds relating to the
payment of principal, interest or fees ratably (other than amounts payable solely to the Agent or a specific Lender pursuant to Section 2.13, Section 2.14, Section 9.05 or
Section 10.07, but after taking into account payments effected pursuant to Section 10.04) in accordance with each Lender's Pro Rata Share to the Lenders for the account of their
respective Applicable Lending Offices, and like funds relating to the payment of any other amount payable to any Lender to such Lender for the account of its Applicable Lending Office, in each case to
be applied in accordance with the terms of this Agreement. 

        (b)    Computations.    All computations of interest based on the Fixed Rate and of fees shall be made by the Agent on
the basis of a year of 365 or 366 days, as the case may be, and all computations of interest based on the Federal Funds Rate shall be made by the Agent, on the basis of a year of
360 days, in each case for the actual number of days (including the first day, but excluding the last day) 

16

 

occurring in the period for which such interest or fees are payable. Each determination by the Agent of an interest rate or fee shall be conclusive and binding for all purposes, absent manifest
error. 

        (c)    Non-Business-Day Payments.    Whenever any payment shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of payment of interest or fees,
as the case may be. 

        (d)    Agent Reliance.    Unless the Agent shall have received written notice from the Borrower prior to the date on
which any payment is due to the Lenders that the Borrower shall not make such payment in full, the Agent may assume that the Borrower has made such payment in full to the Agent on such date and the
Agent may, in reliance upon such assumption, cause to be distributed to each Lender on such date an amount equal to the amount then due such Lender. If and to the extent the Borrower shall not have so
made such payment in full to the Agent, each Lender shall repay to the Agent forthwith on demand such amount distributed to such Lender, together with interest, for each day from the date such amount
is distributed to such Lender until the date such Lender repays such amount to the Agent, at the Federal Funds Rate for such day. 

        Section 2.11    Sharing of Payments, Etc.    If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set off, or otherwise) on account of the Advances made by it in excess of its Pro Rata Share of payments on account of the Advances obtained by all
the Lenders, such Lender shall notify the Agent and forthwith purchase from the other Lenders such
participations in the Advances made by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them;  provided that if all or any portion of such
excess payment is thereafter recovered from such purchasing Lender, such purchase from each Lender shall be
rescinded and such Lender shall repay to the purchasing Lender the purchase price to the extent of such Lender's ratable share (according to the proportion of (a) the amount of the
participation sold by such Lender to the purchasing Lender as a result of such excess payment to (b) the total amount of such excess payment) of such recovery, together with an amount equal to
such Lender's ratable share (according to the proportion of (i) the amount of such Lender's required repayment to the purchasing Lender to (ii) the total amount of all such required
repayments to the purchasing Lender) of any interest or other amount paid or payable by the purchasing Lender in respect of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.11 may, to the fullest extent permitted by law, exercise all its rights of payment (including the right of set off)
with respect to such participation as fully as if such Lender were the direct creditor of the Borrower in the amount of such participation. 

        Section 2.12    Intentionally Omitted.    

        Section 2.13    Increased Costs.    If any Lender determines in good faith that compliance with any law or
regulation or any guideline or request from any central bank or other Governmental Authority (whether or not having the force of law) affects or would affect the amount of capital required or expected
to be maintained by such Lender or any corporation controlling such Lender and that the amount of such capital is increased by or based upon the existence of such Lender's commitment to lend and other
commitments of this type, then, upon 30 days' prior written notice by such Lender (with a copy of any such demand to the Agent), the Borrower shall immediately pay to the Agent for the account
of such Lender from time to time as specified by such Lender additional amounts sufficient to compensate such Lender for the reduced rate of return on that capital of such Lender, in light of such
circumstances, to the extent that such Lender reasonably determines such increase in capital to be allocable to the existence of such Lender's commitment to lend under this Agreement. A certificate as
to such amounts and detailing the calculation of such amounts submitted to the Borrower by such Lender shall be conclusive and binding for all purposes, absent manifest error. 

17

 

        Section 2.14    Taxes.    

        (a)    No Deduction for Certain Taxes.    Any and all payments by the Borrower shall be made, in accordance with
Section 2.10, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto,
excluding, in the case of each Lender and the Agent, taxes imposed on its net income, and franchise taxes imposed on it, by the jurisdiction under the laws of which such Lender or the Agent (as the
case may be) is organized or any political subdivision of the jurisdiction (all such non-excluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes") and, in the case of each Lender, Taxes by the jurisdiction of such Lender's Applicable Lending Office or any
political subdivision of such jurisdiction. If the Borrower shall be required by law to deduct any Taxes
from or in respect of any sum payable to any Lender or the Agent, (i) the sum payable shall be increased as may be necessary so that, after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.14), such Lender or the Agent (as the case may be) receives an amount equal to the sum it would have received had no such deductions
been made; provided that if the Borrower's obligation to deduct or withhold Taxes is caused solely by such Lender's or the Agent's failure to provide
the forms described in Section 2.14(d) and such Lender or the Agent could have provided such forms, no such increase shall be required; (ii) the Borrower shall make such deductions; and
(iii) the Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable law. 

        (b)    Other Taxes.    In addition, the Borrower agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise from any payment made or from the execution, delivery or registration of, or otherwise with respect to, this Agreement, the
Subordinated Notes, or the other Subordinated Loan Documents (hereinafter referred to as "Other Taxes"). 

        (c)    Indemnification.    THE BORROWER INDEMNIFIES EACH LENDER AND THE AGENT FOR THE FULL
AMOUNT OF TAXES OR OTHER TAXES (INCLUDING, WITHOUT LIMITATION, ANY TAXES OR OTHER TAXES IMPOSED BY ANY JURISDICTION ON AMOUNTS PAYABLE UNDER THIS SECTION 2.14) PAID BY SUCH LENDER OR THE AGENT
(AS THE CASE MAY BE) AND ANY LIABILITY (INCLUDING INTEREST AND EXPENSES) ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS
THE PAYMENT OF SUCH TAXES OR OTHER TAXES WERE NOT CORRECTLY OR LEGAL ASSERTED AND SUCH LENDER'S PAYMENT OF SUCH TAXES OR OTHER TAXES WAS THE RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. EACH
PAYMENT REQUIRED TO BE MADE BY THE BORROWER IN RESPECT OF THIS INDEMNIFICATION SHALL BE MADE TO THE AGENT FOR THE BENEFIT OF ANY PARTY CLAIMING SUCH INDEMNIFICATION WITHIN 30 DAYS FROM THE DATE
THE BORROWER RECEIVES WRITTEN DEMAND THEREFOR FROM THE AGENT ON BEHALF OF ITSELF AS AGENT OR ANY SUCH LENDER. IF ANY LENDER, THE AGENT RECEIVES A REFUND IN RESPECT OF ANY TAXES PAID BY THE BORROWER
UNDER THIS PARAGRAPH (C), SUCH LENDER OR THE AGENT, AS THE CASE MAY BE, SHALL PROMPTLY PAY TO THE BORROWER THE BORROWER'S SHARE OF SUCH REFUND.

18

  

        (d)    Foreign Lender Withholding Exemption.    Each Lender that is not incorporated under the laws of the United
States of America or a state thereof agrees that upon the request of the Borrower it shall deliver to the Borrower and the Agent (i) two duly completed copies of United States Internal Revenue
Service Form W8-ECI, W8-IMY or W8-BEN or successor applicable form, as the case may be, certifying in each case that such Lender is entitled to receive payments
under this Agreement and the Subordinated Notes payable to it, without deduction or withholding of any United States federal income taxes, (ii) if applicable, an Internal Revenue Service
Form W 9 or successor applicable form, as the case may be, to establish an exemption from United States backup withholding tax, and (iii) any other governmental forms which are necessary
or required under an applicable tax treaty or otherwise by law to reduce or eliminate any withholding tax, which have been reasonably requested by the Borrower. If an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the date on which any delivery required by the preceding sentence would otherwise be required which renders all such forms
inapplicable or which would prevent any Lender from duly completing and delivering any such form with respect to it and such Lender advises the Borrower and the Agent that it is not capable of
receiving payments without any deduction or withholding of United States federal income tax, and in the case of a Form W-9 establishing an exemption from United States backup
withholding tax, such Lender shall not be required to deliver such form. The Borrower shall withhold tax at the rate and in the manner required by the laws of the United States with respect to
payments made to a Lender failing to timely provide the requisite Internal Revenue Service forms. For any period with respect to which a Lender has failed to provide the Borrower and the Agent with
the appropriate form pursuant to this Section 2.14(d) (unless such failure is due to a change in treaty or Legal Requirement occurring subsequent to the date on which a form originally was
required to be provided), such Lender, as applicable, shall not be entitled to indemnification under Section 2.14(c) with respect to Taxes imposed by the United States which taxes would not
have been imposed but for such failure to provide such forms; provided that should a Lender, which is otherwise exempt from or subject to a reduced rate
of withholding tax becomes subject to Taxes because of its failure to deliver a form required hereunder, the Borrower shall take such steps as such Lender shall reasonable request to assist such
Lender to recover such Taxes. 

 
 

ARTICLE III    
    
    CONDITIONS OF LENDING    
  

        Section 3.01    Conditions Precedent to Closing Date.    The Closing Date shall occur upon the satisfaction of
the following conditions precedent that: 

        (a)    Documentation.    The Agent shall have received the following duly executed by all the parties thereto, in form
and substance satisfactory to the Agent and the Lenders, and, where applicable, in sufficient copies for each Lender: 

          (i)  this
Agreement; 

        (ii)  a
Subordinated Note payable to the order of each Lender in the amount of its Commitment 

        (iii)  a
Second Security Agreement executed by the Borrower and each of its Subsidiaries; 

        (iv)  a
Second Pledge Agreement executed by Brigham Exploration and the General Partner; 

        (v)  the
Second Mortgage Amendments and any additional Second Mortgages that may be required pursuant to Section 5.11; 

        (vi)  copies
of the Borrower's insurance policies that name the Senior Agent as loss payee or additional insured, as applicable, and the Agent as additional insured,
certified by the 

19

 

Borrower's insurance broker as true and correct copies thereof, and which are otherwise satisfactory to the Agent; 

      (vii)  a
favorable opinion dated as of the Closing Date of Thompson & Knight L.L.P., counsel to the Credit Parties, in form and substance satisfactory to the Agent
covering such matters as any Lender through the Agent may reasonably request; 

      (viii)  a
favorable opinion dated as of the date of the Closing Date of Mahaffey & Gore, P.C., Oklahoma counsel to the Credit Parties, in form and substance reasonably
satisfactory to the Agent; 

        (ix)  copies,
certified as of the date of this Agreement by a Responsible Officer or the secretary or an assistant secretary of the General Partner (on behalf of the
Borrower) of (A) the resolutions of the applicable governing body of the Borrower approving the Subordinated Loan Documents to which the Borrower is a party, (B) the organizational
documents of the Borrower, and (C) all other documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement, the Subordinated Notes,
the Subordinated Security Instruments and the other Subordinated Loan Documents to which the Borrower is a party; 

        (x)  certificates
of a Responsible Officer or the secretary or an assistant secretary of the General Partner certifying the names and true signatures of the officers of the
General Partner authorized to sign on behalf of the Borrower this Agreement, the Subordinated Notes, the Subordinated Security Instruments and the other Subordinated Loan Documents to which the
Borrower is a party; 

        (xi)  copies,
certified as of the date of this Agreement by a Responsible Officer or the secretary or an assistant secretary of each Guarantor (A) the resolutions of
the applicable governing body of such Guarantor approving the Subordinated Loan Documents to which it is a party, (B) the organizational documents of such Guarantor, and (C) all other
documents evidencing other necessary corporate action and governmental approvals, if any, with respect to this Agreement, the Subordinated Security Instruments, and the other Subordinated Loan
Documents to which such Guarantor is a party; 

      (xii)  a
certificate of the secretary or an assistant secretary of each Guarantor certifying the names and true signatures of officers of such Guarantor authorized to sign
this Agreement, the Subordinated Security Instruments and the other Subordinated Loan Documents to which such Guarantor is a party; 

      (xiii)  certificates
from the appropriate Governmental Authority certifying as to the good standing, existence and authority of each of the Credit Parties in all
jurisdictions where required by the Agent; 

      (xiv)  a
certificate dated as of the date of this Agreement from the Responsible Officer of the General Partner stating that (A) all representations and warranties of
the Borrower set forth in this Agreement are true and correct in all material respects; (B) no Default has occurred and is continuing; and (C) the conditions in this Section 3.01
have been met; 

      (xv)  the
Intercreditor and Subordination Agreement; 

      (xvi)  results
of lien, tax and judgment searches of the UCC Records of the Secretary of State and applicable counties of the States of Delaware, Oklahoma and Texas from a
source acceptable to the Agent and reflecting no Liens against any of the Collateral as to which perfection of a Lien is accomplished by the filing of a financing statement other than in favor of the
Agent, other than Permitted Liens; 

20

 

    (xvii)  appropriate
UCC-1 Financing Statements covering the Collateral for filing with the appropriate authorities and any other documents, agreements or
instruments necessary to create an Acceptable Security Interest in such Collateral; 

    (xviii)  the
Side Letter Agreement; and 

      (xix)  such
other documents, governmental certificates, agreements and lien searches as the Agent or any Lender may reasonably request. 

        (b)    Due Diligence.    The Agent and the Lenders shall have completed satisfactory due diligence review of the
assets, liabilities, business, operations and condition (financial or otherwise) of the Borrower and its Subsidiaries, including, but not limited, to a review of their Oil and Gas Properties,
Subordinated Debt, and all legal, financial, accounting, governmental, environmental, tax and regulatory matters, and fiduciary aspects of the proposed financing. 

        (c)    Payment of Fees.    On the date of this Agreement, the Borrower shall have paid all costs and expenses that
have been invoiced and are payable pursuant to Section 10.04. 

        (d)    Delivery of Financial Statements.    The Agent and the Lenders shall have received true and correct copies of
(i) the Financial Statements, and (ii) such other financial information as the Agent or any Lender may reasonably request. 

        (e)    No Default.    No Default shall have occurred and be continuing. 

        (f)    Representations and Warranties.    The representations and warranties contained in Article IV and in
each other Subordinated Loan Document shall be true and correct in all respects. 

        (g)    Material Adverse Change.    No event or circumstance that could cause a Material Adverse Change shall have
occurred. 

        (h)    No Proceeding or Litigation; No Injunctive Relief.    Except as described in  Schedule 4.07, no action, suit,
investigation or other proceeding (including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be threatened or pending and no preliminary or permanent injunction or order by a state or federal court shall have been entered
against the Borrower or any of its Subsidiaries. 

        (i)    Consents, Licenses, Approvals, etc.    The Agent shall have received true copies (certified to be such by a
Responsible Officer the Borrower or other appropriate Credit Party) of all consents, licenses and approvals required in accordance with applicable Legal Requirements, or in accordance with any
document, agreement, instrument or arrangement to which any Credit Party is a party, in connection with the execution, delivery, performance, validity and enforceability of this Agreement and the
other Subordinated Loan Documents. In addition, the Credit Parties shall have all such material consents, licenses and approvals required in connection with the continued operation of the Credit
Parties, and such approvals shall be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority which would
restrain, prevent or otherwise impose adverse conditions on this Agreement and the actions contemplated hereby. 

        (j)    Senior Credit Agreement.    The conditions precedent set forth in Section 3.01 of the Senior Credit
Agreement shall have been contemporaneously herewith satisfied or waived as of the Closing Date. The Borrower shall have delivered copies of the Senior Loan Documents on or before the Closing Date. 

        (k)    Subordinated Security Instruments.    The Agent shall have received all appropriate evidence required by the
Agent and the Lenders in their sole discretion necessary to determine that arrangements have been made for the Agent (for its benefit and the benefit of the Lenders) 

21

 

to have an Acceptable Security Interest in the Collateral and that all actions or filings necessary to protect, preserve and validly perfect such Liens have been made, taken or obtained (or will be
upon the filing and recording of the appropriate Subordinated Security Instruments), as the case may be, and are in full force and effect. 

        (l)    Title.    The Agent shall be satisfied in its sole discretion with the title to the Oil and Gas Properties
included in the Borrowing Base and that such Oil and Gas Properties constitute a percentage of such Collateral reasonably satisfactory to the Agent. 

        Section 3.02    Conditions Precedent to All Borrowings.    The obligation of each Lender to make an Advance on
the occasion of each Borrowing shall be subject to the further conditions precedent that on the date of such Borrowing: 

        (a)  the
following statements shall be true (and each of the giving of the applicable Notice of Borrowing or notice of payment in kind and the acceptance by the Borrower of
the proceeds of such Borrowing shall constitute a representation and warranty by the Borrower that on the date of such Borrowing such statements are true): 

          (i)  the
representations and warranties contained in Article IV of this Agreement and the representations and warranties contained in the Subordinated Security
Instruments, the Guaranties, and each of the other Subordinated Loan Documents are true and correct in all material respects on and as of the date of such Borrowing, before and after giving effect to
such Borrowing and to the application of the proceeds from such Borrowing, as though made on and as of such date (unless such representations and warranties are stated to relate to a specific earlier
date, in which case such representations and warranties shall be true and correct in all material respect as of such earlier date); 

        (ii)  no
Default has occurred and is continuing or would result from such Borrowing or from the application of the proceeds therefrom; and 

        (b)  the
Agent shall have received such other approvals, opinions, or documents reasonably deemed necessary or desirable by any Lender as a result of circumstances occurring
after the date of this Agreement, as any Lender through the Agent may reasonably request. 

 
 

ARTICLE IV    
    
    REPRESENTATIONS AND WARRANTIES    
  

        Each Credit Party jointly and severally represents and warrants as follows: 

        Section 4.01    Corporate Existence; Subsidiaries.    Each of the Credit Parties is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its formation and in good standing and qualified to do business in each jurisdiction where its ownership or lease of Property or
conduct of its business requires such qualification and where the failure to so qualify could reasonably be expected to cause a Material Adverse Change. As of the Closing Date, the Credit Parties have
no Subsidiaries other than those listed on Schedule 4.01. 

        Section 4.02    Corporate Power.    The execution, delivery, and performance by each Credit Party of this
Agreement, the Subordinated Notes, and the other Subordinated Loan Documents to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) are within such
Credit Party's powers, (b) have been duly authorized by all necessary governing action, (c) do not contravene (i) such Credit Party's governance documents or (ii) any Legal
Requirement or any material
contractual restriction binding on or affecting such Credit Party, and (d) will not result in or require the creation or imposition of any Lien upon any of the material Property of any Credit
Party prohibited by this Agreement. At the time of each Advance, such Advance and the use of the proceeds of such Advance will (A) be within the Borrower's limited partnership powers,
(B) have been duly authorized 

22

 

by all necessary partnership action, (C) not contravene (i) the Borrower's limited partnership agreement or other organizational documents or (ii) any Legal Requirement or any
material contractual restriction of any material agreement binding on or affecting the Borrower and (D) not result in or require the creation or imposition of any Lien upon any of the material
Property of any Credit Party prohibited by this Agreement. 

        Section 4.03    Authorization and Approvals.    No consent, order, authorization, or approval or other action
by, and no notice to or filing with, any Governmental Authority or any other Person is required for the due execution, delivery, and performance by any Credit Party of this Agreement, the Subordinated
Notes, or the other Subordinated Loan Documents to which such Credit Party is a party or the consummation of the transactions contemplated hereby or thereby. At the time of each Borrowing, no
authorization or approval or other action by, and no notice to or filing with, any Governmental Authority will be required for such Borrowing or the use of the proceeds of such Borrowing. 

        Section 4.04    Enforceable Obligations.    This Agreement, the Subordinated Notes, and the other Subordinated
Loan Documents to which each Credit Party is a party have been duly executed and delivered by such Credit Party. Each Subordinated Loan Document to which each Credit Party is a party is the legal,
valid, and binding obligation of such Credit Party enforceable against such Credit Party in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors' rights generally and by general principles of equity. 

        Section 4.05    Financial Statements.    

        (a)  The
Borrower has delivered to the Agent and the Lenders the Financial Statements, and the Financial Statements are correct and complete in all material respects and
present fairly the consolidated financial condition of the Credit Parties as of their respective dates and for their respective periods in accordance with GAAP, applied on a consistent basis. As of
the date of the Financial Statements, there were no material Debt, trade payables, contingent obligations, liabilities for taxes, unusual forward or long term commitments, or unrealized or anticipated
losses of any Credit Party, except as disclosed therein and adequate reserves for such items have been made in accordance with GAAP. 

        (b)  Since
December 31, 2002, no event or circumstance that could reasonably be expected to cause a Material Adverse Change has occurred. 

        (c)  Each
of the Credit Parties is Solvent. 

        Section 4.06    True and Complete Disclosure.    All written information (whether delivered before or after the
Closing Date) furnished by or on behalf of any Credit Party to any Lender or the Agent for purposes of or in connection with this Agreement, any other Subordinated Loan Document or any transaction
contemplated hereby or thereby, when taken as a whole, is true and accurate in all material respects on the date as of which such information is dated or certified (or, if not dated and certified, as
of the date as of which such information is provided) and does not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements contained therein
not materially misleading at such time. All projections, estimates and pro-forma financial information furnished by the Borrower were prepared on the basis of assumptions, data,
information, tests, or conditions believed to be reasonable at the time such projections, estimates and pro-forma financial information were furnished, but the Credit Parties do not
represent and warrant that such projections, estimates or pro forma information is (or will ultimately prove to have been) accurate. 

        Section 4.07    Litigation.    There is no pending or, to the knowledge of any Responsible Officer of any
Credit Party, threatened action or proceeding affecting any of the Credit Parties before any court, Governmental Authority or arbitrator which (a) both (i) involves the possibility of
any judgment or 

23

 

liability against any Credit Party not fully covered by insurance (except for normal deductibles and (ii) could reasonably be expected to be cause a Material Adverse Change or
(b) purports to affect the legality, validity, binding effect or enforceability of this Agreement, any Subordinated Note, or any other Subordinated Loan Document. Additionally, there is no
pending or, to the knowledge of any Responsible Officer of any Credit Party, threatened action or proceeding instituted against any Credit Party which seeks to adjudicate such Credit Party as bankrupt
or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any substantial part of its Property. 

        Section 4.08    Taxes.    

        (a)    Reports and Payments.    All Returns (as defined below in Section 4.08(c)) required to be filed by or on
behalf of any Credit Party or any member of the Controlled Group (hereafter collectively called the "Tax Group") have been duly filed on a timely basis
or appropriate extensions have been obtained and such Returns are and will be true, complete and correct in all material respects; and all Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto will have been paid in full on a timely basis, and no other Taxes will be payable by the Tax Group with respect to items or periods covered by such Returns, except
where any obligation is being contested in good faith and by appropriate proceedings and after adequate reserves for such items have been made in accordance with GAAP. The reserves for accrued Taxes
reflected in the financial statements delivered to the Lenders under this Agreement are adequate in the aggregate for the payment of all unpaid Taxes, whether or not disputed, for the period ended as
of the date thereof and for any period prior thereto, and for
which the Tax Group may be liable in its own right, as withholding agent or as a transferee of the assets of, or successor to, any Person. 

        (b)    Taxes Definition.    "Taxes" in this Section 4.08 shall
mean all taxes, charges, fees, levies, or other assessments imposed by any federal, state, local, or foreign taxing authority, including without limitation, income, gross receipts, excise, real or
personal property, sales, occupation, use, service, leasing, environmental, value added, transfer, payroll, and franchise taxes (and including any interest, penalties, or additions to tax attributable
to or imposed on with respect to any such assessment). 

        (c)    Returns Definition.    "Returns" in this Section 4.08
shall mean any federal, state, local, or foreign report, estimate, declaration of estimated Tax, information statement or return relating to, or required to be filed in connection with, any Taxes,
including any information return or report with respect to backup withholding or other payments of third parties. 

        Section 4.09    Pension Plans.    All Plans are in compliance in all material respects with all applicable
provisions of ERISA. No Termination Event has occurred with respect to any Plan, and each Plan has complied with and been administered in all material respects in accordance with applicable provisions
of ERISA and the Code. No "accumulated funding deficiency" (as defined in Section 302 of ERISA) has occurred and there has been no excise tax imposed under Section 4971 of the Code. No
Reportable Event has occurred with respect to any Multiemployer Plan, and each Multiemployer Plan has complied with and been administered in all material respects with applicable provisions of ERISA
and the Code. The present value of all benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the
value of the assets of such Plan allocable to such vested benefits. None of the Credit Parties or any member of the Controlled Group has had a complete or partial withdrawal from any Multiemployer
Plan for which there is any withdrawal liability. As of the most recent valuation date applicable thereto, none of the Credit Parties or any member of the Controlled Group would become subject to any
liability under ERISA if any Credit Party or any member of the Controlled Group received notice that any Multiemployer Plan is insolvent or in reorganization. Based upon GAAP existing as of the date
of this 

24

 

Agreement and current factual circumstances, no Credit Party has reason to believe that the annual cost during the term of this Agreement to any Credit Party or any other member of the Controlled
Group for post-retirement benefits to be provided to the current and former employees of the Borrower or any member of the Controlled Group under welfare benefit plans (as defined in
Section 3(1) of ERISA) could, in the aggregate, reasonably be expected to cause a Material Adverse Change. 

        Section 4.10    Condition of Property; Casualties.    

        (a)  Subject
to the matters set forth in Schedule 4.10, each of the Borrower and its Subsidiaries has good and
indefeasible title to all of its Oil and Gas Properties evaluated in any Engineering Report, free and clear of all Liens except for Permitted Liens. Brigham Exploration has good and defensible title
to all of the Equity Interests in the General Partner and, directly and indirectly, all of the ownership interests
in the Limited Partners, except for Permitted Liens. Each of the General Partner and the Limited Partners has good and defensible title to all of the Equity Interests in the Borrower, except for
Permitted Liens. 

        (b)  The
quantum and nature of the interest of the Borrower and its Subsidiaries in and to its Hydrocarbon Interests as set forth in each Engineering Report includes the
entire interest of the Borrower and its Subsidiaries in such Hydrocarbon Interests as of the date of such Engineering Report and are complete and accurate in all material respects as of the date of
such Engineering Report; and there are no "back-in" or "reversionary" interests held by third parties which could materially reduce the interest of the Borrower and its Subsidiaries in
such Hydrocarbon Interests except as taken into account in such Engineering Report. The ownership of the Hydrocarbon Interests held by the Borrower and its Subsidiaries shall not in any material
respect obligate any such Person to bear the costs and expenses relating to the maintenance, development or operations of such Hydrocarbon Interests in an amount in excess of the working interest of
such Person in each such Hydrocarbon Interest set forth in the most recent Engineering Report. 

        (c)  All
leases and agreements comprising the Borrower's and its Subsidiaries' Oil and Gas Properties necessary for the conduct of business of the Borrower and its
Subsidiaries are valid and subsisting, in full force and effect and there exists no default or event of default or circumstance which with the giving of notice or lapse of time or both would give rise
to a default under any such leases, instruments or agreements which would affect in any material respect the conduct of the business of the Borrower and its Subsidiaries. Neither the Borrower or any
of its Subsidiaries nor, to the knowledge of the Borrower, any other party to any leases, instruments or agreements comprising its Oil and Gas Properties evaluated in any Engineering Report, has given
or threatened to give notice of any default under or inquiry into any possible default under, or action to alter, terminate, rescind or procure a judicial reformation of, any such lease, instrument or
agreement. Except as set forth on Schedule 4.10 or as otherwise disclosed in writing to the Agent, neither the Borrower nor any of its
Subsidiaries is subject to any obligation to drill additional wells, finance the drilling of additional wells, or conduct additional operations in order to earn or continue to own any Significant PUD
Location or any other proved developed producing reserves or proved developed nonproducing reserves evaluated in any Engineering Report. 

        (d)  The
Properties presently owned, leased or licensed by the Borrower and its Subsidiaries, including, without limitation, all leases, easements, rights of way, and
contractual rights, include all Properties necessary to permit the Borrower and its Subsidiaries to conduct their business in all material respects in the same manner as its business has been
conducted prior to the Closing Date. 

        (e)  All
of the Properties of the Borrower and its Subsidiaries that are reasonably necessary for the operation of their business are in good repair, working order and
condition in all material respects and are maintained in accordance with prudent business standards. Since the date of the most recent financial statements delivered pursuant to
Section 5.06(a), neither the business nor the Properties of 

25

 

the Credit Parties, taken as a whole, has been materially and adversely affected as a result of any fire, explosion, earthquake, flood, drought, windstorm, accident, strike or other labor
disturbance, embargo,
requisition or taking of Property or cancellation of contracts, Permits, or concessions by a Governmental Authority, riot, activities of armed forces, or acts of God or of any public enemy. 

        (f)    Except
as set forth on Schedule 4.10 or as otherwise disclosed in writing to the Administrative Agent: 

          (i)  In
each case only with respect to any of the Borrower's and its Subsidiaries' Oil and Gas Properties that have been assigned a discounted present value equal to or in
excess of $2,000,000 in any Engineering Report, (A) all rentals, royalties, overriding royalties, shut-in royalties and other payments due under or with respect to any such
Hydrocarbon Interests evaluated in any Engineering Report have been properly and timely paid in the ordinary course of business and (B) all material expenses payable under the terms of the
contracts and agreements comprising such Oil and Gas Properties (other than those described above in clause (A)) have been properly and timely paid in the ordinary course of business except in
each case (1) where such payments are being contested in good faith by appropriate proceedings and for which adequate reserves complying with GAAP have been made or (2) for payments the
late payment of which could not reasonably be expected to cause a termination or forfeiture of any of the Borrower's or its Subsidiaries' rights under any such leases, instruments or agreements
comprising any such Oil and Gas Properties or otherwise, individually or in the aggregate, cause a Material Adverse Change; 

        (ii)  All
of the proceeds from the sale of Hydrocarbons produced from the Borrower's and its Subsidiaries' Hydrocarbon Interests are being properly and timely paid to the
Borrower without suspense, other than any such proceeds the late payment or non-payment of which could not reasonably be expected to cause a Material Adverse Change or materially adversely
affect the value of the Collateral taken as a whole; and 

        (iii)  No
material amount of proceeds that has been received by any Credit Party from the sale of Hydrocarbons produced from the Oil and Gas Properties evaluated in any
Engineering Report is subject to any claim for any refund or refund obligation, except as permitted under Section 4.14 or Section 6.13. 

        Section 4.11    Security Instruments.    

        (a)  The
provisions of each of the Second Pledge Agreements delivered to the Agent are effective to create in favor of the Agent, for the ratable benefit of the Lenders, a
legal, valid and enforceable security interest in the Pledged Collateral (as defined therein) and proceeds thereof and upon the filing of UCC-1 Financing Statements with the secretary of
state of each jurisdiction of formation for each of the grantors party thereto, the Second Pledge Agreements shall constitute an Acceptable Security Interest in all right, title and interest of the
applicable Credit Party in such Pledged Collateral and the proceeds thereof. 

        (b)  On
the Closing Date, the Equity Interests listed on Schedule I to each of the Second Pledge Agreements will constitute all the issued and outstanding Equity
Interests in the Borrower, the General Partner, the Limited Partners, and the direct and indirect Subsidiaries of the Borrower; all such Equity Interests have been duly and validly issued and are
fully paid and nonassessable; and the relevant pledgor of said shares is the record and beneficial owner of said shares. 

        (c)  The
provisions of each Second Mortgage will be effective to grant to the Agent, for the ratable benefit of the Lenders, legal, valid and enforceable mortgage liens on
all of the right, title and interest of the Borrower and its Subsidiaries in the mortgaged property described therein. Once each such Second Mortgage has been recorded in the appropriate recording
office, such Second Mortgage will constitute an Acceptable Security Interest in such mortgaged property. 

26

 

        (d)  The
provisions of each Second Security Agreement delivered to the Agent are effective to create in favor of the Agent, for the ratable benefit of the Lenders, a legal,
valid and enforceable security interest in the collateral described therein and proceeds thereof and, upon the filing of UCC-1 Financing Statements with the secretary of state of each
jurisdiction of formation for each of the grantors party thereto, each Second Security Agreement shall constitute an Acceptable Security Interest in all right, title and interest of the applicable
Credit Party in such collateral and the proceeds thereof. 

