Document:

Exhibit 10.16

Execution Version

 

SECOND AMENDMENT

 

TO

 

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

Among

 

LINN ENERGY, LLC

as Borrower,

 

BNP PARIBAS,

as Administrative Agent,

 

and

 

The Lenders Signatory Hereto

 

 

Effective as of January 31, 2008

 

 

SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

 

This SECOND AMENDMENT TO THIRD AMENDED AND
RESTATED CREDIT AGREEMENT (this “Second Amendment”) executed
effective as of January 31, 2008 (the “Second Amendment Effective Date”)
is among LINN ENERGY, LLC, a limited liability company formed under the laws of
the State of Delaware (the “Borrower”); each of the undersigned
guarantors (the “Guarantors”, and together with the Borrower, the “Obligors”);
each of the Lenders that is a signatory hereto; and BNP PARIBAS, as
administrative agent for the Lenders (in such capacity, together with its
successors, the “Administrative Agent”).

 

Recitals

 

A.            The
Borrower, the Administrative Agent and the Lenders are parties to that certain
Third Amended and Restated Credit Agreement dated as of August 31, 2007
(as amended by the First Amendment to Third Amended and Restated Credit
Agreement, dated November 2, 2007, as the same has been further amended,
supplemented or otherwise modified prior to the date hereof, the “Credit
Agreement”), pursuant to which the Lenders have made certain credit
available to and on behalf of the Borrower.

 

B.            The
Borrower has requested and the Administrative Agent and the Lenders have agreed
to amend certain provisions of the Credit Agreement.

 

C.            NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein
contained, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.               Defined Terms.  Each capitalized term which is defined in the
Credit Agreement, but which is not defined in this Second Amendment, shall have
the meaning ascribed to such term in the Credit Agreement.  Unless otherwise indicated, all section
references in this Second Amendment refer to the Credit Agreement.  For purposes of this Second Amendment, the
following terms have the meanings specified below:

 

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

 

“Acquisition
Documents” means (a) the Purchase and Sale Agreement dated as of December 20,
2007, by and between Lamamco Drilling Company, as seller and Linn Energy
Holdings, LLC, as buyer, and (b) all bills of sale, assignments,
agreements, instruments and documents executed and delivered in connection
therewith, as amended.

 

“Acquisition
Properties” means the Oil and Gas Properties and other properties described
in the Acquisition Documents.

 

Section 2.               Amendments to Credit Agreement.

 

2

 

2.1           Definitions.  Section 1.02 is hereby amended by adding
or amending and restating the following definitions:

 

“ ‘Agreement’ means this Third Amended
and Restated Credit Agreement, as amended by that certain First Amendment to
Third Amended and Restated Credit Agreement, dated as of November 2, 2007,
as amended by the Second Amendment, and as the same may from time to time be
further amended, modified, supplemented or restated.”

 

“ ‘Asset Sale’
means, solely for purposes of Section 3.04(c), the sale, transfer or other
disposition (by way of merger, casualty, condemnation or otherwise) by the
Borrower or any of the Subsidiaries to any Person other than the Borrower or
any Guarantor of (a) any Equity Interests in any of the Subsidiaries
(including any such sale by the issuer of such Equity Interests but excluding
directors’ qualifying shares) or (b) any other assets of the Borrower or
any of the Subsidiaries (other than (x)(i) inventory (including
Hydrocarbons), (ii) damaged, obsolete or worn out assets, scrap and
equipment no longer used in the operations of the Borrower or any Subsidiary,
and (iii) Investments permitted by Section 9.05, in each case
disposed of in the ordinary course of business and (y) any sale, transfer
or other disposition that, together with all related sales, transfers or other
dispositions, has a value not in excess of $25,000,000 in the aggregate).”

 

“ ‘Funded
Debt’ means any Debt of the type described in clause (a), (e), (i) or (m) of
the definition thereof other than Loans or the Second Lien Term Loan.”

 

“ ‘Intercreditor Agreement’ means in
respect of the Second Lien Term Loan Agreement, that certain Intercreditor
Agreement dated as of the Second Amendment Effective Date entered into by and
among the Administrative Agent, the Second Lien Term Loan Administrative Agent,
the Borrower and the Guarantors, as the same may from time to time be amended,
modified, supplemented or restated.”

 

“ ‘Net
Cash Proceeds’ means (a) in connection with any issuance or sale of
Equity Interests, Debt securities, Casualty Events or the incurrence of Debt,
the cash proceeds received from such issuance or incurrence, net of attorneys’
fees, investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith; and (b) in connection with any Asset Sale, the cash
proceeds thereof (including cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net
of (i) selling and other expenses (including reasonable broker’s fees or
commissions, legal fees, transfer and similar taxes, and the Borrower’s good
faith estimate of income taxes actually paid or payable in connection with such
sale), (ii) amounts provided as a reserve, in accordance with GAAP,
against any liabilities under any indemnification obligations or purchase price
adjustment associated with such Asset Sale (provided that,
to the extent and at the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds) and (iii) any amount
payable in 

 

3

 

respect
of any Debt for borrowed money which is secured by the asset sold in such Asset
Sale and which is required to be repaid with such proceeds (excluding any such
Debt assumed by the purchaser of such asset).”

 

“
‘Permitted Refinancing Debt’ means Debt (for purposes of this
definition, “new Debt”) incurred in exchange for, or proceeds of which
are used to refinance, all of the Second Lien Term Loan or any Permitted
Refinancing Debt theretofore incurred (as applicable, the “Refinanced Debt”);
provided that (a) such new Debt is in an aggregate principal amount not in
excess of $400,000,000; (b) such new Debt has a stated maturity no earlier
than the day 365 days after August 1, 2010; and (c) such new Debt
(and any guarantees thereof) is subordinated in right of payment to the
Indebtedness (or, if applicable, the Guaranty Agreement) to at least the same
extent as the Refinanced Debt or is otherwise subordinated on terms reasonably
satisfactory to the Administrative Agent.”

 

“
‘Second Amendment’ means the Second Amendment to Third Amended and
Restated Credit Agreement, dated as of January 31, 2008, among the
Borrower, the Guarantors, the Administrative Agent and each Lender party
thereto.”

 

“
‘Second Amendment Effective Date’ has the meaning assigned to such term
in the Second Amendment.”

 

“
‘Second Lien Term Loan Administrative Agent’ means BNP Paribas, as
administrative agent for the lenders under the Second Lien Term Loan Agreement
(in such capacity, together with its successors and assigns).”

 

“
‘Second Lien Term Loan Agreement’ means that certain Second Lien Term
Loan Agreement, dated as of January 31, 2008, by and among the Borrower,
the several lenders from time to time parties thereto, and the Second Lien Term
Loan Administrative Agent, as the same shall be amended, supplemented or
otherwise modified from time to time in accordance with Section 12.02
thereof and Section 9.04(b).”

 

“
‘Second Lien Term Loan’ means any Debt incurred pursuant to Section 9.02(j) and
all Debt and other obligations under the Second Lien Term Loan Documents.”

 

“
‘Second Lien Term Loan Documents’ means the Second Lien Term Loan
Agreement and the other Loan Documents (as defined in the Second Lien Term Loan
Agreement) as the same shall be amended, supplemented or otherwise modified
from time to time in accordance with Section 9.04(b).”

 

“
‘Second Lien Term Loan Notes’ means the notes from time to time issued
under the Second Lien Term Loan Agreement.”

 

2.2           Section 2.07.

 

(a)           The first sentence of Section 2.07(a) is
hereby amended and restated as follows:

 

4

 

“For the period from and including the Second Amendment Effective Date
to but excluding April 1, 2008, the amount of the Borrowing Base and the
Conforming Borrowing Base shall be $1,900,000,000.”

 

(b)           Section 2.07(e) is hereby
amended and restated as follows:

 

“(e)         Reduction of the Borrowing Base Upon
Issuance of Funded Debt. 
Notwithstanding anything to the contrary contained herein, upon the
issuance of any Funded Debt (excluding Permitted Refinancing Debt), the
Borrowing Base then in effect shall be reduced by an amount equal to the
product of 0.25 multiplied by the stated principal amount of such Debt
(excluding any original issue discount), and the Borrowing Base as so reduced
shall become the new Borrowing Base immediately upon the date of such issuance,
effective and applicable to the Borrower, the Agents, each Issuing Bank and the
Lenders on such date until the next redetermination or modification thereof
hereunder.”

 

2.3           Section 3.04.

 

(a)  Section 3.04(c)(iv) is hereby amended and restated
as follows:

 

“(iv)        If, at any time after the Effective
Date, the Borrower issues additional Funded Debt and any Borrowing Base
Deficiency exists, then the Borrower shall (a) use 100% of the Net Cash
Proceeds from the issuance of such Funded Debt to prepay the Borrowings in an
aggregate principal amount equal to such excess, and (b) if, as a result
of an LC Exposure, any Borrowing Base Deficiency remains after prepaying all of
the Borrowings, deposit with the Administrative Agent on behalf of the Lenders
an amount equal to the lesser of such LC Exposure and any remaining Net Cash
Proceeds to be held as cash collateral as provided in Section 2.08(j).  The Borrower shall be obligated to make such
prepayment and/or deposit of cash collateral as soon as practicable and in any
event no later than the Business Day after it or any Subsidiary receives such
Net Cash Proceeds as a result of such issuance of Funded Debt.”

 

(b)  Section 3.04(c) is hereby amended by adding the
following subsection 3.04(c)(vii):

 

“(vii)       If there is less than
$350,000,000 in availability under this Agreement after giving effect to any
adjustment to the Borrowing Base pursuant to Section 9.12, then the
Borrower shall (A) use 100% of the Net Cash Proceeds from any Asset Sale
to prepay the Borrowings until there is at least $350,000,000 in availability
under this Agreement after giving effect to any adjustments to the Borrowing
Base pursuant to Section 9.12 and (B) if, as a result of an LC
Exposure, any Borrowing Base Deficiency remains after prepaying all of the
Borrowings, deposit with the Administrative Agent on behalf of the Lenders an
amount equal to the lesser of such LC Exposure and any remaining Net Cash
Proceeds to be held as cash collateral as provided in Section 2.08(j).  The Borrower shall be obligated to make such
prepayment and/or deposit of cash collateral as soon as practicable and in any
event no later than the Business Day after it or any Subsidiary receives such
Net 

 

5

 

Cash Proceeds as a result of such Asset Sale.”

 

(c)  Section 3.04(c) is hereby amended by adding the
following subsection 3.04(c)(viii):

 

“(viii)      If
not otherwise required as prepayments by this Section 3.04 (including
payments required within 90 days pursuant to Section 3.04(c)(ii)), the
Borrower shall use 100% of the Net Cash Proceeds of any Equity Interests or
Funded Debt to prepay the Second Lien Term Loans.”

 

2.4           Article VII.  Article VII is hereby amended by adding
a Section 7.24 to read in its entirety as follows:

 

“Section 7.24  Specified
Senior Indebtedness.

 

The Indebtedness of the Borrower constitutes “Senior
Indebtedness” as defined in the Intercreditor Agreement.”

 

2.5           Section 8.14.  Section 8.14 is hereby amended by adding
a subsection “(c)” to read in its entirety as follows:

 

“(c)         Prior to or
contemporaneously with the granting of any Lien on any Property to or for the
benefit of any agent or lender under the Second Lien Term Loan Agreement
pursuant to any Second Lien Term Loan Document or otherwise, the Borrower or
applicable Subsidiary shall grant to the Administrative Agent a first priority
Lien interest (subject only to Excepted Liens of the type described in clauses (a) to
(d) and (f) in the definition thereof, but subject to the provisos at
the end of such definition) on such Property for the benefit of the Lenders to
secure the Indebtedness.  All such Liens
in favor of the Administrative Agent will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, all in form and substance
reasonably satisfactory to the Administrative Agent and in a sufficient number
of executed (and acknowledged where necessary or appropriate) counterparts for
recording purposes.  In order to comply
with the foregoing, if any Subsidiary places a Lien on its Oil and Gas
Properties and such Subsidiary is not a Guarantor, then it shall become a
Guarantor and comply with Section 8.14(b).”

 

2.6           Article VIII.  Article VIII is hereby amended by adding
the following Section 8.18:

 

“Section 8.18.  Additional Swap Agreements.  Within 30 days of the Second Amendment
Effective Date, the Borrower shall enter into Swap Agreements with
respect to the Acquisition Properties for volumes and prices satisfactory to
the Administrative Agent and the Borrower shall neither assign, terminate or
unwind any such Swap Agreements nor sell any Swap Agreements if the effect of
such action (when taken together with any other Swap Agreements executed
contemporaneously with the taking of such action) would have the effect of
canceling its positions under such Swap Agreements required hereby.”

 

6

 

2.7           Section 9.02.  Section 9.02 is hereby amended by adding
subsections “(j)” and “(k)” to read as follows:

 

“(j)          Debt incurred by the
Borrower pursuant to the Second Lien Term Loan Agreement and/or the Permitted
Refinancing Debt in respect thereof and any guarantees thereof by any of the
Guarantors; provided that, without the prior written consent of all of the
Lenders, (i) the aggregate principal amount of such Debt shall not exceed
$400,000,000, (ii) the maturity date of any Permitted Refinancing Debt
shall be no earlier than 365 days after August 1, 2010, (iii) such
Debt and the holders thereof shall at all times be subject to the Intercreditor
Agreement, and (iv) such Debt has no amortization.”

 

“(k)         Extensions, renewals
or replacements of any Debt (for purposes of this paragraph (k), “refinancing
debt”) permitted in clauses (a) through (i) so long as (i) the
principal amount (or accreted value, if applicable) of such refinancing debt
does not exceed the principal amount (or accreted value, if applicable) of the
Debt extended, renewed or replaced (plus all accrued interest on the Debt and
the amount of all expenses and premiums incurred in connection therewith), (ii) such
refinancing debt has a final maturity date later than the final maturity date
of the Debt being extended, renewed or replaced, (iii) if the Debt being
extended, renewed or replaced is subordinated in right of payment to the
obligations under this Agreement, such refinancing debt has a final maturity
date equal to or later than the final maturity date of, and is subordinated in
right of payment to, the obligations under this Agreement on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Debt being extended, renewed or replaced, (iv) such refinancing debt is
incurred either by the Borrower or by a Subsidiary who is the obligor on the
Debt being extended, renewed or replaced, and (v) if incurred by the
Borrower, such refinancing debt may be guaranteed by the Guarantors.

 

2.8           Section 9.03.  Section 9.03 is hereby amended by
amending and restating subsection (f) in its entirety and adding
subsections “(g)” and “(h)” to read as follows:

 

“(f)          Liens on Property not constituting
collateral for the Indebtedness and not otherwise permitted by the foregoing
clauses of this Section 9.03; provided that the aggregate principal or
face amount of all Debt secured under this Section 9.03(f) shall not
exceed $10,000,000 at any time.”

 

“(g)         Liens securing the
obligations of the Borrower and the Guarantors under the Second Lien Term Loan
Agreement and the other Second Lien Term Loan Documents; provided that, such
Liens shall not encumber any Property that is not subject to a first priority
Lien in favor of, or for the benefit of, the Lenders to secure the Indebtedness
as required by Section 8.14.”

 

“(h)         Extensions, renewals
or replacements of any of the Liens permitted in clauses (a) through (g) so
long as (i) the principal amount of the Debt or obligation 

 

7

 

secured thereby is no greater than the principal amount of such Debt or
obligation at the time such Lien was permitted hereunder except for increases
in an amount equal to a reasonable premium or other reasonable amount paid, and
fees and expenses reasonably incurred, in connection with such extension,
renewal, refinancing, or replacement and in an amount equal to any existing
commitments unutilized thereunder, (ii) any such extension, renewal or
replacement Lien is limited to the property originally encumbered thereby, and (iii) any
renewal or extension of the Debt or obligations secured or benefited thereby is
permitted by Section 9.02.”

 

2.9           Section 9.04(b).  Section 9.04(b) is hereby deleted
and restated in its entirety to read as follows:

 

“(b)         Redemption or
Repayment of Subordinated Debt.  The
Borrower will not, and will not permit any Subsidiary to: (i) call, make
or offer to make any Redemption of or otherwise Redeem (whether optional or
mandatory and whether in whole or in part) or repay any subordinated Debt
permitted to be incurred hereunder, including the Second Lien Term Loan, except
with the proceeds of Asset Sales, Casualty Events or Funded Debt, or the
proceeds of the sale or issuance of Equity Interests or Permitted Refinancing
Debt, in each case, in accordance with Section 3.04; (ii) amend,
modify, waive or otherwise change, consent or agree to any amendment,
modification, waiver or other change to, any of the terms of any notes
evidencing any subordinated Debt permitted hereunder, including the Second Lien
Term Loan, or any indenture, agreement, instrument, certificate or other
document relating to any subordinated Debt permitted hereunder (including the
Second Lien Term Loan Agreement, any Second Lien Term Loan Document and any
other document or agreement relating thereto) if (A) the effect of such
amendment, modification or waiver is to shorten the final maturity, except as
permitted under Section 9.02(h) or in accordance with the definition
of Permitted Refinancing Debt, or increase the amount of any payment of
principal thereof or increase the rate or shorten any period for payment of
interest thereon or modify the method of calculating the interest rate, (B) such
action adds covenants, events of default or other agreements to the extent more
restrictive than those contained in this Agreement, or (C) such action
adds collateral unless the Loan Documents are being amended at the same time to
reflect such new collateral, provided that the foregoing shall not prohibit the
execution of supplemental agreements in connection with the issuance of
Permitted Refinancing Debt or the addition of guarantors if required by the
terms thereof; and (iii) designate any Debt (other than obligations of the
Borrower and the Subsidiaries pursuant to the Loan Documents) as “Specified
Senior Indebtedness” or “Specified Guarantor Senior Indebtedness” or give any
such other Debt any other similar designation for the purposes of any
indentures or other documents relating to any subordinated Debt permitted
hereunder, including the Second Lien Term Loan.”

 

2.10         Section 9.07.  Section 9.07 is hereby amended and
restated as follows:

 

8

 

“Section 9.07 Limitation on Leases.  Neither the Borrower nor any of its
Subsidiaries will create, incur, assume or suffer to exist any obligation for the
payment of rent or hire of Property of any kind whatsoever (real or personal
but excluding Capital Leases permitted by Section 9.02(g), leases of
Hydrocarbon Interests and drilling and other similar contracts), under leases
or lease agreements which would cause the aggregate amount of all payments made
by the Borrower and its Subsidiaries pursuant to all such leases or lease
agreements, including, without limitation, any residual payments at the end of
any lease, to exceed $10,000,000 in any period of twelve consecutive calendar
months during the life of such leases.”

 

2.11         Section 9.12.  Section 9.12(d)(iii) is hereby
amended and restated as follows:

 

“(iii) if such other sale or disposition of Oil and Gas Property
or Subsidiary owning Oil and Gas Properties included in the most recently
delivered Reserve Report during any period between two successive Scheduled
Redetermination Dates has a fair market value (as determined by the
Administrative Agent), individually or in the aggregate, in excess of $25,000,000
(or, if the Second Lien Term Loan Agreement has been terminated, $50,000,000),
the Borrowing Base shall be reduced, effective immediately upon such sale or
disposition, by an amount equal to the value, if any, assigned such Property as
determined in good faith by the Supermajority Lenders assigned such Property in
the most recently delivered Reserve Report and”

 

2.12         Section 9.16.  The first parenthetical in Section 9.16 is
hereby amended and restated in its entirety as follows:

 

“(other than this Agreement, the Security Instruments or the Second
Lien Term Loan Documents)”

 

2.13         Section 10.01.  Section 10.01 is hereby amended by
adding a subsection “(o)” to read in its entirety as follows:

 

“(o)         the Intercreditor Agreement, after
delivery thereof shall for any reason, except to the extent permitted by the
terms thereof, cease to be in full force and effect and valid, binding and
enforceable in accordance with its terms against the Borrower or any party
thereto or holder of the Debt subordinated thereby or shall be repudiated by
any of them, or cause the payment of the obligations of the Second Lien Term
Loan Notes to be senior or pari passu in right to the payment of obligations of
this Agreement, or the Borrower or any Guarantor shall make any payment in
violation of the terms of the Intercreditor Agreement.”

 

2.14         Section 11.08(b).  Section 11.08(b) is hereby deleted
and replaced in its entirety to read as follows:

 

“(b)         The Lenders
acknowledge that the Administrative Agent and the Arrangers 

 

9

 

are acting solely in administrative
capacities with respect to the structuring and syndication of this facility and
have no duties, responsibilities or liabilities under this Agreement and the
other Loan Documents other than their administrative duties, responsibilities
and liabilities specifically as set forth in the Loan Documents and in their
capacity as Lenders hereunder.  In
structuring, arranging or syndicating this facility, each Lender acknowledges
that the Administrative Agent and/or Arrangers may be agents or lenders under
these Notes, the Second Lien Term Loan Notes, other loans or other securities
and waives any existing or future conflicts of interest associated with their
role in such other debt instruments.  If
in its administration of this facility or any other debt instrument, the
Administrative Agent determines (or is given written notice by any Lender) that
a conflict exists, then it shall eliminate such conflict within 90 days or
resign pursuant to Section 11.06 and shall have no liability for action
taken or not taken, other than actions taken or not taken which represent
Administrative Agent’s gross negligence or willful misconduct, while such
conflict existed.”

 

2.15         Section 12.01.  Section 12.01(a)(i) and (ii) are
hereby amended and restated in their entirety as follows:

 

	
   

  	
  (i)

  	
   

  	
  “if
  to the Borrower, to it at

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Linn
  Energy, LLC

  
	
   

  	
   

  	
  600 Travis
  Street, Suite 5100

  
	
   

  	
   

  	
  Houston, TX
  77002

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Kolja Rockov

  
	
   

  	
   

  	
  Telephone:
  281-840-4169

  
	
   

  	
   

  	
  Fax:
  281-840-4189

  
	
   

  	
   

  	
  E-Mail:
  kr@linnenergy.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Linn
  Energy, LLC

  
	
   

  	
   

  	
  600 Travis
  Street, Suite 5100

  
	
   

  	
   

  	
  Houston, TX
  77002

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Attention:
  Charlene A. Ripley

  
	
   

  	
   

  	
  Telephone:
  281-840-4119

  
	
   

  	
   

  	
  Fax:
  281-840-4180

  
	
   

  	
   

  	
  E-mail:
  cripley@linnenergy.com

  

 

10

 

	
   

  	
  (ii)

  	
   

  	
  if
  to the Administrative Agent, to it at

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  525 Washington Blvd., 8th
  floor

  
	
   

  	
   

  	
  Jersey City, New Jersey 07310

  
	
   

  	
   

  	
  Attention: Dina Wilson, Loan
  Assistant

  
	
   

  	
   

  	
  Telecopy: 201-850-4020

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy
  to the Administrative Agent at:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  1200 Smith
  Street, Suite 3100

  
	
   

  	
   

  	
  Houston,
  Texas 77002

  
	
   

  	
   

  	
  Attention:
  Betsy Jocher

  
	
   

  	
   

  	
  Telecopy:
  713-659-6915”

  

 

2.16         Annex I.  Annex I is hereby amended and restated in is
entirety as shown on the attached Annex I.

 

2.17         Schedule 7.14.  Schedule 7.14 is hereby amended and restated
in its entirety as shown on the attached Schedule 7.14.

 

Section 3.               Conditions
Precedent.  The effectiveness of this
Second Amendment is subject to the receipt by the Administrative Agent of the
following documents and satisfaction of the other conditions provided in this Section 3,
each of which shall be reasonably satisfactory to the Administrative Agent in
form and substance:

 

3.1           Payment by the
Borrower to the Administrative Agent of all fees and other amounts due and
payable on or prior to the Second Amendment Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower.

 

3.2           The Administrative
Agent shall have received multiple counterparts as requested of this Second
Amendment from all of the Lenders.

 

3.3           The
Administrative Agent shall have received an Intercreditor Agreement executed by
the Second Lien Term Loan Administrative Agent and the Borrower.

 

3.4           No Default or Event
of Default shall have occurred and be continuing as of the Second Amendment
Effective Date.

 

3.5           The
Administrative Agent or its counsel shall have received (a) a certificate
of a Responsible Officer of the Borrower certifying: (i) that the Borrower
is concurrently consummating the Acquisition in accordance with the terms of
the Acquisition Documents (with all of the material conditions precedent
thereto having been satisfied in all material respects by the parties thereto)
and acquiring substantially all of the Acquisition Properties contemplated by
the Acquisition Documents; (ii) as to the final purchase price for the
Acquisition Properties after giving effect to all adjustments as of the closing
date contemplated by the Acquisition Documents and specifying, by category, the
amount of such adjustment, provided that the final purchase price 

 

11

 

shall
not be greater than $600,000,000, subject to pre-closing and post-closing
adjustments under the Acquisition Documents; (iii) that attached thereto
is a true and complete list of the Acquisition Properties which have been
excluded from the Acquisition pursuant to the terms of the Acquisition
Documents, specifying with respect thereto the basis of exclusion as (A) title
defect, (B) preferential purchase right, (C) environmental or (D) casualty
loss; (iv) that attached thereto is a true and complete list of all
Acquisition Properties for which any seller has elected to cure a title defect,
(v) that attached thereto is a true and complete list of all Acquisition
Properties for which any seller has elected to remediate an adverse
environmental condition, (vi) there was no known breach of the seller’s
title or environmental representations in the Acquisition Documents that would
have a material adverse effect on the Acquisition Properties, taken as a whole,
and (vii) that attached thereto is a true and complete list of all
Acquisition Properties which are currently pending final decision by a third
party regarding purchase of such property in accordance with any preferential
right; (b) a true and complete executed copy of each of the Acquisition
Documents; (c) original counterparts or copies, certified as true and complete,
of the assignments, deeds and leases for all of the Acquisition Properties; and
(d) such other related documents and information as the Administrative
Agent shall have reasonably requested.

 

3.6           The
Administrative Agent shall have received an opinion of (i) Akin Gump
Strauss Hauer Feld LLP, special counsel to the Borrower, in form and substance
satisfactory to the Administrative Agent, as to such matters incident to the
Transactions as the Administrative Agent may reasonably request and (ii) local
counsel in each of the following states: West Virginia, Pennsylvania, Texas,
Oklahoma and California and any other jurisdictions requested by the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent.

 

3.7           The
Administrative Agent shall have received a certificate of the Borrower and of
each Guarantor setting forth (a) resolutions of the Managers, board of
directors or other managing body with respect to the authorization of the
Borrower or such Guarantor to execute and deliver the Second Amendment and
related documents to which it is a party and to enter into the transactions
contemplated in those documents, (b) the individuals (i) who are
authorized to sign the Loan Documents to which the Borrower or such Guarantor
is a party and (ii) who will, until replaced by another individual duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with this Agreement and the other Loan Documents to which it is a party, (c) specimen
signatures of such authorized individuals, and (d) that the articles or
certificate of incorporation or formation and bylaws, operating agreement or
partnership agreement, as applicable, of the Borrower and each Guarantor, in
each case, are certified as not being amended since last delivered to the
Administrative Agent.  The Administrative
Agent and the Lenders may conclusively rely on such certificate until the
Administrative Agent receives notice in writing from the Borrower to the
contrary.

 

3.8           The
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of the Security Instruments described on Exhibit A.  After giving effect to the execution and
delivery of the Security Instruments, the Borrower shall be in compliance with Section 8.14(a).

 

3.9           The
Administrative Agent shall be reasonably satisfied with the environmental
condition of the Acquisition Properties.

 

12

 

3.10         The
Administrative Agent shall have received duly executed Notes payable to the
order of each Lender who has requested a Note in a principal amount equal to
its new Aggregate Maximum Credit Amount dated as of the date hereof.

 

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

 

The
Administrative Agent shall notify the Borrower and the Lenders of the Second
Amendment Effective Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of the Lenders to make Loans and of each Issuing Bank to issue
Letters of Credit pursuant to this Second Amendment shall not become effective
unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02)
at or prior to 1:00 p.m., Houston time, on February 1, 2008 (and, in
the event such conditions are not so satisfied or waived, the Commitments shall
terminate at such time).

 

Section 4.               Representations
and Warranties; Etc.  Each Obligor
hereby affirms:  (a) that as of the
date of execution and delivery of this Second Amendment, all of the
representations and warranties contained in each Loan Document to which such
Obligor is a party are true and correct in all material respects as though made
on and as of the Second Amendment Effective Date (unless made as of a specific
earlier date, in which case, was true as of such date); and (b) that after
giving effect to this Second Amendment and to the transactions contemplated
hereby, no Defaults exist under the Loan Documents or will exist under the Loan
Documents.

 

Section 5.               Miscellaneous.

 

5.1           Confirmation.  The provisions of the Credit Agreement (as
amended by this Second Amendment) shall remain in full force and effect in
accordance with its terms following the effectiveness of this Second Amendment.

 

5.2           Ratification and
Affirmation of Obligors.  Each of the
Obligors hereby expressly (i) acknowledges the terms of this Second
Amendment, (ii) ratifies and affirms its obligations under the Guaranty
Agreement and the other Security Instruments to which it is a party, (iii) acknowledges,
renews and extends its continued liability under the Guaranty Agreement and the
other Security Instruments to which it is a party and agrees that its guarantee
under the Guarantee Agreement and the other Security Instruments to which it is
a party remains in full force and effect with respect to the Indebtedness as
amended hereby.

 

5.3           Counterparts.  This Second Amendment may be executed by one
or more of the parties hereto in any number of separate counterparts, and all
of such counterparts taken together shall be deemed to constitute one and the
same instrument.

 

5.4           No Oral Agreement.  THIS WRITTEN SECOND AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND
THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

 

13

 

5.5           Governing Law.  THIS SECOND AMENDMENT (INCLUDING, BUT NOT
LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

 

14

 

IN WITNESS WHEREOF, the parties hereto have caused this Second
Amendment to be duly executed effective as of the date first written above.

