CREDIT AGREEMENT
among
WESTSIDE ENERGY PRODUCTION COMPANY, LP
and
WESTSIDE ENERGY OPERATING COMPANY, LP
as Borrowers,

WESTSIDE ENERGY CORPORATION
as Parent,

SPINDRIFT PARTNERS, L.P., OR ITS DESIGNEE
as Administrative Agent

and

The Lenders Party Hereto

 

dated as of March 23, 2007

 

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

TABLE OF CONTENTS
Page

 
ARTICLE I. DEFINITIONS
1.01 Certain Defined Terms.
1.02 Other Interpretive Provisions
1.03 Accounting
Principles                                                                             
ARTICLE II. THE CREDIT
2.01 Amounts and Terms of the Loan
2.02 Borrowing Mechanics
2.03 Prepayment
2.04 Interest; Repayment
2.05 Conversion
2.06 Fees and Overriding Royalty Interests
2.07 Computation of Fees and Interest
2.08 Payments by Borrowers
2.09 Increased Costs and Reduced Return
2.10 Taxes
2.11 Sharing of Payments
ARTICLE III. SECURITY
3.01 The Security
3.02 Agreement to Deliver Security Documents
3.03 Perfection and Protection of Security Interests and Liens
3.04 Offset.
ARTICLE IV. CONDITIONS PRECEDENT
4.01 Conditions Precedent
ARTICLE V. REPRESENTATIONS AND WARRANTIES
5.01 Corporate Existence and Power
5.02 Corporate Authorization; No Contravention
5.03 Governmental Authorization
5.04 Binding Effect
5.05 Financial Condition
5.06 Litigation
5.07 No Default
5.08 ERISA
5.09 Margin Regulations
5.10 Title to Properties
5.11 Oil and Gas Reserves
5.12 Hydrocarbon Interests
5.13 Operator
5.14 Intellectual Property; Licenses
5.15 Taxes
5.16 Environmental Matters
5.17 Regulated Entities
5.18 No Burdensome Restrictions
5.19 Solvency
5.20 Subsidiaries/Investments/Ownership
5.21 Insurance
5.22 Full Disclosure
5.23 Capitalization
5.24 Authorization of Conversion Shares.
5.25 Material Contracts
5.26 Fiscal Year
5.27 Gas Balancing Agreements and Advance Payment Contracts
5.28 Business; Compliance
5.29 Marketing Arrangements.
5.30 Right to Receive Payment for Future Production.
5.31 Hedge Agreements.
ARTICLE VI. AFFIRMATIVE COVENANTS
6.01 Financial Statements; Other Information.
6.02 Right of Inspection.
6.03 Notice of Default.
6.04 Public Information.
6.05 Preservation of Corporate Existence, Etc.
6.06 Maintenance of Property.
6.07 Title Data.
6.08 Insurance.
6.09 Payment of Obligations.
6.10 Compliance with Laws.
6.11 Maintenance of Books and Records.
6.12 Environmental Laws.
6.13 Use of Proceeds.
6.14 Further Assurances.
6.15 Guaranties.
6.16 Security Documents.
ARTICLE VII. NEGATIVE COVENANTS
7.01 Limitation on Liens.
7.02 Sale of Property.
7.03 Consolidations and Mergers.
7.04 Loans and Investments.
7.05 Limitation on Indebtedness.
7.06 Transactions with Affiliates.
7.07 Margin Stock.
7.08 Contingent Obligations.
7.09 Restricted Payments.
7.10 Change in Business, Organization Documents, Name and Address.
7.11 Accounting Changes.
7.12 Restrictions of Pledges.
7.13 Conversion.
7.14 Hedge Agreement.
7.15 Operating Leases.
ARTICLE VIII. EVENTS OF DEFAULT
8.01 Event of Default.
8.02 Remedies.
8.03 Set-off.
8.04 Payments Set Aside.
8.05 Rights Not Exclusive.
8.06 Application of Funds.
ARTICLE IX. ADMINISTRATIVE AGENT
 9.01 Appointment and Authorization.
9.02 Delegation of Duties.
9.03 Liability of Administrative Agent.
9.04 Reliance by Administrative Agent.
9.05 Notice of Default.
9.06 Credit Decisions.
9.07 Indemnification.
9.08 Administrative Agent in Individual Capacity.
9.09 Successor Administrative Agent.
ARTICLE X. MISCELLANEOUS
10.01 Amendments and Waivers.
10.02 Notices.
10.03 No Waiver; Cumulative Remedies.
10.04 Survival of Representations and Warranties.
10.05 Indemnity.
10.06 Environmental Indemnification.
10.07 Successors and Assigns
10.08 Interest.
10.09 Counterparts and Facsimile Signatures.
10.10 Severability
10.11 Third Party Beneficiaries
10.12 USA Patriot Act Notice
10.13 Governing Law
10.14 Submission to Jurisdiction
10.15 Waiver Of Jury Trial
10.16 Amendment and Restatement
10.17 Entire Agreement.
10.18 Obligations Several.
10.19 Taxes - Allocation
10.20 General Release.
10.21 NO ORAL AGREEMENTS

APPENDIX

Appendix I  Specific Terms, Fees and Conditions
Appendix II  Collateral Properties
Appendix III  North Properties

SCHEDULES

Schedule I  Security Documents
Schedule II  [Reserved]
Schedule 5.06  Litigation
Schedule 5.12  Hydrocarbon Interests
Schedule 5.20  Corporate Structure
Schedule 5.30  Production Matters
Schedule 7.01  Liens
Schedule 7.06  Transactions with Affiliates

EXHIBITS

Exhibit A  Form of Guaranty
Exhibit B  Form of Convertible Note
Exhibit C   Form of Notice of Capitalization/Conversion
Exhibit D   Form of Assignment of Overriding Royalty Interest

 
Credit Agreement - Westside Energy Production Company, LP
Westside Energy Operating Company, LP  

 

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

CREDIT AGREEMENT

This CREDIT AGREEMENT, dated as of March 23, 2007, is entered into by and among
WESTSIDE ENERGY PRODUCTION COMPANY, LP, a Texas limited partnership (“Westside
Production”), WESTSIDE ENERGY OPERATING COMPANY, LP, a Texas limited partnership
(“Westside Operating”), Westside Production and Westside Operating are each a
“Borrower”, and are collectively, jointly and severally, “Borrowers”, the
undersigned Guarantors, the financial institutions from time to time parties
hereto (each a “Lender” and collectively, “Lenders”) and SPINDRIFT PARTNERS,
L.P., a Delaware limited partnership, as a Lender and as administrative agent
for Lenders (in such capacity, “Administrative Agent”).

RECITALS

A.  Borrowers, as borrowers, Westside Energy Corporation, a Nevada corporation
(“Parent”), as a guarantor, and GasRock Capital LLC, as lender, have entered
into that certain Advancing Term Credit Agreement dated as of March 17, 2006
(the “Existing Credit Agreement”);

B.  GasRock Capital LLC has assigned to Administrative Agent and Lenders all of
its rights and obligations under the Existing Credit Agreement pursuant to that
certain Loan Purchase and Assignment Agreement by and among GasRock Capital LLC
and Lenders dated as of March 23, 2007 (the “Assignment Agreement”).

C.  Borrowers, Lenders and Administrative Agent desire to amend and restate the
Existing Credit Agreement in its entirety as set forth herein; and

D.  Lenders are willing to make Loans upon the terms and subject to the
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I.  
 
DEFINITIONS
 
·  Certain Defined Terms. 
 
In addition to the terms defined in the preamble of this Agreement, the
following terms have the following meanings herein:
 
“Administrative Agent” means the Administrative Agent so named in the preamble,
and any successor thereto.
 
“Advance Payment Contracts” means any contract whereby any Loan Party either
(a) receives or becomes entitled to receive (either directly or indirectly) any
payment (an “Advance Payment”) to be applied toward payment of the purchase
price of Hydrocarbons to be produced from Hydrocarbon Interests owned by any
Loan Party and which Advance Payment is paid or to be paid in advance of actual
delivery of such production to or for the account of the purchaser regardless of
such production, or (b) grants an option or right of refusal to the purchaser to
take delivery of such production in lieu of payment, and, in either of the
foregoing instances, the Advance Payment is, or is to be, applied as payment in
full for such production when sold and delivered or is, or is to be, applied as
payment for a portion only of the purchase price thereof or of a percentage or
share of such production; provided that inclusion of the standard “take or pay”
provision in any gas sales or purchase contract or any other similar contract
shall not, in and of itself, constitute such contract as an Advance Payment
Contract for the purposes hereof.
 
“Affiliate” means, as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
 
“Agent-Related Person” means Administrative Agent’s Affiliates, and the
officers, directors, employees, agents, and attorneys-in-fact of Administrative
Agent and its Affiliates.
 
“Agreement” means this Credit Agreement including all Appendices, Schedules and
Exhibits attached hereto, as same may be amended in writing from time to time.
 
“Alternative Financings” has the meaning set forth under Subsection 7.05(d).
 
“Asset Disposition” shall mean any direct or indirect sale, lease (other than an
operating lease entered into in the ordinary course of business), transfer,
issuance or other disposition, or a series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan, of any oil and gas
property (each referred to for the purposes of this definition as a
“disposition”) by a Borrower, including dispositions by means of a merger,
consolidation or similar transactions, and farm-outs, production sales or other
contracts, farm-in agreements, area of mutual interest agreements and other
similar agreements. Notwithstanding the preceding, the following items shall not
be deemed to be Asset Dispositions:
 
(a) a disposition by one Borrower to another Borrower;
 
(b) a disposition or abandonment of obsolete or worn out equipment or equipment
that is no longer useful in the conduct of the business of the Borrowers and
that is disposed of in each case in the ordinary course of business; and
 
(c) a sale, transfer or abandonment (whether or not in the ordinary course of
business) of oil and gas properties; provided that at the time of such sale,
transfer or abandonment such oil and gas properties do not have associated with
them any material Proved Reserves.
 
“Assignment Agreement” has the meaning set forth in the recitals to this
Agreement.
 
“Available Advance Amount” means, as of Closing, the Maximum Loan Amount minus
all outstanding “Obligations” (as defined in the Existing Credit Agreement)
under the Existing Credit Agreement. 
 
“Bankruptcy Code” means the Federal Bankruptcy Reform Act of 1978 (11 U.S.C.
§101, et seq.).
 
“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks located in the city of Administrative Agent’s address, as set
forth on Appendix I hereto, are authorized or required by law to close.
 
“Capital Lease” means, when used with respect to any Person, any lease in
respect of which any of the obligations of such Person thereunder constitute
Capitalized Lease Obligations.
 
“Capitalized Lease Obligations” means, all obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations shall have been or should be, in accordance with GAAP, capitalized
on the books of such Person.
 
“Cash Equivalents” means: (a) securities issued or fully guaranteed or insured
by the United States Government or any agency thereof and backed by the full
faith and credit of the United States having maturities of not more than twelve
(12) months from the date of acquisition; (b) certificates of deposit, time
deposits, Eurodollar time deposits, or bankers’ acceptances having in each case
a tenor of not more than three (3) months from the date of acquisition issued by
any U.S. commercial bank or any branch or agency of a non-U.S. commercial bank
licensed to conduct business in the U.S. having combined capital and surplus of
not less than Five Hundred Million Dollars ($500,000,000); and (c) commercial
paper of an issuer rated at least A-2 by S&P or P-2 by Moody’s at the time of
acquisition, and in either case having a tenor of not more than twelve (12)
months.
 
“Change of Control” means (a) a purchase or acquisition, directly or indirectly,
by any “person” or “group” within the meaning of Section 13(d)(3) and 14(d)(2)
of the Securities Exchange Act of 1934 (a “Group”), of “beneficial ownership”
(as such term is defined in Rule 13d-3 under the Exchange Act) of securities of
Parent which, together with any securities owned beneficially by any
“affiliates” or “associates” of such Group (as such terms are defined in Rule
12b-2 under the Exchange Act), shall represent more than fifty percent (50%) of
the combined voting power of Parent's securities which are entitled to vote
generally in the election of directors and which are outstanding on the date
immediately prior to the date of such purchase or acquisition; or (b) a sale of
all or substantially all of the assets of Westside Production or of the
Borrowers taken as a whole to any Person or Group; or (c) the liquidation or
dissolution of a Borrower; or (d) the withdrawal or removal of Westside Energy
GP, L.L.C. as general partner of any of the Borrowers; or (e) the sale or
transfer by the current owners thereof of the membership interests or voting
rights with respect to the membership interests of Westside Energy GP, L.L.C. or
of the ownership interests in any Borrower.
 
“Closing” means the date on which all conditions precedent set forth in Section
4.01 are satisfied or waived by Administrative Agent and Lenders.
 
“Code” means the Internal Revenue Code of 1986 and regulations promulgated
thereunder.
 
“Collateral” means those certain Oil and Gas Properties of Borrowers and any
Subsidiary thereof more particularly described on Appendix II attached hereto,
plus all Oil and Gas attributable thereto, now existing or hereafter acquired.
 
“Common Stock” means common stock of Parent.
 
“Contingent Obligation” means, as to any Person without duplication, any direct
or indirect liability of that Person with or without recourse, (a) with respect
to any Indebtedness, dividend, letter of credit or other similar obligation (the
“primary obligations”) of another Person (the “primary obligor”), including any
Guaranty Obligation of that Person; (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that Person is otherwise
liable for reimbursement of drawings or payments; or (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered. The amount of any Contingent Obligation shall, in the
case of Guaranty Obligations, be deemed equal to the maximum stated or
determinable amount of the primary obligation in respect of which such Guaranty
Obligation is made or, if not stated or if indeterminable, the maximum
reasonably anticipated liability in respect thereof, and in the case of other
Contingent Obligations shall be equal to the maximum reasonably anticipated
liability in respect thereof.
 
“Contract Rate” has the meaning specified in Appendix I.
 
“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, undertaking, contract, indenture,
mortgage, deed of trust or other instrument, document or agreement to which such
Person is a party or by which it or any of its property is bound.
 
“Conversion Option” has the meaning specified in Section 2.05.
 
“Conversion Price” has the meaning specified in Section 2.05.
 
“Conversion Shares” has the meaning specified in Section 5.23.
 
“Debtor Relief Laws” means the Bankruptcy Code, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.
 
“Deed of Trust Assignment” means the Assignment of Deed of Trust, Mortgage,
Security Agreement, Financing Statement and Assignment of Production and
Revenues dated as of the date hereof made by GasRock Capital LLC to Lenders in
relation to the Deed of Trust (as defined in the Existing Credit Agreement).
 
“Default” means any event or circumstance which, with the giving of notice, the
lapse of time, or both, would (if not cured or otherwise remedied during such
time) constitute an Event of Default.
 
“Default Rate” has the meaning specified in Section 2.04.
 
“Dollars”, “dollars” and “$” each mean lawful money of the United States.
 
“Environmental Claims” means all claims by any Governmental Authority or other
Person alleging potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment.
 
“Environmental Complaint” means any complaint, summons, citation, notice,
directive, order, claim, litigation, investigation, proceeding, judgment, letter
or other communication from any federal, state or municipal authority or any
other party against any Loan Party involving (a) a Hazardous Discharge from,
onto or about any real property owned, leased or operated at any time by any
Loan Party, (b) a Hazardous Discharge caused, in whole or in part, by any Loan
Party or by any Person acting on behalf of or at the instruction of any Loan
Party, or (c) any violation of any Environmental Law by any Loan Party.
 
“Environmental Laws” means any law, statute, ordinance, rule, regulation, order
or determination of any Governmental Authority (or other body exercising similar
functions), affecting any real or personal property owned, operated or leased by
any Loan Party or any other operation of any Loan Party in any way pertaining to
health, safety or the environment, including all applicable health, safety and
environmental laws and regulations, and further including (a) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986 (as amended from time
to time, herein referred to as “CERCLA”), (b) the Resource Conservation and
Recovery Act of 1976, as amended by the Used Oil Recycling Act of 1980, the
Solid Waste Recovery Act of 1976, as amended by the Solid Waste Disposal Act of
1980, and the Hazardous and Solid Waste Amendments of 1984 (as amended from time
to time, herein referred to as “RCRA”), (c) the Safe Drinking Water Act, as
amended, (d) the Toxic Substances Control Act, as amended, (e) the Clean Air
Act, as amended, (f) the Occupational Safety and Health Act of 1970, as amended,
(g) the laws, rules and regulations of any state having jurisdiction over any
real or personal property owned, operated or leased by any Loan Party or any
other operation of any Loan Party which relates to health, safety or the
environment, as each may be amended from time to time, and (h) any federal,
state or municipal laws, ordinances or regulations which may now or hereafter
require removal of asbestos or other Hazardous Substances or impose any
liability related to asbestos or other Hazardous Substances. The terms
“petroleum”, “release” and “threatened release” have the meanings specified in
CERCLA, and the terms “solid waste” and “disposal” (or “disposed”) have the
meanings specified in RCRA; provided, however, in the event either 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
with respect to all provisions of this Agreement; and provided further that, to
the extent the laws of the state in which any real or personal property owned,
operated or leased by any Loan Party is located establish a meaning for
“petroleum”, “release”, “solid waste” or “disposal” which is broader than that
specified in either CERCLA or RCRA, such broader meaning shall apply in so far
as such broader meaning is applicable to the real or personal property owned,
operated or leased by any such Loan Party and located in such state.
 
“Environmental Liability” means any liability, loss, fine, penalty, charge,
Lien, damage, cost, or expense of any kind that results directly or indirectly,
in whole or in part (a) from the violation of any Environmental Law, (b) from
the release or threatened release of any Hazardous Substance, (c) from removal,
remediation, or other actions in response to the release or threatened release
of any Hazardous Substance, (d) from actual or threatened damages to natural
resources, (e) from the imposition of injunctive relief or other orders, (f)
from personal injury, death, or property damage which occurs as a result of any
Loan Party’s use, storage, handling, or the release or threatened release of a
Hazardous Substance, or (g) from any environmental investigation performed at,
on, or for any real property owned by any Loan Party.
 
“ERISA” means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
 
“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with a Borrower within the meaning of Section 414(b), (c),
(m) or (o) of the Code.
 
“Event of Default” means any of the events or circumstances specified in Section
8.01.
 
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time, and regulations promulgated thereunder.
 
“Existing Credit Agreement” means the Existing Credit Agreement so described in
the recitals to this Agreement.
 
“Existing Loan Documents” means the Existing Credit Agreement, any note,
guaranty, overriding royalty interest conveyance, security document and all
other documents delivered pursuant to or in connection with the Existing Credit
Agreement.
 
“FRB” means the Board of Governors of the Federal Reserve System, and any
Governmental Authority succeeding to any of its principal functions.
 
“GAAP” means generally accepted accounting principles set forth from time to
time in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board.
 
“Gas Balancing Agreements” means any agreement or arrangement whereby any Loan
Party, or any other party having an interest in any Hydrocarbons to be produced
from Hydrocarbon Interests in which any Loan Party owns an interest, has a right
to take more than its proportionate share of production therefrom.
 