        (e)  On
the Closing Date all governmental actions and all other filings, recordings, registrations, third party consents and other actions which are necessary to create and
perfect the Liens provided for in the Subordinated Security Instruments will have been made, obtained and taken in all relevant jurisdictions (or are the subject of arrangements, satisfactory to the
Agent, to be made, obtained or taken on or promptly after the Closing Date). No other filings or recordings are required in order to perfect the security interests created under any Subordinated
Security Instruments. 

        Section 4.12    No Burdensome Restrictions; No Defaults.    

        (a)  Neither
the Borrower nor any of its Subsidiaries is a party to any indenture, loan, or credit agreement or any lease or other agreement or instrument or subject to any
charter or corporate restriction or provision of applicable law or governmental regulation that could reasonably be expected to cause a Material Adverse Change. Neither the Borrower nor any of its
Subsidiaries is in default nor has any event or circumstance occurred which, but the expiration of any grace period or the giving of notice, or both, would constitute a default under (i) the
Senior Credit Agreement or (ii) any other material contract, agreement, lease, or other instrument to which such Credit Party is a party which default could reasonably be expected to cause a
Material Adverse Change. None of the Credit Parties has received any notice of default under any material contract, agreement, lease, or other instrument to which such Credit Party is a party. 

        (b)  No
Default has occurred and is continuing. 

        Section 4.13    Environmental Condition.    Other than exceptions to any of the following that would not
reasonably be expected to cause a Material Adverse Change or materially adversely affect the value of the Collateral taken as a whole: 

        (a)    Permits, Etc.    With respect to its Oil and Gas Properties for which such Credit Party is the operator and
with respect to its Oil and Gas Properties that are operated by operators other than the Borrower or a Subsidiary, to the best of its knowledge, in all material respects, each of the Credit Parties
(i) has obtained all Environmental Permits necessary for the ownership and operation of any and all of their respective Properties and the conduct of their respective businesses;
(ii) have at all times been and are in compliance with all terms and conditions of such Permits and with all other requirements of applicable Environmental Laws and other Legal Requirements;
(iii) have not received notice of any violation or alleged violation of any Environmental Law or any such Permit; and (iv) are not subject to any actual or contingent Environmental Claim
with respect to such Properties. 

        (b)    Certain Liabilities.    None of the present or, to the best knowledge of any Credit Party, previously owned or
operated Property of any of the Credit Parties, wherever located, (i) has been placed on or proposed to be placed on the National Priorities List, the Comprehensive Environmental Response
Compensation Liability Information System list, or their state or local analogs, or have been otherwise investigated, designated, listed, or identified as a potential site for removal, remediation,
cleanup, closure, restoration, reclamation, or other response activity under any Environmental Laws; (ii) is subject to a Lien, other than a Permitted Lien, arising under or in connection with
any Environmental Laws, that attaches to any revenues or to any Property owned or operated by the Borrower or any of its Subsidiaries, wherever located; or (iii) has been the site of any
Release of Hazardous Substances or Hazardous Wastes from present or past operations that has caused at the site or at any third party site any condition that has resulted in or could reasonably be
expected to result in the need for Response. 

27

  

        (c)    Certain Actions.    Without limiting the foregoing, (i) all necessary notices have been properly filed,
and no further action is required under current Environmental Law as to each Response or other restoration or remedial project undertaken by the Borrower or its Subsidiaries or any of their former
Subsidiaries on any of their presently or formerly owned or operated Property and (ii) there is no present and, to the Borrower's knowledge, future liability, if any, of the Borrower and its
Subsidiaries which could reasonably be expected to arise in connection with requirements under Environmental Laws. 

        Section 4.14    Gas Contracts.    Except as set forth in the most recent Engineering Report or in  Schedule 4.14, on a net basis there
are no material gas imbalances, material take-or-pay or other prepayments with
respect to the Oil and Gas Properties of the Borrower and its Subsidiaries (or, in the case of Oil and Gas Properties operated by operators other than the Borrower or its Subsidiaries, to the
Borrower's knowledge after reasonable investigation) that would require the Borrower and its Subsidiaries to deliver 2.5% or more of the aggregate calendar quarter production from the Borrower's and
its Subsidiaries' Hydrocarbons produced on a calendar quarter basis from their Hydrocarbon Interests at some future time without then or thereafter receiving full payment therefor. 

        Section 4.15    Compliance with Laws.    Except for any failure to comply with any of the foregoing which would
not reasonably be expected to cause a Material Adverse Change, each of the Credit Parties has (a) complied with all applicable Legal Requirements of any Governmental Authority having
jurisdiction over the conduct of their respective businesses or the ownership of their respective Property and (b) obtained all Permits that are necessary for the ownership of any of its
Properties or the conduct of their business. Other than immaterial exceptions to any of the following: (i) the prices being received by the Borrower and its Subsidiaries for the production of
Hydrocarbons do not violate any material provision of any contract or agreement comprising the Oil and Gas Properties of the Borrower and its Subsidiaries or any Legal Requirement, (ii) where
applicable, all of the wells located on the Borrower's and its Subsidiaries' Hydrocarbon Interests and production of Hydrocarbons therefrom have been properly classified under appropriate governmental
regulations, (iii) all necessary regulatory filings have been properly made in connection with the drilling, completion and operation of the wells on or attributable to the Borrower's and its
Subsidiaries' Hydrocarbon Interests and all other operations related thereto and (iv) all production and sales of the Borrower's and its Subsidiaries' Hydrocarbons produced or sold from the
Borrower's and its Subsidiaries' Hydrocarbon Interests have been made in accordance with any applicable allowables (plus permitted tolerances) imposed by any Governmental Authorities. 

        Section 4.16    Hedging Agreements.    Schedule 4.16
sets forth, as of the Closing Date, a true and complete list of all Interest Hedge Agreements and Hydrocarbon Hedge Agreements of the Borrower and each of its
Subsidiaries, setting forth the type, term, effective date, termination date and notional amounts or volumes, and the counterparty to each such agreement. 

        Section 4.17    Material Agreements.    Schedule 4.17
sets forth a complete and correct list of all material agreements, leases, indentures, purchase agreements, obligations in respect of letters of credit, guarantees, joint venture agreements, and other
instruments in effect or to be in effect as of the Closing Date (other than the agreements set forth in Schedule 4.16) providing for, evidencing,
securing or otherwise relating to any material Debt of the Borrower or any of its Subsidiaries, and all obligations of the Borrower or any of its Subsidiaries to issuers of surety or appeal bonds
(other than operator's bonds, plugging and abandonment bonds, and similar surety obligations obtained in the ordinary course of business) issued for the account of the Borrower or any of its
Subsidiaries, and such list correctly sets forth the names of the debtor or lessee and creditor or lessor with respect to the Debt or lease obligations outstanding or to be outstanding and the
Property subject to any Lien securing such Debt or lease obligation. 

28

 

        Section 4.18    Organizational Documents.    The Partnership Agreement has not been terminated, is in full
force and effect as of the Closing Date and no default has occurred and is continuing thereunder that could reasonably be expected to cause a Material Adverse Change. 

        Section 4.19    Guarantors.    All of the Borrower's Subsidiaries are Guarantors under Article VIII. 

        Section 4.20    Insurance.    Each of the Borrower and its Subsidiaries carry insurance required under
Section 5.02. 

        Section 4.21    Use of Proceeds.    The proceeds of the Advances will be used by the Borrower for the purposes
described in Section 5.10. The Borrower is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U). No
proceeds of any Advance will be used to purchase or carry any margin stock in violation of Regulation T, U or X. 

        Section 4.22    Investment Company Act.    Neither Brigham Exploration nor any of its Subsidiaries is an
"investment company" or a company "controlled" by an "investment company" within the meaning of the Investment Company Act of 1940, as amended. 

        Section 4.23    Public Utility Holding Company Act.    Neither Brigham Exploration nor any of its Subsidiaries
is a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a
"holding company" or of a "subsidiary company" of a "holding company," or a "public utility" within the meaning of the Public Utility Holding Company Act of 1935, as amended. 

        Section 4.24    Transmitting Utility.    Neither Brigham Exploration nor any of its Subsidiaries is a
"transmitting utility" or an "interstate gas pipeline company" or a "public service corporation" within the meaning of the laws currently in effect for the States of Texas and/or Oklahoma. 

 
 

ARTICLE V    
    
    AFFIRMATIVE COVENANTS    
  

        So long as any Subordinated Note or any amount under any Subordinated Loan Document shall remain unpaid or any Lender shall have any Commitment hereunder, each of
the Credit Parties agrees to comply with the following covenants. 

        Section 5.01    Compliance with Laws, Etc.    The Borrower shall comply, and cause each of its Subsidiaries to
comply, in all material respects with all Legal Requirements; provided that this Section 5.01 shall not prevent the Borrower or any of its
Subsidiaries from, in good faith and with reasonable diligence, contesting the validity or application of any such laws or regulations by appropriate legal proceedings. Without limitation of the
foregoing, the Borrower shall use commercially reasonable efforts to obtain, and shall cause each of its Subsidiaries to use commercially reasonable efforts to obtain, as soon as practicable, all
consents or approvals required from any states of the United States (or other Governmental Authorities) necessary to grant the Agent an Acceptable Security Interest in the Borrower's and its
Subsidiaries' Oil and Gas Properties. 

        Section 5.02    Maintenance of Insurance.    

        (a)  The
Borrower shall, and shall cause each of its Subsidiaries to, maintain with financially sound and reputable insurance companies insurance of such types, in such
amounts and against such risks as is customary to be maintained by companies engaged in the same or a similar business in the same general area; and furnish to the Agent, upon written request, full
information as to the insurance carried. In addition, the Borrower shall, and shall cause each of its Subsidiaries to, comply with all requirements regarding insurance contained in the Subordinated
Security Instruments. 

        (b)  All
certified copies of policies or certificates thereof, and endorsements and renewals thereof shall be delivered to and retained by the Agent. All policies of
insurance shall name the Agent as an 

29

 

additional insured. All policies or certificates of insurance shall set forth the coverage, the limits of liability, the name of the carrier, the policy number, and the period of coverage. In
addition, all policies of insurance required under the terms hereof shall contain an endorsement or agreement by the insurer that any loss shall be payable in accordance with the terms of such policy
notwithstanding any act of negligence of the Borrower, or a Subsidiary or any party holding under the Borrower or a Subsidiary which might otherwise result in a forfeiture of the insurance and the
further agreement of the insurer waiving all rights of setoff, counterclaim or deductions against the Borrower and its Subsidiaries. All such policies shall contain a provision that notwithstanding
any contrary agreements between the Borrower, its Subsidiaries, and the applicable insurance company, such policies will not be canceled, allowed to lapse without renewal, surrendered or amended
(which provision shall include any reduction in the scope or limits of coverage) without at least 10 days' prior written notice to the Agent in the event of the Borrower's failure to pay any
premiums and in all other cases, 30 days' prior written notice to the Agent. 

        Section 5.03    Preservation of Corporate Existence, Etc.    Each of the Credit Parties shall preserve and
maintain its corporate, limited partnership or limited liability company, as applicable, existence, and all of its material rights, franchises, and privileges in the jurisdiction of its formation, and
qualify and remain qualified as a foreign entity in each jurisdiction in which qualification is necessary or desirable in view of its business and operations or the ownership of its Properties to the
extent the failure to qualify could reasonably be expected to cause a Material Adverse Change. 

        Section 5.04    Payment of Taxes, Etc.    The Borrower shall, and shall cause each of its Subsidiaries to, pay
and discharge, before the same shall become delinquent, (a) all taxes, assessments, and governmental charges or levies imposed upon it or upon its income or profits or Property prior to the
date on which penalties attach thereto and (b) all lawful claims that are material in amount which, if unpaid, could by law become a Lien upon its Property;  provided that neither the Borrower nor
any such Subsidiary shall be required to pay or discharge any such tax, assessment, charge, levy, or claim which
is being contested in good faith and by appropriate proceedings, and with respect to which reserves in conformity with GAAP have been provided. 

        Section 5.05    Inspection; Books and Records.    Upon reasonable notice, each Credit Party shall permit the
Agent and any Lender or any of their respective agents or representatives thereof, during normal business hours, to (a) examine and make copies of and abstracts from the records and books of
account of, and visit and inspect at their reasonable discretion the Properties of, such Credit Party, and (b) discuss the affairs, finances and accounts of such Credit Party with any of their
respective officers or directors, all to the extent reasonably requested by the Agent or such Lender, as the case may be. Each Credit Party shall keep proper books of records and account in which
full, true and correct entries in conformity with GAAP and all Legal Requirements shall be made of all dealings and transactions in relation to its business and activities. 

        Section 5.06    Reporting Requirements.    The Borrower shall furnish, or shall cause the applicable Credit
Party to furnish, to the Agent and each Lender: 

        (a)    Annual Financials of Brigham Exploration.    As soon as available, but in any event within 90 days after
the end of each fiscal year of Brigham Exploration or sooner if required by the SEC, the audited consolidated statements of income, stockholders' equity, changes in financial position and cash flow of
Brigham Exploration and its consolidated Subsidiaries for such fiscal year, and the related consolidated and unaudited consolidating balance sheets of Brigham Exploration and its consolidated
Subsidiaries as at the end of such fiscal year, and setting forth in each case in comparative form the corresponding figures for the preceding fiscal year, together with a certification by its Chief
Executive Officer and its Chief Financial Officer in accordance with the Sarbanes-Oxley Act of 2002 and accompanied by the related opinion of independent public accountants of recognized national
standing reasonably acceptable to the Agent which opinion 

30

 

shall state that such financial statements fairly present the consolidated financial position and results of operations of Brigham Exploration and its consolidated Subsidiaries as at the end of, and
for, such fiscal year and that such financial statements have been prepared in accordance with GAAP except for such changes in such principles with which the independent public accountants shall have
concurred and such opinion shall not contain a "going concern" or like qualification or exception; 

        (b)    Quarterly Financials of Brigham Exploration.    As soon as available, but in any event not later than
45 days after the end of each of the first three quarterly fiscal periods of each fiscal year of Brigham Exploration and its consolidated Subsidiaries (or sooner if required by the SEC),
consolidated statements of income, stockholders' equity, changes in financial position and cash flow of Brigham Exploration and its consolidated Subsidiaries for such period and for the period from
the beginning of the respective fiscal year to the end of such period, and the related consolidated and consolidating balance sheets of Brigham Exploration and its consolidated Subsidiaries as at the
end of such period, and setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, together with a certification by its Chief
Executive Officer and its Chief Financial Officer in accordance with the Sarbanes-Oxley Act of 2002 and accompanied by the certificate of a Responsible Officer of Brigham Exploration, which
certificate shall state that such financial statements fairly present the consolidated financial position and results of operations of Brigham Exploration and its consolidated Subsidiaries in
accordance with GAAP, as at the end of, and for such period (subject to normal year-end audit adjustments); 

        (c)    Compliance Certificates.    Concurrently with the delivery of each of the financial statements referred to in
Section 5.06(a) and Section 5.06(b), a Compliance Certificated executed by a Responsible Officer of Brigham Exploration; 

        (d)    Insurance Certificates.    Concurrently with the delivery of each of the financial statements referred to in
Section 5.06(a), insurance certificates naming the Agent additional insured and evidencing insurance which meets the requirements of this Agreement and the Subordinated Security Instruments; 

        (e)    Notice of Defaults.    As soon as possible after the occurrence of a Default known to any Responsible Officer
of any Credit Party which is continuing on the date of such statement, a statement of a Responsible Officer setting forth the details of such Default and the actions which the Credit Parties have
taken and propose to take with respect thereto; 

        (f)    Material Changes.    Prompt written notice of any condition or event of which any Responsible Officer of any
Credit Party has knowledge, which condition or event has resulted or could reasonably be expected to cause a Material Adverse Change; 

        (g)    Annual Budget.    As soon as available and in any event prior to January 31, a one- year
financial projection for Brigham Exploration and its Subsidiaries in form and substance acceptable to the Agent, which projection shall include revenues, expenses and capital expenditures (detailing
the projected capital expenditures with respect to drilling (both development and exploration), leasehold, geological and geophysical, capitalized general and administrative expenses, and capitalized
interest) for the following fiscal year; 

        (h)    Hedging Agreements.    Concurrently with the delivery of each of the financial statements referred to in
Section 5.06(a) and Section 5.06(b), a true and complete list of all Interest Hedge Agreements and Hydrocarbon Hedge Agreements of the Borrower and each of its Subsidiaries, setting
forth the type, term, effective date, termination date and notional amounts or volumes and the counterparty to each such agreement; 

        (i)    Litigation.    Prompt written notice of (i) any claims, legal or arbitration proceedings, proceedings
before any Governmental Authority, or disputes, or to the knowledge of the Borrower 

31

 

threatened, or affecting any Credit Party which, if adversely determined, could reasonably be expected to cause a Material Adverse Change, (ii) any material litigation or proceeding against
the Borrower or any of its Subsidiaries in which the amount involved is not covered in full by insurance (subject to normal and customary deductibles), or in which injunctive or similar relief is
sought or (iii) any claim, judgment, Lien or other encumbrance (other than a Permitted Lien) affecting any Property of the Borrower or any of its Subsidiaries if the value of such claim,
judgment, Lien, or other encumbrance affecting such Property shall exceed $1,000,000 (excluding liabilities to the extent covered by insurance if the insurer has confirmed that such insurance covers
such liabilities); 

        (j)    Environmental.    Prompt written notice of any threatened action, investigation or inquiry by any Governmental
Authority of which any Responsible Officer of any Credit Party has knowledge in connection with any Environmental Laws with respect to the Property of the Borrower or any of its Subsidiaries,
excluding routine testing, compliance and corrective action; 

        (k)    Other Accounting Reports.    Promptly upon receipt thereof, a copy of each other report or letter (excluding
routine correspondence) submitted to any Credit Party by independent accountants in connection with any annual, interim or special audit made by them of the books of any Credit Party, and a copy of
any response by any Credit Party to such letter or report; 

        (l)    Securities Law Filings and other Public Information.    Promptly, upon its becoming available, each financial
statement, notice, proxy material, reports and other information which any Credit Party sends to the holders of its respective public securities generally, files with or received from the SEC
(excluding correspondence and other information received from the SEC concerning draft registration statements), or otherwise makes available to the public or the financial community generally; 

        (m)    Notices Under Other Loan Agreements.    Promptly after the furnishing thereof, copies of any statement, report
or notice furnished to any Person pursuant to the terms of any 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 5.06; 

        (n)    ERISA Information and Compliance.    Promptly furnish, and will cause any ERISA Affiliate to promptly furnish,
(i) if requested by the Agent promptly after the filing thereof with the United States Secretary of Labor, the Interest Revenue Service or the PBGC, copies of each annual and other report with
respect to each Plan or any trust created thereunder, (ii) 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 a Responsible Officer of the General Partner
or such ERISA Affiliate specifying the nature thereof, what action the borrower 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 (iii) 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; and 

        (o)    Acquisition Information.    Concurrently with the delivery of each of the financial statements referred to in
Section 5.06(a) and Section 5.06(b), a list of any Oil and Gas Properties purchased by the Borrower or any of its Subsidiaries during the previous twelve consecutive calendar months for
a price equal to or greater than $1,000,000 for any single transaction or group of related transactions or $5,000,000 in the aggregate, together with such other information regarding such Oil and Gas
Properties as Agent or any Lender may reasonably request; and 

        (p)    Other Information.    Subject to any applicable restrictions on disclosure, such other information respecting
the business or Properties, or the condition or operations, financial or 

32

 

otherwise, of the Credit Parties (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA), as any Lender through the Agent
may from time to time reasonably request. The Agent agrees to provide the Lenders with copies of any
material notices and information delivered solely to the Agent pursuant to the terms of this Agreement. 

        Section 5.07    Maintenance of Property.    The Borrower shall, and shall cause each of its Subsidiaries to,
(a) develop and operate its Oil and Gas Properties in a good and workmanlike manner as is customary in the oil and gas industry, and observe and comply in all material respects with all of the
terms and provisions, express or implied, of all oil and gas leases relating to such Properties so long as the oil and gas leases are capable of producing Hydrocarbons in quantities and at prices
providing for continued efficient and profitable operation of business; (b) comply in all material respects with all contracts and agreements applicable to or relating to its Oil and Gas
Properties or the production and sale of Hydrocarbons and accompanying elements therefrom; (c) maintain, preserve, and keep all operating equipment used with respect to its Oil and Gas
Properties in proper repair, working order and condition, and make all necessary or appropriate repairs, renewals, replacements, additions and improvements thereto so that the efficiency of the
operating equipment shall at all times be properly preserved and maintained, provided that no item of operating equipment need be so repaired, renewed,
replaced, added to or improved, if the Borrower or its Subsidiaries shall in good faith determine that the action is not necessary or desirable for such Person's continued efficient and profitable
operation of business, and (d) with respect to its Oil and Gas Properties that are operated by operators other than the Borrower or a Subsidiary, (i) seek to enforce the operators'
contractual obligations to maintain, develop, and operate such Properties subject to the applicable operating agreements and (ii) cause or make reasonable and customary efforts to cause such
Oil and Gas Properties to be operated in a good and workmanlike manner as is customary in the oil and gas industry. 

        Section 5.08    Environmental Laws.    To the extent that a reasonably prudent owner or operator would do so
under the same or similar circumstances, the Borrower shall, and shall cause each of its Subsidiaries to establish and implement such procedures as may be reasonably necessary to periodically
determine and assure that any failure of the following does not cause a Material Adverse Change: (i) all Property of the Borrower and its Subsidiaries and the operations conducted thereon and
other activities of the Borrower and the Subsidiaries are in compliance with and do not violate the requirements of any Environmental Laws; (ii) no Hazardous Substances or Hazardous Wastes are
disposed of or otherwise releases on or to any Property owned by any such party except in compliance with Environmental Laws, (iii) no Hazardous Substance will be released on or to any such
Property in a quantity equal to or exceeding that quantity that requires reporting under CERCLA, and (iv) no Hazardous Substances or Hazardous Wastes is released on or to any such Property so
as to pose an imminent and substantial endangerment to public health or welfare or the environment. 

        Section 5.09    Payment of Trade Payables.    Each of the Credit Parties shall pay, and shall cause each of its
Subsidiaries to pay, all of their customary trade payables incurred in the ordinary course of business now or hereafter incurred within 90 days of the date the invoice is received by such
Credit Party, unless subject to legal offset or unless being contested in good faith by appropriate proceedings and reserves adequate under GAAP shall have been established therefor. 

        Section 5.10    Use of Proceeds.    The Borrower shall use the proceeds of the Advances and Letters of Credit
to refinance Debt under the Existing Subordinated Credit Agreement. 

        Section 5.11    Additional Collateral.    The Borrower will grant, and will cause each of its Subsidiaries to
grant, to the Agent an Acceptable Security Interest in such Oil and Gas Properties of the Borrower and its Subsidiaries, constituting at least 90% of the discounted net present value of the Proven
Reserves of the Borrower and its Subsidiaries as determined by the Agent. 

33

 

        Section 5.12    New Subsidiaries.    Within 10 days after (a) the date of the creation of any new
Subsidiary of Brigham Exploration or the Borrower, or (b) the purchase by Brigham Exploration, the Borrower, or any of its other Subsidiaries of the Equity Interests of any Person, which
purchase results in such Person becoming a Subsidiary of Brigham Exploration or of the Borrower permitted by this Agreement, Brigham Exploration or the Borrower, as applicable, shall, in each case,
cause (i) such Person to execute and deliver to the Agent (with sufficient originals for each applicable Lender) a joinder agreement to this Agreement in form and substance acceptable to the
Agent, a Second Pledge Agreement (if such new Subsidiary owns one or more Subsidiaries), one or more Second Mortgages (if such new Subsidiary owns Oil and Gas Properties), a Second Security Agreement,
and such other Subordinated Security Instruments as the Agent or any Lender may reasonably request, in each case to secure the Subordinated Obligations together with evidence of corporate authority to
enter into and such legal opinions in relation to such joinder agreement, Second Pledge Agreement, Second Mortgages, Second Security Agreement and other Subordinated Security Instruments as the Agent
may reasonably request, and (ii) the stockholder of such new Subsidiary to execute a Second Pledge Agreement pledging its interests in the Equity Interests of such new Subsidiary to secure the
Subordinated Obligations and such evidence of corporate authority to enter into and such legal opinions in relation to such Second Pledge Agreement as the Agent may reasonably request, along with
share certificates, if any, pledged thereby and appropriately executed stock powers in blank. 

        Section 5.13    Title.    As of the Closing Date, the Agent shall have received title opinions reflecting that
the Borrower has title reasonably satisfactory to the Agent in such Oil and Gas Properties of the Borrower and its Subsidiaries constituting at least 50% of the Borrower's and its Subsidiaries'
proved, developed, producing Hydrocarbon reserves and proved, developed, nonproducing Hydrocarbon reserves (each as determined in conformity with the guidelines in effect from time to time as
promulgated by the Society of Petroleum Engineers or its successor association) as determined by the Agent. In addition, the Borrower shall from time to time upon the reasonably request of the Agent
or the Majority Lenders, provide evidence of title reasonably satisfactory to the Agent constituting an additional 30% of the Borrower's and its Subsidiaries' proved, developed, producing Hydrocarbon
reserves and proved, developed, nonproducing Hydrocarbon reserves as determined by the Agent with respect to the Oil and Gas Properties of the Borrower and its Subsidiaries as of the Closing Date.
Thereafter, with respect to Oil and Gas Properties acquired after the Closing Date or not previously included in the Borrowing Base, the Borrower shall from time to time upon the reasonable request of
the Agent, take such actions and execute and deliver such documents and instruments as the Agent shall require to ensure that the Agent shall, at all times, have received satisfactory title opinions
(including, if requested, supplemental or new title opinions addressed to it), which title opinions shall be in form and substance acceptable to the Agent in its sole discretion and shall include
opinions regarding the before payout and after payout ownership interests held by the Borrower and its Subsidiaries, for all wells located on the Oil and Gas Properties covered thereby as to the
ownership of Oil and Gas Properties of the Borrower and its Subsidiaries, and reflecting that the Agent has an Acceptable Security Interest in such Oil and Gas Properties of the Borrower and its
Subsidiaries. 

        Section 5.14    Further Assurances.    The Borrower shall, and shall cause each of its Subsidiaries to, cure
promptly any defects in the execution and delivery of the Subordinated Loan Documents, including, without limitation, the Subordinated Security Instruments and this Agreement. The Borrower hereby
authorizes the Agent to file any financing statements without the signature of the Borrower to the extent permitted by applicable law in order to perfect or maintain the perfection of any security
interest granted under any of the Subordinated Loan Documents. The Borrower at its expense will, and will cause each of its Subsidiaries to, promptly execute and deliver to the Agent upon request all
such other documents, agreements and instruments to comply with or accomplish the covenants and agreements of the Borrower or any Subsidiary of the Borrower, as the case may be, in the Subordinated
Security Instruments and this Agreement, or to further evidence and more fully describe the collateral intended as security for the Subordinated Notes, or to correct any omissions in the 

34

 

Subordinated Loan Documents, or to state more fully the security obligations set out herein or in any of the Subordinated Loan Documents, or to perfect, protect or preserve any Liens created pursuant
to any of the Subordinated Loan Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in connection therewith or to enable the Agent
to exercise and enforce its rights and remedies with respect to any Collateral. 

 
 

ARTICLE VI    
    
    NEGATIVE COVENANTS    
  

        So long as any Subordinated Note or any amount under any Subordinated Loan Document shall remain unpaid or any Lender shall have any Commitment, each of the
Credit Parties agrees to comply with the following covenants. 

        Section 6.01    Liens, Etc.    None of the Credit Parties shall create, assume, incur, or suffer to exist, or
permit any of their Subsidiaries to create, assume, incur, or suffer to exist, any Lien on or in respect of any of its Property whether now owned or hereafter acquired, or assign any right to receive
income, except that the Credit Parties may create, incur, assume, or suffer to exist the following (collectively, the "Permitted Liens"): 

        (a)  Liens
securing the Subordinated Obligations; 

        (b)  Liens
securing the Senior Obligations; 

        (c)  Excepted
Liens; 

        (d)  Liens
securing leases allowed under Section 6.02(f) but only on the Property under lease; 

        (e)  Liens
disclosed on Schedule 6.01; and 

        (f)    any
encumbrances permitted under the terms of any Second Mortgage. 

        Section 6.02    Debts, Guaranties, and Other Obligations.    None of the Credit Parties shall, and none of the
Credit Parties shall permit any of their Subsidiaries to, create, assume, suffer to exist, or in any manner become or be liable in respect of, any Debt except: 

        (a)  the
Senior Obligations; 

        (b)  the
Subordinated Obligations; 

        (c)  Debt
existing on the Closing Date that is reflected in the Financial Statements or is disclosed on Schedule 6.02,
and any renewals or extensions (but not increases) thereof; 

        (d)  Accounts
payable for the deferred purchase price of Property or services (other than customary trade payables incurred in the ordinary course of business) from time to
time incurred in the ordinary course of business which, if greater than 90 days past the date the invoice is received by such Credit Party, are being contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP have been established; 

        (e)  Debt
owing by a Credit Party to any other Credit Party which is subordinated to the Subordinated Obligations pursuant to subordination provision in form and substance
acceptable to the Agent; 

        (f)    Debt
of the Borrower under Capital Leases not to exceed $2,000,000 at any one time outstanding; 

        (g)  Debt
of the Borrower under Hydrocarbon Hedge Agreements or Interest Hedge Agreements that is made (i) with a Person that is, at the time such Hydrocarbon Hedge
Agreement or Interest Hedge Agreement is made, either a Lender, a Senior Lender or an Affiliate 

35

 

of a Lender or a Senior Lender, or (ii) with another counterparty rated at least A- or better by S&P or A3 or better by Moody's,  provided that the aggregate notional amounts under all such
Hydrocarbon Hedge Agreements (other than Hydrocarbon Hedge Agreement that are floors) do not
exceed 75% of the Borrower's proved, developed, producing Hydrocarbon reserves (as determined in conformity with the guidelines in effect from time to time as promulgated by the Society of Petroleum
Engineers or its successor association) to be produced during the term of such Hydrocarbon Hedge Agreements and that such Hydrocarbon Hedge Agreements are entered into as a part of its normal business
operations as risk management strategy and/or hedge against changes resulting from market conditions related to the Borrower's and its Subsidiaries' operations; 

        (h)  Debt
of the Borrower and its Subsidiaries (i) associated with bonds or surety obligations required by Legal Requirements in connection with the operation of the
Oil and Gas Properties and (ii) associated with the financing of insurance premiums; 

        (i)    Debt
of the Borrower described in Schedule 6.02(i) and such other Debt of the Borrower related to the acquisition
of software and licensing rights related thereto that does not exceed $100,000 at any one time outstanding; and 

        (j)    Debt
that is not described in subsections (a) through (i) above and that together with all Debt of the Borrower allowed under subsection (i) above
does not exceed $1,000,000 at any one time outstanding. 

        Section 6.03    Agreements Restricting Liens and Distributions.    None of the Credit Parties shall, nor shall
any of the Credit Parties permit any of their Subsidiaries to, create, incur, assume or permit to exist any contract, agreement or understanding (other than the Senior Loan Documents and the
Subordinated Loan Documents) that in any way prohibits or restricts (a) the granting, conveying, creation or imposition of any Lien on any of its Property, whether now owned or hereafter
acquired, to secure the Subordinated Obligations, except for customary limitations and restrictions contained in, and limited to, specific leases, licenses, conveyances, partnership agreements and
co-owners' agreements, and similar conveyances and agreements or (b) any Subsidiary from paying dividends or making any other distribution to the Borrower, or otherwise transferring
assets, or which requires the consent of or notice to other Persons in connection therewith. 

