Exhibit 10.1

 

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LOAN AGREEMENT

by and between

RAM ENERGY RESOURCES, INC.,

as Borrower,

and

THE FINANCIAL INSTITUTIONS NAMED HEREIN

as the Lenders,

GUGGENHEIM CORPORATE FUNDING, LLC

as the Arranger and Administrative Agent,

WELLS FARGO FOOTHILL, INC.

as the Documentation Agent

and

WESTLB AG, NEW YORK BRANCH

and

CIT CAPITAL USA INC.

as the Co-Syndication Agents

Dated as of November 29, 2007

 

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TABLE OF CONTENTS

 

               Page(s)

1.

  

        DEFINITIONS AND CONSTRUCTION.

   1   

1.1

  

Definitions

   1   

1.2

  

Accounting Terms

   27   

1.3

  

Construction

   27   

1.4

  

Schedules and Exhibits

   27

2.

  

        LOAN AND TERMS OF PAYMENT.

   27   

2.1

  

Advances.

   27   

2.2

  

Borrowing Base.

   28   

2.3

  

Funding and Borrowings.

   30   

2.4

  

Payments.

   33   

2.5

  

Overadvances

   39   

2.6

  

Interest, Rates, Payments, and Calculations.

   39   

2.7

  

INTENTIONALLY OMITTED.

   41   

2.8

  

Crediting Payments; Application of Collections

   42   

2.9

  

Telephonic Instructions

   42   

2.10

  

Maintenance of Loan Account; Statements of Obligations

   42   

2.11

  

Fees.

   42   

2.12

  

Letters of Credit.

   43   

2.13

  

Noteless Agreement; Registered Notes.

   45   

2.14

  

Intentionally Omitted

   45   

2.15

  

LIBOR Option.

   45   

2.16

  

Securitization

   48   

2.17

  

Increase in Term Loan B Amount.

   48

3.

  

        CONDITIONS; TERM OF AGREEMENT.

   50   

3.1

  

Conditions Precedent to the Initial Revolving Advance and the Term Loan B

   50   

3.2

  

Conditions Precedent to all Extensions of Credit

   53   

3.3

  

Term of Commitments.

   53   

3.4

  

Effect of Termination

   54   

3.5

  

Early Termination by Borrower

   54   

3.6

  

Termination Upon Event of Default or Otherwise

   54

4.

  

        YIELD PROTECTION.

   55   

4.1

  

Increased Costs.

   55   

4.2

  

Taxes.

   56   

4.3

  

Mitigation Obligations; Replacement of Lenders.

   58

5.

  

        REPRESENTATIONS AND WARRANTIES.

   59   

5.1

  

No Encumbrances

   59   

5.2

  

Ownership of Oil and Gas Properties.

   59

 

  i   LOAN AGREEMENT

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5.3

  

Equipment

   60   

5.4

  

Location of Chief Executive Office; Accounting Records; FEIN

   60   

5.5

  

Due Organization and Qualification; Subsidiaries.

   61   

5.6

  

Due Authorization; No Conflict.

   61   

5.7

  

Claims, Disputes, and Litigation

   63   

5.8

  

No Material Adverse Change

   63   

5.9

  

No Fraudulent Transfer

   63   

5.10

  

Employee Benefits

   63   

5.11

  

Environmental Condition

   63   

5.12

  

Compliance with the Law

   64   

5.13

  

Insurance

   64   

5.14

  

Hedging Agreements

   65   

5.15

  

Brokerage Fees

   65   

5.16

  

Permits and other Intellectual Property

   65   

5.17

  

Absence of Certain Changes

   65   

5.18

  

Operating Costs

   66   

5.19

  

Imbalances

   66   

5.20

  

Material Contracts; No Default

   66   

5.21

  

Leases

   66   

5.22

  

Marketing Agreements

   66   

5.23

  

Non-Consent Operations

   66   

5.24

  

Wells

   67   

5.25

  

DDAs

   67   

5.26

  

Complete Disclosure

   67   

5.27

  

Indebtedness

   67   

5.28

  

Investment Company Status

   67   

5.29

  

Taxes

   67   

5.30

  

Labor Matters

   67   

5.31

  

Unsecured Notes Indenture and Unsecured Notes

   68

6.

  

        AFFIRMATIVE COVENANTS.

   68   

6.1

  

Financial Reporting

   68   

6.2

  

Collateral Reporting

   70   

6.3

  

Notices of Material Events

   72   

6.4

  

Existence

   72   

6.5

  

Performance of Obligations under Loan Documents.

   73   

6.6

  

Operation and Maintenance of Properties

   73   

6.7

  

Taxes.

   74   

6.8

  

Insurance.

   74   

6.9

  

Compliance with Laws

   75   

6.10

  

Environmental Matters.

   75   

6.11

  

Employee Benefits.

   76   

6.12

  

Oil and Gas Property Title Information.

   77   

6.13

  

Additional Collateral and Guarantees.

   77   

6.14

  

Hedging Agreements.

   77   

6.15

  

Further Assurances.

   78   

6.16

  

Payment of Trade Payables and Indebtedness.

   78

 

  ii   LOAN AGREEMENT

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6.17

  

Unsecured Notes Indenture and Unsecured Notes

   79

7.

  

        NEGATIVE COVENANTS

   79   

7.1

  

Indebtedness

   79   

7.2

  

Liens

   80   

7.3

  

Restrictions on Fundamental Changes.

   80   

7.4

  

Disposal of Assets

   81   

7.5

  

Change of Name

   81   

7.6

  

Guarantee

   81   

7.7

  

Nature of Business

   81   

7.8

  

Prepayments and Amendments of Indebtedness.

   81   

7.9

  

Change of Control

   82   

7.10

  

Distributions; Repurchases of Capital Stock.

   82   

7.11

  

Accounting Methods

   82   

7.12

  

Investments

   82   

7.13

  

Transactions with Affiliates

   82   

7.14

  

Limited Business of Certain Subsidiaries

   83   

7.15

  

Use of Proceeds

   83   

7.16

  

Change in Location of Chief Executive Offices

   83   

7.17

  

No Prohibited Transactions Under ERISA

   83   

7.18

  

Financial Covenants

   84   

7.19

  

Gas Imbalances, Take-or-Pay or Other Prepayments

   85   

7.20

  

Unsecured Notes

   85   

7.21

  

Hedging Agreements and Material Agreements.

   85   

7.22

  

Non-Consent Operations

   85   

7.23

  

Contracts for Sale of Production

   86

8.

  

        EVENTS OF DEFAULT

   86

9.

  

        THE LENDER GROUP’S RIGHTS AND REMEDIES.

   88   

9.1

  

Rights and Remedies.

   88   

9.2

  

Remedies Cumulative

   89   

9.3

  

Lender Directed Remedies

   89

10.

  

        TAXES AND EXPENSES

   91

11.

  

        EXPENSES; INDEMNIFICATION; DAMAGE WAIVER.

   91   

11.1

  

Costs and Expenses

   91   

11.2

  

Indemnification by the Borrower.

   92   

11.3

  

Reimbursement by Lenders.

   92   

11.4

  

Consequential Damages, etc.

   92   

11.5

  

Payments.

   93

12.

  

        NOTICES

   93   

12.1

  

Notices Generally

   93   

12.2

  

Electronic Communications

   94   

12.3

  

Change of Address, etc

   94

 

  iii   LOAN AGREEMENT

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13.

  

        CHOICE OF LAW AND VENUE; SERVICE OF PROCESS; JURY TRIAL WAIVER.

   94

14.

  

        DESTRUCTION OF BORROWER’S DOCUMENTS

   95

15.

  

        SUCCESSORS AND ASSIGNS.

   95   

15.1

  

Successors and Assigns Generally

   95   

15.2

  

Assignments by Lenders

   96   

15.3

  

Register

   97   

15.4

  

Participations

   97   

15.5

  

Limitations Upon Participant Rights

   97   

15.6

  

Certain Pledges

   98

16.

  

        AMENDMENTS; WAIVERS.

   98   

16.1

  

Amendments and Waivers

   98   

16.2

  

No Waivers; Cumulative Remedies.

   99   

16.3

  

Replacement of Holdout Lender.

   99

17.

  

        AGENT; THE LENDER GROUP.

   100   

17.1

  

Appointment and Authorization of Administrative Agent

   100   

17.2

  

Delegation of Duties

   101   

17.3

  

Liability and Responsibility of Agents.

   101   

17.4

  

Reliance by Administrative Agent

   101   

17.5

  

Notice of Default or Event of Default

   101   

17.6

  

Credit Decision

   102   

17.7

  

Costs and Expenses

   102   

17.8

  

Administrative Agent in Individual Capacity

   103   

17.9

  

Successor Administrative Agent

   103   

17.10

  

Lender in Individual Capacity

   103   

17.11

  

Collateral Matters.

   104   

17.12

  

Right of Setoff; Sharing of Payments.

   105   

17.13

  

Agency for Perfection

   105   

17.14

  

Payments by Administrative Agent to the Lenders

   106   

17.15

  

Concerning the Collateral and Related Loan Documents

   106   

17.16

  

Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information

   106   

17.17

  

Several Obligations; No Liability

   107   

17.18

  

Lender Related Persons

   108   

17.19

  

Buy-Out Option

   108

18.

  

        GENERAL PROVISIONS.

   110   

18.1

  

Effectiveness

   110   

18.2

  

Section Headings

   110   

18.3

  

Interpretation

   110   

18.4

  

Severability of Provisions

   111   

18.5

  

USA Patriot Act Notice

   111   

18.6

  

Counterparts; Telefacsimile Execution

   111   

18.7

  

Revival and Reinstatement of Obligations

   111

 

  iv   LOAN AGREEMENT

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18.8

  

Integration

   111   

18.9

  

Assumption, Ratification, and Amendment; Release

   111

 

  v   LOAN AGREEMENT

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SCHEDULES AND EXHIBITS

 

Schedule C-1

  

Commitments

Schedule P-1

  

Permitted Liens

Schedule 1.1

  

Pro Forma EBITDA and Interest Expense

Schedule 3.1

  

Post-Closing Items and Conditions

Schedule 5.1(a)

  

Information regarding Certain Owned Oil and Gas Properties

Schedule 5.1(b)

  

Material Contract Rights & Obligations

Schedule 5.2(b)

  

Imbalances in Gas Production

Schedule 5.5(b)

  

Capital Stock/Subsidiaries/Organization Chart - Borrower

Schedule 5.7

  

Litigation

Schedule 5.10

  

ERISA Benefit Plans

Schedule 5.11

  

Environmental

Schedule 5.13

  

Insurance

Schedule 5.14

  

Hedging Agreements

Schedule 5.22

  

Certain Marketing Agreements

Schedule 5.25

  

DDAs

Schedule 5.27

  

Indebtedness of Borrower and Subsidiaries

Schedule 7.1

  

Permitted Other Indebtedness

Schedule 7.12

  

Permitted Other Investments

Exhibit A-1

  

Form of Assignment and Assumption

Exhibit C-1

  

Form of Compliance Certificate

Exhibit L-1

  

Form of LIBOR Notice

Exhibit N-1

  

Form of Notice of Borrowing

Exhibit T-1

  

Form of Transfer Order Letters

 

  vi   LOAN AGREEMENT

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LOAN AGREEMENT

THIS LOAN AGREEMENT (this “Agreement”), is entered into as of November 29, 2007,
among the financial institutions listed on the signature pages hereof (such
financial institutions, together with their respective successors and assigns,
are referred to hereinafter each individually as a “Lender” and collectively as
the “Lenders”), GUGGENHEIM CORPORATE FUNDING, LLC, a Delaware limited liability
company, as arranger and administrative agent for the Lenders (“Administrative
Agent”), WELLS FARGO FOOTHILL, INC., a California corporation, as Documentation
Agent, WESTLB AG, NEW YORK BRANCH and CIT CAPITAL USA INC., as Co-Syndication
Agents and RAM ENERGY RESOURCES, INC., a Delaware corporation (“Borrower”).

DEFINITIONS AND CONSTRUCTION.

Definitions. As used in this Agreement, the following terms shall have the
following definitions:

“Accounts” means all currently existing and hereafter arising accounts, contract
rights, and all other forms of obligations owing to Borrower or any of its
Subsidiaries arising out of the sale or lease of goods, Hydrocarbons or Oil and
Gas Properties or the rendition of services by Borrower or any of its
Subsidiaries, irrespective of whether earned by performance, and any and all
credit insurance, guaranties, or security therefor.

“Administrative Agent” has the meaning set forth in the preamble to this
Agreement.

“Administrative Agent Account” means an account at a bank designated by
Administrative Agent from time to time as the account into which Borrower shall
make all payments to Administrative Agent for the benefit of the Lender Group,
and into which the Lender Group shall make all payments to Administrative Agent,
under this Agreement and the other Loan Documents.

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

“Advances” means Revolving Advances and the Term Loan B, individually and
collectively.

“Affiliate” means, as applied to any Person, any other Person who, directly or
indirectly, controls, is controlled by, or is under common control with, such
Person. For purposes of this definition, “control” means the possession,
directly or indirectly, of the power to direct the management and policies of a
Person, whether through the ownership of Stock, by contract, or otherwise;
provided, however, that, in any event, (a) any Person which owns directly or
indirectly 10% or more of the securities having ordinary voting power for the
election of directors or other members of the governing body of a Person or 10%
or more of the partnership or other ownership interests of a Person (other than
as a limited partner of such Person) shall be deemed to control such Person;
provided, however, that in no event shall Jefferies & Company, Inc., or any of
its Affiliates be deemed Affiliates of Borrower; (b) each director (or
comparable manager) of a Person shall be deemed to be an Affiliate of such
Person; and (c) each partnership or joint venture in which a Person is a partner
or joint venturer shall be deemed to be an Affiliate of such Person.

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“Agent-Related Persons” means Administrative Agent and any successor
Administrative Agent, together with their respective Affiliates, and the
officers, directors, employees, counsel, agents, and attorneys-in-fact of such
Persons and their Affiliates.

“Agreement” has the meaning set forth in the preamble hereto.

“Applicable Margin” means, with respect to LIBOR Loans and Reference Rate Loans,
the margins therefor as determined under the Pricing Grid. Each change in the
Applicable Margin shall apply during the period commencing on the date of such
change in the Borrowing Base Utilization and ending on the date immediately
preceding the effective date of the next such change.

“Applicable Premiums” means the Applicable Revolving Loan Refinancing Premium
and the Applicable Term Loan B Prepayment Premium; provided that for any
prepayments of Advances which are made with Liquidity Event Proceeds the
Applicable Premium shall be zero (0) with respect to the first $100,000,000 of
such prepayments.

“Applicable Revolving Loan Refinancing Premium” means, as of any date of
determination, during the period of time from and after the Closing Date up to
(but not including) the date that is the first anniversary of the Closing Date,
an amount equal to 2% times the initial Borrowing Base amount as of the Closing
Date; provided, for any refinancing in full of the Revolving Advances financed
by all of the Revolver Lenders, the Applicable Revolving Loan Refinancing
Premium shall be 0%.

“Applicable Term Loan B Prepayment Premium” means, as of any date of
determination, (a) during the period of time from and after the Closing Date up
to (but not including) the date that is the first anniversary of the Closing
Date, an amount equal to two percent (2.0%) times the aggregate principal amount
of the Term Loan B prepaid (or required to be prepaid) on such date of
determination, and (b) during the period of time from and after the first
anniversary of the Closing Date up to (but not including) the date that is the
second anniversary of the Closing Date, an amount equal to one percent
(1.0%) times the aggregate principal amount of the Term Loan B prepaid (or
required to be prepaid) on such date of determination.

“Approved Engineer” means Williamson Petroleum Consultants, Inc., Forrest Garb &
Associates, Inc., Netherland, Sewell and Associates, Inc., or any other
independent petroleum engineer satisfactory to Administrative Agent.

“Ascent” means Ascent Energy, Inc., a Delaware corporation.

“Ascent Acquisition Agreement” means that certain Agreement and Plan of Merger
dated October 16, 2007, by and among Borrower, Ascent Acquisition Corp. (a
special purpose merger subsidiary wholly owned by Borrower), and Ascent.

“Ascent Energy Holdings” means Ascent Energy Holdings, Inc., a Delaware
corporation.

“Ascent GP LLC” mean Ascent GP LLC, a Delaware limited liability company.

“Ascent LP LLC” mean Ascent LP LLC, a Delaware limited liability company.

“Ascent LA” mean Ascent Energy Louisiana, LLC, a Delaware limited liability
company.

 

  2   LOAN AGREEMENT

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“Ascent Oil & Gas” means Ascent Oil and Gas, Inc., a Delaware corporation.

“Ascent Operating” means Ascent Operating, LP, a Delaware limited partnership.

“Ascent WV” mean Ascent Resources WV, Inc., a Delaware corporation.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 15), and accepted by the Administrative Agent, in
substantially the form of Exhibit A-1 attached hereto.

“Availability” means, as of any date of determination, if such date is a
Business Day, and determined at the close of business on the immediately
preceding Business Day, if such date of determination is not a Business Day, the
amount of the Borrowing Base less the Revolving Advances, less the Letter of
Credit Usage, less the Unsecured Notes Reserve; provided, however, that
Availability shall not be calculated net of the Unsecured Notes Reserve if the
purpose of accessing such Availability is to pay off the Unsecured Notes;
provided further, to the extent that the Borrower represents in a Borrowing
Request that the use of a Revolver Advance requested thereby is to develop wells
categorized as Proved Undeveloped Reserves in the most recent Reserve Report,
the Borrowing Base component of Availability shall not be calculated net of that
portion of the Borrowing Base Proved Undeveloped Reserve Capital Expenditure
Adjustment equal to such Revolver Advance.

“Bankruptcy Code” means the United States Bankruptcy Code (11 U.S.C. § 101 et
seq.), as amended, and any successor statute.

“Base LIBOR Rate” means the rate per annum, determined by Administrative Agent
in accordance with its customary procedures, and utilizing such electronic or
other quotation sources as it considers appropriate (rounded upwards, if
necessary, to the next 1/16%), on the basis of the rates at which Dollar
deposits are offered to major banks in the London interbank market on or about
12:00 p.m. (New York time) two (2) Business Days prior to the commencement of
the applicable Interest Period, for a term and in amounts comparable to the
Interest Period and amount of the LIBOR Rate Loan requested by Borrower in
accordance with this Agreement, which determination shall be conclusive in the
absence of manifest error.

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35) of
ERISA) for which Borrower, any Subsidiary of Borrower, or any ERISA Affiliate
has been an “employer” (as defined in Section 3(5) of ERISA) within the past six
years.

“Books” means all of Borrower’s and its Subsidiaries’ books and records
including: ledgers; records indicating, summarizing, or evidencing Borrower’s
and its Subsidiaries’ properties or assets (including the Collateral) or
liabilities, including but not limited to land and title files, geological and
geophysical data, well logs and seismographic reports; all information relating
to Borrower’s and its Subsidiaries’ business operations or financial condition;
and all computer programs, disk or tape files, printouts, runs, or other
computer prepared information.

“Borrower” has the meaning set forth in the preamble to this Agreement.

“Borrower Warrants” means the warrants issued by Borrower, outstanding as of the
Closing Date to purchase 18,850,000 shares of common stock of Borrower at a
price of $5.00 per share, as adjusted, expiring on May 11, 2008.

 

  3   LOAN AGREEMENT

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“Borrowing” means a borrowing hereunder consisting of Revolver Advances made on
the same day by the Lenders to Borrower.

“Borrowing Base” means at the particular time in question, the amount determined
pursuant to Section 2.2; provided, that in no event shall the Borrowing Base
ever exceed the Maximum Revolver Amount.

“Borrowing Base Assets” has the meaning set forth in Section 2.4(c)(iii).

“Borrowing Base Entities” means Borrower, Ascent, Ascent WV, Ascent LA, Dyne,
Gulf States, OBEC, Pontotoc Gathering, PPC, RAM Energy, RWG and SLPH.

“Borrowing Base Proved Undeveloped Reserve Capital Expenditure Adjustment” means
an amount equal to $25,000,000 less the cash proceeds paid from the Closing Date
forward to fund development capital expenditures of a Borrowing Base Entities’
Proved Undeveloped Reserves; provided that in no case shall the Borrowing Base
Proved Undeveloped Reserve Capital Expenditure Adjustment amount be less than
$0.

“Borrowing Base Utilization” means at any time, an amount equal to the quotient
of (i) the aggregate principal amount of Revolving Advances outstanding plus
Letter of Credit Usage, divided by (ii) the Borrowing Base.

“Borrowing Request” has the meaning set forth in Section 2.3(a).

“Business Day” means any day that is not a Saturday, Sunday, or other day on
which national banks are authorized or required to close, except that, if a
determination of a Business Day shall relate to a LIBOR Rate Loan, the term
“Business Day” also shall exclude any day on which banks are closed for dealings
in Dollar deposits in the London interbank market.

“Capital Lease” means a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.

“Capitalized Lease Obligation” means any Indebtedness represented by obligations
under a Capital Lease.

“Cash Equivalents” means (a) marketable direct obligations issued or
unconditionally guaranteed by the United States or issued by any agency thereof
and backed by the full faith and credit of the United States, in each case
maturing within 1 year from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United States or any political
subdivision of any such state or any public instrumentality thereof maturing
within 1 year from the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from either S&P or Moody’s,
(c) commercial paper maturing no more than 270 days from the date of acquisition
thereof and, at the time of acquisition, having a rating of A-1 or P-1, or
better, from S&P or Moody’s, and (d) certificates of deposit or bankers’
acceptances maturing within 1 year from the date of acquisition thereof either
(i) issued by any bank organized under the laws of the United States or any
state thereof which bank has a rating of A or A2, or better, from S&P or
Moody’s, or (ii) certificates of deposit less than or equal to $100,000 in the
aggregate issued by any other bank insured by the Federal Deposit Insurance
Corporation.

 

  4   LOAN AGREEMENT

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“Casualty Event” means any loss, casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any Property of Borrower or any of its Subsidiaries having a fair market
value in excess of $250,000.00.

“CDC” means Carmen Development Corporation, an Oklahoma corporation.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

“Change of Control” shall be deemed to have occurred at such time as a “person”
or “group” (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) becomes the “beneficial owner” (as defined in Rule 13d-3
under the Securities Exchange Act of 1934), directly or indirectly, of more than
40% of the total voting power of all classes of stock then outstanding of
Borrower entitled to vote in the election of directors.

“Closing Date” means November 29, 2007.

“Code” means the Uniform Commercial Code as from time-to-time in effect in the
state of New York.

“Collateral” means all of Borrower’s and each Subsidiary’s right, title, and
interest in and to all real and personal property of any kind including: the Oil
and Gas Property Collateral, Equipment, Gathering Systems, Borrower’s equity in
each Subsidiary of Borrower and each Subsidiary’s interest in its Subsidiaries,
and any other assets of Borrower (together with each Subsidiary of Borrower)
described in the Security Agreements, and the proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of insurance
covering any or all of the Collateral, and other proceeds resulting from the
sale, exchange, collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein.

“Collections” means all cash, checks, notes, instruments, and other items of
payment (including, insurance proceeds, proceeds of cash sales, rental proceeds,
and tax refunds) of Borrower and each of its Subsidiaries.

“Commitment” means, with respect to each Lender, its Revolver Commitment, its
Term Loan B Commitment, or its Total Commitment, as the context requires, and,
with respect to all Lenders, their Revolver Commitments, their Term Loan B
Commitments, or their Total Commitments, as the context requires, in each case
as such Dollar amounts are set forth beside such Lender’s name under the
applicable heading on Schedule C-1 or on the signature page of the Assignment
and Assumption pursuant to which such Lender became a Lender hereunder, as such
amounts may be reduced or increased from time to time pursuant to assignments
made in accordance with the provisions of Section 15.1.

“Compliance Certificate” means a certificate substantially in the form of
Exhibit C-1 and delivered by the chief accounting officer of Borrower to
Administrative Agent.

“Consolidated Net Income” means with respect to Borrower and its Subsidiaries,
for any period, the aggregate of the net income (or loss) of Borrower and its
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: (i)

 

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the net income of any Person in which Borrower or any of its Subsidiaries has an
interest (which interest does not cause the net income of such other Person to
be consolidated with the net income of Borrower and its Subsidiaries in
accordance with GAAP), except to the extent of the amount of dividends or
distributions actually paid in such period by such other Person to Borrower or
to any of its Subsidiaries, as the case may be; (ii) the net income (but not
loss) of any of Borrower’s Subsidiaries to the extent that the declaration or
payment of dividends or similar distributions or transfers or loans by that
Subsidiary is not at the time permitted by operation of the terms of its charter
or any agreement, instrument or Legal Requirement applicable to such Subsidiary,
or is otherwise restricted or prohibited in each case determined in accordance
with GAAP; (iii) any extraordinary gains, including gains attributable to
Property sales not in the ordinary course of business; (iv) the cumulative
effect of a change in accounting principles and any gains or losses attributable
to write-ups or write downs of assets; and (v) any write downs of non-current
assets, provided, however, that any ceiling limitation write downs under SEC
guidelines shall be treated as capitalized costs, as if such write downs had not
occurred.

“Control Agreement” means a control agreement, in form and substance reasonably
satisfactory to Administrative Agent, among a Loan Party, Administrative Agent,
and the applicable bank with respect to a DDA.

“Coral Hedging Agreements” has the meaning set forth in the definition of
“Permitted Liens.”

“Current Assets” means all assets of Borrower and its Subsidiaries on a
consolidated basis that, in accordance with GAAP, would be included as current
assets on a balance sheet for Borrower as of a date of calculation, provided
that (i) Availability shall be included as Current Assets, (ii) notes receivable
for loans to employees, officers or directors of Borrower or its Subsidiaries,
if any, shall be excluded from Current Assets, and (iii) non-cash amounts
required to be included in Current Assets as the result of the application of
FASB Statement 133 or FASB 143 shall be excluded from Current Assets.

“Current Liabilities” means all liabilities of Borrower and its Subsidiaries on
a consolidated basis that, in accordance with GAAP, would be included as current
liabilities on a balance sheet for Borrower as of the date of calculation;
provided, that (i) current maturities of Advances, the Term Loan B and the
Unsecured Notes which are not past due may be treated as an allowable deduction
from Current Liabilities, and (ii) non-cash obligations under Hedge Agreements
resulting from the requirements under FASB Statement 133 and FASB 143 shall be
excluded from Current Liabilities.

“Daily Balance” means the amount of an Obligation owed at the end of a given
day.

“DDA” means any checking or other demand deposit account maintained by Borrower
or any Subsidiary.

“Default” means an event, condition, or default that, with the giving of notice,
the passage of time, or both, would be an Event of Default.

“Defaulting Lender” means any Lender that fails to make any Advance (or other
extension of credit) that it is required to make hereunder on any Funding Date
and that has not cured such failure by making such Advance (or other extension
of credit) within one (1) Business Day after written demand upon it by
Administrative Agent to do so.

 

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“Defaulting Lender’s Rate” means the Reference Rate for the first three (3) days
from and after the date the relevant payment is due and, thereafter, at the
interest rate then applicable to Advances.

“Defensible Title” means as to the Mineral Interests, such title held by a Loan
Party that (i) is free from reasonable doubt to the end that a prudent purchaser
engaged in the business of the ownership, development and operation of producing
oil and gas properties, with knowledge of all of the facts and their legal
bearing, would be willing to accept and pay full value therefor; (ii) is
deducible of record from the records of the applicable parish or county, or, in
the case of federal leases, from the records of the applicable office of the
Bureau of Lands Management or Minerals Management Service, or, in the case of
state leases, from the applicable records of the applicable state land office;
(iii) entitle such Loan Party to receive not less than the “Net Revenue
Interest” set forth in Schedule 5.1(a) with respect to each Mineral Interest
owned by such Loan Party as of the date of this Agreement, and not less than the
“Net Revenue Interest” set forth in the most recent Reserve Report with respect
to each Mineral Interest acquired by such Loan Party after the date of this
Agreement, in each case, without reduction, suspension or termination throughout
the productive life of such Mineral Interest; (iv) obligates such Loan Party to
bear costs and expenses relating to operations on and the maintenance and
development of each Mineral Interest in an amount not greater than the “Working
Interest” set forth in Schedule 5.1(a) with respect to each Mineral Interest
owned by such Loan Party as of the date of this Agreement, and not greater than
the “Working Interest” set forth in the most recent Reserve Report with respect
to each Mineral Interest acquired by such Loan Party after the date of this
Agreement (except to the extent that such Loan Party is obligated under an
Operating Agreement to assume a portion of a defaulting or non-consenting
party’s share of costs), in each case without increase for the respective
productive life of such Mineral Interest; and (v) is free and clear of Liens and
material encumbrances and defects, except for Permitted Liens.

“Disbursement Letter” means the initial Borrowing Request executed and delivered
by Borrower to Administrative Agent contemporaneous with the Closing Date
regarding the extensions of credit to be made on the Closing Date, the form and
substance of which shall be satisfactory to Administrative Agent.

“Documentation Agent” means WFF solely in its capacity as documentation agent
for the Lenders hereunder, and shall include any successor thereto.

“Dollars” or “$” means United States dollars.

“Dyne” means Dyne Exploration Company, an Oklahoma corporation.

“EBITDA” means, for any period, the sum, determined (without duplication) for
Borrower and its Subsidiaries, of (i) Consolidated Net Income of Borrower and
its Subsidiaries plus (ii) Interest Expense of Borrower and its Subsidiaries for
such period to the extent deducted in the determination of Consolidated Net
Income of Borrower and its Subsidiaries for such period plus (iii) depreciation,
amortization, share-based compensation expenses under the RAM Energy Resources,
Inc. 2006 Long Term Incentive Plan, and other similar non-cash items (with the
exception of non-cash charges that require an accrual or reserve for cash
charges for any future period and normally recurring accruals) to the extent
deducted in the determination of Consolidated Net Income of Borrower and its
Subsidiaries for such period plus (iv) all taxes accrued for such period on or
measured by income to the extent deducted in the determination of Consolidated
Net Income of Borrower and its Subsidiaries for such period plus (v) all
unrealized losses (and minus unrealized gains) related to Hedging Agreements to
the extent recognized in the determination of Consolidated Net Income of
Borrower and its Subsidiaries for such period; provided that, EBITDA for the
first three quarters of 2007 shall be the amounts set forth on Schedule 1.1.

 

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“Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) a
Related Fund, and (d) any other Person (other than a natural person) approved by
(i) the Administrative Agent, (ii) the Issuing Lender, and (iii) unless an Event
of Default has occurred and is continuing, the Borrower (each such approval not
to be unreasonably withheld or delayed); provided that notwithstanding the
foregoing, “Eligible Assignee” shall not include the Borrower or any of the
Borrower’s Affiliates or Subsidiaries.

“Engineering Reports” shall have the meaning set forth in Section 2.2(c)(i).

“Environmental Action” means any complaint, order, demand, citation or notice
threatened or issued in writing to Borrower or any of its Subsidiaries by any
Person with regard to air emissions, water discharges, releases, or disposal of
any Hazardous Material, noise emissions or any other environmental, health or
safety matter affecting Borrower, its Subsidiaries, or any of their respective
Oil and Gas Properties.

“Environmental Laws” means any and all Legal Requirements pertaining to health
or the environment 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”), the Clean Air Act, as
amended, the Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 (“CERCLA”), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 (“RCRA”), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Superfund Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other environmental
conservation or protection laws. The term “oil” shall have the meaning specified
in OPA, the term “release” (or “threatened release”) has the meaning specified
in CERCLA, and the terms “solid waste” and “disposal” (or “disposed”) have the
meanings specified in RCRA; provided, however, that (i) in the event either OPA,
CERCLA or RCRA 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 (ii) to the extent the laws of the state in which any
Property of the Borrower or any Subsidiary is located establish a meaning for
“oil,” “release,” “solid waste” or “disposal” which is broader than that
specified in either OPA, CERCLA or RCRA, such broader meaning shall apply as to
Borrower or such Subsidiary, as the case may be, and the Property thereof
located within that particular share.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

“Environmental Lien” means any Lien in favor of any Governmental Authority for
any liabilities, monetary obligations, losses, damages, punitive damages,
consequential damages, treble damages, costs and expenses (including all
reasonable fees, disbursements and expenses of counsel, experts, or consultants
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and

 

  8   LOAN AGREEMENT

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interest incurred as a result of any claim or demand by any Governmental
Authority or any third party, and which relate to any environmental action
(whether remedial, preventative, investigatory or otherwise).

“Equipment” means all of Borrower’s and each Subsidiary of Borrower’s now owned
or hereafter acquired right, title an interest with respect to machinery,
machine tools, motors, equipment, furniture, furnishings, fixtures, drilling
rigs, work-over rigs and associated equipment including swabbing units, downhole
tools, drill pipe, drillsite equipment (including separators, dehydrators,
meters, etc.), compressors, gathering lines, pipelines, vehicles (including
motor vehicles and trailers), tools, parts, and other goods (other than consumer
goods, farm products, or Inventory), wherever located, including, all
attachments, accessories, accessions, replacements, substitutions, additions,
and improvements to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, 29 U.S.C. §§
1000 et seq., amendments thereto, successor statutes, and regulations or
guidance promulgated thereunder.

“ERISA Affiliate” means (a) any corporation subject to ERISA whose employees are
treated as employed by the same employer as the employees of Borrower and its
Subsidiaries under IRC Section 414(b), (b) any trade or business subject to
ERISA whose employees are treated as employed by the same employer as the
employees of Borrower and its Subsidiaries under IRC Section 414(c), (c) solely
for purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated service group of
which Borrower is a member under IRC Section 414(m), or (d) solely for purposes
of Section 302 of ERISA and Section 412 of the IRC, any party subject to ERISA
that is a party to an arrangement with Borrower and its Subsidiaries and whose
employees are aggregated with the employees of Borrower under IRC
Section 414(o).

“ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan or
Multiemployer Plan, (b) the withdrawal of Borrower or any of its Subsidiaries or
ERISA Affiliates from a Benefit Plan during a plan year in which it was a
“substantial employer” (as defined in Section 4001(a)(2) of ERISA), (c) the
providing of notice of intent to terminate a Benefit Plan in a distress
termination (as described in Section 4041(c) of ERISA), (d) the institution by
the PBGC of proceedings to terminate a Benefit Plan or Multiemployer Plan,
(e) any event or condition (i) that provides a basis under Section 4042(a)(1),
(2), or (3) of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan or Multiemployer Plan, or (ii) that may result in
termination of a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of Sections 4203 and 4205 of
ERISA, of Borrower, any of its Subsidiaries or ERISA Affiliates from a
Multiemployer Plan, or (g) providing any security to any Plan under
Section 401(a)(29) of the IRC by Borrower or its Subsidiaries or any of their
ERISA Affiliates.

“Event of Default” has the meaning set forth in Section 8.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any
successor statute thereto.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
the Issuing Lender or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) taxes imposed on or
measured by its overall net income (however denominated), and franchise taxes
imposed on it (in lieu of net income taxes), by the jurisdiction (or any
political subdivision thereof) 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

 

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branch profits taxes imposed by the United States of America or any similar tax
imposed by any other jurisdiction in which the Borrower is located and (c) in
the case of a Foreign Lender (other than an assignee pursuant to a request by
the Borrower under Section 4.3(b)), any withholding tax that is imposed on
amounts payable to such Foreign Lender at the time such Foreign Lender becomes a
party hereto (or designates a new lending office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in
Law) to comply with Section 4.2(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 4.2(a).

“Existing Credit Facilities” means that certain Third Amended and Restated
Credit Agreement dated as of April 3, 2006, as amended, among RAM Energy, Inc.,
as borrower, Guggenheim Corporate Funding, LLC, as arranger and administrative
Agent, and Wells Fargo Foothill, Inc. as documentation agent and WestLB AG, New
York Branch, as syndication agent.

“Existing Hedging Agreements” means, to the extent scheduled on Schedule 5.14,
(i) Hedging Agreements entered into between any Loan Party and a Lender party to
the Existing Credit Facilities, and (ii) Hedging Agreements entered into by
Ascent to the extent there are no Liens on the Collateral securing any Loan
Party’s obligations under such Hedging Agreements.

“Extraordinary Proceeds” means any cash received by Borrower or any of its
Subsidiaries not in the ordinary course of business (and not consisting of
proceeds described in Section 2.4(c)(ii)(B) or Section 2.4(c)(ii)(D) or proceeds
received by Borrower in an underwritten public offering of Borrower’s common
stock or any sale by Borrower of shares of its preferred stock), including,
without limitation: (i) foreign, United States, state or local tax refunds,
(ii) pension plan reversions, (iii) proceeds of insurance, (iv) judgments,
proceeds of settlements or other consideration of any kind in connection with
any cause of action, (v) condemnation awards (and payments in lieu thereof), and
(vi) any purchase price adjustment received in connection with any purchase
agreement.

“FEIN” means Federal Employer Identification Number.

“Financial Officer” means any of the President, Chief Financial Officer, Vice
President and Treasurer, or such other officer of a Loan Party so designated in
writing to Administrative Agent.

“Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is resident for tax purposes.
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.

“Funding Date” means the date on which a Borrowing occurs.

“GAAP” means generally accepted accounting principles as in effect from time to
time in the United States, consistently applied.

“Gathering Systems” means all right, title and interest of Borrower and each of
its Subsidiaries in and to all (i) Hydrocarbon pipelines through which any
Hydrocarbons produced from any of the Oil and Gas Properties is transported to a
master/sales meter from which such Hydrocarbons can be sold to, or delivered for
further transport to, a non-Affiliate of Borrower or any of its Subsidiaries and
meters, compressors, drips, stripping or other treatment plants or facilities
located on or used in connection therewith; (ii) easements, rights of way,
permits, licenses, road boring agreements and similar

 

  10   LOAN AGREEMENT

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contracts and grants pursuant to which the Gathering Systems were constructed or
exist (whether such rights are contained in a separate instrument or in an oil
and gas lease or other instrument); and (iii) all accounts, contract rights and
general intangibles related to the Hydrocarbons located, stored or transported
through the Gathering Systems.

“GCF” means Guggenheim Corporate Funding, LLC, a Delaware limited liability
company.

“Governing Documents” means, with respect to any Person, the certificate or
articles of incorporation, by-laws, or other organizational or governing
documents of such Person.

“Governmental Authority” means any nation or government, any state, province, or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through Stock or
capital ownership or otherwise, by any of the foregoing.

“Great Plains” means Great Plains Pipeline Company, a Delaware corporation.

“Guarantor” means RAM Energy, Ascent, Ascent Oil & Gas, Ascent Energy Holdings,
Ascent LA, Ascent LP LLC, Ascent GP LLC, Ascent Operating, Ascent WV, Dyne,
Pontotoc Acquisition, Pontotoc Gathering, Pontotoc Holdings, PPC, OBEC, SLPH,
Gulf States, RWG, WG Operating, and WG Pipeline and each other Person who may
hereafter guarantee payment or performance of the whole or any part of the
Obligations.

“Guaranty Agreements” means, collectively, any and all of the guaranty
agreements with respect to the Obligations which are, or are to be, executed by
a Guarantor in favor of Administrative Agent for the benefit of the Lender
Group, as required from time to time by Administrative Agent, in form and
substance satisfactory to Administrative Agent, in each case as the same may be
amended, modified, restated, supplemented, increased, renewed, extended,
substituted for or replaced from time to time.

“Gulf States” means RLP Gulf States, L.L.C., an Oklahoma limited liability
company.

“Hazardous Materials” means (a) substances that are defined or listed in, or
otherwise classified pursuant to, any applicable laws or regulations as
“hazardous substances,” “hazardous materials,” “hazardous wastes,” “toxic
substances,” or any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as ignitability,
corrosivity, reactivity, carcinogenicity, reproductive toxicity, or “EP
toxicity”, (b) oil, petroleum, or petroleum derived substances, natural gas,
natural gas liquids, synthetic gas, drilling fluids, produced waters, and other
wastes associated with the exploration, development, or production of crude oil,
natural gas, or geothermal resources, (c) any flammable substances or explosives
or any radioactive materials, and (d) asbestos in any form or electrical
equipment that contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.