 

 

	
  BORROWER:

  	
   

  	
  LINN ENERGY, LLC

  

 

 

	
   

  	
  By:

  	
    /s/
  Kolja Rockov

  	
   

  
	
   

  	
   

  	
  Kolja
  Rockov, Executive Vice President

  	
   

  
	
   

  	
   

  	
  and Chief
  Financial Officer

  	
   

  

 

	
  GUARANTORS:

  	
   

  	
  LINN ENERGY HOLDINGS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINN OPERATING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PENN WEST PIPELINE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID ATLANTIC WELL SERVICE, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID-CONTINENT HOLDINGS I, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID-CONTINENT HOLDINGS II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID-CONTINENT I, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MID-CONTINENT II, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINN GAS MARKETING, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LINN EXPLORATION MIDCONTINENT, LLC

  

 

 

	
   

  	
  By:

  	
  /s/ Kolja
  Rockov

  	
   

  
	
   

  	
  Kolja Rockov

  
	
   

  	
  Executive
  Vice President and Chief

  
	
   

  	
  Financial
  Officer

  

 

Second
Amendment

 

15

 

	
   

  	
  BNP PARIBAS, as
  Administrative Agent and a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas
  R. Liftman

  	
   

  
	
   

  	
  Name:

  	
  /s/
  Douglas R. Liftman

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Betsy
  Jocher

  	
   

  
	
   

  	
  Name:

  	
  Betsy
  Jocher

  
	
   

  	
  Title:

  	
  Director

  

 

16

 

	
   

  	
  ROYAL BANK OF CANADA, as
  Syndication

  Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Don J.
  McKinnerney

  	
   

  
	
   

  	
  Name:

  	
  Don
  J. McKinnerney

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

17

 

	
   

  	
  SOCIETE GENERALE, as
  a Co-Documentation

  Agent and a Lender

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elena
  Robciuc

  	
   

  
	
   

  	
  Name:

  	
  Elena
  Robciuc

  
	
   

  	
  Title:

  	
  Director

  

 

18

 

	
   

  	
  COMERICA BANK, as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Huma
  Manal

  	
   

  
	
   

  	
  Name:

  	
  Huma
  Manal

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

19

 

	
   

  	
  FORTIS CAPITAL CORP., as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Montgomery

  	
   

  
	
   

  	
  Name:

  	
  David
  Montgomery

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deirdre
  Sanbom

  	
   

  
	
   

  	
  Name:

  	
  Deirdre
  Sanbom

  
	
   

  	
  Title:

  	
  Director

  

 

20

 

	
   

  	
  CITIBANK, NA, as a
  Co-Documentation Agent

  and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  E. Hunt

  	
   

  
	
   

  	
  Name:

  	
  David
  E. Hunt

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

21

 

	
   

  	
  KEYBANK NATIONAL ASSOCIATION, as
  a

  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  Rajan

  	
   

  
	
   

  	
  Name:

  	
  Thomas
  Rajan

  
	
   

  	
  Title:

  	
  Director

  

 

22

 

	
   

  	
  WACHOVIA BANK, N.A.,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leanne
  S. Phillips

  	
   

  
	
   

  	
  Name:

  	
  Leanne
  S. Phillips

  
	
   

  	
  Title:

  	
  Director

  

 

23

 

	
   

  	
  BMO CAPITAL MARKETS FINANCING,

  INC., as a Co-Documentation Agent
  and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  V. Ducote

  	
   

  
	
   

  	
  Name:

  	
  James
  V. Ducote

  
	
   

  	
  Title:

  	
  Director

  

 

24

 

	
   

  	
  CREDIT SUISSE, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa
  Gomez

  	
   

  
	
   

  	
  Name:

  	
  Vanessa
  Gomez

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Morenikeji Ajayi

  	
   

  
	
   

  	
  Name:

  	
  Morenikeji
  Ajayi

  
	
   

  	
  Title:

  	
  Associate

  
					

 

25

 

	
   

  	
  COMPASS BANK, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Murray
  E. Brasseux

  	
   

  
	
   

  	
  Name:

  	
  Murray
  E. Brasseux

  
	
   

  	
  Title:

  	
  Executive
  Vice President

  

 

26

 

	
   

  	
  DnB NOR BANK ASA,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Philip
  F. Kurpiewski

  	
   

  
	
   

  	
  Name:

  	
  Philip
  F. Kurpiewski

  
	
   

  	
  Title:

  	
  Senior
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jack
  Sun

  	
   

  
	
   

  	
  Name:

  	
  Jack
  Sun

  
	
   

  	
  Title:

  	
  First
  Vice President

  
					

 

27

 

	
   

  	
  DZ BANK AG, DEUTSCHE ZENTRAL-

  GENOSSENSCHAFTSBANK, FRANKFURT

  AM MAIN, NEW YORK BRANCH,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott
  B. Lamoreaux

  	
   

  
	
   

  	
  Name:

  	
  Scott
  B. Lamoreaux

  
	
   

  	
  Title:

  	
  First
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul J.
  Bowles

  	
   

  
	
   

  	
  Name:

  	
  Paul
  J. Bowles

  
	
   

  	
  Title:

  	
  Assistant
  Treasurer

  

 

28

 

	
   

  	
  GUARANTY BANK, FSB,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.
  David McCarver IV

  	
   

  
	
   

  	
  Name:

  	
  W.
  David McCarver IV

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

29

 

	
   

  	
  LEHMAN BROTHERS COMMERCIAL

  BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  McNany

  	
   

  
	
   

  	
  Name:

  	
  Brian
  McNany

  
	
   

  	
  Title:

  	
  Authorized
  Signatory

  

 

30

 

	
   

  	
  JPMORGAN CHASE BANK, N.A.,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  A. Kamauf

  
	
   

  	
  Name:

  	
  Michael
  A. Kamauf

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

31

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND plc,
  as a

  
	
   

  	
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark
  Lumpkin, Jr.

  
	
   

  	
  Name:

  	
  Mark
  Lumpkin, Jr.

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

32

 

	
   

  	
  RZB FINANCE LLC, as
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Shirley
  Ritch

  
	
   

  	
  Name:

  	
  Shirley
  Ritch

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A.
  Valiska

  
	
   

  	
  Name:

  	
  John
  A. Valiska

  
	
   

  	
  Title:

  	
  First
  Vice President

  

 

33

 

	
   

  	
  UNION BANK OF CALIFORNIA, N.A.,
  as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott
  Gildea

  
	
   

  	
  Name:

  	
  Scott
  Gildea

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

34

 

	
   

  	
  U.S. BANK NATIONAL ASSOCIATION,
  as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Justin
  M. Alexander

  
	
   

  	
  Name:

  	
  Justin
  M. Alexander

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

35

 

	
   

  	
  CALYON NEW YORK BRANCH,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Page Dillehunt

  
	
   

  	
  Name:

  	
  Page Dillehunt

  
	
   

  	
  Title:

  	
  Managing
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharada
  Manne

  
	
   

  	
  Name:

  	
  Sharada
  Manne

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

36

 

	
   

  	
  THE BANK OF NOVA SCOTIA,
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Mills

  
	
   

  	
  Name:

  	
  David
  Mills

  
	
   

  	
  Title:

  	
  Director

  

 

 

37

 

	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  AMERICAS, as a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan
  LeFevre

  
	
   

  	
  Name:

  	
  Susan
  LeFevre

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Erin
  Morrissey

  
	
   

  	
  Name:

  	
  Erin
  Morrissey

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

38

 

	
   

  	
  ALLIED IRISH BANKS P.L.C.,
  as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  O’Driscoll

  
	
   

  	
  Name:

  	
  David
  O’Driscoll

  
	
   

  	
  Title:

  	
  Assistant
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Aidan
  Lanigan

  
	
   

  	
  Name:

  	
  Aidan
  Lanigan

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

39

 

	
   

  	
  WESTLB AG, NEW YORK BRANCH,
  as a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dominick D’Ascoli

  
	
   

  	
  Name:

  	
  Dominick
  D’Ascoli

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Jennifer King

  
	
   

  	
  Name:

  	
  Jennifer
  King

  
	
   

  	
  Title:

  	
  Director

  

 

40

 

	
   

  	
  SUNTRUST BANK, as
  a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter
  Panos

  
	
   

  	
  Name:

  	
  Peter
  Panos

  
	
   

  	
  Title:

  	
  Vice
  President

  

 

41Exhibit 10.18

Execution Version

 

SECOND LIEN TERM LOAN AGREEMENT

 

 

DATED AS OF

 

JANUARY 31, 2008

 

 

AMONG

 

 

LINN ENERGY, LLC,

 

AS BORROWER,

 

 

BNP PARIBAS,

 

AS ADMINISTRATIVE AGENT,

 

RBC CAPITAL MARKETS,

 

AS SYNDICATION AGENT,

 

SOCIETE
GENERALE, CALYON CORPORATE AND INVESTMENT BANK

 

AND THE ROYAL BANK OF SCOTLAND PLC,

 

AS
CO-DOCUMENTATION AGENTS

 

AND

 

THE LENDERS PARTY HERETO

 

 

JOINT LEAD ARRANGERS AND JOINT BOOK RUNNERS

 

 

	
  BNP
  PARIBAS

  	
   

  	
  RBC CAPITAL MARKETS

  

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I

  
	
  DEFINITIONS AND ACCOUNTING MATTERS

  
	
  Section 1.01

  	
  Terms
  Defined Above

  	
  1

  
	
  Section 1.02

  	
  Certain
  Defined Terms

  	
  1

  
	
  Section 1.03

  	
  Types of
  Loans and Tranches

  	
  19

  
	
  Section 1.04

  	
  Terms
  Generally

  	
  19

  
	
  Section 1.05

  	
  Accounting
  Terms and Determinations; GAAP

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  
	
  THE CREDITS

  	
   

  
	
   

  	
   

  
	
  Section 2.01

  	
  Term Loans

  	
  20

  
	
  Section 2.02

  	
  Loans and
  Tranches

  	
  20

  
	
  Section 2.03

  	
  Requests for
  the Loans

  	
  21

  
	
  Section 2.04

  	
  Interest
  Elections

  	
  22

  
	
  Section 2.05

  	
  Funding of
  Tranches

  	
  23

  
	
  Section 2.06

  	
  Termination

  	
  24

  
	
  Section 2.07

  	
  Total
  Reserve Value

  	
  24

  
	
  Section 2.08

  	
  Intercreditor
  Agreement

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
   

  
	
  PAYMENTS OF
  PRINCIPAL AND INTEREST; PREPAYMENTS; FEES

  	
   

  
	
   

  	
   

  
	
  Section 3.01

  	
  Repayment of
  Loans

  	
  24

  
	
  Section 3.02

  	
  Interest

  	
  24

  
	
  Section 3.03

  	
  Alternate
  Rate of Interest

  	
  25

  
	
  Section 3.04

  	
  Optional
  Prepayments

  	
  26

  
	
  Section 3.05

  	
  Mandatory
  Prepayments

  	
  26

  
	
  Section 3.06

  	
  Fees

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  
	
  PAYMENTS;
  PRO RATA TREATMENT; SHARING OF SET-OFFS

  	
   

  
	
   

  	
   

  
	
  Section 4.01

  	
  Payments
  Generally; Pro Rata Treatment; Sharing of Set-offs

  	
  27

  
	
  Section 4.02

  	
  Presumption
  of Payment by the Borrower

  	
  28

  
	
  Section 4.03

  	
  Certain
  Deductions by the Administrative Agent

  	
  28

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  
	
  INCREASED
  COSTS; BREAK FUNDING PAYMENTS; TAXES

  	
   

  
	
   

  	
   

  
	
  Section 5.01

  	
  Increased
  Costs

  	
  28

  
	
  Section 5.02

  	
  Break
  Funding Payments

  	
  29

  
	
  Section 5.03

  	
  Taxes

  	
  30

  
	
  Section 5.04

  	
  Designation
  of Different Lending Office; Replacement of Lenders

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  
	
  CONDITIONS
  PRECEDENT

  	
   

  
	
   

  	
   

  
	
  Section 6.01

  	
  Effective
  Date

  	
  32

  

 

i

 

	
  Section 6.02

  	
  Additional
  Conditions

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  
	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  
	
  Section 7.01

  	
  Organization;
  Powers

  	
  35

  
	
  Section 7.02

  	
  Authority;
  Enforceability

  	
  36

  
	
  Section 7.03

  	
  Approvals;
  No Conflicts

  	
  36

  
	
  Section 7.04

  	
  Financial
  Position; No Material Adverse Change

  	
  36

  
	
  Section 7.05

  	
  Litigation

  	
  37

  
	
  Section 7.06

  	
  Environmental
  Matters

  	
  37

  
	
  Section 7.07

  	
  Compliance
  with the Laws and Agreements; No Defaults

  	
  38

  
	
  Section 7.08

  	
  Investment
  Company Act

  	
  38

  
	
  Section 7.09

  	
  Taxes

  	
  39

  
	
  Section 7.10

  	
  ERISA

  	
  39

  
	
  Section 7.11

  	
  Disclosure;
  No Material Misstatements

  	
  40

  
	
  Section 7.12

  	
  Insurance

  	
  40

  
	
  Section 7.13

  	
  Restriction
  on Liens

  	
  40

  
	
  Section 7.14

  	
  Subsidiaries

  	
  40

  
	
  Section 7.15

  	
  Location of
  Business and Offices

  	
  40

  
	
  Section 7.16

  	
  Properties;
  Titles, Etc

  	
  41

  
	
  Section 7.17

  	
  Maintenance
  of Properties

  	
  42

  
	
  Section 7.18

  	
  Gas
  Imbalances, Prepayments

  	
  42

  
	
  Section 7.19

  	
  Marketing of
  Production

  	
  42

  
	
  Section 7.20

  	
  Swap
  Agreements

  	
  43

  
	
  Section 7.21

  	
  Use of Loans

  	
  43

  
	
  Section 7.22

  	
  Solvency

  	
  43

  
	
  Section 7.23

  	
  Acquisition

  	
  43

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
   

  
	
  AFFIRMATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 8.01

  	
  Financial
  Statements; Other Information

  	
  44

  
	
  Section 8.02

  	
  Notices of
  Material Events

  	
  47

  
	
  Section 8.03

  	
  Existence;
  Conduct of Business

  	
  48

  
	
  Section 8.04

  	
  Payment of
  Obligations

  	
  48

  
	
  Section 8.05

  	
  Performance
  of Obligations under Loan Documents

  	
  48

  
	
  Section 8.06

  	
  Operation
  and Maintenance of Properties

  	
  48

  
	
  Section 8.07

  	
  Insurance

  	
  49

  
	
  Section 8.08

  	
  Books and
  Records; Inspection Rights

  	
  49

  
	
  Section 8.09

  	
  Compliance
  with Laws

  	
  49

  
	
  Section 8.10

  	
  Environmental
  Matters

  	
  49

  
	
  Section 8.11

  	
  Further
  Assurances

  	
  50

  
	
  Section 8.12

  	
  Reserve
  Reports

  	
  51

  
	
  Section 8.13

  	
  Title Information

  	
  52

  
	
  Section 8.14

  	
  Additional
  Collateral; Additional Guarantors

  	
  53

  
	
  Section 8.15

  	
  ERISA
  Compliance

  	
  54

  
	
  Section 8.16

  	
  Marketing
  Activities

  	
  54

  
	
  Section 8.17

  	
  Swap
  Agreements

  	
  54

  
				

 

ii

 

	
  Section 8.18

  	
  Permanent
  Securities

  	
  54

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
   

  
	
  NEGATIVE
  COVENANTS

  	
   

  
	
   

  	
   

  
	
  Section 9.01

  	
  Financial
  Covenants

  	
  55

  
	
  Section 9.02

  	
  Debt

  	
  55

  
	
  Section 9.03

  	
  Liens

  	
  57

  
	
  Section 9.04

  	
  Dividends

  	
  57

  
	
  Section 9.05

  	
  Investments,
  Loans and Advances

  	
  58

  
	
  Section 9.06

  	
  Nature of
  Business

  	
  59

  
	
  Section 9.07

  	
  Limitation
  on Leases

  	
  59

  
	
  Section 9.08

  	
  Proceeds of
  Notes

  	
  59

  
	
  Section 9.09

  	
  ERISA
  Compliance

  	
  60

  
	
  Section 9.10

  	
  Sale or
  Discount of Receivables

  	
  60

  
	
  Section 9.11

  	
  Mergers, Etc

  	
  60

  
	
  Section 9.12

  	
  Sale of
  Properties

  	
  60

  
	
  Section 9.13

  	
  Environmental
  Matters

  	
  61

  
	
  Section 9.14

  	
  Transactions
  with Affiliates

  	
  61

  
	
  Section 9.15

  	
  Subsidiaries

  	
  61

  
	
  Section 9.16

  	
  Negative
  Pledge Agreements; Dividend Restrictions

  	
  61

  
	
  Section 9.17

  	
  Gas
  Imbalances, Take-or-Pay or Other Prepayments

  	
  62

  
	
  Section 9.18

  	
  Swap
  Agreements

  	
  62

  
	
  Section 9.19

  	
  Tax Status
  as Partnership

  	
  63

  
	
  Section 9.20

  	
  Acquisition
  Documents

  	
  63

  
	
  Section 9.21

  	
  Anti-Layering

  	
  63

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
   

  
	
  EVENTS OF
  DEFAULT; REMEDIES

  	
   

  
	
   

  	
   

  
	
  Section
  10.01

  	
  Events of
  Default

  	
  63

  
	
  Section
  10.02

  	
  Remedies

  	
  65

  
	
  Section
  10.03

  	
  Disposition
  of Proceeds

  	
  66

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
   

  
	
  THE
  ADMINISTRATIVE AGENT

  	
   

  
	
   

  	
   

  
	
  Section
  11.01

  	
  Appointment;
  Powers

  	
  66

  
	
  Section
  11.02

  	
  Duties and
  Obligations of Administrative Agent

  	
  66

  
	
  Section
  11.03

  	
  Action by
  Agent

  	
  67

  
	
  Section
  11.04

  	
  Reliance by
  Agent

  	
  68

  
	
  Section
  11.05

  	
  Subagents

  	
  68

  
	
  Section
  11.06

  	
  Resignation
  or Removal of Agents

  	
  68

  
	
  Section
  11.07

  	
  Agents and
  Lenders

  	
  69

  
	
  Section
  11.08

  	
  No Reliance

  	
  69

  
	
  Section
  11.09

  	
  Administrative
  Agent May File Proofs of Claim

  	
  70

  
	
  Section
  11.10

  	
  Authority of
  Administrative Agent to Release Collateral and Liens

  	
  70

  
	
  Section
  11.11

  	
  The
  Arrangers and the Agents

  	
  70

  
				

 

iii

 

	
  ARTICLE XII

  	
   

  
	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  
	
  Section
  12.01

  	
  Notices

  	
  71

  
	
  Section
  12.02

  	
  Waivers;
  Amendments

  	
  72

  
	
  Section
  12.03

  	
  Expenses,
  Indemnity; Damage Waiver

  	
  73

  
	
  Section
  12.04

  	
  Successors
  and Assigns

  	
  75

  
	
  Section
  12.05

  	
  Survival;
  Revival; Reinstatement

  	
  78

  
	
  Section
  12.06

  	
  Counterparts;
  Integration; Effectiveness

  	
  79

  
	
  Section
  12.07

  	
  Severability

  	
  79

  
	
  Section
  12.08

  	
  Right of
  Setoff

  	
  79

  
	
  Section
  12.09

  	
  GOVERNING
  LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS

  	
  79

  
	
  Section
  12.10

  	
  Headings

  	
  81

  
	
  Section
  12.11

  	
  Confidentiality

  	
  81

  
	
  Section
  12.12

  	
  Interest
  Rate Limitation

  	
  82

  
	
  Section
  12.13

  	
  EXCULPATION
  PROVISIONS

  	
  83

  
	
  Section
  12.14

  	
  No Third
  Party Beneficiaries

  	
  83

  
	
  Section
  12.15

  	
  USA Patriot
  Act Notice

  	
  83

  
	
  Section
  12.16

  	
  Senior
  Revolving Credit Documents

  	
  84

  

 

iv

 

ANNEXES, EXHIBITS AND SCHEDULES

 

	
  Annex I

  	
   

  	
  Commitments

  
	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  Form of Note

  
	
  Exhibit B

  	
   

  	
  Form of Compliance Certificate

  
	
  Exhibit C

  	
   

  	
  Security Instruments

  
	
  Exhibit D

  	
   

  	
  Form of Assignment and Assumption

  
	
  Exhibit E

  	
   

  	
  Form of Borrowing Request

  
	
  Exhibit F

  	
   

  	
  Form of Interest Election Request

  
	
   

  	
   

  	
   

  
	
  Schedule 7.05

  	
   

  	
  Litigation

  
	
  Schedule 7.14

  	
   

  	
  Subsidiaries and Partnerships

  
	
  Schedule 7.18

  	
   

  	
  Gas Imbalances

  
	
  Schedule 7.19

  	
   

  	
  Marketing Contracts

  
	
  Schedule 7.20

  	
   

  	
  Swap Agreements

  

 

v

 

THIS SECOND
LIEN TERM LOAN AGREEMENT dated as of January 31, 2008, is among Linn Energy,
LLC, a limited liability company duly formed and existing under the laws of the
State of Delaware  (the “Borrower”);
each of the Lenders from time to time party hereto; BNP PARIBAS  (in its individual capacity, “BNP
Paribas”), as administrative agent for the Lenders (in such capacity,
together with its successors in such capacity, the “Administrative Agent”);
RBC Capital Markets plc (in its individual capacity, “RBC”), as
syndication agent for the Lenders (in such capacity, together with its
successor in such capacity, the “Syndication Agent”), and Societe
Generale, Calyon Corporate and Investment Bank and The Royal Bank of Scotland
plc, as co-documentation agents (in such capacities, together with their
successors in such capacity, the “Co-Documentation Agents”) for the
Lenders.

 

R E C I T A L S

 

A.            The Borrower has requested that
the Lenders provide a $400,000,000 second lien term loan facility to the
Borrower.

 

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

 

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

 

ARTICLE I

Definitions and Accounting Matters

 

Section 1.01           Terms Defined Above.  As used in this Agreement, each term defined
above has the meaning indicated above.

 

Section 1.02           Certain Defined
Terms.  As used in this Agreement,
the following terms have the meanings specified below:

 

“ABR”, when used in
reference to any Tranche, refers to whether such Loan, or the Loans comprising
such Tranche, are bearing interest at a rate determined by reference to the
Alternate Base Rate.

 

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

 

“Acquisition Documents”
means (a) the Purchase and Sale Agreement dated as of December 20,
2007, by and between Lamamco Drilling Company, as seller and Linn Energy
Holdings, LLC, as buyer, and (b) all bills of sale, assignments, agreements,
instruments and documents executed and delivered in connection therewith, as
amended.

 

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

 

 

“Administrative Questionnaire”
means an Administrative Questionnaire in a form supplied by the Administrative
Agent.

 

“Affiliate” means, with
respect to a specified Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

 

“Agent” means the
Administrative Agent, the Syndication Agent, any Co-Documentation Agent or any
combination of them as the context requires.

 

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

 

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

 

“Applicable Margin” means
the rate per annum applicable to each Type of Tranche or Loan for the period
set forth below:

 

	
  Period

  	
   

  	
  Eurodollar

  	
   

  	
  ABR

  	
   

  
	
  Effective Date to and including the one
  year anniversary of Effective Date

  	
   

  	
  5.0

  	
  %

  	
  3.5

  	
  %

  
	
  One day after anniversary of Effective Date
  to Maturity Date

  	
   

  	
  7.5

  	
  %

  	
  6.0

  	
  %

  

 

“Approved Counterparty”
means (a) any “Lender” as such term is defined under the Senior Revolving
Credit Agreement or any Affiliate of such lender and (b) any other Person
whose long term senior unsecured debt rating is A/A2 by S&P or Moody’s (or
their equivalent) or higher.

 

“Arrangers” means BNP
Paribas and RBC Capital Markets, in their capacities as joint lead arrangers
and joint book runners hereunder.

 

“Asset Sale” means,
solely for purposes of Section 3.05, the sale, transfer or other
disposition (by way of merger, casualty, condemnation or otherwise) by the
Borrower or any of the Subsidiaries to any Person other than the Borrower or
any Guarantor of (a) any Equity Interests in any of the Subsidiaries
(including any such sale by the issuer of such Equity Interests but excluding
directors’ qualifying shares) or (b) any other assets of the Borrower or
any of the Subsidiaries (other than (x)(i) inventory (including
Hydrocarbons), (ii) damaged, obsolete or worn out assets, scrap and
equipment no longer used in the operations of the Borrower or any 

 

2

 

Subsidiary, and
(iii) Investments permitted by Section 9.05, in each case disposed of
in the ordinary course of business and (y) any sale, transfer or other
disposition that, together with all related sales, transfers or other
dispositions, has a value not in excess of $25,000,000).

 

“Assignment and Assumption”
means an assignment and assumption entered into by a Lender and an assignee
(with the consent of any party whose consent is required by Section 12.04(b)),
and accepted by the Administrative Agent, in the form of Exhibit D or any
other form approved by the Administrative Agent.

 

“Available Cash” means,
with respect to any fiscal quarter ending prior to the Maturity Date:

 

(a)           the sum of (i) all cash and cash equivalents of the
Borrower and each Subsidiary on hand at the end of such fiscal quarter; and (ii) all
additional cash and cash equivalents of the Borrower and each Subsidiary on
hand on the date of determination of Available Cash for such fiscal quarter
resulting from working capital borrowings made subsequent to the end of such
fiscal quarter, less

 

(b)           the amount of any cash reserves established by the board of
directors of the Borrower to (i) provide for the proper conduct of the
business of the Borrower and each Subsidiary (including reserves for future
capital expenditures including drilling and acquisitions and for anticipated
future credit needs of the Borrower and each Subsidiary), (ii) comply with
applicable law or any loan agreement, security agreement, mortgage, debt
instrument or other agreement or obligation to which the Borrower or any
Subsidiary is a party or by which it is bound or its assets are subject or (iii) provide
funds for distributions with respect to any one or more of the next four fiscal
quarters;

 

provided
that disbursements made by the Borrower or any Subsidiary or cash reserves
established, increased or reduced after the end of such fiscal quarter but on
or before the date of determination of Available Cash with respect to such fiscal
quarter shall be deemed to have been made, established, increased or reduced,
for purposes of determining Available Cash, within such fiscal quarter if the
board of directors so determines.

 

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

 

“Borrowing Request” means
a request by the Borrower for the funding of the Loans in accordance with Section 2.03
in substantially the form of Exhibit E.

 

“Business Day” means any
day that is not a Saturday, Sunday or other day on which commercial banks in
New York City or Houston, Texas are authorized or required by law to remain
closed; and if such day relates to a Tranche or continuation of, a payment or
prepayment of principal of or interest on, or a conversion of or into, or the
Interest Period for, a Eurodollar Tranche or a notice by the Borrower with
respect to any such Tranche or continuation, payment, prepayment, conversion or
Interest Period, any day which is also a day on which dealings in dollar
deposits are carried out in the London interbank market.

 

3

 

“Capital Leases” means,
in respect of any Person, all leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases on the balance sheet
of the Person liable (whether contingent or otherwise) for the payment of rent
thereunder.

 

“Casualty Event” means
any loss, casualty or other insured damage to, or any nationalization, taking
under power of eminent domain or by condemnation or similar proceeding of, any
Property of the Borrower or any of its Subsidiaries having a fair market value
in excess of $10,000,000 in the aggregate for any calendar year.

 

“Change in Control” means
the occurrence of any of the following events: 
(a) any Person or group of Persons acting in concert as a
partnership or other group (a “Group of Persons”), shall be the legal or
beneficial owner (within the meaning of Rule 13d-3 under the Securities
Exchange Act of 1934, as amended) of more than 35% of the combined voting power
of the then total membership interests (including all securities which are
convertible into membership interests) of the Borrower, provided, that a “Group
of Persons” shall not include the underwriter in any firm underwriting
undertaken in connection with any public offering of the Borrower, or (b) occupation
of a majority of the seats (other than vacant seats) on the board of directors
(or board of managers) of the Company by Persons who were neither (i) nominated
by the board of directors of the Borrower nor (ii) appointed by directors
a majority of whom were so nominated.

 

“Change in Law” means (a) the
adoption of any law, rule or regulation after the date of this Agreement, (b) any
change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this
Agreement or (c) compliance by any Lender (or, for purposes of Section 5.01(b),
by any lending office of such Lender or by such Lender’s holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.

 

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

 

“Commitment” means, with
respect to each Lender, the commitment of such Lender to make its Loan
hereunder on the Effective Date and “Commitments” means the aggregate amount of
the Commitments of all Lenders.  The
amount of each Lender’s Commitment is set forth on Annex I.

 

“Consolidated Net Income”
means with respect to the Borrower and the Consolidated Subsidiaries, for any
period, the aggregate of the net income (or loss) of the Borrower and the
Consolidated Subsidiaries after allowances for taxes for such period determined
on a consolidated basis in accordance with GAAP; provided that there shall be
excluded from such net income (to the extent otherwise included therein) the
following: (a) the net income of any Person in which the Borrower or a
Consolidated Subsidiary has an interest (which interest does not cause the net
income of such other Person to be consolidated with the net income of the
Borrower and the Consolidated Subsidiaries in accordance with GAAP), except to
the extent of the amount of dividends or distributions actually paid in cash
during such period by such other Person to the Borrower or to a Consolidated
Subsidiary, as the case may be; (b) the net income 

 

4

 

(but not loss)
during such period of any Consolidated Subsidiary to the extent that the
declaration or payment of dividends or similar distributions or transfers or
loans by that Consolidated Subsidiary is not at the time permitted by operation
of the terms of its charter or any agreement, instrument or Governmental
Requirement applicable to such Consolidated Subsidiary or is otherwise
restricted or prohibited, in each case determined in accordance with GAAP; (c) any
extraordinary gains or losses during such period; (d) non-cash gains,
losses or adjustments under FASB Statement No. 133 as a result of changes
in the fair market value of derivatives; (e) any gains or losses
attributable to writeups or writedowns of assets, including ceiling test
writedowns; and (f) non-cash share-based payments under FASB Statement No. 123R;
and provided further that if the Borrower or any Consolidated Subsidiary shall
acquire or dispose of any Property during such period, then Consolidated Net
Income shall be calculated after giving pro
forma effect to such acquisition or disposition, as if such acquisition
or disposition had occurred on the first day of such period.

 

“Consolidated Subsidiaries”
means each Subsidiary of the Borrower (whether now existing or hereafter
created or acquired) the financial statements of which shall be (or should have
been) consolidated with the financial statements of the Borrower in accordance
with GAAP.

 

“Control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the ability
to exercise voting power, by contract or otherwise.  For the purposes of this definition, and
without limiting the generality of the foregoing, any Person that owns directly
or indirectly 10% or more of the Equity Interests having ordinary voting power
for the election of the directors or other governing body of a Person will be
deemed to “control” such other Person.  “Controlling”
and “Controlled” have meanings correlative thereto.

 

“Debt” means, for any
Person, the sum of the following (without duplication): (a) all
obligations of such Person for borrowed money or evidenced by bonds, bankers’
acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable, accrued expenses, liabilities or other obligations of such
Person, in each such case to pay the deferred purchase price of Property or
services; (d) all obligations under Capital Leases; (e) all
obligations under Synthetic Leases; (f) all Debt (as defined in the other
clauses of this definition) of others secured by (or for which the holder of
such Debt has an existing right, contingent or otherwise, to be secured by) a
Lien on any Property of such Person, whether or not such Debt is assumed by
such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or with respect to which such
Person otherwise assures a creditor against loss of the Debt (howsoever such
assurance shall be made) to the extent of the lesser of the amount of such Debt
and the maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be
maintained the financial position or covenants of others or to purchase the
Debt or Property of others; (i) obligations to deliver commodities, goods
or services, including, without limitation, Hydrocarbons, in consideration of
one or more advance payments, other than gas balancing arrangements in the
ordinary course of business; (j) obligations to pay for goods or services
whether or not such goods or services are

 

5

 

actually
received or utilized by such Person (other than obligations under firm
transportation or drilling contracts); (k) any Debt of a partnership for
which such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l) Disqualified
Capital Stock; and (m) the undischarged balance of any production payment
created by such Person or for the creation of which such Person directly or
indirectly received payment.  The Debt of
any Person shall include all obligations of such Person of the character
described above to the extent such Person remains legally liable in respect
thereof notwithstanding that any such obligation is not included as a liability
of such Person under GAAP.

 

“Default”
means any event or condition which constitutes an Event of Default or which
upon notice, lapse of time or both would, unless cured or waived, become an
Event of Default.