“General Partner” means Westside Energy GP, L.L.C., a Texas limited liability
company.
 
“Governmental Authority” means any nation or government, any state 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.
 
“Guarantor” means Parent, the General Partner and any Subsidiary that executes a
Guaranty pursuant to Section 6.15 hereof.
 
“Guaranty” means a guaranty in the form of Exhibit A-1 or Exhibit A-2 attached
hereto, as applicable, to be executed by each Guarantor (collectively,
“Guaranties”).
 
“Guaranty Obligations” means with respect to any Indebtedness, dividend, letter
of credit or other similar obligation (the “primary obligations”) of another
Person (the “primary obligor”), including any obligation of that Person (a) to
purchase, repurchase or otherwise acquire such primary obligations or any
security therefor, (b) to advance or provide funds for the payment or discharge
of any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or any
balance sheet item, level of income or financial condition of the primary
obligor, (c) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability of
the primary obligor to make payment of such primary obligation, or (d) otherwise
to assure or hold harmless the holder of any such primary obligation against
loss in respect thereof.
 
“Hazardous Discharge” means any releasing, spilling, leaking, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, disposing or dumping of
any Hazardous Substance from or onto any real property owned, leased or operated
at any time by any Loan Party or any real property owned, leased or operated by
any other party.
 
“Hazardous Substance” means any pollutant, toxic substance, hazardous waste,
compound, element or chemical that is defined as hazardous, toxic, noxious,
dangerous or infectious pursuant to any Environmental Law or which is otherwise
regulated by any Environmental Law.
 
“Hedge Agreements” means all future contracts, forward contracts, swap, cap or
collar contracts, option contracts, hedging contracts or other derivative
contracts or similar agreements covering Oil and Gas commodities or prices or
financial, monetary or interest rate instruments.
 
“Highest Lawful Rate” means, as of a particular date, the maximum nonusurious
interest rate that under applicable federal and any applicable state law may
then be contracted for, charged or received by Lenders in connection with the
Obligations.
 
“Hydrocarbons” means oil, gas, casinghead gas, drip gasolines, natural gasoline,
condensate, distillate, and all other liquid and gaseous hydrocarbons produced
or to be produced in conjunction therewith, and all products, by-products and
all other substances derived therefrom or the processing thereof.
 
“Hydrocarbon Interests” means leasehold and other interests in or under oil, gas
and other liquid or gaseous hydrocarbon leases with respect to Oil and Gas
located in or under those certain properties more particularly described in
Appendix II, mineral fee interests, overriding royalty and royalty interests,
net profit interests, production payment interests relating to Oil and Gas
located in or under those certain properties more particularly described in
Appendix II, including any beneficial, reserved or residual interest of whatever
nature.
 
“Immaterial Title Deficiencies” means, with respect to Hydrocarbon Interests,
defects or clouds on title, discrepancies in reported net revenue and working
interest ownership percentages and other Liens, defects, discrepancies and
similar matters which do not, individually or in the aggregate, affect
Hydrocarbon Interests with a Recognized Value greater than four percent (4%) of
the Recognized Value of all such Hydrocarbon Interests.
 
“Indebtedness” of any Person means, without duplication, (a) all indebtedness
for borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
entered into in the ordinary course of business on ordinary terms); (c) all
non-contingent reimbursement or payment obligations with respect to Surety
Instruments; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all indebtedness
created or arising under any conditional sale or other title retention
agreement, or incurred as financing, in either case with respect to property
acquired by the Person (even though the rights and remedies of the seller or
bank under such agreement in the event of default are limited to repossession or
sale of such property) including, without limitation, production payments, net
profit interests and other Hydrocarbon Interests subject to repayment out of
future Oil and Gas production; (f) all obligations with respect to Capital
Leases; (g) all indebtedness referred to in clauses (a) through (f) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in property
(including accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness;
and (i) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (g) above.
 
“Indemnified Environmental Liabilities” has the meaning specified in Section
10.06.
 
“Indemnified Liabilities” has the meaning specified in Section 10.05.
 
“Indemnified Person” has the meaning specified in Section 10.05.
 
“Insolvency Proceeding” means (a) any case, action or proceeding relating to
bankruptcy, reorganization, insolvency, liquidation, receivership, dissolution,
winding up or relief of debtors, or (b) any general assignment for the benefit
of creditors, composition, marshalling of assets for creditors, or other,
similar arrangement in respect of its creditors generally or any substantial
portion of its creditors; undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
 
“IP Rights” has the meaning specified in Section 5.14.
 
“IRS” means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.
 
“Lender” means each Person party hereto identified as a “Lender” on Appendix I
hereto, and its successor and assigns, and “Lenders” shall mean all Lenders
collectively.
 
“Lender ORRI %” has the meaning specified in Section 2.06.
 
“Lender’s Payment Office” means, with respect to any Lender, the address set
forth on Appendix I hereto, or such other address as such Lender or the
Administrative Agent may from time to time specify.
 
“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising under
or evidenced by any conditional sale or other title retention agreement and the
interest of a lessor under a Capital Lease), any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such Lien relates
as debtor, under the Uniform Commercial Code or any comparable law and any
contingent or other agreement to provide any of the foregoing.
 
“Loans” means the extensions of credit by Lenders in their Pro Rata Share of the
Maximum Loan Amount to Borrowers.
 
“Loan Documents” means this Agreement, the Notes, the Registration Rights
Agreement, any Guaranty, the ORRI Conveyance, the Security Documents, the
Assignment Agreement, the Deed of Trust Assignment, the Release, the Notice of
Borrowing and all other documents delivered to Administrative Agent or any
Lender in connection herewith.
 
“Loan Parties” means collectively Borrowers, Parent and Guarantors, and "Loan
Party" means each of the Parent, each of the Borrowers and each of the
Guarantors, individually.
 
“Majority Lenders” means, at any time, Lenders holding at least sixty-six and
two-thirds percent (66 2/3%) of the Maximum Loan Amount.
 
“Margin Stock” means “margin stock” as such term is defined in Regulation T, U
or X of the FRB.
 
“Material Adverse Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, properties or financial condition
of the Loan Parties, taken as a whole; (b) a material impairment of the ability
of the Loan Parties, taken as a whole, to perform under any Loan Document; or
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document.
 
“Material Contract” means any contract or other arrangement to which any Loan
Party is a party (other than the Loan Documents) for which breach,
nonperformance or cancellation would reasonably be expected to have a Material
Adverse Effect.
 
“Material Gas Imbalance” means, with respect to all Gas Balancing Agreements to
which any Loan Party is a party or by which any Hydrocarbon Interest owned by
any Loan Party is bound, a net gas imbalance of Borrowers, individually or taken
as a whole, owed to third parties in excess of five percent (5.0%) of engineered
proved developed reserves. Gas imbalances will be determined based on written
agreements, if any, specifying the method of calculation thereof.
 
“Maximum Loan Amount” means the amount set forth under Appendix I.
 
“Mortgages” means any mortgage, deed of trust, assignment of production,
security agreement and financing statement from a Borrower to Administrative
Agent (or any comparable instrument) and all supplements, assignments,
amendments and restatements thereto (or any agreement in substitution therefor)
which are executed and delivered to Administrative Agent pursuant to Article III
of this Agreement.
 
“Mortgaged Properties” means the Oil and Gas Properties and such other
properties upon which a Borrower has purported to grant a Lien in favor of
Administrative Agent pursuant to the Mortgages.
 
“Multiemployer Plan” means a “multiemployer plan,” within the meaning of Section
4001(a)(3) of ERISA, to which a Borrower or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding seven (7)
calendar years, has made, or been obligated to make, contributions.
 
“Net Available Cash” from an Asset Disposition shall mean cash payments received
(including any Cash Equivalents or liquid securities or cash payments received
by way of deferred payment of principal pursuant to a note or installment
receivable or otherwise, but only as and when received, but excluding any other
consideration received in the from of assumption by the acquiring person of debt
or other obligations relating to the oil and gas properties that are the subject
of such Asset Disposition or received in any other non-cash form) therefrom, in
each case net of:
 
(a) all legal, accounting, investment banking, title and recording tax expenses,
commissions and other fees and expenses incurred, and all federal, state,
provincial, foreign and local taxes required to be paid or accrued as a
liability under GAAP as a consequence of such Asset Disposition; and
 
(b) the deduction of appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
assets disposed of in such Asset Disposition and retained by the Borrowers after
such Asset Disposition, provided, however, that such reserve amounts shall
constitute Net Available Cash as soon as they have been released from such
reserve.
 
“North Properties” means those certain Oil and Gas Properties of Borrowers and
any Subsidiary thereof more particularly described on Appendix III attached
hereto, plus all Oil and Gas attributable thereto, now existing or hereafter
acquired.
 
“Notes” means the notes, substantially in the form of Exhibit B, issued by
Borrowers hereunder to Lenders in their respective Pro Rata Share, including any
amendment, modification, renewal or replacement of such promissory notes.
 
“Notice of Capitalization/Conversion” means a notice substantially in the form
of Exhibit C hereto.
 
“Obligations” means the aggregate amount of all advances, debts, liabilities,
obligations, covenants and duties of Borrowers or any other Loan Party arising
under or evidenced by any Loan Document or owing by Borrowers or any other Loan
Party to any Lender, Administrative Agent or any Indemnified Person, whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising under or evidenced by any Loan Document.
 
“Off-Balance Sheet Liabilities” means, with respect to any Person as of any date
of determination thereof, without duplication and to the extent not included as
a liability on the consolidated balance sheet of such Person and its
Subsidiaries in accordance with GAAP: (a) with respect to any asset
securitization transaction (including any accounts receivable purchase facility)
(i) the unrecovered investment of purchasers or transferees of assets so
transferred, and (ii) any other payment, recourse, repurchase, hold harmless,
indemnity or similar obligation of such Person or any of its Subsidiaries in
respect of assets transferred or payments made in respect thereof, other than
limited recourse provisions that are customary for transactions of such type and
that neither (x) have the effect of limiting the loss or credit risk of such
purchasers or transferees with respect to payment or performance by the obligors
of the assets so transferred nor (y) impair the characterization of the
transaction as a true sale under applicable laws; (b) the monetary obligations
under any financing lease or so-called “synthetic,” tax retention or off-balance
sheet lease transaction which, upon the application of any Debtor Relief Law to
such Person or any of its Subsidiaries, would be characterized as indebtedness;
or (c) the monetary obligations under any sale and leaseback transaction which
does not create a liability on the consolidated balance sheet of such Person and
its Subsidiaries.
 
“Oil and Gas” means petroleum, natural gas and other related Hydrocarbons or
minerals or any of them and all other substances produced or extracted in
association therewith.
 
“Oil and Gas Properties” means, with respect to the properties more particularly
described on Appendix II, any and all Hydrocarbon Interests now owned or
hereafter acquired by a Borrower, or any Subsidiary thereof, and contracts
executed in connection therewith and all tenements, hereditaments,
appurtenances, and properties belonging, affixed or incidental to such
Hydrocarbon Interests, including, without limitation, any and all property, real
or personal, now owned or hereafter acquired by a Borrower or any Subsidiary
thereof and situated upon or to be situated upon, and used, built for use, or
useful in connection with the operating, working or developing of such
Hydrocarbon Interests, including, without limitation, any and all petroleum
and/or natural gas wells, structures, field separators, liquid extractors, plant
compressors, pumps, pumping units, field gathering systems, tank and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
liters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, tubing and rods, surface leases, rights-of-way, easements and
servitudes, and all additions, substitutions, replacements for, fixtures and
attachments to any and all of the foregoing owned directly or indirectly by a
Borrower and its Subsidiaries.
 
“Operating Lease” means any lease, sublease, license or similar arrangement
(other than a Capital Lease and other than leases with a primary term of one
year or less or which can be terminated by the lessee upon notice of one year or
less without incurring a penalty) pursuant to which a Person leases, subleases
or otherwise is granted the right to occupy, take possession of, or use property
whether real, personal or mixed; provided, that “Operating Lease” shall not
include oil, gas or mineral leases, easements, right of way grants, surface use
agreements, and similar real property agreements entered into in the ordinary
course of the oil and gas exploration and production business.
 
“Operator” means any operators, including, contract operators, of the Oil and
Gas Properties (as such terms are generally understood in the oil and gas
industry) and, includes, in any event, Westside Operating.
 
“Organization Documents” means, for any corporation: the articles of
incorporation, the bylaws, any certificate of determination or instrument
relating to the rights of the shareholders of such corporation, any shareholder
rights agreement, and all applicable resolutions of the board of directors (or
any committee thereof) of such corporation; for any limited liability company:
the articles of organization, the regulations or operating agreement,
certificate of organization and all applicable resolutions of the members of
such company; and for any limited partnership: the certificate of limited
partnership, the limited partnership agreement and all Organization Documents
for its general partner as any of the foregoing have been amended or
supplemented from time to time.
 
“Other Taxes” means any present or future mortgage tax, stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
 
“Overriding Royalty Interests” means the overriding royalty interests described
in Subsection 2.06(a).
 
“ORRI Conveyance” means any assignment of Overriding Royalty Interests in the
form of Exhibit D hereto.
 
“Parent” means the Parent so named in the recitals to this Agreement.
 
“Parent Guaranty” means the Guaranty executed by Parent.
 
”Participant” has the meaning specified in Section 10.07.
 
“Payment Date” means (i) March 15 and September 15 of each calendar year,
commencing September 15, 2007, until the Termination Date, and (ii) the
Termination Date.
 
“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA, other than a Multiemployer Plan, which a Borrower
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiemployer Plan (as described in Section
4064(a) of ERISA) has made contributions at any time during the immediately
preceding five (5) plan years.
 
“Permitted Consideration” has the meaning set forth in Section 7.02.
 
“Permitted Liens” has the meaning set forth in Section 7.01.
 
“Person” means an individual, partnership, limited partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
 
“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which is subject to ERISA, other than a Multiemployer Plan, and which a Borrower
sponsors or maintains or to which a Borrower makes, is making, or is obligated
to make contributions and includes any Pension Plan.
 
“Principal Business” means the business of the exploration for, development of,
and the acquisition, production, gathering and upstream marketing of Oil and
Gas.
 
“Pro Rata Share” means, as to any Lender at any time, the percentage set forth
opposite its name on Appendix I hereto, as amended from time to time.
 
“Proved Reserves” has the meaning given to such term by the Society of Petroleum
Engineers.
 
“Recognized Value” means with respect to Hydrocarbon Interests, the discounted
present value of the estimated net cash flow to be realized from the production
of Hydrocarbons from such Hydrocarbon Interests.
 
“Registration Rights Agreement” means that certain Registration Rights Agreement
of even date herewith between Borrowers, Parent and Lenders.
 
“Regulation T”, “Regulation U” and “Regulation X” means Regulation T, Regulation
U and Regulation X, respectively, of the FRB.
 
“Related Fund” means, with respect to any Lender that is a fund that invests (in
whole or in part) in commercial loans, any other fund that invests (in whole or
in part) in commercial loans and is managed by the same investment advisor as
such Lender or by an Affiliate of such investment advisor.
 
“Release” means (i) the amended ISDA Master Agreement between Keybank National
Association and Borrowers and (ii) the written consent of Keybank National
Association to the transactions contemplated by the Assignment Agreement and the
Deed of Trust Assignment, including the release of collateral in relation
thereto.
 
“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
 
“Reserves” means those quantities of Oil and Gas which are anticipated to be
commercially recovered from known accumulations from a given date forward
including “Proved Reserves,” “Probable Reserves” and “Possible Reserves” as
those reserves are denominated and determined in accordance with the methods
commonly accepted by the Society of Petroleum Engineers for evaluating Oil and
Gas reserves.
 
“Responsible Officer” means, with respect to any Loan Party, the president or
such other individual designated as a Responsible Officer by the directors,
managers, general partner or comparable governing body of such Loan Party.
 
“SEC” means the Securities and Exchange Commission.
 
“Securities Act” means the Securities Act of 1933, as amended.
 
“Security Documents” means the Mortgages, collateral assignments, security
agreements, pledges, assignments, control agreements, and related financing
statements listed on Schedule I as the same may be amended, supplemented or
modified from time to time and any and all other instruments now or hereafter
executed in connection with or as security for the payment of the Obligations.
 
“Solvent” means, as to any Person at any time, that (a) the fair value of all of
the property of such Person is greater than the amount of such Person’s
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(32) of the Bankruptcy Code; (b) the present fair saleable value of all of
the property 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 does not intend to, and does not believe that it
will, incur debts or liabilities beyond such Person’s ability to pay as such
debts and liabilities mature; and (d) such Person is not engaged in a business
or a transaction, and is not about to engage in a business or a transaction, for
which such Person’s property would constitute unreasonably small capital.
 
“Stated Maturity Date” means the date set forth on Appendix I stated to be the
maturity date for the Notes.
 
“Subsidiary” of a Person means any corporation, association, partnership, joint
venture or other business entity of which more than 50% of the voting stock or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of the
Subsidiaries of the Person, or a combination thereof. Unless the context
otherwise clearly requires, references herein to a “Subsidiary” refer to a
Subsidiary of a Borrower.
 
“Surety Instruments” means all letters of credit (including standby), banker’s
acceptances, bank guaranties, shipside bonds, surety bonds and similar
instruments.
 
“Taxes” means any and all present or future taxes, levies, imposts, deductions,
charges or withholdings, and all liabilities with respect thereto, excluding, in
the case of each Lender and Administrative Agent, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by such Lender's or
Administrative Agent's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender or Administrative
Agent, as the case may be, is organized or maintains a lending office or is
otherwise doing business.
 
“Termination Date” means the earlier of (a) the Stated Maturity Date, or (b) the
date on which the Loans are due and payable in accordance with the provisions of
this Agreement.
 
“United States” and “U.S.” each means the United States of America.
 
·  Other Interpretive Provisions. 
 
The meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms. Unless otherwise specified or the context clearly
requires otherwise, the words “hereof”, “herein”, “hereunder” and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and Subsection, Section, Schedule and Exhibit references are to this
Agreement. The term “documents” includes any and all instruments, documents,
agreements, certificates, indentures, notices and other writings, however
evidenced. The term “including” is not limiting and means “including without
limitation.” In the computation of periods of time from a specified date to a
later specified date, the word “from” means “from and including”; the words “to”
and “until” each mean “to but excluding”, and the word “through” means “to and
including.” Unless otherwise expressly provided herein, (a) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (b) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation. The captions and headings of this Agreement are for convenience of
reference only and shall not affect the interpretation of this Agreement. This
Agreement and the other Loan Documents are the result of negotiations among and
have been reviewed by counsel to Lenders, Administrative Agent and Borrowers,
and are the products of all parties. Accordingly, they shall not be construed
against Borrowers, Lenders, or Administrative Agent merely because of their
involvement in the preparation thereof.
 
·  Accounting Principles. 
 