“Hedging Agreements” means (a) any interest rate or currency swap, rate cap,
rate floor, rate collar, forward agreement or other exchange or rate protection
agreements or any option with respect to any such transaction and (b) any swap
agreement, call option, put option, cap, floor, collar, exchange transaction,
forward agreement or other exchange or protection agreement relating to
Hydrocarbons or contracts of sale which provide for prepayment for deferred
shipment or delivery of oil, gas or other commodities.

 

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

“Indebtedness” of any Person means, without duplication, (a) all obligations of
such Person for borrowed money or with respect to deposits or advances of any
kind, (b) all obligations of such Person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such Person upon which interest
charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to Property
acquired by such Person, (e) all obligations of such Person in respect of the
deferred purchase price of Property or services (excluding current accounts
payable incurred in the ordinary course of business), (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on Property owned or
acquired by such Person, whether or not the Indebtedness secured thereby has
been assumed, (g) all guarantees by such Person of Indebtedness of others,
(h) all Capitalized Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, (j) all obligations, contingent or
otherwise, of such Person in respect of bankers’ acceptances, (k) all
obligations of such Person with respect to any arrangement, directly or
indirectly, whereby such Person shall sell or transfer any material asset, and
whereby such Person shall then or immediately thereafter rent or lease as lessee
such asset or any part thereof, (l) all recourse and support obligations of such
Person with respect to the sale or discount of any of its accounts receivable,
(m) all obligations of such Person with respect to any arrangement for the
purchase of materials, supplies, other Property or services if such arrangement
by its express terms requires that payment be made by such Person regardless of
whether such materials, supplies, other Property or services are delivered or
furnished to it, (n) net liabilities of such Person under all Lender Hedge
Agreements and all other Hedging Agreements for realized losses due and payable,
(o) all obligations of such Person under any prepayment for oil and gas
production or other similar agreement, and (p) all obligations of such Person
under operating leases which require such Person to make payments over the term
of such lease based on the purchase price or appraised value of the Property
subject to such lease plus a marginal interest rate, and used primarily as a
financing vehicle for, or to monetize, such Property. The Indebtedness of any
Person shall include the Indebtedness of any other entity (including any
partnership in which such Person is a general partner) to the extent such Person
is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such
Indebtedness provide that such Person is not liable therefor.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indenture Guarantors” means the “Subsidiary Guarantors,” as such term is
defined in the Unsecured Notes Indenture.

“Insolvency Proceeding” means any proceeding commenced by or against any Person
under any provision of the Bankruptcy Code or under any other bankruptcy or
insolvency law, assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or proceedings
seeking reorganization, arrangement, or other similar relief.

“Intellectual Property” has the meaning ascribed thereto in Section 5.16.

“Interest Expense” means, for any period, the sum (determined without
duplication) of the aggregate amount of interest expense accruing during such
period on Indebtedness of

 

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Borrower and its Subsidiaries on a consolidated basis, including the interest
portion of payments under capitalized leases and any capitalized interest, but
excluding amortization of debt discount and expense; provided that, Interest
Expense for the first three quarters of 2007 shall be the amounts set forth on
Schedule 1.1.

“Interest Period” means, with respect to each LIBOR Rate Loan, a period
commencing on the date of the making of such LIBOR Rate Loan and ending 1, 2, 3
or 6 months thereafter; provided, however, that (a) if any Interest Period would
end on a day that is not a Business Day, such Interest Period shall be extended
(subject to clauses (c)-(e) below) to the next succeeding Business Day,
(b) interest shall accrue at the applicable rate based upon the LIBOR Rate from
and including the first day of each Interest Period to, but excluding, the day
on which any Interest Period expires, (c) any Interest Period that would end on
a day that is not a Business Day shall be extended to the next succeeding
Business Day unless such Business Day falls in another calendar month, in which
case such Interest Period shall end on the next preceding Business Day, (d) with
respect to an Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period), the Interest Period shall
end on the last Business Day of the calendar month that is 1, 2, 3, or 6 months
after the date on which the Interest Period began, as applicable, and
(e) Borrower may not elect an Interest Period which will end after the Maturity
Date.

“Interim Redetermination” has the meaning assigned such term in Section 2.2(b).

“Interim Redetermination Date” means the date on which a Borrowing Base that has
been redetermined pursuant to an Interim Redetermination becomes effective as
provided in Section 2.2(b).

“Inventory” means all of Borrower’s or any of its Subsidiaries’ now owned or
hereafter acquired right, title and interest with respect to inventory,
including goods and extracted Hydrocarbons held for sale or to be furnished
under a contract of sale.

“Investment” means, with respect to any Person, any investment by such Person in
any other Person in the form of loans, guarantees, advances (excluding
(a) commission, travel, and similar advances to officers and employees of such
Person made in the ordinary course of business, and (b) bona fide Accounts
arising from the sale of goods or rendition of services in the ordinary course
of business consistent with past practice), capital contributions, purchases of
Stock, and any other items that are or would be classified as investments on a
balance sheet prepared in accordance with GAAP.

“IRC” means the Internal Revenue Code of 1986, as amended, and the regulations
thereunder.

“Issuing Lender” means one or more of the Lenders, designated by Administrative
Agent, in its capacity as the issuer of Letters of Credit hereunder, and its
successors in such capacity as provided in Section 2.12. The Issuing Lender may,
in its discretion, arrange for one or more Letters of Credit to be issued by
Affiliates of the Issuing Lender, in which case the term “Issuing Lender” shall
include any such Person with respect to Letters of Credit issued by such Person.

“L/C” has the meaning set forth in Section 2.12(a).

“L/C Disbursement” means a payment made by Issuing Lender pursuant to a Letter
of Credit.

 

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“L/C Undertaking” has the meaning set forth in Section 2.12(a).

“Legal Requirements” means all applicable international, foreign, federal,
state, and local laws, judgments, decrees, orders, statutes, ordinances, rules,
regulations, or Permits, including, without limitation, all Environmental Laws.

“Lender” and “Lenders” have the respective meanings set forth in the preamble to
this Agreement, and shall include any other Person made a party to this
Agreement in accordance with the provisions of Section 15.1 hereof for so long
as such Person is a Lender hereunder.

“Lender Group” means, individually and collectively, each of the individual
Lenders and Administrative Agent.

“Lender Group Expenses” means all: costs or expenses (including taxes, and
insurance premiums) required to be paid by Borrower or any of its Subsidiaries
under any of the Loan Documents that are paid or incurred by any one or more
members of the Lender Group; fees or charges paid or incurred by any one or more
members of the Lender Group in connection with the Lender Group’s transactions
with Borrower or any of its Subsidiaries, including, fees or charges for
photocopying, notarization, couriers and messengers, telecommunication, public
record searches (including tax lien, litigation, and UCC or equivalent searches
and including searches with the patent and trademark office, the copyright
office, or the department of motor vehicles), filing, recording, publication,
appraisal (including Reserve Reports and environmental audits); costs and
expenses incurred by any one or more members of the Lender Group in the
disbursement of funds to Borrower (by wire transfer or otherwise); charges paid
or incurred by any one or more members of the Lender Group resulting from the
dishonor of checks; costs and expenses paid or incurred by any one or more
members of the Lender Group to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining, handling,
preserving, storing, shipping, selling, preparing for sale, or advertising to
sell the Collateral, or any portion thereof, irrespective of whether a sale is
consummated; costs and expenses paid or incurred by any one or more members of
the Lender Group in examining the Books; costs and expenses of third party
claims or any other suit paid or incurred by any one or more members of the
Lender Group in enforcing or defending the Loan Documents or in connection with
the transactions contemplated by the Loan Documents or the Lender Group’s
relationship with Borrower (or any of its Subsidiaries party to one or more Loan
Documents); and the Lender Group’s reasonable attorneys fees and expenses
incurred in advising, structuring, drafting, reviewing, administering, amending,
terminating, enforcing (including attorneys fees and expenses incurred in
connection with a “workout,” a “restructuring,” or an Insolvency Proceeding
concerning Borrower or any Subsidiary or in exercising rights or remedies under
the Loan Documents), defending, or concerning the Loan Documents, irrespective
of whether suit is brought, or in any Remedial Action concerning the Collateral;
provided, however, that Lender Group Expenses shall not include fees or expenses
incurred by the Administrative Agent or any Lender in connection with the
syndication, assignment or securitization of the Obligations or any portion
thereof subsequent to the initial syndication of assignment thereof by GCF.

“Lender Hedging Agreement” means the Existing Hedging Agreements and all Hedging
Agreements hereafter entered into between Borrower or its Subsidiaries and any
Lender or Lender-Related Person while such Person (or in the case of a
Lender-Related Person, the Lender affiliated therewith) is a Lender hereunder.

“Lender Hedging Obligations” means all obligations, liabilities, fees, and
expenses owing by Borrower or its Subsidiaries to any Lender or Lender-Related
Person under Lender Hedging Agreements.

 

  14   LOAN AGREEMENT

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“Lender-Related Persons” means, with respect to any Lender, such Lender,
together with such Lender’s Affiliates, Related Funds, and the officers,
directors, employees, counsel, agents, and attorneys-in-fact of such Lender and
such Lender’s Affiliates.

“Letter of Credit” means an Existing L/C, a L/C or a LC Undertaking, as the
context requires.

“Letter of Credit Usage” means, as of any date of determination, the sum of
(a) the aggregate undrawn amount of all outstanding Letters of Credit, plus
(b) 100% of the amount of outstanding time drafts accepted by an Underlying
Issuer as a result of drawings under Underlying Letters of Credit.

“LIBOR Deadline” has the meaning set forth in Section 2.15(b)(i).

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

“LIBOR Rate” means, for each Interest Period for each LIBOR Rate Loan, the rate
per annum determined by Administrative Agent (rounded upwards, if necessary, to
the next  1/16%) by dividing (a) the Base LIBOR Rate for such Interest Period,
by (b) 100% minus the Reserve Percentage. The LIBOR Rate shall be adjusted on
and as of the effective day of any change in the Reserve Percentage.

“LIBOR Rate Loan” means each portion of an Advance or Term Loan B that bears
interest at a rate determined by reference to the LIBOR Rate.

“Lien” means any interest in Property securing an obligation owed to, or a claim
by, any Person other than the owner of the Property, whether such interest shall
be based on the common law, statute, or contract, whether such interest shall be
recorded or perfected, and whether such interest shall be contingent upon the
occurrence of some future event or events or the existence of some future
circumstance or circumstances, including (a) the lien or security interest
arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, adverse claim or charge,
conditional sale or trust receipt, or from a lease, consignment, or bailment for
security purposes and also including reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Oil and Gas Property and
(b) Production Payments and the like payable out of Oil and Gas Property. For
purposes of this Agreement, Borrower or any of its Subsidiaries shall be deemed
to be the owner of any Property which it has acquired or holds 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 financing.

“Liquidity Event Proceeds” means net cash proceeds from (i) any disposal of
assets not permitted by Section 7.4 that is approved by the applicable number of
Lenders, and (ii) the exercise of the Borrower Warrants.

“Loan” means the extension of credit by a Lender to Borrower in the form of a
LIBOR Rate Loan or a Reference Rate Loan.

“Loan Account” has the meaning set forth in Section 2.10.

“Loan Documents” means this Agreement, the Disbursement Letter, the Fee Letter,
the Letters of Credit, the Mortgages, the Guaranty Agreements, the Security
Agreements, any note or notes executed by Borrower and payable to the Lender
Group, and any other agreement entered into, now or in the future, in connection
with this Agreement.

 

  15   LOAN AGREEMENT

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“Loan Party” means Borrower and each Guarantor.

“Material Adverse Change” means (a) a material adverse change in the business,
prospects, operations, results of operations, assets, liabilities or condition
(financial or otherwise) of Borrower and its Subsidiaries taken as a whole,
(b) a material adverse effect on the ability of any Loan Party to carry out its
business as at the Closing Date or as proposed as of the Closing Date, (c) the
material impairment of any Loan Party’s ability to perform its obligations under
the Loan Documents to which it is a party or of the Lender Group to enforce the
Obligations or realize upon the Collateral, (d) any event or circumstance that
in the reasonable judgment of the Administrative Agent is likely to have a
material adverse effect on the value of the Collateral or the amount that the
Lender Group would be likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of the Collateral, or (e) a
material impairment of the enforceability or priority of the Administrative
Agent’s Liens with respect to the Collateral.

“Material Contract” means, as to any Person, any supply, purchase, service,
employment, tax, indemnity, farm-in agreement, farm-out agreement, gas
marketing, gas imbalance, operating, unitization, communitization, partnership,
joint venture or other agreement of such Person or any of its Subsidiaries or by
which such Person or any of its Subsidiaries or any of their respective
properties are otherwise bound, if such agreement either (i) requires the
expenditure of over $500,000 by such Person during any calendar year (other than
contracts with respect to the routine acquisition of leasehold, the drilling of
wells, the construction and operation of gathering, processing or treating
facilities or equipment, or other similar contracts pursuant to which such
Person routinely acquires, drills, develops and operates the Mineral Interests),
or (ii) involves the sale of more than $2,500,000 in Hydrocarbons by such Person
in any calendar year (except to the extent any such contract is cancelable by
such Person on 60-days’ notice or less), or (iii) involves a liability of such
Person in excess of $500,000, or (iv) results or could result in the loss of
title to, or the transfer or creation of a Lien upon any Collateral (except to
the extent otherwise permitted hereunder), or (v) is otherwise determined by
Administrative Agent, in its reasonable judgment, to be material to the
business, operations or properties of such Person, as the same shall be amended,
modified and supplemented and in effect from time to time.

“Maturity Dates” shall have the meaning set forth in Section 3.3(a).

“Maximum Facility Amount” means the aggregate of the Maximum Revolver Amount and
the Term Loan B Amount.

“Maximum Revolver Amount” means $250,000,000.

“MCAC” means Magic Circle Acquisition Corporation, an Oklahoma corporation.

“Mineral Interests” means all right, title, interest and estates now owned 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 interests, reversionary interests, carried
working interests, or residual interests of whatever nature.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

 

  16   LOAN AGREEMENT

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“Mortgages” means one or more mortgages or deeds of trust, as same be amended or
supplemented from time to time, to secure the Obligations, executed by Borrower
or its Subsidiaries in favor of Administrative Agent for the benefit of the
Lender Group, the form and substance of which shall be satisfactory to
Administrative Agent, that encumber the Oil and Gas Property Collateral and the
related improvements thereto.

“Multiemployer Plan” means a “multiemployer plan” (as defined in
Section 4001(a)(3) of ERISA) to which Borrower, any of its Subsidiaries, or any
ERISA Affiliate has contributed, or was obligated to contribute, within the past
six years.

“NYMEX Price” means, as of the date of the determination thereof with respect to
each of the appropriate crude oil or natural gas categories included in the then
most recent Reserve Report provided by Borrower to Administrative Agent pursuant
to Section 6.2, the prices for the 36 succeeding monthly futures contract prices
(the “3 Year Strip”) and held constant thereafter based on the price of the
average of the contract prices for the last twelve (12) months of such 3-Year
Strip period, commencing with the month during which the determination is to be
made, as quoted on the New York Mercantile Exchange (the “NYMEX”) and published
in a nationally recognized publication for such pricing as selected by
Administrative Agent, adjusted to account for the historical basis in a manner
acceptable to the Administrative Agent, and held constant thereafter; provided,
however, in the event that the NYMEX no longer provides futures contract price
quotes for 36 month periods, the longest period of quotes of less than 36 months
shall be used and held constant thereafter based on the average of the contract
prices for the last twelve (12) months of such period, and, if the NYMEX no
longer provides such futures contract quotes or has ceased to operate, the
Administrative Agent shall designate another nationally recognized commodities
exchange to replace the NYMEX for purposes of the references to the NYMEX
herein.

“NYMEX Value” means, at any date of determination thereof as to the Proved
Reserves of the Borrowing Base Entities, the present value, discounted at
10% per annum, of future net revenues (i.e., after deducting production and ad
valorem taxes and less future capital costs and operating expenses) from Proved
Reserves of the Borrowing Base Entities as of such date calculated for all
volumes covered under Hedging Agreements at the contract price under such
Hedging Agreements and for all volumes in excess of the volumes covered under
Hedging Agreements utilizing the NYMEX Price and assuming that production costs
thereafter remain constant on a per barrel of oil equivalent basis. Solely for
purposes of calculating NYMEX Value, Proved Developed Producing Reserves shall
comprise not less than sixty percent (60%) of the NYMEX Value.

“OBEC” means Oklahoma Basic Economy Corporation, an Oklahoma corporation.

“Obligations” means all loans, Advances, debts, principal, interest (including
any interest that, but for the provisions of the Bankruptcy Code, would have
accrued), contingent reimbursement obligations with respect to outstanding
Letters of Credit, obligations under Lender Hedging Agreements, premiums
(including Applicable Premiums), liabilities (including all amounts charged to
Borrower’s Loan Account pursuant hereto), obligations, fees, charges, costs,
Lender Group Expenses (including any fees or expenses that, but for the
provisions of the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties of any kind and description owing by Borrower
or any of its Subsidiaries to the Lender Group (or with respect to Lender
Hedging Agreements, any Lender-Related Person) (whether pursuant to or evidenced
by the Loan Documents or pursuant to any other agreement between the Lender
Group or the Lender-Related Persons and Borrower and/or its Subsidiaries), and
irrespective of whether for the payment of money (and including, without
limitation, all claims for indemnity under the Loan Documents including claims
under Section 11.2. of this Agreement),

 

  17   LOAN AGREEMENT

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whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter arising, and including any debt, liability, or obligation
owing from Borrower to others that the Lender Group may have obtained by
assignment or otherwise, and further including all interest not paid when due
and all Lender Group Expenses that Borrower or any of its Subsidiaries is
required to pay or reimburse by the Loan Documents, by law, or otherwise. Any
reference in this Agreement or in the Loan Documents to the Obligations shall
include all amendments, changes, extensions, modifications, renewals
replacements, substitutions, and supplements, thereto and thereof, as
applicable, both prior and subsequent to any Insolvency Proceeding.

“Oil and Gas Properties” means all of the present and future right, title and
interest (real, personal, mixed, contractual or otherwise) of each Loan Party
in, to and under or derived from the following:

(a) All presently existing and hereafter arising Mineral Interests and surface
interests;

(b) All presently existing and hereafter arising unitization, communitization
and pooling declarations, orders, and agreements (including all units formed by
voluntary agreement and those formed under the rules, regulations, orders or
other official acts of any governmental entity or tribal authority having
appropriate jurisdiction);

(c) All presently existing and arising oil sales contracts, casinghead gas sales
contracts, gas sales contracts, processing contracts, gathering contracts,
transportation contracts, easements, rights-of-way, servitudes, surface leases,
subsurface leases, farm-out contracts, farm-in contracts, operating agreements,
areas of mutual interest and other contracts, agreements and instruments;

(d) All presently existing and hereafter arising personal property,
improvements, fixtures, wells (whether producing, plugged and abandoned,
shut-in, injection, disposal or water supply), tanks, boilers, buildings,
machinery, vehicles, Equipment, gathering lines, pipelines, utility lines, power
lines, telephone lines, water rights, roads, permits, licenses and other
appurtenances, to the extent the same are situated upon and used or held for use
by such Loan Party in connection with the ownership, operation, maintenance or
repair of the Mineral Interests and/or surface interests; and

(e) All reservoir, reserve, seismic, geologic or geophysical information and
data.

“Oil and Gas Property Collateral” means all Oil and Gas Properties and all
Gathering Systems now owned or hereafter acquired by the Loan Parties.

“Other Taxes” means 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 under any other Loan Document or from the execution,
delivery, or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

“Overadvance” has the meaning set forth in Section 2.5.

“Participant” has the meaning set forth in Section 15.4.

“PBGC” means the Pension Benefit Guaranty Corporation as defined in Title IV of
ERISA, or any successor thereto.

 

  18   LOAN AGREEMENT

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“Permits” of a Person means all rights, franchises, permits, authorities,
licenses, certificates of approval or authorizations, including licenses and
other authorizations issuable by a Governmental Authority, which pursuant to
applicable Legal Requirements are necessary to permit such Person lawfully to
conduct and operate its business as currently conducted and to own and use its
assets.

“Permitted Investments” has the meaning set forth in Section 7.12.

“Permitted Liens” means (a) Liens held by Administrative Agent for the benefit
of the Lender Group, (b) Liens for unpaid taxes that either (i) are not yet due
and payable or (ii) are the subject of Permitted Protests, (c) Liens set forth
on Schedule P-1, (d) the interests of lessors under operating leases and
purchase money Liens of lessors under capital leases to the extent that the Lien
only attaches to the asset purchased or acquired and only secures the purchase
price of the asset, (e) Liens arising by operation of law in favor of
warehousemen, landlords, carriers, mechanics, materialmen, laborers, or
suppliers, or other like Liens arising by operation of law incidental to the
exploration, development, operation and maintenance of Oil and Gas Properties
and Liens granted to the operator of a property under a standard form joint
operating agreement to secure the timely payment of joint interest billings, in
each case incurred in the ordinary course of business of Borrower or the
relevant Subsidiary of Borrower not in connection with the borrowing of money,
and which Liens either (i) are for sums not yet due and payable, or (ii) are the
subject of Permitted Protests, (f) Liens arising from deposits made in
connection with obtaining worker’s compensation or other unemployment insurance,
(g) Liens on deposits and escrowed funds made to secure performance of bids,
tenders and leases (to the extent permitted under this Agreement) incurred in
the ordinary course of business of Borrower or the relevant Subsidiary of
Borrower and not in connection with the borrowing of money, (h) Liens of or
resulting from any judgment or award that do not result in and reasonably could
not be expected to result in a Material Adverse Change and as to which the time
for the appeal or petition for rehearing of which has not yet expired, or in
respect of which Borrower or the relevant Subsidiary of Borrower is in good
faith prosecuting an appeal or proceeding for a review and in respect of which a
stay of execution pending such appeal or proceeding for review has been secured,
(i) Liens with respect to the Oil and Gas Property Collateral that are
exceptions to the title opinions issued in connection with the Mortgages, as
accepted by Administrative Agent, (j) minor defects in title which (i) do not
affect the Defensible Title thereto to an extent unacceptable to Administrative
Agent in its reasonable judgment or restrict the full use or other benefits of
ownership by Borrower or such Subsidiary, as the case may be, and (ii) do not
affect the ability of Borrower or such Subsidiary, as the case may be, to
receive a share of production or proceeds from, allocated to, or attributable to
such Mineral Interests equal to the interest of Borrower or such Subsidiary, as
the case may be, therein as represented herein or in the other Loan Documents,
and (iii) do not materially interfere with the ordinary conduct of the business
of Borrower or such Subsidiary, as the case may be, and (iv) do not interfere
with or impair the value of Administrative Agent’s Lien therein for the benefit
of the Lender Group, and (v) are customarily waived by reasonable and prudent
Mineral Interest owners, and (k) Liens reserved in leases or farmout agreements
for rent or royalties and for compliance with the terms of the farmout
agreements or leases in the case of leasehold estates, to the extent that any
such Lien referred to in this clause does not materially impair the use of the
Mineral Interest covered by such Lien for the purposes for which such Mineral
Interest is held by the Borrower or any Subsidiary, does not materially
interfere with or impair the value of such Mineral Interest subject thereto or
Administrative Agent’s Lien therein for the benefit of the Lender Group, is
customarily waived by reasonable and prudent operators, and is consented to in
writing by Administrative Agent, (l) farmout, carried Working Interests, joint
operating, unitization, royalty, overriding royalty, sales and similar
agreements relating to the exploration or development of, or production from,
any Oil and Gas Properties or the sale of the hydrocarbons after they are
produced which are usual and customary in the industry and, with respect to Oil
and Gas Properties acquired after the Closing Date, are also existing at the
time of acquisition of such Oil and Gas Properties and are disclosed to and
approved by Administrative Agent in writing prior to any Proved Developed
Producing Reserves or Proved Developed Non-Producing

 

  19   LOAN AGREEMENT

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Reserves attributable to such Oil and Gas Properties being included in Eligible
Reserves, (m) Liens disclosed on Schedule P-1 that secure Permitted Indebtedness
permitted by Section 7.1(b), (n) purchase money Liens incurred in connection
with the purchase of vehicles and equipment securing Indebtedness not to exceed
$1,000,000 in the aggregate at any time, as permitted by Section 7.1(j), (o) a
Lien held by Coral Energy Holding, L.P. (“Coral”) on cash posted by Borrower to
secure Hedging Agreements between Borrower and Coral permitted under this
Agreement (“Coral Hedging Agreements”), (p) rights of offset of up to
$20,000,000 in the aggregate in favor of Coral or Shell Trading (US) Company in
connection with obligations under Coral Hedging Agreements, and
(q) continuations and renewals of otherwise Permitted Liens.

“Permitted Protest” means the right of Borrower or the relevant Subsidiary of
Borrower to protest any Lien other than any such Lien that secures the
Obligations, tax (other than payroll taxes or taxes that are the subject of a
United States federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the books of Borrower or the
relevant Subsidiary of Borrower in an amount that is satisfactory to
Administrative Agent, (b) any such protest is promptly instituted and diligently
prosecuted by Borrower or the relevant Subsidiary of Borrower in good faith, and
(c) Administrative Agent is satisfied that, while any such protest is pending,
there will be no impairment of the enforceability, validity, or priority of any
of the Administrative Agent’s Liens in and to the Collateral.

“Person” means and includes natural persons, corporations, limited liability
companies, limited partnerships, general partnerships, limited liability
partnerships, joint ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities, and governments
and agencies and political subdivisions thereof.

“Plan” means any employee benefit plan, program, or arrangement maintained or
contributed to by Borrower or with respect to which it may incur liability.

“Pontotoc Acquisition” means Pontotoc Acquisition Corp., an Nevada corporation.

“Pontotoc Gathering” means Pontotoc Gathering, LLC, an Oklahoma limited
liability company.

“Pontotoc Holdings” means Pontotoc Gathering, Inc., an Oklahoma corporation.

“PPC” means Pontotoc Production Company, Inc., a Texas corporation.

“Pricing Grid” means the annualized variable rates set forth below for the
Applicable Margin based upon Borrowing Base Utilization, as follows:

 

Borrowing Base Utilization

   Applicable Margin        LIBOR Rate Loan     Reference Rate Loan  

Less than or equal to 50%

   1.25 %   1.25 %

Greater than 50% but less than or equal to 75%

   1.50 %   1.50 %

Greater than 75% but less than or equal to 90%

   1.75 %   1.75 %

Greater than 90%

   2.00 %   2.00 %

 

  20   LOAN AGREEMENT

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provided, however, that the “Applicable Margin” means the rate per annum set
forth on the grid when the Borrowing Base Utilization Percentage is at its
highest level (a) during the occurrence and continuance of an Event of Default,
and (b) if at any time Borrower fails to deliver a Reserve Report pursuant to
Section 6.2 (b), until such time as a Reserve Report is delivered.

“Prior Obligations” has the meaning set forth in Section 18.9.

“Production Payments” means a production payment (whether volumetric or dollar
denominated) or similar royalty, overriding royalty, net profits interest or
other similar interest in Oil and Gas Properties, or the right to receive all or
a portion of the production or the proceeds from the sale of production
attributable to such Oil and Gas Properties where the holder of such interest
has recourse solely to such interest and the grantor or transferor thereof has
an express contractual obligation to produce and sell Hydrocarbons from such Oil
and Gas Properties, or to cause such Oil and Gas Properties to be so operated
and maintained, in each case in a reasonably prudent manner.

“Projections” means Borrower’s forecasted (a) balance sheets, (b) profit and
loss statements, and (c) cash flow statements, all prepared on a basis
consistent with Borrower’s historical financial statements, together with
appropriate supporting details and a statement of underlying assumptions.

“Property” means any interest in any kind of property or asset, whether real,
personal or mixed, tangible or intangible.

“Proposed Borrowing Base” shall have the meaning set forth in Section 2.2(c)(i).

“Proposed Borrowing Base Notice” shall have the meaning set forth in
Section 2.2(c)(ii).

“Pro Rata Share” means, as of any date of determination:

(a) with respect to a Revolver Lender’s obligation to make Advances and receive
payments of principal, interest, fees, costs, and expenses with respect thereto,
(i) prior to the Revolver Commitments being terminated or reduced to zero, the
percentage obtained by dividing (y) such Revolver Lender’s Revolver Commitment,
by (z) the aggregate Revolver Commitments of all Revolver Lenders, and (ii) from
and after the time that the Revolver Commitments have been terminated or reduced
to zero, the percentage obtained by dividing (y) the aggregate outstanding
principal amount of such Revolver Lender’s Advances by (z) the aggregate
outstanding principal amount of all Advances,

(b) with respect to a Revolver Lender’s obligation to participate in Letters of
Credit, to reimburse the Issuing Lender, and to receive payments of fees with
respect thereto, (i) prior to the Revolver Commitments being terminated or
reduced to zero, the percentage obtained by dividing (y) such Lender’s Revolver
Commitment, by (z) the aggregate Revolver Commitments of all Revolver Lenders,
and (ii) from and after the time that the Revolver Commitments have been
terminated or reduced to zero, the percentage obtained by dividing (y) the
aggregate outstanding principal amount of such Revolver Lender’s Advances by
(z) the aggregate outstanding principal amount of all Advances,

(c) with respect to a Term Loan B Lender’s obligation to make the Term Loan B
and receive payments of interest, fees, and principal with respect thereto,
(i) prior to the making of the Term Loan B, the percentage obtained by dividing
(y) such Term Loan B Lender’s Term Loan B Commitment, by (z) the aggregate
amount of all Term Loan B Lenders’ Term Loan B Commitments, and (ii) from and
after the making of the Term Loan B, the percentage obtained by dividing (y) the
principal amount of such Term Loan B Lender’s portion of the Term Loan B by
(z) the principal amount of the Term Loan B, and

 

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(d) with respect to all other matters as to a particular Lender (including the
indemnification obligations arising under Section 17.7), the percentage obtained
by dividing (i) such Lender’s Revolver Commitment plus the outstanding principal
amount of such Lender’s portion of the Term Loan B, by (ii) the aggregate amount
of Total Commitments of all Revolver Lenders plus the outstanding principal
amount of the Term Loan B; provided, however, that, in the event the Revolver
Commitments have been terminated or reduced to zero, the Pro Rata Share under
this clause shall be the percentage obtained by dividing (A) the outstanding
principal amount of such Lender’s Revolver Advances plus such Lender’s ratable
portion of the Letter of Credit Usage with respect to outstanding Letters of
Credit plus the outstanding principal amount of such Lender’s portion of the
Term Loan B, by (B) the outstanding principal amount of all Revolver Advances
plus the aggregate amount of the Letter of Credit Usage with respect to the
outstanding Letters of Credit plus the principal amount of the Term Loan B.

“Proved Reserves” means “Proved Reserves” as defined in the Definitions for Oil
and Gas Reserves (in this paragraph, the “Definitions”) promulgated by the
Society of Petroleum Engineers (or any generally recognized successor) as in
effect at the time in question. “Proved Developed Producing Reserves” means
Proved Reserves which are categorized as both “Developed” and “Producing” in the
Definitions. “Proved Developed Non-Producing Reserves” means Proved Reserves
which are categorized as both “Developed” and “Non-Producing” in the
Definitions. “Proved Developed Reserves” means Proved Reserves which are
categorized as either “Proved Developed Producing Reserves” or “Proved Developed
Non-Producing Reserves” in the definitions. “Proved Undeveloped Reserves” means
Proved Reserves which are categorized as “Undeveloped” in the Definitions.

“RAM Energy” means RAM Energy, Inc., a Delaware corporation.

“Record” means information that is inscribed on a tangible medium or which is
stored in an electronic or other medium and is retrievable in perceivable form.

“Redetermination Date” means, with respect to any Scheduled Redetermination or
any Interim Redetermination, the date that the redetermined Borrowing Base
related thereto becomes effective pursuant to Section 2.2(d).

“Reference Rate” means for any day the “Prime Rate” as published for each
Business Day (or if such day is not a Business Day, the immediately preceding
Business Day) in the Wall Street Journal under the caption “Money Rates, Prime
Rate.”

“Reference Rate Loan” means each portion of a Revolving Advance or Term Loan B
that bears interest at a rate determined by reference to the Reference Rate.

“Register” has the meaning set forth in Section 15.3

“Related Fund” means a fund, money market account, investment account or other
account managed by a Lender or an Affiliate of such Lender or its investment
manager.

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents and advisors of such
Person and of such Person’s Affiliates.

 

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“Reportable Event” means any of the events described in Section 4043(c) of ERISA
or the regulations thereunder other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under applicable regulations.

“Required Lenders” means, at any time, (a) the Required Revolver Lenders plus
(b) the Required Term Loan B Lenders.

“Required Revolver Lenders” means, at any time, Lenders whose aggregate Pro Rata
Shares (determined pursuant to clause (a) of such definition) equal or exceed
66 2/3% of the aggregate of the Revolver Commitment (and, if there are two
(2) or more Lenders with Revolver Commitments, shall include at least two
(2) Lenders with Revolver Commitments).

“Required Term Loan B Lenders” means, at any time, at least two (2) Lenders
whose Pro Rata Shares (determined pursuant to clause (c) of such definition)
aggregate at least 50.1% of the Term Loan B Commitment (or, from and after the
making of Term Loan B, the aggregate unpaid principal amount of Term Loan B).

“Reserve Percentage” means, on any day, for any Lender, the maximum percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor Governmental Authority) for determining the reserve requirements
(including any basic, supplemental, marginal, or emergency reserves) that are in
effect on such date with respect to eurocurrency funding (currently referred to
as “eurocurrency liabilities”) of that Lender, but so long as such Lender is not
required or directed under applicable regulations to maintain such reserves, the
Reserve Percentage shall be zero.

“Reserve Report” means a report, in form and substance satisfactory to
Administrative Agent, prepared by an Approved Engineer (or, where expressly
permitted hereunder, by Borrower, but in either case at Borrower’s sole cost and
expense) evaluating the oil and gas reserves attributable to the Mineral
Interests owned directly by the Borrowing Base Entities (and no other Persons)
which shall, among other things, (a) identify the wells covered thereby, (b) set
forth the Approved Engineer’s opinions with respect to the total volume of
Proved Reserves (specifying with such opinions the terms of categories Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves) which the Borrowing Base Entities have the right to
produce (or cause to be produced) for their own account, (c) set forth the
Approved Engineer’s opinions with respect to the NYMEX Value of each of the
categories of the Proved Reserves as specified in subclause (b) above, (d) set
forth the Approved Engineer’s opinions with respect to the future rate of
production of the Proved Reserves, (e) contain such other information as
requested by Administrative Agent with respect to the projected rate of
production, gross revenues, operating expenses, net income, taxes, capital
expenditures and other capital costs, net revenues and present value of future
net revenues attributable to such reserves and production therefrom, and
(f) contain a statement of the volumes, price and escalation parameters,
discount rate, assumptions and net proceeds of production, present value of net
proceeds of production, estimated costs of remedial, preventative or
investigating action, operating expenses, net income, taxes, capital
expenditures and other capital costs, procedures and other assumptions upon
which such determinations were based, in each case reasonably acceptable to
Administrative Agent.

“Retiree Health Plan” means an “employee welfare benefit plan” within the
meaning of Section 3(1) of ERISA that provides benefits to individuals after
termination of their employment, other than as required by Section 601 of ERISA.

 

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“Revolver Commitment” means, with respect to each Revolver Lender, its Revolver
Commitment, and, with respect to all Revolver Lenders, their Revolver
Commitments, in each case as such Dollar amounts are set forth beside such
Lender’s name under the applicable heading on Schedule C-1 or on the signature
page of the Assignment and Assumption pursuant to which such Lender became a
Lender hereunder, as such Revolver Commitments are subject to the Borrowing Base
and as such amounts may be reduced or increased from time to time pursuant to
assignments made in accordance with the provisions of Section 15.2.

“Revolver Lender” and “Revolver Lenders” means each Lender individually, and all
Lenders collectively, with a Revolver Commitment.

“Revolver Maturity Date” shall have the meaning set forth in Section 3.3.

“Revolving Advances” has the meaning set forth in Section 2.1(a).

“Revolving Facility Usage” means, as of any date of determination, the sum of
(a) the aggregate amount of Revolving Advances outstanding, plus (b) the Letter
of Credit Usage.

“RWG” means RWG Energy, Inc., a Delaware corporation.

“SEC” means the United States Securities and Exchange Commission and any
successor Federal agency having similar powers.

“Scheduled Redetermination” has the meaning assigned such term in
Section 2.2(b).

“Scheduled Redetermination Date” means the date on which a Borrowing Base that
has been redetermined pursuant to a Scheduled Redetermination becomes effective
as provided in Section 2.2(b).

“Securitization” has the meaning set forth in Section 2.16.

“Securitizing Lender” has the meaning set forth in Section 2.16.

“Security Agreements” means, collectively, any and all of the security
agreement, pledges, mortgages, deeds of trust, assignments, stock pledge
agreements, assignments of partnership interests, assignments of member
interests, and such other agreements, documents and instruments, in form and
substance satisfactory to Administrative Agent, which are, or are to be,
executed by a Loan Party in favor of Administrative Agent and/or the Lenders as
may be required from time to time by Administrative Agent to provide
Administrative Agent for the benefit of the Lender Group with Liens upon all of
the assets and properties of such Loan Party as security for the payment and
performance in full of the Obligations, in each case as the same may be amended,
modified, restated, supplemented, increased, renewed, extended, substituted for
or replaced from time to time.

“Settlement” has the meaning set forth in Section 2.3(d)(i).

“Settlement Date” has the meaning set forth in Section 2.3(d)(i).

“SLPH” means South Louisiana Property Holdings, Inc., a Louisiana corporation.

 

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

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto.

“Stock” means all shares, units, partnership interests, options, warrants,
interests, participations, or other equivalents (regardless of how designated)
of or in a Person, whether voting or nonvoting, including common stock,
preferred stock, master limited partnership units, or any other “equity
security” (as such term is defined in Rule 3a11-1 of the General Rules and
Regulations promulgated by the SEC under the Exchange Act).

“Subsidiary” of a Person means a corporation, partnership, limited liability
company, or other entity in which that Person directly or indirectly owns or
controls the shares of Stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors (or appoint other comparable
managers) of such corporation, partnership, limited liability company, or other
entity.

“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

“Term Loan B” has the meaning set forth in Section 2.1(b).

“Term Loan B Amount” means $200,000,000 as the same may be increased pursuant to
Section 2.17.

“Term Loan B Commitment” means, with respect to each Lender, its Term Loan B
Commitment, and, with respect to all Lenders, their Term Loan B Commitments, in
each case as such Dollar amounts are set forth beside such Lender’s name under
the applicable heading on Schedule C-1 or in the Assignment and Assumption
pursuant to which such Lender became a Lender hereunder, as such amounts may be
reduced or increased from time to time pursuant to Section 2.17 and pursuant to
assignments made in accordance with the provisions of Section 15.1.

“Term Loan B Lender” and “Term Loan B Lenders” means each Lender individually,
and all Lenders collectively, with a Term Loan B Commitment.

“Term Loan B Maturity Date” shall have the meaning set forth in Section 3.3.

 

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“Total Commitment” means, with respect to each Lender, its Total Commitment,
and, with respect to all Lenders, their Total Commitments, in each case as such
Dollar amounts are set forth beside such Lender’s name under the applicable
heading on Schedule C-1 attached hereto or on the signature page of the
Assignment and Assumption pursuant to which such Lender became a Lender
hereunder, as such amounts may be reduced or increased from time to time
pursuant to assignment made in accordance with the provisions of Section 15.1.

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

“Transfer Order Letters” means transfer order letters in the form of Exhibit T-1
attached hereto containing the information as provided for therein.

“Underlying Issuer” means a third Person which is the beneficiary of an L/C
Undertaking and which has issued a letter of credit at the request of
Administrative Agent for the benefit of Borrower.

“Underlying Letter of Credit” means a letter of credit that has been issued by
an Underlying Issuer.

“Unsecured Notes” means those certain 11 1 1/2% unsecured notes issued by RAM
Energy in the aggregate original principal amount of $115,000,000, dated as of
February 24, 1998, and maturing on February 15, 2008, issued under the Unsecured
Notes Indenture, as amended, modified, renewed or restated from time to time.