 

“Disqualified
Capital Stock” means any Equity Interest that, by its terms (or by the
terms of any security into which it is convertible or for which it is
exchangeable) or upon the happening of any event, matures or is mandatorily
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock), pursuant to a sinking fund
obligation or otherwise, or is convertible or exchangeable for Debt or
redeemable for any consideration other than other Equity Interests (which would
not constitute Disqualified Capital Stock) at the option of the holder thereof,
in whole or in part, on or prior to the date that is one year after the earlier
of (a) the Maturity Date and (b) the date on which there are no Loans
or other obligations hereunder outstanding.

 

“dollars”
or “$” refers to lawful money of the United States of America.

 

“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of the
United States of America or any state thereof or the District of Columbia.

 

“Dominion
Production Payment” means (i) the Production Payment Purchase and
Sale Agreement between Dominion Oklahoma Texas Exploration &
Production, Inc. and Dominion Natural Gas III, L.P., as sellers, and
Dominion VPP Holdings, LLC, as buyer, dated as of August 27, 2007, (ii) the
Conveyance of Term Overriding Royalty Including Assignment of Interests in Oil
and Gas Wells and Leases from Dominion Exploration &
Production, Inc. and Dominion Natural Gas III, L.P. to Dominion VPP
Holdings, LLC, dated as of August 27, 2007, and (iii) the Natural Gas
Exchange Agreement between Dominion Oklahoma Texas Exploration &
Production, Inc. and Dominion VPP Holdings, LLC dated as of August 27,
2007; in the case of each agreement referenced in clause (i), (ii) or (iii) above,
as such agreement is amended on or prior to the Effective Date.

 

“EBITDA”
means, for any period, the sum of Consolidated Net Income for such period plus
the following expenses or charges to the extent deducted from Consolidated Net
Income in such period: Interest Expense, income taxes, depreciation, depletion,
amortization and other similar charges, minus all noncash income added to
Consolidated Net Income.

 

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

 

6

 

“Environmental
Laws” means any and all Governmental Requirements pertaining in any way to
health and safety (to the extent relating to exposure to Hazardous Materials),
the environment or the preservation or reclamation of natural resources, in
effect in any and all jurisdictions in which the Borrower or any Subsidiary is
conducting or at any time has conducted business, or where any Property of the
Borrower or any Subsidiary is located, including without limitation, the Oil
Pollution Act of 1990 (“OPA”), as amended, the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control
Act, as amended, the Occupational Safety and Health Act of 1970, as amended,
the Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended,
the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, as amended,
and Hazardous Materials Transportation Act, as amended.  The term “oil” shall have the meaning
specified in OPA, the terms “hazardous substance” and “release”
(or “threatened release”) have the meanings specified in CERCLA, the
terms “solid waste” and “disposal” (or “disposed”) have
the meanings specified in RCRA and the term “oil and gas waste” shall
mean those waste that are excluded from the definition of “hazardous waste”
pursuant to 40 C.F.R. Section 261.4(b)(5) (“Section 261.4(b)(5)”);
provided, however, that (a) in the event either OPA, CERCLA, RCRA or Section 261.4(b)(5) is
amended so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment and (b) to
the extent the laws of the state or other jurisdiction in which any Property of
the Borrower or any Subsidiary is located establish a meaning for “oil,”
“hazardous substance,” “release,” “solid waste,” “disposal”
or “oil and gas waste” which is broader than that specified in either
OPA, CERCLA, RCRA or Section 261.4(b)(5), such broader meaning shall
apply.

 

“Environmental
Permit” means any permit, registration, license, approval, consent,
exemption, variance, or other authorization of a Governmental Authority
required under or issued pursuant to applicable Environmental Laws.

 

“Equity
Interests” means shares of capital stock, partnership interests, membership
interests in a limited liability company, beneficial interests in a trust or
other equity ownership interests in a Person, and any warrants, options or
other rights entitling the holder thereof to purchase or acquire any such
Equity Interest.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute.

 

“ERISA
Affiliate” means each trade or business (whether or not incorporated) which
together with the Borrower or any of its Subsidiaries would be deemed to be a “single
employer” within the meaning of section 4001(b)(1) of ERISA or subsections
(b), (c), (m) or (o) of section 414 of the Code.

 

“ERISA Event”
means (a) a reportable event described in section 4043 of ERISA and the
regulations issued thereunder, (b) the withdrawal of the Borrower or any
of its Subsidiaries or any ERISA Affiliate from a Plan during a plan year in
which it was a “substantial employer” as defined in section 4001(a)(2) of
ERISA, (c) in each case solely with respect to a Plan subject to Title IV
of ERISA, the filing of a notice of intent to terminate a Plan or the treatment
of a Plan 

 

7

 

amendment
as a termination under section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the PBGC, (e) receipt by the Borrower
or any of its Subsidiaries or any ERISA Affiliate of a notice of withdrawal
liability pursuant to Section 4202 of ERISA with respect to any
Multiemployer Plan or (f) any other event or condition which might
constitute grounds under section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan subject to Title IV of ERISA.

 

“Eurodollar”,
when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the LIBO Rate.

 

“Event of
Default” has the meaning assigned such term in Section 10.01.

 

“Excepted
Liens” means:  (a) Liens for
Taxes, assessments or other governmental charges or levies which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP; (b) Liens
in connection with workers’ compensation, unemployment insurance or other
social security, old age pension or public liability obligations which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP; (c) statutory
landlord’s liens, operators’, vendors’, carriers’, warehousemen’s, repairmen’s,
mechanics’, suppliers’, workers’, materialmen’s, construction or other like
Liens arising by operation of law in the ordinary course of business or
incident to the exploration, development, operation and maintenance of Oil and
Gas Properties each of which is in respect of obligations that are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP; (d) contractual
Liens which arise in the ordinary course of business under operating
agreements, joint venture agreements, oil and gas partnership agreements, oil
and gas leases, farm-out agreements, division orders, contracts for the sale,
transportation or exchange of oil and natural gas, unitization and pooling
declarations and agreements, area of mutual interest agreements, overriding
royalty agreements, marketing agreements, processing agreements, net profits
agreements, development agreements, gas balancing or deferred production
agreements, injection, repressuring and recycling agreements, salt water or
other disposal agreements, seismic or other geophysical permits or agreements,
and other agreements which are usual and customary in the oil and gas business
and are for claims which are not delinquent or which are being contested in
good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP, provided that any such Lien referred to in
this clause does not materially impair the use of the Property covered by such
Lien for the purposes for which such Property is held by the Borrower or any of
its Subsidiaries or materially impair the value of material Property subject
thereto; (e) Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights and
remedies and burdening only deposit accounts or other funds maintained with a
creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board and no such deposit account is intended by the Borrower or any of its
Subsidiaries to provide collateral to the depository institution; (f) easements,
restrictions, servitudes, permits, conditions, covenants, exceptions or
reservations in 

 

8

 

any
Property of the Borrower or any of its Subsidiaries for the purpose of roads,
pipelines, transmission lines, transportation lines, distribution lines for the
removal of gas, oil, coal or other minerals or timber, and other like purposes,
or for the joint or common use of real estate, rights of way, facilities and
equipment, that do not secure any monetary obligations and which in the
aggregate do not materially impair the use of such Property for the purposes of
which such Property is held by the Borrower or any of its Subsidiaries or
materially impair the value of any material Property subject thereto; (g) Liens
on cash or securities pledged to secure performance of tenders, surety and
appeal bonds, government contracts, performance and return of money bonds,
bids, trade contracts, leases, statutory obligations, regulatory obligations
and other obligations of a like nature incurred in the ordinary course of
business; (h) judgment and attachment Liens not giving rise to an Event of
Default, provided that any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceeding may be initiated shall
not have expired and no action to enforce such Lien has been commenced; and (i) Liens
arising from precautionary Uniform Commercial Code financing statement filings
entered into by the Borrower and the Subsidiaries covering Property under true
leases entered into in the ordinary course of business; provided, further that
Liens described in clauses (a) through (e) shall remain “Excepted
Liens” only for so long as no action to enforce such Lien has been commenced
and no intention to subordinate the Lien granted in favor of the Administrative
Agent and the Lenders is to be hereby implied or expressed by the permitted
existence of such Excepted Liens.

 

“Excluded
Taxes” means, with respect to the Administrative Agent, any Lender or any
other recipient of any payment to be made by or on account of any obligation of
the Borrower or any Guarantor hereunder or under any other Loan Document, (a) income
or franchise taxes imposed on (or measured by) its net income by the United
States of America or such other jurisdiction under the laws of which such
recipient is organized or in which its principal office is located or, in the
case of any Lender, in which its applicable lending office is located, (b) any
branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower or any Guarantor is
located and (c) in the case of a Foreign Lender any withholding tax that
is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party to this Agreement (or designates a new lending office)
or is attributable to such Foreign Lender’s failure to comply with Section 5.03(e),
unless such Foreign Lender (or its assignor, if any) was entitled at the time
of designation of a new lending office (or assignment) to receive additional
amounts with respect to such withholding tax pursuant to Section 5.03(a) or
Section 5.03(c).

 

“Federal
Funds Effective Rate” means, for any day, the weighted average (rounded
upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers, as published on the next succeeding Business Day by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day that is a Business Day, the average (rounded upwards, if necessary, to
the next 1/100 of 1%) of the quotations for such day for such transactions
received from three Federal funds brokers of recognized standing selected by
the Administrative Agent.

 

9

 

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

 

“Financial
Statements” means the financial statement or statements of the Borrower and
its Consolidated Subsidiaries referred to in Section 7.04(a).

 

“Foreign
Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located.  For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.

 

“Foreign
Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

 

“GAAP”
means generally accepted accounting principles in the United States of America
as in effect from time to time subject to the terms and conditions set forth in
Section 1.05.

 

“Governmental
Authority” means the government of the United States of America, any other
nation or any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government over the
Borrower or any of its Subsidiaries, any of their Properties, any Agent or any
Lender.

 

“Governmental
Requirement” means any law, statute, code, ordinance, order, determination,
rule, regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization or other directive or
requirement, whether now or hereinafter in effect, including, without
limitation, Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.

 

“Guarantors”
means the Subsidiaries of the Borrower listed on Part I of Schedule 7.14
and each other Material Domestic Subsidiary or other Domestic Subsidiary that
guarantees the Indebtedness pursuant to Section 8.14(b).

 

“Guaranty
Agreement” means an agreement executed by the Guarantors in form and
substance reasonably satisfactory to the Administrative Agent unconditionally
guarantying on a joint and several basis, payment of the Indebtedness, as the
same may be amended, modified or supplemented from time to time.

 

“Hazardous
Material” means any substance regulated or as to which liability might
arise under any applicable Environmental Law and including, without
limitation:  (a) any chemical,
compound, material, product, byproduct, substance or waste defined as or
included in the definition or meaning of “hazardous substance,” “hazardous
material,” “hazardous waste,” “solid waste,” “toxic waste,” “extremely
hazardous substance,” “toxic substance,” “contaminant,” “pollutant,” or words
of similar meaning or import found in any applicable Environmental Law; (b) petroleum
hydrocarbons, petroleum products, petroleum substances, natural gas, oil, oil
and 

 

10

 

gas
waste, crude oil, and any components, fractions, or derivatives thereof; and (c) radioactive
materials, asbestos containing materials, polychlorinated biphenyls, or radon.

 

“Highest
Lawful Rate” means, with respect to each Lender, the maximum nonusurious
interest rate, if any, that at any time or from time to time may be contracted
for, taken, reserved, charged or received on the Notes or on other Indebtedness
under laws applicable to such Lender which are presently in effect or, to the
extent allowed by law, under such applicable laws which may hereafter be in effect
and which allow a higher maximum nonusurious interest rate than applicable laws
allow as of the date hereof.

 

“Hydrocarbon
Interests” means all rights, titles, interests and estates now or hereafter
acquired in and to oil and gas leases, oil, gas and mineral leases, or other
liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty
and royalty interests, net profit interests and production payment interests,
including any reserved or residual interests of whatever nature.

 

“Hydrocarbons”
means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined
or separated therefrom.

 

“Indebtedness”
means, without duplication, any and all amounts owing or to be owing by the
Borrower or any Guarantor (whether direct or indirect (including those acquired
by assumption), absolute or contingent, due or to become due, now existing or
hereafter arising): (a) to the Administrative Agent or any Lender under
any Loan Document and (b) all renewals, extensions and/or rearrangements
of any of the above.

 

“Indemnified
Taxes” means Taxes other than Excluded Taxes.

 

“Intercreditor
Agreement” means that certain Intercreditor Agreement dated as of the
Effective Date entered into by and among BNP Paribas, as administrative agent
for the lenders pursuant to the Senior Revolving Credit Documents, the
Administrative Agent, and the Borrower, as the same may from time to time be
amended, modified, supplemented or restated.

 

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

 

“Interest
Expense” means, for any period, the sum (determined without duplication) of
the aggregate gross interest expense of the Borrower and the Consolidated
Subsidiaries for such period, including (a) to the extent included in
interest expense under GAAP:  (i) amortization
of debt discount, (ii) capitalized interest and (iii) the portion of
any payments or accruals under Capital Leases allocable to interest expense,
plus the portion of any payments or accruals under Synthetic Leases allocable
to interest expense whether or not the same constitutes interest expense under
GAAP and (b) cash dividend payments by the Borrower in respect of any
Disqualified Capital Stock; but excluding non-cash gains, losses or adjustments
under FASB Statement No. 133 as a result of changes in the fair market
value of derivatives.

 

11

 

“Interest
Period” means with respect to any Eurodollar Tranche, the period commencing
on the date of such Tranche and ending on the numerically corresponding day in
the calendar month that is one, two, three or six months thereafter, as the Borrower
may elect; provided, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period pertaining to a
Eurodollar Tranche that commences on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof, the date of a Tranche
initially shall be the date on which such Loans comprising such Tranche are
made and thereafter shall be the effective date of the most recent conversion
or continuation of such Tranche.

 

“Investment”
means, for any Person: (a) the acquisition (whether for cash, Property,
services or securities or otherwise) of Equity Interests of any other Person or
any unfunded subscription agreement to make any such acquisition or fund
capital calls (including, without limitation, any “short sale” or any sale of
any securities at a time when such securities are not owned by the Person
entering into such short sale, but excluding any unconsummated purchase and
sale agreements to purchase all or substantially all the Equity Interests of
Persons owning Oil and Gas Properties); (b) the making of any deposit
with, or advance, loan or capital contribution to, assumption of Debt of,
purchase or other acquisition of any other Debt or equity participation or
interest in, or other extension of credit to, any other Person (including the
purchase of Property from another Person subject to an understanding or
agreement, contingent or otherwise, to resell such Property to such Person, but
excluding any such advance, loan or extension of credit having a term not
exceeding ninety (90) days representing the purchase price of inventory or supplies
sold by such Person in the ordinary course of business); (c) the purchase
or acquisition (in one or a series of transactions) of Property of another
Person that constitutes a business unit or (d) the entering into of any
guarantee of, or other contingent obligation (including the deposit of any
Equity Interests to be sold) with respect to, Debt or other liability of any
other Person and (without duplication) any amount committed to be advanced,
lent or extended to such Person.

 

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

 

“Lenders”
means the Persons listed on Annex I and any Person that shall have become a
party hereto pursuant to an Assignment and Assumption, other than any such
Person that ceases to be a party hereto pursuant to an Assignment and
Assumption.

 

“LIBO
Rate” means, with respect to any Eurodollar Borrowing for any Interest
Period, the rate per annum determined on the basis of the rate for deposits in
dollars for a period equal to such Interest Period commencing on the first day
of such Interest Period appearing on the Reuters Screen LIBOR01 Page as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period.  In the event that such
rate does not appear on such page (or otherwise on such screen), the “LIBO
Rate” shall be determined by reference to such other comparable publicly
available service for displaying eurodollar rates as may be selected by the 

 

12

 

Administrative Agent or, in the absence
of such availability, by reference to the rate at which the Administrative
Agent is offered dollar deposits at or about 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period in the interbank
eurodollar market where its eurodollar and foreign currency and exchange
operations are then being conducted for delivery on the first day of such
Interest Period for the number of days comprised therein.

 

“Lien”
means any interest in Property securing an obligation owed to, or a claim by, a
Person other than the owner of the Property, whether such interest is based on
the common law, statute or contract, and whether such obligation or claim is
fixed or contingent, and including but not limited to (a) the lien or
security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes or (b) production payments and the like
payable out of Oil and Gas Properties. 
The term “Lien” shall include easements, restrictions,
servitudes, permits, conditions, covenants, exceptions or reservations. For the
purposes of this Agreement, the Borrower and its Subsidiaries shall be deemed
to be the owner of any Property which they have acquired or hold subject to a
conditional sale agreement, or leases under a financing lease or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person in a transaction intended to create a financing.

 

“Loan
Documents” means this Agreement, the Notes, Security Instruments and the
Intercreditor Agreement.

 

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

 

“Majority
Lenders” means, at any time while no Loans are outstanding, Lenders having
at least sixty-six and two-thirds percent (66-2/3%) of the Commitments; and at
any time while any Loans are outstanding, Lenders holding at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding principal amount of the
Loans (without regard to any sale by a Lender of a participation in any Loan
under Section 12.04(c)).

 

“Managers”
means the members of the Board of Managers or Board of Directors (however
designated from time to time) of the Borrower as constituted from time to time.

 

“Material
Adverse Effect” means a material adverse change in, or material adverse
effect on (a) the business, operations, Property, condition (financial or
otherwise) or prospects of the Borrower and the Guarantors taken as a whole, (b) the
ability of the Borrower, any of its Subsidiaries or any Guarantor to perform
any of its obligations under any Loan Document to which it is a party, (c) the
validity or enforceability of any Loan Document or (d) the rights and
remedies of or benefits available to the Administrative Agent, any other Agent
or any Lender under any Loan Document.

 

“Material
Domestic Subsidiary” means, as of any date, any Domestic Subsidiary that (a) is
a Wholly-Owned Subsidiary and (b) together with its Subsidiaries, owns
Property having a fair market value of $10,000,000 or more.

 

13

 

“Material
Indebtedness” means Debt (other than the Loans), or obligations in respect
of one or more Swap Agreements, of any one or more of the Borrower and its
Subsidiaries in an aggregate principal amount exceeding $10,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower or any
of its Subsidiaries in respect of any Swap Agreement at any time shall be the
maximum aggregate amount (giving effect to any netting agreements) that the
Borrower or such Subsidiary would be required to pay if such Swap Agreement
were terminated at such time.

 

“Maturity
Date” means July 31, 2009.

 

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto that is a
nationally recognized rating agency.

 

“Mortgaged
Property” means any Property owned by the Borrower or any Guarantor which
is subject to the Liens existing and to exist under the terms of the Security
Instruments.

 

“Multiemployer
Plan” means a multiemployer plan as defined in section 3(37) or 4001 (a)(3) of
ERISA to which any Borrower or any Subsidiary or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within the six calendar
years preceding the date hereof, made or accrued an obligation to make
contributions.

 

“Net Cash
Proceeds” means (a) in connection with any issuance or sale of Equity
Interests, Debt securities, Casualty Events or the incurrence of Debt, the cash
proceeds received from such issuance or incurrence, net of attorneys’ fees,
investment banking fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred in
connection therewith; and (b) in connection with any Asset Sale, the cash
proceeds thereof (including cash proceeds subsequently received (as and when
received) in respect of noncash consideration initially received), net
of (i) selling and other expenses (including reasonable broker’s fees or
commissions, legal fees, transfer and similar taxes, and the Borrower’s good
faith estimate of income taxes actually paid or payable in connection with such
sale), (ii) amounts provided as a reserve, in accordance with GAAP,
against any liabilities under any indemnification obligations or purchase price
adjustment associated with such Asset Sale (provided that,
to the extent and at the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds) and (iii) any amount
payable in respect of any Debt for borrowed money which is secured by the asset
sold in such Asset Sale and which is required to be repaid with such proceeds
(excluding any such Debt assumed by the purchaser of such asset).

 

“Notes”
means the promissory notes of the Borrower described in Section 2.02(d) and
being substantially in the form of Exhibit A, together with all
amendments, modifications, replacements, extensions and rearrangements thereof.

 

“Oil and Gas
Properties” means (a) Hydrocarbon Interests; (b) the Properties
now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all
presently existing or future unitization, pooling agreements and declarations
of pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental
Authority) which may affect all or any portion of the Hydrocarbon Interests; 

 

14

 

(d) all
operating agreements, contracts and other agreements, including production
sharing contracts and agreements, which relate to any of the Hydrocarbon
Interests or the production, sale, purchase, exchange or processing of
Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all
Hydrocarbons in and under and which may be produced and saved or attributable
to the Hydrocarbon Interests, including all oil in tanks, and all rents,
issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; (f) all tenements,
hereditaments, appurtenances and Properties in any manner appertaining,
belonging, affixed or incidental to the Hydrocarbon Interests and (g) all
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such
Hydrocarbon Interests or Property (excluding drilling rigs, automotive
equipment, rental equipment or other personal Property which may be on such
premises for the purpose of drilling a well or for other similar temporary
uses) and including any and all oil wells, gas wells, injection wells or other
wells, buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.

 

“Other Taxes”
means any and all present or future stamp or documentary taxes or any other
excise or Property taxes, charges or similar levies arising from any payment
made hereunder or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement and any other Loan Document.

 

“Participant”
has the meaning set forth in Section 12.04(c)(i).

 

“PBGC”
means the Pension Benefit Guaranty Corporation, or any successor thereto.

 

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

 

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

 

“Plan”
means any employee pension benefit plan, as defined in section 3(2) of
ERISA, which (a) is currently or hereafter sponsored or maintained by the
Borrower, any of its Subsidiaries or an ERISA Affiliate or (b) was at any
time during the six calendar years preceding the date hereof, sponsored or
maintained by the Borrower, any of its Subsidiaries or an ERISA Affiliate.

 

“Prime Rate”
means the rate of interest per annum publicly announced from time to time by
BNP Paribas as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.  Such rate is set by BNP Paribas as a general
reference rate of 

 

15

 

interest,
taking into account such factors as BNP Paribas may deem appropriate; it being
understood that many of BNP Paribas’s commercial or other loans are priced in
relation to such rate, that it is not necessarily the lowest or best rate
actually charged to any customer and that BNP Paribas may make various
commercial or other loans at rates of interest having no relationship to such
rate.

 

“Property”
means any interest in any kind of property or asset, whether real, personal or
mixed, or tangible or intangible, including, without limitation, cash,
securities, accounts and contract rights.

 

“Proved
Developed Producing Properties” means Oil and Gas Properties which are
categorized as “Proved Reserves” that are both “Developed” and “Producing”, as
such terms are defined in the Definitions for Oil and Gas Reserves as
promulgated by the Society of Petroleum Engineers (or any generally recognized
successor) as in effect at the time in question.

 

“Proved
Reserves” means “Proved Reserves” as defined in the Definitions for Oil and
Gas Reserves promulgated by the Society of Petroleum Engineers (or any
generally recognized successor) as in effect at the time in question.

 

“PV”
means the net present value, discounted at 10% per annum, of the future net
revenues expected to accrue to the Borrower’s and its Subsidiaries’ collective
interests in Proved Reserves expected to be produced from their Oil and Gas
Properties during the remaining expected economic lives of such reserves.  Each calculation of such expected future net
revenues shall be made in accordance with the then existing standards of the
Society of Petroleum Engineers, provided that in any event (a) appropriate
deductions shall be made for severance and ad valorem taxes, and for operating,
gathering, transportation and marketing costs required for the production and
sale of such reserves, (b) appropriate adjustments shall be made for
hedging operations, provided that Swap Agreements with non-investment grade
counterparties shall not be taken into account to the extent that such Swap
Agreements improve the position of or otherwise benefit the Borrower or any of
its Subsidiaries, (c) the pricing assumptions used in determining net
present value for any particular reserves shall be based upon the following
price decks:  (i) for natural gas,
the quotation for deliveries of natural gas for each such year from the New
York Mercantile Exchange for Henry Hub, provided that with respect to
quotations for calendar years after the fifth calendar year, the quotation for
the fifth calendar year shall be applied and (ii) for crude oil, the
quotation for deliveries of West Texas Intermediate crude oil for each such
calendar year from the New York Mercantile Exchange for Cushing, Oklahoma,
provided that with respect to quotations for calendar years after the fifth
calendar year, the quotation for the fifth calendar year shall be applied, and (d) the
cash-flows derived from the pricing assumptions set forth in clauses (b) and
(c) above shall be further adjusted to account for the historical basis
differentials for each month during the preceding 12-month period calculated by
comparing realized crude oil and natural gas prices to Cushing, Oklahoma and
Henry Hub NYMEX prices for each month during such period.

 

“Redemption”
means with respect to any Debt, the repurchase, redemption, prepayment,
repayment or defeasance or any other acquisition or retirement for value (or
the segregation of funds with respect to any of the foregoing) of any such
Debt.  “Redeem” has the
correlative meaning thereto.

 

16

 

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

 

“Related
Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and
advisors (including attorneys, accountants and experts) of such Person and such
Person’s Affiliates.

 

“Release”
means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing.

 

“Remedial
Work” has the meaning assigned such term in Section 8.10(a).

 

“Reserve
Report” means a report, in form and substance reasonably satisfactory to
the Administrative Agent, setting forth, as of each December 31st
or June 30th (or any other specified “as of” date), the oil and
gas reserves attributable to the Oil and Gas Properties of the Borrower and its
Subsidiaries, together with a projection of the rate of production and future
net income, taxes, operating expenses and capital expenditures with respect
thereto as of such date, based upon the economic assumptions consistent with
the Administrative Agent’s lending requirements at the time.

 

“Responsible
Officer” means, as to any Person, the Chief Executive Officer, the
President, any Financial Officer or any Vice President of such Person.  Unless otherwise specified, all references to
a Responsible Officer herein means a Responsible Officer of the Borrower.

 

“Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other Property) with respect to any Equity Interests in the
Borrower or any of its Subsidiaries, or any payment (whether in cash,
securities or other Property), including any sinking fund or similar deposit,
on account of the purchase, redemption, retirement, acquisition, cancellation
or termination of any such Equity Interests in the Borrower or any of its
Subsidiaries or any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any of its Subsidiaries.

 

“SEC”
means the Securities and Exchange Commission or any successor Governmental
Authority.

 

“Security
Instruments” means the Guaranty Agreement, if any, mortgages, deeds of
trust and other agreements, instruments or certificates described or referred
to in Exhibit C, and any and all other agreements, instruments, consents
or certificates now or hereafter executed and delivered by the Borrower or any
other Person (other than participation or similar agreements between any Lender
and any other lender or creditor with respect to any Indebtedness pursuant to
this Agreement) in connection with, or as security for the payment or
performance of the Indebtedness, the Notes or this Agreement, as such
agreements may be amended, modified, supplemented or restated from time to
time.

 

“Senior
Revolving Credit Agreement” means that certain Third Amended and Restated
Credit Agreement dated as of August 31, 2007 among the Borrower, as
borrower, BNP Paribas, as administrative agent and the other agents and lenders
from time to time parties thereto, as 

 

17

 

amended
by that certain First Amendment to Third Amended and Restated Credit Agreement
dated as of November 2, 2007, and as hereafter amended, supplemented,
modified, restated, refinanced or replaced from time to time.

 

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

 

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

 

“S&P”
means Standard & Poor’s Ratings Group, a division of The McGraw-Hill
Companies, Inc., and any successor thereto that is a nationally recognized
rating agency.

 

“Subsidiary”
means: (a) any Person of which at least a majority of the outstanding
Equity Interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors, manager or other governing body of such
Person (irrespective of whether or not at the time Equity Interests of any
other class or classes of such Person shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by the Borrower or one or more of its
Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any
partnership of which the Borrower or any of its Subsidiaries is a general
partner.  Unless otherwise indicated
herein, each reference to the term “Subsidiary” means a Subsidiary of
the Borrower.

 

“Swap
Agreement” means any agreement with respect to any swap, forward, future or
derivative transaction or option or similar agreement, whether exchange traded,
“over-the-counter” or otherwise, involving, or settled by reference to, one or
more rates, currencies, commodities, equity or debt instruments or securities,
or economic, financial or pricing indices or measures of economic, financial or
pricing risk or value or any similar transaction or any combination of these
transactions; provided that no phantom stock or similar plan providing for
payments only on account of services provided by current or former directors,
officers, employees or consultants of the Borrower or any of its Subsidiaries
shall be a Swap Agreement.

 

“Synthetic
Leases” means, in respect of any Person, all leases which shall have been,
or should have been, in accordance with GAAP, treated as operating leases on
the financial statements of the Person liable (whether contingently or
otherwise) for the payment of rent thereunder and which were properly treated
as indebtedness for borrowed money for purposes of U.S. federal income taxes,
if the lessee in respect thereof is obligated to either purchase for an amount
in excess of, or pay upon early termination an amount in excess of, 80% of the
residual value of the Property subject to such operating lease upon expiration
or early termination of such lease.

 

“Taxes”
means any and all present or future taxes, levies, imposts, duties, deductions,
charges or withholdings imposed by any Governmental Authority.

 

“Total Debt”
means, at any date, all Debt of the Borrower and its Consolidated Subsidiaries
on a consolidated basis, excluding (i) non-cash obligations under FAS 133
or 143 

 

18

 

and
(ii) accounts payable and other accrued liabilities (for the deferred
purchase price of Property or services) from time to time incurred in the
ordinary course of business which are not greater than sixty (60) days past the
date of invoice or delinquent or which are being contested in good faith by
appropriate action and for which adequate reserves have been maintained in
accordance with GAAP.

 

“Total
Reserve Value” means at any time the PV attributable to Proved Reserves as
most recently determined and certified to the Lenders in accordance with Section 2.07,
as the same may be adjusted from time to time pursuant to Section 8.13(c) or
Section 9.12(d).

 

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

 

“Transactions”
means, with respect to (a) the Borrower, the execution, delivery and
performance by the Borrower of this Agreement, and each other Loan Document and
Acquisition Document to which it is a party, the Acquisition, the borrowing of
Loans, the use of the proceeds thereof, and the grant of Liens by the Borrower
on Mortgaged Properties and other Properties pursuant to the Security
Instruments and (b) any Guarantor, the execution,
delivery and performance by such Guarantor of each Loan Document and
Acquisition Document to which it is a party, the Acquisition, the guaranteeing
of the Indebtedness and the other obligations under the Guaranty Agreement by
such Guarantor and such Guarantor’s grant of the security interests and
provision of collateral under the Security Instruments, and the grant of Liens
by such Guarantor on Mortgaged Properties and other Properties pursuant to the
Security Instruments.

 

“Type”,
when used in reference to any Loan or Tranche, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Tranche is determined by
reference to the Alternate Base Rate or the LIBO Rate.

 

“Wholly-Owned
Subsidiary” means any Subsidiary of which all of the outstanding Equity
Interests (other than any directors’ qualifying shares mandated by applicable
law), on a fully-diluted basis, are owned by the Borrower or one or more of the
Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the
Wholly-Owned Subsidiaries.

 

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

 

Section 1.04                                Terms Generally.  The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms.  The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”.  The word “will” shall be construed to have
the same meaning and effect as the word “shall”.  Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth in the Loan Documents), (b) any reference herein to any law
shall be construed as referring to such law as amended, modified, codified or
reenacted, in whole or in part, and in effect from time to time, (c) any
reference herein to any Person shall be construed to 

 

19

 

include such Person’s
successors and assigns (subject to the restrictions contained in the Loan
Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof, (e) with respect to the
determination of any time period, the word “from” means “from and including”
and the word “to” means “to and including” and (f) any reference herein to
Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer
to Articles and Sections of, and Annexes, Exhibits and Schedules to, this
Agreement.  No provision of this
Agreement or any other Loan Document shall be interpreted or construed against
any Person solely because such Person or its legal representative drafted such
provision.