Unless the context otherwise clearly requires, all accounting terms not
expressly defined herein shall be construed, and all financial computations
required under this Agreement shall be made in accordance with GAAP,
consistently applied.
 
References herein to “fiscal year” and “fiscal quarter” refer to such fiscal
periods of Parent.
 
ARTICLE II.  
 
THE CREDIT
 
·  Amounts and Terms of the Loan. 
 
Each Lender severally agrees, on the terms and conditions set forth herein, to
make Loans to Borrowers in an aggregate principal amount up to such Lender’s Pro
Rata Share of the Maximum Loan Amount. At Closing, each Lender severally agrees
to advance to Borrowers in a single advance its respective Pro Rata Share of the
Available Advance Amount and at Closing each Lender shall assume, by way of
assignment from GasRock Capital LLC, its Pro Rata Share of the outstanding
“Obligations” (as defined in the Existing Credit Agreement). The obligation of
Borrowers to repay the Loans made by Lenders, together with interest accruing
thereon, shall be evidenced by the Notes. If Borrowers pay or prepay any portion
of the Loans under this Agreement, then such portion may not be re-borrowed.
 
·  Borrowing Mechanics.
 
(a) Out of the borrowing to be made on the date of Closing, (i) $12,642,697.19
shall be borrowed and be disbursed to account number 3100026081 with
PlainsCapital Bank, 2911 Turtle Creek Boulevard, Dallas, Texas 75219, ABA
111322994, for further credit to Westside Energy Operating Company, LP, and (ii)
$12,357,302.81 be borrowed and disbursed in accordance with Appendix I attached
hereto and in accordance with the disbursement authorization dated as of even
date herewith made by Borrowers in favor of Administrative Agent. 
 
(b) Not later than 1:00 p.m. (Boston time) on the date of Closing, each Lender
shall make available an amount equal to its Pro Rata Share of the aggregate
amount to be borrowed hereunder on the date of Closing in immediately available
funds to Administrative Agent at its address set forth on the signature page
hereof. Unless Administrative Agent determines that any applicable condition
specified in Article IV has not been satisfied, Administrative Agent will make
the funds so received from Lenders available to Borrowers at Administrative
Agent’s aforesaid address.
 
·  Prepayment. 
 
In addition to mandatory repayments of the Notes under Section 2.04, Borrowers
may, at any time, prepay the Loans in full, or in minimum amounts of $100,000.00
or integral multiples thereof, plus accrued and unpaid interest to the date of
such prepayment, without penalty or premium, upon irrevocable notice to the
Administrative Agent of not less than five (5) Business Days.
 
·  Interest; Repayment. 
 
(a) The outstanding principal amount under each of the Notes shall bear interest
from Closing at a rate per annum equal to the lesser of (i) the Contract Rate,
or (ii) the Highest Lawful Rate, and such interest shall be paid in arrears on
each Payment Date to each Lender in its respective Pro Rata Share.
Notwithstanding the foregoing, while any Event of Default exists, Borrowers
shall pay interest (after, as well as before, entry of judgment thereon, to the
extent permitted by law) on the outstanding principal amount of the Loans, at a
rate per annum equal to the lesser of (x) the Highest Lawful Rate or (y) the
Default Rate; set forth on Appendix I (the “Default Rate”).
 
(b) (i) On each Payment Date, Borrowers may pay, in immediately available funds,
the full amount of the accrued but unpaid interest due on such Payment Date to
each Lender in its respective Pro Rata Share; or (ii) if Borrowers elect not to
pay the full amount of accrued but unpaid interest on such Payment Date,
Borrowers shall give written notice to the Administrative Agent fifteen (15)
days prior to such Payment Date of such decision stating the amount of accrued
interest Borrowers elect not to pay in cash and each Lender shall then decide
whether such accrued interest shall be: (A) satisfied by conversion to Common
Shares as provided in Section 2.05; or (B) capitalized, thereby increasing the
original principal amount of the Loans by an amount equal to the amount of such
capitalized interest, and all such capitalized interest shall accrue interest
and be repaid in the same manner as the original principal amount of the Loans
in accordance with Sections 2.04(a) and (c).
 
(c)  On the Termination Date, Borrowers shall repay an amount equal to any
outstanding principal under the Notes remaining on such date, together with all
accrued but unpaid interest and outstanding expenses hereunder or under the Loan
Documents.
 
·  Conversion.
 
(a) Pursuant to Section 2.04(b), if a Lender elects to convert all or a portion
of the accrued but unpaid interest owed on a Payment Date after Closing, then,
upon providing a Notice of Capitalization/Conversion to Borrowers, such accrued
unpaid interest owing to such Lender shall be converted into fully paid and
non-assessable shares of Common Stock (the “Conversion Option”).
 
(b) Upon receipt of such Notice of Capitalization/Conversion, Borrowers shall
(i) promptly send a copy of such notice to the Administrative Agent, and (ii)
give effect promptly to the conversion requested by delivering or causing to be
delivered to each such Lender, a certificate representing the number of shares
of Common Stock owed each such Lender together with corresponding assignment or
transfer powers duly executed in blank.
 
(c) The Conversion Option shall be exercised on the terms set forth herein and
in the Notes and at the conversion price set forth on Appendix I hereto (the
“Conversion Price”), and the Obligations owing to such Lender shall be deemed to
have been repaid by an amount equal to the number of shares received by such
Lender times the Conversion Price.
 
(d) No fractional shares or scrip representing fractional shares shall be
transferred upon the exercise of the conversion rights provided herein. In lieu
thereof, any such fractional share shall be rounded upward to a whole share.
 
(e) Parent acknowledges the right of Lenders to utilize the Conversion Option
and agrees to promptly do all acts and things, and will execute and file or
record, as necessary, all instruments, documents or agreements necessary to
effectuate the conversion as set forth above in this Section 2.05 and to issue
and enable Borrowers to deliver to Lenders Common Stock as contemplated by this
Section 2.05.
 
·  Fees and Overriding Royalty Interests.
 
(a) Overriding Royalty Interest. At Closing, Borrowers shall convey to each
Lender pursuant to an instrument substantially in the form of Exhibit D hereto,
its Pro Rata Share of an overriding royalty interest equal to the aggregate
percentage of 8/8ths set forth on Appendix I hereto (the “Lender ORRI %”),
proportionately reduced to Borrowers’ working interest, in and to all Oil and
Gas produced, saved and marketed from the initial Mortgaged Properties.
Notwithstanding anything to the contrary set forth herein, Section 2.09 and
Section 2.10 shall apply to neither the conveyance of this Pro Rata Share nor
any payments thereunder.
 
(b) Other Fees. Borrowers shall pay such other fees at Closing as required under
Section 4.01(c) and as Borrowers shall be required to pay pursuant to any
separate agreement between Borrowers and Administrative Agent or any of its
Affiliates setting forth the compensation to be paid to Administrative Agent
and/or its Affiliates in consideration of providing services in connection with
the credit facilities provided pursuant hereto.
 
(c) Fees Fully Earned. Borrowers agree that as of Closing all such fees and
Overriding Royalty Interests as provided under this Section 2.06 shall be fully
earned.
 
·  Computation of Fees and Interest. 
 
All computations of interest for the Loans and all other computations of fees
shall be made on the basis of actual days elapsed (including the first day but
excluding the last day) and a calendar year consisting of 365 or 366 days, as
applicable.
 
·  Payments by Borrowers.
 
(a) All payments to be made by Borrowers shall be made to Administrative Agent,
for the account of Lenders, without set-off, recoupment or counterclaim. Except
as otherwise expressly provided herein, all payments by Borrowers shall be made
to Administrative Agent at its Payment Office, and shall be made in dollars and
in immediately available funds, no later than 11:00 a.m. (Central time) on the
date due. Any payment received by Administrative Agent later than 11:00 a.m.
(Central time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue.
 
(b) 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.
 
·  Increased Costs and Reduced Return.
 
If any Lender determines in good faith that as a result of the introduction of
or any change in or in the interpretation of any Requirement of Law, or such
Lender’s compliance therewith, in each case after the date hereof, there shall
be any increase in the cost to such Lender of agreeing to make or making,
funding or maintaining Loans, or a reduction in the amount received or
receivable by such Lender in connection with any of the foregoing (excluding for
purposes of this Section 2.09 any such increased costs or reduction in amount
resulting from changes in the basis of taxation of overall net income or overall
gross income by the United States or any foreign jurisdiction or any political
subdivision of either thereof under the laws of which such Lender is organized
or has its Lender’s Payment Office, or is otherwise doing business) then from
time to time upon demand of such Lender (with a copy of such demand to the
Administrative Agent), Borrowers shall pay to such Lender such additional
amounts as will compensate such Lender for such increased cost or reduction.
 
·  Taxes.
 
(a) Any and all payments by Borrowers hereunder or under the Notes shall be made
free and clear of and without deduction for any and all present or future Taxes.
If Borrowers shall be required by any Requirement of Law to deduct any Taxes
from or in respect of any sum payable hereunder or under the Notes to Lenders,
then (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.10) Lenders receive an amount equal to the sum
they would have received had no such deductions been made, (ii) Borrowers shall
make such deductions, and (iii) Borrowers shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with applicable
law.
 
(b) In addition, Borrowers agree to pay any Other Taxes.
 
(c) Borrowers will indemnify Lenders for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section 2.10) paid by Lenders or any
liability (including penalties and interest) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within five (5) days from the date
any Lender makes written demand therefor. Lenders shall reasonably cooperate
with Borrowers to obtain a refund of any Taxes or Other Taxes that were
incorrectly withheld or paid (which for the avoidance of doubt shall not include
an obligation on Lenders to request any information from or request any action
to be taken by its beneficial owners) and Lenders shall pay such refund to
Borrowers within 30 days after receipt thereof.
 
(d) Within 30 days after the date of any payment of Taxes, Borrowers will
furnish to Administrative Agent at its address for notices set forth on Appendix
I, the original or a certified copy of a receipt evidencing payment thereof.
 
(e) Without prejudice to the survival of any other agreement of Borrower
hereunder, the agreements and obligations of each Borrower contained in this
Section 2.10 shall survive the termination of the commitments under this
Agreement and the payment in full of the Obligations.
 
·  Sharing of Payments. 
 
If any Lender shall obtain on account of the Obligations, any payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) or receive any Collateral in respect thereof in excess of the amount
such Lender was entitled to receive pursuant to the terms hereof, such Lender
shall immediately (a) notify Administrative Agent of such fact, and (b) purchase
from the other Lenders such participations in the Loans made by them as shall be
necessary to cause such purchasing Lender to share the excess payment according
to the terms hereof; provided, however, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Lender, such purchase
shall, to that extent, be rescinded and each other Lender shall repay to the
purchasing Lender the purchase price paid therefor, together with an amount
equal to such paying Lender’s ratable share (according to the proportion of (i)
the amount of such paying Lender’s required repayment to (ii) the total amount
so recovered from the purchasing Lender) of any interest or other amount paid or
payable by the purchasing Lender in respect of the total amount so recovered.
Borrowers agree that any Lender so purchasing a participation from another
Lender may, to the fullest extent permitted by law, exercise all its rights of
payment (including the right of set-off) with respect to such participation as
fully as if such Lender were the direct creditor of Borrowers in the amount of
such participation. Administrative Agent will keep records (which shall be
conclusive and binding in the absence of manifest error) of participations
purchased under this Section 2.11 and will in each case notify Lenders following
any such purchases or repayments.
 
ARTICLE III.  
 
SECURITY
 
·  The Security. 
 
The Obligations will be secured by a first and prior Lien on all of the
Collateral, now or hereafter acquired.
 
·  Agreement to Deliver Security Documents. 
 
Borrowers agree to notify Administrative Agent in writing of any additional
interests acquired by a Borrower or any Subsidiary in the Collateral (including
in any proceeds thereof or in any property or interests acquired from such
proceeds) or of any proceeds from the sale of any of the North Properties or of
any additional property or interests acquired by a Borrower or any Subsidiary
from the proceeds of a sale of any of the North Properties, and, if requested by
Administrative Agent, to promptly deliver to Administrative Agent to further
secure the Obligations, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements, letters in lieu of production, and other
Security Documents in form and substance satisfactory to Administrative Agent
covering any such proceeds, properties or interests, for the purpose of
granting, confirming, and perfecting first and prior Liens or security
interests. Borrowers agree to use reasonable efforts to obtain a release of any
prior Lien on any such proceeds, properties or interests.
 
·  Perfection and Protection of Security Interests and Liens. 
 
Loan Parties, as applicable, will from time to time deliver to Administrative
Agent any financing statements, amendments, assignments and continuation
statements, extension agreements and other documents, properly completed (and
executed and/or acknowledged when required) by such Loan Parties in form and
substance satisfactory to Administrative Agent, which Administrative Agent
requests for the purpose of perfecting, confirming, or protecting any Liens or
other rights in Collateral securing any Obligations. Loan Parties hereby
authorize Administrative Agent to file, in any applicable jurisdiction where
Administrative Agent deems it necessary, a financing statement or statements,
and at the request of Administrative Agent, Loan Parties will join
Administrative Agent in executing one or more financing statements pursuant to
the applicable Uniform Commercial Code in form satisfactory to Administrative
Agent, and will pay the cost of filing or recording such instrument, as a
financing statement, in all public offices at any time and from time to time
whenever filing or recording of any financing statement is deemed by
Administrative Agent to be necessary.
 
·  Offset. 
 
To secure the repayment of the Obligations, Loan Parties hereby grant Lenders a
security interest, Lien, and right of offset, each of which shall be in addition
to all other interests, Liens, and rights of Lenders at common law, under the
Loan Documents or otherwise, and each of which shall be upon and against (a) any
and all moneys, securities or other property (and the proceeds therefrom) of
Loan Parties now or hereafter held or received by or in transit to Lenders from
or for the account of Loan Parties, whether for safekeeping, custody, pledge,
transmission, collection or otherwise, and (b) any other credits and claims of a
Loan Party at any time existing against Lenders. Upon the occurrence of any
Event of Default, each Lender is hereby authorized to foreclose upon, offset,
appropriate, and apply, at any time and from time to time, without notice to
Loan Parties, any and all items hereinabove referred to against the Obligations
then due and payable.
 
ARTICLE IV.  
 
CONDITIONS PRECEDENT
 
·  Conditions Precedent. 
 
The obligation of Lenders to make the Loans is subject to the condition that
Administrative Agent shall have received the following, in form and substance
satisfactory to Administrative Agent and Lenders:
 
(a) Credit Agreement and Other Loan Documents. The Loan Documents, executed by
each party thereto, and where appropriate, properly acknowledged and notarized;
 
(b) Secretary’s Certificate. A certificate of the Secretary or Assistant
Secretary of each Borrower and each Guarantor, or in the event that any such
Person is a limited partnership, such Person’s general partner, certifying as of
the Closing to: (i) resolutions of the board of directors or members of such
Person or such Person’s general partner, as applicable, authorizing the
transactions contemplated hereby; (ii) the names and genuine signatures of the
Responsible Officers of such Person or such Person’s general partner, as
applicable, authorized to execute, deliver and perform, as applicable, this
Agreement, the Security Documents and all other Loan Documents to be delivered
hereunder; (iii) the Organization Documents of such Person and, as applicable,
such Person’s general partner, as in effect at Closing; (iv) the good standing
certificate for such Person or such Person’s general partner, as applicable,
from its state of incorporation, formation or organization, as applicable,
evidencing its qualification to do business in such state as of a date no more
than thirty (30) days prior to Closing; and (v) as applicable, certificate(s) of
authority for such Person from foreign states wherein such Person conducts
business, evidencing such Person’s qualification to do business in such state as
of a date no more than thirty (30) days prior to Closing;
 
(c) Payment of Fees. Payment by Borrowers of all accrued and unpaid fees, costs
and expenses owed pursuant to this Agreement to the extent then due and payable
at Closing including such fees set forth on Appendix I, including any such
costs, fees and expenses arising under or referenced in Sections 2.06 and 10.05;
 
(d) Opinions of Counsel. Opinions of Loan Parties’ counsel under New York law
and Nevada law in form and substance satisfactory to Administrative Agent
including, among other matters, the due formation, standing and authorization of
the Loan Parties and as to the enforceability of the Loan Documents, perfection
of the Security Documents, the authorized capitalization of Parent and choice of
laws;
 
(e) Additional Conditions Precedent. Borrowers shall deliver or cause to be
delivered such additional documentation and such other conditions shall be
satisfied as set forth on Appendix I hereto.
 
ARTICLE V.  
 
REPRESENTATIONS AND WARRANTIES
 
Each Loan Party represents and warrants to Administrative Agent and Lenders
that:
 
·  Corporate Existence and Power. 
 
Such Loan Party: (a) is validly existing and in good standing under the laws of
the state of its incorporation, formation or organization, as applicable; (b)
has the power and authority and all material governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
as currently conducted and to execute, deliver, and perform its obligations
under the Loan Documents, (c) is duly qualified, is licensed and is in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires any such
qualification or license; and (d) is in compliance in all material respects with
all Requirements of Law.
 
·  Corporate Authorization; No Contravention. 
 
The execution, delivery and performance by each Loan Party of this Agreement and
each other Loan Document to which such Person is a party, have been duly
authorized by all necessary corporate, partnership or limited liability company
actions, as applicable, and do not and will not: (a) contravene the terms of any
of that Person's Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, any document
evidencing any Contractual Obligation to which such Person is a party or any
order, injunction, writ or decree of any Governmental Authority to which such
Person or its property is subject; or (c) violate any Requirement of Law.
 
·  Governmental Authorization. 
 
No approval, consent, exemption, authorization, or other action by, or notice
to, or filing with, any Governmental Authority is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document to which it
is a party.
 
·  Binding Effect. 
 
This Agreement and each other Loan Document to which each Loan Party is a party
constitute the legal, valid and binding obligations of such Person to the extent
it is a party thereto, enforceable against such Person in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, or similar laws affecting the enforcement of creditors’
rights generally or by equitable principles relating to enforceability.
 
·  Financial Condition. 
 
(a) The audited annual financial statements contained in the most recent Form
10-K of Parent filed with the SEC (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present in all material respects the
financial condition of Parent and its Subsidiaries as of the date thereof and
their results of operations for the period covered thereby in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein; and (iii) show all material Indebtedness and
other liabilities, direct or contingent, of Parent and its Subsidiaries as of
the date thereof, including liabilities for taxes and material commitments.
 
(b) The unaudited quarterly financial statements contained in the three latest
Forms 10-Q of Parent filed with the SEC (i) were prepared in accordance with
GAAP consistently applied throughout the period covered thereby, except as
otherwise expressly noted therein, and (ii) fairly present in all material
respects the financial condition of the Parent and its Subsidiaries as of the
date thereof and their results of operations for the period covered thereby,
subject to the absence of footnotes and to normal year-end audit adjustments.
 
(c) As of the Closing, any and all events or circumstances that, either
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect have been described in Parent’s filings with the
SEC.
 
(d) As of the Closing, none of the Loan Parties have any Off-Balance Sheet
Liabilities.
 