“Unsecured Notes Indenture” means that certain Indenture, dated as of
February 24, 1998, among Borrower, the Indenture Guarantors and United States
Trust Company of New York, pursuant to which the Unsecured Notes have been
issued, as amended, modified, renewed or restated from time to time.

“Unsecured Notes Reserve” means, an amount equal to the principal amount then
outstanding under the Unsecured Notes, provided, that the Unsecured Notes
Reserve shall be zero if the Unsecured Notes have been retired in full.

“Voidable Transfer” has the meaning set forth in Section 18.7.

“WFF” means Wells Fargo Foothill, Inc., a California corporation.

“WG Operating” means WG Operating, Inc., a Texas corporation.

“WG Pipeline” means WG Pipeline LLC, a Texas limited liability company.

“Working Interest” means that interest in an oil and gas or mineral lease which
gives the owner the right to explore for, develop, exploit, and/or produce the
minerals and includes the obligation to pay the expense of such activities.

 

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Accounting Terms. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP. When used herein, the term “financial
statements” shall include the notes and schedules thereto. Whenever the term
“Borrower” is used in respect of a financial covenant or a related definition,
it shall be understood to mean Borrower and its Subsidiaries on a consolidated
basis unless the context clearly requires otherwise.

Construction. Unless the context of this Agreement or any other Loan Document
clearly requires otherwise, references to the plural include the singular,
references to the singular include the plural, the term “including” is not
limiting, and the term “or” has, except where otherwise indicated, the inclusive
meaning represented by the phrase “and/or.” The words “hereof,” “herein,”
“hereby,” “hereunder,” and similar terms in this Agreement or any other Loan
Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular provision of this Agreement or such
other Loan Document, as the case may be. An Event of Default shall “continue” or
be “continuing” until such Event of Default has been waived in writing by
Administrative Agent. Section, subsection, clause, schedule, and exhibit
references herein are to this Agreement unless otherwise specified. Any
reference in this Agreement or in the other Loan Documents to this Agreement or
any of the other Loan Documents or any other agreement, instrument or document
shall include all alterations, amendments, changes, extensions, modifications,
renewals, replacements, substitutions, joinders, and supplements, thereto and
thereof, as applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements set forth herein). Any reference herein
to any Person shall be construed to include such Person’s successors and
assigns. Any requirement of a writing contained herein or in the other Loan
Documents shall be satisfied by the transmission of a Record and any Record
transmitted shall constitute a representation and warranty as to the accuracy
and completeness of the information contained therein.

Schedules and Exhibits. All of the schedules and exhibits attached to this
Agreement shall be deemed incorporated herein by reference.

LOAN AND TERMS OF PAYMENT.

Advances.

Revolving Advances. Subject to the terms and conditions of this Agreement and
during the term of this Agreement, each Revolver Lender (severally, not jointly
or jointly and severally) agrees to make advances (“Revolving Advances”) to
Borrower in an amount at any one time outstanding not to exceed such Revolver
Lender’s Pro Rata Share of an amount equal to the Availability. The Revolver
Lenders shall have no obligation to make further Revolving Advances hereunder to
the extent they would cause the outstanding Revolving Facility Usage to exceed
the Availability or the Borrowing Base as determined from time to time. Amounts
borrowed pursuant to this Section 2.1 may be repaid and, subject to the terms
and conditions of this Agreement, reborrowed at any time during the term of this
Agreement. At no time shall the sum of the principal amount of the Revolving
Advances and the Letter of Credit Usage exceed the Maximum Revolver Amount.

Term Loan B. Subject to the terms and conditions of this Agreement, on the
Closing Date each Term Loan B Lender with a Term Loan B Commitment agrees
(severally, not jointly or jointly and severally) to make term loans to Borrower
in an amount equal to such Lender’s Pro Rata Share of the Term Loan B Amount on
the date hereof. All such term loans, together with all additional term loans
made upon any increase in the aggregate Term Loan B

 

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Commitments under Section 2.17, shall be collectively referred to herein as the
“Term Loan B”. The outstanding unpaid principal balance and all accrued and
unpaid interest under the Term Loan B shall be due and payable, subject to
Section 2.4(b) on the Term Loan B Maturity Date or on any earlier date of
termination of the Term Loan B or this Agreement, whether by its terms, by
prepayment, or by acceleration. No amount paid on Term Loan B may be reborrowed.
All amounts outstanding under the Term Loan B shall constitute Obligations.

Borrowing Base.

Initial Borrowing Base. For the period from and including the Closing Date to
but excluding the first Redetermination Date, the amount of the Borrowing Base
shall be $175,000,000 minus the Borrowing Base Proved Undeveloped Reserve
Capital Expenditure Adjustment. Notwithstanding the foregoing, the Borrowing
Base is subject to further adjustments from time to time pursuant to
Section 6.12 or Section 7.4.

Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined
semi-annually in accordance with Section 2.2(c)(i) (a “Scheduled
Redetermination”), and, subject to Section 2.2(d), such redetermined Borrowing
Base shall become effective and applicable to Borrower, Administrative Agent,
the Issuing Lender and the Lenders on March 15th and September 15th of each
year, commencing March 15, 2008. In addition, Borrower may, by notifying the
Administrative Agent thereof, and the Administrative Agent may, at the direction
of the Required Revolver Lenders, by notifying Borrower thereof, one time during
any 12 month period, each elect to cause the Borrowing Base to be redetermined
between Scheduled Redeterminations (an “Interim Redetermination”) in accordance
with Section 2.2(c).

Scheduled and Interim Redetermination Procedure.

Each Scheduled Redetermination and each Interim Redetermination shall be
effectuated as follows: Upon receipt by the Administrative Agent of (A) the
Reserve Report and the certificate required to be delivered by Borrower to the
Administrative Agent, in the case of a Scheduled Redetermination, pursuant to
Sections 6.2(b) and 6.2(c), and, in the case of an Interim Redetermination, a
Reserve Report prepared by Borrower and audited by an Approved Engineer which
shall accompany any Interim Redetermination requested by Borrower, and otherwise
shall be delivered within 30 days of any Interim Redetermination requested by
the Required Revolver Lenders and (B) such other reports, data and supplemental
information, including, without limitation, the information provided pursuant to
Section 7.4, as may, from time to time, be reasonably requested by the Required
Revolver Lenders (the Reserve Report, such certificate and such other reports,
data and supplemental information being the “Engineering Reports”), the
Administrative Agent shall evaluate the information contained in the Engineering
Reports and shall, in its sole discretion, propose a new Borrowing Base (the
“Proposed Borrowing Base”) based upon such information and such other
information (including, without limitation, the status of title information with
respect to the Oil and Gas Properties as described in the Engineering Reports
and the existence of any other Indebtedness) as the Administrative Agent deems
appropriate and consistent with its normal oil and gas lending criteria as it
exists at the particular time, which amount shall be reduced by the Borrowing
Base Proved Undeveloped Reserve Capital Expenditure Adjustment. In no event
shall the Proposed Borrowing Base exceed the Maximum Revolver Amount nor shall
Proved Developed Reserves constitute less than 75% of the Borrowing Base total
value.

 

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The Administrative Agent shall notify Borrower and the Lenders of the Proposed
Borrowing Base (the “Proposed Borrowing Base Notice”):

(A) in the case of a Scheduled Redetermination (1) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by Borrower
pursuant to Section 6.2(b) in a timely and complete manner (copies of which
Administrative Agent shall promptly forward to the Revolver Lenders), then on or
before March 15th and September 15th of such year following the date of delivery
or (2) if the Administrative Agent shall not have received the Engineering
Reports required to be delivered by Borrower pursuant to Section 6.2(b) in a
timely and complete manner, then promptly after the Administrative Agent has
received complete Engineering Reports from Borrower and Administrative Agent has
had a reasonable opportunity to determine the Proposed Borrowing Base in
accordance with Section 2.2(c)(i);

(B) in the case of an Interim Redetermination, promptly, and in any event,
within fifteen (15) days after the Administrative Agent has received the
required Engineering Reports; and

(C) in the event that Borrower fails to timely deliver the Reserve Reports when
due under Section 6.2(b) for Scheduled Redeterminations and under Section 2.2(c)
for Interim Redeterminations, the Administrative Agent may nevertheless
redetermine the Borrowing Base within the prescribed time frame based upon such
available information as Administrative Agent determines is appropriate.

Any Proposed Borrowing Base that would increase the Borrowing Base then in
effect must be approved or deemed to have been approved by all Revolver Lenders
as provided in this Section 2.2(c)(iii); and any Proposed Borrowing Base that
would decrease or maintain the Borrowing Base then in effect must be approved or
be deemed to have been approved by the Required Revolver Lenders as provided in
this Section 2.2(c)(iii). Upon receipt of the Proposed Borrowing Base Notice,
each Revolver Lender shall have fifteen (15) days to agree with the Proposed
Borrowing Base or disagree with the Proposed Borrowing Base by proposing an
alternate Borrowing Base. If at the end of such fifteen (15) days, any Revolver
Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
Proposed Borrowing Base. If, at the end of such 15-day period, all of the
Required Revolver Lenders and all of the other Revolver Lenders, in the case of
a Proposed Borrowing Base that would increase the Borrowing Base then in effect,
or the Required Revolver Lenders, in the case of a Proposed Borrowing Base that
would decrease or maintain the Borrowing Base then in effect, have approved or
been deemed to have approved, as aforesaid, then the Proposed Borrowing Base
shall become the new Borrowing Base, effective on the date specified in
Section 2.2(d). If, however, at the end of such fifteen (15) day period, the
Revolver Lenders and/or Required Revolver Lenders, as applicable, have not
approved or been deemed to have approved, as aforesaid, then the Administrative
Agent shall poll the Revolver Lenders to ascertain the highest Borrowing Base
then acceptable to the Required Revolver Lenders for purposes of this
Section 2.2(c)(i) and, so long as such amount does not increase the Borrowing
Base then in effect, such amount shall become the new Borrowing Base, effective
on the date specified in Section 2.2(d).

 

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The Borrowing Base shall be determined based upon the loan collateral value
assigned to the Oil and Gas Properties and such other credit factors (including
without limitation the assets, liabilities, cash flow, business, properties,
prospects, management and ownership of Borrower and the other Loan Parties)
which the Revolver Lenders deem significant. The Revolver Lenders’ determination
of the Borrowing Base shall be in their sole discretion. Borrower, Revolver
Lenders and the Administrative Agent acknowledge that (a) due to the
uncertainties of exploring, developing and producing Hydrocarbon, the Oil and
Gas Properties are not subject to evaluation with a high degree of accuracy and
are subject to potential rapid deterioration in value, and (b) for this reason
and the difficulties and expenses involved in liquidating and collecting against
the Oil and Gas Properties, the Administrative Agent’s determination of the
Borrowing Base that may be supported by the Oil and Gas Properties contains an
equity cushion, which equity cushion is acknowledged by Borrower as essential
for the adequate protection of the Revolver Lenders.

Effectiveness of a Redetermined Borrowing Base. After a redetermined Borrowing
Base is approved or is deemed to have been approved by the Required Revolver
Lenders and all of the other Revolver Lenders and/or the Required Revolver
Lenders, as applicable, pursuant to Section 2.2(c), the Administrative Agent
shall notify Borrower and the Lenders of the amount of the redetermined
Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become
the new Borrowing Base, effective and applicable to Borrower, the Administrative
Agent, the Issuing Lender and the Lenders:

in the case of a Scheduled Redetermination, (A) if the Administrative Agent
shall have received the Engineering Reports required to be delivered by Borrower
pursuant to Section 6.2(b) in a timely and complete manner, then on the
April 1st or October 1st, as applicable, following such notice, or (B) if the
Administrative Agent shall not have received the Engineering Reports required to
be delivered by Borrower pursuant to Sections 6.2(b) in a timely and complete
manner, then on the Business Day next succeeding delivery of such notice; and

in the case of an Interim Redetermination, on the Business Day next succeeding
delivery of such notice.

Such amount shall then become the Borrowing Base until the next Scheduled
Redetermination Date, the next Interim Redetermination Date or the next
adjustment to the Borrowing Base under Section 6.12 or Section 7.4, whichever
occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or
Interim Redetermination shall become effective until the New Borrowing Base
Notice related thereto is received by Borrower.

Funding and Borrowings.

Procedure for Borrowing. Each Borrowing of Revolving Advances shall be made upon
Borrower’s irrevocable request therefor (the “Borrowing Request”) delivered in
writing to Administrative Agent in the form of a Notice of Borrowing duly
completed; which notice must be received by Administrative Agent no later than
12:00 p.m. (New York City time) three (3) Business Days preceding the requested
Funding Date specifying (i) the amount of the Borrowing, (ii) if a LIBOR Rate
Loan, the initial Interest Period to be applicable thereto, which

 

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shall be a period contemplated by the definition of the term “Interest Period,”
and (iii) the requested Funding Date, which shall be a Business Day. All
Revolving Advances requested in any Borrowing Request must be in an amount not
less than $1,000,000 and integral multiples of $500,000 in excess thereof,
unless the amount available for further Advances is less than $1,000,000, in
which event the Borrowing Request must be in an amount equal to the maximum
amount then available for further Advances. If no Interest Period is specified
with respect to any requested Borrowing, then Borrower shall be deemed to have
selected an Interest Period of one month’s duration.

Making of Advances.

Promptly after receipt of a request for a Borrowing pursuant to Section 2.3(a),
Administrative Agent shall notify the Revolver Lenders, not later than 1:00 p.m.
(New York City time) two (2) Business Days immediately preceding the Funding
Date applicable thereto, by telecopy, telephone, or other similar form of
transmission, of the requested Borrowing. Each Revolver Lender shall make the
amount of such Revolver Lender’s Pro Rata Share of the requested Borrowing
available to Administrative Agent in immediately available funds, to such
account of Administrative Agent as Administrative Agent may designate, not later
than 1:00 p.m. (New York time) on the Funding Date applicable thereto. After
Administrative Agent’s receipt of the proceeds of such Revolving Advances, upon
satisfaction of the applicable conditions precedent set forth in Article 3
hereof, Administrative Agent shall make the proceeds of such Advances available
to Borrower on the applicable Funding Date by transferring same day funds equal
to the proceeds of such Revolving Advances received by Administrative Agent to
the account designated by Borrower; provided, however, that, subject to the
provisions of Section 2.3(c), Administrative Agent shall not request any
Revolver Lender to make, and no Revolver Lender shall have the obligation to
make, any Advance if Administrative Agent shall have received written notice
from any Revolver Lender, or otherwise has actual knowledge, that (1) one or
more of the applicable conditions precedent set forth in Article 3 will not be
satisfied on the requested Funding Date for the applicable Borrowing unless such
condition has been waived by Administrative Agent, or (2) the requested
Borrowing would exceed the Availability of the Borrower requesting the Advance
on such Funding Date.

Unless Administrative Agent receives notice from a Lender on or prior to the
Closing Date or, with respect to any Borrowing after the Closing Date, at least
one (1) Business Day prior to the date of such Borrowing, that such Lender will
not make available as and when required hereunder to Administrative Agent for
the account of Borrower the amount of that Lender’s Pro Rata Share of the
Borrowing, Administrative Agent may assume that each Lender has made or will
make such amount available to Administrative Agent in immediately available
funds on the Funding Date and Administrative Agent may (but shall not be so
required), in reliance upon such assumption, make available to Borrower on such
date a corresponding amount. If and to the extent any Lender shall not have made
its full amount available to Administrative Agent in immediately available funds
and Administrative Agent in such circumstances has made available to Borrower
such amount, that Lender shall on the Business Day following such Funding Date
make such amount available to Administrative Agent, together with interest at
the Defaulting Lenders Rate for each day during such period. A notice submitted
by Administrative Agent to any Lender with respect to amounts owing under this
subsection shall be conclusive, absent manifest error. If such amount is so made
available,

 

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such payment to Administrative Agent shall constitute such Lender’s Advance on
the date of Borrowing for all purposes of this Agreement. If such amount is not
made available to Administrative Agent on the Business Day following the Funding
Date, Administrative Agent will notify Borrower of such failure to fund and,
upon demand by Administrative Agent, Borrower shall pay such amount to
Administrative Agent for Administrative Agent’s account, together with interest
thereon for each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Advances
composing such Borrowing.

Administrative Agent shall not be obligated to transfer to a Defaulting Lender
any payments made by Borrower to Administrative Agent for the Defaulting
Lender’s benefit; nor shall a Defaulting Lender be entitled to the sharing of
any payments hereunder. Amounts payable to a Defaulting Lender shall instead be
paid to or retained by Administrative Agent. Administrative Agent may hold and,
in its discretion, re-lend to Borrower the amount of all such payments received
or retained by it for the account of such Defaulting Lender. Solely for the
purposes of voting or consenting to matters with respect to the Loan Documents
and determining Pro Rata Shares, such Defaulting Lender shall be deemed not to
be a “Lender” and such Lender’s Commitment shall be deemed to be zero (-0-).
This Section shall remain effective with respect to such Lender until (x) the
Obligations under this Agreement shall have been declared or shall have become
immediately due and payable or (y) the requisite non-Defaulting Lenders and
Administrative Agent shall have waived such Lender’s default in writing. The
operation of this Section shall not be construed to increase or otherwise affect
the Commitment of any Lender, or relieve or excuse the performance by Borrower
of its duties and obligations hereunder.

INTENTIONALLY OMITTED.

Settlement. It is agreed that each Lender’s funded portion of the Advances is
intended by the Lenders to equal, at all times, such Lender’s Pro Rata Share of
the outstanding Advances for the applicable credit facility hereunder. Such
agreement notwithstanding, Administrative Agent, and the Lenders agree (which
agreement shall not be for the benefit of or enforceable by Borrower) that in
order to facilitate the administration of this Agreement and the other Loan
Documents, settlement among them as to the Advances under each credit facility
hereunder shall take place on a periodic basis in accordance with the following
provisions:

Administrative Agent shall request settlement (“Settlement”) with the Lenders on
a weekly basis, or on a more frequent basis if so determined by Administrative
Agent, with respect to Collections received, by notifying the Lenders by
electronic mail, facsimile, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (New York City time) on the
Business Day immediately prior to the date of such requested Settlement (the
date of such requested Settlement being the “Settlement Date”). Such notice of a
Settlement Date shall include a summary statement of the amount of outstanding
Advances for the period since the prior Settlement Date, the amount of
repayments received in such period, and the amounts allocated to each Lender of
the interest, fees, and other charges for such period. Subject to the terms and
conditions contained herein (including Section 2.3(b)(iii)): (y) if a Lender’s
balance of the Advances exceeds such Lender’s Pro Rata Share of the Advances as
of a Settlement Date, then Administrative Agent shall by no later than 12:00
p.m. (New York City time) on the Settlement Date transfer in immediately
available funds to the account of such Lender as such Lender may designate, an
amount such that each such Lender shall, upon receipt of such amount, have as of
the Settlement Date, its Pro Rata Share of the Advances; and (z) if a Lender’s
balance of the Advances is less than such Lender’s Pro Rata Share of the
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a Settlement Date, such Lender shall no later than 12:00 p.m. (New York City
time) on the Settlement Date transfer in immediately available funds to such
account of Administrative Agent as Administrative Agent may designate, an amount
such that each such Lender shall, upon transfer of such amount, have as of the
Settlement Date, its Pro Rata Share of the Advances. Such amounts made available
to Administrative Agent under clause (z) of the immediately preceding sentence
shall constitute Revolving Advances of such Lenders. If any such amount is not
made available to Administrative Agent by any Lender on the Settlement Date
applicable thereto to the extent required by the terms hereof, Administrative
Agent shall be entitled to recover for its account such amount on demand from
such Lender together with interest thereon at the Defaulting Lenders Rate.

In determining whether a Lender’s balance of the Advances is less than, equal
to, or greater than such Lender’s Pro Rata Share of the Advances as of a
Settlement Date, Administrative Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received in good funds by
Administrative Agent with respect to principal, interest, fees payable by
Borrower and allocable to the Lenders hereunder, and proceeds of Collateral. To
the extent that a net amount is owed to any such Lender after such application,
such net amount shall be distributed by Administrative Agent to that Lender as
part of such next Settlement.

Notation. Administrative Agent shall record on its books the principal amount of
the Advances owing to each Lender and the interests therein of each Lender, from
time to time. In addition, each Lender is authorized, at such Lender’s option,
to note the date and amount of each payment or prepayment of principal of such
Lender’s Advances in its books and records, including computer records, such
books and records constituting rebuttably presumptive evidence, absent manifest
error, of the accuracy of the information contained therein.

Lenders’ Failure to Perform. All Advances shall be made by the Lenders
simultaneously and in accordance with their Pro Rata Shares. It is understood
that (i) no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make any Advances hereunder, nor shall any Commitment
of any Lender be increased or decreased as a result of any failure by any other
Lender to perform its obligation to make any Advances hereunder, and (ii) no
failure by any Lender to perform its obligation to make any Advances hereunder
shall excuse any other Lender from its obligation to make any Advances
hereunder.

Payments.

Payments by Borrower.

All payments to be made by Borrower shall be made without set-off, recoupment,
deduction, or counterclaim, except as otherwise required by law. Except as
otherwise expressly provided herein, all payments by Borrower shall be made to
Administrative

 

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Agent for the account of the Lenders at Administrative Agent’s address set forth
in Section 12, and shall be made in immediately available funds, no later than
12:00 p.m. (New York City time) on the date specified herein. Any payment
received by Administrative Agent later than 12:00 p.m. (New York City time), at
the option of Administrative Agent, shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue until such following Business Day.

Whenever any payment is due on a day other than a Business Day, such payment
shall be made on the following Business Day, and such extension of time shall in
such case be included in the computation of interest or fees, as the case may
be.

Unless Administrative Agent receives notice from Borrower prior to the date on
which any payment is due to the Lenders that Borrower will not make such payment
in full as and when required, Administrative Agent may assume that Borrower has
made (or will make) such payment in full to Administrative Agent on such date in
immediately available funds and Administrative Agent may (but shall not be so
required), in reliance upon such assumption, distribute to each Lender on such
due date an amount equal to the amount then due such Lender. If and to the
extent Borrower does not make such payment in full to Administrative Agent, each
Lender shall repay to Administrative Agent on demand such amount distributed to
such Lender, together with interest thereon at the Defaulting Lender Rate for
each day from the date such amount is distributed to such Lender until the date
repaid.

Apportionment and Application.

Except as otherwise provided with respect to Defaulting Lenders and except as
may otherwise be agreed among all Lenders, aggregate principal and interest
payments shall be apportioned ratably among the Lenders (according to the unpaid
principal balance of the Obligations to which such payments relate held by each
Lender) and payments of the fees and expenses (other than fees or expenses
designated for Administrative Agent’s sole and separate account after giving
effect to any agreement with the Lenders) shall, as applicable, be apportioned
ratably among the Lenders having a Pro Rata Share of the type of Commitment or
Obligation to which a particular fee relates. Except as otherwise provided in
clause (b)(iii) below or Section 2.4(c), all payments shall be remitted to
Administrative Agent and all such payments not relating to principal or interest
of specific Advances, or not constituting payment of specific fees, and all
proceeds of Accounts or other Collateral received by Administrative Agent, shall
be applied as follows:

first, to pay any Lender Group Expenses then due to Administrative Agent or any
of the Lenders under the Loan Documents, until paid in full,

second, to pay any fees then due to Administrative Agent (for its separate
account, after giving effect to any agreements between Administrative Agent and
the individual Lenders) under the Loan Documents, until paid in full,

third, to pay any fees then due to any or all of the Lenders (after giving
effect to any agreements between Administrative Agent and individual Lenders)
under the Loan Documents, on a ratable basis, until paid in full; provided that,
if an Event of Default has occurred and is continuing, the priority of the
payment of any fee payable to any Lender in respect of Term Loan B shall,

 

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unless the Required Revolver Lenders agree in their sole discretion to forgo
deferring such payment, be deferred to item “ninth” below; as applicable;
provided, further, that, if an Event of Default has occurred and is continuing,
the priority of the payment of any fee payable to any Lender in respect of the
Applicable Premium shall be deferred to items “twelfth” and “thirteenth” below,
as applicable,

fourth, ratably to pay interest due in respect of the Revolver Advances, until
paid in full,

fifth, so long as no Event of Default has occurred and is continuing other than
an Event of Default solely arising under Section 8(b) as a result of Borrower’s
failure to comply with respect to Section 6.1 (Financial Reporting) or
Section 6.2 (Collateral Reporting), or if an Event of Default has occurred and
is continuing (other than an Event of Default solely arising under Section 8(b)
as a result of Borrower’s failure to comply with Sections 6.1, or 6.2) and to
the extent that the Required Revolver Lenders agree, in their sole discretion,
that interest due in respect of the Term Loan B may be paid pursuant to this
item “fifth”, ratably to the payment of interest due in respect of the Term Loan
B, until paid in full (provided, if an Event of Default has occurred and is
continuing other than an Event of Default solely arising under Section 8(b) as a
result of Borrower’s failure to comply with respect to Sections 6.1 and 6.2, or
if an Event of Default has occurred and is continuing (other than an Event of
Default solely arising under Section 8(b) as a result of Borrower’s failure to
comply with Section 6.1, or Section 6.2) and to the extent that the Required
Revolver Lenders have not agreed that the interest due in respect of the Term
Loan B may be paid pursuant to this item “fifth,” the priority of the payment of
such interest on the Term Loan B is deferred to item “tenth” below),

sixth, so long as no Event of Default has occurred and is continuing, ratably to
pay all principal amounts then due and payable (other than as a result of an
acceleration) with respect to the Term Loan B until paid in full,

seventh, so long as no Event of Default has occurred and is continuing ratably,
(i) to pay principal of all Revolving Advances and (ii) all Lender Hedging
Obligations then due and owing by Borrower or its Subsidiaries,

eighth, if an Event of Default has occurred and is continuing, ratably (i) to
pay the principal of all Revolving Advances until paid in full, (ii) to
Administrative Agent, to be held by Administrative Agent, for the ratable
benefit of Issuing Lender and those Lenders having a Revolver Commitment, as
cash collateral in an amount up to 105% of the Letter of Credit Usage until paid
in full, and (iii) all Lender Hedging Obligations then due and owing by Borrower
or its Subsidiaries arising under Lender Hedging Agreements but only to the
extent such Lender Hedging Agreements were entered into prior to the occurrence
of, and not in contemplation of, the subject Event of Default,

ninth, if an Event of Default has occurred and is continuing, to pay fees due
Term Loan B Lenders in respect of Term Loan B, until paid in full,

tenth, if an Event of Default has occurred and is continuing, to pay interest
due in respect of the Term Loan B, until paid in full,

eleventh, if an Event of Default has occurred and is continuing, to pay the
outstanding principal balance of Term Loan B, until Term Loan B is paid in full,

twelfth, if an Event of Default has occurred and is continuing, to pay any
Applicable Revolving Loan Refinancing Premium then due and payable to Lenders
with a Revolver Commitment,

 

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thirteenth, if an Event of Default has occurred and is continuing, to pay any
Applicable Term Loan B Prepayment Premium then due and payable to Lenders
holding a Term Loan B,

fourteenth, to pay any other Obligations (including the provision of amounts to
Administrative Agent, to be held by Administrative Agent, for the benefit of the
Lenders and Lender Related Persons, as cash collateral in an amount up to the
amount determined by Administrative Agent in its permitted discretion as the
amount necessary to secure Borrower’s and its Subsidiaries’ Lender Hedging
Obligations), until paid in full, and

fifteenth, to Borrower (to be remitted by wire transfer to the an account
designated by Borrower) or such other Person entitled thereto under applicable
law.

For purposes of the foregoing, “paid in full” means payment of all amounts owing
under the Loan Documents according to the terms thereof, including loan fees,
service fees, professional fees, interest (and specifically including interest
accrued after the commencement of any Insolvency Proceeding), default interest,
interest on interest, and expense reimbursements, whether or not the same would
be or is allowed or disallowed in whole or in part in any Insolvency Proceeding.

Administrative Agent promptly shall distribute to each Lender, pursuant to the
applicable wire instructions received from each Lender in writing, such funds as
it may be entitled to receive, subject to a Settlement delay as provided in
Section 2.3(d).

In each instance, so long as no Event of Default has occurred and is continuing,
Section 2.4(b) shall not be deemed to apply to any payment by Borrower specified
by Borrower to be for the payment of specific Obligations then due and payable
(or prepayable) under any provision of this Agreement.

In the event of a direct conflict between the priority provisions of this
Section 2.4 and other provisions contained in any other Loan Document, it is the
intention of the parties hereto that such priority provisions in such documents
shall be read together and construed, to the fullest extent possible, to be in
concert with each other. In the event of any actual, irreconcilable conflict
that cannot be resolved as aforesaid, the terms and provisions of this
Section 2.4 shall control and govern.

Prepayments.

Optional Payments. All Revolving Advances may be voluntarily prepaid in
accordance with Section 2.1(a). The Term Loan B may be prepaid at any time,
provided that (A) no Event of Default shall have occurred and be continuing
either immediately before or immediately after giving effect to such prepayment,
(B) the sum of Availability and Borrower’s unrestricted immediately available
cash on hand is not less than $10,000,000 immediately after giving effect to any
such prepayment, and (C) Borrower shall pay all interest and fees as required
under Section 2.4(c)(iv).

 

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Mandatory Prepayments.

Borrower shall immediately prepay the outstanding principal amount of the Term
Loan B in the event that the Revolver Commitment is terminated and accelerated
for any reason prior to its scheduled termination under Section 3.3(a).

Immediately upon any voluntary or involuntary sale or disposition by Borrower or
any of its Subsidiaries of property or assets (other than in accordance with
Section 7.4), Borrower shall prepay the outstanding Obligations in accordance
with Section 2.4(c)(iii) in an amount equal to 100% of the net cash proceeds
received by such Person in connection with such sales or dispositions. Nothing
contained in this Section 2.4(c)(ii)(B) shall permit Borrower or any of its
Subsidiaries to sell or otherwise dispose of any property or assets other than
in accordance with Section 7.4.

Immediately upon the receipt by Borrower or any of its Subsidiaries of any
Extraordinary Proceeds in any one or series of related events, Borrower shall
prepay the outstanding Obligations in accordance with Section 2.4(c)(iii) in an
amount equal to 100% of such Extraordinary Proceeds, net of any reasonable
expenses incurred in collecting such Extraordinary Proceeds.

Immediately upon the issuance or incurrence by Borrower or any of its
Subsidiaries of any Indebtedness other than Indebtedness referred to in
Section 7.1(a) through (i), Borrower shall prepay the outstanding Obligations in
accordance with Section 2.4(c)(iii) in an amount equal to 100% of the net cash
proceeds received by such Person in connection with such issuance or incurrence.
Nothing contained in this Section 2.4(c)(ii)(D) shall permit Borrower or any of
its Subsidiaries to issue or incur any Indebtedness other than in accordance
with the terms and conditions of this Agreement.

[Reserved].

If, on any date, the aggregate amount of all Revolving Advances, Unsecured Notes
Reserve, and Letter of Credit Usage exceeds the Borrowing Base, Borrower shall
immediately prepay the outstanding Obligations in accordance with
Section 2.4(c)(iii) in an amount equal to such excess.

Upon the receipt of Liquidity Event Proceeds, Borrower shall prepay the
outstanding principal amount of the Obligations in accordance with
Section 2.4(c)(iii) in an amount equal to such Liquidity Event Proceeds.

Application of Mandatory Payments. During the occurrence and continuance of an
Event of Default, the prepayments required under Section 2.4(c)(ii) shall be
applied in accordance with Section 2.4(b)(i). At any time when no Event of
Default exists, the prepayments required under Section 2.4(c)(ii) shall be
applied as follows:

the proceeds from any prepayment pursuant to (x) a sale or disposition of any
Borrowing Base Entity’s Proved Reserves (“Borrowing Base Assets”), (y) any
Extraordinary Receipts consisting of proceeds of insurance or condemnation
awards with respect to Borrowing Base Assets or (z) any Extraordinary Receipts
consisting of a judgment, proceeds of settlement or other consideration in
connection with a cause of action, in each case of this subclause (z) which
proceeds are received as compensation for a loss of revenue or income from
Borrowing Base Assets, shall be applied as follows: first, to the outstanding
principal amount of the Revolving Advances until paid in full, and second, to
the outstanding principal amount of the Term Loan B until paid in full,

 

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the proceeds from any prepayment pursuant to a sale or disposition of any of the
assets of any Person or any insurance which sale or disposition or proceeds of
insurance includes both Borrowing Base Assets and assets and property other than
Borrowing Base Assets, shall be applied as follows: (x) an amount equal to the
fair market value of such Borrowing Base Assets sold or disposed of or in
respect of which such insurance proceeds are collected consisting of Borrowing
Base Assets (determined at the time of such sale or disposition or event
resulting in such insurance proceeds) shall be applied to the outstanding
principal amount of the Revolving Advances until paid in full and (y) the
remaining proceeds shall be applied as follows: first, to the outstanding
principal amount of the Term Loan B, until paid in full (unless the Term Loan B
Lenders otherwise elect, in their sole discretion, to have all or a portion of
their share of such proceeds applied to the outstanding principal amount of the
Revolving Advances), and second, to the outstanding principal amount of the
Revolving Advances,

the proceeds from any prepayment event set forth in subclauses (ii)(C) (other
than proceeds from any Extraordinary Receipts consisting of (x) insurance
policies or condemnation awards with respect to Borrowing Base Assets or (y) a
judgment, proceeds of settlement or other consideration in connection with a
cause of action, in each case of this subclause (y), which amount is received as
compensation for a loss of revenue or income from Borrowing Base Assets) and
(ii)(D) of this Section 2.4(c), shall be applied as follows: first, to the
outstanding principal amount of the Term Loan B until paid in full (unless the
Term Loan B Lenders otherwise elect, in their sole discretion, to have all or a
portion of their share of such proceeds applied to the outstanding principal
amount of the Revolving Advances), and second, to the outstanding principal
amount of the Revolving Advances, until paid in full, and

the proceeds from any prepayment event set forth in subclause (ii)(F) of this
Section 2.4(c) shall be applied as follows: first, to the outstanding principal
amount of the Revolving Advances until paid in full, and second, to the
outstanding principal amount of the Term Loan B until paid in full.

notwithstanding anything to the contrary set forth in this section, Liquidity
Event Proceeds from any prepayment event set forth in this Section 2.4(c) shall
be applied as follows: first to the outstanding Revolving Advances to the extent
that the aggregate amount of all Revolving Advances, Unsecured Notes Reserve,
and Letter of Credit Usage exceeds the Borrowing Base, second to Revolving
Advances up to an amount equal to fifty percent (50%) of the reduction in the
Borrowing Base attributable to such prepayment event until paid in full, and
third to the outstanding principal amount of the Term Loan B until paid in full.

Notwithstanding anything to the contrary contained herein, if on the date
Borrower is obligated to make a prepayment under Section 2.4(c)(ii) that is to
be applied in accordance with Sections 2.4(c)(iii)(B), (C) or (E) the sum of
Availability and Borrower’s unrestricted immediately available cash on hand is
less than $10,000,000, either immediately before or immediately after giving
effect to all or any portion of any prepayment of Term Loan B pursuant to such
sections, the proceeds which were to be applied to repay the Term Loan B shall
be applied to the repayment of the outstanding principal amount of the Revolving
Advances until paid in full; provided, that, (x) concurrently with such
application to the outstanding Revolving Advances, Administrative Agent shall
establish and maintain a corresponding reserve against the Maximum Facility
Amount and the Borrowing Base in an amount equal to the amount that would have
otherwise been applied to the prepayment of Term Loan B, and (y) the amount that
is so applied to the outstanding principal amount of the Revolving Advances
shall be applied to the prepayment of the Term Loan B, and the corresponding
reserve against the Maximum Facility Amount and the Borrowing Base shall be
released, at such time and from time to time, as the sum of Availability and
Borrower’s unrestricted immediately available cash on hand is greater than or
equal to $10,000,000 both before and immediately after giving effect to such
prepayment of the Term Loan B.

 

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Interest and Fees. Any prepayment made pursuant to Section 2.4(c) shall be
accompanied by (A) accrued interest on the principal amount being prepaid to the
date of prepayment, and (B) the Applicable Premium.

Cumulative Prepayments. Except as otherwise expressly provided in
Section 2.4(c)(iii), payments with respect to any subsection of
Section 2.4(c)(iii) are in addition to payments made or required to be made
under any other subsection of Section 2.4(c).

Overadvances. If, at any time or for any reason, the amount of Obligations
pursuant to Sections 2.1 and 2.12 is greater than either the Dollar or
percentage limitations set forth in Sections 2.1 and 2.12 (an “Overadvance”),
Borrower immediately shall pay to Administrative Agent, in cash, the amount of
such excess, which amount shall be used by Administrative Agent to reduce the
Obligations in accordance with the priority set forth in Section 2.4(b).

Interest, Rates, Payments, and Calculations.

Interest Rate on Revolving Advances. Except as provided in clause (c) below, all
Obligations (except for undrawn Letters of Credit, Lender Hedging Obligations
and the Term Loan B) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof as follows: (i) if
the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal to the
sum of (A) the Applicable Margin plus (B) the LIBOR Rate; and (ii) otherwise, at
a per annum rate equal to (A) the Applicable Margin plus (B) the Reference Rate
(provided that interest shall not accrue on unpaid interest on Revolving
Advances prior to the date payment of such interest is due).

Letter of Credit Fee. Borrower shall pay Administrative Agent, for the ratable
benefit of the Revolver Lenders, a Letter of Credit fee (in addition to the
charges, commissions, fees and costs set forth in Section 2.12(d)) equal to the
Applicable Margin for LIBOR Rate Loans times the Daily Balance of the amount of
the undrawn Letters of Credit.

Default Rate. Upon the occurrence and during the continuation of an Event of
Default (i) all Obligations (except for undrawn Letters of Credit and Lender
Hedging Obligations) that have been charged to the Loan Account pursuant to the
terms hereof shall bear interest on the Daily Balance thereof at a per annum
rate equal to four percent (4%) above the per annum rate otherwise applicable
hereunder, and (ii) the Letter of Credit fee provided for above shall be
increased to four percent (4%) above the per annum rate otherwise applicable
hereunder.

Interest Rate on the Term Loan B. Except as provided in clause (c) above, the
Term Loan B shall bear interest on the average Daily Balance thereof as follows:
(i) if the relevant Obligation is a LIBOR Rate Loan, at a per annum rate equal
to the sum of (A) seven and one half percent (7.5%), plus (B) the LIBOR Rate;
and (ii) otherwise, at a per annum rate equal to the sum of (A) seven and one
half percent (7.5%), plus (B) the Reference Rate (provided that interest shall
not accrue on unpaid interest on the Term Loan B prior to the date payment of
such interest is due).

 

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Payments. Interest and Letter of Credit fees payable hereunder shall be due and
payable, in arrears, on the first day of each month during the term hereof;
provided that interest based on LIBOR shall be paid on the last day of each
Interest Period and no less than quarterly. Borrower hereby authorizes
Administrative Agent, at its option, without prior notice to Borrower, to charge
such interest and Letter of Credit fees, all Lender Group Expenses (as and when
incurred), the charges, commissions, fees, and costs provided for in
Section 2.12(e) (as and when accrued or incurred), the fees and charges provided
for in Section 2.11 (as and when accrued or incurred), and all other payments
due under any Loan Document (including any Lender Hedging Obligations due and
payable) to Borrower’s Loan Account, which amounts thereafter shall accrue
interest at the rate then applicable to Revolving Advances hereunder; provided,
that if, at the time that any amounts due in respect of interest on the Term
Loan B are charged to the Loan Account an Event of Default or Overadvance exists
or would result from such charge to the Loan Account, such amounts shall not
constitute Revolving Advances but instead shall continue to remain outstanding
as amounts due in respect of the Term Loan B and such amounts shall be
compounded and added to the outstanding principal balance of the Term Loan B;
provided, that the failure to make any such payment and the compounding of such
interest shall nonetheless constitute an Event of Default under Section 8.1 if
it would otherwise have constituted an Event of Default under Section 8.1 after
giving effect to any applicable grace period. Any interest not paid when due
shall be compounded by being charged to Borrower’s Loan Account and shall
thereafter accrue interest at the rate then applicable to Advances hereunder;
provided, that if, at the time that any amounts due in respect of interest on
the Term Loan B are charged to the Loan Account an Event of Default or
Overadvance exists or would result from such charge to the Loan Account, such
amounts shall not constitute Advances but instead shall continue to remain
outstanding as amounts due in respect of the Term Loan B and such amounts shall
be compounded and added to the outstanding principal balance of the Term Loan B;
provided, that the failure to make any such payment and the compounding of such
interest shall nonetheless constitute an Event of Default under Section 8.1 if
it would otherwise have constituted an Event of Default under Section 8.1 after
giving effect to any applicable grace period.