 

Section 1.05                                Accounting
Terms and Determinations; GAAP.  Unless otherwise specified herein, all terms
of an accounting or financial nature shall be construed in accordance with
GAAP, as in effect from time to time; provided that, if the Borrower
notifies the Administrative Agent that the Borrower requests an amendment to
any provision hereof to eliminate the effect of any change occurring after the
date hereof in GAAP or in the application thereof on the operation of such
provision (or if the Administrative Agent notifies the Borrower that the
Majority Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until 
such notice shall have been withdrawn or such provision  amended in accordance herewith.

 

ARTICLE II

The Credits

 

Section 2.01                                Term Loans.  Subject to the terms and conditions set forth
herein, each Lender agrees to make a Loan on the Effective Date in dollars to
the Borrower to fund the Acquisition in an aggregate principal amount equal to
such Lender’s Commitment.  The
Commitments are not revolving and amounts repaid or prepaid may not be
re-borrowed under any circumstance.

 

Section 2.02                                Loans and
Tranches.

 

(a)                                  Loans; Several
Obligations.  Each Loan
shall be made as part of a Tranche consisting of Loans by each Lender ratably
in accordance with its respective Commitment. 
The failure of any Lender to fund its Loan shall not relieve any other
Lender of its obligations hereunder; provided that the Commitments are several
and no Lender shall be responsible for any other Lender’s failure to fund its
Loan as required.

 

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

 

20

 

(c)                                  Minimum Amounts.  At the commencement of each Interest Period
for any Eurodollar Tranche, such Tranche shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000.  At the time that each ABR Tranche is made, such
Tranche shall be in an aggregate amount that is an integral multiple of
$250,000 and not less than $1,000,000. 
Tranches of more than one Type may be outstanding at the same time;
provided that there shall not at any time be more than a total of four (4) Eurodollar
Tranches outstanding.  Notwithstanding
any other provision of this Agreement, the Borrower shall not be entitled to
request, or to elect to convert or continue, any Tranche if the Interest Period
requested with respect thereto would end after the Maturity Date.

 

(d)                                 Notes.  If a Lender shall make a written request to
the Administrative Agent and the Borrower to have its Loan evidenced by a
promissory note, then the Borrower shall executed and deliver a single
promissory note of the Borrower in substantially the form of Exhibit A
payable to the order of such Lender in a principal amount equal to such Lender’s
Commitment and otherwise duly completed. 
The date, amount, Type, interest rate and, if applicable, Interest
Period of each Tranche consisting of a portion of the Loan made by each Lender,
and all payments made on account of the principal thereof, may be recorded by
such Lender on its books for its Note, and, prior to any transfer, may be
endorsed by such Lender on a schedule attached to such Note or any continuation
thereof or on any separate record maintained by such Lender.  Failure to make any such notation or to
attach a schedule shall not affect any Lender’s or the Borrower’s rights or
obligations in respect of its Loan or affect the validity of such transfer by
any Lender of its Note.

 

Section 2.03                                Requests for
the Loans.  To request
a Loan, the Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurodollar Tranche, not later than 11:00 a.m.,
Houston time, three Business Days before the Effective Date or (b) in the
case of an ABR Tranche, not later than 12:00 noon, Houston time, on the
Effective Date.  Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Borrowing Request
and signed by the Borrower.  Each such
telephonic and written Borrowing Request shall specify the following
information in compliance with Section 2.02:

 

(i)                                     the aggregate
amount of the requested Loans;

 

(ii)                                  the date of
such Loan, which shall be the Effective Date;

 

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

 

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

 

(v)                                 the location
and number of the Borrower’s account to which funds are to be disbursed, which
shall comply with the requirements of Section 2.05.

 

21

 

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

 

Promptly
following receipt of a Borrowing Request in accordance with this Section 2.03,
the Administrative Agent shall advise each Lender of the details thereof and of
the amount of such Lender’s Loan to be made.

 

Section 2.04                                Interest
Elections.

 

(a)                                  Conversion and
Continuance.  Each
Tranche initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurodollar Tranche, shall have an initial Interest Period
as specified in such Borrowing Request. 
Thereafter, the Borrower may elect to convert such Tranche to a
different Type or to continue such Tranche and, in the case of a Eurodollar
Tranche, may elect Interest Periods therefor, all as provided in this Section 2.04.  The Borrower may elect different options with
respect to different portions of the affected Tranche, in which case each such
portion shall be allocated ratably among the Lenders holding the Loans
comprising such Tranche, and the Loans comprising each such portion shall be
considered a separate Tranche.

 

(b)                                 Interest
Election Requests.  To make an
election pursuant to this Section 2.04, the Borrower shall notify the
Administrative Agent of such election by telephone by the time that a Borrowing
Request would be required under Section 2.03 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. 
Each such telephonic Interest Election Request shall be irrevocable and
shall be confirmed promptly by hand delivery or telecopy to the Administrative
Agent of a written Interest Election Request and signed by the Borrower.

 

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

 

(i)                                     the Tranche to
which such Interest Election Request applies and, if different options are
being elected with respect to different portions thereof, the portions thereof
to be allocated to each resulting Tranche (in which case the information to be
specified pursuant to Section 2.04(c)(iii) and (iv) shall be
specified for each resulting Tranche);

 

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

 

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

 

(iv)                              if the
resulting Tranche is a Eurodollar Tranche, the Interest Period to be applicable
thereto after giving effect to such election, which shall be a period
contemplated by the definition of the term “Interest Period”.

 

22

 

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

 

(e)                                  Notice to
Lenders by the Administrative Agent.  Promptly following receipt of an Interest
Election Request, the Administrative Agent shall advise each Lender of the
details thereof and of such Lender’s portion of each resulting Tranche.

 

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

 

Section 2.05                                Funding of
Tranches.

 

(a)                                  Funding by
Lenders.  Each Lender shall make its
Loan on the Effective Date by wire transfer of immediately available funds by
1:00 p.m., Houston time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders.  The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in
like funds, to an account of the Borrower and designated by the Borrower in
such Borrowing Request.  Nothing herein
shall be deemed to obligate any Lender to obtain the funds for its Loan in any
particular place or manner or to constitute a representation by any Lender that
it has obtained or will obtain the funds for its Loan in any particular place
or manner.

 

(b)                                 Presumption of
Funding by the Lenders. 
Unless the Administrative Agent shall have received notice from a Lender
prior to the Effective Date that such Lender will not make available to the
Administrative Agent such Lender’s Loan, the Administrative Agent may assume
that such Lender has made its Loan available on such date in accordance with Section 2.05(a) and
may, in reliance upon such assumption, make available to the Borrower a
corresponding amount.  In such event, if
a Lender has not in fact made its Loan available to the Administrative Agent,
then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, the greater of
the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation
or (ii) in the case of the Borrower, the interest rate applicable to ABR
Tranches.  If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan.

 

23

 

Section 2.06                                Termination.  The Commitments shall terminate on the
Effective Date.  Any portion of the
Commitments not borrowed on the Effective Date shall terminate.

 

Section 2.07                                Total Reserve
Value.  Subject to interim adjustment
under Section 8.13(c) and Section 9.12(d), the initial Total
Reserve Value shall be $4,600,000,000.00. 
The Borrower shall deliver to the Administrative Agent a certificate, in
form reasonably satisfactory to the Administrative Agent, no later than March 15th
and September 15th of each year, commencing March 15,
2008, reflecting the Total Reserve Value as of the immediately preceding December 31st
or June 30th. In addition, the Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the
direction of the Majority Lenders, by notifying the Borrower thereof, each
elect to require the Total Reserve Value be determined one additional time on a
specified “as of” date between such regular determinations (which shall be the
first day of a calendar month following the date of such notice), in which
event the Borrower shall deliver to the Administrative Agent a certificate, in
form reasonably satisfactory to the Administrative Agent, no later than three
months after such specified date reflecting the Total Reserve Value as of such
specified date.  The Borrower shall
calculate the Total Reserve Value based upon the applicable definitions of this
Agreement, and provide with each such certificate the Reserve Report and other
information used by the Borrower in calculating the Total Reserve Value.

 

Upon
receipt of such certificate, the Administrative Agent shall promptly review
such certificate and, within five (5) Business Days, confirm to the
Borrower and the Lenders that (i) the calculations used to determine the
Total Reserve Value were based upon the pricing and other requirements set
forth in the definition of Total Reserve Value and (ii) no mathematical or
other errors or omissions have been made in such calculation.  If discrepancies or errors under (i) or (ii) are
ascertained to exist, the Administrative Agent and the Borrower shall cooperate
to promptly calculate the proper amount of the Total Reserve Value.  Otherwise, upon confirmation of such amount
as the Total Reserve Value, such amount will be the Total Reserve Value until
next adjusted or redetermined in accordance with the terms of this Agreement.

 

Section 2.08                                Intercreditor
Agreement.  The Loans,
the Notes, this Agreement and the other Loan Documents; the rights and remedies
of the Lenders and the Administrative Agent hereunder and thereunder and the
Liens created thereby are subject to the Intercreditor Agreement.

 

ARTICLE III

Payments of Principal and Interest; Prepayments; Fees

 

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

 

Section 3.02                                Interest.

 

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

 

24

 

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

 

(c)                                  Post-Default
Rate.  Notwithstanding the foregoing,
if an Event of Default has occurred and is continuing, or if any principal of
or interest on any Loan or any fee or other amount payable by the Borrower or
any Guarantor hereunder or under any other Loan Document is not paid when due,
whether at stated maturity, upon acceleration or otherwise, then all Loans
outstanding, in the case of an Event of Default, and such overdue amount, in
the case of a failure to pay amounts when due, shall bear interest, after as
well as before judgment, at a rate per annum equal to two percent (2%) plus the
rate applicable to ABR Tranches as provided in Section 3.02(a), but in no
event to exceed the Highest Lawful Rate.

 

(d)                                 Interest
Payment Dates.  Accrued
interest on each Loan shall be payable in arrears on: (i) with respect to
any ABR Tranche, the last day of each March, June, September and December;
(ii) with respect to any Eurodollar Tranche, the last day of the Interest
Period applicable to the Borrowing of which such Loan is a part but in all
cases to be paid at least every three months and (iii) in any case, on the
Maturity Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall
be payable on demand, (ii) in the event of any prepayment of principal of
any Loan, accrued interest on the principal amount prepaid shall be payable on
the date of such prepayment, and (iii) in the event of any conversion of
any Eurodollar Tranche prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion.

 

(e)                                  Interest Rate
Computations.  All
interest hereunder shall be computed on the basis of a year of 360 days, unless
such computation would exceed the Highest Lawful Rate, in which case interest
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), except that interest computed by reference to the Alternate Base Rate
shall be computed on the basis of a year of 365 days (or 366 days in a leap
year), and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).  The applicable Alternate Base Rate or LIBO
Rate shall be determined by the Administrative Agent, and such determination
shall be conclusive absent manifest error, and be binding upon the parties
hereto.

 

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

 

(a)                                  the
Administrative Agent determines (which determination shall be conclusive absent
manifest error) that adequate and reasonable means do not exist for
ascertaining the LIBO Rate for such Interest Period; or

 

(b)                                 the
Administrative Agent is advised by the Majority Lenders that the LIBO Rate for
such Interest Period will not adequately and fairly reflect the cost to such
Lenders of making or maintaining a portion of their Loans included in such
Tranche for such Interest Period;

 

25

 

then
the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Tranche to, or
continuation of any Tranche as, a Eurodollar Tranche shall be ineffective, and (ii) if
any Borrowing Request requests a Eurodollar Tranche, such Tranche shall be made
as an ABR Tranche.

 

Section 3.04                                Optional Prepayments.

 

(a)                                  The Borrower
shall have the right at any time and from time to time to prepay any Borrowing
in whole or in part, subject to prior notice in accordance with Section 3.04(b).

 

(b)                                 Notice and
Terms of Optional Prepayment.  The Borrower shall notify the Administrative
Agent by telephone (confirmed by telecopy) of any prepayment hereunder (i) in
the case of prepayment of a Eurodollar Tranche, not later than 12:00 noon,
Houston time, three Business Days before the date of prepayment, or (ii) in
the case of prepayment of an ABR Tranche, not later than 12:00 noon, Houston
time, one Business Day before the date of prepayment.  Each such notice shall be irrevocable and
shall specify the prepayment date and the principal amount of the Loans or portion
thereof to be prepaid.  Promptly
following receipt of any such notice, the Administrative Agent shall advise the
Lenders of the contents thereof.  Each
prepayment of a Tranche shall be applied ratably to the Loans of all Lenders in
respect of such Tranche.  Prepayments
shall be accompanied by accrued interest to the extent required by Section 3.02.

 

Section 3.05                                Mandatory
Prepayments

 

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

 

(i)                                     100% of the Net
Cash Proceeds of any Debt incurrence of the Borrower or any of its Subsidiaries
pursuant to Section 9.02(i) or 9.02(j) (but only, in the case of
9.02(j), to the extent such Debt exceeds $10,000,000 in the aggregate), or of
the sale or issuance of any Equity Interests of the Borrower.  Such prepayment shall be made no later than
the next Business Day after the receipt of such proceeds.

 

(ii)                                  100% of the Net
Cash Proceeds of any Casualty Event related to the Borrower or any of its
Subsidiaries. Such prepayment shall be made no later than the next Business Day
after the receipt of such proceeds.

 

(iii)                               100% of the Net
Cash Proceeds of any Asset Sale.  Such
prepayment shall be made no later than the next Business Day after the receipt
of such proceeds.

 

(b)                                 Notwithstanding
anything herein to the contrary, (x) if the terms of the Senior Revolving
Credit Agreement require that any Net Cash Proceeds referred to in Section 3.05(a)(i) through
(iii) be applied to the obligations under the Senior Revolving Credit
Agreement, then prepayment under Sections 3.05(a)(i) through (iii) shall
only be required to the 

 

26

 

extent any Net Cash Proceeds
remain after any such application (taking into consideration any waiver or
reduction of such requirement) and (y) if not required as a prepayment
pursuant to clause (x), then any Net Cash Proceeds received from the issuance
of the Permanent Securities shall first be applied to prepay the Loans.

 

Section 3.06                                Fees.  The Borrower agrees to pay to the
Administrative Agent, for its own account, fees payable in the amounts and at
the times separately agreed upon between the Borrower and the Administrative
Agent.

 

ARTICLE IV

Payments; Pro Rata Treatment; Sharing of Set-offs

 

Section 4.01                                Payments
Generally; Pro Rata Treatment; Sharing of Set-offs.

 

(a)                                  Payments by the
Borrower.  The
Borrower shall make each payment required to be made by it hereunder (whether
of principal, interest or fees, or of amounts payable under Section 5.01, Section 5.02,
Section 5.03 or otherwise) prior to 1:00 p.m., Houston time, on the
date when due, in immediately available funds, without defense, deduction,
recoupment, set-off or counterclaim. 
Fees, once paid, shall be fully earned and shall not be refundable under
any circumstances, absent manifest error. 
Any amounts received after such time on any date may, in the discretion
of the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon.  All such payments shall be made to the
Administrative Agent at its offices specified in Section 12.01, as
expressly provided herein and except that payments pursuant to Section 5.01,
Section 5.02, Section 5.03 and Section 12.03 shall be made
directly to the Persons entitled thereto. 
The Administrative Agent shall distribute any such payments received by
it for the account of any other Person to the appropriate recipient promptly
following receipt thereof.  If any
payment hereunder shall be due on a day that is not a Business Day, the date
for payment shall be extended to the next succeeding Business Day, and, in the
case of any payment accruing interest, interest thereon shall be payable for
the period of such extension.  All
payments hereunder shall be made in dollars.

 

(b)                                 Application of
Insufficient Payments.  If
at any time insufficient funds are received by and available to the
Administrative Agent to pay fully all amounts of principal, interest and fees
then due hereunder, such funds shall be applied (i) first, towards payment
of interest and fees then due hereunder, ratably among the parties entitled
thereto in accordance with the amounts of interest and fees then due to such
parties, and (ii) second, towards payment of principal then due hereunder,
ratably among the parties entitled thereto in accordance with the amounts of
principal then due to such parties.

 

(c)                                  Sharing of
Payments by Lenders.  If any
Lender shall, by exercising any right of set-off or counterclaim or otherwise,
obtain payment in respect of any principal of or interest on its Loan resulting
in such Lender receiving payment of a greater proportion of the aggregate
amount of its Loan and accrued interest thereon than the proportion received by
any other Lender, then the Lender receiving such greater proportion shall purchase
(for cash at face value) participations in the Loans of other Lenders to the
extent necessary so that the benefit of all such payments shall be shared by
the Lenders ratably in accordance with the aggregate 

 

27

 

amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such
participations are purchased and all or any portion of the payment giving rise
thereto is recovered, such participations shall be rescinded and the purchase
price restored to the extent of such recovery, without interest, and (ii) the
provisions of this Section 4.01(c) shall not be construed to apply to
any payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in its Loan to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this Section 4.01(c) shall
apply).  The Borrower consents to the
foregoing and agrees, to the extent it may effectively do so under applicable
law, that any Lender acquiring a participation pursuant to the foregoing
arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.

 

Section 4.02                                Presumption of
Payment by the Borrower. 
Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Lenders the amount due.  In such event, if the Borrower has not in
fact made such payment, then each of the Lenders severally agrees to repay to
the Administrative Agent forthwith on demand the amount so distributed to such
Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Effective Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation.

 

Section 4.03                                Certain
Deductions by the Administrative Agent.  If any Lender shall fail to make any payment
required to be made by it pursuant to Section 2.05(a), Section 4.01(c) or
Section 4.02 then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter
received by the Administrative Agent for the account of such Lender to satisfy
such Lender’s obligations under such Sections until all such unsatisfied
obligations are fully paid.

 

ARTICLE V

Increased Costs; Break Funding Payments; Taxes

 

Section 5.01                                Increased Costs.

 

(a)                                  Eurodollar
Changes in Law.  If any
Change in Law shall:

 

(i)                                     impose, modify
or deem applicable any reserve (including marginal, special, emergency or
supplemental reserves), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any Lender for
Eurocurrency liabilities under Regulation D of the Board (as the same may be
amended, supplemented or replaced from time to time) or otherwise; or

 

28

 

(ii)                                  impose on any
Lender or the London interbank market any other condition affecting this
Agreement or any Eurodollar Tranche consisting of any portion of the Loan of
such Lender;

 

and
the result of any of the foregoing shall be to increase the cost to such Lender
of making or maintaining any Eurodollar Tranche (or of maintaining its
obligation to make any such Loan) or to reduce the amount of any sum received
or receivable by such Lender (whether of principal, interest or otherwise),
then the Borrower will pay to such Lender such additional amount or amounts as
will compensate such Lender for such additional costs incurred or reduction
suffered.

 

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

 

(c)                                  Certificates.  A certificate of a Lender setting forth in
reasonable detail the basis of its request and the amount or amounts necessary
to compensate such Lender or its holding company, as the case may be, as
specified in Section 5.01 (a) or (b) shall be delivered to
the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

 

(d)                                 Effect of
Failure or Delay in Requesting Compensation.  Failure or delay on the part of any Lender to
demand compensation pursuant to this Section 5.01 shall not constitute a
waiver of such Lender’s right to demand such compensation; provided that the
Borrower shall not be required to compensate a Lender pursuant to this Section 5.01
for any increased costs or reductions incurred more than 180 days prior to the
date that such Lender notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 180-day period
referred to above shall be extended to include the period of retroactive effect
thereof.  No Lender may make any demand
pursuant to this Section 5.01 more than 180 days after the Maturity Date.

 

Section 5.02                                Break Funding
Payments.  In the
event of (a) the payment of any principal of any Eurodollar Tranche other
than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar
Tranche into an ABR Tranche other than on the last day of the Interest Period
applicable thereto or (c) the failure to borrow, convert, continue or
prepay any Eurodollar Tranche on the date specified in any notice delivered
pursuant hereto, then, in any such event, the Borrower shall compensate each
Lender for the loss, cost and expense attributable to such event.  In the case of a Eurodollar Tranche, such
loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would 

 

29

 

have accrued on the
principal amount of its Loan had such event not occurred, at the LIBO Rate that
would have been applicable to such Loan, for the period from the date of such
event to the last day of the then current Interest Period therefor (or, in the
case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Loan), over (ii) the amount of
interest which would accrue on such principal amount for such period at the
interest rate which such Lender would bid were it to bid, at the commencement
of such period, for dollar deposits of a comparable amount and period from
other banks in the eurodollar market.

 

A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section 5.02 and reasonably
detailed calculations therefore, upon written request of the Borrower, shall be
delivered to the Borrower and shall be conclusive absent manifest error.  The Borrower shall pay such Lender the amount
shown as due on any such certificate within 10 days after receipt thereof.

 

Section 5.03                                Taxes.

 

(a)                                  Payments Free
of Taxes.  Any and all
payments by or on account of any obligation of the Borrower or any Guarantor
under any Loan Document shall be made free and clear of and without deduction
for any Indemnified Taxes or Other Taxes; provided that if the Borrower or any
Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 5.03(a)), the Administrative
Agent or Lender (as the case may be) receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Borrower or
such Guarantor shall make such deductions and (iii) the Borrower or such Guarantor
shall pay the full amount deducted to the relevant Governmental Authority in
accordance with applicable law.

 

(b)                                 Payment of
Other Taxes by the Borrower.  The Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

 

(c)                                  Indemnification
by the Borrower.  The
Borrower shall indemnify the Administrative Agent and each Lender, within 10
days after written demand therefor, for the full amount of any Indemnified
Taxes or Other Taxes paid by the Administrative Agent or such Lender on or with
respect to any payment by or on account of any obligation of the Borrower
hereunder (including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section 5.03) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority.  A certificate of the Administrative Agent or
a Lender as to the basis of such Indemnified Taxes and Other Taxes and the
amount of such payment or liability under this Section 5.03 shall be
delivered to the Borrower and shall be conclusive absent manifest error.

 

(d)                                 Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower or a Guarantor to a
Governmental Authority, the Borrower shall deliver to the Administrative Agent
the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment, a copy of the return 

 

30

 

reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative
Agent.

 

(e)                                  Foreign Lenders.  Any Foreign Lender that is entitled to an
exemption from or reduction of withholding tax under the law of the
jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement or any
other Loan Document shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.

 

Section 5.04                                Designation of
Different Lending Office; Replacement of Lenders.

 

(a)                                  Designation of
Different Lending Office. If any Lender requests compensation under Section 5.01,
or if the Borrower is required to pay any additional amount to any Lender
or any Governmental Authority for the account of any Lender pursuant to Section 5.03, then such Lender shall
use reasonable efforts to designate a different lending office for funding or
booking its Loan hereunder or to assign its rights and obligations hereunder to
another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 5.01 or Section 5.03, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not
otherwise be disadvantageous to such Lender. 
The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.

 

(b)                                 Replacement of
Lenders.  If (i) any
Lender requests compensation under Section 5.01, (ii) the Borrower is
required to pay any additional amount to any Lender or any Governmental
Authority for the account of any Lender pursuant to Section 5.03, (iii) any
Lender defaults in its obligation to fund Loans hereunder, (iv) any Lender
has voted against an amendment, modification or waiver of any provision of this
Agreement proposed by the Borrower, which proposed amendment, modification or
waiver (x) was approved by Lenders representing no less than 90% of the
outstanding principal amount of the Loans but (y) required the approval of
all of the Lenders and did not get such approval, or (v) any Lender has
voted against an amendment, modification or waiver of any provision of this
Agreement proposed by the Borrower, which proposed amendment, modification or
waiver (x) was approved by Lenders representing no less than 50% of the
outstanding principal amount of the Loans but (y) required the approval of
the Majority Lenders and did not get such approval, then the Borrower may, at
its sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 12.04(b)),
all its interests, rights and obligations under this Agreement to an assignee
that shall assume such obligations (which assignee may be another Lender, if a
Lender accepts such assignment); provided that (1) the Borrower shall have
received the prior written consent of the Administrative Agent, which consent
shall not unreasonably be withheld, (2) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, accrued
interest thereon, accrued fees and all other amounts payable to it hereunder,
from the assignee (to the extent of such outstanding principal and accrued
interest and fees) or the Borrower (in the case of all other amounts) and (3) in
the case of any such 

 

31

 

assignment resulting from a
claim for compensation under Section 5.01 or payments required to be made
pursuant to Section 5.03, such assignment will result in a reduction in
such compensation or payments.  A Lender
shall not be required to make any such assignment and delegation if, prior
thereto, as a result of a waiver by such Lender or otherwise, the circumstances
entitling the Borrower to require such assignment and delegation cease to
apply.

 

ARTICLE VI

Conditions Precedent

 

Section 6.01                                Effective Date.  The obligations of each Lender to make its
Loan hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 12.02):

 

(a)                                  The Arrangers,
the Administrative Agent and the Lenders shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder.

 

(b)                                 The
Administrative Agent shall have received a certificate of the Borrower and of
each Guarantor setting forth (i) resolutions of the Managers, board of
directors or other managing body with respect to the authorization of the
Borrower or such Guarantor to execute and deliver the Loan Documents to which
it is a party and to enter into the transactions contemplated in those
documents, (ii) the individuals (y) who are authorized to sign the
Loan Documents to which the Borrower or such Guarantor is a party and (z) who
will, until replaced by another individual duly authorized for that purpose,
act as its representative for the purposes of signing documents and giving
notices and other communications in connection with this Agreement and the
other Loan Documents to which it is a party, (iii) specimen signatures of
such authorized individuals, and (iv) the articles or certificate of
incorporation or formation and bylaws, operating agreement or partnership
agreement, as applicable, of the Borrower and each Guarantor, in each case,
certified as being true and complete. 
The Administrative Agent and the Lenders may conclusively rely on such
certificate until the Administrative Agent receives notice in writing from the
Borrower to the contrary.

 

(c)                                  The
Administrative Agent shall have received certificates of the appropriate State
agencies with respect to the existence, qualification and good standing of the
Borrower and each Guarantor.

 

(d)                                 The
Administrative Agent shall have received a closing certificate which shall be
in form and substance reasonably satisfactory to the Administrative Agent, duly
and properly executed by a Responsible Officer and dated as of the Effective
Date.

 

(e)                                  The
Administrative Agent shall have received from each party hereto counterparts
(in such number as may be requested by the Administrative Agent) of this
Agreement signed on behalf of such party.

 

32

 

(f)                                    The Borrower
shall have received a copy of an amendment or waiver from the requisite lenders
under the Senior Revolving Credit Agreement authorizing this Agreement and the
transactions contemplated hereby.

 

(g)                                 The
Administrative Agent shall have received from each party thereto duly executed
counterparts (in such number as may be requested by the Administrative Agent)
of the Security Instruments, including the Guaranty Agreement and the other
Security Instruments described on Exhibit C.  In connection with the execution and delivery
of the Security Instruments, the Administrative Agent shall be reasonably
satisfied that:

 

(i)                                     the Security
Instruments create second priority, perfected Liens (subject only to Liens
existing under the Senior Revolving Credit Documents and Excepted Liens
identified in clauses (a) to (d) and (f) of the definition
thereof, but subject to the provisos at the end of such definition) on so much
of the total value of the Oil and Gas Properties (x) evaluated in the most
recently delivered Reserve Report and (y) included in the Acquisition
Properties as is necessary to satisfy Section 8.14(a).

 

(ii)                                  the
administrative agent under the Senior Revolving Credit Agreement has received
certificates, together with undated, blank stock powers for each such
certificate, representing all of the issued and outstanding Equity Interests of
each of the Guarantors.

 

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

 

(h)                                 The
Administrative Agent shall have received an opinion of (i) Akin Gump
Strauss Hauer Feld LLP, special counsel to the Borrower, in form and substance
satisfactory to the Administrative Agent, as to such matters incident to the
Transactions as the Administrative Agent may reasonably request, and (ii) local
counsel in each of the following states: West Virginia, Pennsylvania, Texas,
Oklahoma and California and any other jurisdictions requested by the
Administrative Agent, in form and substance satisfactory to the Administrative
Agent.

 

(i)                                     The
Administrative Agent shall have received a certificate of insurance coverage of
the Borrower evidencing that the Borrower is carrying insurance in accordance
with Section 7.12.

 

(j)                                     The
Administrative Agent shall have received a certificate of a Responsible Officer
certifying that the Borrower has received all consents and approvals required
by Section 7.03.

 

(k)                                  The
Administrative Agent shall have received the financial statements referred to
in Section 7.04(a).

 

(l)                                     The
Administrative Agent shall have received appropriate UCC search certificates
reflecting no prior Liens, other than Liens in favor of the administrative
agent under the Senior Revolving Credit Agreement, encumbering the Properties
of the Borrower, and its 

 

33

 

Subsidiaries for each of the
following jurisdictions:  Pennsylvania,
West Virginia, California, Oklahoma, Texas, Louisiana, Illinois, Delaware and
any other jurisdiction requested by the Administrative Agent; other than those
being assigned or released on or prior to the Effective Date or Liens permitted
by Section 9.03.

 

(m)                               The
Administrative Agent or its counsel shall have received (i) a certificate
of a Responsible Officer of the Borrower certifying:  (A) that the Borrower is concurrently
consummating the Acquisition in accordance with the terms of the Acquisition
Documents (with all of the material conditions precedent thereto having been
satisfied in all material respects by the parties thereto) and acquiring
substantially all of the Acquisition Properties contemplated by the Acquisition
Documents; (B) as to the final purchase price for the Acquisition
Properties after giving effect to all adjustments as of the closing date
contemplated by the Acquisition Documents and specifying, by category, the
amount of such adjustment; (C) that attached thereto is a true and
complete list of the Acquisition Properties which have been excluded from the
Acquisition pursuant to the terms of the Acquisition Documents, specifying with
respect thereto the basis of exclusion as (1) title defect, (2) preferential
purchase right, (3) environmental or (4) casualty loss; (D) that
attached thereto is a true and complete list of all Acquisition Properties for
which any seller has elected to cure a title defect, (E) that attached
thereto is a true and complete list of all Acquisition Properties for which any
seller has elected to remediate an adverse environmental condition, there was
no known breach of the seller’s title or environmental representations in the
Acquisition Documents that would have a material adverse effect on the
Acquisition Properties, taken as a whole, and (F) that attached thereto is
a true and complete list of all Acquisition Properties which are currently
pending final decision by a third party regarding purchase of such property in
accordance with any preferential right; (ii) a true and complete executed
copy of each of the Acquisition Documents; (iii) original counterparts or
copies, certified as true and complete, of the assignments, deeds and leases
for all of the Acquisition Properties; and (iv) such other related
documents and information as the Administrative Agent shall have reasonably
requested.

 

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

 

(o)                                 The
Administrative Agent shall be reasonably satisfied with the environmental
condition of the Acquisition Properties of the Borrower and its Subsidiaries.

 

(p)                                 The
Administrative Agent shall have received title information as the
Administrative Agent may reasonably require satisfactory to the Administrative
Agent such that the requirements of Section 8.13(a) are satisfied
after giving effect to the inclusion of the Acquisition Properties.

 

(q)                                 The
Administrative Agent shall have received duly executed Notes payable to the
order of each Lender who has requested a Note in a principal amount equal to
its Commitment dated as of the date hereof.