        Section 6.04    Merger or Consolidation.    None of the Credit Parties shall, nor shall any of the Credit
Parties permit any of their Subsidiaries to (a) merge or consolidate with or into any other Person, or (b) 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 (i) if either Brigham Exploration or the Borrower is a party to such merger or consolidation, then
Brigham Exploration or the Borrower, as the case may be, shall be the continuing Person, (ii) a Subsidiary of the Borrower may merge with or into
the Borrower or a wholly owned Subsidiary of the Borrower (provided that if either of such Subsidiaries is a Guarantor, the surviving entity shall be a
Guarantor), (iii) a Subsidiary of the Borrower may transfer all or substantially all of its assets (upon voluntary liquidation or otherwise) to the Borrower or to another wholly owned
Subsidiary of the Borrower (provided that if the transferor in such a transaction is a Guarantor, then the transferee must either be the Borrower or a
Guarantor), and (iv) a Subsidiary of Brigham Exploration (other than the Borrower and its Subsidiaries) may merge with or into Brigham Exploration or a wholly owned Subsidiary of Brigham
Exploration (provided that if either of such Subsidiaries is a Guarantor, the surviving entity shall be a Guarantor),  provided in each case that
(A) no Event of Default exists or no Default would be caused thereby, and (B) if any Collateral is transferred
pursuant to this Section 6.04, the Borrower shall provide the Agent with ten Business Days' written notice prior to such transfer, and the Borrower or such Guarantor, as the case may be, owning
the Collateral after such transfer shall ratify and confirm the Lien on such Collateral and shall take all action reasonably requested by the Agent in respect of the continued priority and perfection
of the Lien over such Collateral. 

36

  

        Section 6.05    Sales of Assets.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of its Subsidiaries to, discount or sell (with or without recourse) any of their notes receivable or accounts receivable. The Borrower shall not, nor shall it permit any of its Subsidiaries
to sell, assign, farm-out, convey or otherwise transfer any Hydrocarbon Interests except for (a) the sale of Hydrocarbons in the ordinary course of business, (b) the sale or
transfer of equipment that is no longer necessary for the business of such Person or contemporaneously replaced by equipment of at least comparable value and use, or (c) sales of Oil and Gas
Properties made in arm's length transactions for fair market value, not exceeding $3,000,000 in any period of twelve consecutive calendar months in the aggregate,  provided that no Default or Event of
Default has occurred and is continuing or would result from such sale. 

        Section 6.06    Restricted Payments.    Neither Brigham Exploration nor the Borrower shall make any Restricted
Payments except (a) as permitted under Section 6.07(a)(iii) or (b) any Preferred Shareholder Transaction. 

        Section 6.07    Investments and Acquisitions.    

        (a)  None
of the Credit Parties shall, nor shall any of the Credit Parties permit any of their Subsidiaries to, make or permit to exist any Investment, except: 

          (i)  Investments,
loans or advances reflected in the Financial Statements or that are disclosed to the Lenders in  Schedule 6.07; 

        (ii)  Investments
in Cash Equivalents; and 

        (iii)  Investments
by any Credit Party in the Borrower or a Person that is or will become within 10 Business Days after the making of such Investment a Guarantor in
accordance with Section 5.12 or that will, within ten (10) Business Days after the making of any such Investment merge or consolidate into such Credit Party,  provided that the Borrower may
only make Investments to Brigham Exploration or any Partner to pay federal or state taxes owing by any of them, payroll
and payroll related taxes and other reasonable general and administrative expenses, or consisting of forgiveness of indebtedness; 

        (b)  None
of the Credit Parties shall, nor shall any of the Credit Parties permit any of their Subsidiaries to, purchase any Hydrocarbon Interests not evaluated in any
Engineering Report or any pipelines, gas gathering systems gas plants, and similar assets related thereto in an aggregate amount in excess of $5,000,000 in any period of twelve consecutive calendar
months. 

        Section 6.08    Affiliate Transactions.    None of the Credit Parties shall, nor shall any of the Credit
Parties permit any of their Subsidiaries to, directly or indirectly, enter into or permit to exist any transaction or series of transactions (including, but not limited to, the purchase, sale, lease
or exchange of Property, the making of any investment, the giving of any guaranty, the assumption of any obligation or the rendering of any service) with any of their Affiliates (other than any
transaction between the Borrower, any Credit Party, or any Subsidiary of the Borrower) unless such transaction or series of transactions is not in violation of this Agreement and upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable arm's length transaction with a Person that is not such an Affiliate. 

        Section 6.09    Compliance with ERISA.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, directly or indirectly, (a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with which any Credit Party or any ERISA
Affiliate could be subjected to either a civil penalty assessed pursuant to Section 502(c), (i) or (l) of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code in excess
of $500,000; (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 reasonably be expected to
result in any liability to any Credit 

37

 

Party or any ERISA Affiliate to the PBGC in excess of $500,000; (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, any Credit Party 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 in excess of $500,000 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 (as "actuarial present value of the benefit liabilities"
shall have the meaning specified in Section 4041 of ERISA) under any Plan maintained by any Credit Party 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 by an amount in excess of $500,000;
(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 any Credit Party or any ERISA Affiliate 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 which in the aggregate for all such liabilities exceeds $500,000; (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; or (j) amend or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that any Credit Party or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the Code. 

        Section 6.10    Sales and Leasebacks.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, enter into any arrangement, directly or indirectly, with any Person whereby such Credit Party shall sell or transfer any of its Property, whether now owned or
hereafter acquired, and whereby such Credit Party shall then or thereafter rent or lease as lessee such Property or any part thereof or other Property which such Credit Party intends to use for
substantially the same purpose or purposes as the Property sold or transferred. 

        Section 6.11    Change of Business.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, allow any material change to be made in the character of its business as an independent oil and gas exploration and production company 

        Section 6.12    Use of Proceeds.    The Borrower will not permit the proceeds of any Advance or Letters of
Credit to be used for any purpose other than those permitted by Section 5.09. Neither the Borrower nor any Person acting on behalf of the Borrower has taken or shall take, any action which
might cause any of the Subordinated Loan Documents to violate Regulation T, U or X or any other regulation of the Board of Governors of the Federal Reserve System 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. 

        Section 6.13    Gas Imbalances, Take-or-Pay or Other Prepayments.    Except as set
forth in Schedule 4.14, the Borrower shall not allow gas imbalances, take-or-pay or other prepayments with respect to the
Oil and Gas Properties of the Borrower and its Subsidiaries that would require the Borrower and its Subsidiaries to deliver 2.5% or more of the aggregate calendar quarter production 

38

 

from the Borrower's and its Subsidiaries' Hydrocarbons produced on a calendar quarter basis from such Hydrocarbon Interests at some future time without then or thereafter receiving full payment
therefor. 

        Section 6.14    Additional Subsidiaries.    Except as otherwise permitted by Section 6.07, none of the
Credit Parties shall, nor shall any of the Credit Parties permit any of their Subsidiaries to, create any additional Subsidiaries or make any additional Investment in a Subsidiary unless such Credit
Party has complied with Section 5.12. All Subsidiaries of the Borrower together at no time shall own or hold Oil and Gas Properties having Proven Reserves with a net discounted present value
calculated in the same manner as in the most recent Engineering Report in excess of 10% of the total net discounted present value of Proven Reserves of the Borrower and its Subsidiaries as reflected
in such Engineering Report (plus such Subsidiaries' Proven Reserved not included in such Engineering Report). Except as
otherwise permitted by Section 6.07(a)(iii), no assets may be transferred to a Subsidiary that is not a Guarantor. 

        Section 6.15    Limitation on Leases.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, 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 including Capital
Leases but excluding leases of Hydrocarbon Interests and the equipment used thereon), under leases or lease agreements that would cause the aggregate amount of all payments made by the Credit Parties
and their Subsidiaries pursuant to all such leases or lease agreements to exceed $1,500,000 in any period of twelve consecutive calendar months during the life of such leases. 

        Section 6.16    Environmental Matters.    None of the Credit Parties shall, nor shall any of the Credit Parties
permit any of their Subsidiaries to, cause or permit any of its Property to be in violation of, or do anything to permit anything to be done that will subject any such Property to any remedial
obligations 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 would cause a Material Adverse Change. 

        Section 6.17    Borrower as Operator.    Except for any Oil and Gas Properties sold in accordance with
Section 6.05, the Borrower shall not, and shall not permit any of its Subsidiaries to, during any calendar year, voluntarily resign as the operator of Oil and Gas Properties constituting more
than twenty-five percent (25%) of the value of the proved developed producing reserves evaluated in the Engineering Report applicable to such calendar year unless the Majority Lenders
deliver prior written approval of such resignations to the Borrower. 

        Section 6.18    Equity Interests of Partners.    Brigham Exploration will not permit any of Equity Interests of
any of the Partners to be owned or controlled by any Person other than Brigham Exploration or another Partner. 

        Section 6.19    Speculative Trading.    The Borrower shall not, nor shall it permit any of its Subsidiaries to,
purchase, assume, or hold a speculative position in any commodities market or futures market or enter into any Hydrocarbon Hedge Agreement, Interest Hedge Agreement or similar hedge arrangements for
speculative purposes; provided that any hedge arrangements which cover anticipated production volumes attributable to Proven Reserves of the Borrower
and its Subsidiaries within the limits set forth in Section 6.02(g) shall not be considered "speculative". 

        Section 6.20    Change of Name; Fiscal Year; Accounting Method.    None of the Credit Parties shall, nor shall
any of the Credit Parties permit any of their Subsidiaries to, change its name, fiscal year or method of accounting except as required by GAAP; provided
that any Credit Party may change its name if such Credit Party has given the Agent at least 30 days' (unless otherwise consented to by the Agent) prior written notice of such name change and
taken such action as the Agent deems reasonably necessary to continue the perfection of the Liens securing payment of the Subordinated Obligations. 

39

 

        Section 6.21    Current Ratio.    Brigham Exploration shall not permit the ratio of (a) its consolidated
current assets (including the Unused Commitment Amount, as such term is defined in the Senior Credit Agreement) of Brigham Exploration and its consolidated Subsidiaries to (b) their
consolidated current liabilities to be less than 1.00 to 1.00 at any time. 

        Section 6.22    Interest Coverage Ratio.    Brigham Exploration shall not permit the Interest Coverage Ratio as
of the end of any fiscal quarter (calculated quarterly at the end of each fiscal quarter) to be less than 2.75 to 1.0 for the twelve month period ending March 31, 2003; and thereafter, not less
than 3.25 to 1.0 for the twelve-month period ending June 30, 2003, and each twelve-month period ending at the end of each fiscal quarter. 

        Section 6.23    Restrictions on Limited Partners.    Brigham Exploration shall not permit either of the Limited
Partners to hold any Properties other than the limited partner interests in the Borrower. 

        Section 6.24    Advance Payment Contracts.    None of the Credit Parties will enter into or be a party to any
Advance Payment Contract with respect to any Oil and Gas Properties that are Collateral. 

 
 

ARTICLE VII    
    
    EVENTS OF DEFAULT; REMEDIES    
  

        Section 7.01    Events of Default.    The occurrence of any of the following events shall constitute an "Event
of Default" under any Subordinated Loan Document: 

        (a)    Payment.    The Borrower shall fail to (i) pay any principal of any Advance when the same becomes due
and payable, or (ii) pay any interest on any Subordinated Note, any fees, reimbursements, indemnifications, or other amounts payable in connection with the Subordinated Obligations, this
Agreement or any of the other Subordinated Loan Documents within three Business Days after the same becomes due and payable; 

        (b)    Representation and Warranties.    Any representation or warranty made or deemed to be made (i) by any
Credit Party in this Agreement or in any other Subordinated Loan Document, or (ii) by any Credit Party in connection with this Agreement or any other Subordinated Loan Document, shall prove to
have been incorrect in any material and adverse respect when made or deemed to be made; 

        (c)    Covenant Breaches.    Any Credit Party shall fail to perform or observe (i) any covenant contained in
Section 2.05(b), Section 5.02(a), Section 5.06(e), Section 5.12 or Article VI or (ii) any other term or covenant set forth in this Agreement or in any other
Subordinated Loan Document which is not covered by clause (i) above or any other provision of this Section 7.01 if such failure shall remain unremedied for 30 days after notice of
such breach or failure has been given to the Borrower by the Agent or any of the Lenders (through the Agent); 

        (d)    Cross Defaults.    (i) Any Credit Party shall fail to pay any principal of or premium or interest on its
Debt which is outstanding in a principal amount of at least $1,000,000 individually or when aggregated with all such Debt of the Credit Parties so in default (but excluding Debt evidenced by the
Subordinated Notes) when the same becomes due and payable (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure shall continue after the applicable
grace period, if any, specified in the agreement or instrument relating to such Debt; (ii) any other event shall occur or condition shall exist under any agreement or instrument (including,
without limitation, the Senior Credit Agreement) relating to Debt which is outstanding in a principal amount of at least $1,000,000 individually or when aggregated with all such Debt of the Credit
Parties so in default, and shall continue after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such event or condition is to accelerate, or to permit
the acceleration of, the maturity of such Debt; or (iii) any such Debt shall 

40

 

be declared to be due and payable, or required to be prepaid (other than by a regularly scheduled required prepayment or optional prepayment), prior to the stated maturity thereof; 

        (e)    Insolvency.    Any Credit Party shall generally not pay its debts as such debts become due, or shall admit in
writing its inability to pay its debts generally, or shall make a general assignment for the benefit of creditors; or any proceeding shall be instituted by or against any Credit Party seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding instituted against any Credit Party either such proceeding shall remain undismissed for a period of 60 days or any of
the actions sought in such proceeding shall occur; or any Credit Party shall take any corporate action to authorize any of the actions set forth above in this Section 7.01(e); 

        (f)    Judgments.    Any judgment or order for the payment of money in excess of $1,000,000 (excluding liabilities to
the extent covered by insurance if the insurer has confirmed that such insurance covers
such liabilities) shall be rendered against any Credit Party and either (i) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (ii) there
shall be any period of 30 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; 

        (g)    Subordinated Loan Documents.    Any provision of any Subordinated Loan Document shall for any reason cease to
be in full force and effect and valid, binding and enforceable in all material respects in accordance with their terms or cease in any material respect 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 otherwise permitted by this Agreement, or any Credit Party shall so state in writing; 

        (h)    Brigham Exploration.    Any Change of Control shall occur; or 

        (i)    Operator.    The Borrower ceases to be the primary operating entity for Brigham Exploration and its
Subsidiaries and the Borrower and its Subsidiaries cease to be the only Brigham Exploration entities owning Oil and Gas Properties. 

        Section 7.02    Optional Acceleration of Maturity.    If any Event of Default (other than an Event of Default
pursuant to Section 7.01(e)) shall have occurred and be continuing, then, and in any such event: 

        (a)  the
Agent (i) shall at the request, or may with the consent, of the Majority Lenders, by notice to the Borrower, declare the Commitments and the obligation of
each Lender to make extensions of credit hereunder, including making Advances, to be terminated, whereupon the same shall forthwith terminate, and (ii) shall at the request, or may with the
consent, of the Majority Lenders, by notice to the Borrower, declare all principal, interest, fees, reimbursements, indemnifications, and all other amounts payable under this Agreement, the
Subordinated Notes, and the other Subordinated Loan Documents to be forthwith due and payable, whereupon all such amounts shall become and be forthwith due and payable in full, without notice of
intent to demand, demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to accelerate, notice of acceleration, and all other
notices, all of which are hereby expressly waived by the Borrower; and 

        (b)  the
Agent shall at the request of, or may with the consent of, the Majority Lenders proceed to enforce its rights and remedies under the Subordinated Security
Instruments, this Agreement, and any other Subordinated Loan Document for the ratable benefit of the Lenders by appropriate proceedings. 

41

 

        Section 7.03    Automatic Acceleration of Maturity.    If any Event of Default pursuant to
Section 7.01(e) shall occur: 

        (a)  (i) the
Commitments and the obligation of each Lender to make extensions of credit hereunder, including making Advances, shall terminate, and (ii) all
principal, interest, fees, reimbursements, indemnifications, and all other amounts payable under this Agreement, the Subordinated Notes, and the other Subordinated Loan Documents shall become and be
forthwith due and payable in full, without notice of intent to demand, demand, presentment for payment, notice of nonpayment, protest, notice of protest, grace, notice of dishonor, notice of intent to
accelerate, notice of acceleration, and all other notices, all of which are hereby expressly waived by the Borrower; and 

        (b)  the
Agent shall at the request of, or may with the consent of, the Majority Lenders proceed to enforce its rights and remedies under the Subordinated Security
Instruments, this Agreement, and any other Subordinated Loan Document for the ratable benefit of the Lenders by appropriate proceedings. 

        Section 7.04    Right of Set off.    Upon the occurrence and during the continuance of any Event of Default,
the Agent and each Lender 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 indebtedness at any time owing by the Agent or such Lender to or for the credit or the account of the Borrower against any and all of the obligations
of the Borrower now or hereafter existing under this Agreement, the Subordinated Notes held by the Agent or such Lender, and the other Subordinated Loan Documents, irrespective of whether or not the
Agent or such Lender shall have made any demand under this Agreement, such Subordinated Notes, or such other Subordinated Loan Documents, and although such obligations may be unmatured. The Agent and
each Lender agrees to promptly notify the Borrower after any such set off and application made by the Agent or such Lender, provided that the failure to
give such notice shall not affect the validity of such set off and application. The rights of the Agent and each Lender under this Section 7.04 are in addition to any other rights and remedies
(including, without limitation, other rights of set off) that the Agent or such Lender may have. 

        Section 7.05    Non-exclusivity of Remedies.    No remedy conferred upon the Agent and the Lenders
is intended to be exclusive of any other remedy, and each remedy shall be cumulative of all other remedies existing by contract, at law, in equity, by statute or otherwise. 

        Section 7.06    Application of Proceeds.    From and during the continuance of any Event of Default, any monies
or property actually received by the Agent pursuant to this Agreement or any other Subordinated Loan Document, the exercise of any rights or remedies under any Subordinated Security Instrument or any
other agreement with the Borrower, any Guarantor or any of the Borrower's Subsidiaries which secures any of the Subordinated Obligations, shall be applied in the following order: 

        (a)  First,
to the payment of all amounts, including without limitation costs and expenses incurred in connection with the collection of such proceeds and the payment of any
part of the Subordinated
Obligations, due to the Agent under any of the expense reimbursement or indemnity provisions of this Agreement or any other Subordinated Loan Document, any Subordinated Security Instrument or other
collateral documents, and any applicable law; 

        (b)  Second,
to the ratable payment of accrued but unpaid commitment fees under this Agreement and the Subordinated Notes; 

        (c)  Third,
to the ratable payment of accrued but unpaid interest on the Advances owing under this Agreement and the Subordinated Notes; 

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        (d)  Fourth,
ratably, according to the then unpaid amounts thereof, without preference or priority of any kind among them, to the ratable payment of all other Subordinated
Obligations then due and payable which relate to Advances and which are owing to the Agent and the Lenders; and 

        (e)  Fifth,
the remainder, if any, to the Borrower or its Subsidiaries, or its respective successors or assigns, or such other Person as may be lawfully entitled to receive
the same or as a court of competent jurisdiction may direct. 

 
 

ARTICLE VIII    
    
    THE GUARANTY    
  

        Section 8.01    Liabilities Guaranteed.    Each Guarantor hereby, joint and severally, irrevocably and
unconditionally guarantees the prompt payment at maturity of the Subordinated Obligations. 

        Section 8.02    Nature of Guaranty.    This guaranty is an absolute, irrevocable, completed and continuing
guaranty of payment and not a guaranty of collection, and no notice of the Subordinated Obligations or any extension of credit already or hereafter contracted by or extended to the Borrower need be
given to any Guarantor. This guaranty may not be revoked by any Guarantor and shall continue to be effective with respect to the Subordinated Obligations arising or created after any attempted
revocation by such Guarantor and shall remain in full force and effect until the Subordinated Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to time prior thereto no Subordinated Obligations may be outstanding. The Borrower and the Lenders may modify, alter,
rearrange, extend for any period and/or renew from time to time, the Subordinated Obligations, and the Lenders may waive any Default or Events of Default without notice to any Guarantor and in such
event each Guarantor will remain fully bound hereunder on the Subordinated Obligations. This guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of
the Subordinated Obligations is rescinded or must otherwise be returned by any of the Lenders upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as though such payment
had not been made. This guaranty may be enforced by the Agent and any subsequent holder of any of the Subordinated Obligations and shall not be discharged by the assignment or negotiation of all or
part of the Subordinated Obligations. Each Guarantor hereby expressly waives presentment, demand, notice of non-payment, protest and notice of protest and dishonor, notice of Default or
Event of Default, and also notice of acceptance of this guaranty, acceptance on the part of the Lenders being conclusively presumed by the Lenders' request for this guaranty and the Guarantors' being
party to this Agreement. 

        Section 8.03    Agent's Rights.    Each Guarantor authorizes the Agent, without notice or demand and without
affecting any Guarantor's liability hereunder, to take and hold security for the payment of its obligations under this Article VIII or the Subordinated Obligations, and exchange, enforce, waive
and release any such security; and to apply such security and direct the order or manner of sale thereof as the Agent in its discretion may determine, and to obtain a guaranty of the Subordinated
Obligations from any one or more Persons and at any time or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from their obligations under such guaranties. 

        Section 8.04    Guarantor's Waivers.    

        (a)    General.    Each Guarantor waives any right to require any of the Lenders to (i) proceed against the
Borrower or any other person liable on the Subordinated Obligations, (ii) enforce any of their rights against any other guarantor of the Subordinated Obligations, (iii) proceed or
enforce any of their rights against or exhaust any security given to secure the Subordinated Obligations, (iv) have the Borrower joined with any Guarantor in any suit arising out of this
Article VIII or the Subordinated Obligations, or (v) pursue any other remedy in the Lenders' powers whatsoever. The Lenders shall not 

43

 

be required to mitigate damages or take any action to reduce, collect or enforce the Subordinated Obligations. Guarantor waives any defense arising by reason of any disability, lack of corporate
authority or power, or other defense of the Borrower or any other guarantor of the Subordinated Obligations, and shall remain liable hereon regardless of whether the Borrower or any other guarantor be
found not liable thereon for any reason. Whether and when to exercise any of the remedies of the Lenders under any of the Subordinated Loan Documents shall be in the sole and absolute discretion of
the Agent, and no delay by the Agent in enforcing any remedy, including delay in conducting a foreclosure sale, shall be a defense to any Guarantor's liability under this Article VIII. 

        (b)    Subrogation.    Until the Subordinated Obligations have been paid in full, each Guarantor waives all rights of
subrogation or reimbursement against the Borrower, whether arising by contract or operation
of law (including, without limitation, any such right arising under any federal or state bankruptcy or insolvency laws) and waives any right to enforce any remedy which the Lenders now have or may
hereafter have against the Borrower, and waives any benefit or any right to participate in any security now or hereafter held by the Agent or any Lender. 

        Section 8.05    Maturity of Obligations, Payment.    Each Guarantor agrees that if the maturity of any of the
Subordinated Obligations is accelerated by bankruptcy or otherwise, such maturity shall also be deemed accelerated for the purpose of this Article VIII without demand or notice to any
Guarantor. Each Guarantor will, forthwith upon notice from the Agent, jointly and severally pay to the Agent the amount due and unpaid by the Borrower and guaranteed hereby. The failure of the Agent
to give this notice shall not in any way release any Guarantor hereunder. 

        Section 8.06    Agent's Expenses.    If any Guarantor fails to pay the Subordinated Obligations after notice
from the Agent of the Borrower's failure to pay any Subordinated Obligations at maturity, and if the Agent obtains the services of an attorney for collection of amounts owing by any Guarantor
hereunder, or obtaining advice of counsel in respect of any of their rights under this Article VIII, or if suit is filed to enforce this Article VIII, or if proceedings are had in any
bankruptcy, probate, receivership or other judicial proceedings for the establishment or collection of any amount owing by any Guarantor hereunder, or if any amount owing by any Guarantor hereunder is
collected through such proceedings, each Guarantor jointly and severally agrees to pay to the Agent the Agent's reasonable attorneys' fees. 

        Section 8.07    Liability.    It is expressly agreed that the liability of each Guarantor for the payment of
the Subordinated Obligations guaranteed hereby shall be primary and not secondary. 

        Section 8.08    Events and Circumstances Not Reducing or Discharging any Guarantor's Obligations.    Each
Guarantor hereby consents and agrees to each of the following to the fullest extent permitted by law, and agrees that each Guarantor's obligations under this Article VIII shall not be released,
diminished, impaired, reduced or adversely affected by any of the following, and waives any rights (including without limitation rights to notice) which each Guarantor might otherwise have as a result
of or in connection with any of the following: 

        (a)    Modifications, etc.    Any renewal, extension, modification, increase, decrease, alteration or rearrangement of
all or any part of the Subordinated Obligations, or of the Subordinated Notes, or this Agreement or any instrument executed in connection therewith, or any contract or understanding between the
Borrower and any of the Lenders, or any other Person, pertaining to the Subordinated Obligations; 

        (b)    Adjustment, etc.    Any adjustment, indulgence, forbearance or compromise that might be granted or given by any
of the Lenders to the Borrower or any Guarantor or any Person liable on the Subordinated Obligations; 

        (c)    Condition of the Borrower or any Guarantor.    The insolvency, bankruptcy arrangement, adjustment, composition,
liquidation, disability, dissolution, death or lack of power of the Borrower 

44

 

or any Guarantor or any other Person at any time liable for the payment of all or part of the Subordinated Obligations; or any dissolution of the Borrower or any Guarantor, or any sale, lease or
transfer of any or all of the assets of the Borrower or any Guarantor, or any changes in the shareholders, partners, or members of the Borrower or any Guarantor; or any reorganization of the Borrower
or any Guarantor; 

        (d)    Invalidity of Obligations.    The invalidity, illegality or unenforceability of all or any part of the
Subordinated Obligations, or any document or agreement executed in connection with the Subordinated Obligations, for any reason whatsoever, including without limitation the fact that the Subordinated
Obligations, or any part thereof, exceed the amount permitted by law, the act of creating the Subordinated Obligations or any part thereof is ultra vires, the officers or representatives executing the
documents or otherwise creating the Subordinated Obligations acted in excess of their authority, the Subordinated Obligations violate applicable usury laws, the Borrower has valid defenses, claims or
offsets (whether at law, in equity or by agreement) which render the Subordinated Obligations wholly or partially uncollectible from the Borrower, the creation, performance or repayment of the
Subordinated Obligations (or the execution, delivery and performance of any document or instrument representing part of the Subordinated Obligations or executed in connection with the Subordinated
Obligations, or given to secure the repayment of the Subordinated Obligations) is illegal, uncollectible, legally impossible or unenforceable, or this Agreement or other documents or instruments
pertaining to the Subordinated Obligations have been forged or otherwise are irregular or not genuine or authentic; 

        (e)    Release of Obligors.    Any full or partial release of the liability of the Borrower on the Subordinated
Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Subordinated Obligations or any part thereof, it being recognized, acknowledged and agreed by any Guarantor that such Guarantor may be required to pay
the Subordinated Obligations in full without assistance or support of any other Person, and no Guarantor has been induced to enter into this Article VIII on the basis of a contemplation,
belief, understanding or agreement that other parties other than the Borrower will be liable to perform the Subordinated Obligations, or the Lenders will look to other parties to perform the
Subordinated Obligations. 

        (f)    Other Security.    The taking or accepting of any other security, collateral or guaranty, or other assurance of
payment, for all or any part of the Subordinated Obligations; 

        (g)    Release of Collateral etc.    Any release, surrender, exchange, subordination, deterioration, waste, loss or
impairment (including without limitation negligent, willful, unreasonable or unjustifiable impairment) of any collateral, property or security, at any time existing in connection with, or assuring or
securing payment of, all or any part of the Subordinated Obligations; 

        (h)    Care and Diligence.    The failure of the Lenders or any other Person to exercise diligence or reasonable care
in the preservation, protection, enforcement, sale or other handling or treatment of all or any part of such collateral, property or security; 

45

  

        (i)    Status of Liens.    The fact that any collateral, security, security interest or lien contemplated or intended
to be given, created or granted as security for the repayment of the Subordinated Obligations shall not be properly perfected or created, or shall prove to be unenforceable or subordinate to any other
security interest or lien, it being recognized and agreed by each Guarantor that no Guarantor is entering into this Article VIII in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the collateral for the Subordinated Obligations; 

        (j)    Payments Rescinded.    Any payment by the Borrower to the Lenders is held to constitute a preference under the
bankruptcy laws, or for any reason the Lenders are required to refund such payment or pay such amount to the Borrower or someone else; or 

        (k)    Other Actions Taken or Omitted.    Any other action taken or omitted to be taken with respect to this
Agreement, the Subordinated Obligations, or the security and collateral therefor, whether or not such action or omission prejudices any Guarantor or increases the likelihood that any Guarantor will be
required to pay the Subordinated Obligations pursuant to the terms hereof, it being the unambiguous and unequivocal intention of each Guarantor that each Guarantor shall be obligated to joint and
severally pay the Subordinated Obligations when due, notwithstanding any occurrence, circumstance, event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full and final payment and satisfaction of the Subordinated Obligations. 

        Section 8.09    Subordination of All Guarantor Claims.    As used herein, the term "Guarantor Claims" shall
mean all debts and liabilities of the Borrower or any Subsidiary of the Borrower to any Guarantor, whether such debts and liabilities now exist or are hereafter incurred or arise, or whether the
obligation of the Borrower or such Subsidiary thereon be direct, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such debts or liabilities be
evidenced by note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such debts or liabilities may, at their inception, have been, or may hereafter be
created, or the manner in which they have been or may hereafter be acquired by any Guarantor. The Guarantor Claims shall include without limitation all rights and claims of any Guarantor against the
Borrower or any Subsidiary of the Borrower arising as a result of subrogation or otherwise as a result of such Guarantor's payment of all or a portion of the Subordinated Obligations. Until the
Subordinated Obligations shall be paid and satisfied in full and each Guarantor shall have performed all of its obligations hereunder, no Guarantor shall receive or collect, directly or indirectly,
from the Borrower or any Subsidiary of the Borrower or any other party any amount upon the Guarantor Claims during the occurrence and the continuance of an Event of Default. 

        Section 8.10    Claims in Bankruptcy.    In the event of receivership, bankruptcy, reorganization, arrangement,
debtor's relief, or other insolvency proceedings involving the Borrower or any Subsidiary of the Borrower, as debtor, the Lenders shall have the right to prove their claim in any proceeding, so as to
establish their rights hereunder and receive directly from the receiver, trustee or other court custodian, dividends and payments which would otherwise be payable upon Guarantor Claims. Each Guarantor
hereby assigns such dividends and payments to the Lenders, subject to the prior rights of the Senior Agent and the Senior Lenders. Should the Agent or any Lender receive, for application upon the
Subordinated Obligations, any such dividend or payment which is otherwise payable to any Guarantor, and which, as between the Borrower or any Subsidiary of the Borrower and any Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment in full of the Subordinated Obligations, such Guarantor shall become subrogated to the rights of the Lenders to the extent that such
payments to the Lenders on the Guarantor Claims have contributed toward the liquidation of the Subordinated Obligations, and such subrogation shall be with respect to that proportion of the
Subordinated Obligations which would have been unpaid if the Agent or a Lender had not received dividends or payments upon the Guarantor Claims. 

46

 

        Section 8.11    Payments Held in Trust.    In the event that notwithstanding Section 8.09 and
Section 8.10, any Guarantor should receive any funds, payments, claims or distributions which is prohibited by such Sections, such Guarantor agrees to hold in trust for the Lenders an amount
equal to the amount of all funds, payments, claims or distributions so received, and agrees that it shall have absolutely no dominion over the amount of such funds, payments, claims or distributions
except to pay them promptly to the Agent or the Senior Agent, and each Guarantor covenants promptly to pay the same to the Agent or the Senior Agent. 

        Section 8.12    Liens Subordinate.    Each Guarantor agrees that any liens, security interests, judgment liens,
charges or other encumbrances upon the Borrower's or any Subsidiary of the Borrower's assets securing payment of the Guarantor Claims shall be and remain inferior and subordinate to any liens,
security interests, judgment liens, charges or other encumbrances upon the Borrower's or any Subsidiary of the Borrower's assets securing payment of the Subordinated Obligations, regardless of whether
such encumbrances in favor of any Guarantor, the Agent or the Lenders presently exist or are hereafter created or attach. 

        Section 8.13    Guarantor's Enforcement Rights.    Without the prior written consent of the Lenders, no
Guarantor shall (a) exercise or enforce any creditor's right it may have against the Borrower or any Subsidiary of the Borrower, or (b) foreclose, repossess, sequester or otherwise take
steps or institute any action or proceeding (judicial or otherwise, including without limitation the commencement of or joinder in any liquidation, bankruptcy, rearrangement, debtor's relief or
insolvency proceeding) to enforce any lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other encumbrances on assets of the Borrower or any Subsidiary of the Borrower
held by Guarantor. 