Computation. In the event the Reference Rate is changed from time to time
hereafter, the rate of interest provided for in Sections 2.6(a), (c) and
(d) automatically and immediately shall be increased or decreased by an amount
equal to such change in the Reference Rate. All interest and fees chargeable
under the Loan Documents shall be computed on the basis of a 360 day year for
the actual number of days elapsed.

Intent to Limit Charges to Maximum Lawful Rate. It is the intention of the
parties hereto that the Administrative Agent or each Lender shall conform
strictly to usury laws applicable to it. Accordingly, if the transactions
contemplated hereby or by any other Loan Document would be usurious as to the
Administrative Agent or any Lender under laws applicable to it (including the
laws of the United States of America and the State of New York 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 Indebtedness,
it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to Administrative Agent or any Lender
that is contracted for, taken, reserved, charged or received by Administrative
Agent or such Lender under any of the Loan Documents or agreements or otherwise
in connection with the Indebtedness shall under

 

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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 the Administrative Agent or 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 the
Administrative Agent or such Lender, as applicable, to the Borrower); and
(ii) in the event that the maturity of the Indebtedness 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 Administrative Agent or 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
Administrative Agent or such Lender, as applicable, as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by
Administrative Agent or such Lender, as applicable, 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
Administrative Agent or such Lender to the Borrower). All sums paid or agreed to
be paid to Administrative Agent or any Lender for the use, forbearance or
detention of sums due hereunder shall, to the extent permitted by law applicable
to Administrative Agent or such Lender, be amortized, prorated, allocated and
spread throughout the full term of the Obligations until payment in full so that
the rate or amount of interest on account of any Obligations 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 Administrative Agent or
any Lender on any date shall be computed at the Highest Lawful Rate (as defined
below) applicable to Administrative Agent or such Lender pursuant to this
Section 2.6(g) and (ii) in respect of any subsequent interest computation period
the amount of interest otherwise payable to Administrative Agent or such Lender
would be less than the amount of interest payable to Administrative Agent or
such Lender computed at the Highest Lawful Rate applicable to Administrative
Agent or such Lender, then the amount of interest payable to Administrative
Agent or such Lender in respect of such subsequent interest computation period
shall continue to be computed at the Highest Lawful Rate applicable to
Administrative Agent or such Lender until the total amount of interest payable
to Administrative Agent or such Lender shall equal the total amount of interest
which would have been payable to Administrative Agent or such Lender if the
total amount of interest had been computed without giving effect to this
Section 2.6(g). For purposes of this Section 2.6(g), the term “applicable law”
shall mean that law in effect from time to time and applicable to the loan
transaction between Borrower and the Lender Group that lawfully permits the
charging and collection of the highest permissible, lawful non-usurious rate of
interest on such loan transaction and this Agreement, including laws of the
State of New York and, to the extent controlling, laws of the United States of
America. For purposes of this Section 2.6(g), “Highest Lawful Rate” means, with
respect to Administrative Agent or any Lender, the maximum non-usurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Obligations under the laws
applicable to Administrative Agent or such Lender which are currently 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 non-usurious interest rate than
applicable laws now allow.

INTENTIONALLY OMITTED.

 

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Crediting Payments; Application of Collections. The receipt of any payment item
by Administrative Agent shall not be considered a payment on account unless such
payment item is a wire transfer of immediately available federal funds and is
made to the Administrative Agent Account or unless and until such payment item
is honored when presented for payment; provided, however, that Administrative
Agent reserves the right, in its sole discretion, to exclude from such
provisional reduction and payment the amount of any such Collections that
Administrative Agent determines may constitute trust funds (e.g., production
taxes, severance taxes, or payroll taxes) or amounts attributable to Mineral
Interests of third Persons. Should any Collection item not be honored when
presented for payment, then Borrower shall be deemed not to have made such
payment, and interest shall be recalculated accordingly. Anything to the
contrary contained herein notwithstanding, any Collection item shall be deemed
received by Administrative Agent only if it is received into the Administrative
Agent Account on a Business Day on or before 11:00 a.m. New York City time. If
any Collection item is received into the Agent Account on a non-Business Day or
after 11:00 a.m. New York City time on a Business Day, it shall be deemed to
have been received by Administrative Agent as of the opening of business on the
immediately following Business Day. The parties acknowledge and agree that the
economic benefit of the foregoing provisions of this Section 2.8 shall be for
the exclusive benefit of Administrative Agent.

Telephonic Instructions. Administrative Agent and the Lenders are authorized to
make the Advances, and the Letters of Credit under this Agreement based upon
telephonic or other instructions received from anyone purporting to be a
Financial Officer of Borrower, or without instructions if pursuant to
Section 2.6(e) (provided that any telephonic notice must be promptly confirmed
in writing in accordance with Section 2.3(a)).

Maintenance of Loan Account; Statements of Obligations. Administrative Agent
shall maintain an account on its books in the name of Borrower (the “Loan
Account”) on which Borrower will be charged with the Term Loan B and all
Advances made by Administrative Agent or the Lenders to Borrower or for
Borrower’s account, including, accrued interest, Lender Group Expenses, and any
other payment Obligations of Borrower (except for Bank Product Obligations). In
accordance with Section 2.8, the Loan Account will be credited with all payments
received by Administrative Agent from Borrower or for Borrower’s account.
Administrative Agent shall render statements regarding the Loan Account to
Borrower, including principal, interest, fees, and including an itemization of
all charges and expenses constituting Lender Group Expenses owing, and such
statements shall be conclusively presumed to be correct and accurate and
constitute an account stated between Borrower and the Lender Group unless,
within 30 days after receipt thereof by Borrower, Borrower shall deliver to
Administrative Agent written objection thereto describing the error or errors
contained in any such statements.

Fees.

Borrower shall pay to Administrative Agent, as and when due and payable under
the terms of the Fee Letter, the fees set forth in the Fee Letter dated
September 28, 2007, between Borrower and GCF.

(b) Borrower shall pay to Administrative Agent, for the ratable benefit of the
Revolver Lenders, on the first day of each month prior to the Termination Date,
an unused line fee in an amount equal to 0.25% per annum times the average Daily
Balance of the Availability during the immediately preceding month.

 

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Letters of Credit.

Subject to the terms and conditions of this Agreement, Issuing Lender agrees to
issue letters of credit for the account of Borrower (each, an “L/C”) or to
purchase participations or execute indemnities or reimbursement obligations
(each such undertaking, an “L/C Undertaking”) with respect to letters of credit
issued by an Underlying Issuer for the account of Borrower. To request the
issuance of an L/C or an L/C Undertaking (or the amendment, renewal, or
extension of an outstanding L/C or L/C Undertaking), Borrower shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by Lender) to Administrative Agent and Issuing Lender or
the Underlying Issuer, as appropriate, (reasonably in advance of the requested
date of issuance, amendment, renewal, or extension but in no event less than
five (5) Business Days in advance) a notice requesting the issuance of an L/C or
L/C Undertaking, or identifying the L/C or L/C Undertaking to be amended,
renewed, or extended, the date of issuance, amendment, renewal, or extension,
the date on which such L/C or L/C Undertaking is to expire (which date shall be
no later than 60 days prior to the date on which this Agreement is scheduled to
terminate under Section 3.3 (without regard to any potential renewal term)), the
amount of such L/C or L/C Undertaking, the name and address of the beneficiary
thereof (or the beneficiary of the Underlying Letter of Credit, as applicable),
and such other information as shall be necessary to prepare, amend, renew, or
extend such L/C or L/C Undertaking. If requested by Issuing Lender or the
Underlying Issuer, Borrower also shall be an applicant under the application
with respect to any Underlying Letter of Credit that is to be the subject of an
L/C Undertaking. Issuing Lender and the Underlying Issuer shall have no
obligation to issue a Letter of Credit if any of the following would result
after giving effect to the requested Letter of Credit:

the Letter of Credit Usage would exceed the Availability, or

the Letter of Credit Usage would exceed $5,000,000 in excess of any L/Cs issued
as credit support for the Coral Hedging Agreements.

Borrower and Issuing Lender acknowledge and agree that certain Underlying
Letters of Credit may be issued to support letters of credit that already are
outstanding as of the Closing Date. Each Letter of Credit (and corresponding
Underlying Letter of Credit) shall be in form and substance acceptable to
Issuing Lender in its good faith discretion, including the requirement that the
amounts payable thereunder must be payable in Dollars. If Issuing Lender is
obligated to advance funds under a Letter of Credit, Borrower immediately shall
reimburse such L/C Disbursement to Issuing Lender by paying to Issuing Lender an
amount equal to such L/C Disbursement not later than 12:00 p.m., New York City
time, on the date that such L/C Disbursement is made, if Borrower shall have
received written or telephonic notice of such L/C Disbursement prior to 10:00
a.m., New York City time, on such date, or, if such notice has not been received
by Borrower prior to such time on such date, then not later than 12:00 p.m., New
York City

 

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time, on the Business Day immediately following the day that Borrower receives
such notice pursuant to the foregoing, and, in the absence of such
reimbursement, the L/C Disbursement immediately and automatically shall be
deemed to be an Advance hereunder and, thereafter, shall bear interest at the
rate then applicable to Advances under Section 2.6. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower’s obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance.

Borrower hereby agrees to indemnify, save, defend, and hold Issuing Lender and
the Underlying Issuer harmless from any loss, cost, expense, or liability, and
reasonable attorneys fees incurred by Issuing Lender or the Underlying Issuer
arising out of or in connection with any Letter of Credit; provided, however,
that Borrower shall not be obligated hereunder to indemnify for any loss, cost,
expense, or liability that is caused by the gross negligence or willful
misconduct of Issuing Lender or the Underlying Issuer. Borrower agrees to be
bound by the Underlying Issuer’s regulations and interpretations of any
Underlying Letter of Credit or by Issuing Lender’s interpretations of any L/C
issued by Issuing Lender to or for Borrower’s account, even though this
interpretation may be different from Borrower’s own, and Borrower understands
and agrees that Issuing Lender and the Underlying Issuer shall not be liable for
any error, negligence, or mistake, whether of omission or commission, in
following Borrower’s instructions or those contained in the Letter of Credit or
any modifications, amendments, or supplements thereto. Borrower understands that
the L/C Undertakings may require Issuing Lender to indemnify the Underlying
Issuer for certain costs or liabilities arising out of claims by Borrower
against such Underlying Issuer. Borrower hereby agrees to indemnify, save,
defend, and hold Issuing Lender harmless with respect to any loss, cost, expense
(including reasonable attorneys fees), or liability incurred by Issuing Lender
under any L/C Undertaking as a result of Issuing Lender’s indemnification of any
Underlying Issuer; provided, however, that Borrower shall not be obligated
hereunder to indemnify for any loss, cost, expense, or liability that is caused
by the gross negligence or willful misconduct of Issuing Lender.

Borrower hereby authorizes and directs any Underlying Issuer to deliver to
Issuing Lender all instruments, documents, and other writings and property
received by such Underlying Issuer pursuant to such Underlying Letter of Credit
and to accept and rely upon Issuing Lender’s instructions with respect to all
matters arising in connection with such Underlying Letter of Credit and the
related application.

Any and all charges, commissions, fees, and costs incurred by Issuing Lender
relating to Underlying Letters of Credit shall be Lender Group Expenses for
purposes of this Agreement and immediately shall be reimbursable by Borrower to
Issuing Lender for the account of the Lenders; it being acknowledged and agreed
by Borrower that, as of the Closing Date, the issuance charge imposed by the
prospective Underlying Issuer is .825% per annum times the face amount of each
Underlying Letter of Credit, that such issuance charge may be changed from time
to time, and that the Underlying Issuer also imposes a schedule of charges for
amendments, extensions, drawings, and renewals.

 

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If by reason of (i) any change in any applicable law, treaty, rule, or
regulation or any change in the interpretation or application thereof by any
Governmental Authority, or (ii) compliance by the Underlying Issuer or Lender
with any direction, request, or requirement (irrespective of whether having the
force of law) of any Governmental Authority or monetary authority including,
Regulation D of the Federal Reserve Board as from time to time in effect (and
any successor thereto):

any reserve, deposit, or similar requirement is or shall be imposed or modified
in respect of any Letter of Credit issued hereunder, or

there shall be imposed on the Underlying Issuer or Issuing Lender any other
condition regarding any Underlying Letter of Credit or any Letter of Credit
issued pursuant hereto, and the result of the foregoing is to increase, directly
or indirectly, the cost to Issuing Lender of issuing, making, guaranteeing, or
maintaining any Letter of Credit or to reduce the amount receivable in respect
thereof by Issuing Lender, then, and in any such case, Issuing Lender may, at
any time within a reasonable period after the additional cost is incurred or the
amount received is reduced, notify Borrower, and Borrower shall pay on demand
such amounts as Issuing Lender may specify to be necessary to compensate Issuing
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date of such demand until payment in full thereof at the
rate then applicable to Advances hereunder. The determination by Issuing Lender
of any amount due pursuant to this Section 2.12, as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.

Noteless Agreement; Registered Notes.

Except as otherwise provided in Section 2.13(b), no promissory notes shall
evidence the payment obligations of any Advances to Borrower. Administrative
Agent shall maintain in accordance with its usual practice an account or
accounts on its books evidencing the obligations of Borrower resulting from the
Term Loan B and each Revolving Advance from time to time, including the amounts
of principal and interest payable and paid to each Lender hereunder. The entries
maintained in said accounts shall be prima facie evidence of the existence and
amounts of the Term Loan B and the Revolving Advances and the payment
obligations of Borrower; provided, however, that the failure of Administrative
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligation of Borrower to repay the Revolving Advances and the Term
Loan B.

Administrative Agent, acting solely for this purpose as a non-fiduciary agent on
behalf of Borrower, agrees to record the Commitments, Revolving Advances and
Term Loan B on the Register. Once recorded on the Register, no Commitment,
Revolving Advance or Term Loan B may be removed from the Register so long as it
remains outstanding.

Intentionally Omitted.

LIBOR Option.

Interest and Interest Payment Dates. In lieu of having interest charged at the
rate based upon the Reference Rate, Borrower shall have the option (the “LIBOR
Option”) to

 

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have interest on all or a portion of the Revolving Advances or Term Loan B be
charged at a rate of interest based on the LIBOR Rate. Interest on LIBOR Rate
Loans shall be payable on the earliest of (i) the last day of the Interest
Period applicable thereto, (ii) the occurrence of an Event of Default in
consequence of which the Required Lenders or Administrative Agent on behalf
thereof elect to accelerate the maturity of all or any portion of the
Obligations, (iii) termination of this Agreement pursuant to the terms hereof,
or (iv) the first day of each calendar quarter that such LIBOR Rate Loan is
outstanding. On the last day of each applicable Interest Period, unless Borrower
properly has exercised the LIBOR Option with respect thereto, the interest rate
applicable to such LIBOR Rate Loan automatically shall convert to the rate of
interest then applicable to Reference Rate Loans of the same type hereunder. At
any time that an Event of Default has occurred and is continuing, Borrower no
longer shall have the option to request that Revolving Advances or the Term Loan
B bear interest at a rate based upon the LIBOR Rate and Administrative Agent
shall have the right to convert the interest rate on all outstanding LIBOR Rate
Loans to the rate then applicable to Reference Rate Loans hereunder.

LIBOR Election.

Borrower may, at any time and from time to time, so long as no Event of Default
has occurred and is continuing, elect to exercise the LIBOR Option by notifying
Administrative Agent prior to 11:00 a.m. (New York City time) at least 3
Business Days prior to the commencement of the proposed Interest Period (the
“LIBOR Deadline”). Notice of Borrower’s election of the LIBOR Option for a
permitted portion of the Revolving Advances or Term Loan B and an Interest
Period pursuant to this Section shall be made by delivery to Administrative
Agent of a LIBOR Notice received by Administrative Agent before the LIBOR
Deadline, or by telephonic notice received by Administrative Agent before the
LIBOR Deadline (to be confirmed by delivery to Administrative Agent of a LIBOR
Notice received by Administrative Agent prior to 5:00 p.m. (New York City time)
on the same day). Promptly upon its receipt of each such LIBOR Notice,
Administrative Agent shall provide a copy thereof to each of the Lenders having
a Revolver Commitment or Term Loan B Commitment, as applicable.

Each LIBOR Notice shall be irrevocable and binding on Borrower. In connection
with each LIBOR Rate Loan, Borrower shall indemnify, defend, and hold
Administrative Agent and the Lenders harmless against any loss, cost, or expense
incurred by Administrative Agent or any Lender as a result of (a) the payment of
any principal of any LIBOR Rate Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default),
(b) the conversion of any LIBOR Rate Loan other than on the last day of the
Interest Period applicable thereto, or (c) the failure to borrow, convert,
continue or prepay any LIBOR Rate Loan on the date specified in any LIBOR Notice
delivered pursuant hereto (such losses, costs, and expenses, collectively,
“Funding Losses”). Funding Losses shall, with respect to Administrative Agent or
any Lender, be deemed to equal the amount determined by Administrative Agent or
such Lender to be the excess, if any, of (i) the amount of interest that would
have accrued on the principal amount of such LIBOR Rate Loan had such event not
occurred, at the LIBOR Rate that would have been applicable thereto, 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 therefor), minus
(ii) the amount of interest that would accrue on such principal amount for such

 

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period at the interest rate which Administrative Agent or such Lender would be
offered were it to be offered, at the commencement of such period, Dollar
deposits of a comparable amount and period in the London interbank market. A
certificate of Administrative Agent or a Lender delivered to Borrower setting
forth any amount or amounts that Administrative Agent or such Lender is entitled
to receive pursuant to this Section shall be conclusive absent manifest error.

Borrower shall have not more than 5 LIBOR Rate Loans in effect at any given
time. Borrower only may exercise the LIBOR Option for LIBOR Rate Loans of at
least $1,000,000 and integral multiples of $500,000 in excess thereof.

Prepayments. Borrower may prepay LIBOR Rate Loans at any time; provided,
however, that in the event that LIBOR Rate Loans are prepaid on any date that is
not the last day of the Interest Period applicable thereto, including as a
result of any automatic prepayment through the required application by
Administrative Agent of proceeds of Collections for any reason, including early
termination of the term of this Agreement or acceleration of all or any portion
of the Obligations pursuant to the terms hereof, Borrower shall indemnify,
defend, and hold Administrative Agent and the Lenders and their Participants
harmless against any and all Funding Losses in accordance with clause (b) above.

Special Provisions Applicable to LIBOR Rate.

The LIBOR Rate may be adjusted by Administrative Agent with respect to any
Lender on a prospective basis to take into account any additional or increased
costs to such Lender of maintaining or obtaining any Eurodollar deposits or
increased costs due to changes in applicable law occurring subsequent to the
commencement of the then applicable Interest Period, including changes in tax
laws (except changes of general applicability in corporate income tax laws) and
changes in the reserve requirements imposed by the Board of Governors of the
Federal Reserve System (or any successor), excluding the Reserve Percentage,
which additional or increased costs would increase the cost of funding loans
bearing interest at the LIBOR Rate. In any such event, the affected Lender shall
give Borrower and Administrative Agent notice of such a determination and
adjustment and Administrative Agent promptly shall transmit the notice to each
other Lender and, upon its receipt of the notice from the affected Lender,
Borrower may, by notice to such affected Lender (y) require such Lender to
furnish to Borrower a statement setting forth the basis for adjusting such LIBOR
Rate and the method for determining the amount of such adjustment, or (z) repay
the LIBOR Rate Loans with respect to which such adjustment is made (together
with any amounts due under clause (b)(ii) above).

In the event that any change in market conditions or any law, regulation,
treaty, or directive, or any change therein or in the interpretation of
application thereof, shall at any time after the date hereof, in the reasonable
opinion of any Lender, make it unlawful or impractical for such Lender to fund
or maintain LIBOR Advances or to continue such funding or maintaining, or to
determine or charge interest rates at the LIBOR Rate, such Lender shall give
notice of such changed circumstances to Administrative Agent and Borrower and
Administrative Agent promptly shall transmit the notice to each other Lender and
(y) in the case of any LIBOR Rate Loans of such Lender that are outstanding, the
date specified in such Lender’s notice shall be deemed to be the last day of the
Interest Period of such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
of such Lender thereafter shall accrue interest at

 

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the rate then applicable to Reference Rate Loans, and (z) Borrower shall not be
entitled to elect the LIBOR Option until such Lender determines that it would no
longer be unlawful or impractical to do so.

No Requirement of Matched Funding. Anything to the contrary contained herein
notwithstanding, neither Administrative Agent, nor any Lender, nor any of their
Participants, is required actually to acquire Eurodollar deposits to fund or
otherwise match fund any Obligation as to which interest accrues at the LIBOR
Rate. The provisions of this Section shall apply as if each Lender or its
Participants had match funded any Obligation as to which interest is accruing at
the LIBOR Rate by acquiring Eurodollar deposits for each Interest Period in the
amount of the LIBOR Rate Loans.

Securitization. Borrower hereby acknowledges that each Lender (a “Securitizing
Lender”) may securitize the Obligations (a “Securitization”) through the pledge
of the Obligations as collateral security for loans to such Securitizing Lender
or its Affiliates or Related Funds or through the sale of the Obligations or the
issuance of direct or indirect interests in the Obligations, which loans to such
Securitizing Lender or its Affiliates or Related Funds or direct or indirect
interests will be rated by Moody’s, S&P or one or more other rating agencies
(the “Rating Agencies”). Borrower agrees to cooperate with such Securitizing
Lender and its Affiliates and Related Funds to effect the Securitization
including, without limitation, by (a) executing such additional documents, as
reasonably requested by such Securitizing Lender in connection with the
Securitization; provided that (i) any such additional documentation does not
impose material additional costs on Borrower, and (ii) any such additional
documentation does not materially adversely affect the rights, or increase the
obligations, of Borrower under the Loan Documents or change or affect in a
manner adverse to Borrower the financial terms of any of the Obligations, and
(b) providing such information as may be reasonably requested by such
Securitizing Lender in connection with the rating of any of the Obligations or
the Securitization. Notwithstanding anything contained in this Agreement to the
contrary, expenses in connection with a Securitization incurred by each Lender
conducting a Securitization shall not constitute Lender Group Expenses.

Increase in Term Loan B Amount.

Provided there exists no Default or Event of Default and subject to the
conditions set forth under clause (e) below, upon notice to the Administrative
Agent (which shall promptly notify the Lenders), the Borrower may, from time to
time, request increases in the aggregate Term Loan B Commitment under the Term
Loan B by an amount not exceeding $50,000,000 in the aggregate; provided, that
(i) after giving effect to such requested increase, the Term Loan B Amount shall
not exceed $250,000,000, and (ii) each increase of the Term Loan B Amount shall
be in a minimum amount of $10,000,000, or integral multiples of $1,000,000 in
excess thereof.

Any requested increase in the aggregate Term Loan B Commitment must be approved
or deemed to have been approved by all of the Term Loan B Lenders as provided in
this Section 2.17(b). Upon receipt of a request for increase in the aggregate
Term Loan B Commitment, each Term Loan B Lender shall have fifteen (15) days to
(i) agree with the requested increase in the aggregate Term Loan B Commitment or
disagree with the requested increase in the aggregate Term Loan B Commitment,
and (ii) indicate any approved increase to its individual Term Loan B
Commitment. If at the end of such fifteen (15) days, any Term Loan

 

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B Lender has not communicated its approval or disapproval in writing to the
Administrative Agent, such silence shall be deemed to be an approval of the
requested increase in the aggregate Term Loan B Commitment. If, at the end of
such 15-day period all of the Term Loan B Lenders have approved or been deemed
to have approved, as aforesaid, and once the Borrower shall have received
additional or increased Term Loan B Commitments from existing Term Loan B
Lenders or additional Eligible Assignees, then the requested increase in the
aggregate Term Loan B Commitment shall become the new aggregate Term Loan B
Commitment, effective on the date specified in Section 2.17(c). If, however, at
the end of such fifteen (15) day period, all of the Term Loan B Lenders have not
approved or been deemed to have approved, as aforesaid, the aggregate Term Loan
B Commitment shall remain unchanged.

The Administrative Agent shall notify the Borrower and each Lender of the Term
Loan B Lenders’ responses to the request made hereunder. To achieve the full
amount of an increase that has been approved by all the Term Loan B Lenders
pursuant to Section 2.17(b) and subject to the approval of the Administrative
Agent, in Administrative Agent’s sole discretion, the Borrower may also invite
additional Eligible Assignees to make Term Loan B Commitments pursuant to a
joinder agreement in form and substance satisfactory to the Administrative
Agent, so long as each existing, approving Term Loan B Lender has been allocated
its full desired increase, if any, to its Term Loan B Commitment, as indicated
in its approval pursuant to Section 2.17(b).

If the Term Loan B Amount is increased in accordance with this Section, the
Administrative Agent and the Borrower shall determine the effective date (such
date, the “Increase Effective Date”). In either event, the Administrative Agent
shall promptly notify the Borrower and the Lenders whether or not the required
approval of increase in the Term Loan B Amount has been obtained, and if so, the
Increase Effective Date and the Schedule C-1 shall be amended to reflect the
increase, if any, in each Term Loan B Lender’s Term Loan B Commitment and the
addition of any new Term Loan B Lender.

As a condition precedent to such increase, the Borrower shall deliver to the
Administrative Agent a certificate of each Loan Party dated as of the Increase
Effective Date signed by a Responsible Officer of such Loan Party (i) certifying
that each of the conditions set forth in Section 3.2 have been satisfied by such
Loan Party or waived by all Lenders, (ii) certifying and attaching the
resolutions adopted by such Loan Party approving or consenting to such increase,
and (iii) certifying that, before and after giving effect to such increase,
(A) the representations and warranties contained in Article 5 (in the case of
the Borrower) and the other Loan Documents to which it is a party are true and
correct on and as of the Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Section 2.17, the representations and warranties contained in
Section 5.8 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.1, and (B) no
Default or Event of Default exists or will be caused by the requested increase
in the Term Loan B Amount. To the extent necessary to keep the outstanding Term
Loan B ratable with any revised Pro Rata Shares of the Term Loan B Lenders
arising from any nonratable increase in the Term Loan B Commitments under this
Section, the Lenders shall make assignments pursuant to arrangements
satisfactory to the Administrative Agent.

 

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This Section shall supersede any provisions in Section 16.1 to the contrary.

CONDITIONS; TERM OF AGREEMENT.

Conditions Precedent to the Initial Revolving Advance and the Term Loan B. The
obligation of the Lender Group (or any member thereof) to make the initial
Revolving Advance and the Term Loan B (or otherwise to extend any credit
provided for hereunder) is subject to the fulfillment, to the satisfaction of
Administrative Agent, of each of the following conditions on or before the
Closing Date (other than each condition, if any, listed on Schedule 3.1, which
conditions are hereby permitted to be satisfied after the Closing Date, but not
later than the respective dates for satisfaction specified on Schedule 3.1):

Administrative Agent shall have received all financing statements required by
Administrative Agent, duly executed by Borrower, and Administrative Agent shall
have received searches of all recording offices requested by Administrative
Agent reflecting the filing of all such financing statements, together with
searches of such other offices as Administrative Agent may require (including
those of Borrower, and the Subsidiaries of Borrower), each such search dated a
date within 30 days of the Closing Date;

Administrative Agent shall have received each of the following documents, in
form and substance satisfactory to Administrative Agent, duly executed (and
acknowledged, as the case may be) by all parties and formalities contemplated
thereunder, and each such document shall be in full force and effect:

the Control Agreement;

the Mortgages covering each of the Oil and Gas Properties constituting all of
the Proved Developed Reserves and not less than 80% by value of the Proved
Undeveloped Reserves;

Guaranty Agreements, in form and substance acceptable to Administrative Agent,
executed by each Guarantor;

Security Agreements, in form and substance acceptable to Administrative Agent,
executed by each Loan Party with respect to all of such Loan Party’s assets and
properties;

the Transfer Order Letters for each well on the Oil and Gas Properties, which
shall be in form and substance satisfactory to Administrative Agent;

all original Stock certificates evidencing all the issued and outstanding shares
of capital stock of Ascent, Ascent Oil & Gas, Ascent Energy Holdings, Ascent WV,
Pontotoc Acquisition, Dyne, SLPH, PPC, OBEC, Pontotoc Holdings, Great Plains,
RWG, and WG Operating, together with stock powers duly executed in blank by the
holders of all of the legal and beneficial ownership of such shares; and

 

  50   LOAN AGREEMENT

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Appointment by Borrower of CT Corporation Systems, 111 Eighth Avenue, 13th
Floor, New York New York 10111 as designated agent for service of process in any
legal action or proceeding with respect to the Loan Documents.

Administrative Agent shall have received a certificate from the Secretary of
each Loan Party attesting to the resolutions of such Loan Party’s Board of
Directors authorizing its execution, delivery, and performance of this Agreement
and the other Loan Documents to which such Loan Party is a party and authorizing
specific officers of such Loan Party to execute the same;

Administrative Agent shall have received copies of each Loan Party’s Governing
Documents, as amended, modified, or supplemented by the Closing Date, certified
by the Secretary of such Loan Party;

Administrative Agent shall have received a certificate of status with respect to
each Loan Party, dated within 45 days of the Closing Date, such certificate to
be issued by the appropriate officer of the jurisdiction of organization of such
Loan Party, which certificate shall indicate that such Loan Party is in good
standing in such jurisdiction;

Administrative Agent shall have received certificates of status with respect to
each Loan Party, each dated within 45 days of the Closing Date, such
certificates to be issued by the appropriate officer of the jurisdictions in
which its failure to be duly qualified or licensed would constitute a Material
Adverse Change, which certificates shall indicate that such Loan Party is in
good standing in such jurisdictions;

Each of the Loan Parties shall have requested from their insurance carriers that
certificates of insurance, which name Administrative Agent for the benefit of
the Lender Group as loss payee and additional insured on all of such Loan
Party’s policies of insurance as are required by Section 6.10, the form and
substance of which shall be satisfactory to Administrative Agent, be delivered
to the Administrative Agent;

Administrative Agent shall have received and reviewed copies of all Material
Contracts, as requested by Administrative Agent and such Material Contracts
shall be in form and substance satisfactory to Administrative Agent;

Administrative Agent shall have received an opinion of Borrower’s and the other
Loan Parties’ counsel in form and substance satisfactory to Administrative Agent
in its sole discretion;

Administrative Agent shall have received title opinions or other title
information reasonably satisfactory to Administrative Agent on at least seventy
percent (70%) by value of the Loan Parties’ Proved Developed Producing Reserves,
plus such supplemental title reports or other information on a total of eighty
percent (80%) by value of the Loan Parties’ Proved Developed Reserves,
satisfactory to Administrative Agent; each of such title opinions (and other
legal opinions supplemental thereto) shall opine as to the Defensible Title of
the Loan Parties to such Oil and Gas Properties consistent with the working and
net revenue interests set forth on Schedule 5.1(a) as Administrative Agent may
reasonably request;

 

  51   LOAN AGREEMENT

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Borrower shall have delivered to Administrative Agent such existing
environmental reports (whether prepared internally or by an outside party) with
respect to the Oil and Gas Property Collateral, and the matters contained
therein shall be reasonably acceptable to Administrative Agent;

Administrative Agent and counsel to Administrative Agent shall have received and
reviewed all documentation relating to the Unsecured Notes, including, without
limitation, the Unsecured Notes Indenture, and all of such documentation, and
the terms and provisions of such documentation, including, without limitation,
the Unsecured Notes and the Unsecured Notes Indenture, shall be acceptable to
Administrative Agent and its counsel;

Administrative Agent shall have received and reviewed Borrower’s December 31,
2006 financial statements, and such financial statements shall be in form and
substance satisfactory to Administrative Agent;

Administrative Agent shall have completed its business, legal, and collateral
due diligence, including (i) a collateral audit and review of Borrower’s and
each of its Subsidiaries’ books and records and verification of Borrower’s and
each of its Subsidiaries’ representations and warranties to Administrative
Agent, the results of which shall be satisfactory to Administrative Agent, and
(ii) an inspection of such locations of Borrower and its Subsidiaries as shall
be required by Administrative Agent, the results of which shall be satisfactory
to Administrative Agent;

Administrative Agent shall have received and reviewed the final combined
appraisal report prepared as of June 30, 2007, by the applicable Approved
Engineer (or with respect to Ascent, prepared by Borrower and audited by the
applicable Approved Engineer), covering the Oil and Gas Properties and such
report shall contain such information as may be requested by Administrative
Agent and shall be in form and substance satisfactory to Administrative Agent;

Administrative Agent shall have received evidence satisfactory to Administrative
Agent including, without limitation, a certificate executed by the chief
financial officer of Borrower, to such effect, that (i) no Material Adverse
Change has occurred in the business, assets, operations, prospects or financial
or other condition of Borrower or any of its Subsidiaries since December 31,
2006, and (ii) no contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments or unrealized or unanticipated losses from any
unfavorable commitments exist that are not disclosed in Borrower’s most recent
annual audited and interim financial statements delivered to the Administrative
Agent;

The Existing Credit Facilities shall have been repaid in full or refinanced with
proceeds of the Advances hereunder;

Closing on Ascent Transaction under terms of Ascent Acquisition Agreement
without waiver of the conditions precedent set forth therein;

Administrative Agent shall have received evidence that Borrower has entered in
to Hedging Agreements satisfactory to the Administrative Agent;

 

  52   LOAN AGREEMENT

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Administrative Agent, Administrative Agent’s attorneys, and other third party
advisors shall have been paid on or before the Closing Date all fees and
expenses to the extent invoiced prior to Closing Date; and

all other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered, executed, or recorded
and shall be in form and substance satisfactory to Administrative Agent and its
counsel.

Conditions Precedent to all Extensions of Credit. The obligation of the Lender
Group (or any member thereof) to make all Advances (or to extend any other
credit hereunder) shall be subject to the following conditions precedent:

the representations and warranties contained in this Agreement and the other
Loan Documents shall be true and correct in all respects on and as of the date
of such extension of credit, as though made on and as of such date (except to
the extent that such representations and warranties relate solely to an earlier
date);

no Default or Event of Default shall have occurred and be continuing on the date
of such extension of credit, nor shall either result from the making thereof;

no injunction, writ, restraining order, or other order of any nature
prohibiting, directly or indirectly, the extending of such credit shall have
been issued and remain in force by any governmental authority against any Loan
Party, Administrative Agent, the Lender Group, or any of their respective
Affiliates; and

the aggregate amount of the Revolving Facility Usage, after giving effect to the
requested Advance or Letter of Credit, shall not exceed the Availability.

The foregoing conditions precedent are not conditions to each Lender
(i) participating in or reimbursing the Administrative Agent for such Lenders’
Pro Rata Share of any Overadvance as provided herein, or (ii) participating in
or reimbursing Administrative Agent for such Lenders’ Pro Rata Share of any
drawings under Letters of Credit as provided herein.

Term of Commitments.

This Agreement shall become effective upon the execution and delivery hereof by
Borrower and the Lender Group. The Revolver Commitment shall terminate on the
fourth anniversary of the Closing Date (the “Revolver Maturity Date”). The Term
Loan B shall mature on the fifth anniversary of the Closing Date (the “Term Loan
B Maturity Date” and, together with the Revolver Maturity Date, the “Maturity
Dates”).

The Lender Group, upon the election of the Required Lenders, shall have the
right to terminate its obligations under this Agreement immediately and without
notice upon the occurrence and during the continuation of an Event of Default.

 

  53   LOAN AGREEMENT

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Effect of Termination. On the date of termination of the Revolver Commitment,
all Obligations (including contingent reimbursement obligations of Borrower with
respect to any outstanding Letters of Credit but excluding Obligations under the
Term Loan B) immediately shall become due and payable without notice or demand
(including (a) either (i) providing cash collateral to be held by Administrative
Agent in an amount equal to 105% of the then extant Letter of Credit Usage, or
(ii) causing the original Letters of Credit to be returned to Administrative
Agent marked “terminated” by the beneficiary thereof, and (b) providing cash
collateral to be held by Administrative Agent for the benefit of the Lenders or
Lender-Related Persons, as applicable, with respect to the Lender Hedging
Obligations). On the Term Loan B Maturity Date, all Obligations, to the extent
not already due and payable, immediately shall become due and payable without
notice or demand (including (a) either (i) providing cash collateral to be held
by Administrative Agent in an amount equal to 105% of the then extant Letter of
Credit Usage, or (ii) causing the original Letters of Credit to be returned to
Administrative Agent marked “terminated” by the beneficiary thereof, and
(b) providing cash collateral to be held by Administrative Agent for the benefit
of the Lenders or Lender-Related Persons, as applicable, with respect to the
Lender Hedging Obligations). No termination of the Commitments however, shall
relieve or discharge Borrower of Borrower’s duties, Obligations, or covenants
hereunder or under the other Loan Documents, and the Administrative Agent’s
Liens in the Collateral, for the benefit of the Lender Group, shall remain in
effect until all Obligations have been fully and finally discharged and the
Administrative Agent and the Lender Group’s obligations to provide additional
credit hereunder have been terminated.

Early Termination by Borrower. Borrower has the option to terminate the Revolver
Commitment and the option to terminate the Term Loan B Commitment by paying to
Administrative Agent, for the ratable benefit of the Lender Group, in cash, the
Obligations (including either (a) providing cash collateral to be held by
Administrative Agent in an amount equal to 105% of the extant Letter of Credit
Usage, or (b) causing the original Letters of Credit to be returned to
Administrative Agent marked “terminated” by the beneficiary thereof in full),
together with the Applicable Premium. If Borrower has sent a notice of
termination pursuant to the provisions of this Section, then the Commitments
shall terminate and Borrower shall be obligated to repay the Obligations
(including either (a) providing cash collateral to be held by Administrative
Agent in an amount equal to 105% of the then extant Letter of Credit Usage, or
(c) causing the original Letters of Credit to be returned to Administrative
Agent marked “terminated” by the beneficiary thereof in full), together with the
Applicable Premium, on the date set forth as the date of termination of this
Agreement in such notice.

Termination Upon Event of Default or Otherwise. In the event of the termination
of the Revolver Commitment and the Term Loan B Commitment and repayment of the
Obligations at any time prior to their stated termination dates provided under
Section 3.4 above, for any reason other than as provided for in Section 3.5,
including (a) termination upon the election of Administrative Agent to terminate
after the occurrence of an Event of Default, (b) foreclosure and sale of
Collateral, (c) sale of the Collateral in any Insolvency Proceeding, or
(d) restructure, reorganization, or compromise of the Obligations by the
confirmation of a plan of reorganization or any other plan of compromise,
restructure, or arrangement in any Insolvency Proceeding, then, in view of the
impracticability and extreme difficulty of ascertaining the actual amount of
damages to the Lender Group or profits lost by the Lender Group as a result of
such early termination, and by mutual agreement of the parties as to a
reasonable estimation and calculation of the lost profits or damages of the
Lender Group, Borrower shall pay the Applicable Premium to Administrative Agent
for the ratable benefit of the Lender Group (payable to the Lenders as agreed to
between and/or among them), upon the effective date of such termination,
measured as of the date of such termination.

 

  54   LOAN AGREEMENT

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YIELD PROTECTION.

Increased Costs.

Increased Costs Generally. If any Change in Law shall:

impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Rate) or the Issuing Lender;

subject any Lender or the Issuing Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any LIBOR Rate Loan made by it, or change the basis of taxation of
payments to such Lender or the Issuing Lender in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 4.2 and the imposition of,
or any change in the rate of, any Excluded Tax payable by such Lender or the
Issuing Lender); or

impose on any Lender or the Issuing Lender or the London interbank market any
other condition, cost or expense affecting this Agreement or LIBOR Rate Loans
made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or the
Issuing Lender of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or the Issuing Lender hereunder (whether of principal, interest or any
other amount) then, upon request of such Lender or the Issuing Lender, the
Borrower will pay to such Lender or the Issuing Lender, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing
Lender, as the case may be, for such additional costs incurred or reduction
suffered.