·  Litigation. 
 
Except as described in Parent’s filings with the SEC or as otherwise described
in Schedule 5.06, there are no material actions, suits, proceedings, claims or
disputes pending, or to the knowledge of the Loan Parties, threatened at law, in
equity, in arbitration or before any Governmental Authority, by or against any
Loan Party, or any of their properties or revenues. No injunction, writ,
temporary restraining order or any order of any nature has been issued by any
court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
 
·  No Default. 
 
No Default or Event of Default exists or would be reasonably expected to result
from the incurring of any Obligations by a Loan Party. As of Closing, no Loan
Party is in default under or with respect to any Contractual Obligation in any
respect which, individually or together with all such defaults, would reasonably
be expected to have a Material Adverse Effect.
 
·  ERISA. 
 
No Loan Party sponsors, maintains or contributes to, or has at any time in the
preceding six (6) calendar years, sponsored, maintained or contributed to, any
Multiemployer Plan.
 
·  Margin Regulations. 
 
The proceeds of the Loans shall be used solely for the purposes set forth in and
permitted by Section 6.13. No Loan Party is generally engaged in the business of
purchasing or selling Margin Stock or extending credit for the purpose of
purchasing or carrying Margin Stock.
 
·  Title to Properties. 
 
Except for Immaterial Title Deficiencies, each Loan Party has defensible title
to its material Oil and Gas Properties. As of Closing, the Collateral is subject
to no Liens, other than Permitted Liens. Appendix II is a full and complete list
of all properties to which the Loan Parties have title in the Southeast and
Southwest program areas and Appendix III is a full and complete list of all
properties to which the Loan Parties have title in the North program area.
 
·  Oil and Gas Reserves. 
 
Except for Immaterial Title Deficiencies, each Loan Party is and will hereafter
be the owner of the Reserves that it purports to own from time to time in and
under the Oil and Gas Properties, together with the right to produce the same.
Such Oil and Gas Properties are not subject to any Lien other than Permitted
Liens. All Oil and Gas has been and will hereafter be produced, sold and
delivered in accordance with all Requirements of Law; each Loan Party has
complied and will comply with all material terms of each oil, gas and mineral
lease comprising the Oil and Gas Properties and all other material Contractual
Obligations related thereto. Nothing in this Section 5.11 shall prevent any such
Loan Party from abandoning any well or forfeiting, surrendering, releasing or
defaulting under any lease in the ordinary course of business which, in the
opinion of such Loan Party, is in the best interest of such Loan Party, and such
Loan Party is and will hereafter be in compliance with all obligations
hereunder, unless such abandonment, forfeiture, surrender, release or default
would result in a Material Adverse Effect.
 
·  Hydrocarbon Interests.
 
Subject to Section 6.04, Schedule 5.12 contains a full and complete list of all
Hydrocarbon Interests held by the Loan Parties and the “working interests” and
the “net revenue interest” of the Loan Parties set forth therein. With the
exception of Immaterial Title Deficiencies, all Hydrocarbon Interests are valid,
subsisting, and in full force and effect, and all rentals, royalties, and other
amounts due and payable in respect thereof have been duly paid, except where
failure to so pay any such amounts could not reasonably be expected to have a
Material Adverse Effect. Without regard to any consent or non-consent provisions
of any joint operating agreement covering any Loan Party’s Hydrocarbon
Interests, and with the exception of Immaterial Title Deficiencies, each Loan
Party’s share of (a) the costs for each Hydrocarbon Interest is not greater than
the decimal fraction set forth in Schedule 5.12 attached hereto, before and
after payout, as the case may be, and described therein by the respective
designations “working interests”, “WI”, “gross working interest”, “GWI”, or
similar terms, and (b) production from, allocated to, or attributed to each such
Hydrocarbon Interest is not less than the decimal fraction set forth in Schedule
5.12 attached hereto, before and after payout, as the case may be, and described
therein by the designations “net revenue interest,” “NRI,” or similar terms.
There are no funds in respect of any well drilled in respect of each Hydrocarbon
Interest described in Schedule 5.12 attached hereto being presently held in
suspense, other than any such funds being held in suspense pending delivery of
appropriate division orders. Each producing well in respect of each Hydrocarbon
Interest described in Schedule 5.12 has been drilled, bottomed, completed, and
operated in compliance, in all material respects, with all Requirements of Law
and no such well which is currently producing Hydrocarbons is subject to any
penalty in production by reason of such well having produced in excess of its
allowable production.
 
·  Operator.
 
To the extent Westside Operating is the Operator of the wells located on the Oil
and Gas Properties, Westside Operating has obtained and is in compliance with
all Requirements of Law, except where failure to comply is not reasonably
expected to have a Material Adverse Effect.
 
·  Intellectual Property; Licenses. 
 
Each Loan Party owns, or possesses the right to use, all of the trademarks,
service marks, trade names, copyrights, patents, patent rights, franchises,
licenses and other intellectual property rights (collectively, “IP Rights”) that
are reasonably necessary for the operation of their respective businesses. To
the knowledge of the Loan Parties, none of their respective material IP Rights,
slogans or advertising materials, products, processes, methods, substances,
parts or other materials now employed by any Loan Party infringe in any material
respect on any IP Rights or other material rights held by any other Person. No
written claim or litigation regarding any of the foregoing is pending or, to the
knowledge of the Loan Parties, threatened, which, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect. 
 
·  Taxes.
 
Parent has filed all Federal tax returns and reports required to be filed, or if
not filed, for which an extension has been granted therefor, and has paid all
Federal taxes, assessments, fees and other governmental charges levied or
imposed upon its or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
diligently conducted and for which adequate reserves have been provided in
accordance with GAAP. Parent has filed all material state and other non-Federal
tax returns and reports required to be filed, and has paid all state and other
non-Federal taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable.
To the knowledge of Parent, there is no proposed tax assessment against it that
would, if made, reasonably be expected to have a Material Adverse Effect
 
·  Environmental Matters. 
 
Each Loan Party conducts in the ordinary course of business a review of the
effect of existing Environmental Laws, Environmental Claims and Environmental
Complaints, if any, on its business, operations and properties, and such
properties which it is acquiring or planning to acquire. No real or personal
property owned or leased by any Loan Party and no operations conducted thereon,
and no operations of any prior owner, lessee or operator of any such properties,
is or has been in violation of any Environmental Law other than violations which
neither individually nor in the aggregate will have or could be reasonably
expected to have a Material Adverse Effect, nor is any such property or
operation the subject of any existing, pending or, to Borrowers’ knowledge,
threatened Environmental Complaint which could, individually or in the
aggregate, have or be reasonably expected to have a Material Adverse Effect. All
notices, permits, licenses, and similar authorizations, if any, required to be
obtained or filed in connection with the ownership or operation of any and all
real and personal property owned, leased or operated by any Loan Party,
including notices, licenses, permits and authorizations required in connection
with any past or present treatment, storage, disposal, or release of Hazardous
Substances into the environment, have been duly obtained or filed except to the
extent the failure to obtain or file such notices, licenses, permits and
authorizations would not have or would not be reasonably expected to have a
Material Adverse Effect. All Hazardous Substances, if any, generated at any and
all real and personal property owned, leased or operated by any Loan Party have
been transported, treated, and disposed of only by carriers maintaining valid
permits under all Environmental Laws, and, to such Loan Party’s actual
knowledge, the same is true as to periods of time prior to such Loan Party’s
ownership, lease or operation. There have been no Hazardous Discharges by any
Loan Party which were not in compliance with Environmental Laws other than
Hazardous Discharges which would not, individually or in the aggregate, have or
be reasonably expected to have a Material Adverse Effect and, to such Loan
Party’s actual knowledge, the same is true as to any Hazardous Discharge on any
real and personal property owned, leased or operated by any Loan Party during
periods of time prior to such Loan Party’s ownership, lease or operation of such
property. No Loan Party has actual knowledge of any contingent liability in
connection with any Hazardous Discharges which could have or be reasonably
expected to have a Material Adverse Effect.
 
·  Regulated Entities. 
 
No Loan Party is an “Investment Company” within the meaning of the Investment
Company Act of 1940. No Borrower is subject to regulation under the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
 
·  No Burdensome Restrictions. 
 
No Loan Party is a party to or bound by any Contractual Obligation, or subject
to any restriction in any Organization Document, or any Requirement of Law,
which would reasonably be expected to have a Material Adverse Effect.
 
·  Solvency. 
 
As of the date of Closing, each of the Loan Parties is Solvent.
 
·  Subsidiaries/Investments/Ownership. 
 
As of the date of Closing the corporate structure of Parent and its Subsidiaries
is as set out on Schedule 5.20 attached hereto. Except as set forth on Schedule
5.20, no Borrower has Subsidiaries or equity investments in any other Person and
Parent has no Subsidiaries and no equity investments in any other Person other
than Borrowers and the Parent is the sole, legal and beneficial owner, directly
or indirectly, of all interests in each of the Borrowers.
 
·  Insurance. 
 
Each Loan Party's interest in the Oil and Gas Properties and any other
Collateral and the North Properties, is insured with financially sound and
reputable insurance companies not Affiliates of a Borrower, in such amounts,
with such deductibles and covering such risks as are customarily carried by
companies engaged in similar businesses and owning similar properties in
localities where such Loan Party’s properties are located.
 
·  Full Disclosure. 
 
None of the representations or warranties made by the Loan Parties in the Loan
Documents as of the date such representations and warranties are made or deemed
made, and none of the statements contained in any exhibit, report, written
statement or certificate furnished by or on behalf of each Loan Party in
connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of each Loan Party to Administrative Agent
prior to Closing), taken as a whole, contains any untrue statement of a material
fact or omits any material fact required to be stated therein or necessary to
make the statements made therein, in light of the circumstances under which they
are made, not misleading as of the time when made or delivered.
 
·  Capitalization.
 
(a) As of Closing, (i) the authorized capital stock of Parent consists solely of
(A) fifty million (50,000,000) shares of Common Stock and (B) ten million
(10,000,000) shares of preferred stock, (ii) twenty-one million four hundred
sixty-one thousand nine hundred and nine (21,461,909) shares of Common Stock
have been issued and are outstanding, and (iii) three million three hundred and
ninety-six thousand six hundred and sixty-eight (3,396,668) shares of Common
Stock have been reserved for issuance upon exercise of options, warrants and
other performance awards (whether vested or unvested as of the date hereof),
including without limitation, one million six hundred and sixty-six thousand six
hundred and sixty-eight (1,666,668) shares of Common Stock reserved for issuance
upon exercise of the Conversion Option (the “Conversion Shares”). All
outstanding shares of Common Stock have been validly issued, are fully paid and
non-assessable, were issued in compliance with the Securities Act and applicable
state securities laws, and no capital stock of Parent is subject to, nor has
been issued in violation of, any preemptive or similar rights.
 
(b) Except as set forth in Subsection 5.23(a), or as otherwise contemplated by
this Agreement, there are outstanding (i) no shares of capital stock or other
voting securities of Parent, (ii) no securities of Parent convertible into or
exchangeable for shares of capital stock or other voting securities of Parent,
or (iii) no subscriptions, options, warrants, calls, commitments, preemptive
rights or other rights of any kind to acquire from Parent, and no obligation of
Parent to issue or sell any shares of capital stock or other voting securities
of Parent or any securities of Parent convertible into or exchangeable for such
capital stock or voting securities. There are no outstanding contractual
obligations of Parent to repurchase, redeem or otherwise acquire any shares of
the capital stock of Parent, or any other securities of the type described in
(i)-(iii) above. Except as provided in this Agreement, there are no restrictions
upon the voting or transfer of any share of the capital stock or other voting
securities of Parent pursuant to the Organization Documents of Parent or any
agreement or other instrument to which Parent is a party.
 
·  Authorization of Conversion Shares.
 
At Closing, the Conversion Shares will be duly authorized, and, upon issuance
thereof, will be validly issued, fully paid and non-assessable and not subject
to, or issued in violation of, any preemptive or similar rights.
 
·  Material Contracts.
 
The reports filed by Parent with the SEC contain a true, correct and complete
list of all Material Contracts in effect as of Closing (other than this
Agreement and the other Loan Documents) and except as described in such reports,
all such Material Contracts are in full force and effect and no Loan Party is in
default thereunder.
 
·  Fiscal Year.
 
Each Loan Party’s fiscal year is January 1 through December 31.
 
·  Gas Balancing Agreements and Advance Payment Contracts.
 
On the date of this Agreement, (a) there is no Material Gas Imbalance, and (b)
the aggregate amount of all Advance Payments received by any Loan Party under
Advance Payment Contracts which have not been satisfied by delivery of
production does not exceed $100,000.
 
·  Business; Compliance.
 
Each Loan Party has performed and abided by all obligations required to be
performed under each license, permit, order, authorization, grant, contract,
agreement, or regulation to which such Loan Party is a party or by which such
Loan Party or any of its assets are bound to the extent a failure to perform and
abide by such obligations could have or be reasonably expected to have a
Material Adverse Effect.
 
·  Marketing Arrangements.
 
(a) No Hydrocarbon Interest of any Loan Party is subject to any contractual or
other arrangement (i) whereby payment for production is or can be deferred for a
substantial period after the month in which such production is delivered (in the
case of oil, not in excess of 60 days, and in the case of gas, not in excess of
90 days) or (ii) whereby payments are made to a Loan Party other than by checks,
drafts, wire transfer advises or other similar writings, instruments or
communications for the immediate payment of money; (b) no Hydrocarbon Interest
of any Loan Party is subject to any contractual or other arrangement for the
sale, processing or transportation of production (or otherwise related to the
marketing of production) which cannot be canceled on 180 days’ (or less) notice;
(c) all contractual or other arrangements for the sale, processing or
transportation of production (or otherwise related to the marketing of
production) are bona fide arm’s length transactions made on the best terms
reasonably available with third parties not affiliated with Loan Parties; and
(d) each Loan Party is presently receiving a price for all production from (or
attributable to) each Hydrocarbon Interest owned by it covered by a production
sales contract or marketing contract that is computed in accordance with the
terms of such contract, and no Loan Party is having deliveries of production
from such Hydrocarbon Interest curtailed by any purchaser or transporter of
production substantially below such property’s delivery capacity, except for
curtailments caused (i) by an act or event of force majeure not reasonably
within the control of and not caused by the fault or negligence of a Loan Party
and which by the exercise of reasonable diligence such Loan Party is unable to
prevent or overcome, and (ii) by routine maintenance requirements in the
ordinary course of business.
 
·  Right to Receive Payment for Future Production.
 
Except as set forth in Schedule 5.30, no Loan Party, nor any Loan Party’s
predecessors in title, has received prepayments (including payments for gas not
taken pursuant to “take or pay” or other similar arrangements) for any oil, gas
or other hydrocarbons produced or to be produced from any Hydrocarbon Interests
after the date hereof. Except as set forth in Schedule 5.30, no Hydrocarbon
Interest of any Loan Party is subject to any “take or pay”, gas imbalances or
other similar arrangement (i) which can be satisfied in whole or in part by the
production or transportation of gas from other properties or (ii) as a result of
which production from any such Hydrocarbon Interest may be required to be
delivered to one or more third parties without payment (or without full payment)
therefor as a result of payments made, or other actions taken, with respect to
other properties. No Hydrocarbon Interest of any Loan Party is subject at the
present time to any regulatory refund obligation and, to the best of Loan
Party’s knowledge, no facts exist which might cause the same to be imposed.
 
·  Hedge Agreements.
 
No Loan Party is party to any Hedge Agreement other than the ISDA Master
Agreement dated as of March 17, 2006 between Keybank National Association and
Westside Production.
 
ARTICLE VI.  
 
AFFIRMATIVE COVENANTS
 
So long as the Loans or other Obligations shall remain unpaid or unsatisfied,
unless the Majority Lenders waive compliance in writing:
 
·  Financial Statements; Other Information. 
 
(a) The Loan Parties shall maintain a system of accounting established and
administered in accordance with GAAP and deliver to Administrative Agent, with
sufficient copies for each Lender, promptly upon its becoming publicly
available, each financial statement, report, budget, notice or proxy statement
sent by Parent to its shareholders generally and each regular or periodic report
and any registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by Parent with the SEC or any
successor agency.
 
(b) Subject to Section 6.04, the Loan Parties shall deliver to Administrative
Agent, with sufficient copies for each Lender, in form and detail reasonably
satisfactory to Administrative Agent:
 
(i) promptly upon receipt of same, any notice or other information received by
any Loan Party indicating any actual or alleged (A) non-compliance with or
violation of the requirements of any Environmental Law which could result in
liability to any Loan Party for fines, clean up or any other remediation
obligations or any other liability in excess of $250,000 in the aggregate;
(B) release or threatened release of any Hazardous Discharge which release would
impose on any Loan Party a duty to report to a Governmental Authority or to pay
cleanup costs or to take remedial action under any Environmental Law which could
result in liability to any Loan Party for Environmental Claims and other
remediation obligations or any other liability in excess of $250,000 in the
aggregate; or (C) the existence of any Lien arising under any Environmental Law
securing any obligation to pay Environmental Claims or other remediation costs
or any other liability in excess of $250,000 in the aggregate. Without limiting
the foregoing, Parent and Borrower shall provide to Administrative Agent
promptly upon receipt of same copies of all environmental consultants or
engineers reports received by any Loan Party which would render the
representations and warranties contained in Section 5.16 untrue or inaccurate in
any respect;
 
(ii) in the event any notification is provided by any Loan Party to
Administrative Agent pursuant to Section 6.01(b)(i) hereof or Administrative
Agent or any Lender otherwise learns of any event or condition under which any
such notice would be required, then, upon request of the Majority Lenders,
Parent and Borrowers shall, within ninety (90) days of such request, cause to be
furnished to each Lender a report by an environmental consulting firm acceptable
to Administrative Agent and Majority Lenders, stating that a review of such
event, condition or circumstance has been undertaken (the scope of which shall
be acceptable to Administrative Agent and Majority Lenders) and detailing the
findings, conclusions, and recommendations of such consultant. Borrowers shall
bear all expenses and costs associated with such review and updates thereof, as
well as all remediation or curative action recommended by any such environmental
consultant; and
 
(iii) from time to time such additional information regarding the financial
position or business of each Loan Party as Administrative Agent, at the request
of any Lender, may reasonably request.
 
·  Right of Inspection. 
 
Loan Parties will permit any officer, employee or agent of Administrative Agent
or any Lender 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, accountants and auditors, all upon
reasonable advance notice and at such reasonable times and as often as
Administrative Agent or any Lender may desire, all at the expense of Borrowers;
provided, that, prior to the occurrence of an Event of Default, neither
Administrative Agent nor any Lender will require any Loan Party to incur any
unreasonable expense as a result of the exercise by Administrative Agent or any
Lender of its rights pursuant to this Section 6.02.
 
·  Notice of Default. 
 