 
 

ARTICLE IX    
    
    THE AGENT    
  

        Section 9.01    Authorization and Action.    Each Lender hereby appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof and of the other Subordinated Loan Documents, together with such powers
as are reasonably incidental thereto. As to any matters not expressly provided for by this Agreement or any other Subordinated Loan Document (including, without limitation, enforcement or collection
of the Subordinated Notes), the Agent shall not be required to exercise any discretion or take any action, but shall be required to act or to refrain from acting (and shall be fully protected in so
acting or refraining from acting) upon the instructions of the Majority Lenders, and such instructions shall be binding upon all Lenders and all holders of Subordinated Notes;  provided that the Agent
shall not be required to take any action which exposes the Agent to personal liability or which is contrary to this Agreement,
any other Subordinated Loan Document, or applicable law. 

        Section 9.02    Agent's Reliance, Etc.    Neither the Agent nor any of its directors, officers, agents, or
employees shall be liable for any action taken or omitted to be taken (INCLUDING THE AGENT'S OWN NEGLIGENCE) by it or them under or in connection with
this Agreement or the other Subordinated Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the generality of the foregoing, the Agent:
(a) may treat the payee of any Subordinated Note as the holder thereof until the Agent receives written notice of the assignment or transfer thereof signed by such payee and in form
satisfactory to the Agent; (b) may consult with legal counsel (including counsel for any Credit Party), independent public accountants, and other experts selected by it and shall not be liable
for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants, or experts; (c) makes no warranty or representation to any Lender and
shall not be responsible to any Lender for any statements, warranties, or representations made in or in connection with this Agreement or the other Subordinated Loan Documents; (d) shall not
have any duty to ascertain or to inquire as to the performance or observance 

47

 

of any of the terms, covenants or conditions of this Agreement or any other Subordinated Loan Document on the part of any Credit Party or to inspect the property (including the books and records) of
any Credit Party; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency, or value of this Agreement or any other
Subordinated Loan Document; and (f) shall incur no liability under or in respect of this Agreement or any other Subordinated Loan Document by acting upon any notice, consent, certificate, or
other instrument or writing (which may be by telecopier or telex) believed by it to be genuine and signed or sent by the proper party or parties. 

        Section 9.03    The Agent and Its Affiliates.    With respect to its Commitments, the Advances made by it and
the Subordinated Notes issued to it, the Agent shall have the same rights and powers under this Agreement as any other Lender and may exercise the same as though it were not the Agent. The term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include the Agent in its individual capacity. The Agent and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, any Credit Party, and any Person who may do business with or own securities of any Credit Party, all as if the Agent were not an
agent hereunder and without any duty to account therefor to the Lenders. 

        Section 9.04    Lender Credit Decision.    Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on the Financial Statements and such other documents and information as it has deemed appropriate, made its own credit analysis and decision to
enter into this Agreement. Each Lender also acknowledges that it shall, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. 

        Section 9.05    Indemnification.    THE LENDERS SEVERALLY AGREE TO INDEMNIFY THE AGENT
AND EACH AFFILIATE THEREOF AND ITS DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS (TO THE EXTENT NOT REIMBURSED BY THE CREDIT PARTIES), ACCORDING TO THEIR RESPECTIVE PRO RATA SHARES FROM AND AGAINST ANY
AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY, OR
ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THE AGENT UNDER THIS AGREEMENT OR ANY OTHER SUBORDINATED LOAN DOCUMENT (INCLUDING
THE AGENT'S OWN NEGLIGENCE), AND INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS RESULTING FROM THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, EACH LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS RATABLE SHARE OF ANY OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES)
INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT, OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE)
OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT OR ANY OTHER SUBORDINATED LOAN DOCUMENT, TO THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH BY THE CREDIT
PARTIES, PROVIDED THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF SUCH OUT-OF-POCKET EXPENSES (INCLUDING COUNSEL FEES) INCURRED BY THE AGENT AS A RESULT OF THE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.

48

 

        Section 9.06    Successor Agent.    The Agent may resign at any time by giving written notice thereof to the
Lenders and the Borrower and may be removed at any time with or without cause by the Majority Lenders upon receipt of written notice from the Majority Lenders to such effect. Upon receipt of notice of
any such resignation or removal, the Majority Lenders shall have the right to appoint a successor Agent with, if any Event of Default has not occurred and is not continuing, the consent of the
Borrower, which consent shall not be unreasonably withheld. If no successor Agent shall have been so appointed by the Majority Lenders with the consent of the Borrower, and shall have accepted such
appointment, within 30 days after the resigning Agent's giving of notice of resignation or the Majority Lenders' removal of the resigning Agent, then the resigning Agent may, on behalf of the
Lenders and the Borrower, appoint a successor Agent, which shall be, in the case of a successor agent, a commercial bank having a combined capital and surplus of at least $500,000,000.00. Upon the
acceptance of any appointment as Agent by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges, and duties of the resigning
Agent, and the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Subordinated Loan Documents. After any resigning Agent's resignation or removal
hereunder as Agent, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other
Subordinated Loan Documents. 

        Section 9.07    Collateral Matters.    

        (a)  The
Agent is authorized on behalf of the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time, to take any actions with
respect to any Collateral or Subordinated Security Instruments which may be necessary to perfect and maintain Acceptable Security Interests in and Liens upon the Collateral granted pursuant to the
Subordinated Security Instruments. The Agent is further authorized on behalf of the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time, to take any
action in exigent circumstances as may be reasonably necessary to preserve any rights or privileges of the Lenders under the Subordinated Loan Documents or applicable Legal Requirements. 

        (b)  Each
of the Lenders irrevocably authorizes the Agent to release any Lien granted to or held by the Agent upon any Collateral (i) upon termination of the
Commitments and payment in full of all outstanding Advances and all other Obligations payable under this Agreement and under any other Subordinated Loan Document; (ii) constituting property
sold or to be sold or disposed of as part of or in connection with any disposition permitted under this Agreement or the other Subordinated Loan Documents; (iii) constituting property in which
any Credit Party owned no interest at the time the Lien was granted or at any time thereafter; (iv) constituting Oil and Gas Properties to which no Proven Reserves are attributed that currently
encumbered under the Mortgage Amendments; (v) if approved, authorized or ratified in writing by the Majority Lenders or all the Lenders, as the case may be, as required by Section 10.01
or (vi) as otherwise permitted by this Agreement. Upon the request of the Agent at any time, the Lenders will confirm in writing the Agent's authority to release particular types or items of
Collateral pursuant to this Section 9.07. The Agent hereby agrees, from time to time upon the prior written request of the Borrower, to execute and deliver such releases and/or termination
documents as may be necessary to effectively release any and all of the Liens granted to or held by the Agent upon any Collateral described in this Section 9.07(b). 

        (c)  The
powers conferred on the Agent under this Agreement and the other Subordinated Security Instruments are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the reasonable care of any Collateral in its possession and the accounting for monies or other property actually received by it
hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The
Agent shall be deemed to have exercised reasonable care as to the custody and preservation of the Collateral in its possession if the Collateral is 

49

 

accorded treatment substantially equal to that which the Agent accords its own property, provided that the Agent shall have no responsibility for
taking any necessary steps to preserve rights against any parties with respect to any Collateral. 

 
 

ARTICLE X    
    
    MISCELLANEOUS    
  

        Section 10.01    Amendments, Etc.    No amendment or waiver of any provision of this Agreement, the
Subordinated Notes, or any other Subordinated Loan Document, nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed
by the Majority Lenders and the Borrower, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given;  provided that: 

        (a)  no
amendment, waiver, or consent shall, unless in writing and signed by all of the Lenders and the Borrower, do any of the following: 

          (i)  waive
any of the conditions specified in Section 3.01 or Section 3.02; 

        (ii)  increase
the Commitments of the Lenders; 

        (iii)  change
the percentage of Lenders which shall be required for the Lenders or any of them to take any action hereunder or under any other Subordinated Loan Document; 

        (iv)  amend
Section 2.11 or this Section 10.01; 

        (v)  amend
the definition of "Majority Lenders"; 

        (vi)  release
any Guarantor from its obligations under Article VIII; 

      (vii)  permit
any Credit Party to enter into any merger or consolidation with or into any other Person, except as permitted by Section 6.04, or amend
Section 6.04; 

      (viii)  release
any Collateral, except for releases of Collateral in connection with dispositions permitted by this Agreement; 

        (ix)  reduce
the principal of, or interest on, the Subordinated Notes or any fees or other amounts payable hereunder or under any other Subordinated Loan Document to or for
the benefit of the Lenders; 

        (x)  postpone
any date fixed for any payment of principal of, or interest on, the Subordinated Notes or any fees or other amounts payable hereunder or extend the Maturity
Date; or 

        (xi)  amend
or waive any provision of, nor consent to any departure by any party thereto from, the Intercreditor and Subordination Agreement; 

        (b)  no
amendment, waiver or consent shall, unless in writing and signed by the Agent in addition to the Lenders required above to take such action, affect the rights or
duties of the Agent, as the case may be, under this Agreement or any other Subordinated Loan Document. 

        Notwithstanding
any of the foregoing provisions of this Section 10.01, the Agent may release Collateral relating to sales or transfers of property permitted under this Agreement
or any other Subordinated Loan Document; provided that in no event shall Agent release all or substantially all of the Collateral without the prior
written consent of each of the Lenders. 

        Section 10.02    Notices, Etc.    All notices and other communications shall be in writing (including, without
limitation, telecopy or telex) and mailed by certified mail, return receipt requested, telecopied, telexed, hand delivered, or delivered by a nationally recognized overnight courier, at the address
for the 

50

 

appropriate party specified in Schedule 1 or at such other address as shall be designated by such party in a written notice to the other
parties. All such notices and communications shall, when so mailed, telecopied, telexed, or hand delivered or delivered by a nationally recognized overnight courier, be effective when received if
mailed, when telecopy transmission is completed, when confirmed by telex answer-back, or when delivered by such messenger or courier, respectively, except that notices and communications
to the Agent pursuant to Article II, Article IX or Article X shall not be effective until received by the Agent. 

        Section 10.03    No Waiver; Remedies.    No failure on the part of any Lender or the Agent to exercise, and no
delay in exercising, any right hereunder or under any Subordinated Note shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein provided are cumulative and not exclusive of any remedies provided by law. 

        Section 10.04    Costs and Expenses.    The Borrower agrees to pay on demand (a) all reasonable
out-of-pocket costs and expenses of the Agent in connection with the preparation, execution, delivery, administration, modification, and amendment of this Agreement, the
Subordinated Notes, and the other Subordinated Loan Documents including, without limitation, the reasonable fees and out of pocket expenses of counsel for the Agent with respect to advising the Agent
as to its rights and responsibilities under this Agreement, and (b) all out of pocket costs and expenses, if any, of the Agent and each Lender (including, without limitation, reasonable counsel
fees and expenses of the Agent and each Lender) in connection with the enforcement (whether through negotiations, legal proceedings, or otherwise) of this Agreement, the Subordinated Notes, and the
other Subordinated Loan Documents. 

        Section 10.05    Binding Effect.    This Agreement shall become effective when it shall have been executed by
each of the Credit Parties and the Agent, and when the Agent shall have, as to each Lender, either received a counterpart hereof executed by such Lender or been notified by such Lender that such
Lender has executed it and thereafter shall be binding upon and inure to the benefit of the Credit Parties, the Agent and each Lender and their respective successors and assigns, except that the
Borrower shall not have the right to assign its rights or delegate its duties under this Agreement or any interest in this Agreement without the prior written consent of each Lender. 

        Section 10.06    Lender Assignments and Participations.    

        (a)    Assignments.    Any Lender may assign to one or more banks or other entities all or any portion of its rights
and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Subordinated Notes held by it);  provided that (i) the
amount of the Commitments and Advances of such Lender being assigned pursuant to each such assignment (determined as of the
date of the Assignment and Acceptance with respect to such assignment) shall be, if to an entity other than a Lender, not less than $5,000,000.00, (ii) each such assignment shall be to an
Eligible Assignee, (iii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an Assignment and Acceptance, together with the Subordinated Notes subject to such assignment, and (iv) each Eligible
Assignee (other than an Eligible Assignee that is a Lender or an Affiliate of a Lender) shall pay to the Agent a $3,500 administrative fee. Any such assignment need not be ratable as among the
Facilities. Upon such execution, delivery, acceptance and recording, from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least three
Business Days after the execution thereof unless otherwise waived by the Agent in its sole discretion, (A) the assignee thereunder shall be a party hereto for all purposes and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder and (B) such Lender thereunder
shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this
Agreement (and, in the case of an Assignment 

51

 

and Acceptance covering all or the remaining portion of such Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto). 

        (b)    Term of Assignments.    By executing and delivering an Assignment and Acceptance, the Lender thereunder and the
assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than as provided in such Assignment and Acceptance, such Lender makes no
representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency of value of this Agreement or any other instrument or document furnished pursuant hereto; (ii) such Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any Credit Party or the performance or observance by the Borrower or its Subsidiaries of any of their obligations under this
Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recently
delivered financial statements pursuant to Section 5.06 and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the Agent, such Lender or any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (v) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and
(vi) such assignee agrees that it will perform in accordance with their terms all of the obligations which by the terms of this Agreement are required to be performed by it as a Lender. 

        (c)    The Register.    The Agent shall maintain at its address referred to in Section 10.02 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitments of, and principal amount of the Advances
owing to, each Lender from time to time (the "Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest
error, and each of the Credit Parties, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. The Register
shall be available for inspection by the Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice. 

        (d)    Procedures.    Upon its receipt of an Assignment and Acceptance executed by a Lender and an Eligible Assignee,
together with the Subordinated Notes subject to such assignment, the Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form of the attached  Exhibit A,
(i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of such notice, the Borrower shall execute and deliver to the Agent in exchange for the surrendered
Subordinated Notes (A) if such Eligible Assignee has acquired a Commitment, a new Subordinated Note to the order of such Eligible Assignee in an amount equal to such Commitment assumed by it
pursuant to such Assignment and Acceptance and (B) if such Lender has retained any Commitment hereunder, a new Subordinated Note to the order of such Lender in an amount equal to the Commitment
retained by it hereunder. Such new Subordinated Note shall be dated the effective date of such Assignment and Acceptance and shall otherwise be in substantially the form of the attached  Exhibit E.

        (e)    Participations.    Each Lender may sell participations to one or more banks or other entities in or to all or a
portion of its rights and obligations under this Agreement (including, without limitation, all or a portion of its Commitments, the Advances owing to it and the Subordinated Notes held by it);  provided
that (i) such Lender's obligations under this Agreement (including, without limitation, its Commitments to the Borrower hereunder) shall
remain unchanged, (ii) such Lender shall remain solely 

52

 

responsible to the other parties hereto for the performance of such obligations, (iii) such Lender shall remain the holder of any such Subordinated Notes for all purposes of this Agreement,
(iv) the Credit Parties, the 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, and (v) such Lender shall not require the participant's consent to any matter under this Agreement, except for change in the principal amount of the Subordinated Notes, reductions in
fees or interest, releasing all or substantially all of any Collateral or Brigham Exploration or the General Partner as a Guarantor, permitting any Credit Party to enter into any merger or
consolidation with or into any other (except as permitted hereby), postponement of any date fixed for any payment of principal of, or interest on, the Subordinated Notes or any fees or other amounts
payable hereunder, or extensions of the Maturity Date. The Borrower hereby agrees that participants shall have the same rights under Section 2.13, Section 2.14 and Section 10.07
as a Lender to the extent of their respective participations. 

        Section 10.07    INDEMNIFICATION.    THE BORROWER SHALL INDEMNIFY THE AGENT, THE LENDERS AND EACH AFFILIATE
THEREOF AND THEIR RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, AND AGENTS FROM, AND DISCHARGE, RELEASE, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, OR DAMAGES WHICH
MAY BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THEM IN ANY WAY RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY ACTION TAKEN OR OMITTED BY THEM UNDER THIS AGREEMENT OR ANY OTHER SUBORDINATED
LOAN DOCUMENT (INCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSE INCURRED BY REASON OF THE PERSON BEING INDEMNIFIED'S OWN NEGLIGENCE OR STRICT LIABILITY) AND INCLUDING WITHOUT
LIMITATION ENVIRONMENTAL LIABILITIES, BUT EXCLUDING ANY SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, OR EXPENSES INCURRED BY REASON OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE
INDEMNIFIED. 

        Section 10.08    Execution in Counterparts.    This Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. 

        Section 10.09    Survival of Representations, Etc.    All representations and warranties contained in this
Agreement or made in writing by or on behalf of the Borrower in connection herewith shall survive the execution and delivery of this Agreement and the Subordinated Loan Documents, the making of the
Advances and any investigation made by or on behalf of the Lenders, none of which investigations shall diminish any Lender's right to rely on such representations and warranties. All obligations of
the Borrower provided for in Section 2.13, Section 2.14(c), Section 10.04 and Section 10.07 and all of the obligations of the Lenders in Section 10.05 shall survive
any termination of this Agreement and repayment in full of the Subordinated Obligations. 

        Section 10.10    Severability.    In case one or more provisions of this Agreement or the other Subordinated
Loan Documents shall be invalid, illegal or unenforceable in any respect under any applicable law, the validity, legality, and enforceability of the remaining provisions contained herein or therein
shall not be affected or impaired thereby. 

        Section 10.11    GOVERNING LAW.    EXCEPT AS OTHERWISE EXPRESSLY STATED IN ANY SUBORDINATED SECURITY
INSTRUMENT, THIS AGREEMENT, THE SUBORDINATED NOTES AND THE OTHER SUBORDINATED LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

53

 

        Section 10.12    SUBMISSION TO JURISDICTION; WAIVERS.    THE BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY: 

        (a)  SUBMITS
FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER SUBORDINATED LOAN DOCUMENTS TO WHICH IT IS A PARTY, OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA
FOR THE SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF; 

        (b)  CONSENTS
THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME; 

        (c)  AGREES
THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR
FORM OF MAIL), POSTAGE PREPAID, TO THE BORROWER AT ITS ADDRESS SET FORTH IN SECTION 10.02 OR AT SUCH OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO; 

        (d)  AGREES
THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO SUE IN ANY OTHER
JURISDICTION; AND 

        (e)  WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
SECTION 10.12(E) ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES. 

        Section 10.13    WAIVER OF JURY TRIAL.    EACH OF THE CREDIT PARTIES, THE LENDERS AND THE AGENT HEREBY
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED BY AND HAS CONSULTED WITH COUNSEL OF ITS CHOICE, AND HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN RESPECT OF ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER SUBORDINATED LOAN DOCUMENT, OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 

        Section 10.14    ORAL AGREEMENTS.    THIS AGREEMENT AND THE SUBORDINATED LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO. 

54

   
        Section 10.15    Dissemination of Information.    The Agent and each Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information may be disclosed (a) to 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 Governmental Authority in connection with banking regulations or supervision; (c) to the extent required by applicable Legal
Requirements or by any subpoena or similar legal process; (d) to any other party to this Agreement; (e) to the extent required, in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder; (f) subject to an agreement for the benefit of the Credit Parties containing provisions
substantially the same as those of this Section 10.15 or any other confidentiality obligation referred to herein, to (i) any participant or Eligible Assignee or any other Person
acquiring an interest in the Subordinated Loan Documents (each a "Transferee") and any prospective Transferee or (ii) any direct or indirect contractual counterparty or prospective counterparty
(or such contractual counterparty's or prospective counterparty's professional advisor) to any credit derivative transaction relating to obligations of Credit Parties; (g) with the prior
written 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 or (ii) becomes available
to the Agent or any Lender on a nonconfidential basis from a source other than any Credit Party. In addition, the Agent or any Lender may disclose the existence of this Agreement and information about
this Agreement to market data collectors, similar service providers to the lending industry, and service providers to the Agent and the Lenders in connection with the administration and management of
this Agreement, the other Subordinated Loan Documents, and the Advances. For the purposes of this Section 10.15, "Information" means all information received from, or on behalf of, any Credit
Parties relating to any Credit Party or their business, other than any such information that is available to any Agent or any Lender on a nonconfidential basis prior to disclosure by any Credit Party;  provided that, in the case of information received from any Credit Party after the date hereof, such information is clearly identified in writing at the
time of delivery as confidential; and provided, further, that notwithstanding the foregoing, each
Engineering Report shall be deemed to be confidential regardless of whether such Engineering Report is identified in writing at the time of delivery as confidential. Any Person required to maintain
the confidentiality of Information as provided in this Section 10.15 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 10.16    Production Proceeds.    Notwithstanding that, by the terms of the various Subordinated
Security Instruments, the Credit Parties are and will be assigning to the Agent and the Lenders all of the "Production Proceeds" (as defined therein) accruing to the Property covered thereby, so long
as no Event of Default has occurred the Credit Parties may continue to receive from the purchasers of production all such Production Proceeds, subject, however, to the Liens created under the
Subordinated Security Instruments, which Liens are hereby affirmed and ratified. Upon the occurrence of an Event of Default, the Agent and the Lenders may exercise all rights and remedies granted
under the Subordinated Security Instruments, including the right to obtain possession of all Production Proceeds
then held by the Credit Parties or to receive directly from the purchasers of production all other Production Proceeds. In no case shall any failure, whether intentional or inadvertent, by the Agent
or the Lenders to collect directly any such Production Proceeds constitute in any way a waiver, remission or release of any of their rights under the Subordinated Security Instruments, nor shall any
release of any Production Proceeds by the Agent or the Lenders to the Credit Parties constitute a waiver, remission, or release of any other Production Proceeds or of any rights of the Agent or the
Lenders to collect other Production Proceeds thereafter. 

        Section 10.17    Amendment and Restatement.    The Borrower, the Agent and the Lenders have agreed that this
Agreement is an amendment and restatement of the Existing Subordinated Credit Agreement in its entirety and the terms and provisions hereof supersede the terms and provisions thereof, and this
Agreement is not a new or substitute credit agreement or novation of the Existing Subordinated Credit Agreement. 

55

   
        EXECUTED as of the date first above written. 

	 	 	BORROWER:
	

 	
 	

BRIGHAM OIL & GAS, L.P.
	

 	
 	

By:	
 	

Brigham, Inc., its General Partner
	

 	
 	

By:	
 	

/s/ WARREN J. LUDLOW
 Name: Warren J. Ludlow

Title: Secretary
	

 	
 	
GUARANTORS:
	

 	
 	

BRIGHAM EXPLORATION COMPANY
	

 	
 	

By:	
 	

/s/ WARREN J. LUDLOW
 Name: Warren J. Ludlow

Title: Secretary
	

 	
 	

BRIGHAM, INC.
	

 	
 	

By:	
 	

/s/ WARREN J. LUDLOW
 Name: Warren J. Ludlow

Title: Secretary
	

 	
 	
AGENT:
	

 	
 	

THE ROYAL BANK OF SCOTLAND plc,

as Agent
	

 	
 	

By:	
 	

/s/ PHILLIP BALLARD
 Name: Phillip Ballard

Title: Senior Vice President
	

 	
 	
LENDERS:
	

 	
 	

THE ROYAL BANK OF SCOTLAND plc
	

 	
 	

By:	
 	

/s/ PHILLIP BALLARD
 Name: Phillip Ballard

Title: Senior Vice President

56

  

 
 

EXHIBIT A    
    
    FORM OF ASSIGNMENT AND ACCEPTANCE    
  

Dated                        ,
             

        Reference is made to the Amended and Restated Subordinated Credit Agreement dated as of March [    ], 2003 (as the same may be
amended or modified from time-to-time, the "Subordinated Credit Agreement") among Brigham Oil & Gas, L.P., a Delaware limited partnership (the "Borrower"), Brigham
Exploration Company, a Delaware corporation, Brigham, Inc., a Nevada corporation, the lenders party thereto (the "Lenders"), and The Royal Bank of Scotland plc, as agent (the "Agent") for the
Lenders. Capitalized terms not otherwise defined in this Assignment and Acceptance shall have the meanings assigned to them in the Subordinated Credit Agreement. 

        Pursuant
to the terms of the Subordinated Credit Agreement,                        wishes to assign and delegate    %(1)
 of its rights and obligations under the Subordinated Credit
Agreement. Therefore,                        ("Assignor"), ("Assignee"), and the Agent agree as follows: 

	(1)
	Specify
percentage in no more than 5 decimal points. 

        1.    The
Assignor hereby sells and assigns and delegates to the Assignee, and the Assignee hereby purchases and assumes from the Assignor, without recourse to the Assignor and
without representation or warranty except for the representations and warranties specifically set forth in clauses (i) and (ii) of Section 2, a    % interest in and to
all of the Assignor's rights and obligations under the Subordinated Credit Agreement as of the Effective Date (as defined below), including, without limitation, such
percentage interest in the Assignor's Advances owing to the Assignor, and the Subordinated Note held by the Assignor. 

        2.    The
Assignor (i) represents and warrants that, prior to executing this Assignment and Acceptance, the aggregate outstanding principal amount of Advances owed to it
by the Borrower is
$                                         
 ; (ii) represents and warrants that it is the legal and beneficial owner of the interest being assigned by it hereunder and that such interest
is free and clear of any adverse claim; (iii) makes no representation or warranty and assumes no responsibility with respect to any statements, warranties, or representations made in, or in
connection with, the Subordinated Credit Agreement or any other Subordinated Loan Document or the execution, legality, validity, enforceability, genuineness, sufficiency, or value of the Subordinated
Credit Agreement or any other Subordinated Loan Document or any other instrument or document furnished pursuant thereto; (iv) makes no representation or warranty and assumes no responsibility
with respect to the financial condition of any Credit Party or the performance or observance by any Credit Party of any of its respective obligations under the Subordinated Credit Agreement or any
other Subordinated Loan Document or any other instrument or document furnished pursuant thereto; and (v) attaches the Subordinated Note referred to in paragraph 1 above and requests that
the Agent exchange such Subordinated Note for a new Subordinated Note dated                        ,
            in the principal amount of
$                                         
 payable to the order of the
Assignee, and [a new Subordinated Note dated                        ,
            in the principal amount of
$                        payable to the order of the Assignor.] 

        3.    The
Assignee (i) confirms that it has received a copy of the Subordinated Credit Agreement, together with copies of the most recent financial statements referred
to in Section 5.06 thereof and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance;
(ii) agrees that it will, independently and without reliance upon the Agent, the Assignor, or any other Lender and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action under the Subordinated Credit Agreement or any other Subordinated Loan 

A-1

 

Document; (iii) appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under the Subordinated Credit Agreement and any other Subordinated Loan
Document as are delegated to the Agent by the terms thereof, together with such powers as are reasonably incidental thereto; (iv) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Subordinated Credit Agreement or any other Subordinated Loan Document are required to be performed by it as a Lender; (v) specifies as its Lending
Office (and address for notices) the office set forth beneath its name on the signature pages hereof; (vi) attaches the forms prescribed by the Internal Revenue Service of the United States
certifying as to the Assignee's status for purposes of determining exemption from United States withholding taxes with respect to all payments to be made to the Assignee under the Subordinated Credit
Agreement and the Subordinated Notes or such other documents as are necessary to indicate that all such payments are subject to such rates at a rate reduced by an applicable tax treaty;(2) and
(vii) represents that it is an Eligible Assignee. 

	(2)
	If
the Assignee is organized under the laws of a jurisdiction outside the United States. 

        4.    The
Assignee confirms that it has received a copy of the Intercreditor and Subordination Agreement and expressly agrees that it will be bound, in its capacity as a
Subordinated Lender, by the terms thereof. The Assignee shall execute such other agreements, documents and instruments as the Senior Agent may reasonably request to effect the purpose of this
paragraph 4. 

        5.    The
effective date for this Assignment and Acceptance shall be dated                        ,
            (the "Effective Date")(3) and following the execution of this
Assignment and Acceptance, the Agent will record it. 

	(3)
	See
Section 11.06 of the Subordinated Credit Agreement. Such date shall be at least three Business Days after the date of this Assignment and Acceptance, unless otherwise
waived by the Agent in its sole discretion. 

        6.    Upon
such recording, and as of the Effective Date, (i) the Assignee shall be a party to the Subordinated Credit Agreement for all purposes, and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Subordinated Credit Agreement. 

        7.    Upon
such recording, from and after the Effective Date, the Agent shall make all payments under the Subordinated Credit Agreement and the Subordinated Note in respect of
the interest assigned hereby (including, without limitation, all payments of principal, interest, letter of credit fees and commitment fees) to the Assignee. The Assignor and Assignee shall make all
appropriate adjustments in payments under the Subordinated Credit Agreement and the Subordinated Note for periods prior to the Effective Date directly between themselves. 

        8.    This
Assignment and Acceptance shall be governed by, and construed and enforced in accordance with, the laws of the State of New York. 

A-2

 

        The
parties hereto have caused this Assignment and Acceptance to be duly executed as of the date first above written. 

	 	 	[ASSIGNOR]
	

 	
 	

 	
 	

 
	 	 	By:	 	    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	

 	
 	

 
	 	 	Address:	 	    

	 	 	 	 	    

	 	 	 	 	    

	 	 	Attention:	 	    

	 	 	Telecopy No: (XXX) XXX-XXXX
	

 	
 	

 	
 	

 
	 	 	[ASSIGNEE]
	

 	
 	

 	
 	

 
	 	 	By:	 	    

	 	 	Name:	 	    

	 	 	Title:	 	    

	

 	
 	

 	
 	

 
	 	 	Lending Office
	

 	
 	

 	
 	

 
	 	 	Address:	 	    

	 	 	 	 	    

	 	 	 	 	    

	 	 	Attention:	 	    

	 	 	Telecopy No: (XXX) XXX-XXXX

A-3

  

 
 

EXHIBIT B    
    
    Form of Compliance Certificate    
  

FOR THE PERIOD FROM            , 200    TO            , 200  

        This certificate dated as of            , 200    is prepared pursuant to Amended and Restated Subordinated
Credit Agreement dated as of March
[    ], 2003 (as the same may be amended or modified from time-to-time, the "Subordinated Credit
Agreement") among Brigham Oil & Gas, L.P., a Delaware limited partnership (the "Borrower"), Brigham Exploration Company,
a Delaware corporation, Brigham, Inc., a Nevada corporation, the lenders party thereto (the "Lenders"), and The Royal Bank of Scotland plc, as
agent (the "Agent") for the Lenders. Unless otherwise defined in this certificate, capitalized terms that are defined in the Subordinated Credit Agreement shall have the meanings assigned to them by
the Subordinated Credit Agreement. 

        Brigham
Exploration hereby certifies (a) that no Default or Event of Default has occurred or is continuing, (b) that all of the representations and warranties made by each
of the Credit Parties in the Subordinated Credit Agreement and the other Loan Documents are true and correct in all material respects as if made on this date (unless such representations and
warranties are stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respect as of such earlier date), and
(c) that as of the date hereof, the following amounts and calculations were true and correct: 

	1.	 	Section 6.22 Current Ratio.	 	 	 	 
	

 	
 	

(a)	
 	

consolidated current assets of Brigham Exploration and its consolidated Subsidiaries (including the Unused Revolving Commitment Amount as of the date of calculation)	
 	

$	
 	

 
	

 	
 	

(b)	
 	

consolidated current liabilities of Brigham Exploration and its consolidated Subsidiaries	
 	

$	
 	

 
	

 	
 	

Current Ratio = (a) divided by (b)	
 	

 	
 	

 
	

 	
 	

Minimum Current Ratio	
 	

1.00 to 1.00
	

 	
 	

Compliance	
 	

Yes	
 	

No
	

2.	
 	

Section 6.23 Interest Coverage Ratio.	
 	

 	
 	

 
	

 	
 	

(a)	
 	

Consolidated Net Income	
 	

$	
 	

 
	

 	
 	

(b)	
 	

Interest Expense	
 	

$	
 	

 
	

 	
 	

(c)	
 	

taxes, depreciation, amortization, depletion, and other non-cash charges	
 	

$	
 	

 
	

 	
 	

(d)	
 	

all non-cash income	
 	

$	
 	

 
	

 	
 	

(e)	
 	

EBITDA = (a) + (b) + (c) - (d)	
 	

$	
 	

 
	

 	
 	

Interest Coverage Ratio = (e) divided by (b)	
 	

 	
 	

 
	

 	
 	

Minimum Current Ratio for twelve-month period ending March 31, 2003	
 	

2.75 to 1.00
	

 	
 	

For twelve-month period ending June 30, 2003 and each twelve-month period ending at the end of each fiscal quarter thereafter	
 	

3.25 to 1.00
	

 	
 	

Compliance	
 	

Yes	
 	

No

        IN
WITNESS THEREOF, I have hereto signed my name to this Compliance Certificate as an officer of Brigham Exploration and not in my individual capacity as of            ,
200  . 