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

 

  55   LOAN AGREEMENT

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

Delay in Requests. Failure or delay on the part of any Lender or the Issuing
Lender to demand compensation pursuant to this Section shall not constitute a
waiver of such Lender’s or the Issuing Lender’s right to demand such
compensation, provided that the Borrower shall not be required to compensate a
Lender or the Issuing Lender pursuant to this Section for any increased costs
incurred or reductions suffered more than nine months prior to the date that
such Lender or the Issuing Lender, as the case may be, notifies the Borrower of
the Change in Law giving rise to such increased costs or reductions and of such
Lender’s or the Issuing Lender’s intention to claim compensation therefor
(except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be
extended to include the period of retroactive effect thereof).

Taxes.

Payments Free of Taxes. Any and all payments by or on account of any obligation
of the Borrower hereunder or under any other Loan Document shall be made free
and clear of and without reduction or withholding for any Indemnified Taxes or
Other Taxes, provided that if the Borrower shall be required by applicable law
to deduct any Indemnified Taxes (including any 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) the Administrative Agent, Lender or Issuing 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 shall make such deductions
and (iii) the Borrower shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

Payment of Other Taxes by the Borrower. Without limiting the provisions of
paragraph (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.

Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent, each Lender and the Issuing Lender, within ten (10) days after demand
therefor, for the full amount of any Indemnified Taxes or Other Taxes (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to
amounts payable under this Section) paid by the Administrative Agent, such
Lender or the Issuing Lender, as the case may be, 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 as to the amount
of such payment or liability delivered to the Borrower by a Lender or the
Issuing Lender (with a copy to the Administrative Agent), or by the
Administrative Agent on its own behalf or on behalf of a Lender or the Issuing
Lender, shall be conclusive absent manifest error.

 

  56   LOAN AGREEMENT

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Evidence of Payments. As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

Status of 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 resident for tax purposes, or any treaty to which such jurisdiction
is a party, with respect to payments hereunder or under 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 or reasonably requested by the
Borrower or the Administrative Agent, such properly completed and executed
documentation prescribed by applicable law as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, any
Lender, if requested by the Borrower or the Administrative Agent, shall deliver
such other documentation prescribed by applicable law or reasonably requested by
the Borrower or the Administrative Agent as will enable the Borrower or the
Administrative Agent to determine whether or not such Lender is subject to
backup withholding or information reporting requirements.

Without limiting the generality of the foregoing clause (e), in the event that
the Borrower is resident for tax purposes in the United States of America, any
Foreign Lender shall deliver to the Borrower and the Administrative Agent (in
such number of copies as shall be requested by the recipient) on or prior to the
date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the request of the Borrower or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,

duly completed copies of Internal Revenue Service Form W-8ECI,

in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the IRC, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the IRC, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the IRC, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the IRC and (y) duly
completed copies of Internal Revenue Service Form W-8BEN, or

any other form prescribed by applicable law as a basis for claiming exemption
from or a reduction in United States Federal withholding tax duly completed
together with such supplementary documentation as may be prescribed by
applicable law to permit the Borrower to determine the withholding or deduction
required to be made.

Treatment of Certain Refunds. If the Administrative Agent, a Lender or the
Issuing Lender determines, in its sole discretion, that it has received a refund
of any Taxes or

 

  57   LOAN AGREEMENT

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Other Taxes as to which it has been indemnified by the Borrower or with respect
to which the Borrower has paid additional amounts pursuant to this Section, it
shall pay to the Borrower an amount equal to such refund (but only to the extent
of indemnity payments made, or additional amounts paid, by the Borrower under
this Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent, such
Lender or the Issuing Lender, as the case may be, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to
such refund), provided that the Borrower, upon the request of the Administrative
Agent, such Lender or the Issuing Lender, agrees to repay the amount paid over
to the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Lender or the
Issuing Lender in the event the Administrative Agent, such Lender or the Issuing
Lender is required to repay such refund to such Governmental Authority. This
paragraph shall not be construed to require the Administrative Agent, any Lender
or the Issuing Lender to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to the Borrower or
any other Person.

Mitigation Obligations; Replacement of Lenders.

Designation of a Different Lending Office. If any Lender requests compensation
under Section 4.1, or requires the Borrower to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 4.2, then, if so requested by Borrower, such Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 4.1 or Section 4.2, 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 at the request of
Borrower in connection with any such designation or assignment.

Replacement of Lenders. If any Lender requests compensation under Section 4.1,
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 4.2, or
if any Lender defaults in its obligation to fund Loans hereunder, 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, and
consents required by, Section 15), all of its interests, rights and obligations
under this Agreement and the related Loan Documents to an assignee that shall
assume such obligations (which assignee may be another Lender, if a Lender
accepts such assignment), provided that:

the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 15;

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 and under the other Loan Documents (including
any amounts under Section 2.15(b)(ii)) 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);

 

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in the case of any such assignment resulting from a claim for compensation under
Section 4.1 or payments required to be made pursuant to Section 4.2, such
assignment will result in a reduction in such compensation or payments
thereafter; and

such assignment does not conflict with applicable law.

A Lender shall not be required to make any such assignment or 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.

REPRESENTATIONS AND WARRANTIES.

In order to induce the Administrative Agent and the Lender Group to enter into
this Agreement, Borrower makes the following representations and warranties to
the Administrative Agent and the Lender Group which shall be true, correct, and
complete in all respects as of the Closing Date, and at and as of the date of
the making of each Advance (or other extension of credit) made thereafter, as
though made on and as of the date of the making of such Advance (or other
extension of credit) (except to the extent that such representations and
warranties relate solely to an earlier date) and such representations and
warranties shall survive the execution and delivery of this Agreement:

No Encumbrances. The Borrowing Base Entities have Defensible Title to the
Collateral, free and clear of all Liens (except for Permitted Liens), including
but not limited to:

Ownership by the Borrowing Base Entities of the Oil and Gas Properties listed on
Schedule 5.1(a) as identified therein, with the operator (where an operator is
indicated), Working Interest and Net Revenue Interest as to such Oil and Gas
Properties as described on Schedule 5.1(a); and

All rights under the Material Contracts listed on Schedule 5.1(b).

Ownership of Oil and Gas Properties.

All of the information with respect to the Oil and Gas Properties contained on
Schedules 5.1(a), 5.1(b) and 5.2(b) is true and correct. To the best of
Borrower’s knowledge, all wells drilled and Hydrocarbons produced with respect
to all Proved Developed Producing Reserves and Proved Developed Non-Producing
Reserves were drilled and produced in compliance with all applicable
regulations. The Mortgages covering the Oil and Gas Property Collateral grant to
Administrative Agent, for the benefit of Lenders, a perfected lien upon not less
than 99% of the NYMEX Value of the Oil and Gas Property Collateral.

All of each Borrowing Base Entity’s marketing arrangements with respect to its
Proved Reserves are valid, enforceable and in full force and effect. To the best
of Borrower’s knowledge, there do not exist any cumulative imbalances in gas
production or receipt of “take or pay” payments except as disclosed (as to both
existence and extent) on Schedule 5.2(b) attached hereto or as otherwise
permitted under this Agreement.

 

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All information contained in the most recently delivered Reserve Report is true
and correct in all material respects as of the date thereof.

There has not been any Material Adverse Change in the Oil and Gas Properties
since the date of the most recent Reserve Report.

Equipment. All of the Equipment is used or held for use in Borrower’s or a
Subsidiary of Borrower’s business and is fit for such purposes, subject to
(a) normal wear and tear and (b) dispositions permitted under Section 7.4. All
of the Equipment is fully and adequately described under the Security Agreements
for purposes of perfecting a Lien thereon.

Location of Chief Executive Office; Accounting Records; FEIN . The chief
executive office of Borrower and each of the other Loan Parties is located at
Meridian Tower, Suite 650, 5100 E. Skelly Drive, Tulsa Oklahoma. The Accounting
books and records of Borrower and the other Loan Parties are located principally
at 601 N. Broadway, Shawnee, Oklahoma.

The FEIN numbers for the Loan Parties are:

 

i.   Borrower    —      ii.   RAM Energy    52-1535102    iii.   Gulf States   
73-1522976    iv.   Great Plains    73-1095820    v.   RWG    02-0685292    vi.
  WG Operating    75-2883588    vii.   WG Pipeline    59-3765071    ix.   Ascent
   72-1493233    x.   Ascent Oil & Gas    34-2003055    xi.   SLPH    72-0954774
   xii.   Ascent Energy Holdings    34-2003056    xiii.   Ascent WV   
84-1682713    xiv.   Pontotoc Acquisition    72-1496932    xv.   Dyne   
73-1108446    xvi.   Ascent GP LLC    84-1651434    xvii.   Ascent LP LLC   
03-0544853    xviii.   PPC    74-2353501    xix.   OBEC    73-0772108    xx.  
Ascent LA    84-1651433    xxi.   Ascent Operating    03-0544856    xxii.  
Pontotoc Holdings    73-1590776    xxiii.   Pontotoc Gathering    73-1558561   

 

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Due Organization and Qualification; Subsidiaries.

Borrower is duly organized and existing and in good standing under the laws of
the jurisdiction of its incorporation and qualified and licensed to do business
in, and in good standing in, any state where the failure to be so licensed or
qualified could be expected to constitute a Material Adverse Change. Each of
Borrower’s Subsidiaries is duly organized and existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and
qualified and licensed to do business in, and in good standing in, any state
where the failure to be so licensed or qualified could be expected to constitute
a Material Adverse Change.

Set forth on Schedule 5.5(b), is a complete and accurate description of the
authorized capital Stock of Borrower, by class, and, as of the Closing Date, a
description of the number of shares of each such class that are issued and
outstanding and the number of such shares that are held in Borrower’s treasury.
All such outstanding shares have been validly issued and, as of the Closing
Date, are fully paid, nonassessable shares free of contractual preemptive
rights. The issuance and sale of all such shares have been in compliance with
all applicable federal and state securities laws. Other than as described on
Schedule 5.5(b), there are no subscriptions, options, warrants, or calls
relating to any shares of Borrower’s capital Stock, including any right of
conversion or exchange under any outstanding security or other instrument.
Except as provided on Schedule 5.5(b), Borrower is not subject to any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or exchangeable for
any of its capital Stock.

Set forth on Schedule 5.5(b), is a complete and accurate list of Borrower’s
direct and indirect Subsidiaries, showing: (i) the jurisdiction of their
incorporation or organization; (ii) the number of shares of each class of common
and preferred Stock authorized for each of such Subsidiaries; and (iii) the
number and the percentage of the outstanding shares of each such class owned
directly or indirectly by Borrower. All of the outstanding capital Stock of each
such Subsidiary has been validly issued and is fully paid and non-assessable.
Borrower has no direct or indirect interest in any partnerships or limited
liability companies (other than Gulf States, WG Pipeline, Ascent GP LLC, Ascent
LP LLC, Ascent LA, Ascent Operating, Pontotoc Gathering, and GeoPetra LLC).
Borrower has no equity interest in any Person other than Borrower’s
Subsidiaries. Except as set forth on Schedule 5.5(b), no capital Stock (or any
securities, instruments, warrants, options, purchase rights, conversion or
exchange rights, calls, commitments or claims of any character convertible into
or exercisable for capital Stock) of any direct or indirect Subsidiary of
Borrower is subject to the issuance of any security, instrument, warrant,
option, purchase right, conversion or exchange right, call, commitment or claim
of any right, title, or interest therein or thereto. Neither Borrower nor any of
its Subsidiaries is subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any shares of capital Stock or any
security convertible into or exchangeable for any of capital Stock.

Neither of CDC or MCAC owns any assets or conducts any business and Great Plains
owns assets of less than $50,000 and conducts no business.

Due Authorization; No Conflict.

 

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The execution, delivery, and performance by Borrower of this Agreement and by
Borrower and each of the other Loan Parties of the other Loan Documents to which
it is a party have been duly authorized by all necessary action on the part of
Borrower and such other Loan Parties.

The execution, delivery, and performance by Borrower and the other Loan Parties
of this Agreement and the Loan Documents to which it is a party do not and will
not (i) violate any provision of federal, state, or local law or regulation
(including Regulations U and X of the Federal Reserve Board) applicable to
Borrower or any such other Loan Parties, the Governing Documents of Borrower or
the other Loan Parties, or any order, judgment, or decree of any court or other
Governmental Authority binding on Borrower or any of the other Loan Parties,
(ii) conflict with, result in a breach of, or constitute (with due notice or
lapse of time or both) a default under any Material Contract or other material
contractual obligation or material lease of Borrower or any of the other Loan
Parties, (iii) result in or require the creation or imposition of any Lien of
any nature whatsoever upon any properties or assets of Borrower or any of the
other Loan Parties, other than Permitted Liens, or (iv) require any approval of
stockholders of Borrower or any of the other Loan Parties or any approval or
consent of any Person under any Material Contract or other material contractual
obligation of Borrower or any of the other Loan Parties.

Other than the taking of any action expressly required under this Agreement and
the Loan Documents and any required filings with the SEC, the execution,
delivery, and performance by Borrower of this Agreement and the Loan Documents
to which Borrower or the other Loan Parties is a party does not and will not
require any registration with, consent, or approval of, or notice to, or other
action with or by, any federal, state, foreign, or other Governmental Authority
or other Person.

This Agreement and the other Loan Documents to which Borrower and any other Loan
Party is a party, and all other documents contemplated hereby and thereby, when
executed and delivered by Borrower and such other Loan Party, as applicable,
will be the legally valid and binding obligations of Borrower and such other
Loan Party, enforceable against Borrower and such other Loan Party in accordance
with their respective terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization, moratorium, or similar
laws relating to or limiting creditors’ rights generally.

The Administrative Agent’s Liens granted by each Loan Party to Administrative
Agent, for the benefit of the Lender Group, in and to its properties and assets
pursuant to this Agreement and the other Loan Documents are validly created,
perfected, and first priority Liens, subject only to Permitted Liens.

Neither the Borrower nor any of its Subsidiaries has violated, and neither the
Borrower nor any Subsidiary will be in violation of, any provisions of the
Natural Gas Act or the Natural Gas Policy Act of 1978 or any other Federal or
State law or any of the regulations thereunder (including those of the
respective Conservation Commissions and Land Offices of the various
jurisdictions having authority over its Oil and Gas Properties) with respect to
its Oil and Gas Properties which would create a Material Adverse Change, and the
Borrower and each Subsidiary have or will have made all necessary rate filings,
certificate applications, well

 

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category filings, interim collection filings and notices, and any other filings
or certifications, and has or will have received all necessary regulatory
authorizations (including without limitation necessary authorizations, if any,
with respect to any processing arrangements conducted by it or others respecting
its Oil and Gas Properties or production therefrom) required under said laws and
regulations with respect to all of its Oil and Gas Properties or production
therefrom so as not to create a Material Adverse Change. Said material rate
filings, certificate applications, well category filings, interim collection
filings and notices, and other filings and certifications contain no untrue
statements of material facts nor do they omit any statements of material facts
necessary in said filings.

Claims, Disputes, and Litigation. There are no actions or proceedings pending by
or against any Loan Party before any court or administrative agency and Borrower
does not have knowledge or belief of any pending or threatened litigation,
governmental investigations, or claims, complaints, actions, or prosecutions
involving any Loan Party, except for: (a) ongoing collection matters in which
such Loan Party is the claimant, petitioner or plaintiff; (b) matters disclosed
on Schedule 5.7; and (c) matters that, if decided adversely to such Loan Party,
reasonably could not be expected to result in a Material Adverse Change.

No Material Adverse Change. All financial statements relating to any Loan Party
that have been delivered by Borrower to the Lender Group have been prepared in
accordance with GAAP (except, in the case of unaudited financial statements, for
the lack of footnotes and being subject to year-end audit adjustments) and
fairly present such Loan Party’s financial condition as of the date thereof and
such Loan Party’s results of operations for the period then ended. There has not
been a Material Adverse Change with respect to any Loan Party since the date of
the latest financial statements submitted to the Lender Group on or before the
Closing Date.

No Fraudulent Transfer. No transfer of property is being made by any Loan Party
and no obligation is being incurred by any Loan Party in connection with the
transactions contemplated by this Agreement or the other Loan Documents with the
intent to hinder, delay, or defraud either present or future creditors of
Borrower or any other Loan Party.

Employee Benefits. None of Borrower, any of its Subsidiaries, or any of their
ERISA Affiliates maintains or contributes to any Benefit Plan, other than those
listed on Schedule 5.10. Borrower, each of its Subsidiaries and each ERISA
Affiliate have satisfied the minimum funding standards of ERISA and the IRC with
respect to each Benefit Plan to which it is obligated to contribute. No ERISA
Event has occurred nor has any other event occurred that may result in an ERISA
Event that reasonably could be expected to result in a Material Adverse Change.
None of Borrower or its Subsidiaries, any ERISA Affiliate, or any fiduciary of
any Plan is subject to any direct or indirect liability with respect to any Plan
under any applicable law, treaty, rule, regulation, or agreement. None of
Borrower or its Subsidiaries or any ERISA Affiliate is required to provide
security to any Plan under Section 401(a)(29) of the IRC.

Environmental Condition. None of the Oil and Gas Properties owned by the Loan
Parties has ever been designated or identified in any manner pursuant to any
Environmental Laws as a Hazardous Materials disposal site, or a candidate for
closure pursuant to any environmental protection statute. No Lien arising under
any Environmental Laws has attached to any revenues or to any real or personal
property owned or operated by Borrower or by any Subsidiary of Borrower. Other
than is disclosed on Schedule 5.11 attached hereto, neither Borrower nor any
Subsidiary of Borrower has received a summons, citation, notice, or directive
from the Environmental Protection Agency or any other federal or state
governmental agency concerning any action or omission by Borrower or any
Subsidiary of

 

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Borrower resulting in the releasing or disposing of Hazardous Materials into the
environment that remains outstanding. Each of Borrower and each Subsidiary of
Borrower has taken all steps reasonably necessary to determine and, except as
disclosed on Schedule 5.11 attached hereto, has determined that no Hazardous
Materials, solid waste, or oil and gas exploration and production wastes, have
been disposed of or otherwise released and there has been no threatened release
of any Hazardous Materials on or to any Property of Borrower or any of its
Subsidiaries except in compliance with Environmental Laws and so as not to pose
an imminent and substantial endangerment to public health or welfare or the
environment. To the extent applicable, except as disclosed on Schedule 5.11
attached hereto or that would not reasonably be expected to result in a Material
Adverse Change, all Property of Borrower and each of its Subsidiaries which is
operated by Borrower and any of its Subsidiaries or Affiliates currently
satisfies all design, operation, and equipment requirements imposed by the OPA
or scheduled as of the Closing Date to be imposed by OPA during the term of this
Agreement, and Borrower does not have any reason to believe that such Property,
to the extent subject to OPA, will not be able to maintain compliance with the
OPA requirements during the term of this Agreement. Other than disclosed on
Schedule 5.11 attached hereto, neither Borrower nor any of its Subsidiaries has
any known contingent liability in connection with any release or threatened
release of any oil, Hazardous Material or solid waste into the environment that
would reasonably be expected to result in a Material Adverse Change. To the best
of Borrower’s knowledge, all Hazardous Materials, solid waste, and oil and gas
exploration and production wastes, if any, generated at any and all Property of
Borrower or any of its Subsidiaries have in the past been transported, treated
and disposed of in accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of Borrower, all such transport carriers
and treatment and disposal facilities have been and are operating in compliance
with Environmental Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action, investigation or inquiry
by any Governmental Authority in connection with any Environmental Laws.

Compliance with the Law. Neither Borrower nor any of its Subsidiaries has
violated any requirement of a Governmental Authority or failed to obtain any
license, permit, franchise or other governmental authorization necessary for the
ownership of the Property or the conduct of its business, which violation or
failure could be expected to result in (in the event such violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Change. Except for such acts or failures to act as do not result in and could
not be expected to result in a Material Adverse Change, the Oil and Gas
Properties have been maintained, operated and developed in a good and
workmanlike manner and in conformity with all applicable laws and all rules,
regulations and orders of all duly constituted authorities having jurisdiction
and in conformity with the provisions of all leases, subleases or other
contracts comprising a part of the Mineral Interests and other contracts and
agreements forming a part of the Oil and Gas Properties; specifically in this
connection, (i) after the Closing Date, no Oil and Gas Properties are 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) prior to the Closing Date
and (ii) none of the wells comprising a part of the Oil and Gas Properties are
deviated from the vertical more than the maximum permitted by applicable laws,
regulations, rules and orders, and such wells are, in fact, bottomed under and
are producing from the Oil and Gas Properties. Neither Borrower nor any of its
Subsidiaries has entered into, and the Oil and Gas Properties are not subject
to, any agreements, consent orders, administrative orders or similar obligations
based on a violation or alleged violation of Legal Requirements.

Insurance. Schedule 5.13 attached hereto contains an accurate and complete
description of all material policies of insurance owned or held by Borrower and
each Subsidiary. All such policies are in full force and effect, all premiums
with respect thereto covering all periods up to and including the Closing Date
have been paid, and no notice of cancellation or termination has been received
with respect

 

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to any such policy. Neither Borrower nor any of its Subsidiaries has been
refused any bonds or insurance with respect to its assets or operations, nor has
its coverage been limited below usual and customary bond or policy limits, by
any bonding company or insurance carrier to which it has applied for any such
bond or insurance or with which it has carried insurance during the last three
years.

Hedging Agreements. Schedule 5.14 sets forth, as of the Closing Date, a true and
complete list of all Lender Hedging Agreements and all other Hedging Agreements
of Borrower and each of its Subsidiaries that will survive the Closing Date by
more than five (5) Business Days, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or volumes),
the net mark to market value thereof, all credit support agreements relating
thereto (including any margin required or supplied), and the counterparty to
each such agreement. Borrower has delivered true and correct copies of each of
the Lender Hedging Agreements and the other Hedging Agreements that will survive
the Closing Date by more than five (5) Business Days to Administrative Agent
prior to the date of this Agreement.

Brokerage Fees. No brokerage commission or finders fees have or shall be
incurred or payable in connection with or as a result of Borrower’s obtaining
financing from the Lender Group under this Agreement.

Permits and other Intellectual Property. Borrower and each Subsidiary of
Borrower owns or possesses adequate licenses or other rights to use all Permits,
patents, patent applications, trademarks, trademark applications, service marks,
service mark applications, trade names, copyrights, trade secrets and know-how
(collectively, the “Intellectual Property”) that are necessary for the operation
of its business as currently conducted. No claim is pending or threatened to the
effect that Borrower or any Subsidiary of Borrower infringes upon, or conflicts
with, the asserted rights of any other Person under any Intellectual Property,
and to the best of Borrower’s knowledge there is no basis for any such claim
(whether pending or threatened).

Absence of Certain Changes. Since December 31, 2006, there has not been without
Administrative Agent’s prior written consent:

A waiver of any right relating to the Oil and Gas Properties;

A sale, lease or other disposition of the Oil and Gas Properties;

A mortgage, pledge or grant of a lien or security interest in any of the Oil and
Gas Properties, except for liens in favor of Administrative Agent for the
benefit of the Lender Group;

A contract for the sale of products produced from the Oil and Gas Properties,
except for (i) such contracts that have been supplied to and reviewed and
approved by Administrative Agent, (ii) such contracts as are described in
Schedule 5.17 or similar contracts on like terms, or (iii) such contracts of 60
days or less duration which are automatically renewed for an additional period
not to exceed 60 days unless terminated prior thereto by a party thereto
provided the sale price under such contract is not materially less than the spot
price for the appropriate category of oil or gas covered by such contract and
such contract does not require sales of minimum quantities by Borrower or any of
its Subsidiaries, involve any advance payments or other advances to or by
Borrower or any of its Subsidiaries, or constitute Indebtedness or otherwise
involve any material undertaking by Borrower or any of its Subsidiaries;

 

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A contract between Borrower and any of its Subsidiaries; or

A contract or commitment to do any of the foregoing.

Operating Costs. All costs and expenses incurred in connection with the
operation of the Properties have been fully paid and discharged by Borrower and
the Subsidiaries of Borrower, except normal costs and expenses incurred in
operating the Oil and Gas Properties which (a) in the case of costs and expenses
for drilling and drilling services, are less than 180 days past the original
invoice date and do not give rise to a Lien other than a Permitted Lien, and
(b) in the case of costs and expenses other than for drilling and drilling
services, are less than 120 days past the original invoice date and do not give
rise to a Lien other than a Permitted Lien.

Imbalances. Except as set forth on Schedule 5.2(b) or following the Closing Date
as permitted pursuant to Section 7.19, (a) no Borrowing Base Entity has taken or
received any amount of gas, oil or liquid hydrocarbons (or products refined
therefrom) so that any person or entity may thereafter be entitled to receive
any portion of the interests of such Borrowing Base Entity to “balance” any
previous disproportionate allocation, (b) no Borrowing Base Entity has accrued
or incurred any liabilities under gas purchase contracts for gas not taken, but
for which it is liable to pay if not made up, (c) no claims exist against
Borrower or any of its Subsidiaries for gas imbalances which claims if adversely
determined could result in liability in excess of $1,000,000 in the aggregate,
and (d) no purchaser of product supplied by Borrower, any of its Subsidiaries
has any claim against Borrower, any of its Subsidiaries for product paid for,
but for which delivery was not taken as and when paid for, which claim if
adversely determined could result in liability in excess of $1,000,000 in the
aggregate.

Material Contracts; No Default. Set forth on Schedule 5.1(b) is a complete and
correct list of all Material Contracts in effect or to be in effect as of the
Closing Date. Borrower has delivered to Administrative Agent true and complete
copies of each Material Contract, as each may have been amended, that have been
requested by Administrative Agent. The Material Contracts are in full force and
effect in accordance with their respective terms, and there exist no defaults in
the performance of any obligation thereunder. Additionally, Borrower is not
aware of any event that with notice or lapse of time, or both, would constitute
a default under any such Material Contracts.

Leases. The oil and gas leases associated with the Oil and Gas Properties are in
full force and effect in accordance with their respective terms, and there exist
no material defaults in the performance of any obligation thereunder.
Additionally, Borrower is not aware of any event that with notice or lapse of
time, or both, would constitute a default under any such oil and gas leases.

Marketing Agreements. Except as set forth in Schedule 5.22 and except to the
extent permitted under Section 7.23, the Oil and Gas Properties (and the
production therefrom) are not subject to any purchase agreement, sale agreement
or similar marketing arrangement not cancelable on sixty (60) days notice, nor
are any of the Properties subject to any agreements with any companies
affiliated with Borrower that cannot be terminated immediately upon Closing
without penalty, cost or liability to Borrower or any of its Subsidiaries.

Non-Consent Operations. Since the execution of this Agreement, there have been
no operations associated with the Oil and Gas Properties under an operating
agreement, unit agreement or governmental order with respect to which any
Borrowing Base Entity has become a non-consenting party, except for those
relating to periods after the Closing Date to the extent permitted under
Section 7.22.

 

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Wells. Each oil or gas well located on the Oil and Gas Properties is: (a) if
such oil or gas well is listed on a currently-effective Reserve Report (that is,
the most recent Reserve Report furnished to the Administrative Agent), capable
of producing in paying quantities as of the date of such Reserve Report,
(b) properly permitted, and (c) to the best of Borrower’s knowledge, in
compliance with all applicable Laws. Each of each Borrowing Base Entity’s
producing wells listed on Schedule 5.1(a) is located on an Oil and Gas Property
(i) covered by title opinions or other title information reasonably satisfactory
to Administrative Agent (to the extent of at least 80% of the NYMEX Value in the
aggregate as of the Closing Date), and (ii) described in the legal description
contained in an Oil and Gas Property Mortgage.

DDAs. Set forth on Schedule 5.25 are all of the DDAs of Borrower and its
Subsidiaries, including, with respect to each depository (i) the name and
address of such depository, and (ii) the account numbers of the accounts
maintained with such depository.

Complete Disclosure. All factual information (taken as a whole) furnished by or
on behalf of Borrower and its Subsidiaries in writing to Administrative Agent or
any Lender (including all information contained in the Schedules hereto or in
the other Loan Documents) for purposes of or in connection with this Agreement,
the other Loan Documents or any transaction contemplated herein or therein is,
and all other such factual information (taken as a whole) hereafter furnished by
or on behalf of Borrower and its Subsidiaries in writing to the Administrative
Agent or any Lender will be, true and accurate, in all material respects, on the
date as of which such information is dated or certified and not incomplete by
omitting to state any fact necessary to make such information (taken as a whole)
not misleading in any material respect at such time in light of the
circumstances under which such information was provided. On the Closing Date,
the Projections delivered as of the Closing Date represent, and as of the date
on which any other Projections are delivered to Administrative Agent, such
additional Projections represent Borrower’s good faith best estimate of the
future performance of Borrower and its Subsidiaries for the periods covered
thereby.

Indebtedness. Set forth on Schedule 5.27 is a true and complete list of all
Indebtedness of Borrower and its Subsidiaries outstanding immediately prior to
the Closing Date that is to remain outstanding after the Closing Date and such
Schedule accurately reflects the aggregate principal amount of such Indebtedness
and the principal terms thereof.

Investment Company Status. Neither Borrower nor any of its Subsidiaries is an
“investment company” as defined in, or subject to regulation under, the
Investment Company Act of 1940, as amended.

Taxes. Borrower and each of its Subsidiaries has timely filed or caused to be
filed all tax returns and reports required to have been filed and has paid or
caused to be paid all taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority required to have been paid by
it, except (a) taxes, levies, imposts, duties, deductions, charges or
withholdings imposed by any Governmental Authority that are being contested in
good faith by appropriate proceedings and for which Borrower has set aside on
its books adequate reserves or (b) to the extent that the failure to do so could
not reasonably be expected to result in a Material Adverse Change.

Labor Matters. As of the Closing Date, there are no strikes, lockouts or
slowdowns against Borrower and its Subsidiaries pending or, to the knowledge of
Borrower and its Subsidiaries,

 

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threatened. The hours worked by and payments made to employees of Borrower and
its Subsidiaries have not been in material violation of the Fair Labor Standards
Act or any other applicable Federal, state, local or foreign law dealing with
such matters. All payments due from Borrower and its Subsidiaries, or for which
any claim may be made against Borrower or any of its Subsidiaries, on account of
wages and employee health and welfare insurance and other benefits, have been
paid or accrued as a liability on the books of Borrower and its Subsidiaries.

Unsecured Notes Indenture and Unsecured Notes . The Unsecured Notes Indenture
and the Unsecured Notes, true and correct copies of which have been furnished to
Administrative Agent, have not been amended or otherwise modified (other than in
accordance with written amendments, copies of which have been provided to
Administrative Agent prior to the date of this Agreement), and are in full force
and effect.

AFFIRMATIVE COVENANTS.

Borrower covenants and agrees that, so long as any credit hereunder shall be
available and until full and final payment of the Obligations, Borrower shall,
and shall cause each of its Subsidiaries to, do all of the following:

Financial Reporting. Provide Administrative Agent with the following documents
at the following times in form satisfactory to Administrative Agent during the
term of this Agreement:

Annual Financial Statements. As soon as available, but in any event not later
than 90 days after the end of each fiscal year of Borrower, its audited
consolidated balance sheet and related statements of operations, stockholders’
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 an independent registered public accounting firm acceptable to
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
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied.

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 Borrower, its consolidated balance sheet and related statements
of operations, stockholders’ equity and cash flows as of the end of and for such
fiscal 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 one of its Financial Officers as presenting fairly
in all material respects the financial condition and results of operations of
Borrower and its Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes.

Monthly Reporting. As soon as available, but in any event not later than 45 days
after the end of each month, a report setting forth, for such month, Borrower’s
monthly unaudited consolidated balance sheet and related statement of
operations.

 

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Certificate of Financial Officer — Compliance. Concurrently with any delivery of
financial statements under Section 6.1(a) or Section 6.1(b), a Compliance
Certificate of Borrower’s chief financial officer (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 7.18 and (iii) stating whether any change in GAAP or in the
application thereof has occurred since the date of the most recent audited
financial statements delivered pursuant to Section 6.1(a) and, if any such
change has occurred, specifying the effect of such change on the financial
statements accompanying such certificate.

Certificate of Financial Officer – Hedging Agreements. Concurrently with any
delivery of financial statements under Section 6.1(a) and Section 6.1(b), a
certificate of Borrower’s chief financial officer, in form and substance
satisfactory to the Administrative Agent, setting forth as of the last Business
Day of such fiscal quarter or fiscal year, a true and complete list of all
Hedging Agreements of Borrower and each of its Subsidiaries, listing the type,
term, effective date, termination date and notional amounts or volumes, the net
marked-to-market value therefor, any new credit support agreements relating
thereto not listed on Schedule 5.14, any margin required or supplied under any
credit support document, and the counterparty to each such agreement.

Certificate of Insurer — Insurance Coverage. Concurrently with any delivery of
financial statements under Section 6.1(a), a certificate of insurance coverage
from each insurer with respect to the insurance required by Section 6.8, 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.

Certificate – Use of Proceeds. On a monthly basis in conjunction with the
monthly reporting requirements under Section 6.1(d), a certificate of a
responsible officer of Borrower, in form and substance satisfactory to the
Administrative Agent, attaching a schedule of Borrower’s expenditures for the
development of Proved Undeveloped Reserves since the Closing Date, as well as
the amount of the Borrowing Base less the Borrowing Base Proved Undeveloped
Reserve Capital Expenditure Adjustment.

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 final, definitive materials filed by Borrower, or any Subsidiary or
Affiliate of Borrower with the SEC, or with any national securities exchange or
distributed by Borrower to its shareholders.

Other Accounting Reports. Promptly upon receipt thereof, a copy of each other
report or letter submitted to 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, or the Board of Directors of the
Borrower or any such Subsidiary, to such letter or report.

Access to Accountants. Upon request by Administrative Agent from time to time,
Borrower and its Subsidiaries shall arrange for its independent certified public

 

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accountants to meet with Administrative Agent and its representatives within a
reasonable (as determined by Administrative Agent) time following such request.
Borrower shall be permitted to attend such meeting. In the event that Borrower
and its Subsidiaries shall fail to arrange any such meeting requested by
Administrative Agent within a reasonable (as determined by Administrative Agent)
time following such request, and Administrative Agent shall have notified
Borrower of Administrative Agent’s intention to meet with such independent
certified public accountants, Borrower authorizes its independent certified
public accountants to communicate with Administrative Agent and to release to
Administrative Agent whatever financial information concerning Borrower and its
Subsidiaries that Administrative Agent reasonably may request at Borrower’s
expense (including copies of Borrower’s and its Subsidiaries’ financial
statements, papers related thereto, and other accounting records of any nature
in their possession), and to disclose to Administrative Agent any information
they may have regarding Borrower’s and its Subsidiaries’ business affairs and
financial conditions.

Inspection Rights. Borrower will permit, and will cause each other Loan Party to
permit, any officer, employee or agent of Administrative Agent to visit and
inspect any of the assets of any Loan Party, examine each Loan Party’s books of
record and accounts, take copies and extracts therefrom, and discuss the
affairs, finances and accounts of each Loan Party with any of such Loan Party’s
officers, all upon reasonable advance notice and at such reasonable times and as
often as Administrative Agent may desire, all at the expense of Borrower;
provided that, prior to the occurrence of an Event of Default, Administrative
Agent will not require any Loan Party to incur any unreasonable expense as a
result of the exercise by Administrative Agent of its rights pursuant to this
Section 6.1(k).

Collateral Reporting. Provide Administrative Agent with the following documents
at the following times in form satisfactory to Administrative Agent during the
term of this Agreement:

Production Report and Lease Operating Statements. Within 45 days following the
end of each month following the Closing Date, a report setting forth, for each
calendar month during the then current fiscal year to date on a year to date
comparative basis, 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.

Reserve Reports. Reserve Reports as of December 31st and June 30th of each year
(with such Reserve Reports to be delivered on or before the 60th day following
such date); prepared by an Approved Engineer. Each Reserve Report shall be in
form and substance satisfactory to Administrative Agent, and shall: (i) be
accompanied by a certification of Borrower to the effect that nothing has
occurred since the date of the last Reserve Report that could reasonably be
expected to result in a Material Adverse Change, except that which has
previously been disclosed to Administrative Agent in writing; (ii) be
accompanied by a reconciliation showing any changes in the Oil and Gas Property
Collateral since the date of the most recent of such Reserve Report in
Borrower’s (or such Subsidiaries’, as the case may be) Working Interest or net
revenue interest; (iii) be accompanied by a report, electronically delivered,
containing a schedule of the Oil and Gas Collateral evaluated in such Reserve
Report and demonstrating compliance with the asset coverage test under
Section 7.18(d), and

 

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(iv) contain such other information as may be requested by Administrative Agent.
Each delivery of a Reserve Report by Borrower to Administrative Agent also shall
constitute a representation and warranty by Borrower to Administrative Agent
that, unless otherwise disclosed to Administrative Agent in writing on or prior
to the date of such delivery, (I) Borrower (or its Subsidiary, as the case may
be) owns the Oil and Gas Properties described in the Reserve Report, free and
clear of any Liens (except Permitted Liens), and (II) the Oil and Gas Properties
described in such Reserve Report constitute at least ninety-five percent
(95%) of the value of Borrower’s Proved Reserves.

Lists of Purchasers. Concurrently with the delivery of any Reserve Report to the
Administrative Agent pursuant to Section 6.2(b), a list of Persons who purchase
(or did purchase in the last six months) at least 80% of the Hydrocarbons from
Borrower and its Subsidiaries, taken as a whole.

Notice of Sales of Oil and Gas Properties. In the event Borrower or any
Subsidiary intends to sell, transfer, assign or otherwise dispose of at least
$250,000 worth of any Oil or Gas Properties or any Equity Interests in any
Subsidiary in accordance with Section 7.4, at least ten (10) Business Days prior
to the anticipated date of closing, written notice of such disposition, the
price thereof, and the anticipated date of closing.

Notice of Casualty Events. Prompt written notice, and in any event within three
(3) 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.

Notice of Default. Promptly, and in any event within three (3) Business Days
upon Borrower’s becoming aware of any Default, furnish to Administrative Agent
and each Lender written notice of the occurrence of any Default.

Notices Under Material Instruments. Promptly after the furnishing thereof,
copies of any financial statement or report furnished to or by any Person or
notices furnished by Borrower to any other 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 this Agreement.

Information Regarding Borrower and Guarantors. Prompt written notice (and in any
event within thirty (30) days prior thereto) of any proposed change (i) in
Borrower’s or any of its Subsidiaries’ 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 Borrower or any of its Subsidiaries’
chief executive office or principal place of business if Borrower or any of its
Subsidiaries is not a registered organization under the Code, (iii) in
Borrower’s or any of its Subsidiaries’ jurisdiction of organization or such
Person’s organizational identification number in such jurisdiction of
organization, and (iv) in Borrower’s or any of its Subsidiaries’ federal
taxpayer identification number. Borrower agrees not to effect or permit any
change referred to in the preceding sentence unless all filings have been made
under the Code or otherwise that are required in order for the Administrative
Agent to continue at all times following such change to have a valid, legal and
perfected liens and security interest in all the Collateral.

 

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Notices of Corporate Changes. Prompt written notice (and in any event within
thirty (30) days prior thereto) of any proposed change to the certificate of
formation, certificate or articles of incorporation, operating agreement,
by-laws, any preferred stock designation or any other organic document of
Borrower or any Subsidiary, that could reasonably be expected to result in a
Material Adverse Change.

Disclosure Updates. Promptly and in no event later than five (5) Business Days
after obtaining knowledge thereof, (i) notify Administrative Agent if any
written information, exhibit, or report furnished to Administrative Agent or the
Lender Group contained any untrue statement of a material fact or omitted to
state any material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and (ii) correct any
defect or error that may be discovered therein or in any Loan Document or in the
execution, acknowledgement, filing, or recordation thereof.

Other Requested Information. Promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of Borrower or any Subsidiary (including, without limitation, any Plan or
Multiemployer 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.