 

34

 

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

 

The
Administrative Agent shall notify the Borrower and the Lenders of the Effective
Date, and such notice shall be conclusive and binding.  Notwithstanding the foregoing, the
obligations of each Lender to make its Loan hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 12.02) at or prior to 1:00 p.m., Houston time, on
February 15, 2008 (and, in the event such conditions are not so satisfied
or waived, the Commitments shall terminate at such time).

 

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

 

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

 

(b)                                 At the time of
and immediately after giving effect to such Loans, no Material Adverse Effect
shall have occurred.

 

(c)                                  The
representations and warranties of the Borrower and the Guarantors set forth in
this Agreement and in the other Loan Documents shall be true and correct on and
as of the Effective Date, except to the extent any such representations and
warranties are expressly limited to an earlier date, in which case, on and as
of the Effective Date, such representations and warranties shall continue to be
true and correct as of such specified earlier date.

 

(d)                                 The making of
such Loan would not conflict with, or cause any Lender to violate or exceed,
any applicable Governmental Requirement, and no Change in Law shall have
occurred, and no litigation shall be pending or threatened, which does or, with
respect to any threatened litigation, seeks to, enjoin, prohibit or restrain,
the making or repayment of any Loan, the Senior Revolving Credit Agreement or
the consummation of the transactions contemplated by this Agreement or any
other Loan Document.

 

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

 

ARTICLE VII

Representations and Warranties

 

The
Borrower represents and warrants to the Lenders that:

 

Section 7.01                                Organization;
Powers.  Each of the Borrower and its
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority, and has all material governmental licenses, authorizations, consents
and approvals necessary, to own its assets and to carry on its business as now
conducted, and is qualified to do business in, and is in good standing in, or
has applied to qualify to do business in, every jurisdiction where such
qualification is required, except where

 

35

 

failure to have such power,
authority, licenses, authorizations, consents, approvals and qualifications
could not reasonably be expected to have a Material Adverse Effect.

 

Section 7.02           Authority;
Enforceability.  The
Transactions are within the Borrower’s and each Guarantor’s corporate powers
and have been duly authorized by all necessary corporate and, if required,
member action (including, without limitation, any action required to be taken
by any class of directors of the Borrower or any other Person, whether
interested or disinterested, in order to ensure the due authorization of the
Transactions).  When executed and
delivered, each Loan Document and Acquisition Document to which the Borrower
and any Guarantor is a party will have been duly executed and delivered by the
Borrower and such Guarantor and will constitute a legal, valid and binding
obligation of the Borrower and such Guarantor, as applicable, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors’ rights generally
and subject to general principles of equity, regardless of whether considered
in a proceeding in equity or at law.

 

Section 7.03           Approvals; No
Conflicts.  The
Transactions (a) do not require any consent or approval of, registration
or filing with, or any other action by, any Governmental Authority or any other
third Person (including the members or any class of directors of the Borrower
or any other Person, whether interested or disinterested), nor is any such
consent, approval, registration, filing or other action necessary for the
validity or enforceability of any Loan Document or the consummation of the
transactions contemplated thereby, except (i) such as have been obtained
or made and are in full force and effect, (ii) as may not be filed or
obtained until after the consummation of the Acquisition and (iii) for the
filing and recording of Security Instruments to perfect the Liens created
hereby and by the Security Instruments, (b) will not violate any
applicable law or regulation or the charter, by-laws or other organizational
documents of the Borrower or any of its Subsidiaries or any order of any
Governmental Authority, (c) will not violate or result in a default under
any indenture, agreement or other instrument binding upon the Borrower or any
of its Subsidiaries or their Properties, or give rise to a right thereunder to
require any payment to be made by the Borrower or such Subsidiary and (d) will
not result in the creation or imposition of any Lien on any Property of the
Borrower or any of its Subsidiaries (other than the Liens created by the Loan
Documents).

 

Section 7.04           Financial
Position; No Material Adverse Change.

 

(a)           The Borrower
has heretofore furnished to the Lenders (i) the audited consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of December 31,
2006, and related audited consolidated statements of income, cash flows and
changes in members’ equity for the fiscal year ending December 31, 2006
and (ii) the unaudited consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries as of and for the fiscal quarter and the portion of
the fiscal year ended September 30, 2007 certified by its chief financial
officer.  Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated subsidiaries as
of such date and for such period in accordance with GAAP.

 

(b)           Since December 31,
2006, (i) there has been no event, development or circumstance that has
had or could reasonably be expected to have a Material Adverse Effect and 

 

36

 

(ii) the business of
the Borrower and its Subsidiaries has been conducted only in the ordinary
course consistent with past business practices.

 

(c)           Neither the
Borrower nor any of its Subsidiaries has on the date hereof any material Debt
(including Disqualified Capital Stock), or any contingent liabilities,
off-balance sheet liabilities or partnerships, liabilities for taxes, unusual
forward or long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except for the (i) Indebtedness or (ii) as
referred to or reflected or provided for in the Financial Statements.

 

Section 7.05           Litigation.  Except as set forth on Schedule 7.05, there
are no actions, suits, investigations or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of
the Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries or involving the Acquisition (a) as to which there is a
reasonable possibility of an adverse determination that, if adversely
determined, could reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect or (b) that involve any Loan Document
or (c) that could impair the consummation of the Acquisition on the time
and in the manner contemplated by the Acquisition Documents.

 

Section 7.06           Environmental
Matters.  Except for such matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Borrower:

 

(a)           the Borrower
and its Subsidiaries and each of their respective Properties and operations thereon
are, and within all applicable statute of limitation periods have been, in
compliance with all applicable Environmental Laws;

 

(b)           the Borrower
and its Subsidiaries have obtained all Environmental Permits required for their
respective operations and each of their Properties, with all such Environmental
Permits being currently in full force and effect, and none of Borrower or its
Subsidiaries has received any written notice or otherwise has knowledge that
any such existing Environmental Permit will be revoked or that any application
for any new Environmental Permit or renewal of any existing Environmental
Permit will be protested or denied;

 

(c)           there are no
claims, demands, suits, orders, inquiries, or proceedings concerning any
violation of, or any liability (including as a potentially responsible party)
under, any applicable Environmental Laws that is pending or threatened against
the Borrower or its Subsidiaries or any of their respective Properties or as a
result of any operations at the Properties;

 

(d)           none of the
Properties contain or have contained any: 
(i) underground storage tanks; (ii) asbestos containing
materials in a friable condition or otherwise requiring abatement under
Environmental Laws; or (iii) landfills or dumps; (iv) hazardous waste
management units as defined pursuant to RCRA or any comparable state law; or (v) sites
on or nominated for the National Priority List promulgated pursuant to CERCLA
or any similar state remedial priority list promulgated or published pursuant
to any comparable state law;

 

(e)           there is no
Release or threatened Release, of Hazardous Materials at, on, under or from any
of Borrower’s or its Subsidiaries’ Properties, there are no investigations, 

 

37

 

remediations, abatements,
removals, or monitorings of Hazardous Materials required under applicable
Environmental Laws at such Properties and none of such Properties are adversely
affected by any Release or threatened Release of a Hazardous Material
originating or emanating from any other real property,

 

(f)            neither the
Borrower nor its Subsidiaries has received any written notice asserting an
alleged liability or obligation under any applicable Environmental Laws with
respect to the investigation, remediation, abatement, removal, or monitoring of
any Hazardous Materials at, under, or Released or threatened to be Released
from any real properties offsite the Borrower’s or its Subsidiaries’ Properties
and there are no conditions or circumstances that would reasonably be expected
to result in the receipt of such written notice.

 

(g)           there has been
no exposure of any Person or property to any Hazardous Materials as a result of
or in connection with the operations and businesses of any of the Borrower’s or
its Subsidiaries’ Properties that would reasonably be expected to form the
basis for a material claim for damages or compensation and there are no
conditions or circumstances that would reasonably be expected to result in the
receipt of notice regarding such exposure; and

 

(h)           the Borrower
and its Subsidiaries have made available to Lenders copies of all material
environmental site assessment reports and other material documents relating to
any alleged non-compliance with or liability under Environmental Laws that are
in any of the Borrower’s or its Subsidiaries’ possession or control and
relating to their respective Properties or operations thereon.

 

Section 7.07           Compliance with
the Laws and Agreements; No Defaults.

 

(a)           Each of the
Borrower and its Subsidiaries is in compliance with all Governmental
Requirements applicable to it or its Property and all agreements and other
instruments binding upon it or its Property, and possesses all licenses,
permits, franchises, exemptions, approvals and other authorizations granted by
Governmental Authorities necessary for the ownership of its Property and the
present conduct of its business, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.

 

(b)           Neither the
Borrower nor any of its Subsidiaries is in default nor has any event or
circumstance occurred which, but for the expiration of any applicable grace
period or the giving of notice, or both, would constitute a default or would
require the Borrower or any of its Subsidiaries to Redeem or make any offer to
Redeem all or any portion of any Debt outstanding under any indenture, note,
credit agreement or instrument pursuant to which any Material Indebtedness is
outstanding or by which the Borrower or any of its Subsidiaries or any of their
Properties is bound.

 

(c)           No Default has
occurred and is continuing.

 

Section 7.08           Investment
Company Act.  Neither the
Borrower nor any of its Subsidiaries is an “investment company” or a company “controlled”
by an “investment 

 

38

 

company,” within the meaning
of, or subject to regulation under, the Investment Company Act of 1940, as
amended.

 

Section 7.09           Taxes.  Each of the Borrower and its Subsidiaries has
timely filed or caused to be filed all Tax returns (including extensions) and
reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being
contested in good faith by appropriate proceedings and for which the Borrower
or such Subsidiary, as applicable, has set aside on its books adequate reserves
in accordance with GAAP or (b) to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Effect.  The charges, accruals and reserves on the
books of the Borrower and its Subsidiaries in respect of Taxes and other
governmental charges are, in the reasonable opinion of the Borrower, adequate.  No Tax Lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect to any such
Tax or other such governmental charge.

 

Section 7.10           ERISA.  Except as would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect:

 

(a)           the Borrower,
its Subsidiaries and each ERISA Affiliate have complied in all material
respects with ERISA and, where applicable, the Code regarding each Plan, if
any.

 

(b)           each Plan, if
any, is, and has been, maintained in substantial compliance with ERISA and,
where applicable, the Code.

 

(c)           no act,
omission or transaction has occurred that could result in imposition on the
Borrower, any of its Subsidiaries or any ERISA Affiliate (whether directly or
indirectly) of (i) either a civil penalty assessed pursuant to subsections
(c), (i) or (l) of section 502 of ERISA or a tax imposed pursuant to
Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty
liability damages under section 409 of ERISA.

 

(d)           no liability to
the PBGC (other than for the payment of current premiums which are not past
due) by the Borrower, any of its Subsidiaries or any ERISA Affiliate has been
or is expected by the Borrower, any of its Subsidiaries or any ERISA Affiliate
to be incurred with respect to any Plan. 
No ERISA Event with respect to any Plan has occurred.

 

(e)           no accumulated
funding deficiency (as defined in section 302 of ERISA and section 412 of the
Code), whether or not waived, exists with respect to any Plan.

 

(f)            neither the
Borrower, its Subsidiaries nor any ERISA Affiliate sponsors, maintains or
contributes to, or has at any time in the six-year period preceding the date
hereof sponsored, maintained or contributed to, any Multiemployer Plan.

 

(g)           neither the
Borrower, its Subsidiaries nor any ERISA Affiliate is required to provide
security under section 401(a)(29) of the Code due to a Plan amendment that
results in an increase in current liability for the Plan.

 

39

 

Section 7.11           Disclosure; No
Material Misstatements.  None
of the reports, financial statements, certificates or other information
furnished by or on behalf of the Borrower or any of its Subsidiaries to the
Administrative Agent, any other Agent or any Lender or any of their Affiliates
in connection with the negotiation of this Agreement or any other Loan Document
or delivered hereunder or under any other Loan Document (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.  There is no fact peculiar to the Borrower or
any of its Subsidiaries that could reasonably be expected to have a Material
Adverse Effect or in the future is reasonably likely to have a Material Adverse
Effect and which has not been set forth in this Agreement or the Loan Documents
or the other documents, certificates and statements furnished to the
Administrative Agent, any other Agent or the Lenders by or on behalf of the
Borrower or any of its Subsidiaries prior to, or on, the date hereof in
connection with the transactions contemplated hereby.  There are no statements or conclusions in any
Reserve Report which are based upon or include misleading information or fail
to take into account material information regarding the matters reported
therein, it being understood that projections concerning volumes attributable
to the Oil and Gas Properties and production and cost estimates contained in
each Reserve Report are necessarily based upon professional opinions, estimates
and projections and that the Borrower and the Subsidiaries do not warrant that
such opinions, estimates and projections will ultimately prove to have been
accurate.

 

Section 7.12           Insurance.  The Borrower has, and has caused all of its
Subsidiaries to have, (a) all insurance policies sufficient for the
compliance by each of them with all material Governmental Requirements and all
material agreements and (b) insurance coverage in at least amounts and
against such risk (including, without limitation, public liability) that are
usually insured against by companies similarly situated and engaged in the same
or a similar business for the assets and operations of the Borrower and its
Subsidiaries.  The Administrative Agent
and the Lenders have been named as additional insureds in respect of such
liability insurance policies and the Administrative Agent has been named as
loss payee with respect to property loss insurance.

 

Section 7.13           Restriction on
Liens.  Neither the Borrower nor any
of its Subsidiaries is a party to any material agreement or arrangement (other
than (i) the Senior Revolving Credit Documents and (ii) Capital
Leases creating Liens to the extent permitted by Section 9.03(d), but then
only on the Property subject to such Capital Leases), or subject to any order,
judgment, writ or decree, which either restricts or purports to restrict its
ability to grant Liens to the Administrative Agent and the Lenders on or in
respect of their Properties to secure the Indebtedness and the Loan Documents.

 

Section 7.14           Subsidiaries.  Except as set forth on Schedule 7.14 or as
disclosed in writing to the Administrative Agent (which shall promptly furnish
a copy to the Lenders) and which shall be a supplement to Schedule 7.14,
the Borrower has no Subsidiaries.

 

Section 7.15           Location of
Business and Offices.  The
Borrower’s jurisdiction of organization is Delaware; the name of the Borrower
as listed in the public records of its 

 

40

 

jurisdiction of organization
is Linn Energy, LLC, and the organizational identification number of the
Borrower in its jurisdiction of organization is 3951040 (or, in each case, as
set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(l) in
accordance with Section 12.01).  The
Borrower’s principal place of business and chief executive offices are located
at the address specified in Section 12.01 (or as set forth in a notice
delivered pursuant to Section 8.01(l) and Section 12.01(c)).  Each Subsidiary’s jurisdiction of
organization, name as listed in the public records of its jurisdiction of
organization, organizational identification number in its jurisdiction of
organization, and the location of its principal place of business and chief
executive office is stated on Schedule 7.14 (or as set forth in a notice
delivered pursuant to Section 8.01(l)).

 

Section 7.16          Properties;
Titles, Etc.

 

(a)           Each of the
Borrower and its Subsidiaries has good and defensible title to its Oil and Gas
Properties evaluated in the most recently delivered Reserve Report and good
title to all its personal Properties, in each case, free and clear of all Liens
except Liens permitted by Section 9.03. 
After giving full effect to the Excepted Liens, the Borrower or any of
its Subsidiaries specified as the owner owns the net interests in production
attributable to the Hydrocarbon Interests as reflected in the most recently
delivered Reserve Report, and the ownership of such Properties shall not in any
material respect obligate the Borrower or any of its Subsidiaries to bear the
costs and expenses relating to the maintenance, development and operations of
each such Property in an amount in excess of the working interest of each
Property set forth in the most recently delivered Reserve Report that is not
offset by a corresponding proportionate increase in the Borrower’s or any of
its Subsidiaries’ net revenue interest in such Property.

 

(b)           All material
leases and agreements necessary for the present conduct of the business of the
Borrower and its Subsidiaries are valid and subsisting, in full force and
effect, and there exists no default or event or circumstance which with the
giving of notice or the passage of time or both would give rise to a default
under any such lease or leases, which could reasonably be expected to have a
Material Adverse Effect.

 

(c)           The rights and
Properties presently owned, leased or licensed by the Borrower and its
Subsidiaries including, without limitation, all easements and rights of way,
include all rights and Properties necessary to permit the Borrower and its
Subsidiaries to conduct their business in all material respects as conducted on
the date hereof.

 

(d)           All of the
material Properties of the Borrower and each of its Subsidiaries that are
reasonably necessary for the operation of their businesses are in good working
condition and are maintained in accordance with prudent business standards.

 

(e)           The Borrower
and each of its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual Property material to its
business, and the use thereof by the Borrower and such Subsidiary does not
infringe upon the rights of any other Person, except for any such infringements
that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.  The
Borrower and its Subsidiaries either own or have valid licenses or other rights
to use all 

 

41

 

databases, geological data,
geophysical data, engineering data, seismic data, maps, interpretations and
other technical information used in their businesses as presently conducted,
subject to the limitations contained in the agreements governing the use of the
same, which limitations are customary for companies engaged in the business of
the exploration and production of Hydrocarbons, with such exceptions as could
not reasonably be expected to have a Material Adverse Effect.

 

(f)            For purposes of
determining any Default or Event of Default, each of the representations and
warranties in this Section 7.16 shall be deemed to have been made without
qualification by this Section 7.16(f). 
Subject to the preceding sentence, each of the representations and
warranties in this Section 7.16 as to the Acquisition Properties is to the
knowledge of the Borrower and its Subsidiaries.

 

Section 7.17           Maintenance of
Properties.  Except for
such acts or failures to act as could not be reasonably expected to have a
Material Adverse Effect, the Oil and Gas Properties (and Properties unitized
therewith) have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all Government Requirements and in
conformity with the provisions of all leases, subleases or other contracts comprising
a part of the Hydrocarbon Interests and other contracts and agreements forming
a part of the Oil and Gas Properties. 
Specifically in connection with the foregoing, except as could not
reasonably be expected to have a Material Adverse Effect, (a) no Oil and
Gas Property is subject to having allowable production reduced below the full
and regular allowable (including the maximum permissible tolerance) because of
any overproduction (whether or not the same was permissible at the time) and (b) none
of the wells comprising a part of the Oil and Gas Properties (or Properties
unitized therewith) is deviated from the vertical more than the maximum
permitted by Government Requirements, and such wells are, in fact, bottomed
under and are producing from, and the well bores are wholly within, the Oil and
Gas Properties (or in the case of wells located on Properties unitized
therewith, such unitized Properties). 
All pipelines, wells, gas processing plants, platforms and other
material improvements, fixtures and equipment owned in whole or in part by the
Borrower or any of its Subsidiaries that are necessary to conduct normal
operations are being maintained in a state adequate to conduct normal
operations, and with respect to such of the foregoing which are operated by the
Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s
or its Subsidiaries’ past practices (other than those the failure of which to
maintain in accordance with this Section 7.17 could not reasonably be
expect to have a Material Adverse Effect).

 

Section 7.18           Gas Imbalances,
Prepayments.  As of the
date hereof, except as set forth on Schedule 7.18 or on the most recent
certificate delivered pursuant to Section 8.12(b), on a net basis there
are no gas imbalances, take or pay or other prepayments which would require the
Borrower or any of its Subsidiaries to deliver, in the aggregate, two percent
(2%) or more of the monthly production from Hydrocarbons produced from the Oil
and Gas Properties at some future time without then or thereafter receiving
full payment therefor.

 

Section 7.19           Marketing of
Production.  Except for
contracts listed and in effect on the date hereof on Schedule 7.19, and
thereafter either disclosed in writing to the Administrative Agent or included
in the most recently delivered Reserve Report (with respect to all of which
contracts the Borrower represents that it or its Subsidiaries are receiving a
price for all 

 

42

 

production sold thereunder
which is computed substantially in accordance with the terms of the relevant
contract and are not having deliveries curtailed substantially below the
subject Property’s delivery capacity), no material agreements exist which are
not cancelable on 60 days notice or less without penalty or detriment for the
sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons
(including, without limitation, calls on or other rights to purchase,
production, whether or not the same are currently being exercised) that (a) pertain
to the sale of production at a fixed price and (b) have a maturity or
expiry date of more than six (6) months from the date hereof.

 

Section 7.20           Swap Agreements.  Schedule 7.20, as of December 31, 2007,
and after the date hereof, each report required to be delivered by the Borrower
pursuant to Section 8.01(d) (as of the relevant period end), sets
forth, a true and complete list of all Swap Agreements of the Borrower and each
of its Subsidiaries, the material terms thereof (including the type, term, effective
date, termination date and notional amounts or volumes), the net
marked-to-market value thereof, all credit support agreements relating thereto
(including any margin required or supplied) and the counterparty to each such
agreement.

 

Section 7.21           Use of Loans.  The proceeds of the Loans shall be used to
finance the Acquisition and to pay related fees and expenses.  The Borrower and its Subsidiaries are not
engaged principally, or as one of its or their important activities, in the
business of extending credit for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock (within the meaning of Regulation
T, U or X of the Board).  No part of the
proceeds of any Loan will be used for any purpose which violates the provisions
of Regulations T, U or X of the Board.

 

Section 7.22           Solvency.  After giving effect to the transactions
contemplated hereby, (a) the aggregate assets (after giving effect to
amounts that could reasonably be received by reason of indemnity, offset, insurance
or any similar arrangement), at a fair valuation, of the Borrower and the
Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower
and the Guarantors on a consolidated basis, as the Debt becomes absolute and
matures, (b) each of the Borrower and the Guarantors will not have
incurred or intended to incur, and will not believe that it will incur, Debt
beyond its ability to pay such Debt (after taking into account the timing and
amounts of cash to be received by each of the Borrower and the Guarantors and
the amounts to be payable on or in respect of its liabilities, and giving
effect to amounts that could reasonably be received by reason of indemnity,
offset, insurance or any similar arrangement) as such Debt becomes absolute and
matures and (c) each of the Borrower and the Guarantors will not have (and
will have no reason to believe that it will have thereafter) unreasonably small
capital for the conduct of its business.

 

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

 

43

 

ARTICLE
VIII

Affirmative Covenants

 

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

 

Section 8.01           Financial
Statements; Other Information.  The Borrower will furnish to the Administrative
Agent and each Lender:

 

(a)           Annual
Financial Statements.  As soon as
available, but in any event not later than 90 days after the end of each fiscal
year, Borrower’s audited consolidated balance sheet and related statements of
operations, members’ equity and cash flows as of the end of and for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all reported on by KPMG, LLP or independent public accountants of
recognized national standing and reasonably acceptable to the Administrative
Agent (without a “going concern” or like qualification or exception and without
any qualification or exception as to the scope of such audit) to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of the Borrower and
its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

 

(b)           Quarterly
Financial Statements.  As soon as
available, but in any event not later than 45 days after the end of each of the
first three fiscal quarters of each fiscal year of the Borrower, its
consolidated balance sheet and related statements of operations, members’
equity and cash flows as of the end of and for such quarter and the then
elapsed portion of the fiscal year, setting forth in each case in comparative
form the figures for the corresponding period or periods of (or, in the case of
the balance sheet, as of the end of) the previous fiscal year, all certified by
a Financial Officer as presenting fairly in all material respects the financial
condition and results of operations of the Borrower and its Consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes.

 

(c)           Certificate of
Financial Officer — Compliance.  Concurrently with any delivery of financial
statements under Section 8.01(a) or Section 8.01(b), a
certificate of a Financial Officer in substantially the form of Exhibit B
hereto (i) certifying as to whether a Default has occurred and, if a
Default has occurred, specifying the details thereof and any action taken or
proposed to be taken with respect thereto, (ii) setting forth reasonably
detailed calculations demonstrating compliance with Section 9.01 and (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
Effective Date and, if any such change has occurred, specifying the effect of
such change on the financial statements accompanying such certificate.

 

(d)           Swap Agreements.  Concurrently with any delivery of financial
statements under Section 8.01(a) and Section 8.01(b), a true and
complete list of all Swap Agreements, as of the last Business Day of such
fiscal quarter or fiscal year, of the Borrower and each of its Subsidiaries,
the material terms thereof (including the type, term, effective date,
termination date and notional amounts or volumes), the net mark-to-market value
therefor, any new credit support 

 

44

 

agreements relating thereto
not listed on Schedule 7.20, any margin required or supplied under any credit
support document, and the counterparty to each such agreement.  To the extent the Borrower or a Subsidiary
changes the material terms of a Swap Agreement listed in the foregoing
schedule, terminates any such Swap Agreement or enters into a new Swap
Agreement which has the effect of creating an off-setting position, the
Borrower will give the Lenders prompt written notice of such event if, with
respect to any commodity-price Swap Agreement, the product of (i) the
notional volumes of such commodity-price Swap Agreement times (ii) the
excess of (A) the strike or fixed rate payor price over (B) the “price
deck” used in calculating the Total Reserve Value for the relevant commodities,
exceeds in the aggregate during such period $50,000,000.

 

(e)           Certificate of
Insurer – Insurance Coverage.  Concurrently with any delivery of financial
statements under Section 8.01(a), a certificate of insurance coverage from
each insurer with respect to the insurance required by Section 8.07, in
form and substance satisfactory to the Administrative Agent, and, if requested
by the Administrative Agent or any Lender, all copies of the applicable
policies.

 

(f)            Other
Accounting Reports.  Promptly
upon receipt thereof, a copy of each other report or letter submitted to the
Borrower or any of its Subsidiaries by independent accountants in connection
with any annual, interim or special audit made by them of the books of the
Borrower or any such Subsidiary, and a copy of any response by the Borrower or
any such Subsidiary to such letter or report.

 

(g)           SEC and Other
Filings; Reports to shareholders.  Promptly after the same become publicly
available, copies of all periodic and other reports, proxy statements and other
materials filed by the Borrower or any Subsidiary with the SEC, or with any
national securities exchange, or distributed by the Borrower to its
shareholders generally, as the case may be; provided, however, that the Borrower shall be deemed to have furnished
the information required by this Section 8.01(g) if it shall have
timely made the same available on “EDGAR” and/or on its home page on the
worldwide web (at the date of this Agreement located at
http://www.linnenergy.com); provided further, however, that if any Lender is
unable to access EDGAR or the Borrower’s home page on the worldwide web,
the Borrower agrees to provide such Lender with paper copies of the information
required to be furnished pursuant to this Section 8.01(g) promptly
following notice from the Administrative Agent that such Lender has requested
same.  Information required to be
delivered pursuant to this Section 8.01(g) shall be deemed to have
been delivered on the date on which the Borrower provides notice to the
Administrative Agent that such information has been posted on “EDGAR” or the
Borrower’s website or another website identified in such notice and accessible
by the Administrative Agent without charge (and the Borrower hereby agrees to
provide such notice).

 

(h)           Notices Under
Material Instruments.  Promptly
after the furnishing thereof, copies of any financial statement, report or
notice furnished to or by any Person pursuant to the terms of any preferred
stock designation, indenture, loan or credit or other similar agreement, other
than this Agreement and not otherwise required to be furnished to the Lenders
pursuant to any other provision of this Section 8.01.

 

45

 

(i)            Lists of
Purchasers. 
Concurrently with the delivery of any Reserve Report to the
Administrative Agent pursuant to Section 8.12, a list of Persons
purchasing Hydrocarbons from the Borrower and its Subsidiaries reasonably
expected to account for at least 80% of the revenues resulting from the sale of
Hydrocarbons produced from the Mortgaged Properties in the quarter following
the “as of” date of such Reserve Report.

 

(j)            Notice of Sales
of Oil and Gas Properties.  In
the event the Borrower or any of its Subsidiaries intends to sell, transfer,
assign or otherwise dispose of any Oil or Gas Properties included in the most
recently delivered Reserve Report (or any Equity Interests in any Subsidiary
owning interests in such Oil and Gas Properties) during any period between two
successive dates on which the Total Reserve Value is determined in accordance
with Section 2.07 having a fair market value, individually or in the
aggregate, in excess of $10,000,000, prior written notice of such disposition,
the price thereof, the anticipated date of closing, and any other details
thereof reasonably requested by the Administrative Agent or any Lender.

 

(k)           Notice of
Casualty Events.  Prompt
written notice, and in any event within three Business Days, of the occurrence
of any Casualty Event or the commencement of any action or proceeding that
could reasonably be expected to result in a Casualty Event.

 

(l)            Information
Regarding Borrower and Guarantors.  Prompt written notice of (and in any event
within ten (10) days after) any change (i) in the Borrower or any
Guarantor’s corporate name or in any trade name used to identify such Person in
the conduct of its business or in the ownership of its Properties, (ii) in
the location of the Borrower or any Guarantor’s chief executive office or
principal place of business, (iii) in the Borrower or any Guarantor’s
identity or corporate structure, (iv) in the Borrower or any Guarantor’s
jurisdiction of organization or such Person’s organizational identification number
in such jurisdiction of organization, and (v) in the Borrower or any
Guarantor’s federal taxpayer identification number, if any.

 

(m)          Production Report and Lease Operating Statements.  Within 45 days after the end of each fiscal
quarter, a report setting forth, for each calendar month during the
then-current fiscal year to date, the volume of production and sales
attributable to production (and the prices at which such sales were made and
the revenues derived from such sales) for each such calendar month from the Oil
and Gas Properties, and setting forth the related ad valorem, severance and
production taxes and lease operating expenses attributable thereto and incurred
for each such calendar month.

 

(n)           Notices of
Certain Changes.  Promptly,
but in any event within five (5) Business Days after the execution
thereof, copies of any amendment, modification or supplement to the certificate
or articles of incorporation, by-laws, any preferred stock designation or any
other organic document of the Borrower or any of its Subsidiaries.

 

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

 

46

 

(p)           Acquisition
Notices.  In the event that after the
Effective Date:  (i) the Borrower is
required or elects to purchase any of the Acquisition Properties which had been
excluded from, or return any of the Acquisition Properties which had been
included in, the Acquisition Properties in accordance with the terms of the
Acquisition Documents, (ii) the Borrower is required to honor any
preferential purchase right in respect of any Acquisition Property which has
not been waived, (iii) any matter being disputed in accordance with the
terms of the Acquisition Documents is resolved and (iv) the Borrower
receives the draft and final statements setting forth the final calculation of
the Adjusted Purchase Price (as defined therein) and showing the calculation of
each adjustment, delivered to the Borrower pursuant to Section 14.1 of the
Acquisition Documents, then, in each such case, the Borrower shall promptly
give the Administrative Agent notice in reasonable detail of such circumstances
and such copies of such documents, as applicable.

 

(q)           Certificate of
Responsible Officer—Total Debt.  At the times specified in Section 2.07
and promptly following any change to Total Reserve Value pursuant to Section 8.13(c) or
Section 9.12(d), the Borrower will deliver a certificate of a Responsible
Officer of the Borrower setting forth the Total Reserve Value both immediately
prior to and after giving effect to such event.

 

(r)            Other Requested
Information.  Promptly
following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower or any of
its Subsidiaries (including, without limitation, any Plan and any reports or
other information required to be filed under ERISA), or compliance with the
terms of this Agreement or any other Loan Document, as the Administrative Agent
or any Lender may reasonably request.