B-1

  

 
 

EXHIBIT C    
  

[RESERVED]  

C-1

  

 
 

EXHIBIT D    
  

[RESERVED]  

D-1

  

 
 

 EXHIBIT E  

 

FORM OF SUBORDINATED NOTE  

 

THIS INSTRUMENT IS SUBORDINATED TO THE EXTENT AND IN THE MANNER PROVIDED IN THE INTERCREDITOR AND SUBORDINATION AGREEMENT REFERRED TO BELOW.  

 

SUBORDINATED NOTE  

	$23,000,000.00	 	March [21], 2003

        For value received, the undersigned BRIGHAM OIL & GAS, L.P., a Delaware limited partnership (the
"Borrower"), hereby promises to pay to the order of            (the "Payee") the principal
amount
of            No/100 Dollars ($            ) or, if less, the aggregate outstanding principal amount of the Advances (as defined
in the Subordinated Credit Agreement referred to below) made
by the Payee to the Borrower, together with interest on the unpaid principal amount of the Advances from the date of such Advances until such principal amount is paid in full, at such interest rates,
and at such times, as are specified in the Subordinated Credit Agreement. The Borrower may make prepayments on this Subordinated Note in accordance with the terms of the Subordinated Credit Agreement. 

        This
Subordinated Note is one of the Subordinated Notes referred to in, and is entitled to the benefits of, and is subject to the terms of, the Amended and Restated Subordinated Credit
Agreement dated as of March [21], 2003, (as the same may be amended or modified from time to time, the "Subordinated Credit Agreement"), among the Borrower, Brigham Exploration
Company, a Delaware corporation, Brigham, Inc., a Nevada corporation, the lenders party thereto (the "Lenders"), and The Royal Bank of Scotland
plc, as agent (the "Agent") for the Lenders. Capitalized terms used in this Subordinated Note that are defined in the Subordinated Credit Agreement and
not otherwise defined in this Subordinated Note have the meanings assigned to such terms in the Subordinated Credit Agreement. The Subordinated Credit Agreement, among other things,
(a) provides for the making of the Advances by the Payee to the Borrower in an aggregate amount not to exceed at any time outstanding the Dollar amount first above mentioned, the indebtedness
of the Borrower resulting from each such Advance being evidenced by this Subordinated Note, and (b) contains provisions for acceleration of the maturity of this Subordinated Note upon the
happening of certain events stated in the Subordinated Credit Agreement and for prepayments of principal prior to the maturity of this Subordinated Note upon the terms and conditions specified in the
Subordinated Credit Agreement. 

        In
connection with the execution and delivery of the Subordinated Credit Agreement, the Agent, the Borrower, Brigham Exploration Company, Brigham, Inc., and
Société Générale, as administrative agent (the "Senior Agent") under that certain Second
Amended and Restated Credit Agreement dated as of March [21], 2003, (as the same may be amended or modified from time to time, the "Senior Credit Agreement"), among the
Borrower, Brigham Exploration Company, Brigham, Inc., the lenders party thereto, have entered into that certain Amended and Restated Intercreditor and Subordination Agreement dated as of March
[21], 2003 (as the same may be amended or supplemented from time to time, the "Intercreditor and Subordination Agreement").
Payments of principal and interest on this Subordinated Note are subordinated to the extent provided in the Intercreditor and Subordination Agreement. 

        Both
principal and interest are payable in lawful money of the United States of America to the Agent at 101 Park Avenue, 12th Floor, New York, New York 10178 or such other
location or address in New York specified by the Agent to the Borrower in same day funds. The Payee shall record payments of principal made under this Subordinated Note, but no failure of the Payee to
make such recordings shall affect the Borrower's repayment obligations under this Subordinated Note. 

        This
Subordinated Note is secured by the Subordinated Security Instruments and guaranteed pursuant to Article VIII of the Subordinated Credit Agreement. 

E-1

 

        Except
as specifically provided in the Subordinated Credit Agreement, the Borrower hereby waives presentment, demand, protest, notice of intent to accelerate, notice of acceleration, and
any other notice of any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of the holder of this Subordinated Note shall operate as a waiver of such rights. 

        THIS
SUBORDINATED NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

        THIS
SUBORDINATED NOTE AND THE OTHER SUBORDINATED LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 

        THERE
ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES. 

[SIGNATURE
OF BRIGHAM OIL & GAS, L.P.] 

E-2

  

 
 

EXHIBIT F    
    
    FORM OF SECOND MORTGAGE AMENDMENT    
  

AMENDED AND RESTATED SECOND MORTGAGE, DEED OF TRUST,

ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT,

FIXTURE FILING, AND FINANCING STATEMENT

FROM

BRIGHAM
OIL & GAS, L.P. 

a
Delaware limited partnership, 

as
grantor and mortgagor, 

TO 

PHILLIP
BALLARD, 

as
Trustee 

FOR
THE BENEFIT OF 

THE
ROYAL BANK OF SCOTLAND plc, 

as
Agent, 

as
beneficiary, 

AND
TO 

THE
ROYAL BANK OF SCOTLAND plc, 

as
Agent, 

as
Mortgagee 

NOTICE TO MORTGAGOR:  

        A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. WITH RESPECT TO PORTIONS OF THE MORTGAGED PROPERTY LOCATED IN THE STATE OF OKLAHOMA,
SUCH POWER OF SALE IS GRANTED PURSUANT TO THE OKLAHOMA MORTGAGE FORECLOSURE ACT (AS DEFINED BELOW). # IN CERTAIN STATES, A POWER OF SALE MAY ALLOW TRUSTEE OR MORTGAGEE, AS APPLICABLE, TO TAKE THE
MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE OF AN EVENT OF DEFAULT BY MORTGAGOR UNDER THIS INSTRUMENT. THIS INSTRUMENT CONTAINS AFTER-ACQUIRED
PROPERTY PROVISIONS. THIS INSTRUMENT SECURES PAYMENT OF FUTURE ADVANCES. THIS INSTRUMENT COVERS ALL PRODUCTS AND PROCEEDS OF THE MORTGAGED PROPERTY.

        THIS INSTRUMENT COVERS THE INTEREST OF MORTGAGOR IN MINERALS OR THE LIKE (INCLUDING OIL AND GAS) BEFORE EXTRACTION AND THE SECURITY INTEREST CREATED BY THIS
INSTRUMENT ATTACHES TO SUCH MINERALS AS EXTRACTED AND TO ACCOUNTS
RESULTING FROM THE SALE THEREOF AT THE WELLHEAD. THIS INSTRUMENT COVERS MORTGAGOR'S INTEREST IN FIXTURES. THIS FINANCING STATEMENT IS TO BE FILED FOR
RECORD, AMONG OTHER PLACES, IN THE REAL ESTATE RECORDS.

F-1

 
 
 

AMENDED AND RESTATED SECOND MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING, AND FINANCING STATEMENT    
  

        THE OBLIGATIONS UNDER THIS INSTRUMENT ARE EXPRESSLY SUBORDINATED TO THAT CERTAIN AMENDED AND RESTATED MORTGAGE, DEED OF TRUST, ASSIGNMENT
OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING, AND FINANCING STATEMENT DATED AS OF THE DATE HEREOF THAT HAS BEEN EXECUTED BY MORTGAGOR (AS HEREINAFTER DEFINED) IN FAVOR OF
SOCIÉTÉ GÉNÉRALE ("SG"), THE ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE SENIOR LENDERS (AS HEREINAFTER DEFINED), THAT PROVIDES AND IS
INTENDED TO PROVIDE, A FIRST PRIORITY DEED OF TRUST AND MORTGAGE LIEN AND A FIRST PRIORITY SECURITY INTEREST IN THE MORTGAGED PROPERTY (AS HEREINAFTER DEFINED) TO SECURE THE OBLIGATIONS MORE
PARTICULARLY DESCRIBED IN THAT CERTAIN SECOND AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG MORTGAGOR, BRIGHAM EXPLORATION COMPANY, BRIGHAM, INC., SG, THE ROYAL BANK OF SCOTLAND PLC
("RBS"), AND EACH OF THE OTHER LENDERS PARTY THERETO FROM TIME TO TIME (COLLECTIVELY, "SENIOR LENDERS"). THIS INSTRUMENT IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN AMENDED AND RESTATED
INTERCREDITOR AGREEMENT DATED MARCH    , 2003 BY AND BETWEEN THE SENIOR LENDERS.

        THIS
AMENDED AND RESTATED SECOND MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING, AND FINANCING STATEMENT (this "Second
Mortgage") is made effective as of March    , 2003 (the "Effective Date") by BRIGHAM
OIL & GAS, L.P., a Delaware limited partnership, whose address for notice is 6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730, as grantor and
mortgagor ("Mortgagor") to: 

PHILLIP BALLARD, as Trustee, whose address for notice is 600 Travis Street, Suite 6070, Houston, TX 77002
("Trustee") for the benefit of THE ROYAL BANK OF SCOTLAND plc, as beneficiary, whose address for notice
is 600 Travis Street, Suite 6070, Houston, TX 77002, as Agent (together with any successor agents, "Agent"); and 

Agent,
as mortgagee ("Mortgagee"). 

RECITALS: 

        A.    Mortgagor,
Brigham, Inc., a Nevada Corporation, Brigham Exploration Company, a Delaware corporation, Agent, and certain other lenders are parties to that certain
Amended and Restated Subordinated Credit Agreement dated effective as of March     , 2003, and all supplements thereto and amendments or modifications thereof, and all agreements,
given in substitution therefore or in restatement, renewal or extension thereof, in whole or in part (the "Amended and Restated Subordinated Credit
Agreement"). Agent and the other lenders party, from time to time, to the Amended and Restated Subordinated Credit Agreement may be referred to periodically herein as,
individually, a "Lender" and, collectively, as the "Lenders." 

        B.    Mortgagor,
the lenders party thereto, and Agent entered into that certain Subordinated Credit Agreement dated October 31, 2000 (the
"Existing Subordinated Credit Agreement"). 

        C.    Pursuant
to the Amended and Restated Subordinated Credit Agreement, Mortgagor has agreed to enter into this Second Mortgage. In addition, it is a condition to the
obligation of each Lender to make such Lender's initial Advance as part of the initial Borrowing that this Second Mortgage be executed and delivered to Trustee and to Mortgagee. 

        D.    This
Mortgage constitutes for all purposes an amendment and restatement of the security instruments more particularly described on  Schedule I attached hereto and made a part hereof (collectively, the
"Original Mortgages") and not a new or substitute security instrument. 

F-2

 

        NOW,
THEREFORE, in consideration of the foregoing, in order to comply with the terms, provisions, and conditions of the Amended and Restated Subordinated Credit Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor hereby enters into this Second Mortgage on the following terms and conditions: 

ARTICLE I  

 Granting Clause; Description of Indebtedness Secured  

        Section 1.01    Granting Clause.    In order to secure the payment of the Indebtedness (as hereinafter defined
in Section 1.03) and in order to secure the performance of the covenants, obligations, agreements, warranties, and undertakings herein contained, (x) with respect to any portion of the
Mortgaged Property (as hereinafter defined) that is located in or is subject to the laws of the State of Texas or any other state pursuant to the law of which a deed of trust is a lawful security
instrument, Mortgagor does hereby GRANT, BARGAIN, SELL, ASSIGN, PLEDGE, GIVE, MORTGAGE, WARRANT, SET OVER, TRANSFER, HYPOTHECATE, and CONVEY unto Trustee and Trustee's successors and substitutes in
trust hereunder IN TRUST WITH POWER OF SALE, for the use and benefit of Agent and the Lenders, all of Mortgagor's right, title, and interest, whether now owned or hereafter acquired, in the real and
personal property, rights, titles, interests and estates described hereinafter (the "Trust Estate Property") and (y) with respect to any portion of the Mortgaged Property (as hereinafter
defined) that is located in or is subject to the laws of the State of Oklahoma or any state pursuant to the law of which a deed of trust is not a lawful security instrument, Mortgagor does hereby
GRANT, BARGAIN, SELL, ASSIGN, PLEDGE, GIVE, MORTGAGE, WARRANT, SET OVER, TRANSFER, HYPOTHECATE, and CONVEY to Mortgagee for the use and benefit of Agent and the Lenders all of Mortgagor's right,
title, and interest, whether now owned or hereafter acquired, in the real and personal property, rights, titles, interests and estates described hereinafter (the
"Non-Trust Estate Property") (the Trust Estate Property and the Non-Trust Estate Property are herein collectively called the
"Mortgaged Property"): 

        (a)  All
oil and gas and/or oil, gas and mineral leases and leasehold interests, fee mineral interests, term mineral interests, subleases, farmouts, royalties, overriding
royalties, net profits interests, production payments and similar interests or estates described on Exhibit A attached hereto or constituting interests in the lands described on
Exhibit A attached hereto, including, without limitation any reversionary or carried interests relating to any of the foregoing, together with any instrument executed in amendment, correction,
modification, confirmation, renewal or extension of the same (collectively, the "Hydrocarbon Property"), and including specifically, but without
limitation, the undivided interests of Mortgagor which are represented, warranted, and more particularly described on Exhibit A hereto; 

        (b)  All
rights, titles, interests, estates, tenements, hereditaments, and appurtenances now owned or existing or hereafter acquired by Mortgagor in and to: (i) all
production units and drilling and spacing units (and the property covered thereby) which may affect all or any portion of the Hydrocarbon Property including those units now or hereafter pooled or
unitized with the Hydrocarbon Property; (ii) all presently existing or future unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby,
including, but not limited to, pooling orders of the Oklahoma Corporation Commission (together with all other units created under orders, regulations, rules or other official acts of any Governmental
Authority having jurisdiction over any of the Mortgaged Property and any units created solely among working interest owners pursuant to operating agreements or otherwise) which may affect all or any
portion of the Hydrocarbon Property including,
without limitation, those units, if any, which may be described or referred to on attached Exhibit A; (iii) all operating agreements,
production sales or other contracts, farmout agreements, farm-in agreements, area of mutual interest agreements, joint development agreements, joint exploration agreements, equipment
leases and 

F-3

 

other agreements described or referred to in this Second Mortgage or which cover, affect or relate to any of the Hydrocarbon Property or interests in the Hydrocarbon Property described or referred to
herein or on Exhibit A or to the production, sale, purchase, exchange, processing, handling, storage, transporting or marketing of the Hydrocarbons (hereinafter defined) from or attributable to
such Hydrocarbon Property or interests; and (iv) subject to applicable restrictions on disclosure and/or transfer, all geological, geophysical, engineering, accounting, title, legal, and other
technical or business data concerning the Mortgaged Property, the Hydrocarbons in which Mortgagor can otherwise grant a security interest, and all books, files, records, magnetic media, computer
records, and other forms of recording or obtaining access to such data; 

        (c)  All
rights, titles, interests and estates now owned or hereafter acquired by Mortgagor in and to all oil, gas, coal seam gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and
other substances derived therefrom or the processing thereof, and all other minerals and substances produced in conjunction with such substances, including, but not limited to, sulfur, geothermal
steam, water, carbon dioxide, helium, and any and all minerals, ores, or substances of value and the products and proceeds therefrom (collectively called the
"Hydrocarbons") in and under and which may be produced and saved from or attributable to the Hydrocarbon Property, the lands pooled or unitized
therewith and Mortgagor's interests therein, including all oil in tanks, gas in storage, and all rents, issues, profits, proceeds, products, revenues and other income from or attributable to the
Hydrocarbon Property, the lands pooled or unitized therewith and Mortgagor's interests therein which are subjected to the liens and security interests of this Second Mortgage; 

        (d)  All
tenements, hereditaments, appurtenances and properties in anywise appertaining, belonging, affixed or incidental to the Hydrocarbon Property or the rights, titles,
interests and estates described or referred to in paragraphs (a) and (b) above, which are now owned or which may hereafter be acquired by Mortgagor, including, without limitation, any
and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use, or useful in connection with the operating, working or development of any of such Hydrocarbon
Property or the lands pooled or unitized therewith (excluding drilling rigs, trucks, automotive equipment or other personal property which may be taken to the 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, field separators, liquid extraction plants, plant
compressors, pumps, pumping units, pipelines, sales and flow lines, gathering systems, field gathering systems, salt water disposal facilities, 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, servitudes, licenses and other surface and subsurface rights together with all additions, substitutions, replacements, accessions and attachments to
any and all of the foregoing properties; 

        (e)  Any
property that may from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien and security interest hereof by Mortgagor or by anyone
on Mortgagor's behalf; and Trustee is hereby authorized to receive the same at any time as additional security hereunder; 

        (f)    All
of the rights, titles, interests and estates of every nature whatsoever now owned or hereafter acquired by Mortgagor in and to the Hydrocarbon Property, including,
without limitation, all such rights, titles, interests and estates as the same may be enlarged by the discharge of any payments out of production or by the removal of any charges or Permitted
Encumbrances (as hereinafter defined in Section 3.01) to which any of such rights, titles, interests or estates are subject, or otherwise; all rights of Mortgagor to liens and security
interests securing payment of proceeds from the sale of production from the Mortgaged Property, including, but not limited to, 

F-4

 

those liens and security interests provided for in Section 9.343 of the Texas Business and Commerce Code, as amended from time to time; together with any and all renewals and extensions of any
of such liens and security interests; all contracts and agreements supplemental to or amendatory of or in substitution for the contracts and agreements described or mentioned above, including, without
limitation, any such contracts and agreements comprising or giving rise to any portion of the Hydrocarbon Property; and any and all additional interests of any kind hereafter acquired by Mortgagor in
and to such rights, titles, interests or estates; 

        (g)  All
accounts, contract rights, inventory, general intangibles, insurance contracts and insurance proceeds constituting a part of, relating to or arising out of those
portions of the Mortgaged Property which are described in paragraphs (a) through (f) above and all proceeds and products of all such portions of the Mortgaged Property and payments in
lieu of production (such as "take or pay" payments), whether such proceeds or payments are goods, money, documents, instruments, chattel paper, securities, accounts, general intangibles, fixtures,
real property, or other assets; 

        (h)  All
payments received in lieu of production from the Mortgaged Property (regardless of whether such payments accrued, and/or the events which gave rise to such payments
occurred, on, before, or after the Effective Date), including, without limitation, "take or pay" payments and similar payments, payments received in settlement of or pursuant to a judgment rendered
with respect to take or pay or similar obligations or other obligations under a production sales contract, payments received in buyout or buydown or other settlement of a production sales contract,
and payments received under a gas balancing or similar agreement as a result of (or received otherwise in settlement of or pursuant to a judgment rendered with respect to) rights held by Mortgagor as
a result of Mortgagor (and/or its predecessors in title) taking or having taken less Hydrocarbons from lands covered by the Mortgaged Property (or lands pooled or unitized therewith) than their
ownership of the Mortgaged Property would entitle Mortgagor to receive; and 

        (i)    Any
rights or interests of Mortgagor under any present or future hedge or swap agreements, cap, floor, collar, exchange, forward or other hedge or protection agreements
or transactions relating to Hydrocarbons, or any option with respect to such agreement or transaction now existing or hereafter entered into by or on behalf of Mortgagor. 

        TO
HAVE AND TO HOLD the Trust Estate Property unto Trustee for the benefit of Agent and the Lenders, and Trustee's successors in trust and assigns forever, and the Non-Trust
Estate Property unto Mortgagee for the benefit of Agent and the Lenders, and Mortgagee's successors and assigns forever, in each case upon the terms, provisions, and conditions set forth herein.
Mortgagor does hereby bind itself, and its successors and permitted assigns, to warrant and forever defend all and singular the Mortgaged Property unto Trustee and Mortgagee against every Person
whomsoever lawfully claiming or to claim the same, or any part thereof. 

        WITH RESPECT TO ANY MORTGAGED PROPERTY LOCATED IN THE STATE OF OKLAHOMA, MORTGAGOR HEREBY GRANTS TO MORTGAGEE AND TO TRUSTEE THE RIGHT AND POWER TO FORECLOSE THIS
SECOND MORTGAGE PURSUANT TO THE OKLAHOMA POWER OF SALE MORTGAGE # FORECLOSURE ACT, 46 OKLAHOMA STATUTES, §40, ET. SEQ. (THE "OKLAHOMA
MORTGAGE FORECLOSURE ACT") AS PRESENTLY IN FORCE AND AS MAY BE AMENDED FROM TIME TO TIME.

        Section 1.02    Grant of Security Interest.    To further secure the Indebtedness (as hereinafter defined in
Section 1.03), Mortgagor hereby grants to Mortgagee for the benefit of Agent and the Lenders, subject to the reservations and restrictions set forth herein below, a security interest in and to
the Mortgaged Property (whether now or hereafter acquired by operation of law or otherwise) insofar as the Mortgaged Property consists of equipment, accounts, contract rights, general intangibles
(subject in the case of geological and geophysical data (including without limitation raw data and 

F-5

 

interpretations) contract rights and general intangibles to any existing restrictions on disclosure and/or transfer), insurance contracts, insurance proceeds, inventory, Hydrocarbons, fixtures and
any and all other personal property of any kind or character defined in and subject to the provisions of the Uniform Commercial Code presently in effect in the jurisdiction in which the Mortgaged
Property is situated ("Applicable UCC"), including the proceeds and products from any and all of such personal property, whether such proceed or
products are goods, money, documents, instruments, chattel paper, securities, accounts, general intangibles, fixtures, real or immovable property, personal or movable property, or other assets. In
addition to all other rights and remedies afforded to Mortgagee pursuant to this Second Mortgage, upon the happening of any Event of Default, Mortgagee is and shall be entitled to all of the rights,
powers and remedies afforded a secured party by the Applicable UCC with reference to the personal property and fixtures in which Mortgagee has been granted a security interest herein, or Trustee or
Mortgagee may proceed as to both the real and personal property covered hereby in accordance with the rights and remedies granted under this Second Mortgage in respect of the real property covered
hereby. Such rights, powers and remedies shall be cumulative and in addition to those granted to Trustee or Mortgagee under any other provision of this Second Mortgage or under any other Security
Instrument. Written notice mailed to Mortgagor as provided herein at least ten (10) days prior to the date of public sale of any part of the Mortgaged Property which is personal property
subject to the provisions of the Applicable UCC, or prior to the date after which private sale of any such part of the Mortgaged Property will be made, shall constitute reasonable notice. It is
Mortgagor's intention that the security interest granted pursuant to this Mortgage encumber Mortgagor's interest in As-Extracted Collateral (as hereinafter defined). For purposes of this
Mortgage, the term "As-Extracted Collateral" shall have the meaning ascribed to such term in the Applicable UCC. 

        Section 1.03    Indebtedness Secured.    This Second Mortgage is executed and delivered by Mortgagor to secure
and enforce the following (collectively, the "Indebtedness"): 

        (a)  Full
payment and performance of all indebtedness and other obligations now or hereafter incurred or arising pursuant to the provisions of the Amended and Restated
Subordinated Credit Agreement; 

        (b)  Full
payment and performance of all promissory notes, letters of credit, or other evidences of indebtedness issued from time to time pursuant to the Amended and Restated
Subordinated Credit Agreement, including, without limitation, those certain promissory notes having a maturity date
of                        , 2006; 

        (c)  All
indebtedness and other obligations now or hereafter incurred or arising pursuant to the guarantee by the Guarantors in favor of Agent and the Lenders pursuant to the
Amended and Restated Subordinated Credit Agreement, pursuant to which guarantee the Guarantors have guaranteed the prompt payment at maturity of the Subordinated Obligations (as defined in the Amended
and Restated Subordinated Credit Agreement). 

        (d)  Payment
of and performance of any and all present or future obligations of Mortgagor or any Credit Party according to the terms of any present or future interest or
currency rate swap, rate cap, rate floor, rate collar, exchange transaction, forward rate agreement, or other exchange or rate protection agreements or any option with respect to any such transaction
now existing or hereafter entered into between Mortgagor or any Credit Party, on the one hand, and any party that was a Lender (or any Affiliate of a Lender) at the time such transaction was entered
into, on the other; 

        (e)  Payment
of and performance of any and all present or future obligations of Mortgagor or any Credit Party according to the terms of any present or future swap agreements,
cap, floor, collar, exchange transaction, forward agreement, or other exchange or protection agreements relating to Hydrocarbons, or any option with respect to any such transaction now existing or
hereafter entered into between Mortgagor or any Credit Party, on the one hand, and any party 

F-6

 

that was a Lender (or any Affiliate of a Lender) at the time such transaction was entered into, on the other; and 

        (f)    Without
limiting the generality of the foregoing, all post-petition interest, expenses, and other duties and liabilities with respect to indebtedness or
other obligations described in the foregoing subsections (a) through (f) of this Section 1.03, which would be owed but for the fact that such duties and liabilities are
unenforceable or not allowable due to the existence of a bankruptcy, reorganization, or similar proceeding. 

        Section 1.04    Fixture Filing, Etc.    Without in any manner limiting the generality of any of the other
provisions of this Second Mortgage: (i) some portions of the goods described or to which reference is made herein are or are to become fixtures on the land described or to which reference is
made herein or on attached Exhibit A; (ii) the security interests created hereby under applicable provisions of the Applicable UCC will attach to Hydrocarbons (minerals including oil and
gas) or the accounts resulting from the sale thereof at the wellhead or minehead located on the land described or to which reference is made herein; and (iii) this Second Mortgage is to be
filed of record in the real estate records as a fixture filing with respect to all fixtures comprising any part of the Mortgaged Property and as a financing statement pursuant to the Applicable UCC
with respect to any As-Extracted Collateral and any other personal property comprising any part of the Mortgaged Property. Mortgagor is the record owner of the real estate or interests in
the real estate comprised of the Mortgaged Property. 

        Section 1.05    Defined Terms; Interpretation.    Initially-capitalized terms not otherwise specifically
defined herein shall have the meaning ascribed to such terms in the Amended and Restated Subordinated Credit Agreement. All other rules of interpretation set forth in Section 1.05 of the
Amended and Restated Subordinated Credit Agreement shall apply to this Second Mortgage and are hereby incorporated herein by reference. 

ARTICLE II  

 Assignment of Production  

        Section 2.01    Assignment.    Mortgagor has hereby absolutely and unconditionally assigned, transferred, set
over, and conveyed, and does hereby absolutely and unconditionally assign, transfer, set over, and convey unto Mortgagee, its successors and assigns, all of the Hydrocarbons and all products obtained
or processed therefrom, and the revenues and proceeds now and hereafter attributable to the Hydrocarbons and said products and all payments in lieu of the Hydrocarbons such as "take or pay" payments
or settlements, together with the immediate and continuing right to collect and receive all of the foregoing (the "Production Proceeds"). The
Hydrocarbons and products are to be delivered into pipelines connected with the Mortgaged Property, or to the purchaser thereof, to the credit of Mortgagee, free and clear of all taxes, charges,
costs, and expenses; and all such revenues and proceeds shall be paid directly to Mortgagee, at its banking quarters in [New York, New York] with no duty or obligation of any
party paying the same to inquire into the rights of Mortgagee to receive the same, what application is made thereof, or as to any other matter. Mortgagor agrees to perform all such acts, and to
execute all such further assignments, transfers and division orders, and other instruments as may be required or desired by Mortgagee or any party in order to have said proceeds and revenues so paid
to Mortgagee. Mortgagee is fully authorized to receive and receipt for said revenues and proceeds; to endorse and cash any and all checks and drafts payable to the order of Mortgagor or Mortgagee for
the account of Mortgagor received from or in connection with said revenues or proceeds and to hold the proceeds thereof in a bank account as additional collateral securing the Indebtedness; and to
execute transfer and division orders in the name of Mortgagor, or otherwise, with warranties binding
Mortgagor. All proceeds received by Mortgagee pursuant to this assignment shall be applied as provided in the other Loan Documents. Mortgagee shall not be liable for any delay, neglect, or failure 

F-7

 

to effect collection of any proceeds or to take any other action in connection therewith or hereunder; but Mortgagee shall have the right, at its election, in the name of Mortgagor or otherwise, to
prosecute and defend any and all actions or legal proceedings deemed advisable by Mortgagee in order to collect such funds and to protect the interests of Mortgagee, and/or Mortgagor, with all costs,
expenses and attorneys' fees incurred in connection therewith being paid by Mortgagor. Mortgagor hereby appoints Mortgagee as its attorney-in-fact to pursue any and all rights
of Mortgagor to liens on and security interests in the Hydrocarbons securing payment of proceeds of runs attributable to the Hydrocarbons. In addition to the rights granted to Trustee and/or Mortgagee
in this Second Mortgage, Mortgagor hereby further transfers and assigns to Mortgagee any and all such liens, security interests, financing statements or similar interests of Mortgagor attributable to
its interest in the Hydrocarbons and proceeds of runs therefrom arising under or created by said statutory provision, judicial decision or otherwise. The power of attorney granted to Mortgagee in this
Section 2.01, being coupled with an interest, shall be irrevocable so long as the Indebtedness or any part thereof remains unpaid. 

        Section 2.02    Rights Under Texas Act.    Mortgagor hereby grants, sells, assigns, sets over and mortgages
unto Mortgagee during the term hereof, all of Mortgagor's rights and interests pursuant to the provisions of Section 9.343 of the Texas Business and Commerce Code, hereby vesting in Mortgagee
all of Mortgagor's rights as an interest owner to the continuing security interest in and lien upon the Mortgaged Property. 

        Section 2.03    No Modification of Payment Obligations.    Nothing herein contained shall modify or otherwise
alter the obligation of Mortgagor to make prompt payment of all principal and interest owing on the Indebtedness when and as the same become due regardless of whether the proceeds of the Hydrocarbons
are sufficient to pay the same and the rights provided in accordance with the foregoing assignment provision shall be cumulative of all other security of any and every character now or hereafter
existing to secure payment of the Indebtedness. 

        Section 2.04    Release from Liability; Indemnification.    Agent and its successors and assigns are hereby
absolutely absolved from all liability for failure to enforce collection of the proceeds from runs attributable to the Hydrocarbons and from all other responsibility in connection therewith, except
the responsibility to account to Mortgagor for funds actually received by Agent. Mortgagor agrees to indemnify and hold harmless Agent, including, for purposes of this paragraph, Agent's directors,
officers, partners, employees, and agents and any persons owned or controlled by any affiliate of Agent, from and against all claims, demands, liabilities, losses, damages (including, without
limitation, consequential, punitive, and special damages), causes of action, judgments, penalties, costs and reasonable out-of-pocket expenses (including, without limitation,
reasonable attorneys' fees and expenses) imposed upon, asserted against, or incurred or paid by Agent by reason of the assertion that Agent has received, either before or after payment in full of the
Indebtedness, funds from the production of Hydrocarbons. The foregoing indemnities shall not terminate upon the expiration, termination, or cancellation of the Amended and Restated Subordinated Credit
Agreement or this Second Mortgage, but shall survive such expiration, termination, or cancellation, as well as any foreclosure of this Second Mortgage or any conveyance in lieu of foreclosure, and the
repayment of the Indebtedness and the discharge and release of this Second Mortgage and any other documents evidencing and/or securing the
Indebtedness. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, IT IS THE INTENTION OF MORTGAGOR AND MORTGAGOR HEREBY AGREES THAT THE FOREGOING INDEMNITIES SHALL APPLY TO EACH INDEMNIFIED PARTY WITH
RESPECT TO ALL CLAIMS, DEMANDS, LIABILITIES, LOSSES, DAMAGES (INCLUDING, WITHOUT LIMITATION, CONSEQUENTIAL, PUNITIVE, AND SPECIAL DAMAGES), CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS, AND EXPENSES
(INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES AND EXPENSES) WHICH IN WHOLE OR IN PART ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OF ANY INDEMNIFIED PARTY. Notwithstanding the foregoing,
however, the indemnities set forth 

F-8

 

in this Section 2.04 shall not apply to any particular indemnified party (but shall apply to the other indemnified parties) to the extent the subject of the indemnification is caused by or
arises out of the gross negligence or willful misconduct of such particular indemnified party. 