Notices of Material Events. Deliver to Administrative Agent prompt written
notice of the following:

the occurrence of any Default in accordance with Section 6.1(g);

the filing or commencement of, or the threat in writing of, any action, suit,
proceeding, investigation or arbitration by or before any arbitrator or
Governmental Authority against or affecting the Borrower or any Affiliate
thereof not previously disclosed in writing to the Lenders or any material
adverse development in any action, suit, proceeding, investigation or
arbitration previously disclosed to the Lenders that, if adversely determined,
could reasonably be expected to result in liability in excess of $500,000 net of
insurance coverage, including normal deductibles;

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 $250,000;
and

any other development that results in, or could reasonably be expected to result
in, a Material Adverse Change.

Each notice delivered under this Section 6.3 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.

Existence. At all times preserve and keep in full force and effect the valid
existence and good standing of Borrower and each of its Subsidiaries and any
rights and franchises material to the business of Borrower and its Subsidiaries;
provided, however, the Borrower shall have the right, at any

 

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time and at Borrower’s sole discretion, upon ten (10) days prior notice to the
Administrative Agent, to dissolve, liquidate and terminate MCAC, CDC or Great
Plains if the assets, if any, of such Persons are immediately distributed to
Borrower or a Guarantor, or to merge any Subsidiary with or into Borrower or a
Guarantor.

Performance of Obligations under Loan Documents.

Pay the Loans according to the terms thereof, and Borrower will, and will cause
each Subsidiary 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.

Make payments hereunder and under the other Loan Documents by or on behalf of
Borrower without setoff or counterclaim and free and clear of, and without
deduction or withholding for or on account of, any federal, state, or local
taxes.

Operation and Maintenance of Properties. Borrower, at its own expense, will, and
will cause each Subsidiary to:

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 pro
ration 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
result in a Material Adverse Change.

keep and maintain in good repair, working order, condition, and efficiency
(ordinary wear and tear excepted) all of its Oil and Gas Properties and other
Properties, including, without limitation, all equipment, machinery and
facilities except, in each case, where the failure to do so could not reasonably
be expected to result in a Material Adverse Change.

promptly pay and discharge, or make reasonable and customary efforts to cause to
be paid and discharged, all delay rentals, royalties, expenses and indebtedness
accruing under the leases or other agreements affecting or pertaining to its Oil
and Gas Properties and will do all other things necessary to keep unimpaired its
rights with respect thereto and prevent any forfeiture thereof or a default
thereunder except, in each case, where the failure to do so could not reasonably
be expected to result in a Material Adverse Change.

promptly perform or make reasonable and customary efforts to cause to be
performed, in accordance with industry standards, the obligations required by
each and all of the assignments, deeds, leases, sub-leases, contracts and
agreements affecting its interests in its Oil and Gas Properties and other
material Properties except, in each case, where the failure to do so could not
reasonably be expected to result in a Material Adverse Change.

 

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to the extent Borrower is not the operator of any Property, Borrower shall use
reasonable efforts to cause the operator to comply with this Section 6.6.

perform all acts and execute such documents as Administrative Agent may
reasonably require in order to maintain the existence, perfection and first
priority of Administrative Agent’s Lien on the Oil and Gas Property Collateral
and the other Collateral.

Comply in all material respects with the Material Contracts and all other
contracts and agreements applicable to or relating to the Proved Reserves or the
production and sale of Hydrocarbons and accompanying elements therefrom.

Taxes.

Cause all assessments and taxes, whether real, personal, or otherwise, due or
payable by, or imposed, levied, or assessed against Borrower (or any Subsidiary
of Borrower) or any of its property or assets to be paid in full, before
delinquency or before the expiration of any extension period, except to the
extent that the validity of such assessment or tax (other than production taxes,
severance taxes, payroll taxes or taxes that are the subject of a United States
federal tax lien) shall be the subject of a Permitted Protest.

Make due and timely payment or deposit of all such federal, state, and local
taxes, assessments, or contributions required of it (or a Subsidiary of
Borrower) by law, and will execute and deliver to Administrative Agent, on
demand, appropriate certificates attesting to the payment thereof or deposit
with respect thereto.

Make timely payment or deposit of all tax payments and withholding taxes
required of it and its Subsidiaries by applicable laws, including those laws
concerning F.I.C.A., F.U.T.A., state disability, and local, state, and federal
income taxes, and will, upon request, furnish Administrative Agent with proof
satisfactory to Administrative Agent indicating that Borrower has made such
payments or deposits.

Insurance.

Borrower will, and will cause each Subsidiary 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 shall be endorsed in favor of and made payable to the Administrative
Agent as its interests may appear, shall include a standard mortgagee provision,
and such policies shall name the Administrative Agent for the benefit of the
Lender Group as “additional insured” and “sole loss payee” and provide that the
insurer will give at least 30 days prior notice of any cancellation to the
Administrative Agent. All such policies of insurance shall be in such form, with
such companies, and in such amounts as may be satisfactory to Administrative
Agent. Borrower shall deliver to Administrative Agent certified copies of such
policies of insurance and evidence of the payment of all premiums therefor.

Borrower shall give Administrative Agent prompt notice of any loss covered by
such insurance to the extent such loss is reasonably expected to exceed
$3,000,000 (a

 

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Material Loss”), and Administrative Agent shall have the right to adjust any
such loss. Administrative Agent shall have the exclusive right to adjust all
Material Losses payable under any such insurance policies without any liability
to Borrower or any Subsidiary of Borrower whatsoever in respect of such
adjustments. Any monies received as payment for any loss under any insurance
policy including the insurance policies mentioned above, shall be paid over to
Administrative Agent to be applied in accordance with Section 2.4(c) or at the
option of the Administrative Agent and Required Lenders either to the prepayment
of the Obligations without premium, in such order or manner as Administrative
Agent and Required Lenders may elect, or shall be disbursed to Borrower under
staged payment terms satisfactory to Administrative Agent for application to the
cost of repairs, replacements, or restorations. All repairs, replacements, or
restorations shall be effected with reasonable promptness and shall be of a
value at least equal to the value of the items or property destroyed prior to
such damage or destruction. Upon the occurrence of an Event of Default, the
Lender Group shall have the right to apply all prepaid premiums to the payment
of the Obligations in such order or form as Administrative Agent shall
determine.

Compliance with Laws. Comply with the requirements of all applicable laws,
rules, regulations, and orders of any Governmental Authority, including all
Environmental Laws, the Fair Labor Standards Act and the Americans With
Disabilities Act, other than laws, rules, regulations, and orders the
non-compliance with which, individually or in the aggregate, would not result in
and reasonably could not be expected to result in a Material Adverse Change, and
provide to Administrative Agent documentation of such compliance which
Administrative Agent reasonably requests.

Environmental Matters.

Establish and implement such procedures as may be necessary to continuously
determine and assure that any failure of the following would not result in and
could not be expected to result in a Material Adverse Change: (i) all Property
of the Borrower and its Subsidiaries and the operations conducted thereon and
other activities of the Borrower and its Subsidiaries are in compliance with and
do not violate the requirements of any Environmental Laws, (ii) no oil,
Hazardous Materials or solid wastes are disposed of or otherwise released on or
to any Property owned by any such party except in compliance with Environmental
Laws, (iii) no Hazardous Materials will be released on or to any such Property
in a quantity equal to or exceeding that quantity which requires reporting
pursuant to Section 103 of CERCLA, and (iv) no oil, oil and gas exploration and
production wastes, or Hazardous Materials is released on or to any such Property
so as to pose an imminent and substantial endangerment to public health or
welfare or the environment.

Promptly notify Administrative Agent in writing of any threatened action,
investigation or inquiry by any Governmental Authority of which Borrower or any
of its Subsidiaries has knowledge in connection with any Environmental Laws that
would reasonably be expected to result in a Material Adverse Change.

Provide environmental audits and tests in accordance with American Society for
Testing and Materials standards, as requested by Administrative Agent or as
otherwise required to be obtained by Administrative Agent or by any Governmental
Authority in connection with Borrower’s and Guarantors’ existing and hereafter
acquired Oil and Gas Properties or other material Properties.

 

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Keep any property either owned or operated by Borrower or any of its
Subsidiaries free of any Environmental Liens or post bonds or other financial
assurances sufficient to satisfy the obligations or liability evidenced by such
Environmental Liens, and promptly provide Administrative Agent with written
notice within 10 days of the receipt of any of the following: (i) notice that an
Environmental Lien has been filed against any of the real or personal property
of Borrower or any of its Subsidiaries, (ii) commencement of any Environmental
Action or notice that an Environmental Action will be filed against Borrower or
any of its Subsidiaries that reasonably could be expected to result in a
Material Adverse Change, and (iii) notice of a violation, citation, or other
administrative order which reasonably could be expected to result in a Material
Adverse Change.

Employee Benefits.

Cause to be delivered to Administrative Agent: (i) promptly, and in any event
within ten (10) Business Days after Borrower or any of its Subsidiaries knows or
has reason to know that an ERISA Event has occurred that has resulted in or
reasonably could be expected to result in a Material Adverse Change, a written
statement of the chief financial officer of Borrower describing such ERISA Event
and any action that is being taking with respect thereto by Borrower, any such
Subsidiary or ERISA Affiliate, and any action taken or threatened by the IRS,
Department of Labor, or PBGC. Borrower or such Subsidiary, as applicable, shall
be deemed to know all facts known by the administrator of any Benefit Plan of
which it is the plan sponsor, (ii) promptly, and in any event within three
(3) Business Days after the filing thereof with the IRS, a copy of each funding
waiver request filed with respect to any Benefit Plan and all communications
received by Borrower, any of its Subsidiaries or, to the knowledge of Borrower,
any ERISA Affiliate with respect to such request, and (iii) promptly, and in any
event within three (3) Business Days after receipt by Borrower, any of its
Subsidiaries or, to the knowledge of Borrower, any ERISA Affiliate, of the
PBGC’s intention to terminate a Benefit Plan or to have a trustee appointed to
administer a Benefit Plan, copies of each such notice.

Cause to be delivered to Administrative Agent, upon Administrative Agent’s
request, each of the following: (i) a copy of each Plan (or, where any such plan
is not in writing, complete description thereof) (and if applicable, related
trust agreements or other funding instruments) and all amendments thereto, all
written interpretations thereof and written descriptions thereof that have been
distributed to employees or former employees of Borrower or its Subsidiaries;
(ii) the most recent determination letter issued by the IRS with respect to each
Benefit Plan; (iii) for the three most recent plan years, annual reports on Form
5500 Series required to be filed with any governmental agency for each Benefit
Plan; (iv) all actuarial reports prepared for the last three plan years for each
Benefit Plan; (v) a listing of all Multiemployer Plans, with the aggregate
amount of the most recent annual contributions required to be made by Borrower
or any ERISA Affiliate to each such plan and copies of the collective bargaining
agreements requiring such contributions; (vi) any information that has been
provided to Borrower or any ERISA Affiliate regarding withdrawal liability under
any Multiemployer Plan; and (vii) the aggregate amount of the most recent annual
payments made to former employees of Borrower or its Subsidiaries under any
Retiree Health Plan.

 

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Oil and Gas Property Title Information.

On or before delivery to Administrative Agent of each Reserve Report required
after the Closing Date by Section 2.2 or Section 6.2, and, to the extent not
already provided pursuant to Section 6.13, Borrower will provide Administrative
Agent with title opinions or other title information acceptable to
Administrative Agent covering the Oil and Gas Property Collateral acquired after
the Closing Date so that at all times the value of Proved Developed Reserves for
which title opinions or other title information acceptable to Administrative
Agent shall equal or exceed eighty percent (80%) of the NYMEX Value.

Borrower shall cure all title defects or exceptions which are not Permitted
Liens, or substitute acceptable Oil and Gas Property Collateral with no title
defects or exceptions except for Permitted Liens covering Oil and Gas Property
Collateral of an equivalent value, within 30 days after a request by
Administrative Agent to cure such defects or exceptions. If the Borrower is
unable to cure any title defect requested by Administrative Agent to be cured
within the 30 day period, such failure to cure shall not be a Default or an
Event of Default, but instead such Property shall remain excluded from the
Borrowing Base as provided in Section 2.2 until such time as title is
satisfactory to Administrative Agent. Upon the discovery of any title defect or
exception which is not a Permitted Lien, Administrative Agent shall have the
right to exercise the right to remedy such title defect or exception in its 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 Administrative
Agent).

Additional Collateral and Guarantees.

Should Borrower or any of its Subsidiaries purchase, otherwise acquire or own
any Oil and Gas Property that (i) either (A) is acquired for purchase price
consideration in excess of $250,000, or (B) includes Proved Reserves, and
(ii) is not already subject to a Mortgage, Borrower will grant or cause to be
granted to Administrative Agent for the benefit of the Lender Group as security
for the Obligations a first-priority Lien (subject only to Permitted Liens) on
all of Borrower’s or such Subsidiary’s interest therein simultaneously with
Borrower’s or such Subsidiary’s purchase, acquisition or ownership of such Oil
and Gas Property under a Mortgage and such other security instruments,
satisfactory to Administrative Agent in its discretion;

Borrower shall cause all of its present and future Subsidiaries (other than
MCAC, CDC, and Great Plains) that are 50% or more owned directly or indirectly
by Borrower to execute a Guaranty Agreement and Security Agreements.

Hedging Agreements.

The Borrowing Base Entities shall maintain in effect at all times on a
continuous basis one or more Hedging Agreements satisfactory to Administrative
Agent with respect to their Hydrocarbon production with a Lender or
Lender-Related Person or one or more investment grade counterparties, rated Aa3
or better by Moody’s, A+ or better according to Standard & Poor’s, or the
equivalent by a rating agency acceptable to Administrative Agent or with a
counterparty otherwise acceptable to Administrative Agent in its reasonable
judgment (including, without limitation, Coral Energy Holding, L.P. and Shell
Trading U.S. Company), which Lender Hedging Agreements and other Hedging
Agreements taken together shall at all

 

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times not less than 50% or more than 85% of the volume of hydrocarbons (on
either an Mcf or barrel of oil equivalent basis, where six Mcf of natural gas is
equal to one barrel of oil) of such Proved Developed Producing Reserves
projected in the most recent Reserve Report to be produced during a rolling
30-month period, provided, that compliance with this Section 6.14(a) shall not
be required until December 31, 2007; provided further, that with respect to any
fiscal quarter during which the Maximum Leverage set forth in Section 7.18(c) is
less than 2.00:1.00, compliance with this Section 6.14(a) shall not be required.

Borrower shall use such Hedging Agreements solely as a part of its normal
business operations as a risk management strategy and/or hedge against changes
resulting from market conditions related to Borrower’s and its Subsidiaries’ oil
and gas operations and not as a means to speculate for investment purposes on
trends and shifts in financial or commodities markets.

Borrower shall notify Administrative Agent immediately upon becoming aware (in
any event not later than the close of business on the same Business Day) that
the production of Hydrocarbons by any Borrowing Base Entity could reasonably be
expected to be insufficient to meet its obligations under any Lender Hedging
Agreements or other Hedging Agreements.

Further Assurances.

Borrower shall, at Administrative Agent’s request, promptly cure any defects in
the creation or issuance of the Obligations or the execution or delivery of the
Obligations and/or Loan Documents, including this Agreement;

Borrower shall, at its expense promptly execute and deliver, and cause each of
its Subsidiaries to promptly execute and deliver, to Administrative Agent upon
request all such other documents, agreements and instruments as may be
reasonably necessary to comply with or accomplish the covenants and agreements
of Borrower or any of its Subsidiaries in the Loan Documents, including this
Agreement.

Borrower hereby authorizes the Administrative Agent, on behalf of the Lenders,
to file one or more financing or continuation statements, and amendments
thereto, relative to all or any part of the Collateral without the signature of
Borrower or any of its Subsidiaries where permitted by law. A carbon,
photographic or other reproduction of the Loan Documents or any financing
statement covering the Collateral or any part thereof shall be sufficient as a
financing statement where permitted by law.

Payment of Trade Payables and Indebtedness.

Within sixty (60) days after the same become due, pay all liabilities and debt
owed by Borrower and each of its Subsidiaries on ordinary trade terms to
vendors, suppliers and other Persons providing goods and services used by
Borrower and each Subsidiary in the ordinary course of its business; and

pay the Indebtedness of Borrower and its Subsidiaries and other obligations,
including tax liabilities of Borrower and its Subsidiaries, before the same
shall

 

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become delinquent or in default, except where (i) the validity or amount thereof
is being contested in good faith by appropriate measures, (ii) where applicable,
Borrower has set aside on its books adequate reserves with respect thereto in
accordance with GAAP, (iii) Borrower’s failure to pay such obligations has not
given rise to the filing of a Lien (other than a Permitted Lien) and (iv) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Change.

Unsecured Notes Indenture and Unsecured Notes. Borrower shall perform and
observe all the terms and provisions of each of the Unsecured Notes Indenture
and the Unsecured Notes, and the agreements, documents and instruments relating
thereto, to be performed or observed by it, at the times and in the manner
provided therein.

NEGATIVE COVENANTS. Borrower covenants and agrees that, so long as any credit
hereunder shall be available and until full and final payment of the
Obligations, Borrower will not, and will not permit any of its Subsidiaries to,
do any of the following without the Administrative Agent’s and Required Lenders’
prior written consent:

Indebtedness. Create, incur, assume, permit, guarantee, or otherwise become or
remain, directly or indirectly, liable with respect to any Indebtedness, except:

Indebtedness evidenced by this Agreement and the other Loan Documents, together
with Indebtedness owed to Underlying Issuers with respect to Underlying Letters
of Credit;

Indebtedness set forth on Schedule 7.1;

Indebtedness secured by Permitted Liens;

the Unsecured Notes;

Indebtedness of a Loan Party to another Loan Party which is not set forth in
Schedule 7.1, provided that such Indebtedness is not held, assigned,
transferred, negotiated or pledged to any Person other than Borrower or one of
its wholly-owned Subsidiaries, and, provided further, that any such Indebtedness
owed by Borrower or a Subsidiary shall be subordinated to the Indebtedness on
terms set forth in the Security Agreement;

Indebtedness associated with bonds or surety obligations required by Legal
Requirements in connection with the operation of Borrower’s and its
Subsidiaries’ Oil and Gas Properties;

To the extent approved under the provisions of Section 6.14, Indebtedness under
the Hedging Agreements;

Indebtedness consisting of financed insurance premiums incurred in the ordinary
course of business, consistent with past practices;

Other Indebtedness not included in sub clauses (a) through (g) above, in an
amount which shall not to exceed $1,000,000 in the aggregate at any time; and

 

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refinancings, renewals, replacements (as with new purchase money Indebtedness
for new or replacement vehicles or equipment of the nature described in Schedule
7.1) or extensions of Indebtedness permitted under clauses (b), (c) and (i) of
this Section 7.1 (and continuance or renewal of any Permitted Liens associated
therewith) and under clause (d) of this Section 7.1, in each such case so long
as: (i) the terms and conditions of such refinancings, renewals, replacements,
or extensions do not, in Administrative Agent’s reasonable judgment, materially
impair the prospects of repayment of the Obligations by Borrower or materially
impair Borrower’s creditworthiness, (ii) the net cash proceeds of such
refinancings, renewals, replacements, or extensions do not result in an increase
in the aggregate principal amount of the Indebtedness so refinanced, renewed,
replaced, or extended or add one or more of the Borrower’s Subsidiaries or
Affiliates as liable with respect thereto if such additional Subsidiary or
Affiliate were not liable with respect to the original Indebtedness, (iii) such
refinancings, renewals, replacements, or extensions do not result in a
shortening of the average weighted maturity of the Indebtedness so refinanced,
renewed, or extended, nor are they on terms or conditions, that, taken as a
whole, are materially more burdensome or restrictive to the Borrower, and
(iv) if the Indebtedness that is refinanced, renewed, replaced, or extended was
subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to
Administrative Agent and the Lender Group as those that were applicable to the
refinanced, renewed or extended Indebtedness.

Liens. Create, incur, assume, or permit to exist, directly or indirectly, any
Lien on or with respect to any of its property or assets, of any kind, whether
now owned or hereafter acquired, or any income or profits therefrom, except for
Permitted Liens.

Restrictions on Fundamental Changes.

Enter into any merger, consolidation, reorganization, or recapitalization, or
reclassify its capital Stock, other than (i) a merger of Ascent Acquisition
Corp. with and into Ascent under the terms and conditions described in the
Ascent Acquisition Agreement as same may be amended subject to Administrative
Agent’s consent (in Administrative Agent’s sole discretion), (ii) a merger into
Borrower of one or more of the other Loan Parties, provided that Borrower is the
surviving entity, and (iii) a merger of one or more of the Loan Parties (other
than Borrower) into another Loan Party, and (iv) a recapitalization of the
Unsecured Notes, provided that Administrative Agent has given prior written
consent to the terms and provisions of such recapitalization and, further
provided, that any capital Stock of Borrower or any Subsidiary of Borrower
issued in connection with such recapitalization must not by its terms (or by the
terms of any security into which it is convertible or for which it is
exercisable, redeemable or exchangeable), or upon the happening of any event or
with the passage of time, mature, or be mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or be redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to, the last
Maturity Date, or be convertible into or be exchangeable for debt securities of
Borrower or any Subsidiary of Borrower, except to the extent that such exchange
or conversion rights cannot be exercised prior to the last Maturity Date.

Except as permitted by Section 6.4, liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).

 

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Convey, sell, license, assign, lease, transfer, or otherwise dispose of, in one
transaction or a series of transactions, all or any substantial part of its
property or assets.

Disposal of Assets. Sell, lease, assign, farm-out, convey, transfer, or
otherwise dispose of Borrower’s or any of its Subsidiaries’ Properties or assets
other than (a) sales of Inventory to buyers in the ordinary course of Borrower’s
or such Subsidiary’s business as currently conducted, (b) the sale or transfer
of Equipment that is no longer necessary for the business of Borrower or such
Subsidiary or is replaced by Equipment of at least comparable value and use, and
(c) up to $5,000,000 annually in the aggregate of cash or cash equivalent sales
of Proved Reserves in the ordinary course of business, as long as Borrower shall
deliver to Administrative Agent a certificate executed by the chief executive
officer or chief financial officer of Borrower certifying (i) no Default or
Event of Default is existing or would result therefrom, (ii) after payment to
Administrative Agent of the proceeds of such sale for application to the
Obligations, no Overadvance would result therefrom, (iii) the proceeds of the
sale of such Proved Reserves have been or immediately shall be paid to
Administrative Agent for application in accordance with Section 2.4(c) by wire
transfer of immediately available funds to the Administrative Agent Account, and
(iv) with respect to any Oil and Gas Property with Proved Reserves having a
NYMEX Value in excess of $100,000, the sale price of such Oil and Gas Property
is equal to or greater than ninety percent (90%) of the NYMEX Value of such
Proved Reserves as of the date of the most recent applicable Reserve Report
delivered to Administrative Agent by Borrower, provided that the Borrowing Base
shall be adjusted by an amount equal to the value, if any, assigned to such
Proved Reserves in the most recently determined Borrowing Base.

Change of Name. Change Borrower’s or any of its Subsidiaries’ name, FEIN, or,
except as otherwise permitted herein, corporate structure (within the meaning of
the Code), or identity, or add any new fictitious name; provided, however, that
Borrower or any of its Subsidiaries may change its name upon at least 30 days
prior written notice by Borrower to Administrative Agent of such change and so
long as, at the time of such written notification, Borrower or any such
Subsidiary provides any financing statements or fixture filings necessary to
perfect and continue perfected Administrative Agent’s Liens.

Guarantee. Guarantee or otherwise become in any way liable with respect to the
obligations of any third Person except by endorsement of instruments or items of
payment for deposit to the account of Borrower or which are transmitted or
turned over to Administrative Agent.

Nature of Business. Make any change in the principal nature of Borrower’s or any
of its Subsidiaries’ business as an independent oil and gas exploration and
production company.

Prepayments and Amendments of Indebtedness.

Except in connection with a refinancing permitted by Section 7.1(j), prepay,
redeem, retire, defease, purchase, or otherwise acquire any Indebtedness owing
to any third Person, other than the Obligations in accordance with this
Agreement; provided, however, that Borrower shall be permitted to repay and
retire the Unsecured Notes to the extent permitted under Section 7.20.

Directly or indirectly, amend, modify, alter, increase, or change any of the
terms or conditions of any agreement, instrument, document, indenture, or other
writing evidencing or concerning Indebtedness permitted under Section 7.1(b)
(except for indebtedness permitted under Section 7.1(b) which does not, as
amended, modified, altered, increased or changed, exceed $500,000 in the
aggregate), Section 7.1(c) or Section 7.1(d).

 

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Change of Control. Cause, permit, or suffer, directly or indirectly, any Change
of Control.

Distributions; Repurchases of Capital Stock.

Except with respect to (i) distributions or dividends made or paid by
Subsidiaries of Borrower to Borrower, and (ii) payments made to Persons that
were shareholders of Ascent immediately prior to the closing of the Ascent
Acquisition Agreement in connection with the exercise of such shareholders’
appraisal rights, make any distribution or declare or pay any dividends (in cash
or other property, other than capital Stock) on, or purchase, acquire, redeem,
or retire any of Borrower’s capital Stock, of any class, whether now or
hereafter outstanding.

Accounting Methods. Modify or change its method of accounting or enter into,
modify, or terminate any agreement currently existing, or at any time hereafter
entered into with any third party accounting firm or service bureau for the
preparation or storage of Borrower’s accounting records without said accounting
firm or service bureau agreeing to provide Administrative Agent information
regarding the Collateral or any Loan Party’s financial condition. Borrower
waives the right to assert a confidential relationship, if any, it may have with
any accounting firm or service bureau in connection with any information
requested by Administrative Agent pursuant to or in accordance with this
Agreement, and agrees that Administrative Agent may contact directly any such
accounting firm or service bureau in order to obtain such information.

Investments. Except for Permitted Investments (as defined below), directly or
indirectly make or acquire any Investment or incur any liabilities (including
contingent obligations) for or in connection with any Investment; provided,
however, that Borrower and its Subsidiaries shall not have Permitted Investments
in deposit accounts in excess of $250,000 outstanding at any one time unless
Borrower or its Subsidiary, as applicable, and the applicable bank shall have
entered into Control Agreements governing such Permitted Investments, as
Administrative Agent shall determine in its permitted discretion, to perfect
(and further establish) the Administrative Agent’s Liens in such Permitted
Investments. As used in this Agreement, “Permitted Investments” means
(a) investments in Cash Equivalents, (b) investments in negotiable instruments
for collection, (c) advances made in connection with purchases of goods or
services in the ordinary course of business, (d) advances and deposits made to
operators under wells in connection with proposed operations at such wells,
which shall not exceed $3,000,000 in the aggregate at any time, (e) investments
set forth on Schedule 7.12, and (f) the acquisition of Oil and Gas Properties
and related oilfield equipment located thereon which is an essential component
of the then existing Hydrocarbon production, if any, of the wells on such Oil
and Gas Properties from Persons other than Affiliates of Borrower or its
Subsidiaries as long as (i) there has not occurred an Event of Default and no
Default or Event of Default could reasonably be expected to result from such
acquisition, (ii) Borrower and its Subsidiaries shall have complied with all of
the requirements of Section 6.13 with respect thereto, and (iii) neither
Borrower nor any of its Subsidiaries incurs any indebtedness, liability or other
obligation in connection with such acquisition except for prospective
liabilities for operation of such Oil and Gas Properties and plugging and
abandonment costs on such Oil and Gas Properties.

Transactions with Affiliates. Directly or indirectly enter into or permit to
exist any material transaction with any Affiliate of Borrower except for
transactions that are in the ordinary course of Borrower’s business, upon fair
and reasonable terms, that are fully disclosed to Administrative Agent, and that
are no less favorable to Borrower than would be obtained in an arm’s length
transaction with a non-Affiliate.

 

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Limited Business of Certain Subsidiaries. Borrower shall not permit, and shall
not allow any of its Subsidiaries to permit, (a) MCAC or CDC to own any assets
or owe any Indebtedness or other liabilities, (b) MCAC, CDC or Great Plains to
conduct any business or (c) Great Plains to own more than $50,000 of assets.
Borrower shall not use, and shall not permit to be used, any proceeds of the
Advances for (i) MCAC, CDC, or Great Plains to acquire any assets or pay any
indebtedness or other liabilities or (ii) MCAC, CDC, or Great Plains to conduct
any Business.

Use of Proceeds. Use the proceeds of the Term Loan B and Revolving Advances for
any purpose other than (a) to pay a portion of the consideration to be paid by
Borrower under the Ascent Acquisition Agreement and related expenses, (b) to
refinance the Existing Credit Facilities, (c) for working capital purposes,
(d) to pay off and retire the Unsecured Notes, and (e) to pay fees and expenses
incurred in connection with the Loan Documents consistent with the terms and
conditions hereof.

Change in Location of Chief Executive Offices. Relocate its chief executive
office to a new location without providing 30 days prior written notification
thereof to Administrative Agent.

No Prohibited Transactions Under ERISA. Directly or indirectly:

engage, or permit any Subsidiary of Borrower to engage, in any prohibited
transaction which is reasonably likely to result in a civil penalty or excise
tax described in Sections 406 of ERISA or 4975 of the IRC for which a statutory
or class exemption is not available or a private exemption has not been
previously obtained from the Department of Labor;

permit to exist with respect to any Benefit Plan any accumulated funding
deficiency (as defined in Sections 302 of ERISA and 412 of the IRC), whether or
not waived;

fail, or permit any Subsidiary of Borrower to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Benefit Plan;

terminate, or permit any Subsidiary of Borrower to terminate, any Benefit Plan
where such event would result in any liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate under Title IV of ERISA;

fail, or permit any Subsidiary of Borrower to fail, to make any required
contribution or payment to any Multiemployer Plan;

fail, or permit any Subsidiary of Borrower to fail, to pay any required
installment or any other payment required under Section 412 of the IRC on or
before the due date for such installment or other payment;

amend, or permit any Subsidiary of Borrower to amend, a Plan resulting in an
increase in current liability for the plan year such that either of Borrower,
any Subsidiary of Borrower or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the IRC; or

 

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withdraw, or permit any Subsidiary of Borrower to withdraw, from any
Multiemployer Plan where such withdrawal is reasonably likely to result in any
liability of any such entity under Title IV of ERISA;

which, individually or in the aggregate, results in or reasonably would be
expected to result in a claim against or liability of Borrower, any of its
Subsidiaries or any ERISA Affiliate in excess of $50,000.

Financial Covenants Fail to maintain:

Current Ratio. As of the end of any fiscal quarter of Borrower, a ratio of
Current Assets to Current Liabilities of equal to or greater than 1.00:1.00.

Interest Coverage Ratio. As of the end of any fiscal quarter of the Borrower, a
ratio of EBITDA for the four fiscal quarters then ended to Interest Expense for
the four fiscal quarters then ended of equal to or greater than:

 

As Tested on:

 

Minimum Level

December 31, 2007

  2.00:1.00

March 31, 2008

  2.25:1.00

June 30, 2008

  2.25:1.00

September 30, 2008

  2.50:1.00

December 31, 2008, and thereafter

  2.75:1.00

Maximum Leverage. As of the end of any fiscal quarter of the Borrower, a ratio
of Total Debt to EBITDA for the four fiscal quarters then ended of equal to or
less than:

 

As Tested on:

 

Maximum Level

December 31, 2007

  5.00:1.00

March 31, 2008

  5.00:1.00

June 30, 2008, and thereafter

  4.00:1.00

Asset Coverage Ratio. A ratio of NYMEX Value to Total Debt, tested as of each
Redetermination Date and at any time between such dates that the Borrowing Base
Entities acquire or dispose of Oil and Gas Properties with an aggregate NYMEX
Value equal to or greater than $1,000,000, of more than:

 

As Tested on:

 

Minimum Level

March 15, 2008

  1.50:1.00

September 15, 2008 and thereafter

  1.75:1.00

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Gas Imbalances, Take-or-Pay or Other Prepayments. Borrower shall not, and shall
not permit any of its Subsidiaries to (i) enter into any contracts or agreements
which warrant production of Hydrocarbons (other than Hedging Agreements
permitted hereunder), (ii) accept take-or-pay or other prepayments with respect
to its Oil and Gas Property Collateral which prepayments would require such
Person to deliver Hydrocarbons produced from such Oil and Gas Property at some
future time without then or thereafter receiving full payment therefor to
exceed, during any monthly period, five percent (5%) of the current aggregate
monthly gas production for such monthly period from the Oil and Gas Property
Collateral, (iii) permit, during any month, an imbalance in Borrower’s and its
Subsidiaries’ (on a consolidated basis) net gas production, which imbalance
exceeds 5% of Borrower’s and its Subsidiaries’ current aggregate monthly gas
production for such month.

Unsecured Notes. Use, or permit to be used, any of the proceeds of any Advances
to make any payment of principal or interest on the Unsecured Notes; provided,
however, that:

(i) Borrower may pay when due or pre-pay the Unsecured Notes, from time to time
and in whole or in part, in an aggregate principal amount not to exceed
$28,396,000 plus the associated call premium as set forth in the Unsecured Notes
Indenture as long as no Default or Event of Default then exists or reasonably
could be expected to result therefrom;

(ii) Borrower may use proceeds of Advances to make regularly scheduled payments
of interest on the Unsecured Notes as long as no Default or Event of Default
then exists or reasonably could be expected to result therefrom; and

(iii) Neither Borrower nor any of its Subsidiaries shall enter into any
amendment, modification, alteration, increase, or change which would (i) change
any provision relating to guaranties of the Unsecured Notes (other than the
termination thereof), or (ii) provide for any collateral to secure the Unsecured
Notes.

Hedging Agreements and Material Agreements.

Enter into or maintain any Hedging Agreement, other than Hedging Agreements
entered into in the ordinary course of business to hedge or mitigate risks to
which Borrower is exposed in the conduct of its business or the management of it
liabilities to the extent permitted under Section 0.

Not alter (or permit any Subsidiary of Borrower to alter) any Material Contract
relating to the Oil and Gas Property Collateral except for alterations in the
ordinary course of business which could not reasonably be expected to result in
a Material Adverse Change.

Non-Consent Operations. Become a non-consenting party with respect to any
operations under any operating agreement, unit agreement, governmental order or
otherwise associated with any Oil and Gas Property nor waive any right relating
to any of the Oil and Gas Properties other than waivers and consents relating to
immaterial easements, rights of way and other similar rights except in
connection with the release of oil and gas leases on Oil and Gas Properties on
which there is no commercial production and the right to elect not to
participate in operations on producing Oil and Gas Properties where such
non-consent election is deemed prudent by Borrower.

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Contracts for Sale of Production. Enter into, renew, extend or continue beyond
its original scheduled maturing date any contract for the sale of Hydrocarbons
or other products produced from the Oil and Gas Properties except such contracts
of 10 years or less duration, provided the sale price under such contract is
determined with reference to (i) the spot, posted or other published price for
the appropriate category of oil or gas covered by such contract for such month
in which production is sold, or (ii) the resale price, in the case of a
percentage of proceeds contract, and such contract does not require sales of
minimum quantities by Borrower or any of its Subsidiaries, involve any advance
payments or other advances to or by Borrower or any of its Subsidiaries, or
constitute Indebtedness or otherwise involve any material undertaking by
Borrower or any of its Subsidiaries.

EVENTS OF DEFAULT. Any one or more of the following events shall constitute an
event of default (each, an “Event of Default”) under this Agreement:

If Borrower or any other Loan Party fails to pay when due and payable or when
declared due and payable, any portion of the Obligations (whether of principal,
interest (including any interest which, but for the provisions of the Bankruptcy
Code, would have accrued on such amounts), fees and charges due the Lender
Group, reimbursement of Lender Group Expenses, or other amounts constituting
Obligations); provided, however, that in the case of Overadvances that are
caused by the charging of interest, fees or Lender Group Expenses to the Loan
Account (or that would have been caused by the charging of interest on the Term
Loan B that was instead added to the outstanding principal balance of the Term
Loan B pursuant to Section 2.6(e)), such event shall not constitute an Event of
Default if, within five (5) Business Days of incurring such Overadvance (or
increase to the outstanding principal balance of Term Loan B), Borrower or any
other Loan Party repays, or otherwise eliminates such Overadvance (or increase
to the outstanding principal balance of Term Loan B);

(i) If Borrower fails or neglects to perform, keep, or observe any term,
provision, condition, covenant, or agreement contained in Sections 6.1
(Financial Reporting), 6.2 (Collateral Reporting), 6.3 (Notices of Material
Events), 6.9 (Compliance with Laws), 6.11 (Employee Benefits), or 6.17
(Unsecured Notes Indenture and Unsecured Notes) of this Agreement and such
failure continues for a period of five (5) Business Days; or (ii) if Borrower or
any other Loan Party fails or neglects to perform, keep, or observe any other
term, provision, condition, covenant, or agreement contained in this Agreement,
or in any of the other Loan Documents (giving effect to any grace periods, cure
periods, or required notices, if any, expressly provided for in such Loan
Documents); in each case, other than any such term, provision, condition,
covenant, or agreement that is the subject of another provision of this
Section 8, in which event such other provision of this Section 8 shall govern;
provided that, during any period of time that any such failure or neglect of
Borrower or such other Loan Party referred to in this paragraph exists, even if
such failure or neglect is not yet an Event of Default by virtue of the
existence of a grace or cure period or the pre-condition of the giving of a
notice, neither Administrative Agent nor any Lender shall be required during
such period to make Advances to Borrower;

If there is a Material Adverse Change;

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If any material portion of Borrower’s or any other Loan Party’s properties or
assets is attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes into the possession of any third Person;

If an Insolvency Proceeding is commenced by Borrower or any other Loan Party;

If an Insolvency Proceeding is commenced against Borrower or any other Loan
Party and any of the following events occur: (i) Borrower or such Loan Party, as
the case may be, consents to the institution of the Insolvency Proceeding
against it; (ii) the petition commencing the Insolvency Proceeding is not timely
controverted; (iii) the petition commencing the Insolvency Proceeding is not
dismissed within 45 calendar days of the date of the filing thereof; provided,
however, that, during the pendency of such period, Administrative Agent and any
member of the Lender Group shall be relieved of its obligation to extend credit
hereunder; (iv) an interim trustee is appointed to take possession of all or a
substantial portion of the properties or assets of, or to operate all or any
substantial portion of the business of, Borrower or such Loan Party, as the case
may be; or (v) an order for relief shall have been issued or entered therein;

If Borrower or any other Loan Party is enjoined, restrained, or in any way
prevented by court order from continuing to conduct all or any material part of
its business affairs;

If a notice of Lien, levy, or assessment is filed of record with respect to any
of Borrower’s or any other Loan Party’s properties or assets by the United
States Government, or any department, agency, or instrumentality thereof, or by
any state, county, municipal, or governmental agency, or if any taxes or debts
owing at any time hereafter to any one or more of such entities becomes a Lien,
whether choate or otherwise, upon any of Borrower’s or any other Loan Party’s
properties or assets and the same is not paid on the payment date thereof;

If a judgment or other claim becomes a Lien or encumbrance upon any material
portion of Borrower’s or any other Loan Party’s properties or assets;

If there is (i) a default in any material agreement (including the Unsecured
Notes or the Unsecured Notes Indenture) to which Borrower or any other Loan
Party is a party with one or more third Persons and such default (A) occurs at
the final maturity of the obligations thereunder, or (B) results in a right by
such third Person(s), irrespective of whether exercised, to accelerate the
maturity of Borrower’s or any other Loan Party’s obligations thereunder, to
terminate such agreement, or to refuse to renew such agreement pursuant to an
automatic renewal right therein, or (ii) any payment default under the Unsecured
Notes or the Unsecured Notes Indenture;

If Borrower or any other Loan Party makes any payment on account of Indebtedness
that has been contractually subordinated in right of payment to the payment of
the Obligations, except to the extent such payment is permitted by the terms of
the subordination provisions applicable to such Indebtedness;

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If any material misstatement or misrepresentation exists now or hereafter in any
warranty, representation, statement, or report made to the Lender Group by
Borrower or any other Loan Party or any officer, employee, agent, or director of
Borrower or any other Loan Party, or if any such warranty or representation is
withdrawn;

If the obligation of any Guarantor under its Guaranty Agreement or under any
Loan Document is limited or terminated by operation of law or by such Guarantor
thereunder;

If this Agreement or any other Loan Document that purports to create a Lien,
shall, for any reason, fail or cease to create a valid and perfected and, except
to the extent permitted by the terms hereof or thereof, first priority Lien on
or security interest in the Collateral covered hereby or thereby; or

If Borrower or any of its Subsidiaries makes any payment of principal or
interest on the Unsecured Notes, other than payments permitted under
Section 7.20 of this Agreement; or

Any provision of any Loan Document shall at any time for any reason be declared
to be null and void, or the validity or enforceability thereof shall be
contested by Borrower or any other Loan Party, or a proceeding shall be
commenced by Borrower or any other Loan Party, or by any Governmental Authority
having jurisdiction over Borrower or any other Loan Party, seeking to establish
the invalidity or unenforceability thereof, or Borrower or any other Loan Party
shall deny that Borrower or any other Loan Party has any liability or obligation
purported to be created under any Loan Document.