Each Borrower shall, subject to Section 6.04, promptly notify Administrative
Agent and Lenders of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that would reasonably
be expected to become a Default or Event of Default or of any material breach or
default under any Material Contract. Each notice under this sub-section shall be
accompanied by a written statement by a Responsible Officer setting forth
details of the occurrence referred to therein, and stating what action the Loan
Parties propose to take with respect thereto and at what time.  
 
·  Public Information.
 
(a) Notwithstanding anything to the contrary contained herein, the Loan Parties
hereby agree and acknowledge that Administrative Agent and Lenders generally do
not wish to receive material non-public information with respect to the Parent
or its securities or the other Loan Parties. The Loan Parties hereby agree that,
unless otherwise consented to by Administrative Agent and Lenders, (i) no
information provided or made available to Administrative Agent and/or Lenders
(including, without limitation, information provided on Schedules and Appendices
hereto) shall contain any material non-public information about the Loan
Parties, (ii) all such information about the Loan Parties made available or
provided hereunder to Administrative Agent and Lenders shall be conspicuously
marked “PUBLIC”, which, at a minimum, shall mean that the word “PUBLIC” shall
appear prominently on the first page thereof, (iii) by marking such information
about the Loan Parties “PUBLIC”, the Loan Parties shall be deemed to have
authorized Administrative Agent and Lenders to treat such information as not
containing any material non-public information with respect to the Parent or its
securities for purposes of United States Federal and state securities laws.
 
(b) If any Loan Party is required pursuant to the provisions of this Agreement
or Administrative Agent or any Lender requests any Loan Party to provide
information to Administrative Agent and/or Lenders and such Loan Party believes
that such information may contain material non-public information about Parent
or its securities or the other Loan Parties, such Loan Party shall inform
Administrative Agent and the relevant Lender(s) of such fact (without disclosing
the information in question) and Administrative Agent and/or the relevant
Lender(s) shall upon such notice instruct such Loan Party whether or not it
wishes to receive the non-public information. If Administrative Agent and/or
Lender elects to receive such non-public information, then the Loan Parties
shall so disclose such information and the first sentence of Section 6.04(c)
shall not apply to the disclosure of such non-public information.
 
(c) The Loan Parties further agree that, should the Loan Parties, despite the
preceding provisions of this Section 6.04, either through inadvertence or
otherwise, make available to Administrative Agent and Lenders, without their
prior written consent, any material information which at such time is not
publicly available, such information shall immediately thereafter be disclosed
to the public by the Loan Parties and to the SEC by the filing of a Form 8-K.
Each Loan Party acknowledges that Administrative Agent and Lenders will rely on
the foregoing when transacting in the securities of Parent.
 
·  Preservation of Corporate Existence, Etc. 
 
Each Loan Party shall:
 
(a) preserve and maintain in full force and effect its separate, legal
existence, and maintain its good standing under the laws of its state or
jurisdiction of incorporation or organization, as applicable;
 
(b) preserve and maintain in full force and effect all governmental rights,
privileges, qualifications, permits, licenses and franchises reasonably
necessary for the normal conduct of its business;
 
(c) preserve or renew all of its registered patents, trademarks, trade names and
service marks, the non-preservation of which could reasonably be expected to
have a Material Adverse Effect; and
 
(d) Parent shall maintain the trading of its capital stock on an exchange
acceptable to the Lenders.
 
·  Maintenance of Property. 
 
For those Oil and Gas Properties for which a Loan Party is the designated
operator per the joint operating agreement, each Loan Party shall operate,
maintain and develop such Oil and Gas Properties, including maintenance of
equipment which is used in the operation of its business, pursuant to the
reasonable and prudent operator standard. Each Loan Party shall make all
payments and otherwise perform all obligations in respect of all leases of real
property to which any Loan Party is a party, except where the failure to do so
could not reasonably be expected to have a Material Adverse Effect.
 
·  Title Data. 
 
In addition to any other information required to be delivered under this
Agreement, the Loan Parties shall, upon request of Majority Lenders, cause to be
delivered to Administrative Agent such title opinions and other information
regarding title to Hydrocarbon Interests and Oil and Gas Properties owned by any
Loan Party as are appropriate to determine the status thereof; provided however,
that Lenders may not require Loan Parties to furnish title opinions unless (i)
an Event of Default has occurred and is continuing, or (ii) Majority Lenders
have reason to believe that there is a defect in or Lien upon such Loan Party’s
title to such Hydrocarbon Interest or Oil and Gas Property that is not a
Permitted Lien.
 
·  Insurance. 
 
Each Loan Party shall maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances which insurance shall name Administrative
Agent, as “additional insured” and as a “loss payee”, as applicable.
 
·  Payment of Obligations. 
 
Each Loan Party shall pay and discharge as the same shall become due and
payable, all of its material obligations and liabilities, including: (a) all tax
liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith; (b) all
lawful claims which, if unpaid, would by law become a Lien upon its property,
including without limitation full and prompt payment of all royalties, joint
interest billings and mechanics and materialmens expenses, except to the extent
the same are being contested in good faith; and (c) all Indebtedness, as and
when due and payable, but subject to any subordination provisions contained in
any instrument or agreement evidencing such indebtedness.
 
·  Compliance with Laws. 
 
Each Loan Party shall comply in all material respects with all Requirements of
Law of any Governmental Authority, including, without limitation, all disclosure
requirements of the SEC, having jurisdiction over it or its business except such
as may be contested in good faith or as to which a bona fide dispute may exist
and shall obtain and renew all permits required under any Environmental Laws and
necessary for its operations and properties and conduct any investigation,
study, sampling and testing, and undertake any cleanup, removal, remedial or
other action necessary to remove and clean up all Hazardous Substances from any
of its properties to the extent required by Environmental Laws.
 
·  Maintenance of Books and Records. 
 
Each Loan Party shall maintain proper books of record and account, in which
full, true and correct entries in conformity with GAAP consistently applied
shall be made of all of its financial transactions and matters involving its
assets and business.
 
·  Environmental Laws. 
 
Each Loan Party shall conduct its operations and keep and maintain its property
in compliance with all Environmental Laws.
 
·  Use of Proceeds. 
 
Borrowers shall use the proceeds of the Loans as provided on Appendix I. 
 
·  Further Assurances. 
 
Each Loan Party shall promptly cure any defects in the creation and issuance of
the Notes and the execution and delivery of this Agreement, the Security
Documents, any Guaranty, or any other instruments referred to or mentioned
herein or therein to which such Person is a party. Borrowers, at their expense,
will promptly do all acts and things, and will execute and file or record, all
instruments reasonably requested by Administrative Agent or any Lender, to
establish, perfect, maintain and continue the perfected security interests of
Administrative Agent in or the Lien of Administrative Agent on the Collateral.
Borrowers will pay the reasonable costs and expenses of all filings and
recordings and all searches deemed necessary by Administrative Agent to
establish and determine the validity and the priority of the Liens created or
intended to be created by the Security Documents; and each Loan Party shall
satisfy all other claims and charges which in the reasonable opinion of
Administrative Agent might prejudice, impair or otherwise affect any of the
Collateral or any Lien thereon in favor of Administrative Agent.
 
·  Guaranties. 
 
At Closing, Parent and each Subsidiary of each Borrower, if any, shall execute
and deliver a Guaranty to guaranty Borrowers’ Obligations.
 
·  Security Documents. 
 
Each Loan Party shall promptly execute and deliver to Administrative Agent such
Security Documents as may be required pursuant to Section 3.02.
 
ARTICLE VII.  
 
NEGATIVE COVENANTS
 
So long as the Loans or any other Obligation shall remain unpaid or unsatisfied,
unless the Majority Lenders waive compliance in writing:
 
·  Limitation on Liens. 
 
No Borrower shall directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon or with respect to any part of its property, whether now
owned or hereafter acquired, other than the following (“Permitted Liens”):
 
(a) any Lien created under any Loan Document;
 
(b) Liens consented to in writing by Majority Lenders;
 
(c) Liens scheduled on Schedule 7.01;
 
(d) Liens for taxes, fees, assessments or other governmental charges which are
not delinquent or remain payable without penalty, or to the extent that
non-payment thereof is permitted by Section 6.10;
 
(e) carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s,
repairmen’s or other similar Liens and contractual Liens granted to operators
and non-operators under oil and gas operating agreements arising in the ordinary
course of business securing obligations which are not delinquent or remain
payable without penalty or which are being contested in good faith;
 
(f) Liens consisting of pledges or deposits required in the ordinary course of
business in connection with workers’ compensation, unemployment insurance and
other social security legislation;
 
(g) Liens securing (i) the non-delinquent performance of bids, trade contracts
(other than for borrowed money), statutory obligations, (ii) Contingent
Obligations, Surety Instruments (other than those providing credit support for
borrowed money), and (iii) other non-delinquent obligations of a like nature; in
each case, incurred in the ordinary course of business;
 
(h) easements, rights-of-way, restrictions, defects or other exceptions to title
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount, are not incurred to
secure Indebtedness, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
a Borrower’s business;
 
(i) Liens arising solely by virtue of any statutory or common law provision
relating to banker’s liens, rights of set-off or similar rights and remedies as
to deposit accounts or other funds maintained with a creditor depository
institution; provided that (i) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by a
Borrower, and (ii) a Borrower maintains (subject to such right of set off)
dominion and control over such account(s).
 
(j) royalties, overriding royalties, reversionary interests, net revenue
interests, production payments and similar burdens on production existing as of
the date acquired by a Borrower, provided that such burdens do not reduce such
Borrower’s net revenue interest in the Oil and Gas Properties burdened thereby
below the net revenue interest with respect to such property on the date hereof;
 
(k) operating agreements, gathering agreements, processing agreements, sales
contracts or other arrangements for the sale of Oil and Gas, and other
agreements customary in the oil and gas business for producing, processing,
transporting, and marketing Oil and Gas; and
 
(l) Liens on property other than the Collateral securing the obligations of the
Loan Parties pursuant to a Hedge Agreement permitted pursuant to Section 7.14.
 
·  Sale of Property. 
 
(a) Borrowers shall not sell, assign, convey or otherwise transfer any oil and
gas property, other than any of the North Properties (it being noted that in the
case of a sale, assignment, conveyance or other transfer of any of the North
Properties, the Loan Parties shall comply with the provisions of Section 3.02),
unless (i) consideration equal to the fair market value of such oil and gas
property sold is received, (ii) the sale is an arm’s length transaction, and
(iii) all of the consideration received consists of cash, Cash Equivalents,
liquid securities or oil and gas properties in connection with exchanges of such
property pursuant to Section 1031 of the Code (“Permitted Consideration”);
provided, however, that Borrowers may receive property that does not constitute
Permitted Consideration so long as the aggregate fair market value of all
property received pursuant to this proviso shall not exceed ten percent (10.0%)
of the Recognized Value of Borrowers’ oil and gas properties.
 
(b) Borrowers shall be obligated to prepay the Obligations in an amount equal to
100% of the Net Available Cash from such Asset Disposition, unless Borrowers
notify Administrative Agent in writing that they intend to invest such Net
Available Cash in property that will be used in the oil and gas business of the
Borrowers and such Net Available Cash is so invested within 180 days following
the receipt of such Net Available Cash, after which time such Net Available
Cash, if it has not been so invested, shall be immediately prepaid.
 
·  Consolidations and Mergers. 
 
No Loan Party shall (i) merge, except that so long as no Default or Event of
Default exists, Loan Parties may consummate mergers between or among any of the
Loan Parties, (ii) consolidate, or (iii) convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person.
 
·  Loans and Investments. 
 
No Loan Party shall create any direct or indirect Subsidiary, unless (i) no
Default or Event of Default exists, (ii) such Subsidiary executes and delivers
to Administrative Agent a Guaranty, and (iii) Liens are promptly granted over
all of the assets of such Subsidiary and over the shares or other ownership
interests of such Subsidiary to secure the Obligations. Further, no Loan Party
shall divest themselves of any material assets by transferring them to any
future Subsidiary or by entering into a partnership, joint venture or similar
arrangement, or purchase or acquire or make any commitment therefor, any capital
stock, equity interest, or any obligations or other securities of, or any
interest in, any Person, or make or commit to make any advance, loan, extension
of credit or capital contribution to or any other investment in, any Person
including any Affiliate of a Borrower or acquire, in a single transaction or a
series of transactions, all or substantially all of the assets of any Person or
all or substantially all of the assets comprising a division of any Person,
except for: (a) investments in Cash Equivalents; (b) extensions of credit in the
nature of accounts receivable or notes receivable arising from the sale or lease
of goods or services in the ordinary course of business; (c) extensions of
credit or other advances made in the ordinary course of business in the
estimation of anticipated travel or other reimbursable expenses to any
employees, officers, directors, Administrative Agent or Lenders; (d) loans,
advances or investments by a Loan Party to any other Loan Party; (e)
acquisitions of oil and gas properties to be used in the Oil and Gas business of
the Borrowers; and (f) other loans, advances, acquisitions or investments
(except as set forth in the first sentence hereof) not to exceed in the
aggregate $100,000 at any time.
 
·  Limitation on Indebtedness. 
 
No Loan Party shall create, incur, assume, suffer to exist, or otherwise become
or remain directly or indirectly liable with respect to any Indebtedness or
Off-Balance Sheet Liabilities, except:
 
(a) Indebtedness incurred pursuant to the Loan Documents,
 
(b) Indebtedness consisting of Contingent Obligations permitted pursuant to
Section 7.08;
 
(c) current liabilities, taxes and assessments incurred in the ordinary course
of business;
 
(d) Indebtedness in favor of third parties (i) on terms and conditions first
offered to Lenders that Majority Lenders have declined to provide to Borrowers,
(ii) Majority Lenders have consented to such Indebtedness from such third party
lender, which consent shall not be unreasonably withheld, (iii) at the time of
incurring such Indebtedness, no Default or Event of Default shall exist or would
result from the incurrence of such Indebtedness after giving effect to the
incurrence of such Indebtedness when included with Borrowers’ existing
Indebtedness, (iv) such Indebtedness does not have any scheduled amortization
prior to two years after the Termination Date and (v) such Indebtedness shall be
subordinated to the Obligations pursuant to an intercreditor agreement between
Administrative Agent, Lenders and any such third party lender on terms and
conditions reasonably satisfactory to Administrative Agent and Lenders
(“Alternative Financings”);
 
(e) Indebtedness permitted under Section 7.04; and
 
(f) Indebtedness other than as described under the preceding clauses (a) - (e)
in the aggregate amount not to exceed $150,000.
 
·  Transactions with Affiliates. 
 
Except as may be set forth on Schedule 7.06 and except for transactions by and
among the Loan Parties, no Loan Party shall enter into any transaction with or
make any payment or transfer to any Affiliate of a Borrower, except in the
ordinary course of business and upon fair and reasonable terms no less favorable
to such Loan Party than would be obtained in a comparable arm’s-length
transaction with a Person not an Affiliate of a Borrower. No Loan Party shall,
without the prior written consent of Administrative Agent, enter into any
transaction with or make any payment or transfer to any officer, director,
partner or equity owner of a Loan Party, except in the ordinary course of
business and upon fair and reasonable terms no less favorable to such Loan Party
than would be obtained in a comparable arm’s-length transaction with a Person
who is not an officer, director, partner or equity owner of a Loan Party.
 
·  Margin Stock. 
 
Borrowers shall not use any portion of the proceeds of the Loans, directly or
indirectly, (a) to purchase or carry Margin Stock, (b) to repay or otherwise
refinance Indebtedness of Borrowers or others incurred to purchase or carry
Margin Stock, (c) to extend credit for the purpose of purchasing or carrying any
Margin Stock, or (d) to acquire any security in any transaction that is subject
to Section 13 or 14 of the Exchange Act.
 
·  Contingent Obligations. 
 
No Loan Party shall create, incur, assume or suffer to exist any Contingent
Obligations except: (a) endorsements for collection or deposit in the ordinary
course of business; and (b) obligations under fidelity bonds issued for the
account of any Loan Party’s obligations to indemnify or make whole any surety
and similar agreements incurred in the ordinary course of business.
 
·  Restricted Payments. 
 
No Loan Party shall purchase, redeem or otherwise acquire for value any
membership interests, partnership interests, capital accounts, shares of its
capital stock or any warrants, rights or options to acquire such membership
interests, partnership interests or shares, now or hereafter outstanding from
its members, partners or stockholders and will not declare or pay any
distribution, dividend, return capital to its members, partners or stockholders,
or make any distribution of assets to its stockholders, members or partners or
make any voluntary prepayment of any Indebtedness (other than Indebtedness
incurred under any Loan Document). Further, notwithstanding Section 6.09, during
such time as a Default or Event of Default exists, no Loan Party shall make any
payments to any creditor of such Loan Party, other than (i) payments on the
Obligations, and (ii) payments to trade creditors or employees in its ordinary
course of business.
 
·  Change in Business, Organization Documents, Name and Address. 
 
No Loan Party shall engage in any business or activity other than the Principal
Business. No Loan Party shall materially amend, supplement or modify its
Organization Documents without the prior written consent of Administrative Agent
or otherwise amend, supplement or modify such Organization Documents without
thirty (30) days prior advance written notice to Administrative Agent. No Loan
Party shall change its name or principal business address without thirty (30)
days prior advance written notice to Administrative Agent. No Loan Party shall
make any change to its capital structure which could be reasonably expected to
have a Material Adverse Effect.
 
·  Accounting Changes. 
 
No Loan Party shall make any significant change in its accounting treatment or
reporting practices, except as required by GAAP or the rules and regulations of
the SEC, or change its fiscal year.
 
·  Restrictions of Pledges. 
 
No Loan Party shall enter into any contract or agreement which restricts such
Person’s ability to (a) pledge any or all of its assets or, (b) in the case of
any Subsidiary of a Borrower, distribute any or all of its funds or assets to
such Borrower; provided, however, nothing contained in this Section 7.12 shall
prohibit a Loan Party from entering into any of the Loan Documents.
 
·  Conversion. 
 
Parent will not, by amendment of its Organization Documents or through any
recapitalization, reorganization, reclassification, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by Parent, but will at all times
in good faith assist in the carrying out of all the provisions of Section 2.05
hereof and in the taking of all such action as may be reasonably necessary or
appropriate in order to protect the rights of Lenders against impairment.
 
·  Hedge Agreement. 
 
No Loan Party shall be party to or otherwise enter into any Hedge Agreement that
(i) covers notional volumes in excess of 75% of the anticipated production
volumes attributable to Proved Reserves of the Loan Parties during the period
such hedge arrangement is in effect and (ii) is longer than three (3) years in
duration; provided that a Loan Party may enter into a Hedge Agreement consisting
solely of a floor price (i.e. floor, or put option).
 
·  Operating Leases.
 
No Loan Party will incur, become, or remain liable under any Operating Lease
which would cause the aggregate amount of all payments to be made by any Loan
Party under such Operating Lease in any fiscal year to be greater than $250,000.
 
ARTICLE VIII.  
 
EVENTS OF DEFAULT
 
·  Event of Default. 
 