        Section 2.05    Absolute Obligation of Credit Parties.    Nothing herein contained shall detract from or limit
the obligations of any Mortgagor or any other Credit Party to make payment as required pursuant to the terms of the Loan Documents, regardless of whether the assignment of production described in this
Article II is sufficient to pay same, and the rights under this Article II shall be cumulative of all other rights of Agent and any other Lender under the Loan Documents. 

ARTICLE III  

 Representations, Warranties and Covenants  

        In order to induce Agent and the Lenders to enter into the transactions described in the Amended and Restated Subordinated Credit Agreement, Mortgagor hereby
represents, warrants and covenants, to Trustee, Agent, each of the Lenders, and to Mortgagee as follows: 

        Section 3.01    Title.    To the extent of the undivided interests in the wells specified on attached
Exhibit A, Mortgagor is possessed of such interests in the Mortgaged Property, and Mortgagor has, and Mortgagor covenants to maintain, good and indefeasible title to the Mortgaged Property. The
Mortgaged Property is free of any and all Liens (as defined in the Amended and Restated Subordinated Credit Agreement) except Permitted Liens (as defined in the Amended and Restated Subordinated
Credit Agreement) and Liens, if any, described in Exhibit A (collectively, the "Permitted Encumbrances"). 

        Section 3.02    Defend Title.    This Second Mortgage is, and always will be kept, a direct lien and security
interest upon the Mortgaged Property subject only to the Permitted Encumbrances, and, except for Permitted Encumbrances, Mortgagor will not create or suffer to be created or permit to exist any lien,
security interest or charge prior or junior to or on a parity with the lien and security interest of this
Second Mortgage upon the Mortgaged Property or any part thereof or upon the rents, issues, revenues, profits and other income therefrom. Mortgagor hereby warrants and Mortgagor does by these presents
agree to forever defend the Mortgaged Property against the claims and demands of all other persons whomsoever and to maintain and preserve the lien created hereby so long as any of the Indebtedness
secured hereby remains unpaid. Should an adverse claim be made against or a cloud develop upon the title to any part of the Mortgaged Property, Mortgagor agrees it will immediately defend against such
adverse claim or take appropriate action to remove such cloud at Mortgagor's cost and expense, and Mortgagor further agrees that Trustee and/or Mortgagee may take such other action as they deem
advisable to protect and preserve their interests in the Mortgaged Property, and in such event Mortgagor will indemnify Trustee and Mortgagee against any and all cost, attorney's fees and other
expenses which they may incur in defending against any such adverse claim or taking action to remove any such cloud. 

        Section 3.03    Not a Foreign Person.    Mortgagor is not a "foreign person" within the meaning of the Internal
Revenue Code of 1986, as amended (hereinafter called the "Code"), Sections 1445 and 7701 (i.e. Mortgagor is not a non-resident alien,
foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the Code and any regulations promulgated thereunder). 

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        Section 3.04    Existence; Power to Create Lien and Security; Enforceable Obligations.    

        (a)  Mortgagor
is duly organized, validly existing and in good standing under the laws of the jurisdiction of its formation and in good standing and qualified to do business
in each jurisdiction where its ownership or lease of any of the Mortgaged Property or conduct of its business requires such qualification and where the failure to so qualify could reasonably be
expected to cause a Material Adverse Change. 

        (b)  The
execution, delivery, and performance by Mortgagor of this Second Mortgage and the consummation of the transactions contemplated hereby and thereby (i) are
within such Mortgagor's powers, (ii) have been duly authorized by all necessary governing action, (iii) do not contravene (A) Mortgagor's governance documents or (B) any
Legal Requirement or any material contractual restriction binding on or affecting Mortgagor, and (iv) will not result in or require the creation or imposition of any Lien upon any of the
material Property of any Credit Party prohibited by the Amended and Restated Subordinated Credit Agreement. 

        (c)  This
Second Mortgage has been duly executed and delivered by Mortgagor. This Second Mortgage is the legal, valid, and binding obligation of Mortgagor enforceable against
Mortgagor in accordance with its terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium, or similar law affecting creditors' rights
generally and by general principles of equity. 

        Section 3.05    Net Revenue and Cost Bearing Interest.    With respect to each well listed on Exhibit A
hereto which comprises a part of the Mortgaged Property, Mortgagor's ownership of such Mortgaged Property does and will, with respect to each such well (whether such well is presently unitized or is
presently producing on a lease basis) (a) entitle Mortgagor to receive (subject to the terms and conditions of this Second Mortgage) a decimal share of the Hydrocarbons produced from, or
allocated to, such well equal to not less than the decimal share set forth on Exhibit A in connection with such well under the column on Exhibit A designated by the words
"Net Revenue Interest", the abbreviation "NRI", or words or abbreviations of similar import, and
(b) cause Mortgagor to be obligated to bear a decimal share of the cost of exploration, development, and operation of such well not greater than the decimal share set forth in Exhibit A
in connection with such well under the column on Exhibit A designated by the words "Operating Interest" or "Working
Interest", the abbreviation "WI", or words or abbreviations of similar import (unless there is a corresponding increase in the
Net Revenue Interest). The shares of production which Mortgagor is entitled to receive and the shares of expenses which Mortgagor is obligated to bear are not, and will not be, subject to change other
than changes which (i) arise pursuant
to non-consent provisions of operating agreements in connection with operations proposed after the effective date of this Second Mortgage, or (ii) are expressly described on
Exhibit A. 

        Section 3.06    Rentals Paid; Leases in Effect.    Mortgagor shall maintain all leases and agreements
comprising or relating to the Mortgaged Property in compliance with the requirements of the Amended and Restated Subordinated Credit Agreement. 

        Section 3.07    Operation of Mortgaged Property.    

        (a)  The
Mortgaged Property (and properties unitized therewith) is, and hereafter will be, maintained, operated, and developed in compliance with the requirements of the
Amended and Restated Subordinated Credit Agreement. 

        (b)  To
the extent any interest owned by Mortgagor in the Mortgaged Property is not a working interest, Mortgagor covenants and agrees to take all reasonable action and to
exercise all reasonable rights and remedies as are available to Mortgagor to cause the owner or owners of the working interest in such properties to comply with the covenants and agreements set forth
in this Second Mortgage. 

        (c)  To
the extent Mortgagor's ownership of any particular well constituting the Mortgaged Property is a working interest but such well is operated by a party other than
Mortgagor, Mortgagor 

F-10

 

agrees to take all such action and to exercise all rights and remedies as are reasonably available to Mortgagor (including, without limitation, all rights under any operating agreement) to cause the
party who is the operator of such well to comply with the covenants and agreements set forth in this Second Mortgage. 

        Section 3.08    Abandonment, Sales.    Mortgagor will not sell, lease, assign, transfer or otherwise dispose of
or abandon any of the Mortgaged Property except in compliance with the requirements of the Amended and Restated Subordinated Credit Agreement. 

        Section 3.09    Insurance.    Mortgagor shall carry and maintain insurance as provided in the Amended and
Restated Subordinated Credit Agreement. In the event of foreclosure of this Second Mortgage, or other transfer of title to the Mortgaged Property in extinguishment in whole or in part of the
Indebtedness, all right, title, and interest of Mortgagor in and to such policies then in force concerning the Mortgaged Property and all proceeds payable thereunder shall thereupon vest in the
purchaser at such foreclosure or Agent or other transferee in the event of such other transfer of title. 

        Section 3.10    Further Assurances.    Mortgagor shall, and shall cause each of its Subsidiaries to, cure
promptly any defects in the execution and delivery of this Second Mortgage or any of the other Loan Documents. Mortgagor hereby authorizes the Agent to file any financing statements without
Mortgagor's signature to the extent permitted by applicable law in order to perfect or maintain the perfection of any security interest granted under any of the Loan Documents. Mortgagor at its
expense will, and will cause each of its Subsidiaries to, promptly execute and deliver to the Agent upon request all such other documents, agreements and instruments to comply with or accomplish the
covenants and agreements of Mortgagor or any other Credit Party in this Second Mortgage or any other Loan Document, or to further evidence and more fully describe the collateral intended as security
for Obligations, or to correct any omissions in the Loan Documents, or to state more fully the security obligations set out in this Second Mortgage or in any of the other Loan Documents, or to
perfect, protect or preserve any Liens created pursuant to any of the Loan Documents, or to make any recordings, to file any notices or obtain any consents, all as may be necessary or appropriate in
connection therewith or to enable the Agent to exercise and enforce its rights and remedies with respect to the Mortgaged Property. 

        Section 3.11    Taxes.    Mortgagor shall do or cause to be done everything necessary to preserve the lien
hereof without expense to Trustee or Mortgagee, including, without limitation, paying and discharging or causing to be paid and discharged all taxes, charges, filing, registration and recording fees
relating to the recording of this Second Mortgage, including but not limited to any mortgage tax payable in connection herewith. 

        Section 3.12    Failure to Perform.    Mortgagor agrees that if Mortgagor, after receipt from Mortgagee of
written notice and demand, fails to perform any act or to take any action which Mortgagor is required to perform or take hereunder or pay any money which Mortgagor is required to pay hereunder, each
of Mortgagee and Trustee in Mortgagor's name or its or their own name may, but shall not be obligated to, perform or cause to perform such act or take such action or pay such money, and any expenses
so incurred by either of them and any money so paid by either of them shall be a demand obligation owing by Mortgagor to Mortgagee or Trustee, as the case may be, and each of Mortgagee and Trustee,
upon making such payment, shall be subrogated to all of the rights of the Person receiving such payment. Each amount due and owing by Mortgagor to each of Mortgagee and Trustee pursuant to this Second
Mortgage shall bear interest from the date of such expenditure or payment or other occurrence which gives rise to such amount being owed to such Person until paid at post-default interest
rate described in the Amended and Restated Subordinated Credit Agreement, and all such amounts together with such interest thereon shall be a part of the Indebtedness described in Section 1.03
hereof. 

        Section 3.13    Waste.    Mortgagor shall not commit or permit any waste, impairment, or deterioration of the
Mortgaged Property or any part thereof. 

F-11

 

ARTICLE IV  

 Rights and Remedies  

        Section 4.01    Event of Default.    An "Event of Default"
under the Amended and Restated Subordinated Credit Agreement shall be an Event of Default under this Second Mortgage. 

        Section 4.02    Foreclosure and Sale.    

        (a)  If
an Event of Default shall occur and be continuing, Mortgagee shall have the right and option to proceed with foreclosure by proceeding or by directing Trustee, or his
successors or substitutes in trust, to proceed with foreclosure and to sell, to the extent permitted by law, all or any portion of the Mortgaged Property at one or more sales, as an entirety or in
parcels, at such place or places in otherwise such manner and upon such notice as may be required by law, or, in the absence of any such requirement, as Mortgagee may deem appropriate, and to make
conveyance to the purchaser or purchasers. Where the Mortgaged Property is situated in more than one county, notice as above provided shall be posted and filed in all such counties (if such notices
are required by law), and all such Mortgaged Property may be sold in any such county and any such notice shall designate the county where such Mortgaged Property is to be sold. Nothing contained in
this Section 4.02 shall be construed so as to limit in any way Mortgagee's or Trustee's rights to sell the Mortgaged Property, or any portion thereof, by private sale if, and to the extent
that, such private sale is permitted under the laws of the applicable jurisdiction or by public or private sale after entry of a judgment by any court of competent jurisdiction so ordering. Mortgagor
hereby irrevocably appoints Trustee to be the attorney of Mortgagor and in the name and on behalf of Mortgagor to execute and deliver any deeds, transfers, conveyances, assignments, assurances and
notices which Mortgagor ought to execute and deliver and do and perform any and all such acts and things which Mortgagor ought to do and perform under the covenants herein contained and generally, to
use the name of Mortgagor in the exercise of all or any of the powers hereby conferred on Trustee. At any such sale: (i) whether made under the power herein contained or any other legal
enactment, or by virtue of any judicial proceedings or any other legal right, remedy or recourse, it shall not be necessary for Mortgagee or Trustee to have physically present, or to have constructive
possession of, the Mortgaged Property (Mortgagor hereby covenanting and agreeing to deliver to Mortgagee or Trustee any portion of the Mortgaged Property not actually or constructively possessed by
Mortgagee or Trustee immediately upon demand by Mortgagee or Trustee) and the title to and right of possession of any such property shall pass to the purchaser thereof as completely as if the same had
been actually present and delivered to purchaser at such sale, (ii) each instrument of conveyance executed by Mortgagee or Trustee shall contain a general warranty of title, binding upon
Mortgagor and its successors and assigns, (iii) each and every recital contained in any instrument of conveyance made by Mortgagee or Trustee shall conclusively establish the truth and accuracy
of the matters recited therein, including, without limitation, nonpayment of the Indebtedness, advertisement and conduct of such sale in the manner provided herein and otherwise by law and appointment
of any successor Trustee hereunder, (iv) any and all prerequisites to the validity thereof shall be conclusively presumed to have been performed, (v) the receipt of Mortgagee or Trustee
or of such other party or officer making the sale shall be a sufficient discharge to the purchaser or
purchasers for its purchase money and no such purchaser or purchasers, or its assigns or personal representatives, shall thereafter be obligated to see to the application of such purchase money, or be
in any way answerable for any loss, misapplication or nonapplication thereof, (vi) to the fullest extent permitted by law, Mortgagor shall be completely and irrevocably divested of all of its
right, title, interest, claim and demand whatsoever, either at law or in equity, in and to the property sold and such sale shall be a perpetual bar both at law and in equity against Mortgagor, and
against any and all other persons claiming or to claim the property sold or any part thereof, by, through or under Mortgagor, and (vii) to the extent and under such circumstances as are
permitted by law, Trustee, Mortgagee, or any Lender may be a purchaser at any such sale, and shall have the right, after paying or accounting for all costs of said sale or sales, to credit the amount
of the bid upon the amount of the Indebtedness 

F-12

 

held by such purchaser, if any (in the order of priority set forth in Section 4.13 hereof) in lieu of cash payment. 

        (b)  With
respect to any portion of the Mortgaged Property located in the state of Oklahoma and with respect any foreclosure by Mortgagor pursuant to the power of sale
granted to Mortgagor in this Second Mortgage the following provisions of this Second Mortgage shall apply: 

          (i)  The
notices described in Section 40 and certain following sections of the Oklahoma Mortgage Foreclosure Act, shall be given as and when required therein; 

        (ii)  All
notices which are required to be given to Mortgagor under the Oklahoma Mortgage Foreclosure Act may be given to Mortgagor at the address which is set forth in the
first paragraph of this Second Mortgage, or if such address has been changed in accordance with the express requirements of this Second Mortgage related to such a change of address, to that changed
address; 

        (iii)  Mortgagee
may purchase part or all of the Mortgaged Property at any such sale; 

        (iv)  Mortgagor
stipulates that the total amounts owing under this Second Mortgage benefit, have benefited, and will benefit Mortgagor substantially and are not
unconscionable in amount, and therefore the total amount of the Indebtedness, less the fair market value of the Mortgaged Property sold pursuant to the Oklahoma Mortgage Foreclosure Act, and any prior
indebtedness, shall be available as a deficiency judgment against Mortgagor; 

        (v)  The
purchaser under any sale of the Mortgaged Property conducted pursuant to the Oklahoma Mortgage Foreclosure Act may seek and obtain a writ of assistance by
application to the District Court in the county in Oklahoma in which the portion of the Mortgaged Property to be foreclosed upon is located, or the United States District Court having venue for
actions arising in such county; 

        (vi)  Mortgagee
may, at its option, proceed with foreclosure under judicial proceedings instead of exercising the rights of the power of sale granted by Mortgagor to
Mortgagee in this Second Mortgage; 

      (vii)  All
other terms, conditions, procedures, and requirements of the Oklahoma Mortgage Foreclosure Act shall be followed; 

      (viii)  After
the completion of the sale as contemplated by the Oklahoma Mortgage Foreclosure Act, the purchaser shall have all of Mortgagor's right, title and interest in
and to Mortgaged Property sold pursuant to such sale, free and clear of all rights of Mortgagor, and free and clear of all rights of any person with a priority which is subordinate to the lien of this
Second Mortgage, except any right which may be reserved under the Oklahoma Mortgage Foreclosure Act; 

        (ix)  Any
recitation in any notice, publication thereof, recordation thereof, or deed, of the existence of an Event of Default, giving, publication, service and recordation
of notice, occurrence of the sale at the time and place set forth in such notice or any postponement authorized and effective under the Oklahoma Mortgage Foreclosure Act, circumstances of sale and
bidding, and compliance with the terms of the Oklahoma Mortgage Foreclosure Act, shall be presumed to be statements of fact and no person shall be required to investigate the truthfulness or accuracy
of any such recitation; and 

        (x)  The
proceeds of any such sale shall be applied first to the costs, attorney fees, and expenses of such sale, next to the payment of the Indebtedness; except that if such
application of proceeds conflicts with the requirements of the Oklahoma Mortgage Foreclosure Act, the proceeds of such sale shall be applied as provided under the Oklahoma Mortgage Foreclosure Act,
but in such event, only to the extent of any such conflict. 

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        Section 4.03    Substitute Trustees and Agents.    Trustee or his successor or substitute may appoint or
delegate any one or more persons as agent to perform any act or acts necessary or incident to any sale held by Trustee, including the posting of notices and the conduct of sale, but in the name and on
behalf of Trustee, his successor or substitute. If Trustee or his successor or substitute shall have given notice of sale hereunder, any successor or substitute trustee thereafter appointed may
complete the sale and the conveyance of the property pursuant thereto as if such notice had been given by the successor or substitute trustee conducting the sale. 

        Section 4.04    Judicial Foreclosure; Receivership.    

        (a)  If
any of the Indebtedness shall become due and payable and shall not be promptly paid, Trustee or Mortgagee shall have the right and power to proceed by a suit or suits
in equity or at law, whether for the specific performance of any covenant or agreement herein contained or in aid of the execution of any power herein granted, or for any foreclosure hereunder or for
the sale of the Mortgaged Property under the judgment or decree of any court or courts of competent jurisdiction, or for the appointment of a receiver pending any foreclosure hereunder or the sale of
the Mortgaged Property under the order of a court or courts of competent jurisdiction or under executory or other legal process, or for the enforcement of any other appropriate legal or equitable
remedy. Any money advanced by Trustee and/or Mortgagee in connection with any such receivership shall be a demand obligation (which obligation Mortgagor hereby expressly promises to pay) owing by
Mortgagor to Trustee and/or Mortgagee and shall bear interest from the date of making such advance by Trustee and/or Mortgagee until paid at the interest rate applicable to periods following an Event
of Default in the Amended and Restated Subordinated Credit Agreement. 

        (b)  If
an action is filed to foreclose this Second Mortgage, or if Mortgagee or Trustee seeks to foreclose this Second Mortgage by power of sale under the Oklahoma Power of
Sale Mortgage Foreclosure Act, Mortgagee or Trustee, as applicable, shall be entitled to the immediate appointment of a receiver pursuant to 12 Oklahoma Statutes §1551(2)(c) without the
necessity of further proof. 

        Section 4.05    Foreclosure for Installments.    Mortgagee shall also have the option to proceed with
foreclosure in satisfaction of any installments of the Indebtedness which have not been paid when due either through the courts or by directing Trustee or his successors in trust to proceed with
foreclosure in satisfaction of the matured but unpaid portion of the Indebtedness as if under a full foreclosure, conducting the sale as herein provided and without declaring the entire principal
balance and accrued interest due; such sale may be made subject to the unmatured portion of the Indebtedness, and any such sale shall not in any manner affect the unmatured portion of the
Indebtedness, but as to such unmatured portion of the Indebtedness this Second Mortgage shall remain in full force and effect just as though no sale had been made hereunder. It is further agreed that
several sales may be made hereunder without exhausting the right of sale for any unmatured part of the Indebtedness, it being the purpose hereof to provide for a foreclosure and sale of the security
for any matured portion of the Indebtedness without exhausting the power to foreclose and sell the Mortgaged Property for any subsequently maturing portion of the Indebtedness. 

        Section 4.06    Separate Sales.    The Mortgaged Property may be sold in one or more parcels and in such manner
and order as Mortgagee, in its sole discretion, may elect, it being expressly understood and agreed that the right of sale arising out of any Event of Default shall not be exhausted by any one or more
sales. 

        Section 4.07    Occupancy After Foreclosure.    In the event there is a foreclosure sale hereunder and at the
time of such sale Mortgagor or Mortgagor's heirs, devisees, representatives, successors or assigns or any other person claiming any interest in the Mortgaged Property by, through or under Mortgagor,
are occupying or using the Mortgaged Property or any part thereof, each and all shall immediately become the tenant of the purchaser at such sale, which tenancy shall be a tenancy from day to day,
terminable at the will of either the landlord or tenant, or at a reasonable rental per day based upon the value of the property occupied, such rental to be due daily to the purchaser; to the extent
permitted by 

F-14

 

applicable law, the purchaser at such sale shall, notwithstanding any language herein apparently to the contrary, have the sole option to demand immediate possession following the sale or to permit
the occupants to remain as tenants at will. In the event the tenant fails to surrender possession of said property upon demand, the purchaser shall be entitled to institute and maintain a summary
action for possession of the Mortgaged Property (such as an action for forcible entry and detainer) in any court having jurisdiction. 

        Section 4.08    Remedies Cumulative, Concurrent and Nonexclusive.    Every right, power and remedy herein given
to Trustee or Mortgagee shall be cumulative and in addition to every other right, power and remedy herein specifically given or now or hereafter existing in equity, at law or by statute (including
specifically those granted by the Applicable UCC in effect and applicable to the Mortgaged Property or any portion thereof) each and every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and so often and in such order as may be deemed expedient by Trustee or Mortgagee, and the exercise, or the beginning of the exercise, of any such
right, power or remedy shall not be deemed a waiver of the right to exercise, at the same time or thereafter any other right, power or remedy. No delay or omission by Trustee or Mortgagee in the
exercise of any right, power or remedy shall impair any such right, power or remedy or operate as a waiver thereof or of any other right, power or remedy then or thereafter existing. 

        Section 4.09    No Release of Obligations.    Neither Mortgagor, any Guarantor, any other guarantor of the
Indebtedness, nor any other person hereafter obligated for payment of all or any part of the Indebtedness shall be relieved of such obligation by reason of (a) the failure of Trustee or
Mortgagee to comply with any request of Mortgagor, or any guarantor or any other person so obligated to foreclose the lien of this Second Mortgage or to enforce any provision hereunder or under the
Amended and Restated Subordinated Credit Agreement; (b) the release, regardless of consideration, of the Mortgaged Property or any portion thereof or interest therein or the addition of any
other property to the Mortgaged Property; (c) any agreement or stipulation between any subsequent owner of the Mortgaged Property and Mortgagee extending, renewing, rearranging or in any other
way modifying the terms of this Second Mortgage without first having obtained the consent of, given notice to or paid any consideration to Mortgagor, any guarantor or such other person, and in such
event Mortgagor, guarantor and all such other persons shall continue to be liable to make payment according to the terms of any such extension or modification agreement unless expressly released and
discharged in writing by Mortgagee; or (d) by any other act or occurrence save and except the complete payment of the Indebtedness and the complete fulfillment of all obligations hereunder or
under the Amended and Restated Subordinated Credit Agreement. 

        Section 4.10    Release of and Resort to Mortgaged Property.    Mortgagee may release, regardless of
consideration, any part of the Mortgaged Property without, as to the remainder, in any way impairing, affecting, subordinating or releasing the lien or security interest created in or evidenced by
this Second Mortgage or its stature as a first and prior lien and security interest in and to the Mortgaged Property, and without in any way releasing or diminishing the liability of any person or
entity liable for the repayment of the Indebtedness. For payment of the Indebtedness, Mortgagee may resort to any other security therefor held by Mortgagee or Trustee in such order and manner as
Mortgagee may elect. 

        Section 4.11    Waiver of Redemption, Notice and Marshalling of Assets, Etc.    To the fullest extent permitted
by law, Mortgagor hereby irrevocably and unconditionally waives and releases (a) all benefits that might accrue to Mortgagor by virtue of any present or future moratorium law or other law
exempting the Mortgaged Property from attachment, levy or sale on execution or providing for any appraisement, valuation, stay of execution, exemption from civil process, redemption or extension of
time for payment and (b) any right to a marshalling of assets or a sale in inverse order of alienation. If any law referred to in this Second Mortgage and now in force, of which Mortgagor or
its successor or successors might take advantage despite the provisions hereof, shall hereafter be repealed or cease to be in force, such law shall thereafter be deemed not to constitute any part of
the contract herein contained or to preclude the operation or application of the provisions hereof. Provided,  however, that 

F-15

 

if the laws of any state do not permit the redemption period to be waived, the redemption period is specifically reduced to the minimum amount of time allowable by statute. With respect to any
portion of the Mortgaged Property located in the state of Oklahoma, Mortgagee and Trustee hereby waive or do not waive appraisement, such election to be made at or before entry of judgment in any
action to foreclose this Second Mortgage; provided, however, such waiver or non-waiver shall not affect Mortgagor's waiver of such rights,
which shall be absolute. 

        Section 4.12    Discontinuance of Proceedings.    In case Mortgagee shall have proceeded to invoke any right,
remedy or recourse permitted hereunder or under the Amended and Restated Subordinated Credit Agreement and shall thereafter elect to discontinue or abandon same for any reason, Mortgagee shall have
the unqualified right so to do and, in such an event, Mortgagor and Mortgagee shall be restored to their former positions with respect to the Indebtedness, this Second Mortgage, the Amended and
Restated Subordinated Credit Agreement, the Mortgaged Property and otherwise, and the rights, remedies, recourses and powers of Mortgagee shall continue as if same had never been invoked. 

        Section 4.13    Application of Proceeds.    The proceeds of any sale of the Mortgaged Property or any part
thereof and all other monies received by Trustee or Mortgagee in any proceedings for the enforcement hereof or otherwise, whose application has not elsewhere herein been specifically provided for,
shall be applied: 

        (a)  first,
to the payment of all reasonable expenses incurred by Trustee or Mortgagee incident to the enforcement of this Second Mortgage, the Amended and Restated
Subordinated Credit Agreement or any of the Indebtedness (including, without limiting the generality of the foregoing, expenses of any entry or taking of possession, of any sale, of advertisement
thereof, and of conveyances, and court costs, compensation of agents and employees, legal fees and a reasonable commission to Trustee acting), and to the payment of all other charges, reasonable
expenses, liabilities and advances incurred or made by Trustee or Mortgagee under this Second Mortgage or in executing any trust or power hereunder; 

        (b)  second
to payment of the Indebtedness in the order and manner required in the Amended and Restated Subordinated Credit Agreement; and 

        (c)  third,
to Mortgagor or as otherwise required by any Governmental Requirement. 

        Section 4.14    Resignation of Operator.    In addition to all rights and remedies under this Second Mortgage,
at law and in equity, if any Event of Default shall occur and Trustee or Mortgagee shall exercise any possessory remedies under this Second Mortgage with respect to any portion of the Hydrocarbon
Property (or Mortgagor shall transfer any Mortgaged Property "in lieu of" foreclosure), Mortgagee or Trustee shall have the right to request that any operator of any Hydrocarbon Property which is
either Mortgagor or any Affiliate of Mortgagor to resign as operator under the joint operating agreement applicable thereto, and no later than 60 days after receipt by Mortgagor of any such
request, Mortgagor shall resign (or cause such other party to resign) as operator of such Hydrocarbon Property. 

        Section 4.15    Indemnity.    In connection with any action taken by Trustee and/or Mortgagee pursuant to this
Second Mortgage, Trustee and/or Mortgagee and their officers, directors, employees, representatives, agents, attorneys, accountants and experts ("Indemnified
Parties") shall not be liable for any loss sustained by Mortgagor resulting from an assertion that Mortgagee has received funds from the production of Hydrocarbons claimed by
third persons or any act or omission of any Indemnified Party in administering, managing, operating or controlling the Mortgaged Property INCLUDING SUCH LOSS WHICH MAY RESULT
FROM THE NEGLIGENCE OF AN INDEMNIFIED PARTY unless such loss is caused by the gross negligence or willful misconduct of an Indemnified Party, nor shall Trustee and/or Mortgagee
be obligated to perform or discharge any obligation, duty or liability of Mortgagor. Mortgagor shall and does hereby agree to indemnify each Indemnified Party for, and to hold each Indemnified Party
harmless from, any and all liability, loss or damage which may or might be incurred 

F-16

 

by any Indemnified Party by reason of this Second Mortgage or the exercise of rights or remedies hereunder INCLUDING SUCH LIABILITY, LOSS, OR DAMAGE WHICH MAY RESULT FROM THE
NEGLIGENCE OF AN INDEMNIFIED PARTY unless such liability, loss, or damage is caused by the gross negligence or willful misconduct of an Indemnified Party; should Trustee and/or
Mortgagee make any expenditure on account of any such liability, loss or damage, the amount thereof, including costs, expenses and reasonable attorneys' fees, shall be a demand obligation (which
obligation Mortgagor hereby expressly promises to pay) owing by Mortgagor to Trustee and/or Mortgagee and shall bear interest from the date expended until paid at the Post-Default Rate,
shall be a part of the Indebtedness and shall be secured by this Second Mortgage and any other Security Instrument. Mortgagor hereby assents to, ratifies and confirms any and all actions of Trustee
and/or Mortgagee with respect to the Mortgaged Property taken under, and in compliance with the terms of, this Second Mortgage. The liabilities of Mortgagor as set forth in this Section 4.15
shall survive the termination of this Second Mortgage. 

ARTICLE V  

 Trustee  

        Section 5.01    Duties, Rights, and Powers of Trustee.    It shall be no part of the duty of Trustee to see to
any recording, filing or registration of this Second Mortgage or any other instrument in addition or supplemental thereto, or to give any notice thereof, or to see to the payment of or be under any
duty in respect of any tax or assessment or other governmental charge which may be levied or assessed on the Mortgaged Property, or any part thereof, or against Mortgagor, or to see to the performance
or observance by Mortgagor of any of the covenants and agreements contained herein. Trustee shall not be responsible for the execution, acknowledgment or validity of this Second Mortgage or of any
instrument in addition or supplemental hereto or for the sufficiency of the security purported to be created hereby, and makes no representation in respect thereof or in respect of the rights of
Mortgagee. Trustee shall have the right to advise with counsel upon any matters arising hereunder and shall be fully protected in relying as to legal matters on the advice of counsel. Trustee shall
not incur any personal liability hereunder except for Trustee's own gross negligence, bad faith and/or willful misconduct; and Trustee shall have the right to rely on any instrument, document or
signature authorizing or supporting any action taken or proposed to be taken by him hereunder, believed by him in good faith to be genuine. 

        Section 5.02    Successor Trustee; Resignation by Trustee.    Trustee may resign by written notice addressed to
Mortgagee or be removed at any time with or without cause by an instrument in writing duly executed on behalf of Mortgagee. In case of the death, resignation or removal of Trustee, a successor trustee
may be appointed by Mortgagee by instrument of substitution complying with any applicable requirements of law, or, in the absence of any such requirement, without other formality than appointment and
designation in writing. Written notice of such appointment and designation shall be given by Mortgagee to Mortgagor, but the validity of any such appointment shall not be impaired or affected by
failure to give such notice or by any defect therein. Such appointment and designation shall be full evidence of the right and authority to make the same and of all the facts therein recited, and,
upon the making of any such appointment and designation, this Second Mortgage shall vest in the successor trustee all the estate and title in and to all of the Mortgaged Property, and the successor
trustee shall thereupon succeed to all of the rights, powers, privileges, immunities and duties hereby conferred upon Trustee named herein, and one such appointment and designation shall not exhaust
the right to appoint and designate a successor trustee hereunder but such right may be exercised repeatedly as long as any Indebtedness remains unpaid hereunder. To facilitate the administration of
the duties hereunder, Mortgagee may appoint multiple trustees to serve in such capacity or in such jurisdictions as Mortgagee may designate. 

        Section 5.03    Retention of Moneys.    All moneys received by Trustee shall, until used or applied as herein
provided, be held in trust for the purposes for which they were received, but need not be 

F-17

 

segregated in any manner from any other moneys (except to the extent required by law), and Trustee shall be under no liability for interest on any moneys received by him hereunder. 