THE LENDER GROUP’S RIGHTS AND REMEDIES.

Rights and Remedies.

Upon the occurrence of an Event of Default under Sections 8(e) or 8(f), the
unpaid principal amount of all outstanding Advances, interest, Letters of Credit
and other amounts payable under the Loan Documents (other than Lender Hedging
Agreements) shall automatically become due and payable without further act of
Administrative Agent, and in each case without presentment, demand, protest,
notice of intention to accelerate, notice of acceleration or any other notice of
any kind, all of which are hereby expressly waived by Borrower.

Upon the occurrence, and during the continuation, of any other Event of Default
other than under Section 8(e) or 8(f), the Required Lenders (at their election
but without notice of their election and without demand) may authorize and
instruct Administrative Agent (and Administrative Agent, acting upon the
instructions of the Required Lenders, shall do the same on behalf of the Lender
Group), to declare all Obligations, whether evidenced by this Agreement, by any
of the other Loan Documents, or otherwise, immediately due and payable.

Upon the occurrence, and during the continuation, of any Event of Default, the
Required Lenders (at their election but without notice of their election and
without demand) may authorize and instruct Administrative Agent (and
Administrative Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), to do any of the following,
all of which are authorized by Borrower:

Cease advancing money or extending credit to or for the benefit of Borrower
under this Agreement, under any of the Loan Documents, or under any other
agreement between Borrower and the Lender Group;

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Terminate this Agreement and any of the other Loan Documents as to any future
liability or obligation of the Lender Group, but without affecting
Administrative Agent’s rights and security interests, for the benefit of the
Lender Group, in the Collateral and without affecting the Obligations;

Without notice to Borrower (such notice being expressly waived), and without
constituting a retention of any collateral in satisfaction of an obligation
(within the meaning of the Code), set off and apply to the Obligations any and
all (i) balances and deposits of Borrower held by the Lender Group, or
(ii) indebtedness at any time owing to or for the credit or the account of
Borrower held by the Lender Group; and

Hold, as cash collateral, any and all balances and deposits of Borrower held by
the Lender Group, to secure the full and final repayment of all of the
Obligations.

The Administrative Agent and Lender Group shall have all other rights and
remedies available to it at law or in equity pursuant to any other Loan
Documents.

Remedies Cumulative. The rights and remedies of the Lender Group under this
Agreement, the other Loan Documents, and all other agreements shall be
cumulative. The Lender Group shall have all other rights and remedies not
inconsistent herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be deemed an election,
and no waiver by the Lender Group of any Event of Default shall be deemed a
continuing waiver. No delay by the Lender Group shall constitute a waiver,
election, or acquiescence by it. Nothing in this Agreement in any way limits,
impairs or reduces any rights of the Lender Group under the Mortgages or any of
the other Loan Documents.

Lender Directed Remedies

Upon the occurrence and during the continuance of an Event of Default,
Administrative Agent shall (and is hereby authorized by the Parties hereto), on
or after the date that is 120 days after its receipt of written demand by the
Required Term Loan B Lenders (a copy of such written demand to be simultaneously
delivered to the Revolver Lenders), accelerate the maturity of the Obligations
and promptly commence and diligently pursue in good faith the exercise of its
enforcement rights or remedies against, and take action to enforce its Liens on,
the Collateral so long as Administrative Agent is permitted to exercise such
rights and remedies by the terms of the Loan Documents (excluding any
restriction based upon authorization by Required Lenders or any other vote of
the entire Lender Group) or under applicable law (including, without limitation,
any or all of the following: solicitation of bids from third parties to conduct
the liquidation of all or a material portion of Collateral, the engagement or
retention of sales brokers, marketing agents, investment bankers, accountants,
appraisers, auctioneers or

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other third parties for the purposes of valuing, marketing, promoting, and
selling a material portion of the Collateral, the opposition of the use of cash
collateral or sale of assets in an Insolvency Proceeding, seeking to obtain
relief from any stay imposed by applicable law governing an Insolvency
Proceeding, the commencement of any action to foreclose on its Lien on all or
any material portion of the Collateral, notification of account debtors to make
payments to Administrative Agent or its agents, any action to take possession of
all or any material portion of the Collateral or commencement of any legal
proceedings or actions against or with respect to all or any material portion of
the Collateral), provided that (A) such Event of Default has not been waived or
cured, (B) in the good faith determination of Administrative Agent, taking such
action is permitted under the terms of the Loan Documents and applicable law,
(C) Administrative Agent shall be entitled to all of the benefits of
Section 17.7 of the Loan Agreement in connection with taking such enforcement
action, and (D) Administrative Agent shall not be required to take any such
enforcement action so long as Administrative Agent shall appoint promptly (with
the consent of Required Lenders) a Term Loan B Lender holding a Pro-Rata Share
equal to or greater than each of the other Term Loan B Lenders as its agent, for
the benefit of the holders of all Obligations, and such Term Loan B Lender
agrees to serve in such capacity for Administrative Agent (the “Term Loan B
Agent”) for purposes limited to exercising the rights of Administrative Agent to
take such enforcement action with respect to the Collateral. Any such action
shall be taken by Administrative Agent (or the Term Loan B Agent, as applicable)
to realize a commercially reasonable value from the Collateral within a
commercially reasonable time.

Upon the occurrence and during the continuance of any Event of Default,
Administrative Agent shall (and is hereby authorized by the Parties hereto),
within 120 days of the date of its receipt of a written demand from the Required
Revolver Lenders (a copy of such written demand to be simultaneously delivered
to the Term Loan B Lenders), accelerate the maturity of the Obligations and
promptly commence and diligently pursue in good faith the exercise of its
enforcement rights or remedies against, and take action to enforce its Liens on,
the Collateral so long as Administrative Agent is permitted to exercise such
rights and remedies by the terms of the Loan Documents (excluding any
restriction based upon authorization by Required Lenders or any other vote of
the entire Lender Group) or under applicable law (including, without limitation,
any or all of the following: solicitation of bids from third parties to conduct
the liquidation of all or a material portion of Collateral, the engagement or
retention of sales brokers, marketing agents, investment bankers, accountants,
appraisers, auctioneers or other third parties for the purposes of valuing,
marketing, promoting, and selling a material portion of the Collateral, the
opposition of the use of cash collateral or sale of assets in an Insolvency
Proceeding, seeking to obtain relief from any stay imposed by applicable law
governing an Insolvency Proceeding, the commencement of any action to foreclose
on its Lien on all or any material portion of the Collateral, notification of
account debtors to make payments to Administrative Agent or its agents, any
action to take possession of all or any material portion of the Collateral or
commencement of any legal proceedings or actions against or with respect to all
or any material portion of the Collateral), provided that (A) such Event of
Default has not been waived or cured, (B) in the good faith determination of
Administrative Agent, taking such action is permitted under the terms of the
Loan Documents and applicable law, (C) Administrative Agent shall be entitled to
all of the benefits of Section 17.7 of the Loan Agreement in connection with
taking such enforcement action, and (D) Administrative Agent shall not be
required to take any such enforcement action so long as Administrative Agent
shall

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appoint promptly (with the consent of Required Lenders) a Revolving Lender
holding a Pro-Rata Share of the Revolver Commitment (or, if the Revolver
Commitment has been terminated or the maturity of the Revolver Advances has been
accelerated, the aggregate principal balance of the Revolver Advances then
outstanding) equal to or greater than each of the other Revolving Lenders as its
agent, for the benefit of the holders of all Obligations, and such Revolving
Lender agrees to serve in such capacity for Administrative Agent (the “Revolver
Agent”) for purposes limited to exercising the rights of Administrative Agent to
take such enforcement action with respect to the Collateral. Any such action
shall be taken by Administrative Agent (or the Revolver Agent, as applicable) to
realize a commercially reasonable value from the Collateral within a
commercially reasonable time.

TAXES AND EXPENSES. If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased properties or assets,
rents or other amounts payable under such leases) due to third Persons, or fails
to make any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, to the extent that
Administrative Agent determines that such failure by Borrower could result in a
Material Adverse Change, in its discretion and without prior notice to Borrower,
Administrative Agent may do any or all of the following: (a) make payment of the
same or any part thereof; (b) set up such reserves in Borrower’s Loan Account as
Administrative Agent deems necessary to protect the Lender Group from the
exposure created by such failure; or (c) obtain and maintain insurance policies
of the type described in Section 6.8, and take any action with respect to such
policies as Administrative Agent deems prudent. Any such amounts paid by
Administrative Agent shall constitute Lender Group Expenses. Any such payments
made by Administrative Agent shall not constitute an agreement by the Lender
Group to make similar payments in the future or a waiver by the Lender Group of
any Event of Default under this Agreement. Administrative Agent need not inquire
as to, or contest the validity of, any such expense, tax, or Lien and the
receipt of the usual official notice for the payment thereof shall be conclusive
evidence that the same was validly due and owing.

EXPENSES; INDEMNIFICATION; DAMAGE WAIVER.

Costs and Expenses. Borrower shall pay (i) all reasonable out-of-pocket expenses
incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent) in connection with the initial syndication of the credit facilities
provided for herein, the preparation, negotiation, execution, delivery and
administration of this Agreement and the other Loan Documents or any amendments,
modifications or waivers of the provisions hereof or thereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by the Issuing Lender in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, any Lender or the Issuing Lender (including the
fees, charges and disbursements of any counsel for the Administrative Agent, any
Lender or the Issuing Lender) in connection with the enforcement or protection
of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection with
the Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

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Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent (and any sub-agent thereof), each Lender and the Issuing 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 any
Indemnitee or asserted against any Indemnitee by any third party or by the
Borrower or any other Loan Party arising out of, in connection with, or as a
result of (i) the execution or delivery of this Agreement, any other Loan
Document or any agreement or instrument contemplated hereby or thereby, the
performance by the parties hereto of their respective obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the Issuing Lender to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third
party or by the Borrower or any other Loan Party, and regardless of whether any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses (x) 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 or (y) result from a claim
brought by the Borrower or any other Loan Party against an Indemnitee for breach
in bad faith of such Indemnitee’s obligations hereunder or under any other Loan
Document, if the Borrower or such Loan Party has obtained a final and
nonappealable judgment in its favor on such claim as determined by a court of
competent jurisdiction.

Reimbursement by Lenders. To the extent that the Borrower for any reason fails
to indefeasibly pay any amount required under Section 11.1 or 11.2 to be paid by
it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender or
any Related Party of any of the foregoing, each Lender severally agrees to pay
to the Administrative Agent (or any such sub-agent), the Issuing Lender or such
Related Party, as the case may be, such Lender’s Pro Rata Share (determined as
of the time that the applicable unreimbursed expense or indemnity payment is
sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may
be, was incurred by or asserted against the Administrative Agent (or any such
sub-agent) or the Issuing Lender in its capacity as such, or against any Related
Party of any of the foregoing acting for the Administrative Agent (or any such
sub-agent) or Issuing Lender in connection with such capacity. The obligations
of the Lenders under this paragraph (c) are subject to the provisions of
Section 17.17.

Consequential Damages, etc. To the fullest 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, the transactions contemplated
hereby or thereby, any Loan or Letter of Credit or the use of the proceeds
thereof. No Indemnitee referred to in paragraph (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or
other information transmission systems in connection with this Agreement or the
other Loan Documents or the transactions contemplated hereby or thereby.

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Payments. All amounts due under this Section shall be payable no later than ten
(10) Business Days after demand therefor.

NOTICES.

Notices Generally. Unless otherwise provided in this Agreement, all notices or
demands by any party relating to this Agreement or any other Loan Document shall
be in writing and (except for financial statements and other informational
documents which may be sent by first-class mail, postage prepaid) shall be
personally delivered or sent by registered or certified mail (postage prepaid,
return receipt requested), overnight courier, or telecopier to the relevant
party at its address set forth below:

 

If to Borrower:    RAM ENERGY RESOURCES, INC.    Meridian Tower, Suite 650   
5100 East Skelly Drive    Tulsa, Oklahoma 74135    Attn: Larry E. Lee    Fax
No.: 918 663-9214 with copies to:    MCAFEE & TAFT    10th Floor, Two Leadership
Square    211 North Robinson    Oklahoma City, Oklahoma 73102-7103    Attn: C.
David Stinson, Esq.    Fax No.: 405 235-0439 If to Administrative    GUGGENHEIM
CORPORATE FUNDING Agent or the Lender    135 East 57th Street, 7th Floor Group
in care of    New York, New York 10022 Administrative Agent:    Attn: Kaitlin
Trihn    Fax No.: 212 644-8396 with copies to:    GUGGENHEIM CORPORATE FUNDING
   1301 McKinney, Suite 3105    Houston, Texas 77010    Attn: Daniel Van Loh   
Fax No.: 713 300-1339    HAYNES AND BOONE, LLP    1221 McKinney Street, Suite
2100    Houston, Texas 77010-2007    Attn: Buddy Clark    Fax No. 713 236-5577

Notices sent by hand or overnight courier service, or mailed by certified or
registered mail, shall be deemed to have been given when received; notices sent
by telecopier shall be deemed to have been given when sent (except that, if not
given during normal business hours for the recipient, shall be deemed to have
been given at the opening of business on the next business day for the
recipient). Notices delivered through electronic communications to the extent
provided in Section 12.2 below, shall be effective as provided in said
Section 12.2.

 

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Electronic Communications. Notices and other communications to the Lenders and
the Issuing Lender hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or the Issuing Lender pursuant to
Article II if such Lender or the Issuing Lender, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. 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. Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be deemed
received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or
other communication is not sent during the normal business hours of the
recipient, such notice or communication shall be deemed to have been sent at the
opening of business on the next business day for the recipient, and (ii) notices
or communications posted to an Internet or intranet website shall be deemed
received upon the deemed receipt by the intended recipient at its e-mail address
as described in the foregoing clause (i) of notification that such notice or
communication is available and identifying the website address therefor.

Change of Address, etc. Any party hereto may change its address or telecopier
number for notices and other communications hereunder by notice to the other
parties hereto.

CHOICE OF LAW AND VENUE; SERVICE OF PROCESS; JURY TRIAL WAIVER.

THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY
PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN
DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS
ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED
UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.

THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN
THE STATE AND FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW
YORK, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT’S OPTION, IN THE COURTS OF
ANY JURISDICTION WHERE AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH
COLLATERAL OR OTHER PROPERTY MAY BE FOUND. BORROWER AND THE LENDER GROUP WAIVE,
TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT
THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO

 

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VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS
SECTION 13. BORROWER HEREBY IRREVOCABLY DESIGNATES CT CORPORATION SYSTEMS WITH
OFFICES AT 111 EIGHTH AVENUE, 13th FLOOR, NEW YORK, NEW YORK 10011, AS THE
DESIGNEE, APPOINTEE AND AGENT OF BORROWER TO RECEIVE, FOR AND ON BEHALF OF
BORROWER, SERVICE OF PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD THAT A
COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY FORWARDED BY
OVERNIGHT COURIER TO BORROWER AT ITS ADDRESS SET FORTH IN THE PREAMBLE TO THIS
AGREEMENT, BUT THE FAILURE OF BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN
ANY WAY THE SERVICE OF SUCH PROCESS. IN THE EVENT THAT CT CORPORATION SYSTEM
RESIGNS OR CEASES TO SERVE AS THE BORROWER’S AGENT FOR SERVICE OF PROCESS
HEREUNDER, BORROWER AGREES FORTHWITH (i) TO DESIGNATE ANOTHER AGENT FOR SERVICE
OF PROCESS IN NEW YORK, NEW YORK; AND (ii) TO GIVE PROMPT WRITTEN NOTICE TO THE
LENDER GROUP OF THE NAME AND ADDRESS OF SUCH AGENT. BORROWER FURTHER 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 BORROWER AT ITS SAID ADDRESS. BORROWER AND
THE LENDER GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS
OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.
BORROWER AND THE LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

DESTRUCTION OF BORROWER’S DOCUMENTS. All documents, schedules, invoices, agings,
or other papers delivered to any one or more members of the Lender Group may be
destroyed or otherwise disposed of by such member of the Lender Group four
(4) months after they are delivered to or received by such member of the Lender
Group, unless Borrower requests, in writing, the return of said documents,
schedules, or other papers and makes arrangements, at Borrower’s expense, for
their return.

SUCCESSORS AND ASSIGNS.

Successors and Assigns Generally. 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 neither the Borrower nor
any other Loan Party may assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of the Administrative
Agent and no Lender may assign or otherwise transfer any of its rights or

 

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obligations hereunder except (i) to an assignee in accordance with the
provisions of Section 15.2, (ii) by way of participation in accordance with the
provisions of Section 15.4 or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of Section 15.6 (and any other attempted
assignment or transfer by any party hereto shall be null and void). 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 15.4 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.

Assignments by Lenders. Any Lender may at any time 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); provided that any such assignment shall be subject to the following
conditions:

Minimum Amounts.

in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment and the Loans at the time owing to it or in the case of an
assignment to a Lender, an Affiliate of a Lender or a Related Fund, no minimum
amount need be assigned; and

in any case not described in Section 15.2(a)(i), the aggregate amount of the
Commitment (which for this purpose includes Loans outstanding thereunder) or, if
the applicable Commitment is not then in effect, the principal outstanding
balance of the 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 or, if “Trade Date” is
specified in the Assignment and Assumption, as of the Trade Date) shall not be
less than $5,000,000, unless each of the Administrative Agent and, so long as no
Event of Default has occurred and is continuing, the Borrower otherwise consents
(each such consent not to be unreasonably withheld or delayed).

Proportionate Amounts. 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 with respect to the Loan or the Commitment assigned.

Required Consents. No consent shall be required for any assignment except to the
extent required by Section 15.2(a)(ii) and, in addition:

the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (A) an Event of Default has occurred and is
continuing at the time of such assignment or (B) such assignment is to a Lender,
an Affiliate of a Lender or a Related Fund;

the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required if such assignment is to a Person that is
not a Lender, an Affiliate of such Lender or a Related Fund with respect to such
Lender; and

 

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the consent of the Issuing Lender (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation
of the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding).

Assignment and Assumption. 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 $5,000, and the assignee, if it is not a
Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

No Assignment to Borrower. No such assignment shall be made to the Borrower or
any of the Borrower’s Affiliates or Subsidiaries.

No Assignment to Natural Persons. No such assignment shall be made to a natural
person.

Register. The Administrative Agent, acting solely 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 Commitments of, and principal amounts of
the Loans owing to, each Lender pursuant to the terms hereof from time to time
(the “Register”). The entries in the Register shall be conclusive, and the
Borrower, the Administrative Agent 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.

Participations. Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower’s Affiliates
or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s
rights and/or obligations under this Agreement (including all or a portion of
its Commitment and/or the Loans owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Lenders,
and Issuing Lender shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement.

Limitations Upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Sections 4.1 and 4.2 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 4.2 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 4.2(e) as though it were a Lender.

 

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Certain Pledges. 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; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.

AMENDMENTS; WAIVERS.

Amendments and Waivers. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than the Fee Letter), and no consent
with respect to any departure by Borrower therefrom, shall be effective unless
the same shall be in writing and signed by the Required Lenders (or by
Administrative Agent at the written request of the Required Lenders) and
Borrower and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that no such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and Borrower and acknowledged by Administrative Agent,
do any of the following:

except as provided in Section 2.17, increase or extend the Commitment of any
Lender;

postpone or delay any date fixed by this Agreement, including without limitation
under Section 2.4, or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of them) hereunder or
under any other Loan Document;

reduce the principal of, or the rate of interest specified herein on any Loan,
or any fees or other amounts payable hereunder or under any other Loan Document;

change the percentage of the Commitments or Obligations, as the case may be,
that is required for the Lenders or any of them to take any action hereunder;

amend this Section or any provision of the Agreement providing for consent or
other action by all Lenders;

release, or contractually subordinate any of the Administrative Agent’s Liens
on, Collateral other than as permitted by Section 17.11;

change the definition of “Required Lenders,” “Required Revolver Lenders,”
“Required Term Loan B Lenders,” or “Pro Rata Share;”

release Borrower or any Guarantor from any Obligation for the payment of money;

change the definitions of Availability, Borrowing Base, Maximum Facility Amount,
Maximum Revolver Amount, NYMEX Price, NYMEX Value, or Term Loan B Amount, or the
last sentence of Section 2.1(a); or

amend any of the provisions of this Section 16.1 or Section 17.

 

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and, provided further, however, that no amendment, waiver or consent shall,
unless in writing and signed by Administrative Agent, affect the rights or
duties of Administrative Agent under this Agreement or any other Loan Document.
The foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of or with respect to any provision of this Agreement or
any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrower, shall not require consent by or the agreement of Borrower. At the time
of any amendment to this Agreement, Administrative Agent may require from
Borrower an opinion from counsel to the Loan Parties that each such Person is
authorized to execute such amendment, and that such amendment is enforceable.

No Waivers; Cumulative Remedies. No failure by Administrative Agent or any
Lender to exercise any right, remedy, or option under this Agreement, any other
Loan Document, or any present or future supplement hereto or thereto, or in any
other agreement between or among Borrower and Administrative Agent or any
Lender, or delay by Administrative Agent or any Lender in exercising the same,
will operate as a waiver thereof. No waiver by Administrative Agent or any
Lender will be effective unless it is in writing, and then only to the extent
specifically stated. No waiver by Administrative Agent or the Lenders on any
occasion shall affect or diminish Administrative Agent’s and each Lender’s
rights thereafter to require strict performance by Borrower of any provision of
this Agreement. Administrative Agent’s and each Lender’s rights under this
Agreement and the other Loan Documents will be cumulative and not exclusive of
any other right or remedy which Administrative Agent or any Lender may have.

Replacement of Holdout Lender.

If any action to be taken by the Lender Group or Administrative Agent hereunder
requires the unanimous consent, authorization, or agreement of all Lenders and
has been approved by Required Lenders, and a Lender (“Holdout Lender”) fails to
give its consent, authorization, or agreement, then Administrative Agent, upon
at least five (5) Business Days prior irrevocable notice to the Holdout Lender,
may permanently replace the Holdout Lender with one or more substitute Lenders
(each, a “Replacement Lender”), and the Holdout Lender shall have no right to
refuse to be replaced hereunder. Such notice to replace the Holdout Lender shall
specify an effective date for such replacement, which date shall not be later
than 15 Business Days after the date such notice is given.

Prior to the effective date of such replacement, the Holdout Lender and each
Replacement Lender shall execute and deliver an Assignment and Assumption,
subject only to the Holdout Lender being repaid its share of the outstanding
Obligations (including an assumption of its Pro Rata Share of the Letters of
Credit) without any premium or penalty of any kind whatsoever. If the Holdout
Lender shall refuse or fail to execute and deliver any such Assignment and
Assumption prior to the effective date of such replacement, the Holdout Lender
shall be deemed to have executed and delivered such Assignment and Assumption.
The

 

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replacement of any Holdout Lender shall be made in accordance with the terms of
Section 15.1. Until such time as the Replacement Lenders shall have acquired all
of the Obligations, the Commitments, and the other rights and obligations of the
Holdout Lender hereunder and under the other Loan Documents, the Holdout Lender
shall remain obligated to make the Holdout Lender’s Pro Rata Share of Advances
and to purchase a participation in each Letter of Credit, in an amount equal to
its Pro Rata Share of such Letter of Credit.

AGENT; THE LENDER GROUP.

Appointment and Authorization of Administrative Agent. Each Lender hereby
designates and appoints GCF as its representative under this Agreement and the
other Loan Documents and each Lender hereby irrevocably authorizes
Administrative Agent to take such action on its behalf under the provisions of
this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to Administrative Agent by the
terms of this Agreement or any other Loan Document, together with such powers as
are reasonably incidental thereto. Administrative Agent agrees to act as such on
the express conditions contained in this Section 17. The provisions of this
Section 17 are solely for the benefit of Administrative Agent and the Lenders,
and no Loan Party shall have rights as a third party beneficiary of any of the
provisions contained herein. Any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document notwithstanding, Administrative
Agent shall not have any duties or responsibilities, except those expressly set
forth herein, nor shall Administrative Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against Administrative
Agent; it being expressly understood and agreed that the use of the word
“Administrative Agent” is for convenience only, that the Persons serving in such
capacity are merely the representatives of the Lenders, and have only the
contractual duties set forth herein. Except as expressly otherwise provided in
this Agreement, Administrative Agent shall have and may use its sole discretion
with respect to exercising or refraining from exercising any discretionary
rights or taking or refraining from taking any actions which Administrative
Agent is expressly entitled to take or assert under or pursuant to this
Agreement and the other Loan Documents, and Administrative Agent shall not be
required to take any action that, in its reasonable opinion or the reasonable
opinion of its counsel, may expose Administrative Agent to liability or that is
contrary to any Loan Document or applicable law. Without limiting the generality
of the foregoing, or of any other provision of the Loan Documents that provides
rights or powers to Administrative Agent, Lenders agree that Administrative
Agent shall have the right to exercise the following powers as long as this
Agreement remains in effect: (a) maintain, in accordance with its customary
business practices, ledgers and records reflecting the status of the Advances,
the Letters of Credit, the Collateral, the Collections, and related matters;
(b) execute or file any and all financing or similar statements or notices,
amendments, renewals, supplements, documents, instruments, proofs of claim,
notices and other written agreements with respect to the Loan Documents;
(c) make Advances and Letters of Credit for itself or on behalf of Lenders as
provided in the Loan Documents; (d) exclusively receive, apply, and distribute
the Collections as provided in the Loan Documents; (e) open and maintain such
bank accounts, cash management accounts and lock boxes as Administrative Agent
deems necessary and appropriate in accordance with the Loan Documents for the
foregoing purposes with respect to the Collateral and the Collections;
(f) perform, exercise, and enforce any and all other rights and remedies of the
Lender Group with respect to Borrower, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in the Loan
Documents; and (g) incur and pay such Lender Group Expenses as Administrative
Agent may deem necessary or appropriate for the performance and fulfillment of
its functions and powers pursuant to the Loan Documents.

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Delegation of Duties. Except as otherwise provided in this Article,
Administrative Agent may execute any of its duties under this Agreement or any
other Loan Document by or through agents, employees or attorneys-in-fact and
shall be entitled to advice of counsel concerning all matters pertaining to such
duties. Administrative Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects as long as such
selection was made in compliance with this Article and without gross negligence
or willful misconduct.

Liability and Responsibility of Agents.

None of the Agent-Related Persons shall (i) be liable for any action taken or
omitted to be taken by any of them under or in connection with this Agreement or
any other Loan Document or the transactions contemplated hereby (except for its
own gross negligence or willful misconduct), or (ii) be responsible in any
manner to any of the Lenders for any recital, statement, representation or
warranty made by Borrower or any Subsidiary or Affiliate of Borrower, or any
officer or director thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by Administrative Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of Borrower or any other party to any Loan Document
to perform its obligations hereunder or thereunder. No Agent-Related Person
shall be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the Books or
properties of Borrower or the books, records or properties of Borrower’s
Subsidiaries or Affiliates.

Notwithstanding anything to the contrary set forth herein, none of “syndication
agent,” “documentation agent,” “book manager,” or “arranger,” as may be listed
on the cover page hereof shall have any powers, duties, responsibilities or
liabilities under this Agreement or any of the other Loan Documents, except in
its capacity, as applicable, as the Administrative Agent, a Lender or an Issuing
Lender hereunder.

Reliance by Administrative Agent. Administrative Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing, resolution,
notice, consent, certificate, affidavit, letter, telegraph, facsimile, telex or
telephone message, statement or other document or conversation believed by it to
be genuine and correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal counsel (including
counsel to Borrower or counsel to any Lender), independent accountants and other
experts selected by Administrative Agent. Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless Administrative Agent shall first receive such advice
or concurrence of the Lenders as it deems appropriate. If Administrative Agent
so requests, it shall first be indemnified to its reasonable satisfaction by
Lenders against any and all liability and expense that may be incurred by it by
reason of taking or continuing to take any such action. Administrative Agent
shall in all cases be fully protected in acting, or in refraining from acting,
under this Agreement or any other Loan Document in accordance with a request or
consent of the Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.

Notice of Default or Event of Default. Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal, interest,
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Agent for the account of the Lenders, except with respect to Defaults or Events
of Default of which Administrative Agent has actual knowledge, unless
Administrative Agent shall have received written notice from a Lender or
Borrower referring to this Agreement, describing such Default or Event of
Default, and stating that such notice is a “notice of default.” Administrative
Agent promptly will notify the Lenders of its receipt of any such notice or of
any Default or Event of Default of which Administrative Agent has actual
knowledge. If any Lender obtains actual knowledge of any Default or Event of
Default, such Lender promptly shall notify the other Lenders and Administrative
Agent of such Default or Event of Default. Each Lender shall be solely
responsible for giving any notices to its Participants, if any. Subject to
Section 17.4, Administrative Agent shall take such action with respect to such
Default or Event of Default as may be requested by the Required Lenders in
accordance with Section 9; provided, however, that if an event occurs or a
circumstance exists that materially and imminently threatens the ability of
Administrative Agent and the Lenders to realize upon any material part of the
Collateral, such as, without limitation, fraudulent removal, concealment or
abscondment thereof, destruction (other than to the extent covered by insurance)
or material waste thereof, or failure of Borrower after reasonable demand to
maintain or reinstate adequate casualty insurance coverage with respect thereto,
Administrative Agent may take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable.

Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons
has made any representation or warranty to it, and that no act by Administrative
Agent hereinafter taken, including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any representation or
warranty by any Agent-Related Person to any Lender. Each Lender represents to
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document, and all applicable bank regulatory laws relating to
the transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to Borrower. Each Lender also represents
that it will, independently and without reliance upon any Agent-Related Person
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower and any other Person (other than the Lender Group)
party to a Loan Document. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by Administrative
Agent, Administrative Agent shall not have any duty or responsibility to provide
any Lender with any credit or other information concerning the business,
prospects, operations, property, financial and other condition or
creditworthiness of Borrower and any other Person party to a Loan Document that
may come into the possession of any of the Agent-Related Persons.

Costs and Expenses. Administrative Agent may incur and pay Lender Group Expenses
to the extent Administrative Agent reasonably deems necessary or appropriate for
the performance and fulfillment of its functions, powers, and obligations
pursuant to the Loan Documents, including without limiting the generality of the
foregoing, court costs, reasonable attorneys fees and expenses, costs of
collection by outside collection agencies and auctioneer fees and costs of
security guards or insurance premiums paid to maintain the Collateral, whether
or not Borrower is obligated to reimburse Administrative Agent or Lenders for
such expenses pursuant to the Loan Agreement or otherwise. Administrative Agent
is authorized and directed to deduct and retain sufficient amounts from
Collections received by Administrative Agent to reimburse Administrative Agent
for such out-of-pocket costs and expenses prior to the distribution of any
amounts to Lenders. In the event Administrative Agent is not reimbursed for such
costs and expenses from Collections received by Administrative Agent, each
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hereby agrees that it is and shall be obligated to pay to or reimburse
Administrative Agent for the amount of such Lender’s Pro Rata Share thereof. The
undertaking in this Section shall survive the payment of all Obligations
hereunder and the resignation or replacement of Administrative Agent.

Administrative Agent in Individual Capacity. The Person hereunder designated as
Administrative Agent and its respective Affiliates may make loans to, issue
letters of credit for the account of, accept deposits from, acquire equity
interests in and generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrower and its Subsidiaries and
Affiliates and any other Person (other than the Lender Group) party to any Loan
Documents as though such Person was not Administrative Agent hereunder, and, in
each case, without notice to or consent of the other members of the Lender
Group. The other members of the Lender Group acknowledge that, pursuant to such
activities, such Person or its respective Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other than the Lender
Group) party to any Loan Documents that is subject to confidentiality
obligations in favor of Borrower or such other Person and that prohibit the
disclosure of such information to the Lenders, and the Lenders acknowledge that,
in such circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver Administrative Agent will use its reasonable best
efforts to obtain), Administrative Agent shall not be under any obligation to
provide such information to them.

Successor Administrative Agent. Administrative Agent may resign as
Administrative Agent upon 45 days notice to the Lenders. If Administrative Agent
resigns under this Agreement, the Required Lenders shall appoint a successor
Administrative Agent for the Lenders. If no successor Administrative Agent is
appointed prior to the effective date of the resignation of Administrative
Agent, Administrative Agent shall appoint, after consulting with the Lenders, a
successor Administrative Agent and such appointed successor Administrative Agent
shall be deemed acceptable to the Lenders. If Administrative Agent has
materially breached or failed to perform any material provision of this
Agreement or of applicable law, the Required Lenders may agree in writing to
remove and replace Administrative Agent with a successor Administrative Agent
from among the Lenders. In any such event, upon the acceptance of its
appointment as successor Administrative Agent hereunder, such successor
Administrative Agent shall succeed to all the rights, powers and duties of the
retiring Administrative Agent and the term “Administrative Agent” shall mean
such successor Administrative Agent and the retiring Administrative Agent’s
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent’s resignation hereunder as
Administrative Agent, the provisions of this Article 17 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement. If no successor Administrative Agent
has accepted appointment as Administrative Agent by the date which is 45 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent’s resignation shall nevertheless thereupon become effective
and the Lenders shall perform all of the duties of Administrative Agent
hereunder until such time, if any, as the Lenders appoint a successor
Administrative Agent as provided for above.

Lender in Individual Capacity. Any Lender and its respective Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory, underwriting or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the Lender Group)
party to any Loan Documents as though such Lender were not a Lender hereunder
without notice to or consent of the other members of the Lender Group. The other
members of the Lender Group acknowledge that, pursuant to such activities, such
Lender and its respective Affiliates may receive information regarding Borrower
or its Affiliates and any other Person (other than the Lender Group) party to
any Loan Documents that is subject to confidentiality obligations in favor of
Borrower or such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in such

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circumstances (and in the absence of a waiver of such confidentiality
obligations, which waiver such Lender will use its reasonable best efforts to
obtain), such Lender shall not be under any obligation to provide such
information to them.

Collateral Matters.

The Lenders hereby irrevocably authorize Administrative Agent, at its option and
in its sole discretion, to release any Lien on any Collateral (i) upon the
termination of the Commitments and payment and satisfaction in full by Borrower
of all Obligations; (ii) constituting property being sold or disposed of if a
release is required or desirable in connection therewith and if Borrower
certifies to Administrative Agent that the sale or disposition is permitted
under Section 7.4 of this Agreement or the other Loan Documents (and
Administrative Agent may rely conclusively on any such certificate, without
further inquiry); (iii) constituting property in which Borrower does not own any
interest at the time the security interest was granted or at any time
thereafter; or (iv) constituting property leased to Borrower under a lease that
has expired or is terminated in a transaction permitted under this Agreement.
Except as provided above, Administrative Agent will not execute and deliver a
release of any Lien on any Collateral without the prior written authorization of
(y) if the release is of all or a substantial portion of the Collateral, of all
of the Lenders, or (z) otherwise, the Required Lenders. Upon request by
Administrative Agent or Borrower at any time, the Lenders will confirm in
writing Administrative Agent’s authority to release any such Liens on particular
types or items of Collateral pursuant to this Section 17.11; provided, however,
that (1) Administrative Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Administrative Agent’s
opinion, would expose Administrative Agent to liability or create any obligation
or entail any consequence other than the release of such Lien without recourse,
representation, or warranty, and (2) such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those
expressly being released) upon (or obligations of Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.

Administrative Agent shall have no obligation whatsoever to any of the Lenders
to assure that the Collateral exists or is owned by Borrower or any of its
Subsidiaries or is cared for, protected, or insured or has been encumbered, or
that the Administrative Agent’s Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority, or to exercise at all or in any particular manner or under
any duty of care, disclosure or fidelity, or to continue exercising, any of the
rights, authorities and powers granted or available to Administrative Agent
pursuant to any of the Loan Documents, it being understood and agreed that in
respect of the Collateral, or any act, omission or event related thereto,
subject to the terms and conditions contained herein, Administrative Agent may
act in any manner it may deem appropriate, in its sole discretion given
Administrative Agent’s own interest in the Collateral in its capacity as one of
the Lenders and that Administrative Agent shall have no other duty or liability
whatsoever to any Lender as to any of the foregoing, except as otherwise
provided herein.

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Right of Setoff; Sharing of Payments.

If an Event of Default shall have occurred and be continuing, each Lender, the
Issuing Lender, and each of their respective Affiliates is hereby authorized at
any time and from time to time, to the fullest extent permitted by applicable
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final, in whatever currency) at any time held and other
obligations (in whatever currency) at any time owing by such Lender, the Issuing
Lender or any such Affiliate to or for the credit or the account of the Borrower
or any other Loan Party against any and all of the obligations of the Borrower
or such Loan Party now or hereafter existing under this Agreement or any other
Loan Document to such Lender or the Issuing Lender, irrespective of whether or
not such Lender or the Issuing Lender shall have made any demand under this
Agreement or any other Loan Document and although such obligations of the
Borrower or such Loan Party may be contingent or unmatured or are owed to a
branch or office of such Lender or the Issuing Lender different from the branch
or office holding such deposit or obligated on such indebtedness. The rights of
each Lender, the Issuing Lender and their respective Affiliates under this
Section are in addition to other rights and remedies (including other rights of
setoff) that such Lender, the Issuing Lender or their respective Affiliates may
have. Each Lender and the Issuing Lender agrees to notify the Borrower and the
Administrative Agent promptly after any such setoff and application, provided
that the failure to give such notice shall not affect the validity of such
setoff and application.

If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of
its Loans or other obligations hereunder resulting in such Lender’s receiving
payment of a proportion of the aggregate amount of its Loans and accrued
interest thereon or other such obligations greater than its Pro Rata Share
thereof as provided herein, then the Lender receiving such greater proportion
shall (a) notify the Administrative Agent of such fact, and (b) purchase (for
cash at face value) participations in the Loans and such other obligations of
the other Lenders, or make such other adjustments as shall be equitable, so that
the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans and other amounts owing them, provided that:

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

the provisions of this paragraph shall not be construed to apply to (x) any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement or (y) any payment obtained by a Lender as consideration
for the assignment of or sale of a participation in any of its Loans to any
assignee or participant, other than to the Borrower or any Subsidiary thereof
(as to which the provisions of this paragraph shall apply).

Each Loan Party 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 each
Loan Party rights of setoff and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of each Loan Party in the
amount of such participation.

Agency for Perfection. Administrative Agent hereby appoints each other Lender as
its agent (and each Lender hereby accepts such appointment) for the purpose of
perfecting the

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Administrative Agent’s Liens in assets which, in accordance with Article 9 of
the Code can be perfected only by possession. Should any Lender obtain
possession of any such Collateral, such Lender shall notify Administrative Agent
thereof, and, promptly upon Administrative Agent’s request therefor shall
deliver such Collateral to Administrative Agent or in accordance with
Administrative Agent’s instructions.

Payments by Administrative Agent to the Lenders. All payments to be made by
Administrative Agent to the Lenders shall be made by bank wire transfer or
internal transfer of immediately available funds pursuant to such wire transfer
instructions as each party may designate for itself by written notice to
Administrative Agent. Concurrently with each such payment, Administrative Agent
shall identify whether such payment (or any portion thereof) represents
principal, premium, or interest of the Obligations.