Any of the following shall constitute an “Event of Default”:
 
(a) Non-Payment. A Loan Party fails to pay when due, any amount of principal or,
within three Business Days of when due, any interest of any Loan or any fee or
other amount payable by Borrowers hereunder or under any other Loan Document; or
 
(b) Representation or Warranty. Any representation or warranty by any Loan Party
made or deemed made herein, in any other Loan Document, or which is contained in
any certificate, document or financial or other statement by any Loan Party or
any Responsible Officer, furnished at any time under this Agreement, or in or
under any other Loan Document, is incorrect in any material respect on or as of
the date made or deemed made; or
 
(c) Specific Defaults. Any Loan Party fails to perform, observe or comply with
any term, covenant or agreement applicable to such Loan Party in any of
Subsection 6.05(a), Section 6.15 or Article VII; or
 
(d) Other Defaults. Any Loan Party fails to perform, observe or comply with any
other term or covenant contained in this Agreement other than as identified
under Subsections 8.01(a), (b) or (c) or any other Loan Document to the extent
not covered under Subsections 8.01(a), (b) or (c) of this Agreement, and such
failure shall continue unremedied for a period of thirty (30) days after the
earlier of (i) the date upon which a Responsible Officer knew or reasonably
should have known of such failure or (ii) the date upon which written notice
thereof is given to Borrowers by Administrative Agent or any Lender; or
 
(e) Cross-Default. Any Loan Party (i) fails to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand, or
otherwise) in respect of any Indebtedness or Contingent Obligation having an
aggregate principal amount (including undrawn committed or available amounts and
including amounts owing to all creditors under any combined or syndicated credit
arrangement) of more than $200,000 and such failure continues after the
applicable grace or notice period, if any, specified in the relevant document on
the date of such failure; or (ii) fails to perform, observe or comply with any
other condition or covenant, or any other event shall occur or condition exist,
under any agreement or instrument relating to any such Indebtedness or
Contingent Obligation, if the effect of such failure, event or condition is to
cause, or to permit the holder or holders of such Indebtedness or beneficiary or
beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause such Indebtedness to
be declared to be due and payable prior to its stated maturity, or such
Contingent Obligation to become payable or cash collateral in respect thereof to
be demanded; or (iii) any Indebtedness or Contingent Obligations of the Loan
Parties on an aggregate basis in excess of $200,000 shall be declared due and
payable prior to its stated maturity or cash collateral is demanded in respect
of such Contingent Obligations; or
 
(f) Insolvency; Voluntary Proceedings. Any Loan Party (i) generally fails to
pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) commences any Insolvency Proceeding with respect to itself;
(iii) commences any action for the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its property or
business; or (iv) takes any action to effectuate or authorize any of the
foregoing; or
 
(g) Involuntary Proceedings. (i) Any involuntary Insolvency Proceeding is
commenced or filed against any Loan Party or any writ, judgment, warrant of
attachment, execution or similar process, is issued or levied against all or a
substantial part of any Loan Party’s properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within sixty (60) days after commencement, filing or levy; (ii) any Loan Party
admits the material allegations of a petition against it or any of its
Subsidiaries in any Insolvency Proceeding, or an order for relief is ordered in
any Insolvency Proceeding; or (iii) any Loan Party acquiesces in the appointment
of a receiver, trustee, custodian, conservator, liquidator, mortgagee in
possession (or agent therefor), or other similar Person for itself or a
substantial portion of its property or business; or
 
(h) Monetary Judgments. One or more judgments, orders, decrees or arbitration
awards is entered against any Loan Party involving in the aggregate a liability
(to the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related series of
transactions, incidents or conditions in excess of $250,000, and the same shall
remain unsatisfied, unvacated and unstayed pending appeal for a period of thirty
(30) days after the entry thereof; or
 
(i) Loss of Permit. Any Governmental Authority revokes or fails to renew any
material license, permit or franchise of any Loan Party, or any Loan Party for
any reason loses any material license, permit or franchise, or suffers the
imposition of any restraining order, escrow, suspension or impound of funds in
connection with any proceeding (judicial or administrative) with respect to any
material license, permit or franchise; or
 
(j) Change of Control. There occurs any Change of Control;
 
(k) Dissolution. Any order, judgment or decree shall be entered against any Loan
Party decreeing the dissolution or split up of such Loan Party and such order
shall remain undischarged or unstayed for a period in excess of thirty (30)
days; or
 
(l) Invalidity of Loan Documents. Any Guaranty shall be terminated or the Loan
Documents, or any of them, after delivery thereof, shall for any reason, except
to the extent permitted by the terms thereof, cease to be in full force and
effect and valid, binding and enforceable in accordance with their terms, or,
with respect to the Security Documents, cease to create a valid and perfected
Lien or security interest, as the case may be, of the priority required thereby
on any of the Collateral purported to be covered thereby, except to the extent
permitted by the terms of this Agreement, or any Loan Party shall so state in
writing; or
 
(m) Environmental Liabilities. Any Loan Party shall incur Environmental
Liabilities which, individually or in the aggregate, exceed $250,000.
 
·  Remedies. 
 
If any Event of Default occurs and is continuing, Administrative Agent and/or
Lenders shall:
 
(a) exercise all rights and remedies available to them under the Loan Documents
or applicable law, including declaring the Obligations immediately due and
payable, 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 Loan Parties, and
 
(b) Notwithstanding the foregoing, upon the occurrence of any event specified in
Subsection 8.01(f), or (g), the unpaid principal amount of the Loans and all
interest and other amounts as aforesaid shall automatically become due and
payable without further act of Lenders.
 
·  Set-off. 
 
In addition to any rights and remedies of Administrative Agent and Lenders
provided by law, if an Event of Default exists, each Lender and Administrative
Agent is authorized at any time and from time to time, without prior notice to
any Loan Party, any such notice being waived by each Loan Party to the fullest
extent permitted by law, set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held by, and other
indebtedness at any time owing by such Lender or Administrative Agent to or for
the credit or the account of any Loan Party against any and all Obligations
owing to such Lender or Administrative Agent, now or hereafter existing,
irrespective of whether such Lender or Administrative Agent shall have made
demand under this Agreement or any Loan Document and although such Obligations
may be contingent or unmatured.
 
·  Payments Set Aside. 
 
To the extent that any Loan Party makes a payment to any Lender or
Administrative Agent, or any Lender or Administrative Agent exercises its right
of set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by such
Lender or Administrative Agent in its sole discretion) to be repaid to a
trustee, receiver or any other party, in connection with any Insolvency
Proceeding or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such set-off
had not occurred.
 
·  Rights Not Exclusive. 
 
The rights provided for in this Agreement and the other Loan Documents are
cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, document
or agreement now existing or hereafter arising.
 
·  Application of Funds.
 
After the exercise of remedies provided for in Section 8.02 (or after the Loans
have automatically become immediately due and payable), any amounts received on
account of the Obligations shall be applied by Administrative Agent in the
following order:
 
(a) First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to Administrative Agent) payable to Administrative
Agent in its capacity as such;
 
(b) Second, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (other than principal and interest) then
due and payable to Lenders (including fees, charges and disbursements of counsel
to the respective Lenders), ratably among them in proportion to their respective
Pro Rata Shares;
 
(c) Third, to payment of that portion of the Obligations constituting accrued
and unpaid interest on the Loans and other Obligations, ratably among Lenders in
proportion to their respective Pro Rata Shares;
 
(d) Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, ratably among Lenders in proportion to their respective
Pro Rata Shares; and
 
(e) Last, the balance, if any, after all of the Obligations have been
indefeasibly paid in full, to Borrowers or as otherwise required by any
Requirement of Law.
 
ARTICLE IX.  
 
ADMINISTRATIVE AGENT
 
·  Appointment and Authorization. 
 
Each Lender hereby irrevocably (subject to Section 9.09) appoints, designates
and 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 it by the terms of
this Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document,
Administrative Agent shall have only such duties or responsibilities, as
expressly set forth herein, Administrative Agent shall not 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.
 
·  Delegation of Duties. 
 
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 with reasonable
care.
 
·  Liability of Administrative Agent. 
 
Neither the Administrative Agent nor any of the Agent-Related Persons shall (a)
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 or thereby (except for its own gross negligence or willful
misconduct), or (b) be responsible in any manner to any Lender or any Affiliate
of any Lender for any recital, statement, representation or warranty made by any
Loan Party or any Affiliate of a Loan Party, or any officer 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 (other than the Administrative
Agent’s or such Agent-Related Person’s own due execution and delivery),
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of any Loan Party or any other party to any Loan
Document to perform its obligations hereunder or thereunder. Neither the
Administrative Agent nor any 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 properties, books or records of any Loan
Party or any Affiliate of any Loan Party.
 
·  Reliance by Administrative Agent.
 
(a) Administrative Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, electronic mail, 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, 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 it shall first receive such
advice or concurrence of Lenders as it deems appropriate and, if it so requests,
it shall first be indemnified to its satisfaction by Lenders and their
Affiliates against any and all liability and expense which 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 Lenders and such request and any action taken or failure to act
pursuant thereto shall be binding upon all Lenders.
 
(b) For purposes of determining compliance with the conditions specified in
Section 4.01, each Lender that has made available to Borrowers its Pro Rata
Share of the Maximum Loan Amount shall be deemed to have consented to, approved
or accepted or to be satisfied with, each document or other matter either sent
by Administrative Agent to such Lender for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
acceptable or satisfactory to Lender as a condition precedent to such Loans, as
applicable.
 
·  Notice of Default. 
 
Administrative Agent shall not be deemed to have knowledge or notice of the
occurrence of any Default or Event of Default, unless Administrative Agent shall
have received written notice from a Lender or Borrowers referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a “notice of default”. Administrative Agent will notify Lenders of its
receipt of any such notice. Subject to Subsection 9.04(a), Administrative Agent
shall take such action with respect to such Default or Event of Default as may
be requested by any Lender; provided, however, that unless and until
Administrative Agent has received any such request, Administrative Agent may
(but shall not be obligated to) take such action, or refrain from taking such
action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of Lenders.
 
·  Credit Decisions. 
 
Each Lender acknowledges that neither the Administrative Agent nor any of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by Administrative Agent or any Agent-Related Person hereafter taken,
including any review of the affairs of Borrowers, shall be deemed to constitute
any representation or warranty by the Administrative Agent or any Agent-Related
Person to any Lender. Each Lender represents to Administrative Agent that it
has, independently and without reliance upon Administrative Agent or 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 Borrowers, 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 Borrowers hereunder. Each Lender also
represents that it will, independently and without reliance upon Administrative
Agent or 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. Except for notices,
reports and other documents expressly herein required to be furnished to 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 Borrowers which may come into the possession of
Administrative Agent or any of the Agent-Related Persons.
 
·  Indemnification. 
 
Whether or not the transactions contemplated hereby are consummated, Lenders and
any Affiliates of Lenders shall indemnify upon demand Administrative Agent and
Agent-Related Persons (to the extent not reimbursed by or on behalf of Borrowers
and without limiting the obligation of Borrowers to do so), pro rata according
to each respective Lender’s Pro Rata Share, Administrative Agent and each
Agent-Related Person from and against any and all Indemnified Liabilities
INCLUDING SUCH INDEMNIFIED LIABILITIES AS MAY ARISE OR BE CAUSED BY THE
NEGLIGENCE, SOLE, JOINT, CONCURRENT, COMPARATIVE OR OTHERWISE OF ADMINISTRATIVE
AGENT OR SUCH AGENT-RELATED PERSONS; provided, however, that no Lender shall be
liable for the payment to Administrative Agent or any Agent-Related Persons of
any portion of such Indemnified Liabilities to the extent the same arise from
(i) the gross negligence or willful misconduct of Administrative Agent or any
Agent-Related Person or (ii) a claim or action asserted by Administrative Agent
or one or more Agent-Related Persons. Without limitation of the foregoing, each
Lender shall reimburse Administrative Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including attorney costs) incurred by
Administrative Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether through
negotiations, legal proceedings or otherwise) of, or legal advice in respect of
rights or responsibilities under, this Agreement, any other Loan Document, or
any document contemplated by or referred to herein, to the extent that
Administrative Agent is not reimbursed for such expenses by or on behalf of
Borrowers. The undertaking in this Section 9.07 shall survive the payment of all
Obligations hereunder and the resignation or replacement of Administrative
Agent.
 
·  Administrative Agent in Individual Capacity. 
 
Spindrift Partners, L.P. is Administrative Agent hereunder solely for
administrative purposes and has no commitment, other than in its capacity as
Lender hereunder, to lend to Borrowers under the terms of this Agreement.
Notwithstanding the above, Administrative Agent, in its individual capacity, may
from time to time engage in any kind of activity with Borrowers or any Affiliate
thereof as though Administrative Agent were not Administrative Agent hereunder
and without notice to or consent of Lenders. Lenders acknowledge that, pursuant
to such activities, Administrative Agent or its Affiliates may receive
information regarding Borrowers (including information that may be subject to
confidentiality obligations in favor of Borrowers) and acknowledge that
Administrative Agent and the Agent-Related Persons shall be under no obligation
to provide such information to them. With respect to its Loans, Administrative
Agent, in its individual capacity as Lender, shall have the same rights and
powers under this Agreement as any other Lender and may exercise the same as
though it were not Administrative Agent.
 
·  Successor Administrative Agent. 
 
Administrative Agent may resign as Administrative Agent upon thirty (30) days
notice to Lenders. If Administrative Agent resigns under this Agreement,
Lenders, with the consent of the Borrowers, shall appoint from among Lenders a
successor administrative agent in the same capacity as the retiring
Administrative Agent for Lenders. If no successor administrative agent is
appointed prior to the effective date of the resignation of such retiring
Administrative Agent, such retiring Administrative Agent may appoint, with the
consent of the Borrowers and after consulting with Lenders, a successor
administrative agent from among Lenders. 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 IX and Sections 10.05 and
10.06 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 in the
same capacity as the retiring Administrative Agent by the date which is 30 days
following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent shall either withdraw its resignation or may appoint as a
successor administrative agent a commercial bank organized under the laws of the
United States of America or of any State thereof.
 
ARTICLE X.  
 
MISCELLANEOUS
 
·  Amendments and Waivers. 
 
No amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent with respect to any departure by any Loan Party
therefrom, shall be effective unless the same shall be in writing and signed by
Administrative Agent, the Majority Lenders and the Loan Parties 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 amendment
waiver or consent shall:
 
(a)  postpone any date fixed by this Agreement or any other Loan Document for
any payment of any part of the Obligations;
 
(b)  reduce the principal of, or the rate of interest specified herein on, the
Loans, any fess or other amounts payable hereunder or under any other Loan
Document without the written consent of each Lender directly affected thereby;
 
(c)  change the pro rata sharing among Lenders as contemplated herein without
the written consent of each Lender;
 
(d)  change any provision of this Section or the definition of Majority Lenders;
 
(e)  change Section 10.07 in a manner that would impose any additional
restrictions on the ability of any Lender to assign or sell participations in
any of its rights or obligations under this Agreement;
 
(f)  release any material Guarantor from its Guaranty without the written
consent of each Lender; or
 
(g)  release all or substantially all of the Collateral without the written
consent of each Lender.
 
·  Notices.
 
(a) Subject to the limitations set forth in Subsection 10.02(d) below, Borrowers
are authorized to receive on behalf of all Loan Parties all notices from
Administrative Agent or any Lender at the address, facsimile number and
electronic mail address for Borrowers set out on Appendix I; and all notices to
the Administrative Agent and any Lender shall be sent to Administrative Agent’s
and such Lender’s address, facsimile number and electronic mail address set
forth on Appendix I.
 
(b) All notices, requests, consents and other communications required or
permitted hereunder or under any other Loan Document shall be in writing and
mailed, faxed, delivered, or (subject to Subsection 10.02(d) below) transmitted
by electronic mail, to the address, facsimile number, or electronic mail address
specified for notices; or, as directed to Borrowers, Administrative Agent or
Lenders to such other address as shall be designated by such Person in a written
notice to the other parties, and as directed to any other party, at such other
address as shall be designated by such party in a written notice to Borrowers,
Administrative Agent and Lenders.
 
(c) All such notices, requests, consents and communications shall be deemed to
be given or made, and shall be effective, upon the earlier to occur of (i)
actual receipt by the intended recipient or (ii) (A) if delivered by hand or by
courier, when signed for by the intended recipient or an authorized
representative of such recipient; (B) if delivered by mail, the third Business
Day after the date on which such mail, postage prepaid was deposited in the U.S.
mail; (C) if delivered by facsimile, when transmitted in legible form by
facsimile machine; and (D) if delivered by electronic mail or via internet or
intranet websites (which form of delivery is subject to the provisions of
Subsection 10.02(d) below), when delivered; provided, however, that notices and
other communications to Administrative Agent or any Lender shall not be
effective until actually received by Administrative Agent or such Lender.
 
(d) Electronic mail and internet and intranet websites may be used only to
distribute routine communications, such as financial statements and other
information, and to distribute Loan Documents for execution by the parties
hereto, and shall not be recognized for any other purpose.
 
(e) Any agreement of Administrative Agent or any Lender herein to receive
certain notices by telephone, electronic mail, or facsimile is solely for the
convenience and at the request of the Loan Parties. Administrative Agent and
Lenders shall be entitled to rely on the authority of any Person purporting to
be a Person authorized by such Loan Party to give such notice and neither
Administrative Agent nor Lenders shall have any liability to any Loan Party on
account of any action taken or not taken by Administrative Agent or any Lender
in reliance upon such telephonic or facsimile notice. The obligation of
Borrowers to repay the Loans shall not be affected in any way or to any extent
by any failure by Administrative Agent or any Lender to receive written
confirmation of any telephonic or facsimile notice or the receipt by
Administrative Agent or such Lender of a confirmation which is at variance with
the terms understood by Administrative Agent or such Lender to be contained in
the telephonic or facsimile notice.
 
·  No Waiver; Cumulative Remedies. 
 
No failure to exercise and no delay in exercising, on the part of Administrative
Agent or any Lender, any right, remedy, power or privilege hereunder, shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies and privileges herein provided are cumulative and not
exclusive of any rights, remedies and privileges provided by law.
 
·  Survival of Representations and Warranties.
 
All representations and warranties made in this Agreement and in any other Loan
Document or other documents delivered pursuant hereto or thereto in connection
herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by
Administrative Agent and each Lender, regardless of any investigation made by
Administrative Agent or Lender or on their behalf and notwithstanding that
Administrative Agent or any Lender may have had notice or knowledge of any
Default at the time of Closing, and shall continue in full force and effect as
long as any Obligation shall remain unpaid or unsatisfied.
 
·  Indemnity. 
 