ARTICLE VI  

 Miscellaneous  

        Section 6.01    Instrument Construed as Mortgage, Etc.    With respect to any portions of the Mortgaged
Property located in any state or other jurisdiction the laws of which do not provide for the use or enforcement of a deed of trust or the office, rights and authority of Trustee as herein provided,
the general language of conveyance hereof to Trustee is intended and the same shall be construed as words of mortgage unto and in favor of Mortgagee and the rights and authority granted to Trustee
herein may be enforced and asserted by Mortgagee in accordance with the laws of the jurisdiction in which such portion of the Mortgaged Property is located and the same may be foreclosed at the option
of Mortgagee as to any or all such portions of the Mortgaged Property in any manner permitted by the laws of the jurisdiction in which such portions of the Mortgaged Property is situated. This Second
Mortgage may be construed as a mortgage, deed of trust, chattel mortgage, conveyance, assignment, security agreement, pledge, financing statement, hypothecation or contract, or any one or more of
them, in order fully to effectuate the lien hereof and the purposes and agreements herein set forth. 

        Section 6.02    Release of Mortgage.    If all Indebtedness secured hereby shall be paid and the Amended and
Restated Subordinated Credit Agreement terminated, Mortgagee shall forthwith cause satisfaction and discharge of this Second Mortgage to be entered upon the record at the expense of Mortgagor and
shall execute and deliver or cause to be executed and delivered such instruments of satisfaction and reassignment as Mortgagor may reasonably request. Otherwise, this Second Mortgage shall remain and
continue in full force and effect. 

        Section 6.03    Severability.    If any provision hereof is invalid or unenforceable in any jurisdiction, the
other provisions hereof shall remain in full force and effect in such jurisdiction and the remaining provisions hereof shall be liberally construed in favor of Trustee and Mortgagee in order to
effectuate the provisions hereof, and the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of any such provision in any other
jurisdiction. 

        Section 6.04    Successors and Assigns of Parties.    The term "Lender" as used herein shall mean and include
any legal owner, holder, assignee or pledgee of any of the Indebtedness secured hereby. The terms used to designate Trustee, Mortgagee and Mortgagor shall be deemed to include the respective heirs,
legal representatives, successors and assigns of such parties. 

        Section 6.05    Satisfaction of Prior Encumbrance.    To the extent that proceeds of the Amended and Restated
Subordinated Credit Agreement are used to pay indebtedness secured by any outstanding lien, security interest, charge or prior encumbrance against the Mortgaged Property, such proceeds have been
advanced by Mortgagee or any of the other Lenders at Mortgagor's request, and Mortgagee shall be subrogated to any and all rights, security interests and liens owned by any owner or holder of such
outstanding liens, security interests, charges or encumbrances, and it is expressly understood that, in consideration of the payment of such other indebtedness by Mortgagee or any of the other
Lenders, Mortgagor hereby waives and releases all demands and causes of action against Mortgagee or any of the other Lenders for offsets and payments to, upon and in connection with the said
indebtedness. 

        Section 6.06    Subrogation of Trustee.    This Second Mortgage is made with full substitution and subrogation
of Trustee and his successors in this trust and his and their assigns in and to all covenants and warranties by others heretofore given or made in respect of the Mortgaged Property or any part
thereof. 

F-18

   
        Section 6.07    Nature of Covenants.    The covenants and agreements herein contained shall constitute
covenants running with the land and interests covered or affected hereby and shall be binding upon the heirs, legal representatives, successors and assigns of the parties hereto. 

        Section 6.08    Notices.    All notices and other communications shall be in writing (including, without
limitation, telecopy or telex) and mailed by certified mail, return receipt requested, telecopied, telexed, hand delivered, or delivered by a nationally recognized overnight courier, at the address
for the appropriate party specified in the first paragraph of this Second Mortgage or at such other address as shall be designated by such party in a written notice to the other parties. All such
notices and communications shall, when so mailed, telecopied, telexed, or hand delivered or delivered by a nationally recognized overnight courier, be effective when received if mailed, when telecopy
transmission is completed, when confirmed by telex answer-back, or when delivered by such messenger or courier, respectively. 

        Section 6.09    Counterparts.    This Second Mortgage is being executed in several counterparts, all of which
are identical, except that to facilitate recordation, if the Mortgaged Property is situated in more than one county, descriptions of only those portions of the Mortgaged Property located in the county
in which a particular counterpart is recorded shall be attached as Exhibit A thereto. A complete Exhibit A will be attached to that certain counterpart that is filed in the real property
records of                        County, Texas. Each of such counterparts shall for all purposes be deemed to be an original and
all such counterparts shall together constitute but one and the same
instrument. 

        Section 6.10    Exculpation Provisions.    Each of the parties hereto specifically agrees that it has a duty to
read this Second Mortgage; and agrees that it is charged with notice and knowledge of the terms of this Second Mortgage; that it has in fact read this Second Mortgage and is fully informed and has
full notice and knowledge of the terms, conditions and effects of this Second Mortgage; that it has been represented by independent legal counsel of its choice throughout the negotiations preceding
its execution of this Second Mortgage; and has received the advice of its attorney in entering into this Second Mortgage; and that it recognizes that certain of the terms of this Second Mortgage
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 Second Mortgage on the basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous." 

        Section 6.11    Security Agreement.    With respect to any portion of the Mortgaged Property which constitutes
fixtures or other property governed by the Applicable UCC, this Second Mortgage shall constitute a
security agreement between Mortgagor, as the debtor, and Mortgagee, as the secured party. Cumulative of all other rights of Mortgagee hereunder, Mortgagee shall have all of the rights conferred upon
secured parties by the Applicable UCC. 

        Section 6.12    Ratification of Original Mortgages; Effect of Mortgage.    The conveyance and the granting of
liens in the Original Mortgages is hereby ratified, adopted, confirmed, and renewed. In addition, as stated in the Recitals to this Mortgage, this Mortgage constitutes for all purposes an amendment
and restatement of the Original Mortgages and not a new or substitute security instrument. 

        Section 6.13    Time of the Essence.    Time is of the essence in the performance of each and every obligation
under this Second Mortgage. 

        Section 6.14    Authority of Agent.    The Lenders may, by agreement among them, provide for and regulate the
exercise of rights and remedies hereunder, but, unless and until modified to the contrary in a writing signed by all such persons and recorded in the same counties and parishes as this Second Mortgage
is recorded, (i) all persons other than Mortgagor and its affiliates shall be entitled to rely on the releases, waivers, consents, approvals, notifications and other acts (including, without
limitation, appointment of substitute or successor trustee, or trustees, hereunder and the bidding in of all or any 

F-19

 

part of the secured indebtedness held by any one or more Lenders, whether the same be conducted under the provisions hereof or otherwise) of Agent, without inquiry into any such agreements or the
existence of required consent or approval of any Lender and without the joinder of any party other than Agent in such releases, waivers, consents, approvals, notifications or other acts and
(ii) all notices, requests, consents, demands and other communications required or permitted to be given hereunder may be given to Agent. 

        Section 6.15    Waivers.    Subject to the Amended and Restated Subordinated Credit Agreement, Agent may at any
time and from time to time in writing waive compliance by Mortgagor with any covenant herein made by Mortgagor to the extent and in the manner specified in such writing, or consent to Mortgagor's
doing any act which hereunder Mortgagor is prohibited from doing, or to Mortgagor's failing to do any act which hereunder Mortgagor is required to do, to the extent and in the manner specified in such
writing, or release any part of the Mortgaged Property or any interest therein or any Production Proceeds from the lien and security interest of this Second Mortgage, without the joinder of Trustee.
Any party liable, either directly or indirectly, for the secured indebtedness or for any covenant herein or in any other Loan Document may be released from all or any part of such obligations without
impairing or releasing the liability of any other party. No such act shall in any way impair any rights or powers hereunder except to the extent specifically agreed to in such writing. 

        Section 6.16    Compliance With Usury Laws.    It is the intent of Mortgagor, Trustee, Mortgagee and all other
parties to any of the Loan Documents to contract in strict compliance with applicable usury law from time to time in effect. In furtherance thereof, it is stipulated and agreed that none of the terms
and provisions contained herein or in the other Loan Documents shall ever be construed to create a
contract to pay, for the use, forbearance or detention of money, interest in excess of the maximum amount of interest permitted to be collected, charged, taken, reserved, or received by applicable law
from time to time in effect. 

        Section 6.17    GOVERNING LAW.    THIS SECOND MORTGAGE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ITS LAWS RELATING TO CONFLICTS OF LAWS, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER JURISDICTION MANDATORILY
GOVERN THE CREATION OF, OR THE MANNER OR PROCEDURE FOR ENFORCEMENT OF THE LIEN CREATED BY THIS SECOND MORTGAGE, PROVIDED THAT ANY RIGHTS OR REMEDIES HEREIN PROVIDED THAT SHALL BE VALID UNDER THE LAWS
OF THE JURISDICTION WHERE PROCEEDINGS FOR THE ENFORCEMENT HEREOF SHALL BE TAKEN SHALL NOT BE AFFECTED BY THE INVALIDITY, IF ANY, OF SUCH RIGHTS OR REMEDIES UNDER THE LAWS OF THE STATE OF TEXAS. 

F-20

   NOTICE TO MORTGAGOR:  

        A POWER OF SALE HAS BEEN GRANTED IN THIS INSTRUMENT. WITH RESPECT TO PORTIONS OF THE MORTGAGED PROPERTY LOCATED IN THE STATE OF OKLAHOMA,
SUCH POWER OF SALE IS GRANTED PURSUANT TO THE OKLAHOMA MORTGAGE FORECLOSURE ACT (AS DEFINED IN SECTION 1.01 OF THIS SECOND MORTGAGE). THIS POWER OF SALE MAY ALLOW TRUSTEE OR MORTGAGEE, AS APPLICABLE,
TO TAKE THE MORTGAGED PROPERTY AND SELL IT WITHOUT GOING TO COURT IN A FORECLOSURE ACTION UPON THE OCCURRENCE OF AN EVENT OF DEFAULT BY MORTGAGOR UNDER THIS INSTRUMENT. THIS INSTRUMENT CONTAINS
AFTER-ACQUIRED PROPERTY PROVISIONS, SECURES PAYMENT OF FUTURE ADVANCES, AND COVERS ALL PRODUCTS AND PROCEEDS OF MORTGAGED PROPERTY.

        IN
WITNESS HEREOF, Mortgagor has executed and delivered this Second Mortgage as of the day and year first above written. 

[SIGNATURE
OF MORTGAGOR] 

Prepared
by and after recording return to:

Chadbourne & Parke

c/o Daniel Rogers

1100 Louisiana Street, Suite 3500

Houston, Texas 77002 

F-21

  

	STATE OF TEXAS	 	§
	 	 	§
	COUNTY OF	 	§
	TEXAS	 	 

        This
instrument was acknowledged before me on March            , 2003 by            ,
the            of BRIGHAM, INC., a Nevada corporation, as general partner of
BRIGHAM OIL & GAS, L.P., a Delaware limited partnership, on behalf of such corporation, acting as general partner of the limited partnership, on behalf of the limited partnership. 

	 	 	
 Notary Public in and for the

State of Texas
	

 	
 	

Notarial Seal:

	OKLAHOMA	 	 

        Before
me, a Notary Public in and for said county and state, on this            day of March, 2003, personally
appeared                        , to me known to be the identical person who
subscribed the name of the maker thereof to the foregoing instrument as                        of BRIGHAM, INC., a Nevada
corporation, as general partner of BRIGHAM OIL & GAS, L.P., a Delaware
limited partnership, and acknowledged to me that such
person executed the same as such person's free and voluntary act and deed, and as the free and voluntary act and deed of such corporation for the uses and purposes therein set forth. 

	 	 	
 Notary Public in and for the

State of Texas
	

 	
 	

Notarial Seal:

F-22

  

 
 
 

EXHIBIT A    
  
  TO    
  
  AMENDED AND RESTATED SECOND MORTGAGE, DEED OF TRUST,
  ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT,
  FIXTURE FILING, AND FINANCING STATEMENT    
  

        This Exhibit A describes the Hydrocarbon Property (as defined in the body of this instrument). This Exhibit A also sets forth a list of certain of
the wells located on the Hydrocarbon Property, together with Mortgagor's representation as to the nature and quantum of Working Interest (as defined below) and Net Revenue Interest (as defined below)
owned by Mortgagor with respect to those wells. 

        The
designation "Working Interest" or "WI" when used in this Exhibit A means the
interest of Mortgagor upon which is calculated Mortgagor's proportionate share of the costs, expenses, and liabilities attributable to the oil, gas, and mineral leases described herein. The
designation "Net Revenue Interest" or "NRI" or "NRIO" or
"NRIG" when used in this Exhibit A means the interest in the gross production of oil and gas and
other minerals from other properties subject to the oil, gas, and mineral leases to which Mortgagor is entitled by virtue of its ownership of the Working Interest after deducting all landowner
royalties, overriding royalties, and similar interests attributable to the Working Interest. The designation "Overriding Royalty
Interest" "ORRI" means an interest in production which is free of any obligation for the expense of exploration, development, and production, bearing only its pro rata share of
severance, production, and other similar taxes and, in instances where the document creating the overriding royalty interest so provides, costs associated with compression, dehydration, other treating
or processing, or transportation of production of oil, gas, or other minerals relating to the marketing of such production. The designation "Royalty
Interest" or "RI" means an interest in production which results from an ownership in the mineral fee estate or royalty estate in the relevant land and which is free of any
obligation for the expense of exploration, development, and production, bearing only its pro rata share of severance, production ad valorem, and other similar taxes and, in instances where the
document creating the royalty interest so provides, costs associated with compression, dehydration, other treating or processing or transportation of production of oil, gas, or other minerals relating
to the marketing of such production. Each amount set forth as "Working Interest" or "WI" or
"Net Revenue Interest" or "NRI" or "NRIO" or
"NRIG" is Mortgagor's minimum interest after giving full effect to, among other things, all Permitted Liens (as defined in the Credit Agreement). 

        Any
reference in this Exhibit A to wells or units is for warranty of interest, administrative convenience, and identification and shall not limit or restrict the right, title,
interest, or properties covered by this Deed of Trust. All right, title, and interest of Mortgagor in the properties described herein and in the Mortgaged Property (as defined in the body of this
instrument) is and shall be subject to this Second Mortgage, regardless of the presence thereon of any interests, units, or wells not described herein. 

        Unless
otherwise expressly provided, all recording references in this Exhibit A are references to the official public records of real property in the county or counties (or parish
or parishes) in which the Mortgaged Property is located and in which records documents relating to the Mortgaged Property are recorded, whether Conveyance Records, Deed Records, Mortgage Records, Oil
and Gas Records, Oil and Gas Lease Records, or other records. 

F-23

  

 
 

EXHIBIT G    
    
    FORM OF SECOND PLEDGE AGREEMENT    
  

        THE OBLIGATIONS UNDER THIS INSTRUMENT ARE EXPRESSLY SUBORDINATED TO THE AMENDED AND RESTATED PLEDGE AGREEMENT EXECUTED BY PLEDGOR (AS
HEREINAFTER DEFINED) IN FAVOR OF SOCIÉTÉ GÉNÉRALE ("SG"), THE ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE SENIOR LENDERS (AS HEREINAFTER
DEFINED), THAT PROVIDES, AND IS INTENDED TO PROVIDE, A FIRST PRIORITY SECURITY INTEREST IN THE PLEDGED COLLATERAL (AS HEREINAFTER DEFINED) TO SECURE THE OBLIGATIONS MORE PARTICULARLY DESCRIBED IN THAT
CERTAIN SECOND AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG PLEDGORS, BRIGHAM OIL AND GAS, L.P., SG, THE ROYAL BANK OF SCOTLAND PLC ("RBS"), AND THE OTHER LENDERS PARTY THERETO FROM TIME TO TIME
(COLLECTIVELY "SENIOR LENDERS"). THIS INSTRUMENT IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AGREEMENT DATED MARCH    , 2003 BY AND BETWEEN THE
SENIOR LENDERS.  

        This Amended and Restated Second Pledge Agreement dated as of March    , 2003 ("Second Pledge
Agreement") is between [Brigham Exploration Company, a Delaware corporation][Brigham, Inc., a Nevada corporation]
("Pledgor"), and The Royal Bank of Scotland plc, as agent for the lenders party to the Subordinated Credit Agreement described below
("Secured Party"). 

INTRODUCTION  

        A.    Brigham
Oil & Gas, L.P., a Delaware limited partnership ("Borrower"), the lenders party thereto, and The Royal Bank
of Scotland plc, as agent for such lenders (the "Agent"), were parties to that certain Subordinated Credit Agreement dated October 31, 2000, as
amended or supplemented on or before the date hereof (the "Existing Credit Agreement"). 

        B.    In
order to secure the full and punctual payment and performance of the obligations under the Existing Credit Agreement and the other loan documents contemplated thereby,
the Pledgor executed and delivered the security instruments described on Schedule 1 attached hereto (the "Existing Security Documents" in favor
of the Agent and has granted a continuing security interest in and to the Pledged Collateral (as hereafter defined). 

        C.    Borrower,
Pledgor, [Brigham Exploration Company, a Delaware corporation], [Brigham, Inc., a Nevada corporation],
the lenders named therein (the "Lenders") and Secured Party, as agent for the Lenders, have entered into the Amended and Restated Subordinated Credit
Agreement dated as of March            , 2003 (as amended, restated or otherwise modified from time-to-time, the "Subordinated Credit
Agreement"), which, among other things, amends and restates the Existing Credit Agreement in its entirety. 

        D.    Pledgor
has guaranteed the Obligations of Borrower under the Subordinated Credit Agreement pursuant to Article VIII thereof (the
"Subordinated Guaranty"). 

        E.    Under
the Subordinated Credit Agreement, it is a condition to the making of Advances by the Lenders that Pledgor shall amend and restate the Existing Security Documents
to secure its obligations under the Subordinated Credit Agreement and the Subordinated Guaranty by entering into this Second Pledge Agreement. 

        F.    Pledgor
and Société Générale, as administrative agent for the lenders party ("Senior
Agent") to that certain Second Amended and Restated Credit Agreement, dated as of the date hereof, have entered into the Amended and Restated Pledge Agreement, dated as of the
date hereof (the "Senior Pledge Agreement"). 

G-1

 

        Therefore,
Pledgor hereby agrees with Secured Party for its benefit and the ratable benefit of the Lenders as follows: 

        Section 1.    Definitions.    All capitalized terms not otherwise defined in this Second Pledge Agreement that
are defined in the Subordinated Credit Agreement shall have the meaning assigned to such terms by the Subordinated Credit Agreement. Any capitalized terms used in this Second Pledge Agreement that are
defined in Articles 8 or 9 of the Uniform Commercial Code as adopted in the State of New York ("UCC") shall have the meanings assigned to those terms by
the UCC as of the date of this Second Pledge Agreement, whether specified elsewhere in this Second Pledge Agreement or not. All other rules of interpretation set forth in Section 1.05 of the
Subordinated Credit Agreement shall apply to this Second Pledge Agreement and are hereby incorporated herein by reference. 

        Section 2.    Pledge.    

        (a)    Grant of Pledge.    Pledgor hereby pledges to Secured Party, and grants to Secured Party, for its benefit and
the ratable benefit of the Lenders, a continuing lien on and security interest in the Pledged Collateral, as defined in Section 2(b) below. This Second Pledge Agreement shall secure all
Obligations of Pledgor now or hereafter existing under the Subordinated Credit Agreement, the Guaranty and the other Subordinated Loan Documents to which it is a party, including any extensions,
modification, substitutions, amendments, and renewals thereof, whether for principal, interest, fees, expenses, indemnifications or otherwise, in each case, including the payment of amounts which
would become due but for the operation of the automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., as amended. All such
obligations shall be referred to in this Second Pledge Agreement as the "Secured Obligations". 

        (b)    Pledged Collateral.    "Pledged Collateral" shall mean all of
Pledgor's right, title, and interest in the following, whether now owned or hereafter acquired: 

        (i)    all
of the membership interests listed in the attached Schedule II issued to Pledgor (the "Membership Interests"),
all such additional membership interests of any issuer of such interests hereafter acquired by Pledgor, the certificates representing the Membership Interests, if any, and all such additional
membership interests, all of Pledgor's rights, privileges, authority, and powers as a member of the issuer of such Membership Interests under the applicable [Limited Liability Company
Operating Agreement][Limited Liability Company Regulations] of such issuer and all rights to money or Property which Pledgor now has or hereafter acquires in
respect of the Membership Interests, including, without limitation, (A) any Proceeds from a sale by or on behalf of Pledgor of any of the Membership Interests, and (B) any distributions,
dividends, cash, instruments and other Property from time-to-time received or otherwise distributed in respect of the Membership Interests, whether regular, special or made in
connection with the partial or total liquidation of the issuer and whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Membership Interests
or the ownership thereof other than distributions received by Pledgor in compliance with the Loan Documents (collectively, the "Membership Interests
Distributions"); 

        (ii)  all
of the general and limited partnership interests listed in the attached Schedule II issued to Pledgor (the "Partnership
Interests"), all such additional limited or general partnership interests of any issuer of such Partnership Interests hereafter acquired by Pledgor, all of Pledgor's rights,
privileges, authority, and powers as a limited or general partner of the issuer of such Partnership Interests under the applicable [Limited Partnership
Agreement][Partnership Agreement] of such issuer, and all rights to money or Property which Pledgor now has or hereafter acquires in respect of the Partnership
Interests, including, without limitation, (A) any Proceeds from a sale by or on behalf of Pledgor of any of the Partnership Interests, and (B) any distributions, dividends, cash,
instruments and other 

G-2

 

Property from time-to-time received or otherwise distributed in respect of the Partnership Interests, whether regular, special or made in connection with the partial or total
liquidation of the issuer and
whether attributable to profits, the return of any contribution or investment or otherwise attributable to the Partnership Interests or the ownership thereof other than distributions received by
Pledgor in compliance with the Loan Documents (collectively, the "Partnership Interest Distributions"); and 

        (iii)  all
of the shares of stock listed in the attached Schedule II issued to Pledgor (the "Pledged Shares"), all such
additional shares of stock of any issuer of such Pledged Shares hereafter issued to Pledgor, the certificates representing the Pledged Shares and all such additional shares, all of Pledgor's rights,
privileges, authority, and powers as a shareholder of the issuer of such Pledged Shares under the applicable [Articles][Certificate] of Incorporation
and Bylaws of such issuer and all rights to money or Property which Pledgor now has or hereafter acquires in respect of the Pledged Shares, including, without limitation, (A) any Proceeds from
a sale by or on behalf of Pledgor of any of the Pledged Shares, and (B) any distributions, dividends, cash, instruments and other Property from time-to-time received or
otherwise distributed in respect of the Pledged Shares, whether regular, special or made in connection with the partial or total liquidation of the issuer and whether attributable to profits, the
return of any contribution or investment or otherwise attributable to the Pledged Shares or the ownership thereof other than distributions received by Pledgor in compliance with the Loan Documents
(collectively, the "Pledged Shares Distributions"; together with the Membership Interest Distributions and the Partnership Interest Distributions, the
"Distributions"); and 

        (iv)  all
additions and accessions to, substitutions and replacements of, and all products and proceeds from the Pledged Collateral described in paragraphs (i), (ii), and
(iii) of this Section 2(b). 

        (c)    Delivery of Pledged Collateral.    All certificates or instruments, if any, representing the Pledged Collateral
shall be delivered to Senior Agent pursuant to Section 2(c) of the Senior Pledge Agreement and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and substance reasonably satisfactory to the Senior Agent and the Secured Party. After the occurrence and during the continuance of an Event
of Default, Senior Agent or Secured Party shall have the right, upon prior written notice to Pledgor, to transfer to or to register in the name of Senior Agent or Secured Party or any of its nominees
any of the Pledged Collateral, subject to the rights specified in Section 2(d) of this Second Pledge Agreement and Section 2(d) of the Senior Pledge Agreement. In addition, after the
occurrence and during the continuance of an Event of Default, Senior Agent or Secured Party shall have the right at any time to exchange the certificates or instruments representing the Pledged
Collateral for certificates or instruments of smaller or larger denominations. 

        (d)    Rights Retained by Pledgor.    Notwithstanding the pledge in Section 2(a), so long as no Event of
Default shall have occurred and remain uncured: 

        (i)    and,
if an Event of Default shall have occurred and remain uncured, until such time thereafter as such voting and other consensual rights have been terminated pursuant
to Section 5 hereof, Pledgor shall be entitled to exercise any voting and other consensual rights pertaining to the Pledged Collateral for any purpose not inconsistent with the terms of this
Second Pledge Agreement or the Subordinated Credit Agreement; provided, however, that Pledgor shall not exercise or shall refrain from exercising any
such right if such action would have a materially adverse effect on the value of the Pledged Collateral; 

G-3

 

        (ii)  except
as otherwise provided in the Subordinated Credit Agreement, Pledgor shall be entitled to receive and retain any dividends and other distributions paid on or in
respect of the Pledged Collateral and the Proceeds of any sale of the Pledged Collateral and all payments of principal and interest on loans and advances made by Pledgor to the issuer of the Pledged
Collateral; and 

        (iii)  at
and after such time as voting and other consensual rights have been terminated pursuant to Section 5 hereof, Pledgor shall execute and deliver (or cause to
be executed and delivered) to Secured Party all proxies and other instruments as Secured Party may reasonably request to (A) enable Secured Party to exercise the voting and other rights which
Pledgor is entitled to exercise pursuant to subsection (i) of this Section 2(d), and (B) to receive the dividends or other distributions and Proceeds of sale of the Pledged
Collateral and payments of principal and interest which Pledgor is authorized to receive and retain pursuant to paragraph (ii) of this Section 2(d). 

        Section 3.    Pledgor's Representations and Warranties.    Pledgor represents and warrants to Secured Party and
the Lenders as follows: 

        (a)  The
Pledged Collateral listed on the attached Schedule II has been duly authorized and validly issued and is fully paid and nonassessable. 

        (b)  Pledgor
is the legal and beneficial owner of the Pledged Collateral free and clear of any Lien or option, except for (i) the security interest created by this
Pledge Agreement and (ii) other Permitted Liens. 

        (c)  No
authorization, authentication, approval, or other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required either
(i) for the pledge by Pledgor of the Pledged Collateral pursuant to this Second Pledge Agreement or for the execution, delivery, or performance of this Second Pledge Agreement by Pledgor
(except to the extent that financing statements are required under the UCC to be filed in order to maintain a perfected security interest) or (ii) for the exercise by Secured Party or any
Lender of the voting or other rights provided for in this Second Pledge Agreement or the remedies in respect of the Pledged Collateral pursuant to this Second Pledge Agreement (except as may be
required in connection with such disposition by laws affecting the offering and sale of securities generally). 

        (d)  Pledgor
has the full right, power and authority to deliver, pledge, assign and transfer the Pledged Collateral to Secured Party. 

        (e)  [The
[Membership Interests][Partnership Interests] listed on the attached Schedule II constitute
[100][1]% of the issued and outstanding [membership][general partnership] interests of the respective
issuer thereof and all [Membership Interests][Partnership Interests] in which Pledgor has any ownership interest.][The Pledged
Shares listed on the attached Schedule II constitute 100% of the issued and outstanding shares of capital stock of the respective issuer thereof and of the Pledged Shares in which Pledgor has
any ownership interests.] 

        (f)    The
name of Pledgor set forth in the first paragraph of this Pledge Agreement is the exact legal name of Pledgor. The legal address of Pledgor and the address of its
principal place of business and chief executive office is [6300 Bridge Point Parkway, Building 2, Suite 500, Austin, Texas 78730]. Pledgor keeps all records and documents
relating to the Pledged Collateral at such address or with Nevada Corporate Management, Inc., 3773 Howard Hughes Parkway, Suite 300, North Las Vegas, Nevada 89109. 

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        Section 4.    Pledgor's Covenants.    During the term of this Second Pledge Agreement and until all of the
Secured Obligations have been fully and finally paid and discharged in full, Pledgor covenants and agrees with Secured Party that: 

        (a)    Protect Collateral; Further Assurances.    Pledgor will warrant and defend the rights and title herein granted
unto Secured Party in and to the Pledged Collateral (and all right, title, and interest represented by the Pledged Collateral) against the claims and demands of all Persons whomsoever, except Senior
Agent. Pledgor agrees that, at the expense of Pledgor, Pledgor will promptly execute and deliver all further instruments and documents, and take all further action, that may be reasonably necessary
and that Secured Party or any Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Secured Party or any Lender to
exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral. 

        (b)    Transfer, Other Liens, and Additional Shares.    Pledgor agrees that it will not (i) sell or otherwise
dispose of, or grant any option with respect to, any of the Pledged Collateral or (ii) create or permit to exist any Lien upon or with respect to any of the Pledged Collateral, except for
(A) the Liens and security interest under this Pledge Agreement and (B) other Permitted Liens. Pledgor agrees that it will (1) cause each issuer of the Pledged Collateral not to
issue any other membership interests, partnership interests, capital stock or other securities in addition to or in substitution for the Pledged Collateral issued by such issuer, except to Pledgor and
(2) pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any additional membership interests, partnership interests, capital stock or other securities of an
issuer of the Pledged Collateral. Pledgor shall not approve any amendment or modification of any of the Pledged Collateral unless it shall have given at least ten Business Days' prior written notice
(or such lesser period as may be agreed by Secured Party in writing) to, and such amendment or modification would not be materially adverse to the interests of the Lenders. 

        (c)    Jurisdiction of Formation; Name Change.    Pledgor shall not (i) amend, supplement, modify or restate
its articles or certificate of incorporation, bylaws, limited liability company agreements, or other equivalent organizational documents if such amendment, supplement, modification or restatement
would be materially adverse to the interests of the Lenders, or (ii) unless the Pledgor shall have given Secured Party at least ten (10) Business Days' prior written notice (or such
lesser period as may be agreed by Secured Party in writing), amend its name or change its jurisdiction of incorporation, organization or formation. Promptly upon the request of Secured Party, Pledgor
shall take all such action as Secured Party shall reasonably request to maintain the lien and security interest of Secured Party granted hereby at all time fully perfected and in full force and
effect. 

        Section 5.    Remedies upon Default.    If any Event of Default shall have occurred and be continuing: 

        (a)    UCC Remedies.    To the extent permitted by law, Secured Party may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for in this Second Pledge Agreement or otherwise available to it, all the rights and remedies of a secured party under the UCC (whether or
not the UCC applies to the affected Pledged Collateral). This Second Pledge Agreement shall not be construed to authorize the Secured Party to take any action prohibited by the UCC or to constitute a
waiver by the Pledgor of any right that the UCC does not permit the Pledgor to waive. 

        (b)    Dividends and Other Rights.    

        (i)    All
rights of Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 2(d)(i) may
be exercised by 

G-5

 

Secured Party if Secured Party so elects and gives written notice of such election to Pledgor and all rights of Pledgor to receive the dividends and other distributions on or in respect of the
Pledged Collateral and the proceeds of sale of the Pledged Collateral which it would otherwise be authorized to receive and retain pursuant to Section 2(d)(ii) shall cease at such time
as such written notice is deemed effective pursuant to the provisions of the Subordinated Credit Agreement related to effectiveness of notices. 

        (ii)  All
dividends and other distributions on or in respect of the Pledged Collateral and the proceeds of sale of the Pledged Collateral that are thereafter received by
Pledgor shall be received in trust for the benefit of Secured Party, shall be segregated from other funds of Pledgor, and shall be promptly paid over to Senior Agent or Secured Party as Pledged
Collateral in the same form as so received (with any necessary indorsement). 

        (c)    Sale of Pledged Collateral.    Secured Party may sell all or part of the Pledged Collateral at public or
private sale, at any of Secured Party's offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as Secured Party may deem commercially reasonable in accordance
with applicable laws. Pledgor agrees that to the extent permitted by law such sales may be made without notice. If notice is required by law, Pledgor hereby deems ten (10) days' advance notice
of the time and place of any public sale or the time after which any private sale is to be made reasonable notification, recognizing that if the Pledged Collateral threatens to decline speedily in
value or is of a type customarily sold on a recognized market shorter notice may be reasonable. Secured Party shall not be obligated to make any sale of the Pledged Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale from time-to-time by announcement at the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was so adjourned. Pledgor shall cooperate fully with Secured Party in all respects in selling or realizing upon all or any part of the Pledged
Collateral. In addition, Pledgor shall fully comply with the securities laws of the United States, the State of [Delaware][Nevada], and other states and
take such actions as may be necessary to permit Secured Party to sell or otherwise dispose of any securities representing the Pledged Collateral in compliance with such laws. 