 

Section 8.02           Notices of
Material Events.  The
Borrower will furnish to the Administrative Agent and each Lender, promptly
after the Borrower obtains knowledge thereof, written notice of the following:

 

(a)           the occurrence
of any Default;

 

(b)           the filing or
commencement of, or the threat in writing of, any action, suit, investigation,
arbitration or proceeding by or before any arbitrator or Governmental Authority
against or affecting the Borrower or any Subsidiary thereof, or any material
adverse development in any action, suit, proceeding, investigation or
arbitration (whether or not previously disclosed to the Lenders), that, in
either case, if adversely determined, could reasonably be expected to result in
liability in excess of $10,000,000;

 

(c)           the occurrence
of any ERISA Event that, alone or together with any other ERISA Events that
have occurred, could reasonably be expected to result in liability of the
Borrower and its Subsidiaries in an aggregate amount exceeding $3,000,000; and

 

(d)           any other
development that results in, or could reasonably be expected to result in, a
Material Adverse Effect.

 

47

 

Each
notice delivered under this Section 8.02 shall be accompanied by a
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.

 

Section 8.03           Existence;
Conduct of Business.  The
Borrower will, and will cause each of its Subsidiaries to, do or cause to be
done all things necessary to preserve, renew and keep in full force and effect
its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of its business and maintain, if necessary,
its qualification to do business in each other jurisdiction in which any of its
Oil and Gas Properties is located or the ownership of its Properties requires
such qualification, except where the failure to so qualify could not reasonably
be expected to have a Material Adverse Effect; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution permitted
under Section 9.12.

 

Section 8.04           Payment of
Obligations.  The
Borrower will, and will cause each of its Subsidiaries to, pay its obligations,
including Tax liabilities of the Borrower and all of its Subsidiaries before
the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (b) the Borrower or such Subsidiary has set aside on its
books adequate reserves with respect thereto in accordance with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected
to result in a Material Adverse Effect or result in the seizure or levy of any
material Property of the Borrower or any of its Subsidiaries.

 

Section 8.05           Performance of Obligations
under Loan Documents.  The
Borrower will pay the Notes according to the reading, tenor and effect thereof,
and the Borrower will, and the Borrower will cause each of its Subsidiaries to
do and perform every act and discharge all of the obligations to be performed
and discharged by them under the Loan Documents, including, without limitation,
this Agreement, at the time or times and in the manner specified.

 

Section 8.06           Operation and
Maintenance of Properties.  The
Borrower will, and will cause each of its Subsidiaries to:

 

(a)           operate its Oil
and Gas Properties and other material Properties or cause such Oil and Gas
Properties and other material Properties to be operated in a careful and
efficient manner in accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in compliance with
all Governmental Requirements, including, without limitation, applicable
proration requirements and Environmental Laws, and all applicable laws, rules and
regulations of every other Governmental Authority from time to time constituted
to regulate the development and operation of its Oil and Gas Properties and the
production and sale of Hydrocarbons and other minerals therefrom, except, in
each case, where the failure to comply could not reasonably be expected to have
a Material Adverse Effect.

 

(b)           keep and
maintain all Property material to the conduct of its business in good working
order and condition, ordinary wear and tear excepted, and preserve, maintain
and keep in good repair, working order and efficiency (ordinary wear and tear
excepted) all of its material Oil and Gas Properties and other material
Properties, including, without limitation, all material equipment, machinery
and facilities.

 

48

 

(c)           promptly pay
and discharge, or make reasonable and customary efforts to cause to be paid and
discharged, all delay rentals, royalties, expenses and indebtedness accruing
under the leases or other agreements affecting or pertaining to its material
Oil and Gas Properties and will do all other things necessary to keep
unimpaired their material rights with respect thereto and prevent any
forfeiture thereof or material default thereunder.

 

(d)           promptly
perform or make reasonable and customary efforts to cause to be performed, in
accordance with industry standards and in all material respects, the
obligations required by each and all of the assignments, deeds, leases,
sub-leases, contracts and agreements affecting its interests in its material
Oil and Gas Properties and other material Properties.

 

(e)           to the extent
the Borrower or one of its Subsidiaries is not the operator of any Property,
the Borrower shall use reasonable efforts to cause the operator to comply with
this Section 8.06.

 

Section 8.07           Insurance.  The Borrower will, and will cause each of its
Subsidiaries to, maintain, with financially sound and reputable insurance
companies, insurance in such amounts and against such risks as are customarily
maintained by companies engaged in the same or similar businesses operating in
the same or similar locations.  The loss
payable clauses or provisions in said insurance policy or policies insuring any
of the collateral for the Loans shall be endorsed in favor of and made payable
to the Administrative Agent as its interests may appear and such policies shall
name the Administrative Agent and the Lenders as “additional insureds” and
provide that the insurer will give at least 30 days prior notice of any
cancellation to the Administrative Agent.

 

Section 8.08           Books and
Records; Inspection Rights.  The Borrower will, and will cause each of its
Subsidiaries to, keep proper books of record and account in which full, true
and correct entries are made of all dealings and transactions in relation to
its business and activities.  The
Borrower will, and will cause each of its Subsidiaries to, permit any
representatives designated by the Administrative Agent or any Lender, upon
reasonable prior notice, to visit and inspect its Properties, to examine and
make extracts from its books and records, and to discuss its affairs, finances
and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested.

 

Section 8.09           Compliance with
Laws.  The Borrower will, and will
cause each of its Subsidiaries to, comply with all laws, rules, regulations and
orders of any Governmental Authority applicable to them or their Property,
except where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.

 

Section 8.10           Environmental
Matters.

 

(a)           The Borrower
shall at its sole expense (including such contribution from third parties as
may be available): (i) comply, and shall cause its Properties and
operations and each Subsidiary and each Subsidiary’s Properties and operations
to comply, with all applicable Environmental Laws, the breach of which could be
reasonably expected to have a Material Adverse Effect; (ii) not dispose of
or otherwise release, and shall cause each Subsidiary not to dispose of or
otherwise release, any oil, oil and gas waste, hazardous substance, or solid
waste 

 

49

 

on, under, about or from any
of the Borrower’s or its Subsidiaries’ Properties or any other Property to the
extent caused by the Borrower’s or any of its Subsidiaries’ operations except
in compliance with applicable Environmental Laws, the disposal or release of
which could reasonably be expected to have a Material Adverse Effect; (iii) timely
obtain or file, and shall cause each Subsidiary to timely obtain or file, all
notices, permits, licenses, exemptions, approvals, registrations or other
authorizations, if any, required under applicable Environmental Laws to be
obtained or filed in connection with the operation or use of the Borrower’s or
its Subsidiaries’ Properties, which failure to obtain or file could reasonably
be expected to have a Material Adverse Effect; (iv) promptly commence and
diligently prosecute to completion, and shall cause each Subsidiary to promptly
commence and diligently prosecute to completion, any assessment, evaluation,
investigation, monitoring, containment, cleanup, removal, repair, restoration,
remediation or other remedial obligations (collectively, the “Remedial Work”)
in the event any Remedial Work is required or reasonably necessary under
applicable Environmental Laws because of or in connection with the actual or
suspected past, present or future disposal or other release of any oil, oil and
gas waste, hazardous substance or solid waste on, under, about or from any of
the Borrower’s or its Subsidiaries’ Properties, which failure to commence and
diligently prosecute to completion could reasonably be expected to have a
Material Adverse Effect; and (v) establish and implement, and shall cause
each Subsidiary to establish and implement, such reasonable policies of
environmental audit and compliance as may be reasonably necessary to
continuously determine and assure that the Borrower’s and its Subsidiaries’
obligations under this Section 8.10(a) are timely and fully
satisfied, which failure to establish and implement could reasonably be
expected to have a Material Adverse Effect.

 

(b)           The Borrower
will promptly, but in any event within five (5) days thereof, notify the
Administrative Agent and the Lenders in writing of any threatened action,
investigation or inquiry by any Governmental Authority or any threatened demand
or lawsuit by any landowner or other third party against the Borrower or its
Subsidiaries or their Properties of which the Borrower has knowledge in
connection with any Environmental Laws (excluding routine testing and
corrective action) if the Borrower reasonably anticipates that such action will
result in liability (whether individually or in the aggregate) in excess of
$10,000,000, not fully covered by insurance, subject to normal deductibles.

 

(c)           The Borrower
will, and will cause each Subsidiary to, provide environmental audits and tests
in accordance with American Society of Testing Materials standards upon request
by the Administrative Agent and the Lenders and no more than once per year in
the absence of any Event of Default (or as otherwise reasonably required to be
obtained by the Administrative Agent or the Lenders by any Governmental
Authority), in connection with any future acquisitions of material Oil and Gas
Properties or other material Properties.

 

Section 8.11           Further
Assurances.

 

(a)           The Borrower at
its sole expense will, and will cause each of its Subsidiaries to, promptly
execute and deliver to the Administrative Agent all such other documents,
agreements and instruments reasonably requested by the Administrative Agent to
comply with, cure any defects or accomplish the conditions precedent, covenants
and agreements of the Borrower or any of its Subsidiaries, as the case may be,
in the Loan Documents, including the Notes, or to further evidence and more
fully describe the collateral intended as security for

 

50

 

the Indebtedness, or to
correct any omissions in this Agreement or the Security Instruments, or to
state more fully the obligations secured therein, or to perfect, protect or
preserve any Liens created pursuant to this Agreement or any of the Security Instruments
or the priority thereof, or to make any recordings, file any notices or obtain
any consents, all as may be reasonably necessary or appropriate, in the sole
discretion of the Administrative Agent, in connection therewith.

 

(b)           The Borrower hereby authorizes the
Administrative Agent to file one or more financing or continuation statements,
and amendments thereto, relative to all or any part of the Mortgaged Property
without the signature of the Borrower or any other Guarantor where permitted by
law.  A carbon, photographic or other
reproduction of the Security Instruments or any financing statement covering
the Mortgaged Property or any part thereof shall be sufficient as a financing
statement where permitted by law.  The
Administrative Agent will promptly send the Borrower any financing or
continuation statements it files without the signature of the Borrower or any
other Guarantor and the Administrative Agent will promptly send the Borrower
the filing or recordation information with respect thereto.

 

Section 8.12          Reserve Reports.

 

(a)           On
or before March 1st and September 1st of each year, commencing March 1st,
2008, the Borrower shall furnish to the Administrative Agent and the Lenders a
Reserve Report as of the immediately preceding December 31st or
June 30th, as applicable. 
The Reserve Report as of December 31st of each year
shall be prepared by one or more petroleum engineers reasonably acceptable to
the Administrative Agent and the June 30th Reserve Report of
each year shall be prepared by or under the supervision of the chief engineer
of the Borrower who shall certify such Reserve Report to be true and accurate
and to have been prepared in accordance with the procedures used in the
immediately preceding December 31st Reserve Report.

 

(b)           With the delivery of
each Reserve Report, the Borrower shall provide to the Administrative Agent and
the Lenders a certificate from a Responsible Officer certifying that in all
material respects: (i) the information provided by the Borrower in
connection with the preparation of such Reserve Report and any other
information delivered in connection therewith by the Borrower is true and
correct, and any projections based upon such information have been prepared in
good faith based upon assumptions believed by the Borrower to be reasonable,
subject to uncertainties inherent in all projections, (ii) the Borrower or
its Subsidiaries owns good and defensible title to the Oil and Gas Properties
evaluated in such Reserve Report and such Properties are free of all Liens
except for Liens permitted by Section 9.03, (iii) except as set forth
on an exhibit to the certificate, on a net basis there are no gas imbalances,
take or pay or other prepayments in excess of the volume specified in Section 7.18
with respect to their Oil and Gas Properties evaluated in such Reserve Report
that would require the Borrower or any of its Subsidiaries to deliver
Hydrocarbons either generally or produced from such Oil and Gas Properties at
some future time without then or thereafter receiving full payment therefor, (iv) none
of their Oil and Gas Properties have been sold since the date of the last
Reserve Report except as set forth on an exhibit to the certificate, which
certificate shall list all of its Oil and Gas Properties sold and in such
detail as reasonably required by the Administrative Agent, (v) attached to
the certificate is a list of all marketing agreements entered into subsequent
to the later 

 

51

 

of
the date hereof or the most recently delivered Reserve Report that the Borrower
could reasonably be expected to have been obligated to list on Schedule 7.19
had such agreement been in effect on the date hereof and (vi) attached
thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve
Report that are Mortgaged Properties and demonstrating the percentage of the
present value that such Mortgaged Properties represent.

 

Section 8.13           Title Information.

 

(a)           On or before the
delivery to the Administrative Agent and the Lenders of each Reserve Report
required by Section 8.12(a), to the extent requested by the Administrative
Agent, the Borrower will deliver title information in form and substance
reasonably acceptable to the Administrative Agent covering enough of the Oil
and Gas Properties evaluated by such Reserve Report that were not included in
the immediately preceding Reserve Report, so that the Administrative Agent
shall have received together with title information previously delivered to the
Administrative Agent, reasonably satisfactory title information on such portion
of the Oil and Gas Properties evaluated by such Reserve Report, not to exceed
80% of the total value thereof, as may be reasonably requested by the
Administrative Agent.

 

(b)           If the Borrower has provided title
information for additional Properties under Section 8.13(a), the Borrower
shall, within 60 days of notice from the Administrative Agent that title
defects or exceptions exist with respect to such additional Properties, either (i) cure
any such title defects or exceptions (including defects or exceptions as to
priority) which are not permitted by Section 9.03 raised by such
information, (ii) substitute acceptable Mortgaged Properties with no title
defects or exceptions except for Excepted Liens (other than Excepted Liens
described in clauses (e), (g) and (h) of such definition) having an
equivalent value or (iii) deliver title information in form and substance
reasonably acceptable to the Administrative Agent so that the Administrative
Agent shall have received, together with title information previously delivered
to the Administrative Agent, reasonably satisfactory title information on such
portion of the Oil and Gas Properties evaluated by such Reserve Report, not to
exceed 80% of the total value thereof, as may be reasonably requested by the
Administrative Agent.

 

(c)           If the Borrower is unable to cure any
title defect requested by the Administrative Agent or the Lenders to be cured
within the 60-day period or the Borrower does not comply with the requirements
to provide acceptable title information as required by Section 8.13(a) and
Section 8.13(b), such default shall not be a Default, but instead the
Administrative Agent and/or the Majority Lenders shall have the right to
exercise the following remedy in their sole discretion from time to time, and
any failure to so exercise this remedy at any time shall not be a waiver as to
future exercise of the remedy by the Administrative Agent or the Lenders.  To the extent that the Administrative Agent
or the Majority Lenders are not reasonably satisfied with title to any
Mortgaged Property after the 60-day period has elapsed, such unacceptable
Mortgaged Property shall not count towards the requirements of Section 8.13(a) and
Section 8.13(b), and the Administrative Agent may send a notice to the
Borrower and the Lenders that the then outstanding Total Reserve Value shall be
reduced by an amount as determined by the Majority Lenders to cause the
Borrower to be in compliance with the requirement to provide acceptable title
information pursuant to Section 8.13(a) and Section 8.13(b).  This new Total Reserve Value shall become
effective immediately after receipt of such notice.

 

52

 

Section 8.14           Additional
Collateral; Additional Guarantors.

 

(a)           In connection with the delivery of
each Reserve Report, the Borrower shall review the Reserve Report and the list
of current Mortgaged Properties (as described in Section 8.12(b)(vi)) to
ascertain whether the Mortgaged Properties represent at least 80% of the total
value of the Oil and Gas Properties evaluated in the most recently completed
Reserve Report after giving effect to exploration and production activities,
acquisitions, dispositions and production. 
In the event that the Mortgaged Properties do not represent at least 80%
of such total value, then the Borrower shall, and shall cause its Subsidiaries
to, grant, within sixty (60) days of the delivery of the certificate
contemplated by Section 8.12(b), to the Administrative Agent or its
designee as security for the Indebtedness a Lien interest (subject to a Lien
under the Senior Revolving Credit Documents and provided the Excepted Liens of
the type described in clauses (a) to (d) and (f) of the
definition thereof may exist, but subject to the provisos at the end of such
definition) on additional Oil and Gas Properties not already subject to a Lien
of the Security Instruments such that after giving effect thereto, the
Mortgaged Properties will represent at least 80% of such total value.  All such Liens will be created and perfected
by and in accordance with the provisions of deeds of trust, security agreements
and financing statements or other Security Instruments, all in form and
substance reasonably satisfactory to the Administrative Agent or its designee
and in sufficient executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.  In
order to comply with the foregoing, if any Subsidiary places a Lien on its Oil
and Gas Properties and such Subsidiary is not a Guarantor, then it shall become
a Guarantor and comply with Section 8.14(b).

 

(b)           If (i) the Borrower determines
that any Subsidiary is a Material Domestic Subsidiary or (ii) any Domestic
Subsidiary incurs or guarantees any Debt other than the Indebtedness, and in
either case, such Subsidiary is not already a Guarantor, then the Borrower
shall promptly cause such Subsidiary to guarantee the Indebtedness pursuant to
the Guaranty Agreement.  In connection
with any such guaranty, the Borrower shall, or shall cause such Subsidiary to, (A) execute
and deliver a supplement to the Guaranty Agreement executed by such Subsidiary,
(B) pledge all of the Equity Interests of such Subsidiary (including,
without limitation, delivery of original stock certificates evidencing the
Equity Interests of such Subsidiary, together with an appropriate undated stock
powers for each certificate duly executed in blank by the registered owner
thereof to the Administrative Agent or if the Senior Revolving Credit Agreement
is then in effect, to the administrative agent thereunder) and (C) execute
and deliver such other additional closing documents, certificates and legal
opinions as shall reasonably be requested by the Administrative Agent or its
designee.

 

(c)           Prior to or contemporaneously with
the granting of any Lien on any Property to or for the benefit of any agent or
lender under the Senior Revolving Credit Agreement pursuant to any Senior
Revolving Credit Document or otherwise, the Borrower or applicable Subsidiary
shall grant to the Administrative Agent a Lien interest (subject only to Liens
under the Senior Revolving Credit Documents and Excepted Liens of the type
described in clauses (a) to (d) and (f) in the definition
thereof, but subject to the provisos at the end of such definition) on such
Property for the benefit of the Lenders to secure the Indebtedness.  All such Liens in favor of the Administrative
Agent will be created and perfected by and in accordance with the provisions of
deeds of trust, security agreements and financing statements or other 

 

53

 

Security Instruments, all in
form and substance reasonably satisfactory to the Administrative Agent and in a
sufficient number of executed (and acknowledged where necessary or appropriate)
counterparts for recording purposes.  In
order to comply with the foregoing, if any Subsidiary places a Lien on its Oil
and Gas Properties and such Subsidiary is not a Guarantor, then it shall become
a Guarantor and comply with Section 8.14(b).

 

Section 8.15           ERISA Compliance.  The Borrower will promptly furnish, and will
cause its Subsidiaries and any ERISA Affiliate to promptly furnish, to the
Administrative Agent (a) immediately upon becoming aware of the occurrence
of any ERISA Event, a written notice signed by the President or the principal
Financial Officer of the Borrower, its Subsidiaries or the ERISA Affiliate, as
the case may be, specifying the nature thereof, what action the Borrower, its
Subsidiaries or the ERISA Affiliate is taking or proposes to take with respect
thereto, and, if then known, any action taken or proposed by the Internal
Revenue Service, the Department of Labor or the PBGC with respect thereto, and (b) immediately
upon receipt thereof, copies of any notice of the PBGC’s intention to terminate
or to have a trustee appointed to administer any Plan.

 

Section 8.16           Marketing Activities.  The Borrower will not, and will not permit
any of its Subsidiaries to, engage in marketing activities for any Hydrocarbons
or enter into any contracts related thereto other than (a) contracts for
the sale of Hydrocarbons scheduled or reasonably estimated to be produced from
their proved Oil and Gas Properties during the period of such contract, (b) contracts
for the sale of Hydrocarbons scheduled or reasonably estimated to be produced
from proved Oil and Gas Properties of third parties during the period of such
contract associated with the Oil and Gas Properties of the Borrower and its
Subsidiaries that the Borrower or one of its Subsidiaries has the right to
market pursuant to joint operating agreements, unitization agreements or other
similar contracts that are usual and customary in the oil and gas business and (c) other
contracts for the purchase and/or sale of Hydrocarbons of third parties (i) which
have generally offsetting provisions (i.e. corresponding pricing mechanics,
delivery dates and points and volumes) such that no “position” is taken and (ii) for
which appropriate credit support has been taken to alleviate the material credit
risks of the counterparty thereto.

 

Section 8.17           Swap Agreements.  Within 30 days of the
Effective Date, the Borrower shall enter into Swap Agreements with
respect to the Acquisition Properties for volumes and prices satisfactory to
the Administrative Agent and the Borrower shall neither assign, terminate or
unwind any such Swap Agreements nor sell any Swap Agreements if the effect of
such action (when taken together with any other Swap Agreements executed
contemporaneously with the taking of such action) would have the effect of
canceling its positions under such Swap Agreements required hereby.

 

Section 8.18           Permanent Securities.  The Borrower shall use commercially
reasonable efforts to prepare a registration statement or a Rule 144A
offering memorandum relating to the Permanent Securities, and provide to the
Arrangers a complete initial draft of such document (including the financial
statements to be included therein) in each case, no later than 13 months after
the Effective Date, provided that the Borrower shall not be required to issue
or sell Permanent Securities pursuant to such registration statement or
offering memorandum.  The Borrower shall
engage and provide evidence of such engagement to the Administrative Agent, and
at all times retain an Investment Bank (or promptly engage another Investment
Bank if either 

 

54

 

party disengages from such
relationship) for the purpose of assisting the Borrower using commercially
reasonable efforts to issue, sell or place the Permanent Securities, the Net
Cash Proceeds of which shall equal or exceed the outstanding principal balance
of the Loans, interest thereon and all fees and expenses required to be paid
under this Agreement and be available to repay this Agreement on or before the
Maturity Date.

 

ARTICLE
IX

Negative Covenants

 

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

 

Section 9.01           Financial
Covenants.

 

(a)           Ratio of EBITDA
to Interest Expense.  The
Borrower will not, as of the last day of any fiscal quarter, commencing with
the fiscal quarter ending March 31, 2008, permit its ratio of EBITDA for
the period of four fiscal quarters then ended to Interest Expense for such
period to be less than 2.5 to 1.0.  For
purposes of this Section 9.01(a), the calculation of EBITDA and Interest
Expense shall be as follows: (x) for the fiscal quarter ending March 31,
2008, EBITDA and Interest Expense for the two quarter period ending on such
date, each multiplied by two, (y) for the fiscal quarter ending June 30,
2008, EBITDA and Interest Expense for the three quarter period ending on such
date, each multiplied by 4/3 and (z) for each fiscal quarter ending on or
after September 30, 2008, EBITDA and Interest Expense for the period of
four fiscal quarters then ending.

 

(b)           Current Ratio.  The Borrower will not permit, as of the last
day of any fiscal quarter, its ratio of (i) consolidated current assets
(including the unused amount of the total Commitments, but excluding non-cash
assets under FAS 133) to (ii) consolidated current liabilities (excluding
non-cash obligations under FAS 133 and current maturities under this Agreement)
to be less than 1.0 to 1.0.

 

(c)           Total Reserve
Value to Total Debt Ratio.  The
Borrower will not as of any date of determination permit its ratio of (i) Total
Reserve Value as in effect on such date of determination to (ii) Total
Debt as of such date of determination to be less than 1.5 to 1.0.

 

Section 9.02           Debt.  Neither the Borrower nor any of its
Subsidiaries will incur, create, assume or suffer to exist any Debt, except:

 

(a)           the Notes or
other Indebtedness or any guaranty of or suretyship arrangement for the Notes
or other Indebtedness.

 

(b)           accounts
payable and other accrued expenses, liabilities or other obligations to pay
(for the deferred purchase price of Property or services) from time to time
incurred in the ordinary course of business which are not greater than ninety
(90) days past the date of invoice or delinquent or which are being contested
in good faith by appropriate action and for which adequate reserves have been
maintained in accordance with GAAP.

 

55

 

(c)           intercompany Debt between the
Borrower and any of its Subsidiaries or between Subsidiaries to the extent
permitted by Section 9.05(g); provided that such Debt is not held,
assigned, transferred, negotiated or pledged to any Person other than the
Borrower or one of their Wholly-Owned Subsidiaries, and, provided further, that
any such Debt owed by either the Borrower or a Guarantor shall be subordinated
to the Indebtedness on terms set forth in the Guaranty Agreement.

 

(d)           endorsements of negotiable
instruments for collection in the ordinary course of business.

 

(e)           Debt now or hereafter outstanding
under the Senior Revolving Credit Agreement (and any guarantees thereof by the
Guarantors), provided that (i) the aggregate principal amount of the
Senior Revolving Credit Agreement shall not exceed $2,250,000,000, (ii) no
part of the Debt for principal owing under the Senior Revolving Credit
Agreement is subordinated in right of payment to any other Debt for principal
owing under the Senior Revolving Credit Agreement and (iii) such Debt is
comprised of a single facility with no differentiation among lenders in the
revolving character, pricing or maturity thereof.

 

(f)            Debt associated with bonds or surety
obligations required by Governmental Requirements in connection with the
operation of Oil and Gas Properties in the ordinary course of business.

 

(g)           Debt consisting of the Dominion
Production Payment or any unsecured guarantee by the Borrower or any Guarantor
in respect thereto.

 

(h)           Capital Leases not to exceed
$25,000,000 in the aggregate at any one time.

 

(i)            Debt and any guarantees thereof,
provided that (i) at the time such Debt is incurred, no Default has
occurred and is then continuing, (ii) no Default would result from the
incurrence of such Debt after giving effect to the incurrence of such Debt (and
any concurrent repayment of Debt with the proceeds of such incurrence), and (iii) the
Net Cash Proceeds of such Debt are applied as contemplated by Section 3.05.

 

(j)            other Debt not to exceed $40,000,000
in the aggregate at any one time outstanding.

 

(k)           Extensions, renewals or replacements
of any Debt (for purposes of this paragraph (k), “refinancing debt”)
permitted in clauses (a) through (j) so long as (i) the
principal amount (or accreted value, if applicable) of such refinancing debt
does not exceed the principal amount (or accreted value, if applicable) of the
Debt extended, renewed or replaced (plus all accrued interest on the Debt and
the amount of all expenses and premiums incurred in connection therewith), (ii) such
refinancing debt has a final maturity date later than the final maturity date
of the Debt being extended, renewed or replaced, (iii) if the Debt being
extended, renewed or replaced is subordinated in right of payment to the
obligations under this Agreement, such refinancing debt has a final maturity
date equal to or later than the final maturity date of, and is subordinated in
right of payment to, the obligations under this Agreement on terms at least as
favorable to the Lenders as those contained in the documentation governing the
Debt being 

 

56

 

extended, renewed or
replaced, (iv) such refinancing debt is incurred either by the Borrower or
by a Subsidiary who is the obligor on the Debt being extended, renewed or
replaced, and (v) if incurred by the Borrower, such refinancing debt may
be guaranteed by the Guarantors.

 

Section 9.03           Liens.  Neither the Borrower nor any of its
Subsidiaries will create, incur, assume or permit to exist any Lien on any of
its Properties (now owned or hereafter acquired), except:

 

(a)           Liens securing the payment of any
Indebtedness.

 

(b)           Excepted Liens.

 

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

 

(d)           The Dominion Production Payment.

 

(e)           Liens in connection with Capital
Leases permitted under Section 9.02(h).

 

(f)            Liens on cash, marketable securities
or letters of credit in an aggregate amount not to exceed $50,000,000 at any
one time to secure Swap Agreements with Persons (or their Affiliates) who have
ceased to be lenders under the Senior Revolving Credit Agreement.

 

(g)           Liens on Property not constituting
collateral for the Indebtedness and not otherwise permitted by the foregoing
clauses of this Section 9.03; provided that the aggregate principal or
face amount of all Debt secured under this Section 9.03(g) shall not
exceed $10,000,000 at any time.

 

(h)           Extensions, renewals or replacements
of any of the Liens permitted in clauses (a) through (g) so long as (i) the
principal amount of the Debt or obligation secured thereby is no greater than
the principal amount of such Debt or obligation at the time such Lien was
permitted hereunder except for increases in an amount equal to a reasonable
premium or other reasonable amount paid, and fees and expenses reasonably
incurred, in connection with such extension, renewal, refinancing, or
replacement and in an amount equal to any existing commitments unutilized
thereunder, (ii) any such extension, renewal or replacement Lien is
limited to the property originally encumbered thereby, and (iii) any
renewal or extension of the Debt or obligations secured or benefited thereby is
permitted by Section 9.02.

 

Section 9.04           Dividends.  The Borrower will not, and will not permit
any of its Subsidiaries to, declare or make, or agree to pay or make, directly
or indirectly, any Restricted Payment, return any capital to its stockholders
or make any distribution of their Property to their respective Equity Interest
holders, except (i)  the Borrower may declare and pay dividends or
distributions with respect to its Equity Interests payable solely in additional
shares of its Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries
may declare and pay dividends 

 

57

 

or distributions ratably
with respect to their Equity Interests and (iii) so long as no Default or
Event of Default has occurred and is continuing or would result therefrom, the
Borrower may declare and pay quarterly cash dividends to its members out of
Available Cash for the preceding quarter (including amounts borrowed as
contemplated under clause (a)(ii) of the definition of Available Cash
subsequent to the end of such quarter).

 

Section 9.05           Investments,
Loans and Advances.  Neither the
Borrower nor any of its Subsidiaries will make or permit to remain outstanding
any Investments in or to any Person, except that the foregoing restriction
shall not apply to:

 

(a)           Investments
reflected in the Financial Statements.

 

(b)           accounts
receivable arising in the ordinary course of business.

 

(c)           direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, in each case maturing
within one year from the date of creation thereof.

 

(d)           commercial
paper maturing within one year from the date of creation thereof rated A2 or P2
by S&P or Moody’s.

 

(e)           deposits
maturing within one year from the date of creation thereof with, including
certificates of deposit issued by, any Lender or any office located in the
United States of any other bank or trust company which is organized under the
laws of the United States or any state thereof, has capital, surplus and
undivided profits aggregating at least $250,000,000 (as of the date of such
bank or trust company’s most recent financial reports) and has a short term
deposit rating of no lower than A2 or P2, as such rating is set forth from time
to time, by S&P or Moody’s, respectively.

 

(f)            deposits in
money market funds investing primarily in Investments described in Section 9.05(c),
Section 9.05(d) or Section 9.05(e).

 

(g)           Investments (i) made
by the Borrower in or to the Guarantors, (ii) made by any Subsidiary in or
to the Borrower or any Guarantor, (iii) made by the Borrower or any
Guarantor in any Person that owns Oil and Gas Properties which are overriding
royalty, royalty interests or other similar non-cost bearing interests and
which does not own other material Properties, provided, that after the
consummation of such Investment (A) the Borrower and its Subsidiaries are
in compliance with all covenants under this Agreement and (B) such Person
promptly becomes a Guarantor or is promptly dissolved into a Guarantor or the
Borrower and (iv) made by the Borrower or any Guarantor in Subsidiaries
that are not Guarantors, provided that the aggregate of all Investments made by
the Borrower and the Guarantors in or to all Subsidiaries that are not
Guarantors shall not exceed $10,000,000 at any time.