Whether or not the transactions contemplated hereby are consummated, the Loan
Parties, jointly and severally, shall indemnify and hold Administrative Agent,
Lenders, and each of their Affiliates, officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
attorneys’ fees and expenses) of any kind or nature whatsoever which may at any
time (including at any time following repayment of the Loans) be imposed on,
incurred by or asserted against any Indemnified Person in any way relating to or
arising out of this Agreement and/or any document contemplated by or referred to
herein (including any consents, amendments, waivers or other modifications to
this Agreement and/or such other documents), or the transactions contemplated
hereby, or any action taken or omitted by any Indemnified Person under or in
connection with any of the foregoing, including with respect to any
investigation, litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this Agreement or the Loans
or the use of the proceeds thereof, whether or not any Indemnified Person is a
party thereto (all the foregoing, collectively, the “Indemnified Liabilities”),
provided, that no Loan Party shall have any obligation hereunder to any
Indemnified Person with respect to Indemnified Liabilities to the extent same
arise from the gross negligence, in whole or in part, including without
limitations, those claims which result from the sole, joint, concurrent or
comparative gross negligence or willful misconduct of such Indemnified Person as
determined by a final judgment rendered by a court of competent jurisdiction, or
that arise solely by reason of claims among Indemnified Persons. The agreements
in this Section shall survive payment of all other Obligations.
 
·  Environmental Indemnification.
 
 
 
In addition to the indemnifications hereunder and under any other Loan
Documents, the Loan Parties, jointly and severally, shall indemnify, protect and
hold each Indemnified Person harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
proceedings, costs, expenses (including, without limitation, all attorneys’ fees
and legal expenses whether or not suit is brought) and disbursements of any kind
or nature whatsoever which may at any time be imposed on, incurred by, or
asserted against such Indemnified Person, with respect to or as a direct or
indirect result of the violation by any Loan Party of any Environmental Law; or
with respect to or as a direct or indirect result of any Loan Party's use,
generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence in connection with the Mortgaged Properties of a
hazardous substance including, without limitation, (a) all damages of any such
use, generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence, or (b) the costs of any reasonably required or
necessary environmental investigation, monitoring, repair, cleanup or
detoxification and the preparation and implementation of any closure, remedial
or other plans (all the foregoing, collectively, the “Indemnified Environmental
Liabilities”). Each Loan Party agrees to indemnify and hold each Indemnified
Person harmless as provided in this Section 10.06, provided, that no Loan Party
shall have any obligation hereunder to any Indemnified Person with respect to
Indemnified Environmental Liabilities to the extent same arise from the gross
negligence, in whole or in part, including without limitations, those claims
which result from the sole, joint, concurrent or comparative gross negligence or
willful misconduct of such Indemnified Person as determined by a final judgment
rendered by a court of competent jurisdiction. The provisions of and
undertakings and indemnification set forth in this Section 10.06 shall survive
(x) the satisfaction and payment of the Obligations and termination of this
Agreement, and (y) the release of any Liens securing the Obligations or the
extinguishment of such Liens by foreclosure or action in lieu thereof. It shall
not be a defense to the indemnification obligations set forth in this Section
10.06 that the act, omission, event or circumstance did not constitute a
violation of any Environmental Law at the time of its existence or occurrence. 
 
·  Successors and Assigns
 
. 
 
(a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that no Loan Party may assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of Majority
Lenders. Any Lender may at any time assign or sell participations in all, or any
ratable part of, the Loans and the other rights and obligations of such Lender
hereunder to one or more of its Affiliates and/or to one or more Related Funds.
No Lender may assign or sell participations in all, or any ratable part of, the
Loans and the other rights and obligations of such Lender hereunder to any party
other than its Affiliates or Related Funds without the written consent of
Borrowers. Notwithstanding anything to the contrary contained herein, Lenders
shall at all times be entitled to transfer and/or assign their respective
Overriding Royalty Interests and their rights or obligations under their
respective ORRI Conveyance, provided, however, that Lenders shall be responsible
for any costs, expenses or fees attributable to any such transfer and/or
assignment of their respective Overriding Royalty Interests and their rights or
obligations under their respective ORRI Conveyance.
 
(b)  In the case of a sale of a participation as permitted by Section 10.07(a)
to one or more Persons (each a “Participant”), the selling Lender remains a
“Lender” under the Loan Documents, the Participant does not become a “Lender”
under the Loan Documents, and the selling Lender’s obligations under the Loan
Documents remain unchanged. The selling Lender remains solely responsible for
the performance of its obligations and remains the holder of its share of the
outstanding Loans for all purposes under the Loan Documents. Borrowers and
Administrative Agent shall continue to deal solely and directly with the selling
Lender in connection with that Lender’s rights and obligations under the Loan
Documents, and each Lender must retain the sole right and responsibility to
enforce due Obligations of Borrowers and/or any other Loan Party. Participants
have no rights under the Loan Documents except certain voting rights as provided
below. Subject to the following, each Lender may obtain (on behalf of its
Participants) the benefits of Sections 2.09 and 2.10 with respect to all
participations in its part of the Obligations outstanding from time to time so
long as Borrowers are not obligated to pay any amount in excess of the amount
that would be due to that Lender under Sections 2.09 and 2.10 calculated as
though no participations have been made. No Lender may sell any participating
interest under which the Participant has any rights to approve any amendment,
modification, or waiver of any Loan Document except in respect of any such
amendment, modification or waiver described in Section 10.01(a) or 10.01(b). To
the extent permitted by law, each Participant shall also be entitled to the
benefits of Section 3.04 as though it were a Lender, provided such Participant
agrees to be subject to Section 2.11 as though it were a Lender.
 
(c) Any assignment made by a Lender pursuant to Section 10.07(a) shall be
evidenced by an assignment and assumption agreement in form and substance
acceptable to Administrative Agent (which shall receive a copy thereof), and,
except in the case of an assignment of the entire amount of the assignor
Lender’s Loan at the time owing to it, the amount of the Loan so assigned shall
not be less than $100,000 unless each of Administrative Agent and, so long as no
Event of Default has occurred and is continuing, each Borrower otherwise
consents (each such consent not to be unreasonably withheld or delayed). The
“effective date” in each such assignment and assumption agreement must (unless a
shorter period is agreeable to Borrowers and Administrative Agent) be at least
five (5) Business Days after it is executed and delivered by the assignor Lender
and the assignee to Administrative Agent and Borrowers for acceptance. Once that
assignment and assumption agreement is accepted by Administrative Agent and
Borrowers, then, from and after the “effective date” stated in it (1) assignee
automatically becomes a party to this Agreement and, to the extent provided in
that assignment and assumption agreement, has the rights and obligations of a
Lender under the Loan Documents, (2) the assignor Lender, to the extent provided
in that assignment and assumption agreement, is released from its obligations
under this Agreement and, in the case of an assignment and assumption agreement
covering all of the remaining portion of the assignor Lender’s rights and
obligations under the Loan Documents, that Lender ceases to be a party to the
Loan Documents, (3) Borrowers shall execute and deliver to the assignor Lender
and the assignee the appropriate Notes in accordance with this Agreement
following the transfer, and upon delivery of such Notes, the assignor Lender
shall return to Borrowers all Notes previously delivered to that Lender under
this Agreement, and (4) Appendix I is automatically deemed to be amended to
reflect the name, address, fax number, and Pro Rata Share of the assignee, and
Administrative Agent shall prepare and circulate to Borrowers and Lenders an
amended Appendix I reflecting those changes.
 
·  Interest.
 
(a) It is the intention of the parties hereto to comply with applicable usury
laws; accordingly, notwithstanding any provision to the contrary in this
Agreement, the Notes or in any of the other Loan Documents securing the payment
hereof or otherwise relating hereto, in no event shall this Agreement, the Notes
or such other Loan Documents require the payment or permit the payment, taking,
reserving, receiving, collection, or charging of any sums constituting interest
under applicable laws, if any, which exceed the maximum amount permitted by such
laws. If any such excess interest is called for, contracted for, charged, taken,
reserved, or received in connection with the Loans evidenced by the Notes or in
any of the Loans Documents securing the payment thereof or otherwise relating
thereto, or in any communication by Administrative Agent, Lenders or any other
person to a Borrower or any other person, or in the event all or part of the
principal or interest thereof shall be prepaid or accelerated, so that under any
of such circumstances or under any other circumstance whatsoever the amount of
interest contracted for, charged, taken, reserved, or received on the amount of
principal actually outstanding from time to time under the Notes shall exceed
the maximum amount of interest permitted by applicable usury laws, then in any
such event it is agreed as follows: (i) the provisions of this paragraph shall
govern and control, (ii) neither Borrowers nor any other person or entity now or
hereafter liable for the payment and performance of the Obligations shall be
obligated to pay the amount of such interest to the extent such interest is in
excess of the maximum amount of interest permitted by applicable usury laws,
(iii) any such excess which is or has been received notwithstanding this
paragraph shall be credited against the then unpaid principal balance of the
Notes or, if the Notes have been or would be paid in full, refunded to
Borrowers, and (iv) the provisions of this Agreement, the Notes and the other
Loan Documents securing the payment hereof and otherwise relating hereto, and
any communication to Borrower, shall immediately be deemed reformed and such
excess interest reduced, without the necessity of executing any other document,
to the Highest Lawful Rate allowed under applicable laws as now or hereafter
construed by courts having jurisdiction hereof or thereof. Without limiting the
foregoing, all calculations of the rate of the interest contracted for, charged,
taken, reserved, or received in connection with the Notes or this Agreement
which are made for the purpose of determining whether such rate exceeds the
Highest Lawful Rate shall be made to the extent permitted by applicable laws by
amortizing, prorating, allocating and spreading during the period of the full
term of the Loans, including all prior and subsequent renewals and extensions,
all interest at any time contracted for, charged, taken, reserved, or received.
The terms of this paragraph shall be deemed to be incorporated in every document
and communication relating to the Notes, the Loans or any other Loan Document.
 
(b) If the Contract Rate exceeds the Highest Lawful Rate, then the Contract Rate
shall be limited to the Highest Lawful Rate, but any subsequent reductions in
the Contract Rate shall not reduce the interest rate thereon below the Highest
Lawful Rate until the total amount of accrued interest equals the amount of
interest that would have accrued if Contract Rate had always been in effect. If
at the Termination Date the total interest paid or accrued is less than the
interest that would have accrued if the Contract Rate had always been in effect,
then, at that time and to the extent permitted by law, Borrowers shall pay an
amount equal to the difference between: (i) the lesser of the amount of interest
that would have accrued if the Contract Rates had always been in effect and the
amount of interest that would have accrued if the Highest Lawful Rate had always
been in effect; and (ii) the amount of interest actually paid or accrued on the
Notes.
 
(c) To the extent that the interest rate laws of the State of Texas are
applicable to the Loans, the applicable interest rate ceiling is the indicated
(weekly) ceiling from time to time in effect under Texas Finance Code §303.001,
as limited by Texas Finance Code §303.009, and to the extent that this Agreement
is deemed an “open end account” as such term is defined in Texas Finance Code
§301.002(a)(14), Lenders retain the right to modify the interest rate in
accordance with applicable law.
 
·  Counterparts and Facsimile Signatures. 
 
This Agreement may be executed in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. The Loan Documents may be transmitted and/or signed by facsimile or
“pdf”. The effectiveness of any such documents and signatures shall, subject to
applicable law, have the same force and effect as manually-signed originals and
shall be binding on all Loan Parties; Administrative Agent and any Lender may
also require that any such documents and signatures be confirmed by a
manually-signed original thereof; provided, however, that the failure to request
or deliver the same shall not limit the effectiveness of any facsimile or “pdf”
document or signature.
 
·  Severability
 
. 
 
The illegality or unenforceability of any provision of this Agreement or any
instrument or agreement required hereunder shall not in any way affect or impair
the legality or enforceability of the remaining provisions of this Agreement or
any instrument or agreement required hereunder.
 
·  Third Party Beneficiaries
 
. 
 
This Agreement and the other Loan Documents are made and entered into for the
sole protection and legal benefit of the Loan Parties, Administrative Agent and
Lenders, and their permitted successors and assigns, and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any of the other
Loan Documents.
 
·  USA Patriot Act Notice
 
. 
 
Lenders hereby notify the 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”), they are required to obtain, verify and record information that
identifies the Loan Parties, which information includes the name and address of
the Loan Parties and other information that will allow Lenders to identify the
Loan Parties in accordance with the Act.
 
·  Governing Law
 
. 
 
Except as expressly otherwise set forth in any Loan Document, this Agreement and
the other Loan Documents shall be governed by, construed and interpreted in
accordance with, the laws of the State of New York, except to the extent that
federal laws of the United States of America apply.
 
·  Submission to Jurisdiction
 
. 
 
With respect to any and all disputes arising hereunder, or under the Notes, the
Security Documents, the other Loan Documents, or any of the other instruments
and documents executed in connection herewith or therewith not settled, each
Loan Party, Administrative Agent and Lenders hereby irrevocably and
unconditionally:
 
(a) submits for itself and its property in any legal action or proceeding
relating to this Agreement, the Notes and any document to which it is a party,
or for recognition and enforcement of any judgment in respect of any thereof, to
the non-exclusive general jurisdiction of the courts of the State of New York,
the courts of the United States of America for the Southern District of New
York, and appellate courts from any thereof;
 
(b) consents that any such action or proceeding may be brought in such courts,
and waives any objection that it may now or hereafter have to the venue of any
such action or proceeding in any such court (except to the extent applicable
rules of procedure provide venue lies exclusively in another jurisdiction), or
that such action or proceeding was brought in an inconvenient court and agrees
not to plead or claim the same;
 
(c) agrees that service of process in any such action or proceeding may be
effected by mailing a copy thereof by registered or certified mail (or any
substantially similar form and mail), postage prepaid, to it at its address
specified in Appendix I hereof;
 
(d) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction;
 
(e) agrees that service upon it or its authorized agent shall, to the fullest
extent permitted by law, constitute valid and effective personal service upon
it, as the case may be, and that the failure of any such authorized agent to
give any notice of such service to it shall not impair or affect in any way the
validity of such service or any judgment rendered in any action or proceeding
based thereon; and
 
(f) waives, to the fullest extent permitted by applicable law, any objection,
including any objection to the laying of venue or based on the grounds of forum
non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this agreement or any document
related hereto.
 
·  Waiver Of Jury Trial
 
. 
 
Each Loan Party waives, to the fullest extent permitted by applicable law, its
rights to a trial by jury of any claim or cause of action based upon or arising
out of or related to this Agreement, the Notes, the Security Documents, the
other Loan Documents, or the transactions contemplated hereby or thereby, in any
action, proceeding or other litigation of any type brought by any of the parties
against any other party or any Indemnified Person, or assignee thereof, whether
with respect to contract claims, tort claims, or otherwise. Each Loan Party, to
the fullest extent permitted by applicable law, agrees that any such claim or
cause of action shall be tried by a court trial without a jury. Without limiting
the foregoing, to the fullest extent permitted by applicable law, each Loan
Party further agrees that its respective right to a trial by jury is waived by
operation of this Section as to any action, counterclaim or other proceeding
which seeks, in whole or in part, to challenge the validity or enforceability of
this Agreement or the other Loan Documents or any provision hereof or thereof.
This waiver shall apply to any subsequent amendments, renewals, supplements or
modifications to this Agreement and the other Loan Documents.
 
·  Amendment and Restatement
 
. 
 
The parties hereto agree that as of Closing: (a) the Obligations (as defined in
this Agreement) represents, among other things, the restatement, renewal,
amendment, extension, and modification of the “Obligations” (as defined in the
Existing Credit Agreement); (b) this Agreement is intended to, and does hereby,
restate, renew, extend, amend, modify, supersede, and replace the Existing
Credit Agreement in its entirety; (c) the Notes executed pursuant to the
Existing Credit Agreement remain in full force and effect to evidence the
Obligations; (d) the Security Documents executed pursuant to the Existing Credit
Agreement remain in full force and effect to secure the Obligations; (e) each
Guaranty executed pursuant to the Existing Credit Agreement remains in full
force and effect to guaranty the Obligations; and (f) the entering into and
performance of their respective obligations under this Agreement (and any other
Loan Document executed in connection herewith) and the transactions evidenced
hereby (and thereby, as applicable) do not constitute a novation nor shall they
be deemed to have terminated, extinguished, or discharged the “Obligations”
under the Existing Credit Agreement or the other Existing Loan Documents (or the
collateral security therefor), all of which “Obligations” and Collateral shall
continue under and be governed by this Agreement and the other Loan Documents,
except as provided otherwise herein.
 
·  Entire Agreement. 
 
This Agreement, together with the other Loan Documents, embodies the entire
agreement and understanding among the Loan Parties, Administrative Agent and
Lenders and supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof. Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.
 
·  Obligations Several. 
 
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations of any other Lender. Nothing contained herein or
in any other Loan Document, and no action taken by Lenders pursuant hereto or
thereto, shall be deemed to constitute Lenders as a partnership, an association,
a joint venture or any other kind of entity. The amounts payable at any time
hereunder to each Lender shall be a separate and independent debt, and each
Lender shall be entitled to protect and enforce its rights hereunder and it
shall not be necessary for any other Lender to be joined as an additional party
in any proceeding for such purpose.
 
·  Taxes - Allocation
 
The parties hereto acknowledge and agree that (1) the Loan and the Overriding
Royalty Interests constitute an “investment unit” as set forth in Section 1273
of the Code; (2) as soon as practicable after the Closing the parties hereto
shall reasonably cooperate in allocating the $25,000,000.00 loan amount between
the Loan and the Overriding Royalty Interests in accordance with their relative
fair market values as required by Section 1273 of the Code; and (3) they will be
bound by this allocation for all tax purposes pursuant to Treasury Regulation §
1.1273-2(h).
 
·  General Release.
 
Borrowers hereby remise, release, acquit, satisfy and forever discharge
Administrative Agent and Lenders, their respective agents, employees, officers,
directors, attorneys and all others acting or purporting to act on behalf of or
at the direction of Administrative Agent or Lenders, of and from any and all
manner of actions, causes of action, suit, debts, accounts, covenants,
contracts, controversies, agreements, variances, damages, judgments, claims and
demands whatsoever, in law or in equity, which any of such parties ever had, now
have or can, shall or may at any time have against GasRock Capital LLC and which
Borrowers, by reason of the assignment effected pursuant to the Assignment
Agreement, would purport to make or claim against Administrative Agent or
Lenders. Without limiting the generality of the foregoing, Borrowers waive and
affirmatively agree not to allege or otherwise pursue against Administrative
Agent or Lenders any defenses, affirmative defenses, counterclaims, claims,
causes of action, setoffs or other rights such party does, shall or may have as
of the date hereof, against GasRock Capital LLC, including, but not limited to,
the rights to contest: (a) the right of Administrative Agent or Lenders to
exercise their respective rights and remedies described in this Agreement or any
Loan Document; (b) any provision of this Agreement or any Loan Document; (c) the
Liens granted by the Loan Documents; or (d) any conduct of Administrative Agent
or Lenders.
 
·  NO ORAL AGREEMENTS
 
. 
 
THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER WRITTEN LOAN DOCUMENTS EXECUTED
IN CONNECTION HEREWITH, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
 

 
Remainder of Page Intentionally Left Blank
Signature Pages Follow.