        (d)    Exempt Sale.    If, in the opinion of Secured Party, there is any question that a public or semipublic sale or
distribution of any Pledged Collateral will violate any state or federal securities law, Secured Party in its discretion (i) may offer and sell securities privately to purchasers who will agree
to take them for investment purposes and not with a view to distribution and who will agree to imposition of restrictive legends on the certificates representing the security, or (ii) may sell
such securities in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as amended, and no sale so made in good faith by Secured Party shall be deemed to be not
"commercially reasonable" solely because so made. Pledgor shall cooperate fully with Secured Party in all reasonable respects in selling or realizing upon all or any part of the Pledged Collateral. 

        (e)    Application of Collateral.    The proceeds of any sale, or other realization upon all or any part of the
Collateral pledged by Pledgor shall be applied by Secured Party as set forth in Section 7.06 of the Subordinated Credit Agreement. 

        (f)    Cumulative Remedies.    Each right, power and remedy herein specifically granted to Secured Party or otherwise
available to it shall be cumulative, and shall be in addition to every other right, power and remedy herein specifically given or now or hereafter existing at law, in equity, or otherwise, and each
such right, power and remedy, whether specifically granted herein or otherwise existing, may be exercised at any time and from time-to-time as often and in such order as may be
deemed expedient by Secured Party in its sole discretion. No failure on the part of Secured Party to exercise, and no delay in exercising, and no course of dealing with respect to, any 

G-6

 

such right, power or remedy, shall operate as a waiver thereof, nor shall any single or partial exercise of any such rights, power or remedy preclude any other or further exercise thereof or the
exercise of any other right. 

        Section 6.    Secured Party as Attorney-in-Fact for Pledgor.    

        (a)    Secured Party Appointed Attorney-in-Fact.    Pledgor hereby irrevocably appoints
Secured Party as Pledgor's attorney-in-fact, with full authority after the occurrence and during the continuance of an Event of Default to act for Pledgor and in the name of
Pledgor, and, in Secured Party's discretion, subject to Pledgor's revocable rights specified in Section 2(d), to take any action and to execute any instrument which Secured Party may deem
necessary or advisable to accomplish the purposes of this Second Pledge Agreement, including, without limitation, to receive, indorse, and collect all instruments made payable to Pledgor representing
the proceeds of the sale of the Pledged Collateral, or any distribution in respect of the Pledged Collateral and to give full discharge for the same. Pledgor hereby acknowledges, consents and agrees
that the power of attorney granted pursuant to this Section 6 is irrevocable and coupled with an interest. 

        (b)    Secured Party May Perform.    Secured Party may from time-to-time, at its option and
expense, perform any act which Pledgor agrees hereunder to perform and which Pledgor shall fail to perform after being requested in writing so to perform (it being understood that no such request need
be given after the occurrence and during the continuance of any Event of Default and after notice thereof by Secured Party to Pledgor) and Secured Party may from time-to-time
take any other action which Secured Party reasonably deems necessary for the maintenance, preservation or protection of any of the Pledged Collateral or of its security interest therein. Secured Party
shall be obligated to provide notice to Pledgor of any action taken hereunder by telecopy or by registered mail. 

        (c)    Secured Party Has No Duty.    The powers conferred on Secured Party hereunder are solely to protect its
interest in the Pledged Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Pledged Collateral in its possession and the accounting for moneys
actually received by it hereunder, Secured Party shall have no duty as to any Pledged Collateral or responsibility for taking any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Pledged Collateral. 

        (d)    Reasonable Care.    Secured Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged Collateral is accorded treatment substantially equal to that which Secured Party accords its own property, it being understood
that Secured Party shall have no responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders, or other matters relative to any
Pledged Collateral, whether or not Secured Party has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against any parties with respect to
any Pledged Collateral. 

        Section 7.    Miscellaneous.    

        (a)    Expenses.    Pledgor will upon demand pay to Secured Party for its benefit and the benefit of the Lenders the
amount of any reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts, which Secured Party and the Lenders may
incur in
connection with (i) the custody, preservation, use, or operation of, or the sale, collection, or other realization of, any of the Pledged Collateral, (ii) the exercise or enforcement of
any of the rights of Secured Party or any Lender hereunder, and (iii) the failure by Pledgor to perform or observe any of the provisions hereof. 

        (b)    Amendments, Etc.    No amendment or waiver of any provision of this Second Pledge Agreement nor consent to any
departure by Pledgor herefrom shall be effective unless made in 

G-7

 

writing and authenticated by Pledgor and Secured Party. In addition, no such amendment or waiver shall be effective unless given or entered into with the necessary approvals of the Lenders as
required in the Subordinated Credit Agreement. Any such waiver or consent, whether by Secured Party or Secured Party and the Lenders shall be effective only in the specific instance and for the
specific purpose for which given. 

        (c)    Addresses for Notices.    All notices and other communications provided for hereunder shall be in the manner
and to the addresses set forth in the Subordinated Credit Agreement. 

        (d)    Continuing Security Interest; Transfer of Interest.    This Second Pledge Agreement shall create a continuing
security interest in the Pledged Collateral and, unless expressly released by Secured Party, shall (i) remain in full force and effect until payment in full and termination of the Secured
Obligations, (ii) be binding upon Pledgor, Secured Party, the Lenders and their successors, and assigns, and (iii) inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of and be binding upon, Secured Party, the Lenders and their respective successors, transferees, and assigns. Upon the payment in full and termination of the Secured
Obligations, the security interest granted hereby shall terminate and all rights to the Pledged Collateral shall revert to Pledgor to the extent such Pledged Collateral shall not have been sold or
otherwise applied pursuant to the terms hereof. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the Subordinated
Credit Agreement or other Subordinated Loan Document to any other Person pursuant to the terms of the Subordinated Credit Agreement or other Subordinated Loan Document, that other Person shall
thereupon become vested with all the benefits held by such Lender under this Second Pledge Agreement. Upon any such termination, Secured Party will, at Pledgor's expense, deliver all Pledged
Collateral to Pledgor, execute and deliver to Pledgor such documents as Pledgor shall reasonably request and take any other actions reasonably requested to evidence or effect such termination. 

        (e)    Waivers.    Pledgor hereby waives: 

        (i)    promptness,
diligence, notice of acceptance, and any other notice with respect to any of the Secured Obligations and this Second Pledge Agreement; 

        (ii)  any
requirement that Secured Party or any Lender protect, secure, perfect, or insure any Lien or any Property subject thereto or exhaust any right or take any action
against Pledgor, any other Guarantor, Borrower or any other Person or any collateral; and 

        (iii)  any
duty on the part of Secured Party to disclose to Pledgor any matter, fact, or thing relating to the business, operation, or condition of Pledgor, any other
Guarantor, Borrower and their respective assets now known or hereafter known by such Person. 

        (f)    Severability.    Wherever possible each provision of this Second Pledge Agreement shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision of this Second Pledge Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to
the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Second Pledge Agreement. 

        (g)    Choice of Law.    This Second Pledge Agreement shall be governed by and construed and enforced in accordance
with the laws of the state of New York, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of New York. 

        (h)    Counterparts.    For the convenience of the parties, this Second Pledge Agreement may be executed in multiple
counterparts, each of which for all purposes shall be deemed to be an 

G-8

 

original, and all such counterparts shall together constitute but one and the same Pledge Agreement. 

        (i)    Reinstatement.    If, at any time after payment in full by Pledgor of all Secured Obligations and termination
of Secured Party's security interest, any payments on the Secured Obligations previously made by Pledgor or any other person must be disgorged by Secured Party for any reason whatsoever, including,
without limitation, the insolvency, bankruptcy or reorganization of Pledgor or such Person, this Second Pledge Agreement and Secured Party's security interests herein shall be reinstated as to all
disgorged payments as though such payments had not been made, and Pledgor shall sign and deliver to Secured Party all documents, and shall do such other acts and things, as may be necessary to
reinstate and perfect Secured Party's security interest. 

        (j)    Amendment and Restatement.    This Pledge Agreement amends and restates in its entirety the Existing Security
Documents, and all of the terms hereof shall supersede the terms and provisions thereof. This Pledge Agreement renews and extends all Liens existing by virtue of the Existing Security Documents, but
the terms, provisions and conditions of such Liens shall hereafter be governed in all respects by this Pledge Agreement. 

        Executed
as of the date first above written. 

        [SIGNATURES
OF PLEDGOR AND SECURED PARTY] 

G-9

  

 
 

SCHEDULE I    
    
    EXISTING SECURITY DOCUMENTS    
  

[To
be provided.] 

G-10

  

 
 

SCHEDULE II    
    
    PLEDGED COLLATERAL    
  

[Pledgor
to provide.] 

G-11

  

 
 

 EXHIBIT H  

 

FORM OF SECOND SECURITY AGREEMENT  

        THE OBLIGATIONS UNDER THIS INSTRUMENT ARE EXPRESSLY SUBORDINATED TO THE AMENDED AND RESTATED SECURITY AGREEMENT EXECUTED BY DEBTOR (AS
HEREINAFTER DEFINED) IN FAVOR OF SOCIÉTÉ GÉNÉRALE ("SG"), THE ADMINISTRATIVE AGENT FOR THE BENEFIT OF THE SENIOR LENDERS (AS HEREINAFTER
DEFINED), THAT PROVIDES, AND IS INTENDED TO PROVIDE, A FIRST PRIORITY SECURITY INTEREST IN THE COLLATERAL (AS HEREINAFTER DEFINED) TO SECURE THE OBLIGATIONS MORE PARTICULARLY DESCRIBED IN THAT CERTAIN
SECOND AMENDED AND RESTATED CREDIT AGREEMENT BY AND AMONG DEBTOR, BRIGHAM EXPLORATION COMPANY, BRIGHAM, INC., SG, THE ROYAL BANK OF SCOTLAND PLC ("RBS"), AND THE OTHER LENDERS PARTY THERETO
FROM TIME TO TIME (COLLECTIVELY, "SENIOR LENDERS"). THIS INSTRUMENT IS SUBJECT TO THE TERMS AND PROVISIONS OF THAT CERTAIN AMENDED AND RESTATED INTERCREDITOR AGREEMENT DATED MARCH    , 2003
BY AND BETWEEN THE SENIOR LENDERS.

        This
Amended and Restated Second Security Agreement dated as of March    , 2003 ("Second Security Agreement") is by and between
Brigham Oil & Gas, L.P., a Delaware limited partnership ("Grantor"), and The Royal Bank of Scotland plc, as agent for the Lenders party to the
Subordinated Credit Agreement described below ("Secured Party"). 

INTRODUCTION  

        A.    Grantor,
Brigham Exploration Company, a Delaware corporation, Brigham, Inc., a Nevada corporation, the lenders party thereto, and The Royal Bank of Scotland plc,
as agent for such lenders (the "Agent"), catered into that certain Subordinated Credit Agreement dated October 31, 2000, as amended (the
"Existing Credit Agreement"). 

        B.    In
order to secure the full and punctual payment and performance of the obligations under the Existing Credit Agreement and the other loan documents contemplated thereby,
the Grantor executed and delivered the security instruments described on Schedule I attached hereto (the "Existing Security Documents") in favor
of the Agent and has granted a continuing security interest in and to the Collateral (as hereafter defined). 

        C.    Grantor,
Brigham Exploration Company, a Delaware corporation, Brigham, Inc., a Nevada corporation, the lenders named therein (the "Lenders") and Secured Party, as
agent for the Lenders, have entered into the Amended and Restated Subordinated Credit Agreement dated as of March    , 2003 (as amended, restated or otherwise modified from
time-to-time, the "Subordinated Credit Agreement"), which, among other things, amends and restates the Existing Credit Agreement
in its entirety. 

        D.    Under
the Subordinated Credit Agreement, it is a condition to the making of Advances by the Lenders that Grantor shall amend and restate the Existing Security Documents
to secure its Obligations under the Subordinated Credit Agreement by entering into this Second Security Agreement. 

        E.    Grantor
and Société Générale, as administrative agent for the lenders party ("Senior
Agent") to that certain Second Amended and Restated Credit Agreement, dated as of the date hereof, have entered into the Amended and Restated Security Agreement, dated as of
the date hereof (the "Senior Security Agreement"). 

        Therefore,
Grantor hereby agrees with Secured Party for its benefit and the ratable benefit of the Lenders as follows: 

        Section 1.    Definitions.    All capitalized terms not otherwise defined in this Second Security Agreement
that are defined in the Subordinated Credit Agreement shall have the meaning assigned to 

H-1

 

such terms by the Subordinated Credit Agreement. Any capitalized terms used in this Second Security Agreement that are defined in Article 9 of the Uniform Commercial Code as adopted in the
State of New York ("UCC") shall have the meanings assigned to those terms by the UCC as of the date of this Second Security Agreement, whether specified
elsewhere in this Second Security Agreement or not. All other rules of interpretation set forth in Section 1.05 of the Subordinated Credit Agreement shall apply to this Second Security
Agreement and are hereby incorporated herein by reference. 

        Section 2.    Security Interest.    

        (a)    Grant of Security Interest.    Grantor hereby grants to Secured Party for its benefit and the ratable benefit
of the Lenders a lien on and security interest in the Collateral (as defined in Section 2(b) below) to secure the performance and payment of all Obligations of Grantor now or hereafter existing
under the Subordinated Credit Agreement, the Subordinated Notes and the other Subordinated Loan Documents to which it is a party, including any extensions, modifications, substitutions, amendments and
renewals thereof, whether for principal, interest, fees, expenses, indemnification, or otherwise, in each case, including the payment of amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §§ 101 et seq., as amended. All such obligations shall be referred to in this Second
Security Agreement as the "Secured Obligations". 

        (b)    Collateral.    "Collateral" shall mean all of Grantor's right,
title, and interest in the following, whether now owned or hereafter acquired: 

        (i)    Accounts.    All Accounts and all other rights to payment owing or to be owing to Grantor, including all
Instruments, Documents and Chattel Paper that represent any right of Grantor to payment for Property sold or leased or for services rendered, whether or not it has been earned by performance (all such
Accounts, Instruments, Documents and Chattel Paper being the "Receivables"); 

        (ii)    Equipment.    All Equipment, and all parts thereof and all accessions and additions thereto; 

        (iii)    General Intangibles.    All General Intangibles or contract rights relating to, or existing in connection
with, the other Collateral (all such General Intangibles and contract rights being the "General Intangibles"); 

        (iv)    Inventory.    All Inventory, including, without limitation, all Goods, whether such Goods are in possession of
Grantor or of a bailee or other Person for sale, lease, storage, transit, processing, use or otherwise; 

        (v)    Records.    All ledger sheets, files, Records, and documents relating to the foregoing Collateral; and 

        (vi)    Proceeds.    All Proceeds of the foregoing Collateral and, to the extent not otherwise included, all payments
under any insurance, indemnity, warranty, or guaranty of or for the foregoing Collateral. 

        Section 3.    Representations and Warranties.    Grantor hereby represents and warrants the following to
Secured Party and the Lenders: 

        (a)    Ownership of Collateral; Liens.    Grantor is, and will be the record and beneficial owner of all Collateral
pledged by Grantor free and clear of any Lien, except for Liens created hereby or other Permitted Liens. No effective financing statement or other instrument similar in effect covering all or any part
of the Collateral is, or will be on file in any recording office, except such as may be filed in connection with this Second Security Agreement or in connection with other Permitted Liens or for which
satisfactory releases have been received by Secured Party. The execution, delivery and performance by Grantor of this Second Security Agreement and the grant 

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of the security interest in the Collateral to Secured Party are within Grantor's powers and have been duly authorized by all necessary governing action. 

        (b)    Authorization and Approvals.    No consent, order, authorization, or approval or other action by, and no notice
to or filing with, any Governmental Authority (other than the filing of financing statements) or any other Person (except for the Senior Agent and Senior Lenders) is required for (i) the due
execution, delivery and performance by Grantor of this Second Security Agreement, (ii) the grant by Grantor of the security interest in the Collateral granted by this Second Security Agreement,
(iii) the perfection of such security interest or (iv) the exercise by Secured Party or any Lender of its rights and remedies under this Second Security Agreement (except as may be
required in connection with such disposition by laws affecting the offering and sale of securities generally). 

        (c)    Lien Priority and Perfection.    On the Closing Date this Second Security Agreement will create valid and
continuing security interests in the Collateral, securing the payment of the Secured Obligations. Upon the filing of financing statements in the office(s) set forth on Schedule II attached
hereto, the security interests granted to Secured Party hereunder will constitute valid, perfected security interests in all Collateral with respect to which a security interest can be perfected by
the filing of a financing statement, subject only to Permitted Liens. 

        (d)    Legal Name; Address; Location of Records.    The name of Grantor set forth in the first paragraph of this
Second Security Agreement is the exact legal name of Grantor. The legal address of Grantor and the address of Grantor's principal place of business and chief executive office is 6300 Bridge Point
Parkway, Building 2, Suite 500, Austin, Texas 78730. Grantor keeps all records and documents relating to the Collateral at such address. 

        Section 4.    Grantor Covenants.    

        (a)    Further Assurances.    Grantor agrees that at any time, at Grantor's expense, Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that may be reasonably necessary or that Secured Party or any Lender may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or to enable Secured Party or any Lender to exercise and enforce its rights and remedies hereunder with respect to any
Collateral. Without limiting the generality of the foregoing, Grantor will at Secured Party's request: 

        (i)    with
respect to any of the Collateral that is evidenced by a promissory note or other Instrument or by Chattel Paper and if, in the case of any such instrument, its
value exceeds $100,000, deliver and pledge to the Senior Agent under the Senior Security Agreement, such note, Instrument or Chattel Paper, duly indorsed and accompanied by duly executed instruments
of transfer or assignment, all in form and substance satisfactory to the Secured Party; and 

        (ii)  file
(or authorize the filing of) such financing or continuation statements, or amendments thereto, and such other instruments or notices as may be reasonably
necessary, or as Secured Party may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby. 

        (b)    Insurance.    

        (i)    Grantor
shall, at its own expense, maintain, or cause to be maintained, insurance with respect to the Collateral owned by Grantor in such amounts, against such risks, in
such form, and with such insurers, as the Subordinated Credit Agreement requires. Further, Grantor shall deliver certificates of insurance as the Subordinated Credit Agreement requires. 

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        (ii)  During
the continuance of any Event of Default, all loss casualty insurance payments in respect to such Collateral shall be paid to and applied by Secured Party as
specified in the Subordinated Credit Agreement. 

        (c)    Jurisdiction of Formation; Name Change.    Grantor shall not (i) amend, supplement, modify or restate
its certificate of limited partnership, limited partnership agreements, or other equivalent organizational documents if such amendment, supplement, modification or restatement would be materially
adverse to the interests of the Lenders, or (ii) unless the Grantor shall have given Secured Party at least ten (10) Business Days' prior written notice (or such lesser period as may be
agreed by Secured Party in writing), amend its name or change its jurisdiction of, organization, or formation. Promptly upon the request of Secured Party, Grantor shall take all such action as Secured
Party shall reasonably request to maintain the security interest of Secured Party in the Collateral granted hereby at all time fully perfected and in full force and effect. 

        (d)    Maintenance and Preservation of Records.    Grantor will hold and preserve, at its own cost and expense
satisfactory and complete records of the Collateral, including, but not limited to, Instruments, Documents, Chattel Paper, contracts, and Records with respect to the Receivables. 

        (e)    Liability Under Contracts and Receivables.    Notwithstanding anything in this Second Security Agreement to the
contrary, 

        (i)    the
execution of this Second Security Agreement shall not release Grantor from its obligations and duties under the contracts and agreements and Receivables included in
the Collateral to the extent set forth therein, 

        (ii)  the
exercise by Secured Party of any of its rights hereunder shall not release Grantor from any of its duties or obligations under the contracts and agreements and the
Receivables included in the Collateral, and 

        (iii)  Secured
Party shall not have any obligation or liability under the contracts and agreements and the Receivables included in the Collateral by reason of the execution
and delivery of this Second Security Agreement, nor shall Secured Party be obligated to perform any of the obligations or duties of Grantor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder. 

        (f)    Transfer of Certain Collateral; Release of Certain Security Interests.    Grantor agrees that it shall not
sell, assign, or otherwise dispose of any Collateral except as otherwise permitted under the Subordinated Credit Agreement. Secured Party shall promptly, at Grantor's expense, execute and deliver all
further instruments and documents, and take all further action that Grantor may reasonably request in order to release its security interest in any Collateral that is disposed of in accordance with
the terms of the Subordinated Credit Agreement. 

        (g)    Receivables.    Grantor agrees that it will use commercially reasonable efforts to ensure that each Receivable: 

        (i)    is
and will be, in all material respects, the genuine, legal, valid, and binding obligation of the Account Debtor in respect thereof, representing an unsatisfied
obligation of such Account Debtor (except to the extent compromised or settled in the ordinary course of business), 

        (ii)  is
and will be, in all material respects, enforceable in accordance with its terms, is not and will not be subject to any setoffs, defenses, taxes, counterclaims,
except in the ordinary course of business, 

        (iii)  is
and will be, in all material respects, in compliance with all applicable Legal Requirements, whether federal, state, local or foreign, and 

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        (iv)  that
if evidenced by Chattel Paper, will not require the consent of the account debtor in respect thereof in connection with its assignment hereunder. 

        Section 5.    Remedies.    If any Event of Default shall have occurred and be continuing: 

        (a)    UCC Remedies.    

        (i)    To
the extent permitted by law, Secured Party may exercise in respect of the Collateral, in addition to other rights and remedies provided for in this Second Security
Agreement or otherwise available to it, all the rights and remedies of a secured party under the UCC (whether or not the UCC applies to the affected Collateral). This Second Security Agreement shall
not be construed to authorize the Secured Party to take any action prohibited by the UCC or to constitute a waiver by the Grantor of any right that the UCC does not permit the Grantor to waive. 

        (ii)  Upon
written notice to Grantor, all payments received by Grantor under or in connection with or in respect of the Collateral shall be deposited with Senior Agent or
Secured Party. 

        (b)    Assembly of Collateral.    Secured Party may, in its reasonable discretion, require Grantor to, at Grantor's
expense, promptly assemble all or part of the Collateral in such locations as Grantor and Secured Party may agree at such time and that is reasonably convenient to both parties, and make it available
to Secured Party at such locations. Secured Party may occupy any premises owned or leased by Grantor where the Collateral or any part thereof is assembled for a reasonable period in order to
effectuate its rights and remedies hereunder or under law, without obligation to Grantor in respect of such occupation. 

        (c)    Sale of Collateral.    Secured Party may sell all or part of the Collateral at a public or private sale, at any
of Secured Party's offices or elsewhere, for cash, on credit, or for future delivery, and upon such other terms as Secured Party may deem commercially reasonable. Secured Party shall give Grantor ten
(10) days' advance notice of the time and place of any public sale or the time after which any private sale is to be made reasonable notification, recognizing that if the Collateral is
perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market shorter notice may be reasonable. Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given. Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. 

        (d)    Contract Rights.    Secured Party may exercise any rights and remedies of Grantor under or in connection with
the Instruments, Documents, Chattel Paper, or contracts which represent Receivables, the General Intangibles, or otherwise relate to the Collateral, including, without limitation, any rights of
Grantor to demand or otherwise require payment of any amount under, or performance of any provisions of, the Instruments, Documents, Chattel Paper, or contracts which represent Receivables or the
General Intangibles. 

        (e)    Receivables.    

        (i)    Secured
Party may, or may direct Grantor to, take any action Secured Party deems necessary or advisable to enforce collection of the Receivables including, without
limitation, notifying the Account Debtors or obligors under any Receivables of the assignment of such Receivables to Secured Party and directing such Account Debtors or obligors to make payment of all
amounts due or to become due directly to Secured Party. Upon such notification and direction, and at the expense of Grantor, Secured Party may enforce collection of any such Receivables, and adjust,
settle, or compromise the amount or payment thereof in the same manner and to the same extent as Grantor might have done. 

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        (ii)  After
receipt by Grantor of the notice referred to in subparagraph (i) above, all amounts and Proceeds (including Instruments) received by Grantor in respect of
the Receivables shall be received in trust for the benefit of Secured Party hereunder, shall be segregated from other funds of Grantor, and shall promptly be paid over to Senior Agent or Secured Party
in the same form as so received (with any necessary indorsement) to be held as Collateral. Grantor shall not adjust, settle, or compromise the amount or payment of any Receivable, or release wholly or
partly any Account Debtor or obligor thereof, or allow any credit or discount thereon other than in the ordinary course of business and consistent with past practices. 

        Section 6.    Application of Collateral.    The proceeds of any sale, or other realization upon all or any part
of the Collateral pledged by Grantor shall be applied by Secured Party in the order set forth in Section 7.06 of the Subordinated Credit Agreement. 

        Section 7.    Secured Party as Attorney-in-Fact for Grantor.    

        (a)    Attorney-In-Fact.    Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority after the occurrence and during the continuance of an Event of Default to act for Grantor and in the name of Grantor to, in Secured
Party's discretion: 

        (i)    file
one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral; 

        (ii)  to
obtain and adjust insurance as required pursuant to Section 5.02 of the Subordinated Credit Agreement to the extent Grantor has failed to provide such
insurance; 

        (iii)  to
receive, indorse, and collect any drafts or other Instruments, Documents, and Chattel Paper which are part of the Collateral pledged by Grantor; 

        (iv)  to
take or cause to be taken, all actions necessary to perform or comply or cause performance or compliance with the terms of this Second Security Agreement, including,
without limitation, actions to pay or discharge taxes and Liens levied or placed on or threatened against the Collateral; 

        (v)  to
ask, demand, collect, sue for, recover, compromise, receive, and give acquittance and receipts for moneys due and to become due under or in respect of any of the
Collateral pledged by Grantor and to file any claims or take any action or institute any proceedings which Secured Party may deem necessary or desirable for the collection of any of such Collateral or
otherwise to enforce the rights of Secured Party with respect to any of such Collateral. 

        The
power of attorney granted hereby is coupled with an interest and is irrevocable. 

        (b)    Secured Party May Perform.    Secured Party may from time-to-time, at its option and
expense, perform any act which Grantor agrees hereunder to perform and which Grantor shall fail to perform after being requested in writing so to perform (it being understood that no such request need
be given after the occurrence and during the continuance of any Event of Default) and Secured Party may from time-to-time take any other action which Secured Party reasonably
deems necessary for the maintenance, preservation or protection of any of the Collateral or of its lien thereof and security interest therein. 

        (c)    Secured Party Has No Duty.    The powers conferred on Secured Party hereunder are solely to protect its
interest in the Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable care of any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Secured Party shall have no duty as to any Collateral or 

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responsibility for taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. 

        (d)    Reasonable Care.    Secured Party shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded treatment substantially equal to that which Secured Party accords its own Property, it being understood that Secured
Party shall have no responsibility for taking any necessary steps to preserve rights against any parties with respect to any Collateral. 

        Section 8.    Miscellaneous.    

        (a)    Expenses.    Grantor will upon demand pay to Secured Party for its benefit and the benefit of the Lenders the
amount of any reasonable out-of-pocket expenses, including the reasonable fees and disbursements of its counsel and of any experts, which Secured Party and the Lenders may
incur in connection with: 

        (i)    the
custody, preservation, use, or operation of, or the sale, collection, or other realization of, any of the Collateral, 

        (ii)  the
exercise or enforcement of any of the rights of Secured Party or any Lender hereunder, and 

        (iii)  the
failure by Grantor to perform or observe any of the provisions hereof. 

        (b)    Amendments; Etc.    No amendment or waiver of any provision of this Second Security Agreement nor consent to
any departure by Grantor herefrom shall be effective unless made in writing and authenticated by Grantor and Secured Party. In addition, no such amendment or waiver shall be effective unless given or
entered into with the necessary approvals of the Lenders as required in the Subordinated Credit Agreement. Any such waiver or consent, whether by Secured Party or Secured Party and the Lenders shall
be effective only in the specific instance and for the specific purpose for which given. 

        (c)    Addresses for Notices.    All notices and other communications provided for hereunder shall be made in the
manner and to the addresses set forth in the Subordinated Credit Agreement. 

        (d)    Continuing Security Interest; Transfer of Interest.    This Second Security Agreement shall create a continuing
security interest in the Collateral and, unless expressly released by Secured Party, shall: 

        (i)    remain
in full force and effect until payment in full and termination of the Secured Obligations, 

        (ii)  be
binding upon Grantor, Secured Party, the Lenders and their successors, and assigns, and 

        (iii)  inure,
together with the rights and remedies of Secured Party, hereunder, to the benefit of Secured Party, the Lenders and their respective successors, transferees,
and assigns. 

Upon
the payment in full and termination of the Secured Obligations, the security interest granted hereby shall terminate and all rights to the Collateral pledged by Grantor shall revert to Grantor to
the extent such Collateral shall not have been sold or otherwise applied pursuant to the terms hereof. Without limiting the generality of the foregoing clause, when any Lender assigns or otherwise
transfers any interest held by it under the Subordinated Credit Agreement or other Subordinated Loan Document to any other Person pursuant to the terms of the Subordinated Credit Agreement or other
Subordinated Loan Document, that other Person shall thereupon become vested with all the benefits held by such Lender under this Second Security Agreement. Upon any such termination, Secured Party
will, at Grantor's 

H-7

 

expense, execute and deliver to Grantor such documents as Grantor shall reasonably request and take any other actions reasonably requested to evidence or effect such termination. 

        (e)    Severability.    Wherever possible each provision of this Second Security Agreement shall be interpreted in
such manner as to be effective and valid under applicable law, but if any provision of this Second Security Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Second Security Agreement. 

        (f)    Choice of Law.    This Second Security Agreement shall be governed by and construed and enforced in accordance
with the laws of the state of New York, except to the extent that the validity or perfection of the security interests hereunder, or remedies hereunder, in respect of any particular Collateral are
governed by the laws of a jurisdiction other than the state of New York. 

        (g)    Amendment and Restatement.    This Security Agreement amends and restates in its entirety the Existing Security
Documents, and all of the terms hereof shall supercede the terms and provisions thereof. This Security Agreement renews and extends all Liens existing by virtue of the Existing Security Documents,
but the terms, provisions and conditions of such Liens shall hereafter be governed in all respects by this Security Agreement. 

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        IN
WITNESS WHEREOF, the parties hereto have caused this Second Security Agreement to be duly executed as of the date first above written. 

[SIGNATURES
OF GRANTOR AND SECURED PARTY] 

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SCHEDULE I    
    
    EXISTING SECURITY DOCUMENTS    
  

        [To be provided.] 

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SCHEDULE II    
  
  UCC FILING LOCATIONS    
  

        [Grantor to provide.] 

H-11

QuickLinks

Exhibit 10.54

TABLE OF CONTENTS

AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT

INTRODUCTION

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS

ARTICLE II CREDIT FACILITIES

ARTICLE III CONDITIONS OF LENDING

ARTICLE IV REPRESENTATIONS AND WARRANTIES

ARTICLE V AFFIRMATIVE COVENANTS

ARTICLE VI NEGATIVE COVENANTS

ARTICLE VII EVENTS OF DEFAULT; REMEDIES

ARTICLE VIII THE GUARANTY

ARTICLE IX THE AGENT

ARTICLE X MISCELLANEOUS

EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE

EXHIBIT B Form of Compliance Certificate

EXHIBIT C

EXHIBIT D

EXHIBIT E – Form of Subordinated Note

EXHIBIT F FORM OF SECOND MORTGAGE AMENDMENT

AMENDED AND RESTATED SECOND MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION, SECURITY AGREEMENT, FIXTURE FILING, AND FINANCING STATEMENT

Exhibit A

EXHIBIT G FORM OF SECOND PLEDGE AGREEMENT

SCHEDULE I EXISTING SECURITY DOCUMENTS

SCHEDULE II PLEDGED COLLATERAL

EXHIBIT H – Form of Second Security Agreement

SCHEDULE I EXISTING SECURITY DOCUMENTS

SCHEDULE II UCC FILING LOCATIONS

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