 

(h)           Investments
(including, without limitation, capital contributions) in general or limited
partnerships or other types of entities (each a “venture”) entered into
by the Borrower or any of its Subsidiaries with others in the ordinary course
of business; provided that (i) any such venture is engaged exclusively in
oil and gas exploration, development, production, 

 

58

 

processing and related
activities, including transportation, treatment and storage, (ii) the
interest in such venture is acquired in the ordinary course of business and on
fair and reasonable terms and (iii) such venture interests acquired and
capital contributions made (valued as of the date such interest was acquired or
the contribution made) do not exceed, in the aggregate at any time outstanding
an amount equal to $10,000,000.

 

(i)            subject to the limits in Section 9.06,
Investments, including the Acquisition, in direct ownership interests in
additional Oil and Gas Properties and gas gathering systems related thereto or
related to farm-out, farm-in, joint operating, joint venture or area of mutual
interest agreements, gathering systems, pipelines or other similar arrangements
which are usual and customary in the oil and gas exploration and production
business located within the geographic boundaries of the United States of
America.

 

(j)            loans or advances to employees,
officers or directors in the ordinary course of business of the Borrower or any
of its Subsidiaries, in each case only as permitted by applicable law,
including Section 402 of the Sarbanes Oxley Act of 2002, but in any event
not to exceed $1,000,000 in the aggregate at any time.

 

(k)           Investments in stock, obligations or
securities received in settlement of debts arising from Investments permitted
under this Section 9.05 owing to the Borrower or any of its Subsidiaries
as a result of a bankruptcy or other insolvency proceeding of the obligor in
respect of such debts or upon the enforcement of any Lien in favor of the
Borrower or any of its Subsidiaries; provided that the Borrower shall give the
Administrative Agent prompt written notice in the event that the aggregate
amount of all Investments held at any one time under this Section 9.05(k) exceeds
$1,000,000.

 

(l)            Any guarantee permitted under Section 9.02.

 

Section 9.06           Nature of Business.  Neither the Borrower nor any of its
Subsidiaries will allow any material change to be made in the character of its
business as an independent oil and gas exploration and production company.  The Borrower will not, and will not permit
any of its Subsidiaries to, operate its business outside the geographical
boundaries of the United States.

 

Section 9.07           Limitation on Leases.  Neither the Borrower nor any of its Subsidiaries
will create, incur, assume or suffer to exist any obligation for the payment of
rent or hire of Property of any kind whatsoever (real or personal but excluding
Capital Leases permitted by Section 9.02(h), leases of Hydrocarbon
Interests and drilling and other similar contracts), under leases or lease
agreements which would cause the aggregate amount of all payments made by the
Borrower and its Subsidiaries pursuant to all such leases or lease agreements,
including, without limitation, any residual payments at the end of any lease,
to exceed $10,000,000 in any period of twelve consecutive calendar months
during the life of such leases.

 

Section 9.08           Proceeds of Notes.  The Borrower will not permit the proceeds of
the Notes to be used for any purpose other than those permitted by Section 7.21.  Neither the Borrower nor any Person acting on
behalf of the Borrower has taken or will take any action which might cause any
of the Loan Documents to violate Regulations T, U or X or any other regulation
of the Board or to violate Section 7 of the Securities Exchange Act of
1934 or any rule 

 

59

 

or regulation thereunder, in
each case as now in effect or as the same may hereinafter be in effect.  If requested by the Administrative Agent, the
Borrower will furnish to the Administrative Agent and each Lender a statement
to the foregoing effect in conformity with the requirements of FR Form U-1
or such other form referred to in Regulation U, Regulation T or Regulation X of
the Board, as the case may be.

 

Section 9.09           ERISA
Compliance.  Except as
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect, the Borrower and its Subsidiaries will not at any
time:

 

(a)           terminate, or
permit any ERISA Affiliate to terminate, any Plan in a manner, or take any
other action with respect to any Plan, which could result in any liability of
the Borrower, any of its Subsidiaries or any ERISA Affiliate to the PBGC.

 

(b)           contribute to
or assume an obligation to contribute to, or permit any ERISA Affiliate to
contribute to or assume an obligation to contribute to, any Multiemployer Plan.

 

(c)           acquire, or
permit any ERISA Affiliate to acquire, an interest in any Person that causes
such Person to become an ERISA Affiliate with respect to the Borrower or any of
its Subsidiaries or with respect to any ERISA Affiliate of the Borrower or any
of its Subsidiaries if such Person sponsors, maintains or contributes to, or at
any time in the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, (i) any Multiemployer Plan, or (ii) any
other Plan that is subject to Title IV of ERISA under which the actuarial
present value of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in accordance with
Title IV of ERISA) of such Plan allocable to such benefit liabilities.

 

Section 9.10           Sale or
Discount of Receivables. 
Except for receivables obtained by the Borrower or any of its
Subsidiaries out of the ordinary course of business or the settlement of joint
interest billing accounts in the ordinary course of business or discounts
granted to settle collection of accounts receivable or the sale of defaulted
accounts arising in the ordinary course of business in connection with the
compromise or collection thereof and not in connection with any financing
transaction, neither the Borrower nor any of its Subsidiaries will discount or
sell (with or without recourse) any of its notes receivable or accounts
receivable.

 

Section 9.11           Mergers, Etc.  Neither the Borrower nor any of its
Subsidiaries will merge into or with or consolidate with any other Person, or
sell, lease or otherwise dispose of (whether in one transaction or in a series
of transactions) all or substantially all of its Property to any other Person,
except that any Wholly-Owned Subsidiary may merge with any other Wholly-Owned
Subsidiary so long as in the case of any merger involving a Guarantor, a
Guarantor is the surviving entity, and that the Borrower may merge with any
Wholly-Owned Subsidiary so long as the Borrower is the survivor.

 

Section 9.12           Sale of
Properties.  The
Borrower will not, and will not permit any of its Subsidiaries to, sell,
assign, farm-out, convey or otherwise transfer any Property except for: (a) the
sale of Hydrocarbons in the ordinary course of business; (b) farmouts of
undeveloped acreage 

 

60

 

and assignments in
connection with such farmouts; (c) the sale or transfer of equipment that
is no longer necessary for the business of the Borrower or such Subsidiary or
is replaced by equipment of at least comparable value and use; (d) other
sales or dispositions (including Casualty Events) of Oil and Gas Properties or
any interest therein or Subsidiaries owning Oil and Gas Properties; provided
that (i) 100% of the consideration received in respect of such other sale
or disposition shall be cash, (ii) the consideration received in respect
of such other sale or disposition shall be equal to or greater than the fair
market value of the Oil and Gas Property, interest therein or Subsidiary
subject of such other sale or disposition (as reasonably determined by the
board of directors of the Borrower and, if requested by the Administrative
Agent, the Borrower shall deliver a certificate of a Responsible Officer of the
Borrower certifying to that effect), (iii) if such other sale or
disposition of Oil and Gas Property or Subsidiary owning Oil and Gas Properties
included in the most recently delivered Reserve Report during any period
between two successive dates on which the Total Reserve Value is determined in
accordance with Section 2.07 has a fair market value (as determined by the
Administrative Agent), individually or in the aggregate, in excess of
$25,000,000, the Total Reserve Value shall be reduced, effective immediately
upon such sale or disposition, by an amount equal to the Total Reserve Value of
such Property as calculated pursuant to the most recently delivered Reserve
Report and (iv) if any such other sale or disposition is of a Subsidiary
owning Oil and Gas Properties, such other sale or disposition shall include all
the Equity Interests of such Subsidiary; and (e) sales and other
dispositions of Properties not regulated by Section 9.12(a) to (d) having
a fair market value not to exceed $10,000,000 during any 12-month period.

 

Section 9.13           Environmental Matters.  The Borrower will not, and will not permit
any Subsidiary to, cause or permit any of its Property to be in violation of,
or do anything or permit anything to be done which will subject any such
Property to any Remedial Work under any Environmental Laws, assuming disclosure
to the applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to such Property where such violations or
remedial obligations could reasonably be expected to have a Material Adverse
Effect.

 

Section 9.14           Transactions with Affiliates.  The Borrower will not, and will not permit
any Subsidiary to, enter into any transaction, including, without limitation,
any purchase, sale, lease or exchange of Property or the rendering of any
service, with any Affiliate (other than the Guarantors and Wholly-Owned
Subsidiaries of the Borrower) unless such transactions are otherwise permitted
under this Agreement and are upon fair and reasonable terms no less favorable
to it than it would obtain in a comparable arm’s length transaction with a
Person not an Affiliate.

 

Section 9.15           Subsidiaries.  The Borrower shall have no Subsidiaries other
than Wholly-Owned Subsidiaries.  The
Borrower shall not, and shall not permit its Subsidiaries to, create or acquire
any additional Subsidiary unless the Borrower gives written notice to the
Administrative Agent of such creation or acquisition and complies with Section 8.14(b).  The Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, assign or otherwise dispose of any Equity
Interests in any of its Subsidiaries. 
The Borrower shall have no Foreign Subsidiaries.

 

Section 9.16           Negative Pledge Agreements;
Dividend Restrictions.  Neither the
Borrower nor any of its Subsidiaries will create, incur, assume or suffer to
exist any contract, 

 

61

 

agreement or understanding
(other than this Agreement, the Security Instruments and the Senior Revolving
Credit Documents) that in any way prohibits or restricts the granting,
conveying, creation or imposition of any Lien on any of its Property in favor
of the Administrative Agent and the Lenders or restricts any Subsidiary from
paying dividends or making distributions to the Borrower or any Guarantor, or
which requires the consent of or notice to other Persons in connection
therewith; provided, however, that the preceding  restrictions will not apply to encumbrances
or restrictions arising under or by reason of (1) the Dominion Production
Payment but only on the Oil and Gas Property subject thereto, (2) any
leases (other than leases of Oil and Gas Properties) or licenses or similar
contracts as they affect any Property or Lien subject to such lease or license,
(3) any restriction with respect to a Subsidiary imposed pursuant to an
agreement entered into for the direct or indirect sale or disposition of all or
substantially all the equity or Property of such Subsidiary (or the Property
that is subject to such restriction) pending the closing of such sale or
disposition, (4) customary provisions with respect to the distribution of
Property in joint venture agreements or (5) Capital Leases permitted under
Section 9.02(g), but then only on the Property subject of such Capital
Leases.

 

Section 9.17           Gas Imbalances, Take-or-Pay or
Other Prepayments.  The Borrower will
not, and will not permit any of its Subsidiaries to, allow gas imbalances,
take-or-pay or other prepayments with respect to the Oil and Gas Properties of
the Borrower or any of its Subsidiaries that would require the Borrower or such
Subsidiary to deliver, in the aggregate, two percent (2%) or more of the
monthly production of Hydrocarbons at some future time without then or
thereafter receiving full payment therefor.

 

Section 9.18           Swap Agreements.  Neither the Borrower nor any of its
Subsidiaries will enter into any Swap Agreements with any Person other than (a) Swap
Agreements in respect of commodities (i) with an Approved Counterparty, (ii) the
notional volumes for which (when aggregated with other commodity Swap
Agreements then in effect other than basis differential swaps on volumes
already hedged pursuant to other Swap Agreements) do not exceed, as of the date
such Swap Agreement is executed, 85% of the reasonably anticipated projected
production from Proved Reserves for each month during the period during which
such Swap Agreement is in effect for each of crude oil and natural gas,
calculated separately, for the remainder of the calendar year plus the next two
full calendar years succeeding the execution of such Swap Agreement and 70% of
the reasonably anticipated projected production from Proved Reserves for each month
during the period during which such Swap Agreement is in effect for each of
crude oil and natural gas, calculated separately, for each month thereafter,
and (iii) the notional volumes for which do not exceed the current net
monthly production (regardless of projected production levels) at the time such
Swap Agreement is executed, calculated separately for each of crude oil and
natural gas, provided, that the foregoing shall not prevent the Borrower from
entering into forward agreements in respect of commodity Swap Agreements in
respect of future projected volumes from Oil and Gas Properties subject to the
Dominion Production Payment, so long as the notional volumes under such forward
agreements do not exceed the reasonably anticipated net monthly production for
all calculation periods under such forward agreements, calculated separately
for each of crude oil and natural gas, and (b) Swap Agreements in respect
of interest rates with an Approved Counterparty, which effectively convert
interest rates from floating to fixed, the notional amounts of which (when
aggregated with all other Swap Agreements of the Borrower and its Subsidiaries
then in effect effectively converting interest 

 

62

 

rates from floating to
fixed) do not exceed 90% of the then outstanding principal amount of the
Borrower’s Debt for borrowed money which bears interest at a floating
rate.  Notwithstanding anything to the
contrary in this Section 9.18, there shall be no prohibition against the
Borrower entering into any “put” contracts or commodity price floors so long as
such agreements are entered into for non-speculative purposes and in the
ordinary course of business for the purpose of hedging against fluctuations of
commodity prices.

 

Section 9.19           Tax Status as
Partnership.  The
Borrower shall not alter its status as a partnership for purposes of United
States Federal Income taxes.

 

Section 9.20           Acquisition
Documents.  The
Borrower will not, and will not permit any of its Subsidiaries to, amend,
modify or supplement any of the Acquisition Documents if the effect thereof
could reasonably be expected to have a Material Adverse Effect (and provided
that the Borrower promptly furnishes to the Administrative Agent a copy of such
amendment, modification or supplement).

 

Section 9.21           Anti-Layering.  The Borrower will not, and will not permit
any Subsidiary to, incur, create, assume or suffer to exist any Debt if such
Debt is subordinate or junior in ranking in right of payment to the Senior
Revolving Credit Agreement, unless such Debt is pari passu or expressly
subordinated in right of payment to the obligations under this Agreement.

 

ARTICLE
X

Events of Default; Remedies

 

Section 10.01         Events of
Default.  One or more of the following
events shall constitute an “Event of Default”:

 

(a)           the Borrower
shall fail to pay any principal of any Loan when and as the same shall become
due and payable, whether at the due date thereof or at a date fixed for
prepayment thereof or otherwise.

 

(b)           the Borrower
shall fail to pay any interest on any Loan or any fee or any other amount
(other than an amount referred to in Section 10.01(a)) payable under any
Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of three Business Days.

 

(c)           any
representation or warranty made or deemed made by or on behalf of the Borrower
or any of its Subsidiaries in or in connection with any Loan Document or any
amendment or modification of any Loan Document or waiver under such Loan
Document, or in any report, certificate, financial statement or other document
furnished pursuant to or in connection with any Loan Document or any amendment
or modification thereof or waiver thereunder, shall prove to have been
incorrect when made or deemed made.

 

(d)           the Borrower or
any of its Subsidiaries shall fail to observe or perform any covenant,
condition or agreement contained in, Section 8.01(l), Section 8.01(m),
Section 8.02, Section 8.03 or in ARTICLE IX.

 

63

 

(e)           the Borrower or any of its
Subsidiaries shall fail to observe or perform any covenant, condition or
agreement contained in this Agreement (other than those specified in Section 10.01(a),
Section 10.01(b) or Section 10.01(d)) or any other Loan
Document, and such failure shall continue unremedied for a period of 30 days
after the earlier to occur of (i) notice thereof from the Administrative
Agent to the Borrower (which notice will be given at the request of any Lender)
or (ii) a Responsible Officer of the Borrower or any of its Subsidiaries
otherwise becoming aware of such default.

 

(f)            the Borrower or any of its
Subsidiaries shall fail to make any payment (whether of principal or interest
and regardless of amount) in respect of any Material Indebtedness, when and as
the same shall become due and payable (after giving effect to any applicable
notice and cure period).

 

(g)           any event or condition occurs (after
giving effect to any notice or cure period) that results in any Material
Indebtedness (other than the Senior Revolving Credit Agreement) becoming due
prior to its scheduled maturity or that enables or permits (with or without the
giving of notice, the lapse of time or both) the holder or holders of any
Material Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the Redemption thereof
or any offer to Redeem to be made in respect thereof, prior to its scheduled
maturity or require the Borrower or any of its Subsidiaries to make an offer in
respect thereof.

 

(h)           any event or condition occurs (after
giving effect to any notice or cure period) that results in the Senior
Revolving Credit Notes becoming due prior to their scheduled maturity or
requires the Borrower or any of its Subsidiaries to make an offer in respect
thereof.

 

(i)            an involuntary proceeding shall be
commenced or an involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Borrower or any of its Subsidiaries
or its debts, or of a substantial part of its assets, under any  federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered.

 

(j)            the Borrower or any of its
Subsidiaries shall (i) voluntarily commence any proceeding or file any
petition seeking liquidation, reorganization or other relief under any federal,
state or foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect, (ii) consent to the institution of, or fail to
contest in a timely and appropriate manner, any proceeding or petition
described in Section 10.01(i), (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any of its Subsidiaries or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors or (vi) take any action
for the purpose of effecting any of the foregoing; or any member of the
Borrower shall make any request or take any action for the purpose of calling a
meeting of the members of the Borrower to consider a resolution to dissolve and
wind-up the Borrower’s affairs.

 

64

 

(k)           the Borrower or
any of its Subsidiaries shall become unable, admit in writing its inability or
fail generally to pay its debts as they become due.

 

(l)            (i) one or
more judgments for the payment of money in an aggregate amount in excess of
$10,000,000 (to the extent not covered by independent third party insurance
provided by insurers of the highest claims paying rating or financial strength
as to which the insurer does not dispute coverage and is not subject to an
insolvency proceeding) or (ii) any one or more non monetary judgments that
have, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, shall be rendered against the Borrower,
any of its Subsidiaries or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Borrower or any of its
Subsidiaries to enforce any such judgment.

 

(m)          the Loan
Documents after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms against the Borrower or
a Guarantor party thereto or shall be repudiated by them, or cease to create a valid
and perfected Lien of the priority required thereby on any of the collateral
purported to be covered thereby, except to the extent permitted by the terms of
this Agreement, or the Borrower or any of its Subsidiaries shall so state in
writing.

 

(n)           an ERISA Event
shall have occurred that, when taken together with all other ERISA Events that
have occurred, could reasonably be expected to have a Material Adverse Effect.

 

(o)           a Change in
Control shall occur.

 

Section 10.02         Remedies.

 

(a)           In the case of
an Event of Default other than one described in Section 10.01(i), Section 10.01(j) or
Section 10.01(k), at any time thereafter during the continuance of such
Event of Default, the Administrative Agent, at the request of the Majority
Lenders, shall, by notice to the Borrower, declare the Notes and the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to
be due and payable), and thereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower and the Guarantors accrued hereunder and under the
Notes and the other Loan Documents, shall become due and payable immediately,
without presentment, demand, protest, notice of intent to accelerate, notice of
acceleration or other notice of any kind, all of which are hereby waived by the
Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(i),
Section 10.01(j) or  Section 10.01(k),
the Notes and the principal of the Loans then outstanding, together with
accrued interest thereon and all fees and the other obligations of the Borrower
and the Guarantors accrued hereunder and under the Notes and the other Loan
Documents, shall automatically become due and payable, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower and each Guarantor.

 

65

 

(b)           In the case of the occurrence of an
Event of Default, the Administrative Agent and the Lenders will have all other
rights and remedies available at law and equity.

 

(c)           All proceeds realized from the
liquidation or other disposition of collateral or otherwise received after
maturity of the Notes, whether by acceleration or otherwise, shall be
applied:  first, to reimbursement of expenses and indemnities provided
for in this Agreement and the Security Instruments; second, to accrued interest on the Notes; third, to fees; fourth, pro rata to principal outstanding on the Notes; fifth, to any other Indebtedness; and any
excess shall be paid to the Borrower or as otherwise required by any
Governmental Requirement.

 

Section 10.03         Disposition of Proceeds.  The Security Instruments contain an
assignment by the Borrower and/or the Guarantors unto and in favor of the
Administrative Agent for the benefit of the Lenders of all of the Borrower’s or
each Guarantor’s interest in and to production and all proceeds attributable
thereto which may be produced from or allocated to the Mortgaged Property.  The Security Instruments further provide in
general for the application of such proceeds to the satisfaction of the
Indebtedness and other obligations described therein and secured thereby.  Notwithstanding the assignment contained in
such Security Instruments, except after the occurrence and during the
continuance of an Event of Default, (a) the Administrative Agent and the
Lenders agree that they will neither notify the purchaser or purchasers of such
production nor take any other action to cause such proceeds to be remitted to
the Administrative Agent or the Lenders, but the Lenders will instead permit
such proceeds to be paid to the Borrower and its Subsidiaries and (b) the
Lenders hereby authorize the Administrative Agent to take such actions as may
be necessary to cause such proceeds to be paid to the Borrower and/or its
Subsidiaries.

 

ARTICLE
XI

The Administrative Agent

 

Section 11.01         Appointment; Powers.  Each of the Lenders hereby irrevocably
appoints the Administrative Agent as its agent and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof and the
other Loan Documents, together with such actions and powers as are reasonably
incidental thereto.

 

Section 11.02         Duties and Obligations of
Administrative Agent.  The
Administrative Agent shall have no duties or obligations except those expressly
set forth in the Loan Documents.  Without
limiting the generality of the foregoing, (a) the Administrative Agent
shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing (the use of the term “agent”
herein and in the other Loan Documents with reference to the Administrative
Agent is not intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law; rather, such
term is used merely as a matter of market custom, and is intended to create or
reflect only an administrative relationship between independent contracting
parties), (b) the Administrative Agent shall have no duty to take any
discretionary action or exercise any discretionary powers, except as provided
in Section 11.03, and (c) except as expressly set forth herein, the
Administrative Agent shall have no duty to disclose, and shall not be liable
for the failure to disclose, any information relating to the Borrower or any of
its Subsidiaries that is 

 

66

 

communicated to or obtained
by the bank serving as Administrative Agent or any of its Affiliates in any
capacity.  The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until written notice
thereof is given to the Administrative Agent by the Borrower or a Lender, and
shall not be responsible for or have any duty to ascertain or inquire into (i) any
statement, warranty or representation made in or in connection with this
Agreement or any other Loan Document, (ii) the contents of any
certificate, report or other document delivered hereunder or under any other
Loan Document or in connection herewith or therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth herein or in any other Loan Document, (iv) the
validity, enforceability, effectiveness or genuineness of this Agreement, any
other Loan Document or any other agreement, instrument or document, (v) the
satisfaction of any condition set forth in ARTICLE VI or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to
the Administrative Agent, (vi) the existence, value, perfection or
priority of any collateral security or the financial or other condition of the
Borrower and its Subsidiaries or any other obligor or guarantor, or (vii) any
failure by the Borrower or any other Person (other than itself) to perform any
of its obligations hereunder or under any other Loan Document or the
performance or observance of any covenants, agreements or other terms or
conditions set forth herein or therein. 
For purposes of determining compliance with the conditions specified in
ARTICLE VI, each Lender shall be deemed to have consented to, approved or
accepted or to be satisfied with, each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to a
Lender unless the Administrative Agent shall have received written notice from
such Lender prior to the proposed closing date specifying its objection
thereto.

 

Section 11.03         Action by Agent.  The Administrative Agent shall have no duty
to take any discretionary action or exercise any discretionary powers, except
discretionary rights and powers expressly contemplated hereby or by the other
Loan Documents that the Administrative Agent is required to exercise in writing
as directed by the Majority Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section 12.02)
and in all cases the Administrative Agent shall be fully justified in failing
or refusing to act hereunder or under any other Loan Documents unless it shall (a) receive
written instructions from the Majority Lenders or the Lenders, as applicable,
(or such other number or percentage of the Lenders as shall be necessary under
the circumstances as provided in Section 12.02) specifying the action to
be taken and (b) be indemnified to its satisfaction by the Lenders against
any and all liability and expenses which may be incurred by it by reason of
taking or continuing to take any such action. 
The instructions as aforesaid and any action taken or failure to act
pursuant thereto by the Administrative Agent shall be binding on all of the
Lenders.  If a Default has occurred and
is continuing, then the Administrative Agent shall take such action with
respect to such Default as shall be directed by the requisite Lenders in the
written instructions (with indemnities) described in this Section 11.03,
provided that, unless and until the Administrative Agent shall have received
such directions, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default as it shall deem advisable in the best interests of the Lenders.  In no event, however, shall the
Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to this Agreement,
the Loan Documents or applicable law.  If
a Default has occurred and is continuing, the Syndication Agent and the Co-

 

67

 

Documentation Agents shall
have no obligation to perform any act in respect thereof.  No Agent shall be liable for any action taken
or not taken by it with the consent or at the request of the Majority Lenders
or the Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 12.02), and
otherwise the Administrative Agent shall not be liable for any action taken or
not taken by it hereunder or under any other Loan Document or under any other
document or instrument referred to or provided for herein or therein or in connection
herewith or therewith INCLUDING ITS OWN ORDINARY NEGLIGENCE, except for its own
gross negligence or willful misconduct.

 

Section 11.04         Reliance by Agent.  Each Agent shall be entitled to rely upon,
and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing believed
by it to be genuine and to have been signed or sent by the proper Person.  Each Agent also may rely upon any statement
made to it orally or by telephone and believed by it to be made by the proper
Person, and shall not incur any liability for relying thereon and each of the
Borrower and the Lenders hereby waives the right to dispute such Agent’s record
of such statement, except in the case of gross negligence or willful misconduct
by such Agent.  Each Agent may consult
with legal counsel (who may be counsel for the Borrower), independent
accountants and other experts selected by it, and shall not be liable for any
action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.  The
Agents may deem and treat the payee of any Note as the holder thereof for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof permitted hereunder shall have been filed with the Administrative
Agent.

 

Section 11.05         Subagents.  The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
through their respective Related Parties. 
The exculpatory provisions of the preceding Sections of this ARTICLE XI
shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.

 

Section 11.06         Resignation or Removal of Agents.  Subject to the appointment and acceptance of
a successor Agent as provided in this Section 11.06, any Agent may resign
at any time by notifying the Lenders and the Borrower, and any Agent may be
removed at any time with or without cause by the Majority Lenders.  Upon any such resignation or removal, the
Majority Lenders shall have the right, in consultation with the Borrower, to
appoint a successor.  If no successor
shall have been so appointed by the Majority Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation or removal of the retiring Agent, then the retiring Agent may, on
behalf of the Lenders, appoint a successor Agent.  Upon the acceptance of its appointment as
Agent hereunder by a successor, such successor shall succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder.  The fees payable
by the Borrower to a successor Agent shall be the same as those payable to its
predecessor unless otherwise agreed between the Borrower and such
successor.  After the Agent’s resignation
hereunder, the provisions of this ARTICLE XI and 

 

68

 

Section 12.03 shall
continue in effect for the benefit of such retiring Agent, its sub-agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while it was acting as Agent.

 

Section 11.07         Agents and
Lenders.  Each bank serving as an Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an Agent, and such
bank and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not an Agent hereunder.

 

Section 11.08         No Reliance.

 

(a)           Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and each other Loan Document
to which it is a party.  Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement, any other Loan Document, any related agreement or
any document furnished hereunder or thereunder. 
The Agents shall not be required to keep themselves informed as to the
performance or observance by the Borrower or any of its Subsidiaries of this
Agreement, the Loan Documents or any other document referred to or provided for
herein or to inspect the Properties or books of the Borrower or its
Subsidiaries.  Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent hereunder, no Agent and no Arranger
shall have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of
the Borrower (or any of its Affiliates) which may come into the possession of
such Agent or any of its Affiliates.  In
this regard, each Lender acknowledges that Vinson & Elkins L.L.P. is
acting in this transaction as special counsel to the administrative agent and
arranger of the Senior Revolving Credit Agreement only in respect of the Senior
Revolving Credit Agreement, except to the extent otherwise expressly stated in
any legal opinion or any Loan Document. 
Each other party hereto will consult with its own legal counsel to the
extent that it deems necessary in connection with the Loan Documents and the
matters contemplated therein.

 

(b)           The Lenders
acknowledge that the Administrative Agent and the Arrangers are acting solely
in administrative capacities with respect to the structuring and syndication of
this facility and have no duties, responsibilities or liabilities under this
Agreement and the other Loan Documents other than their administrative duties,
responsibilities and liabilities specifically as set forth in the Loan
Documents and in their capacity as Lenders hereunder.  In structuring, arranging or syndicating this
facility, each Lender acknowledges that the Administrative Agent and/or
Arrangers may be agents or lenders under these Notes, the Senior Revolving
Credit Notes, other loans or other securities and waives any existing or future
conflicts of interest associated with the their role in such other debt
instruments.  If in its administration of
this facility or any other debt instrument, the Administrative Agent determines
(or is given written notice by any Lender) that a conflict exists, then it
shall eliminate such 

 

69

 

conflict within 90 days or
resign pursuant to Section 11.06 and shall have no liability for action
taken or not taken, other than actions taken or not taken which represent
Administrative Agent’s gross negligence or willful misconduct, while such
conflict existed.

 

Section 11.09         Administrative Agent May File
Proofs of Claim.  In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Borrower or any of its Subsidiaries, the
Administrative Agent (irrespective of whether the principal of any Loan shall
then be due and payable as herein expressed or by declaration or otherwise and
irrespective of whether the Administrative Agent shall have made any demand on
the Borrower) shall be entitled and empowered, by intervention in such
proceeding or otherwise:

 

(a)           to file and prove a claim for the
whole amount of the principal and interest owing and unpaid in respect of the
Loans and all other Indebtedness that are owing and unpaid and to file such
other documents as may be necessary or advisable in order to have the claims of
the Lenders and the Administrative Agent (including any claim for the
reasonable compensation, expenses, disbursements and advances of the Lenders
and the Administrative Agent and their respective agents and counsel and all
other amounts due the Lenders and the Administrative Agent under Section 12.03)
allowed in such judicial proceeding; and

 

(b)           to collect and receive any monies or
other property payable or deliverable on any such claims and to distribute the
same;

 

and
any custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by each
Lender to make such payments to the Administrative Agent and, in the event that
the Administrative Agent shall consent to the making of such payments directly
to the Lenders, to pay to the Administrative Agent any amount due for the
reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under Section 12.03.

 

Nothing
contained herein shall be deemed to authorize the Administrative Agent to
authorize or consent to or accept or adopt on behalf of any Lender any plan of
reorganization, arrangement, adjustment or composition affecting the
Indebtedness or the rights of any Lender or to authorize the Administrative
Agent to vote in respect of the claim of any Lender in any such proceeding.

 

Section 11.10         Authority of
Administrative Agent to Release Collateral and Liens.  Each Lender hereby authorizes the
Administrative Agent to release any collateral that is permitted to be sold or
released pursuant to the terms of the Loan Documents.  Each Lender hereby authorizes the
Administrative Agent to execute and deliver to the Borrower, at the Borrower’s
sole cost and expense, any and all releases of Liens, termination statements,
assignments or other documents reasonably requested by the Borrower in
connection with any sale or other disposition of Property to the extent such
sale or other disposition is permitted by the terms of Section 9.12 or is
otherwise authorized by the terms of the Loan Documents.

 

Section 11.11         The Arrangers and the Agents.  The Arrangers, the Syndication Agent and the
Co-Documentation Agents shall have no duties, responsibilities or liabilities
under this 

 

70

 

Agreement and the other Loan
Documents other than their duties, responsibilities and liabilities in their
individual capacity as Lenders hereunder to the extent they are a party to this
Agreement as a Lender.

 

ARTICLE
XII

Miscellaneous

 

Section 12.01                          Notices.