Concerning the Collateral and Related Loan Documents. Each member of the Lender
Group authorizes and directs Administrative Agent to enter into this Agreement
and the other Loan Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any action taken by
Administrative Agent in accordance with the terms of this Agreement or the other
Loan Documents relating to the Collateral and the exercise by Administrative
Agent of its powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.

Field Audits and Examination Reports; Confidentiality; Disclaimers by Lenders;
Other Reports and Information. By becoming a party to this Agreement, each
Lender:

is deemed to have requested that Administrative Agent furnish such Lender,
promptly after it becomes available (and in any event within two (2) Business
Days), a copy of each field audit or examination report (each a “Report” and
collectively, “Reports”) prepared by Administrative Agent, and Administrative
Agent shall so furnish each Lender with such Reports;

expressly agrees and acknowledges that Administrative Agent (i) makes no
representation or warranty as to the accuracy of any Report, and (ii) shall not
be liable for any information contained in any Report;

expressly agrees and acknowledges that the Reports are not comprehensive audits
or examinations, that Administrative Agent or other party performing any audit
or examination will inspect only specific information regarding Borrower and
will rely significantly upon the Books, as well as on representations of
Borrower’s personnel;

agrees to keep all Reports and other material, non-public information regarding
Borrower and its Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner; it being understood and
agreed by Borrower that in any event such Lender may make disclosures (a) to
Subsidiaries and Affiliates of any member of the Lender Group (including the
Lender-Related Persons) and to counsel for and other advisors, accountants, and
auditors to such Lender, (b) reasonably required by any bona fide potential or
actual Assignee or Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or any participation
interest in such Lender’s rights hereunder, (c) of information that has become
public by disclosures made by Persons other than such Lender, its Affiliates,
assignees, transferees, or Participants, or (d) as required or requested by any
court, governmental or administrative agency, pursuant to any

 

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subpoena or other legal process, or by any law, statute, regulation, or court
order; provided, however, that, unless prohibited by applicable law, statute,
regulation, or court order, such Lender shall notify Borrower of any request by
any court, governmental or administrative agency, or pursuant to any subpoena or
other legal process for disclosure of any such non-public material information
concurrent with, or where practicable, prior to the disclosure thereof; and

without limiting the generality of any other indemnification provision contained
in this Agreement, agrees: (i) to hold Administrative Agent and any such other
Lender preparing a Report harmless from any action the indemnifying Lender may
take or conclusion the indemnifying Lender may reach or draw from any Report in
connection with any loans or other credit accommodations that the indemnifying
Lender has made or may make to Borrower, or the indemnifying Lender’s
participation in, or the indemnifying Lender’s purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and hold
Administrative Agent and any such other Lender preparing a Report harmless from
and against, the claims, actions, proceedings, damages, costs, expenses and
other amounts (including, attorneys fees and costs) incurred by Administrative
Agent and any such other Lender preparing a Report as the direct or indirect
result of any third parties who might obtain all or part of any Report through
the indemnifying Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Administrative Agent in writing that Administrative Agent provide to such Lender
a copy of any report or document provided by Borrower to Administrative Agent
that has not been contemporaneously provided by Borrower to such Lender, and,
upon receipt of such request, Administrative Agent shall provide a copy of same
to such Lender; (y) to the extent that Administrative Agent is entitled, under
any provision of the Loan Documents, to request additional reports or
information from Borrower, any Lender may, from time to time, reasonably request
Administrative Agent to exercise such right as specified in such Lender’s notice
to Administrative Agent, whereupon Administrative Agent promptly shall request
of Borrower the additional reports or information reasonably specified by such
Lender, and, upon receipt thereof from Borrower, Administrative Agent promptly
shall provide a copy of same to such Lender; and (z) any time that
Administrative Agent renders to Borrower a statement regarding the Loan Account,
Administrative Agent shall send a copy of such statement to each Lender.

Several Obligations; No Liability. Notwithstanding that certain of the Loan
Documents now or hereafter may have been or will be executed only by or in favor
of Administrative Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Administrative Agent (if any) to
make any credit available hereunder shall constitute the several (and not joint)
obligations of the respective Lenders on a ratable basis, according to their
respective Commitments, to make an amount of such credit not to exceed, in
principal amount, at any one time outstanding, the

 

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amount of their respective Commitments. Nothing contained herein shall confer
upon any Lender any interest in, or subject any Lender to any liability for, or
in respect of, the business, assets, profits, losses, or liabilities of any
other Lender. Each Lender shall be solely responsible for notifying its
Participants of any matters relating to the Loan Documents to the extent any
such notice may be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as provided in
Section 17.7, no member of the Lender Group shall have any liability for the
acts or any other member of the Lender Group. No Lender shall be responsible to
Borrower or any other Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance for it or on its
behalf in connection with its Commitment, nor to take any other action on its
behalf hereunder or in connection with the financing contemplated herein.

Lender Related Persons. Each Lender-Related Person party to Lender Hedging
Agreements shall be deemed a party hereto for purposes of any reference in a
Loan Document to the parties for whom Administrative Agent is acting; it being
understood and agreed that the rights and benefits of such Lender-Related Person
under the Loan Documents consist exclusively of such Lender Related Person’s
right to share in payments and collections out of the Collateral as more fully
set forth herein. In connection with any such distribution of payments and
collections, Administrative Agent shall be entitled to assume no amounts are due
to any Lender Related Person unless such Lender Related Person has notified
Administrative Agent in writing of the amount of any such liability owed to it
prior to such distribution.

Buy-Out Option. The Term Loan B Lenders and the Revolving Lenders hereby agree
that:

at any time on or after the earliest of the dates that any one or more of the
following events (each, a “Triggering Event”) has occurred and is continuing:

the Indebtedness has been accelerated as a result of an Event of Default;

any of the Obligations owing to any Term Loan B Lender shall not have been paid
in full when due and owing; or

the occurrence of any Event of Default under Section 8(e) or (f)

then one or more of the Term Loan B Lenders (the “Committed Term Loan B
Lenders”) shall have the right, by giving a written notice (a “Committed Buy-Out
Notice”; it being understood that the Term Loan B Lenders have no obligation to
send a Committed Buy-Out Notice) to the Administrative Agent, for the benefit of
the Revolving Lenders, to acquire (if more than one Committed Term Loan B
Lender, ratably in proportion to their respective share of such interests to be
acquired) all (but not less than all) of the right, title, and interest of the
Revolving Lenders in and to the Obligations, the Commitments, and the Loan
Documents (including without limitation, their interest in the Revolver
Commitment, the Revolver Advances, the obligations in respect of outstanding
Letters of Credit, and their outstanding Lender Hedging Agreements (which Lender
Hedging Agreements shall not be divided ratably among the Committed Term Loan B
Lenders, but shall be apportioned to one or more Committed Term Loan B Lenders
in a manner acceptable to Administrative Agent and such Committed Term Loan B
Lenders); provided, that if any Term Loan B Lender elects not to send such a
Committed Buy-Out Notice, any other Term Loan B Lender may purchase the ratable
portion of the Commitments, the Obligations and Lender Hedging Agreements that
such declining Term Loan B Lender otherwise would have been entitled to
purchase;

 

  108   LOAN AGREEMENT

--------------------------------------------------------------------------------

promptly upon receipt of an initial Committed Buy-Out Notice, the Administrative
Agent shall notify all Term Loan B Lenders of such Committed Buy-Out Notice, and
any Term Loan B Lender that did not submit such initial Committed Buy-Out Notice
may become a Committed Term Loan B Lender by submitting a Committed Buy-Out
Notice within 10 Business Days following such receipt by the Administrative
Agent of such initial Committed Buy-Out Notice; following such 10 Business Day
period, the Committed Term Loan B Lenders irrevocably shall be committed to
acquire, within 10 Business Days, from the Revolving Lenders all (but not less
than all) of the right, title, and interest of the Revolving Lenders in and to
the Obligations, the Commitments, and the Loan Documents (including, without
limitation, their interest in the Revolver Commitment, the Revolver Advances,
their outstanding Lender Hedging Agreements and the obligations in respect of
outstanding Letters of Credit) by paying to the Administrative Agent, for the
benefit of the Revolving Lenders, in cash a purchase price (the “Purchase
Price”) equal to (subject to this Section 17.19) the sum of:

100% of the outstanding balance with respect to the Revolver Advances,
including, without limitation, principal, interest accrued and unpaid thereon,
and any unpaid fees and premiums (other than the Applicable Revolving Loan
Prepayment Premium; any entitlement to the Applicable Revolving Loan Prepayment
Premium being only as set forth in clause (d) below), to the extent earned or
due and payable in accordance with the Loan Documents,

any un-reimbursed obligations in respect of Letters of Credit owing to the
Revolving Lenders (which may be satisfied by providing cash collateral for the
reimbursement obligations in respect of undrawn Letters of Credit in an amount
not to exceed 105% thereof);

any un-reimbursed obligations in respect of Lender Hedging Obligations owing to
the Revolving Lenders (or Affiliates thereof), plus a net amount quoted by the
Revolver Lenders or Lender-Related Persons holding the Lender Hedging Agreements
to assign or novate each such Lender Hedging Agreement in the ordinary course of
its business as determined under the applicable documentation for such Lender
Hedging Agreement (provided that the portion of the Purchase Price that is
comprised of amounts described in this clause (iii) with respect to a particular
Lender Hedging Agreement shall be paid by the Committed Term Loan B Lender to
whom such Lender Hedging Agreement is assigned); and

all expenses to the extent owing to the Revolver Lenders under the Loan
Documents (including the reimbursement of extraordinary expenses, financial
examination expenses and appraisal fees and the reasonable out-of-pocket
expenses of the Revolving Lenders (including reasonable attorneys’ fees) in
connection with documenting and effecting such assignment and the related
delivery to the Committed Term Loan B Lenders of the original Loan Documents in
the possession of the Revolving Lenders);

whereupon the Revolving Lenders shall assign to the Committed Term Loan B
Lenders, without any representation, recourse, or warranty whatsoever (except
that each Revolving Lender shall warrant to the Committed Term Loan B Lenders
that (1) the amount quoted in writing by such

 

  109   LOAN AGREEMENT

--------------------------------------------------------------------------------

Revolving Lender as its portion of the purchase price represents the amount
shown as due with respect to the claims transferred as reflected on its books
and records, (2) its owns, or has the right to transfer to the Committed Term
Loan B Lenders, the rights being transferred, and (3) the assets being
transferred will be free and clear of Liens and adverse claims), their right,
title, and interest with respect to the Obligations, the Commitments, and the
Loan Documents;

the assignment by the Revolving Lenders of their rights, title, and interest
with respect to the Obligations, the Commitments, and the Loan Documents shall
be at no expense (other than the payment of the Purchase Price, including,
without limitation, as described in clause (b)(iv) above) to Committed Term Loan
B Lenders. In connection with such assignment, the Revolving Lenders shall
deliver to the Committed Term Loan B Lenders any original Loan Documents and any
Collateral in their possession and shall execute such other documents,
instruments, and agreements reasonably necessary or reasonably requested by the
Committed Term Loan B Lenders to effect such assignment, and, except for the
foregoing obligations in this sentence, the Revolving Lenders shall be relieved
from any further duties, obligations, or liabilities to the Term Loan B Holders
pursuant to this Agreement;

anything contained in this Section 17.19 to the contrary notwithstanding, in the
event that: (1) the Committed Term Loan B Lenders receive the Applicable
Revolving Loan Refinancing Premium in cash; (2) all other Obligations other than
the Applicable Revolving Loan Refinancing Premium are repaid in full; and
(3) this Agreement is terminated, in each case, within 90 days following the
date on which the Committed Term Loan B Lenders pay the Purchase Price pursuant
to this Section 17.19, then the Committed Term Loan B Lenders shall pay a
supplemental purchase price in respect of their purchase under this
Section 17.19 in an amount equal to the portion of the Applicable Revolving Loan
Refinancing Premium to which the Revolving Lenders would have been entitled had
the purchase under this Section 17.19 not occurred. The foregoing
notwithstanding, the Issuing Lender shall not be obligated to transfer pursuant
to this Agreement, and the Committed Term Loan B Lenders shall not acquire
pursuant to this Agreement, any claims in respect of obligations in respect of
undrawn Underlying Letters of Credit issued by Issuing Lender (other than
reimbursement obligations of the Revolving Lenders in respect thereof); and

anything in this Agreement to the contrary notwithstanding, each Revolving
Lender hereby agrees that each Committed Term Loan B Lender may assign and
delegate obligations to be acquired by such Committed Term Loan B Lender as a
result of its exercise of the purchase option hereunder.

GENERAL PROVISIONS.

Effectiveness. This Agreement shall be binding and deemed effective when
executed by Borrower and each member of the Lender Group whose signature is
provided for on the signature pages hereof.

Section Headings. Headings and numbers have been set forth herein for
convenience only. Unless the contrary is compelled by the context, everything
contained in each Section applies equally to this entire Agreement.

Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein
shall be construed or resolved against the Administrative Agent, Lender Group or
Borrower, whether under any

 

110

--------------------------------------------------------------------------------

rule of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted according to the
ordinary meaning of the words used so as to fairly accomplish the purposes and
intentions of all parties hereto.

Severability of Provisions. Each provision of this Agreement shall be severable
from every other provision of this Agreement for the purpose of determining the
legal enforceability of any specific provision.

USA Patriot Act Notice. Each Lender hereby notifies Borrower and other Loan
Parties 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 Borrower and other Loan Parties and
other information that will allow such Lender to identify Borrower and other
Loan Parties in accordance with the Act.

Counterparts; Telefacsimile Execution. This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each
of which, when executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and the same
Agreement. Delivery of an executed counterpart of this Agreement by
telefacsimile shall be equally as effective as delivery of an original executed
counterpart of this Agreement. Any party delivering an executed counterpart of
this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Agreement. The forgoing shall apply to each other Loan Document mutatis
mutandis. The words “execution,” “signed,” “signature,” and words of like import
in any Assignment and Assumption shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

Revival and Reinstatement of Obligations. If the incurrence or payment of the
Obligations by Borrower or any guarantor of the Obligations or the transfer by
either or both of such parties to the Lender Group of any property of either or
both of such parties should for any reason subsequently be declared to be void
or voidable under any state or federal law relating to creditors’ rights,
including provisions of the Bankruptcy Code relating to fraudulent conveyances,
preferences, and other voidable or recoverable payments of money or transfers of
property (collectively, a “Voidable Transfer”), and if the Lender Group is
required to repay or restore, in whole or in part, any such Voidable Transfer,
or elects to do so upon the reasonable advice of its counsel, then, as to any
such Voidable Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs, expenses, and
attorneys fees of the Lender Group related thereto, the liability of Borrower or
such guarantor automatically shall be revived, reinstated, and restored and
shall exist as though such Voidable Transfer had never been made.

Integration. This Agreement, together with the other Loan Documents, reflects
the entire understanding of the parties with respect to the transactions
contemplated hereby and shall not be contradicted or qualified by any other
agreement, oral or written, before the date hereof.

Assumption, Ratification, and Amendment; Release. This Agreement and the
obligations of Borrower set forth herein constitute an assumption, ratification,
and amendment, but not an

 

  111   LOAN AGREEMENT

--------------------------------------------------------------------------------

extinguishment, discharge or novation, of obligations of the Loan Parties
originally owed under the Existing Credit Facilities (collectively, the “Prior
Obligations”). This Agreement and the other Loan Documents are not intended as,
and shall not be construed as, a release, impairment or novation of the Prior
Obligations or the other indebtedness, liabilities and obligations of RAM
Energy, Borrower or any of the other Loan Parties under the agreements,
documents and instruments executed in connection therewith or relating thereto
or the Liens granted therein, all of which Liens are hereby modified and
affirmed. All Letters of Credit and Underlying Letters of Credit issued under
the Prior Obligations and all Obligations under Lender Hedging Agreements which
were included under the Prior Obligations to the extent described on Schedule
7.1 are included as “Obligations” hereunder and remain secured by the Liens
granted therein as modified hereby. BORROWER AND EACH OTHER LOAN PARTY HEREBY
VOLUNTARILY AND KNOWINGLY RELEASE AND FOREVER DISCHARGE AGENT AND EACH OF THE
LENDERS, ITS PREDECESSORS, AGENTS, EMPLOYEES, ATTORNEYS, SUCCESSORS AND ASSIGNS,
FROM ALL POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR CONDITIONAL, AT
LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR BEFORE THE DATE THIS
AGREEMENT IS EXECUTED, WHICH BORROWER AND SUCH OTHER LOAN PARTIES, INDIVIDUALLY
OR COLLECTIVELY, MAY NOW OR HEREAFTER HAVE AGAINST AGENT, ANY OF THE LENDERS,
ITS PREDECESSORS, AGENTS, EMPLOYEES, ATTORNEYS, SUCCESSORS AND ASSIGNS, IF ANY,
AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT,
VIOLATION OF LAW OR REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY ADVANCES,
LETTERS OF CREDIT OR OTHER INDEBTEDNESS, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR RECEIVING INTEREST
IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE EXERCISE OF ANY RIGHTS AND
REMEDIES UNDER THE AGREEMENT OR OTHER TRANSACTION DOCUMENTS, AND NEGOTIATION FOR
AND EXECUTION OF THIS AGREEMENT.

(Remainder of this page intentionally left blank)

(Signature Pages Follow)

 

  112   LOAN AGREEMENT

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed.

 

BORROWER:

RAM ENERGY RESOURCES, INC.,

a Delaware corporation

By:  

 

  Larry E. Lee   President and CEO

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

ADMINISTRATIVE AGENT:

GUGGENHEIM CORPORATE FUNDING LLC,

a Delaware limited liability company, as Administrative

Agent for the Lenders

By:  

 

  Stephen D. Sautel   Managing Director

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WELLS FARGO FOOTHILL, INC.

a California corporation, as Documentation Agent and a Lender

By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WESTLB AG, NEW YORK BRANCH By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

MIDLAND NATIONAL LIFE INSURANCE COMPANY By:   Guggenheim Partners Advisory
Company,   as its Agent

  By:  

 

  Name:     Title:  

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

CIT CAPITAL USA INC. By:  

 

  Brian Kerrigan   Vice President

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

NORTH AMERICAN COMPANY FOR LIFE AND HEALTH INSURANCE By:   Guggenheim Partners
Advisory Company,   as its Agent

  By:  

 

  Name:     Title:  

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

SOLAR CAPITAL LLC By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

ORPHEUS HOLDINGS LLC By:   Guggenheim Investment Management, LLC,   as its
Manager

  By:  

 

  Name:     Title:  

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

ALEXANDRA GLOBAL MASTER FUND LTD. By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WHIPPOORWILL DISTRESSED OPPORTUNITY

FUND, L.P.

By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WELLPOINT, INC. By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

PRESIDENT & FELLOWS OF HARVARD
COLLEGE (REF. HARVARD SPECIAL
SITUATIONS ACCOUNT) By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

NZC OPPORTUNITIES LLC By:   Guggenheim Investment Management, LLC,   as its
Manager

  By:  

 

  Name:     Title:  

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WHIPPOORWILL OFFSHORE DISTRESSED
OPPORTUNITY FUND, LTD. By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

CAMOFI MASTER LDC By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

CAMHZN MASTER LDC By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

WHIPPOORWILL ASSOCIATES, INC., PROFIT

SHARING PLAN

By:  

 

Name:  

 

Title:  

 

 

Signature Page to

Loan Agreement

--------------------------------------------------------------------------------

EXHIBIT A-1

TO

LOAN AGREEMENT BY AND AMONG RAM ENERGY RESOURCES, INC., AS BORROWER,

THE LENDERS SIGNATORY THERETO, GUGGENHEIM CORPORATE FUNDING, LLC, AS

ARRANGER AND ADMINISTRATIVE AGENT FOR THE LENDERS

FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between [ASSIGNOR]
(the “Assignor”) and [ASSIGNEE] (the “Assignee”). Capitalized terms not defined
herein shall have the meanings assigned to such terms in the Loan Agreement
referred to below (as amended, modified, supplemented, or restated from time to
time, the “Loan Agreement”), receipt of a copy of which is hereby acknowledged
by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto (the “Standard Terms and Conditions”) are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

For an agreed consideration, the Assignor hereby irrevocably sells and assigns
to the Assignee, and the Assignee hereby irrevocably purchases and assumes from
the Assignor, subject to and in accordance with the Standard Terms and
Conditions and the Loan Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below: (i) all of the Assignor’s rights and
obligations in its capacity as a Lender under the Loan Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the
amount and percentage interest identified below of all of such outstanding
rights and obligations of the Assignor under the respective facilities
identified below (including without limitation any letters of credit and
guarantees included in such facilities); and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether
known or unknown, arising under or in connection with the Loan Agreement, any
other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the
foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause (i)
above (the rights and obligations sold and assigned pursuant to clauses (i) and
(ii) above being referred to herein collectively as the “Assigned Interest”).
Such sale and assignment is without recourse to the Assignor and, except as
expressly provided in this Assignment and Assumption, without representation or
warranty by the Assignor.

 

1.      Assignor:   

 

          

 

   2.      Assignee:   

 

        [for Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]
   3.      Borrower:    RAM Energy Resources, Inc.    4.     
Administrative Agent:    Guggenheim Corporate Funding, LLC    5.     
Loan Agreement:    Loan Agreement dated as of                      among RAM
Energy Resources, Inc., the Lenders parties thereto, and Guggenheim Corporate
Funding, LLC, as Administrative Agent

--------------------------------------------------------------------------------

C. Assigned Interest:

 

Facility Assigned

   Aggregate Amount of
Commitment for all
Lenders1   

Amount of Commitment

Assigned

   Percentage Assigned of
Commitment/Loans2

Revolver Commitment/Term Loan B Commitment

   $      $      %

 

[7.

Trade Date:                                ]3

[Page break]

--------------------------------------------------------------------------------

1

Amount to be adjusted by the counterparties to take into account any payments or
prepayments made between the Trade Date and the Effective Date.

2

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

3

To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

- 2 -

--------------------------------------------------------------------------------

Effective Date:                  , 20     [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR: [NAME OF ASSIGNOR] By:  

 

Title:   ASSIGNEE: [NAME OF ASSIGNEE] By:  

 

Title:  

 

Consented to and Accepted: GUGGENHEIM CORPORATE FUNDING, LLC, as Administrative
Agent By  

 

Title:  

 

- 3 -

--------------------------------------------------------------------------------

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1 Assignor. The Assignor: (a) represents and warrants that: (i) it is the
legal and beneficial owner of the Assigned Interest; (ii) the Assigned Interest
is free and clear of any lien, encumbrance or other adverse claim; and (iii) it
has full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to: (i) any
statements, warranties or representations made in or in connection with the Loan
Agreement or any other Loan Document; (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Loan Documents or any
collateral thereunder; (iii) the financial condition of Borrower, any of its
subsidiaries or Affiliates or any other Person obligated in respect of any Loan
Document; or (iv) the performance or observance by Borrower, any of its
subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Loan Document.

1.2. Assignee. The Assignee: (a) represents and warrants that: (i) it has full
power and authority, and has taken all action necessary, to execute and deliver
this Assignment and Assumption and to consummate the transactions contemplated
hereby and to become a Lender under the Loan Agreement; (ii) it meets all
requirements of an Eligible Assignee under the Loan Agreement (subject to
receipt of such consents as may be required under the Loan Agreement);
(iii) from and after the Effective Date, it shall be bound by the provisions of
the Loan Agreement as a Lender thereunder and, to the extent of the Assigned
Interest, shall have the obligations of a Lender thereunder; (iv) it has
received a copy of the Loan Agreement, together with copies of the most recent
financial statements delivered pursuant thereto, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase the Assigned Interest on the basis of which it has made such analysis
and decision independently and without reliance on the Administrative Agent or
any other Lender; and (v) if it is a Foreign Lender, attached to the Assignment
and Assumption is any documentation required to be delivered by it pursuant to
the terms of the Loan Agreement, duly completed and executed by the Assignee;
and (b) agrees that: (i) it will, independently and without reliance on the
Administrative Agent, the Assignor or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Loan
Documents; and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of the Assigned Interest (including payments of
principal, interest, fees and other amounts) to the Assignor for amounts which
have accrued to but excluding the Effective Date and to the Assignee for amounts
which have accrued from and after the Effective Date.

 

  C.

General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. Pursuant to Section 5-1401 of the New York
General Obligations Law, the

--------------------------------------------------------------------------------

substantive laws of the State of New York applicable to agreements made and to
be performed entirely within such state, without regard to the choice of law
principles that might otherwise apply, and the applicable federal laws of the
United States of America, shall govern the validity, construction, enforcement
and interpretation of this Assignment and Assumption.

--------------------------------------------------------------------------------

EXHIBIT C-1

TO

LOAN AGREEMENT BY AND AMONG RAM ENERGY RESOURCES, INC., AS BORROWER,

THE LENDERS SIGNATORY THERETO, GUGGENHEIM CORPORATE FUNDING, LLC, AS

ARRANGER AND ADMINISTRATIVE AGENT FOR THE LENDERS

COMPANY LETTERHEAD

Guggenheim Corporate Funding, LLC, as Administrative Agent

135 East 57th Street, 7th Floor

New York, New York 10022

Attn: Funding Coordinator

Fax No.: 212 644-8396

 

RE:     Compliance Certificate

In accordance with our Loan Agreement (“Agreement”) dated as of November __,
2007, I hereby certify:

All reports, statements or computer prepared information of any kind or nature
delivered or caused to be delivered to GCF have been prepared in accordance with
GAAP consistently applied and fairly present the financial condition of
Borrower, except as follows:

Borrower is in timely compliance with all other representations, warranties, and
covenants as defined within the Agreement, except as follows:

On the date of delivery of such certificate to GCF there does not exist any
condition or event which constitutes an Event of Default, as defined within the
Agreement, except as follows:

The amount of the Revolving Facility Usage, as defined in the Agreement, shall
not exceed the Availability, as defined in the Agreement after giving effect to
the requested Advance, as defined in the Agreement.

PLEASE ATTACH A SCHEDULE OF FINANCIAL COVENANTS (AND CALCULATIONS THEREOF),
INCLUDING YEAR TO DATE CAPITAL EXPENDITURES, TO THIS COMPLIANCE CERTIFICATE.

--------------------------------------------------------------------------------

RAM Energy Resources, Inc., a Delaware corporation By:  

 

  Financial Officer

with copy to:

GUGGENHEIM CORPORATE FUNDING

1301 McKinney, Suite 3105

Houston, Texas 77010

Attn: Funding Coordinator

Fax No.: 713 300-1339

--------------------------------------------------------------------------------

EXHIBIT L-1

TO

LOAN AGREEMENT BY AND AMONG RAM ENERGY RESOURCES, INC., AS BORROWER,

THE LENDERS SIGNATORY THERETO, GUGGENHEIM CORPORATE FUNDING, LLC, AS

ARRANGER AND ADMINISTRATIVE AGENT FOR THE LENDERS

FORM OF LIBOR NOTICE

Guggenheim Corporate Funding, LLC, as Administrative Agent

135 East 57th Street, 7th Floor

New York, New York 10022

Attn: Funding Coordinator

Fax No.: 212 644-8396

Ladies and Gentlemen:

Reference is made to that certain Loan Agreement dated as of November     , 2007
(the “Loan Agreement”) among RAM Energy Resources, Inc., a Delaware corporation
(the “Borrower”), the lender or lenders signatory thereto (the “Lenders”), and
Guggenheim Corporate Funding, LLC, as the arranger and administrative agent for
the Lenders (“Administrative Agent”). Capitalized terms used in this LIBOR
Notice have the meanings set forth in the Credit Agreement unless specifically
defined herein.

This LIBOR Notice represents Borrower’s request to elect the LIBOR Option with
respect to outstanding [Revolver Advances] [Term Loan Bs] in the amount of
$             (the “LIBOR Rate Advance”)[, and is a written confirmation of the
telephonic notice of such election given to Administrative Agent].

Such LIBOR Rate Advance will have an Interest Period of 1, 2, 3 or 6 month(s)
commencing on                     .

This LIBOR Notice further confirms Borrower’s acceptance, for purposes of
determining the rate of interest based on the LIBOR Rate under the Credit
Agreement, of the LIBOR Rate as determined pursuant to the Credit Agreement.

Borrower represents and warrants that (i) as of the date hereof, each
representation or warranty contained in or pursuant to any Loan Document, any
agreement, instrument, certificate, document or other writing furnished at any
time under or in connection with any Loan Document, and as of the effective date
of any advance, continuation or conversion requested above is true and correct
in all material respects (except to the extent any representation or warranty
expressly related to an earlier date), (ii) each of the covenants and agreements
contained in any Loan Document have been performed (to the extent required to be
performed on or before the date hereof or each such effective date), and
(iii) no Default or Event of Default has occurred and is continuing on the date
hereof, nor will any thereof occur after giving effect to the request above.

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Dated:  

                    

RAM ENERGY RESOURCES, INC.,

a Delaware corporation,

By:  

 

Name:  

 

Title:  

 

 

Acknowledged by:

 

GUGGENHEIM CORPORATE FUNDING, LLC,

as Administrative Agent

By:

 

 

Name:

 

 

Title:

 

 

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EXHIBIT N-1

FORM OF

NOTICE OF BORROWING

This Notice of Borrowing is submitted to Guggenheim Corporate Funding, LLC, as
administrative agent for the lenders (“Administrative Agent”), by RAM ENERGY
RESOURCES, INC. (“Borrower”), pursuant to the Loan Agreement dated November
    , 2007 (as amended, the “Loan Agreement”), among Administrative Agent, the
lenders party thereto, and the Borrower. Capitalized terms used but not
otherwise defined herein shall have the same meaning given them in the Loan
Agreement. Borrower hereby requests a Revolver Advance under the Loan Agreement
in the amount set forth below:

 

A. Requested Advance

 

1.        Amount of Revolver Advance requested    $                    2.   

Total principal amount currently outstanding

(excluding this Advance Request) under:

      a. Borrowing Base4    $                       b. Outstanding Revolver
Advances    $                       c. LC Usage5    $                       d.
Unsecured Notes Reserve    $                    3.   

Availability remaining (excluding this Advance Request)

under Revolver (the sum of line 2a. minus lines 2 b, c, and d6)

(line 3 must be greater than line 1)

   $                    4.    Date of requested Advance:                      7
 

 

B. Representations and Warranties

 

1. Borrower hereby represents and warrants to Administrative Agent and the
Lenders that the following statements are true and correct as of the date of
this Advance Request:

 

  a. Each Loan Document previously delivered to Administrative Agent, are in
full force and effect and have not been terminated, amended or modified.

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4

The Borrowing Base as of Closing is $175,000,000 minus the Borrowing Base Proved
Undeveloped Reserve Capital Expenditure Adjustment (to the extent the requested
Revolver Advances are not being used for Proved Undeveloped Reserve Capital
Expenditures). The Borrowing Base is subject to redetermination per Section 2.2
of the Credit Agreement.

5

This amount may not exceed $5,000,000 less the amount of the Advance Request.

6

2 d should only be subtracted to the extent the requested Revolver Advances are
not being used to repay the Unsecured Notes

7

The Advance Request should be submitted prior to 12 noon New York time, at least
five (5) Business Days prior to the date on which the Advance, if approved, is
to be made. Advances under Revolver shall be made prior to the Revolver Maturity
Date.

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  b. All representations and warranties of Borrower in the Loan Agreement and
the other Loan Documents including, but not limited to, those made in Article V
of the Loan Agreement, are true, complete and correct, except to the extent any
such representations and warranties are expressly limited to an earlier date, in
which case, on and as of the date of such Advance, such representations and
warranties shall continue to be true and correct as of such specified earlier
date.

 

  c. After giving effect to the requested Advance, there will be no Event of
Default or any event which with notice or the passage of time would become an
Event of Default under the Loan Agreement or any of the Loan Documents.

 

  d. All conditions precedent to the making of this Advance set forth in Article
II of the Loan Agreement and the applicable conditions set forth in Article III
of the Loan Agreement have been satisfied.

 

  e. All proceeds of the requested Advance shall only be used for the purposes
permitted in the Loan Agreement for Revolver Advances.

 

  [f. The requested Revolver Advances will be used to repay the Unsecured
Notes.]

 

  [g. The requested Revolver Advances will be used to develop wells categorized
as Proved Undeveloped Reserves in the most recent Reserve Report.]

The undersigned certifies that he is a duly elected, qualified and acting
President of Borrower, and that as such he is authorized to execute this Advance
Request on behalf of Borrower. The undersigned further certifies, represents and
warrants on behalf of Borrower that such Borrower is entitled to receive the
requested borrowing under the terms and conditions of the Loan Agreement.

EXECUTED this      day of                 , 20    .

 

RAM ENERGY RESOURCES, INC. By:  

 

  Financial Officer

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EXHIBIT T-1

TO

LOAN AGREEMENT BY AND AMONG RAM ENERGY RESOURCES, INC., AS BORROWER,

THE LENDERS SIGNATORY THERETO, GUGGENHEIM CORPORATE FUNDING, LLC, AS

ARRANGER AND ADMINISTRATIVE AGENT FOR THE LENDERS

Letter in Lieu of Division or Transfer Orders

                 ,         

VIA CERTIFIED MAIL

RETURN RECEIPT REQUESTED

TO:

 

Re:    Letter in Lieu of Transfer Order

Ladies and Gentlemen:

By one or more mortgages and/or deeds of trust, a copy of which is enclosed with
this letter, RAM Energy Resources, Inc., RLP Gulf States, L.L.C. [Ascent
entities](hereinafter collectively referred to as the “Companies”) have granted
to Guggenheim Corporate Lending, LLC, as administrative agent (in such capacity
together with its successors in such capacity, “Administrative Agent”) for one
or more lenders (such lenders, together with their respective successors and
assigns, the “Lenders”), a lien on and security interest in the property
interests described on Schedule I attached hereto (the “Properties”), including
without limitation an assignment and transfer of all of the present and future
production and proceeds of production from the Properties.

We understand that, pursuant to division orders, transfer orders,
letters-in-lieu thereof or other agreements, you are currently disbursing
proceeds of the production from the Properties to one or more of the Companies
or its designees.

The Companies and Administrative Agent on behalf of the Lenders hereby give you
written notice of the matters set forth above and the assignment and transfer to
Administrative Agent for the benefit of the Lenders of all accounts from the
sale of hydrocarbons from the Properties. Furthermore, you are hereby authorized
and directed to commence paying, immediately upon your receipt of this letter,
100% of all proceeds of production distributed by you and attributable to the
interest of any and all of the Companies in the Properties, less applicable
severance and ad valorem taxes, directly to Administrative Agent for the benefit
of the Lenders at the following address:

 

 

                    .

       

ABA #                     

       

Account Number                     

     

Credit: Guggenheim Corporate Funding, LLC

     

Re: RAM Energy Resources, Inc.

   

You are hereby further authorized and directed to continue to pay applicable
severance and ad valorem taxes to the appropriate parties. To the extent you
currently pay royalties, overriding royalties and other burdens on the interest
of the Companies in the Properties, you are directed to continue making such
distributions. You are hereby further authorized and directed to change your
records in accordance with this letter effective immediately upon your receipt
of this letter.

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In consideration of your acceptance of this letter in lieu of a division or
transfer order, the Companies hereby agree to indemnify, save and hold you
harmless from and against any and all claims, actions, judgments, damages,
liabilities, losses, costs, recoveries and other expenses which you sustain by
reason of the payments to Administrative Agent for the benefit of Lenders of
proceeds of production as requested and authorized hereby.

In order that we have a record evidencing your acceptance of this letter, we
request that you sign two copies of this letter in the space provided below and
return them to Administrative Agent at 135 East 57th Street, 7th Floor, New
York, New York 10022, Attn: Funding Coordinator Fax No.: 212 644-8396 in the
enclosed, self-addressed envelope. If you have further requirements concerning
this transfer, please notify Administrative Agent at the address specified
above. None of the terms or provisions of this letter may be changed without the
prior written consent of Administrative Agent.

 

Sincerely, RAM ENERGY, INC. RAM ENERGY RESOURCES, INC. RLP GULF STATES, L.L.C.
[ASCENT ENTITIES] By:  

 

Name:   Larry E. Lee Title:   President of RAM Energy, Inc., which also is the
manager of RLP Gulf States, L.L.C.

 

GUGGENHEIM CORPORATE FUNDING, LLC, as Administrative Agent By:  

 

Name:  

 

Title:  

 

ACCEPTED AND AGREED this      day of             ,         , and our records
have been changed effective with                     , 20     production.

 

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By:  

 

Name:  

 

Title:  

 

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SCHEDULE I

Attachment to Letter in Lieu of Division Order or Transfer Order

 

DIVISION
ORDER #

 

OPERATOR
WELL #

 

WELL

NAME

 

FIELD

 

LOCATION

 

COUNTY

 

STATE

 

RAM

ENTITY
OWNER

 

OPERATOR

 

NET
REVENUE
INTEREST

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SCHEDULE C-1

Commitments

 

Lender

   Revolver
Commitment*    Pro Rata Share of
Closing Date
Borrowing Base    Term Loan B
Commitment    Total
Commitment

Wells Fargo Foothill, Inc

   $ 107,142,857    $ 75,000,000      —      $ 107,142,857

WestLB AG, New York Branch

   $ 107,142,857    $ 75,000,000      —      $ 107,142,857

Midland National Life Insurance Company

     —        —      $ 75,000,000    $ 75,000,000

CIT Capital USA Inc.

   $ 35,714,286    $ 25,000,000    $ 25,000,000    $ 60,714,286

North American Company for Life and Health Insurance

     —        —      $ 25,000,000    $ 25,000,000

Solar Capital LLC

     —        —      $ 25,000,000    $ 25,000,000

Orpheus Holdings LLC

     —        —      $ 24,000,000    $ 24,000,000

Alexandra Global Master Fund Ltd.

     —        —      $ 5,000,000    $ 5,000,000

Whippoorwill Distressed Opportunity Fund, L.P.

     —        —      $ 4,747,835    $ 4,747,835

WellPoint, Inc.

     —        —      $ 4,006,875    $ 4,006,875

President & Fellows of Harvard College (Ref. Harvard Special Situations Account)

     —        —      $ 3,577,155    $ 3,577,155

NZC Opportunities LLC

     —        —      $ 3,000,000    $ 3,000,000

Whippoorwill Offshore Distressed Opportunity Fund, Ltd.

     —        —      $ 2,604,465    $ 2,604,465

CAMOFI Master LDC

     —        —      $ 2,500,000    $ 2,500,000

CAMHZN Master LDC

     —        —      $ 500,000    $ 500,000

Whippoorwill Associates, Inc., Profit Sharing Plan

     —        —      $ 63,670    $ 63,670

All Lenders

   $ 250,000,000    $ 175,000,000    $ 200,000,000    $ 450,000,000

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* Provided each Revolver Lender’s commitment to make Advances as provided under
Section 2.1 (a) is limited to the lesser of (i) the Revolver Lender’s Revolver
Commitment and (ii) its Pro Rata Share of the Borrowing Base then in effect.

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SCHEDULE 3.1

Post-Closing Items and Conditions

 

ITEM

 

DATE FOR COMPLIANCE

1.      Borrower shall have delivered the Control Agreement

  Thirty (30) days after the Closing Date, or such longer time period as
Administrative Agent may permit, in its sole reasonable discretion

2.      Administrative Agent shall have received title opinions or other title
information reasonably satisfactory to Administrative Agent on at least seventy
percent (70%) by value of the Loan Parties’ Proved Developed Producing Reserves,
plus such supplemental title reports or other information on a total of eighty
percent (80%) by value of the Loan Parties’ Proved Developed Reserves,
satisfactory to Administrative Agent

  Fourteen (14) Business Days after the Closing Date, or such longer time period
as Administrative Agent may permit, in its sole reasonable discretion

3.      Each of the Loan Parties shall have requested from their insurance
carriers that certificates of insurance, which name Administrative Agent for the
benefit of the Lender Group as loss payee and additional insured on all of such
Loan Party’s policies of insurance as are required by Section 6.10, the form and
substance of which shall be satisfactory to Administrative Agent, be delivered
to the Administrative Agent

  Thirty (30) days after the Closing Date, or such longer time period as
Administrative Agent may permit, in its sole reasonable discretion