 

(a)                                  Except in the
case of notices and other communications expressly permitted to be given by
telephone (and subject to Section 12.01(b)), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

 

(i)                                     if to the
Borrower, to it at

 

Linn
Energy, LLC

600
Travis Street, Suite 5100

Houston,
TX 77002

 

Attention:
Kolja Rockov

Telephone:
281-840-4169

Fax:
281-840-4189

E-Mail:
kr@linnenergy.com

 

with a
copy to:

 

Linn
Energy, LLC

600
Travis Street, Suite 5100

Houston,
TX 77002

 

Attention:  Charlene A. Ripley

Telephone:
281-840-4119

Fax:  281-840-4180

E-mail:
cripley@linnenergy.com

 

(ii)                                  if to the
Administrative Agent, to it at

 

525
Washington Blvd., 8th floor

Jersey City,
New Jersey 07310

Attention:
Dina Wilson, Loan Assistant

Telecopy:  201-850-4020

 

with a
copy to the Administrative Agent at:

 

1200
Smith Street, Suite 3100

Houston,
Texas  77002

Attention:  Betsy Jocher

 

71

 

Telecopy:
713-659-6915

 

(iii)          if to any other
Lender, in their capacity as such, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.

 

(b)           Notices and
other communications to the Lenders hereunder may be delivered or furnished by
electronic communications pursuant to procedures approved by the Administrative
Agent; provided that the foregoing shall not apply to notices pursuant to
ARTICLE II, ARTICLE III, ARTICLE IV and ARTICLE V unless otherwise agreed by
the Administrative Agent and the applicable Lender.  The Administrative Agent or the Borrower may,
in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it;
provided that approval of such procedures may be limited to particular notices
or communications.

 

(c)           Any party
hereto may change its address or telecopy number for notices and other communications
hereunder by notice to the other parties hereto.  All notices and other communications given to
any party hereto in accordance with the provisions of this Agreement shall be
deemed to have been given on the date of receipt.

 

Section 12.02         Waivers;
Amendments.

 

(a)           No failure on
the part of the Administrative Agent, any other Agent or any Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any
right, power or privilege, or any abandonment or discontinuance of steps to
enforce such right, power or privilege, under any of the Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under any of the Loan Documents preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies of
the Administrative Agent, any other Agent and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. 
No waiver of any provision of this Agreement or any other Loan Document
or consent to any departure by the Borrower therefrom shall in any event be
effective unless the same shall be permitted by Section 12.02(b), and then
such waiver or consent shall be effective only in the specific instance and for
the purpose for which given.  Without
limiting the generality of the foregoing, the making of a Loan shall not be
construed as a waiver of any Default, regardless of whether the Administrative
Agent, any other Agent or any Lender may have had notice or knowledge of such
Default at the time.

 

(b)           Neither this
Agreement nor any provision hereof nor any Security Instrument nor any other
Loan Document nor any provision thereof may be waived, amended or modified,
except pursuant to an agreement or agreements in writing entered into by the
Borrower and the Majority Lenders or by the Borrower and the Administrative
Agent with the written consent of the Majority Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) modify Section 2.07 or the
definition of Total Reserve Value, (iii) reduce the principal amount of
any Loan or reduce the rate of interest thereon, or reduce any fees payable
hereunder, or reduce any other Indebtedness hereunder or under any other Loan
Document, without the written consent of each Lender affected thereby, (iv) postpone
the scheduled date of payment or prepayment of the 

 

72

 

principal amount of any
Loan, or any interest thereon, or any fees payable hereunder, or any other
Indebtedness hereunder or under any other Loan Document, or reduce the amount
of, waive or excuse any such payment, or postpone or extend the Maturity Date
without the written consent of each Lender affected thereby, (v) change Section 4.01(b) or
Section 4.01(c) in a manner that would alter the pro rata sharing of
payments required thereby, without the written consent of each Lender, (vi) waive
or amend Section 6.01, Section 8.14 or Section 10.02(c) change
the definition of the terms “Domestic Subsidiary”, “Foreign Subsidiary”, “Material
Domestic Subsidiary” or “Subsidiary”, without the written consent of each Lender,
(vii) release any Guarantor (except as set forth in the Guaranty
Agreement), release all or substantially all of the collateral (other than as
provided in Section 11.09), or reduce the percentage set forth in Section 8.14(a) to
less than 80%, without the written consent of each Lender, or (viii) change
any of the provisions of this Section 12.02(b) or the definition of “Majority
Lenders” or any other provision hereof specifying the number or percentage of
Lenders required to waive, amend or modify any rights hereunder or under any
other Loan Documents or make any determination or grant any consent hereunder
or any other Loan Documents, without the written consent of each Lender;
provided further that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Administrative Agent or any other Agent hereunder
or under any other Loan Document without the prior written consent of the
Administrative Agent or such other Agent, as the case may be.  Notwithstanding the foregoing, any supplement
to Schedule 7.14 (Subsidiaries) shall be effective simply by delivering to the
Administrative Agent a supplemental schedule clearly marked as such and, upon
receipt, the Administrative Agent will promptly deliver a copy thereof to the
Lenders.

 

Section 12.03         Expenses,
Indemnity; Damage Waiver.

 

(a)           The Borrower
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including, without limitation, the
reasonable fees, charges and disbursements of counsel and other outside
consultants for the Administrative Agent, the reasonable travel, photocopy,
mailing, courier, telephone and other similar expenses, and, in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration (both before and after the
execution hereof and including advice of counsel to the Administrative Agent as
to the rights and duties of the Administrative Agent and the Lenders with
respect thereto) of this Agreement and the other Loan Documents and any
amendments, modifications or waivers of or consents related to the provisions
hereof or thereof (whether or not the transactions contemplated hereby or
thereby shall be consummated), (ii) all out-of-pocket costs, expenses,
Taxes, assessments and other charges incurred by any Agent or any Lender in
connection with any filing, registration, recording or perfection of any
security interest contemplated by this Agreement or any Security Instrument or
any other document referred to therein, (iii) all out-of-pocket expenses
incurred by any Agent or any Lender, including the fees, charges and
disbursements of any counsel for any Agent or any Lender, in connection with
the enforcement or protection of its rights in connection with this Agreement
or any other Loan Document, including its rights under this Section 12.03,
or in connection with the Loans made, including, without limitation, all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans.

 

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(b)           THE BORROWER SHALL INDEMNIFY EACH
AGENT, THE ARRANGERS AND EACH LENDER, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”)
AGAINST, AND HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,
DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING THE FEES, CHARGES AND
DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE, INCURRED BY OR ASSERTED
AGAINST ANY INDEMNITEE ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (i) THE
EXECUTION OR DELIVERY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (OTHER THAN
EXPENSES IN CONNECTION WITH THE EXECUTION AND DELIVERY OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS DATED OF EVEN DATE HEREWITH, WHICH EXPENSES SHALL ONLY
BE PAID BY THE BORROWER TO THE EXTENT PROVIDED IN SECTION 12.03(A)) OR ANY
AGREEMENT OR INSTRUMENT CONTEMPLATED HEREBY OR THEREBY, THE PERFORMANCE BY THE
PARTIES HERETO OR THE PARTIES TO ANY OTHER LOAN DOCUMENT OF THEIR RESPECTIVE
OBLIGATIONS HEREUNDER OR THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR BY ANY OTHER LOAN DOCUMENT, (ii) THE FAILURE OF THE
BORROWER OR ANY OF ITS SUBSIDIARIES TO COMPLY WITH THE TERMS OF ANY LOAN
DOCUMENT, INCLUDING THIS AGREEMENT, OR WITH ANY GOVERNMENTAL REQUIREMENT, (iii) ANY
INACCURACY OF ANY REPRESENTATION OR ANY BREACH OF ANY WARRANTY OR COVENANT OF
THE BORROWER OR ANY GUARANTOR SET FORTH IN ANY OF THE LOAN DOCUMENTS OR ANY
INSTRUMENTS, DOCUMENTS OR CERTIFICATIONS DELIVERED IN CONNECTION THEREWITH, (iv) ANY
LOAN OR THE USE OF THE PROCEEDS THEREFROM, (v) ANY OTHER ASPECT OF THE
LOAN DOCUMENTS, (vi) THE OPERATIONS OF THE BUSINESS OF THE BORROWER AND
ITS SUBSIDIARIES BY THE BORROWER AND ITS SUBSIDIARIES, (vii) ANY ASSERTION
THAT THE LENDERS WERE NOT ENTITLED TO RECEIVE THE PROCEEDS RECEIVED PURSUANT TO
THE SECURITY INSTRUMENTS, (viii) ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER OR ITS SUBSIDIARIES OR ANY OF THEIR PROPERTIES, INCLUDING WITHOUT
LIMITATION, THE PRESENCE, GENERATION, STORAGE, RELEASE, THREATENED RELEASE,
USE, TRANSPORT, DISPOSAL, ARRANGEMENT OF DISPOSAL OR TREATMENT OF OIL, OIL AND
GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON ANY OF THEIR PROPERTIES, (ix) THE
BREACH OR NON-COMPLIANCE BY THE BORROWER OR ANY OF ITS SUBSIDIARIES WITH ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, (x) THE
PAST OWNERSHIP BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OF ANY OF THEIR
PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR PROPERTIES WHICH, THOUGH LAWFUL AND
FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT LIABILITY, (xi) THE
PRESENCE, USE, RELEASE, STORAGE, TREATMENT, DISPOSAL, GENERATION, THREATENED
RELEASE, TRANSPORT, ARRANGEMENT FOR TRANSPORT OR ARRANGEMENT FOR DISPOSAL OF
OIL, OIL AND GAS WASTES, SOLID WASTES OR HAZARDOUS SUBSTANCES ON OR AT ANY OF
THE PROPERTIES OWNED OR OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OR
ANY ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM 

 

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ANY PROPERTY OWNED OR
OPERATED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES, (xii) ANY ENVIRONMENTAL
LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR
(xiii) ANY OTHER ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH
THE LOAN DOCUMENTS, OR (xiv) ANY ACTUAL OR PROSPECTIVE CLAIM, LITIGATION,
INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY AND REGARDLESS OF WHETHER ANY INDEMNITEE IS
A PARTY THERETO, AND SUCH INDEMNITY SHALL EXTEND TO EACH INDEMNITEE
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNITEES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON ANY ONE
OR MORE OF THE INDEMNITEES; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY
INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES,
LIABILITIES OR RELATED EXPENSES ARE DETERMINED BY A COURT OF COMPETENT
JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE.

 

(c)           To the extent
that the Borrower fails to pay any amount required to be paid by it to any
Agent or the Arrangers under Section 12.03(a) or (b), each Lender
severally agrees to pay to such Agent or the Arrangers, as the case may be,
such Lender’s ratable share (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that the unreimbursed expense or indemnified loss, claim, damage,
liability or related expense, as the case may be, was incurred by or asserted
against such Agent or the Arrangers in its capacity as such.

 

(d)           To the extent
permitted by applicable law, the Borrower shall not assert, and hereby waives,
any claim against any Indemnitee, on any theory of liability, for special,
indirect, consequential or punitive damages (as opposed to direct or actual
damages) arising out of, in connection with, or as a result of, this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or
thereby, the Transactions, any Loan or the use of the proceeds thereof.

 

(e)           All amounts due
under this Section 12.03 shall be payable within ten (10) Business
Days of written demand therefor.

 

Section 12.04         Successors and
Assigns.

 

(a)           The provisions
of this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns permitted hereby, except
that (i) the Borrower may not assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of each
Lender (and any attempted assignment or transfer by the Borrower without such
consent shall be null and void) and (ii) no Lender may assign or otherwise
transfer its rights or obligations hereunder except in accordance with this 

 

75

 

Section 12.04.  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
(to the extent provided in Section 12.04(c)) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by
reason of this Agreement.

 

(b)           (i) Subject
to the conditions set forth in Section 12.04(b)(ii), any Lender may assign
to one or more assignees all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the Loans at
the time owing to it) with the prior written consent (such consent not to be
unreasonably withheld) of:

 

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

 

(B)           the
Administrative Agent, provided that no consent of the Administrative Agent
shall be required for an assignment to an assignee that is a Lender or any
Affiliate of a Lender, immediately prior to giving effect to such assignment.

 

(ii)           Assignments
shall be subject to the following additional conditions:

 

(A)          except in the
case of an assignment to a Lender or an Affiliate of a Lender or an assignment
of the entire remaining amount of the assigning Lender’s Commitment or Loans,
the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $5,000,000 unless each of the Borrower and the Administrative
Agent otherwise consent, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing;

 

(B)           each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender’s rights and obligations under this Agreement;

 

(C)           the parties to
each assignment shall execute and deliver to the Administrative Agent an
Assignment and Assumption, together with a processing and recordation fee of
$3,500; and

 

(D)          the assignee,
if it shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire.

 

(iii)          Subject to Section 12.04(b)(iv) and
the acceptance and recording thereof, from and after the effective date
specified in each Assignment and Assumption the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the 

 

76

 

case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 5.01, Section 5.02, Section 5.03
and Section 12.03).  Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 12.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with Section 12.04(c).

 

(iv)          The Administrative Agent, acting for
this purpose as an agent of the Borrower, shall maintain at one of its offices
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans, each Lender pursuant to the terms hereof
from time to time (the “Register”). 
The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary.  The Register shall be available for
inspection by the Borrower and any Lender, at any reasonable time and from time
to time upon reasonable prior notice.  In
connection with any changes to the Register, if necessary, the Administrative
Agent will reflect the revisions on Annex I and forward a copy of such revised
Annex I to the Borrower and each Lender.

 

(v)           Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an assignee, the
assignee’s completed Administrative Questionnaire (unless the assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in Section 12.04(b) and any written consent to such assignment
required by Section 12.04(b), the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 12.04(b).

 

(c)           (i)            Any
Lender may, without the consent of the Borrower, the Administrative Agent, sell
participations to one or more banks or other entities (a “Participant”)
in all or a portion of such Lender’s rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall
remain unchanged, (B) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (C) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant,
agree to any amendment, modification or waiver described in the proviso to Section 12.02
that affects such Participant.  In
addition such agreement must provide that the Participant be bound by the
provisions of Section 12.03. 
Subject to Section 12.04(c)(ii), the Borrower agrees that each
Participant shall be entitled to the benefits of Section 5.01, Section 5.02
and Section 5.03 to the same extent as if it were a Lender and had
acquired its interest by 

 

77

 

assignment pursuant to Section 12.04(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 12.08 as
though it were a Lender, provided such Participant agrees to be subject to Section 4.01(c) as
though it were a Lender.

 

(ii)           A Participant shall not be entitled
to receive any greater payment under Section 5.01 or Section 5.03
than the applicable Lender would have been entitled to receive with respect to
the participation sold to such Participant, unless the sale of the
participation to such Participant is made with the Borrower’s prior written
consent.  A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 5.03
unless the Borrower is notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrower, to comply with Section 5.03(e) as
though it were a Lender.

 

(d)           Any Lender may at any time pledge or
assign a security interest in all or any portion of its rights under this
Agreement to secure obligations of such Lender, including any pledge or
assignment to secure obligations to a Federal Reserve Bank, and this Section 12.04(d) shall
not apply to any such pledge or assignment of a security interest; provided
that no such pledge or assignment of a security interest shall release a Lender
from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

 

Section 12.05         Survival;
Revival; Reinstatement.

 

(a)           All covenants,
agreements, representations and warranties made by the Borrower herein and in
the certificates or other instruments delivered in connection with or pursuant
to this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Loans, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Administrative Agent, any other Agent or any Lender may have had
notice or knowledge of any Default or incorrect representation or warranty at
the time any credit is extended hereunder, and shall continue in full force and
effect as long as the principal of or any accrued interest on any Loan or any
fee or any other amount payable under this Agreement is outstanding and
unpaid.  The provisions of Section 5.01,
Section 5.02, Section 5.03, Section 12.03, Section 12.11
and ARTICLE XI shall survive and remain in full force and effect regardless of
the consummation of the transactions contemplated hereby, the repayment of the
Loans or the termination of this Agreement, any other Loan Document or any
provision hereof or thereof.

 

(b)           To the extent
that any payments on the Indebtedness or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Administrative Agent’s and
the Lenders’ Liens, security interests, rights, powers and remedies under this
Agreement and each Loan Document shall continue in full force and effect.  In such event, each Loan Document shall be
automatically reinstated and the Borrower shall take such action as may be
reasonably requested by the Administrative Agent and the Lenders to effect such
reinstatement.

 

78

 

Section 12.06         Counterparts;
Integration; Effectiveness.

 

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

 

(b)           This Agreement,
the other Loan Documents and any separate letter agreements with respect to
fees payable to the Administrative Agent constitute the entire contract among
the parties relating to the subject matter hereof and thereof and supersede any
and all previous agreements and understandings, oral or written, relating to
the subject matter hereof and thereof.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT
THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

(c)           Except as
provided in Section 6.01, this Agreement shall become effective when it
shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof which, when taken together, bear
the signatures of each of the other parties hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. 
Delivery of an executed counterpart of a signature page of this
Agreement by telecopy shall be effective as delivery of a manually executed
counterpart of this Agreement.

 

Section 12.07         Severability.  Any provision of this Agreement or any other
Loan Document held to be invalid, illegal or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such
invalidity, illegality or unenforceability without affecting the validity,
legality and enforceability of the remaining provisions hereof or thereof; and
the invalidity of a particular provision in a particular jurisdiction shall not
invalidate such provision in any other jurisdiction.

 

Section 12.08         Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations (of whatsoever
kind, including, without limitation, obligations under Swap Agreements) at any
time owing by such Lender or Affiliate to or for the credit or the account of
the Borrower or any of its Subsidiaries against any of and all the obligations
of the Borrower or any of its Subsidiaries owed to such Lender now or hereafter
existing under this Agreement or any other Loan Document, irrespective of
whether or not such Lender shall have made any demand under this Agreement or
any other Loan Document and although such obligations may be unmatured.  The rights of each Lender under this Section 12.08
are in addition to other rights and remedies (including other rights of setoff)
which such Lender or its Affiliates may have.

 

79

 

Section 12.09         GOVERNING LAW;
JURISDICTION; CONSENT TO SERVICE OF PROCESS.

 

(a)           THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS EXCEPT
TO THE EXTENT THAT UNITED STATES FEDERAL LAW PERMITS ANY LENDER TO CONTRACT
FOR, CHARGE, RECEIVE, RESERVE OR TAKE INTEREST AT THE RATE ALLOWED BY THE LAWS
OF THE STATE WHERE SUCH LENDER IS LOCATED. 
CHAPTER 346 OF THE TEXAS FINANCE CODE (WHICH REGULATES CERTAIN REVOLVING
CREDIT LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY TO THIS
AGREEMENT OR THE NOTES.

 

(b)           ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THE LOAN DOCUMENTS SHALL BE BROUGHT IN THE COURTS OF THE STATE OF
TEXAS OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS,
HOUSTON DIVISION, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY
HEREBY ACCEPTS FOR ITSELF AND (TO THE EXTENT PERMITTED BY LAW) IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS.  EACH PARTY HEREBY IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW
OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH
RESPECTIVE JURISDICTIONS.  THIS
SUBMISSION TO JURISDICTION IS NON-EXCLUSIVE AND DOES NOT PRECLUDE A PARTY FROM
OBTAINING JURISDICTION OVER ANOTHER PARTY IN ANY COURT OTHERWISE HAVING
JURISDICTION.

 

(c)           EACH PARTY IRREVOCABLY CONSENTS TO
THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT THE ADDRESS SPECIFIED IN  SECTION 12.01 OR SUCH OTHER ADDRESS AS
IS SPECIFIED PURSUANT TO SECTION 12.01 (OR ITS ASSIGNMENT AND ASSUMPTION),
SUCH SERVICE TO BECOME EFFECTIVE THIRTY (30) DAYS AFTER SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A
PARTY OR ANY HOLDER OF A NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY
LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANOTHER PARTY
IN ANY OTHER JURISDICTION.

 

(d)           EACH PARTY HEREBY (i) IRREVOCABLY
AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN; (ii) IRREVOCABLY WAIVES,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (iii) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OF COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR

 

80

 

OTHERWISE, OR IMPLIED THAT
SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVERS, AND (iv) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS Section 12.09.

 

Section 12.10         Headings.  Article and Section headings and
the Table of Contents used herein are for convenience of reference only, are
not part of this Agreement and shall not affect the construction of, or be
taken into consideration in interpreting, this Agreement.

 

Section 12.11         Confidentiality.  Each of the Agents and the Lenders agrees to
maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors,
officers, employees and agents, including accountants, legal counsel and other
advisors (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed
to keep such Information confidential), (b) to the extent requested by any
regulatory authority or self-regulatory body, (c) to the extent required
by applicable laws or regulations or by any subpoena or similar legal process, (d) to
any other party to this Agreement or any other Loan Document, (e) in
connection with the exercise of any remedies hereunder or under any other Loan
Document or any suit, action or proceeding relating to this Agreement or any
other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject
to an agreement containing provisions substantially the same as those of this Section 12.11,
to (i) any assignee of or Participant in, or any prospective assignee of
or Participant in, any of its rights or obligations under this Agreement or (ii) any
actual or prospective counterparty (or its advisors) to any Swap Agreement
relating to the Borrower and their obligations, (g) with the consent of
the Borrower, (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section 12.11 or (ii) becomes
available to the Administrative Agent or any Lender on a nonconfidential basis
from a source other than the Borrower, or (i) to the
National Association of Insurance Commissioners or any similar organization or
any nationally recognized rating agency that requires access to information
about a Lender’s investment portfolio in connection with ratings issued with
respect to such Lender.  For the
purposes of this Section 12.11, “Information” means all information
received from the Borrower or any of its Subsidiaries relating to the Borrower
or any of its Subsidiaries and their businesses, other than any such
information that is available to the Administrative Agent or any Lender on a
nonconfidential basis prior to disclosure by the Borrower or any of its
Subsidiaries; provided that, in the case of information received from the
Borrower or any of its Subsidiaries after the date hereof, such information is
clearly identified at the time of delivery as confidential.  Any Person required to maintain the
confidentiality of Information as provided in this Section 12.11 shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.

 

Each
Lender acknowledges that information furnished to it pursuant to this Agreement
or the other Loan Documents may include material non-public information
concerning the Borrower and its Affiliates and their related parties or their
respective securities, and confirms 

 

81

 

that
it has developed compliance procedures regarding the use of material non-public
information and agrees that it will handle such material non-public information
in accordance with those procedures and applicable law, including federal and
state securities laws.

 

All information, including requests for
waivers and amendments, furnished by the Borrower or the Administrative Agent
pursuant to, or in the course of administering, this Agreement or the other
Loan Documents will be syndicate-level information, which may contain material
non-public information about the Borrower and its Affiliates and their related
parties or their respective securities. 
Accordingly, each Lender represents to the Borrower and the
Administrative Agent that it has identified in its Administrative Questionnaire
a credit contact who may receive information that may contain material
non-public information in accordance with its compliance procedures and
applicable law, including federal and state securities laws.

 

Section 12.12         Interest Rate Limitation.  It is the intention of the parties hereto
that each Lender shall conform strictly to usury laws applicable to it.  Accordingly, if the transactions contemplated
hereby would be usurious as to any Lender under laws applicable to it (including
the laws of the United States of America and the State of Texas or any other
jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in any of the Loan Documents or any
agreement entered into in connection with or as security for the Notes, it is
agreed as follows:  (i) the
aggregate of all consideration which constitutes interest under law applicable
to any Lender that is contracted for, taken, reserved, charged or received by
such Lender under any of the Loan Documents or agreements or otherwise in
connection with the Notes shall under no circumstances exceed the maximum
amount allowed by such applicable law, and any excess shall be canceled
automatically and if theretofore paid shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower); and (ii) in the event that the
maturity of the Notes is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to any Lender may
never include more than the maximum amount allowed by such applicable law, and
excess interest, if any, provided for in this Agreement or otherwise shall be
canceled automatically by such Lender as of the date of such acceleration or
prepayment and, if theretofore paid, shall be credited by such Lender on the
principal amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid in full,
refunded by such Lender to the Borrower). 
All sums paid or agreed to be paid to any Lender for the use,
forbearance or detention of sums due hereunder shall, to the extent permitted
by law applicable to such Lender, be amortized, prorated, allocated and spread
throughout the stated term of the Loans evidenced by the Notes until payment in
full so that the rate or amount of interest on account of any Loans hereunder
does not exceed the maximum amount allowed by such applicable law.  If at any time and from time to time (i) the
amount of interest payable to any Lender on any date shall be computed at the
Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12
and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Lender would be less than the
amount of interest payable to such Lender computed at the Highest Lawful Rate
applicable to such Lender, then the amount of interest 

 

82

 

payable to such Lender in
respect of such subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to such Lender until the total
amount of interest payable to such Lender shall equal the total amount of
interest which would have been payable to such Lender if the total amount of
interest had been computed without giving effect to this Section 12.12.  To the extent that Chapter 303 of the Texas
Finance Code is relevant for the purpose of determining the Highest Lawful Rate
applicable to a Lender, such Lender elects to determine the applicable rate
ceiling under such Chapter by the weekly ceiling from time to time in effect.  Chapter 346 of the Texas Finance Code does
not apply to the Borrower’s obligations hereunder.

 

Section 12.13         EXCULPATION PROVISIONS.  EACH OF THE PARTIES HERETO SPECIFICALLY
AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT
AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS,
CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED
THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY
INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF
ITS RESPONSIBILITY FOR SUCH LIABILITY. 
EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE
VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE
OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

 

Section 12.14         No Third Party Beneficiaries.  This Agreement, the other Loan Documents, and
the agreement of the Lenders to make Loans hereunder are solely for the benefit
of the Borrower, and no other Person (including, without limitation, any
Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or
materialsman) shall have any rights, claims, remedies or privileges hereunder
or under any other Loan Document against the Administrative Agent or any Lender
for any reason whatsoever.  There are no
third party beneficiaries.

 

Section 12.15         USA Patriot Act Notice.  Each Lender hereby notifies the Borrower that
pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the “Act”), it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.

 

83

 

Section 12.16         Senior Revolving Credit Documents.  The Lenders acknowledge that, pursuant to the
Senior Revolving Credit Documents, the Borrower and the Guarantors have granted
first priority Liens over all of the property constituting collateral under the
Security Instruments and, notwithstanding anything to the contrary in this
Agreement or any other Loan Document, any representation, warranty or covenant
to the effect that (a) the Liens of the Senior Revolving Credit Documents
do not or shall not exist or (b) the Liens of the Security Instruments are
or shall be senior or equal in priority to the Liens of the Senior Revolving
Credit Documents is qualified accordingly. 
In the event of any conflict between this Section 12.16 and any
other provision of this Agreement or any other Loan Document, this Section 12.16
shall be controlling.

 

[SIGNATURES BEGIN NEXT PAGE]

 

84

 

The
parties hereto have caused this Agreement to be duly executed as of the day and
year first above written.

 

	
  BORROWER:

  	
  LINN ENERGY, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Kolja
  Rockov

  
	
   

  	
   

  	
   

  	
  Kolja Rockov

  
	
   

  	
   

  	
   

  	
  Executive Vice President and Chief

  Financial Officer

  

 

1

 

	
   

  	
  BNP PARIBAS, as Administrative Agent and a

  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Douglas
  R. Liftman

  
	
   

  	
  Name:

  	
  Douglas R. Liftman

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Betsy
  Jocher

  
	
   

  	
  Name:

  	
  Betsy Jocher

  
	
   

  	
  Title:

  	
  Director

  

 

2

 

	
   

  	
  RBC CAPITAL MARKETS,
  as Syndication

  Agent and a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Don J.
  McKinnerney

  
	
   

  	
  Name:

  	
  Don J. McKinnerney

  
	
   

  	
  Title:

  	
  Authorized Signatory

  

 

3

 

	
   

  	
  SOCIETE GENERALE, as a Co-Documentation

  Agent and a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Elena
  Robciuc

  
	
   

  	
  Name:

  	
  Elena Robciuc

  
	
   

  	
  Title:

  	
  Director

  

 

4

 

	
   

  	
  COMERICA BANK, as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Huma
  Manal

  
	
   

  	
  Name:

  	
  Huma Manal

  
	
   

  	
  Title:

  	
  Vice President

  

 

5

 

	
   

  	
  FORTIS CAPITAL
  CORP., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Montgomery

  
	
   

  	
  Name:

  	
  David Montgomery

  
	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Deirdre
  Sanbom

  
	
   

  	
  Name:

  	
  Deirdre Sanbom

  
	
   

  	
  Title:

  	
  Director

  

 

6

 

	
   

  	
  BMO CAPITAL MARKETS FINANCING,

  INC., as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James
  V. Ducote

  
	
   

  	
  Name:

  	
  James V. Ducote

  
	
   

  	
  Title:

  	
  Director

  

 

7

 

	
   

  	
  CREDIT SUISSE, CAYMAN ISLANDS

  BRANCH, as a
  Lender

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Vanessa
  Gomez

  
	
   

  	
  Name:

  	
  Vanessa Gomez

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Morenikeji Ajayi

  
	
   

  	
  Name:

  	
  Morenikeji Ajayi

  	
   

  
	
   

  	
  Title:

  	
  Associate

  	
   

  
					

 

8

 

	
   

  	
  GUARANTY BANK, FSB, as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ W.
  David McCarver IV

  
	
   

  	
  Name:

  	
  W. David McCarver IV

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

9

 

	
   

  	
  LEHMAN BROTHERS COMMERCIAL

  BANK, as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  McNany

  
	
   

  	
  Name:

  	
  Brian McNany

  	
   

  
	
   

  	
  Title:

  	
  Authorized Signatory

  	
   

  

 

10

 

	
   

  	
  THE ROYAL BANK OF SCOTLAND plc as a

  Co-Documentation Agent and a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark
  Lumpkin, Jr.

  
	
   

  	
  Name:

  	
  Mark Lumpkin, Jr.

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

11

 

	
   

  	
  UNIONBANCAL EQUITIES, INC., as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Henry
  Park

  
	
   

  	
  Name:

  	
  Henry Park

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas
  Thompson

  
	
   

  	
  Name:

  	
  Thomas Thompson

  	
   

  
	
   

  	
  Title:

  	
  Senior Vice President

  	
   

  
					

 

12

 

	
   

  	
  CIT CAPITAL USA INC., as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Larry
  Derrett

  
	
   

  	
  Name:

  	
  Larry Derrett

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  

 

13

 

	
   

  	
  CALYON CORPORATE AND INVESTMENT

  BANK, as Co-Documentation Agent
  and a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Page Dillehunt

  
	
   

  	
  Name:

  	
  Page Dillehunt

  	
   

  
	
   

  	
  Title:

  	
  Managing Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sharada
  Manne

  
	
   

  	
  Name:

  	
  Sharada Manne

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

14

 

	
   

  	
  THE BANK OF NOVA SCOTIA, as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David
  Mills

  
	
   

  	
  Name:

  	
  David Mills

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  

 

15

 

	
   

  	
  DEUTSCHE BANK AG CAYMAN ISLANDS

  BRANCH, as a
  Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Susan
  LeFevre

  
	
   

  	
  Name:

  	
  Susan LeFevre

  	
   

  
	
   

  	
  Title:

  	
  Director

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Erin
  Morrissey

  
	
   

  	
  Name:

  	
  Erin Morrissey

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
					

 

16

 

	
   

  	
  USB CAPITAL RESOURCES, INC., as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Brian
  Harrer

  
	
   

  	
  Name:

  	
  Brian Harrer

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

17

 

	
   

  	
  SUNTRUST BANK, as a Lender

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter
  Panos

  
	
   

  	
  Name:

  	
  Peter Panos

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  

 

18

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00137-of-00352.parquet"}]]