 

 
10246832.11 Credit Agreement - Westside Energy Production Company, LP
Westside Energy Operating Company, LP  

 

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

 
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers as of the
day and year first above written.

BORROWERS:

WESTSIDE ENERGY PRODUCTION COMPANY, LP,
a Texas limited partnership
 
By: Westside Energy GP, L.L.C.,
a Texas limited liability company and its general partner
   
By:       
Name:       
Title:       

WESTSIDE ENERGY OPERATING COMPANY, LP,
a Texas limited partnership
 
By: Westside Energy GP, L.L.C.,
a Texas limited liability company and its general partner
   
By:       
Name:       
Title:       

PARENT:

WESTSIDE ENERGY CORPORATION,
a Nevada corporation
 
By:       
Name:       
Title:       

 
Credit Agreement
Westside Energy Production Company, LP &  Westside Energy Operating Company, LP
 

Page of 3 Signature Pages

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

ADMINISTRATIVE AGENT:

SPINDRIFT PARTNERS, L.P.,
a Delaware limited partnership
 
By: Wellington Management Company, LLP,
as Investment Advisor
 
By:       
Name: Steven M. Hoffman
Title: Vice President and Counsel

LENDERS:

SPINDRIFT PARTNERS, L.P.,
a Delaware limited partnership
 
By: Wellington Management Company, LLP,
as Investment Advisor
 
By:       
Name: Steven M. Hoffman
Title: Vice President and Counsel

SPINDRIFT INVESTORS (BERMUDA) L.P.,
a Bermuda limited partnership
 
By: Wellington Management Company, LLP,
as Investment Advisor
 
By:       
Name: Steven M. Hoffman
Title: Vice President and Counsel

 
PLACER CREEK PARTNERS, L.P.,
a Delaware limited partnership
 
By: Wellington Management Company, LLP,
as Investment Advisor
 
By:       
Name: Steven M. Hoffman
Title: Vice President and Counsel

PLACER CREEK INVESTORS (<?xml:namespace prefix = st1 ns =
"urn:schemas-microsoft-com:office:smarttags" />BERMUDA) L.P.,<?xml:namespace
prefix = o ns = "urn:schemas-microsoft-com:office:office" />
a Bermuda limited partnership
 
By: Wellington Management Company, LLP,
as Investment Advisor
 
 
By:                                                                  
Name: Steven M. Hoffman
Title: Vice President and Counsel

 
Credit Agreement
Westside Energy Production Company, LP &  Westside Energy Operating Company, LP
 

Page of 3 Signature Pages

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

APPENDIX I - SPECIFIC TERMS, FEES AND CONDITIONS

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

This Appendix I is attached to and made a part of the Credit Agreement. All
capitalized terms not otherwise defined in this Appendix I are defined in the
Credit Agreement.

Administrative Agent:     Address for Notices:

Spindrift Partners, L.P.   Attn: Peter Ryan
Phone:  (617) 790-7535  C/o Wellington Management Company, LLP 
Fax:  (617) 204-7535  75 State Street
Email:  seclaw@wellington.com  Boston, MA 02109

Payment Office:
 
Citibank NY
ABA#: 021000089
A/C Ref: Morgan Stanley, NY
Sub A/C Ref: FAO Spindrift Partners, LP
Sub A/C#: 038-02069    Cash A/C#: 388-90774

Lenders:      Address for Notices: 

Spindrift Partners, L.P.   Attn: Peter Ryan
Phone:  (617) 790-7535  C/o Wellington Management Company, LLP 
Fax:  (617) 204-7535  75 State Street
Email:  seclaw@wellington.com  Boston, MA 02109

Payment Office:
 
Citibank NY
ABA#: 021000089
A/C Ref: Morgan Stanley, NY
Sub A/C Ref: FAO Spindrift Partners, LP
Sub A/C#: 038-02069    Cash A/C#: 388-90774

Address for Notices:

Spindrift Investors (Bermuda) L.P.  Attn: Peter Ryan   
Phone:  (617) 790-7535  C/o Wellington Management Company, LLP 
Fax:  (617) 204-7535  75 State Street
Email:  seclaw@wellington.com  Boston, MA 02109

Payment Office:
 
Citibank NY
ABA#: 021000089
A/C Ref: Morgan Stanley, NY
Sub A/C Ref: FAO Spindrift Investors (Bermuda), LP
Sub A/C#: 038-03055    Cash A/C#: 388-90774

Address for Notices:

Placer Creek Partners, L.P.   Attn: Peter Ryan
Phone:  (617) 790-7535  C/o Wellington Management Company, LLP 
Fax:  (617) 204-7535  75 State Street
Email:  seclaw@wellington.com  Boston, MA 02109

Payment Office:
 
Chase Manhattan Bank, NY
ABA#: 021000021
A/C Ref: f/a/o Goldman Sachs & Co., NY
Security A/C#: 002-36440-4
Cash A/C#: 930-1-011483

Address for Notices:

Placer Creek Investors (Bermuda) L.P.   Attn: Peter Ryan
Phone:  (617) 790-7535  C/o Wellington Management Company, LLP 
Fax:  (617) 204-7535  75 State Street
Email:  seclaw@wellington.com  Boston, MA 02109

Payment Office:
 
Chase Manhattan Bank, NY
ABA#: 021000021
A/C Ref: f/a/o Goldman Sachs & Co., NY
Security A/C#: 002-36439-6
Cash A/C#: 930-1-011483
 
Borrowers:       Principal Address:

Westside Energy Production Company, LP  Attn: Douglas G. Manner 
Phone:  (214) 522-8990  3131 Turtle Creek Blvd., Suite 1300 
Fax:  (469) 916-1401  Dallas, TX 75219
Email:  dmanner@westsideenergy.com 

Westside Energy Operating Company, LP  Attn: Douglas G. Manner 
Phone:  (214) 522-8990  3131 Turtle Creek Blvd., Suite 1300 
Fax:  (469) 916-1401  Dallas, TX 75219
Email:  dmanner@westsideenergy.com 

Parent:

Westside Energy Corporation  Attn: Douglas G. Manner 
Phone:  (214) 522-8990  3131 Turtle Creek Blvd., Suite 1300 
Fax:  (469) 916-1401  Dallas, TX 75219
Email:  dmanner@westsideenergy.com 

Current Directors of Parent:

Jimmy D. Wright
Douglas G. Manner
Keith D. Spickelmier
Craig S. Glick
Herbert C. Williamson, III    
John T. Raymond

1. LOAN TERMS

A. Lenders and Pro Rata Share:

(i) Spindrift Partners, L.P.  37%

(ii) Spindrift Investors (Bermuda) L.P.   43.8%
 
(iii) Placer Creek Partners, L.P.  9.5%

(iv) Placer Creek Investors (Bermuda) L.P.  9.7%

Total:   100%

B. Maximum Loan Amount - (Section 1.01):  $25,000,000.00

C. Stated Maturity Date - (Section 1.01):   March 23, 2009

D. Pricing - (Section 2.04)

(i) Contract Rate:  10%

(ii) Default Rate:  12%

 
E.
Conversion - (Section 2.05)

(i) Conversion Price:

The greater of the following: (a) $3.00 per share; or (b) the average closing
price of the Common Stock for the ten (10) trading days ending one (1) day prior
to the applicable Payment Date

 
F.
Fees and Overriding Royalty Interests - (Section 2.06)

Lender ORRI %:   3% of 8/8ths, proportionately reduced to Borrowers’ working
interest

G. Estimated transaction costs and expenses - (Section 10.05)  $291,493,54

H. Use of Proceeds - (Section 6.13) 

Borrowers shall use the proceeds of the Loans (i) to finance development
activities; and (ii) for general corporate purposes.

 
2. ADDITIONAL CLOSING CONDITIONS (Subsection 4.01(e)):

A. Evidence satisfactory to Administrative Agent that all existing Indebtedness
owed to GasRock Capital LLC under the Existing Credit Agreement and certain
Liens securing the same have been duly assigned and transferred to
Administrative Agent and Lenders.

B.  Evidence satisfactory to Administrative Agent that all consents, licenses
and approvals of any Governmental Authority or any other Person required in
connection with the execution, delivery and performance by each Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party have been obtained and are in full force and effect.

C. A certificate of a Responsible Officer of each Loan Party certifying that, as
of the Closing, (a) all representations and warranties of the Loan Parties in
the Loan Documents are true and correct, (b) no Default or Event of Default
exists or would result from the consummation of the transactions contemplated by
the Loan Documents, (c) no Material Adverse Effect has occurred since the last
day of the period covered by the Parent’s last filed Form 10Q and (d) no
material non-public information with respect to the Parent or its securities or
the other Loan Parties has been disclosed to Administrative Agent or Lenders in
connection with the transactions closing on the date of Closing.

D.  Administrative Agent shall be satisfied with the amount, types and terms and
conditions of all insurance maintained by the Loan Parties, and Lenders shall
have received endorsements naming Administrative Agent, on behalf of Lenders, as
an additional insured or loss payee, as the case may be, under all insurance
policies to be maintained with respect to the properties of the Loan Parties
forming part of the Collateral.

E. Receipt by Administrative Agent of reports and other information in form,
scope and substance reasonably satisfactory to Administrative Agent, regarding
environmental matters relating to the North Properties and the Oil and Gas
Properties.

F.  Receipt by Administrative Agent of such UCC search reports as Administrative
Agent shall require, prepared as of a date satisfactory to Administrative Agent,
conducted in such jurisdictions and reflecting such names as Administrative
Agent shall request.

G. The transactions contemplated by this Agreement and the other Loan Documents
shall be permitted under all Requirements of Law.

H. No litigation, arbitration or similar proceeding shall be pending which calls
into question the validity or enforceability of this Agreement and/or the other
Loan Documents.

I. Administrative Agent and Lenders shall have completed satisfactory due
diligence review of the assets, liabilities, business, operations and condition
(financial or otherwise) of Parent and its Subsidiaries.

J. Receipt by Administrative Agent of any such title materials (including,
without limitation, title opinions), satisfactory to Administrative Agent, as
Administrative Agent may require in relation to the Oil and Gas Properties, the
North Properties and the Hydrocarbon Interests.

K. Receipt by Administrative Agent of any other such assurances, certificates,
documents, consents or opinions as Administrative Agent or the Majority Lenders
reasonably require.

L. Receipt by Administrative Agent of Letters in Lieu of Transfer Orders, duly
executed in blank by Westside Production, in a number and a form and substance
satisfactory to Administrative Agent.

2. POST CLOSING CONDITIONS

[None]

 
  Appendix I -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

APPENDIX II - COLLATERAL PROPERTIES

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

This Appendix II is attached to and made a part of the Credit Agreement. All
capitalized terms not otherwise defined in this Appendix II are defined in the
Credit Agreement.

COUNTY
LESSOR
LESSEE
DATE
VOLUME
PAGE
           
Brown
Cason, Virginia
River Oil & Gas, LLC
3/21/2005
1575
456
Comanche
Cason, Virginia
River Oil & Gas, LLC
3/21/05
858
44
Comanche
Chapman, James and Donna
River Oil & Gas, LLC
3/3/05
857
319
Comanche
Chapman, Margaret Modet
River Oil & Gas, LLC
3/10/05
857
323
Comanche
Cox, James
River Oil & Gas, LLC
3/19/05
859
340
Comanche
Davis, Fred S. and Betty June
River Oil & Gas, LLC
3/11/05
857
228
Comanche
Eilers, Melvin
River Oil & Gas, LLC
3/4/05
859
344
Comanche
Graham, Roy and Judy
River Oil & Gas, LLC
3/22/05
858
344
Comanche
Hall, Danny
River Oil & Gas, LLC
3/10/05
856
452
Comanche
Hart, W. Joseph
River Oil & Gas, LLC
3/31/05
858
351
Comanche
Holmsley, W.L. (Bill)
River Oil & Gas, LLC
3/11/05
857
220
Comanche
Hurt, Robert and Pamela
River Oil & Gas, LLC
3/15/05
857
232
Comanche
Hyatt
River Oil & Gas, LLC
3/27/05
858
356
Comanche
Pax, Gina and Sonya
River Oil & Gas, LLC
3/31/05
858
360
Comanche
Reed, Billie and Grady
River Oil & Gas, LLC
3/27/05
859
459
Comanche
Shelton, H. Lynn
River Oil & Gas, LLC
3/12/05
859
59
Comanche
Shelton, Marlene
River Oil & Gas, LLC
3/12/05
859
54
Comanche
Shelton, Tammy L.
River Oil & Gas, LLC
3/12/05
859
64
Comanche
Swindle, Jim
River Oil & Gas, LLC
3/8/05
858
740
Comanche
Womack, Jack T.
River Oil & Gas, LLC
3/29/05
858
348
Coryell
Barron, James G.
River Oil & Gas, LLC
2/10/2005
185
181
Coryell
Locke, Milburn and Jerry
River Oil & Gas, LLC
3/8/2005
180
882
Coryell
Locke, Milburn and Jerry
River Oil & Gas, LLC
3/11/2005
180
881
Ellis
Bing, Mary
Westside Energy Corporation
7/8/2004
2054
716
Ellis
Botello, Tomas
Westside Energy Corporation
12/11/2004
2103
1071
Ellis
Bridges, Bobby and Stephanie
Westside Energy Corporation
7/7/2005
2149
2465
Ellis
Brigma, Fred
Westside Energy Corporation
7/19/2004
2054
455
Ellis
Cockerham, Bruce
Westside Energy Corporation
8/18/2004
2065
232
Ellis
Cockerham, E.A.
Westside Energy Corporation
8/18/2004
 2209
 2360
Ellis
Cockerham, Herman
Westside Energy Corporation
8/18/2004
2065
218
Ellis
Cockerham, J.T.
Westside Energy Corporation
8/18/2004
2065
222
Ellis
Coffey, Barbara
Westside Energy Corporation
7/13/2004
2061
1169
Ellis
Crow, David
Westside Energy Corporation
8/27/2004
2065
2019
Ellis
Crow, Thomas
Westside Energy Corporation
8/27/2004
2065
2014
Ellis
Crow, Thomas & Beverly
Westside Energy Corporation
2/3/2004
2021
2172
Ellis
Daniel, Ronnie
Westside Energy Corporation
7/23/2004
2057
1925
Ellis
Eubank, David
Westside Energy Corporation
7/14/2004
2054
708
Ellis
Eubank, James
Westside Energy Corporation
7/14/2004
2064
593
Ellis
Eubank, Obie
Westside Energy Corporation
7/8/2004
2054
712
Ellis
Goble, Onah June
Westside Energy Corporation
7/27/2004
2061
1173
Ellis
Goble, Onah/Black, Ann
Westside Energy Corporation
7/26/2004
2061
1178
Ellis
Grantham, David
Westside Energy Corporation
8/18/2004
2065
2024
Ellis
Hidlebaugh, Jerry
Westside Energy Corporation
7/1/2004
2065
212
Ellis
Irvin, Allie & Opal
Westside Energy Corporation
2/16/2006
 2201
722
Ellis
Irvin, Maureen
Westside Energy Corporation
7/20/2004
2054
2485
Ellis
McClure, David
Westside Energy Corporation
8/18/2004
2068
784
Ellis
Reynolds Trust
Westside Energy Corporation
7/8/2005
2149
2460
Ellis
Reynolds, Phillip
Westside Energy Corporation
7/8/2005
2149
2455
Ellis
Shelton, Thomas
Westside Energy Corporation
2/3/2004
2030
2033
Ellis
Southall, Janice
Westside Energy Corporation
6/28/2005
2140
2144
Ellis
Stiles, HM
Westside Energy Corporation
7/7/2004
2068
829
Ellis
Stiles, WF
Westside Energy Corporation
7/7/2004
2068
833
Ellis
Stiles, WF & HM
Westside Energy Corporation
7/7/2004
2068
825
Ellis
Swindell, Jim
Westside Energy Corporation
4/23/2004
2030
2028
Ellis
Ward, David (et al)
Westside Energy Corporation
8/18/2004
2065
213
Ellis
Wilemon, Jane & Dave
Westside Energy Corporation
8/6/2005
2149
2450
Ellis
Wilson Et AL
Westside Energy Corporation
8/16/2005
2155
30
Ellis
Wilson, Billy J
Westside Energy Corporation
8/16/2005
2057
1934
Ellis
Wilson, Billy J
Westside Energy Corporation
8/24/2004
2065
227
Ellis
Wilson, Joe C
Westside Energy Corporation
7/1/2005
2140
2154
Ellis
Wilson, B J
Westside Energy Corporation
7/3/2004
2057
1934
Ellis
Wilson, E B
Westside Energy Corporation
7/13/2004
2057
1916
Hamilton
Anglin, Larry
River Oil & Gas LLC
1/14/2005
381
763
Hamilton
Barron, James G.
River Oil & Gas LLC
2/10/2005
388
184
Hamilton
Bishop, Dennis & Laurie
River Oil & Gas LLC
9/17/2004
377
153
Hamilton
Bruce, Stephanie
River Oil & Gas LLC
10/10/2004
379
898
Hamilton
Caldwell 2J Ranch LTD
River Oil & Gas LLC
1/8/2005
381
321
Hamilton
Chapman, George
River Oil & Gas LLC
2/8/2005
382
190
Hamilton
Davidson, Jack
River Oil & Gas LLC
9/29/2004
378
877
Hamilton
Day, Billie
River Oil & Gas LLC
3/24/2005
385
401
Hamilton
Eilers, Melvin
River Oil & Gas LLC
3/4/2005
383
610
Hamilton
Eilers, William
River Oil & Gas LLC
3/4/2005
383
509
Hamilton
Ervin, James
River Oil & Gas LLC
9/22/2004
379
902
Hamilton
Falkenstein, Janice
River Oil & Gas LLC
12/17/2004
380
780
Hamilton
Gault, Cheryl
River Oil & Gas LLC
4/28/2005
387
653
Hamilton
Glover, George
River Oil & Gas LLC
1/27/2005
382
186
Hamilton
Harper, Karry
River Oil & Gas LLC
3/23/2005
387
653
Hamilton
Headley, Jim
River Oil & Gas LLC
3/8/2005
383
521
Hamilton
Henderson, William L
River Oil & Gas LLC
11/11/2004
379
894
Hamilton
Henderson, W.L.
River Oil & Gas LLC
11/24/2004
379
890
Hamilton
Hopper, Craig and Melinda
River Oil & Gas LLC
3/10/2005
384
268
Hamilton
Hopper, W.J.
River Oil & Gas LLC
3/10/2005
384
273
Hamilton
Hunt, Robert Earl
River Oil & Gas LLC
4/7/2005
384
658
Hamilton
Hutto,Leonard
River Oil & Gas LLC
2/10/2005
383
614
Hamilton
Ising, Paul Carl
River Oil & Gas LLC
1/27/2005
381
814
Hamilton
Kennedy, Donald
River Oil & Gas LLC
3/5/2005
385
517
Hamilton
Kohler Family Trust
River Oil & Gas LLC
5/4/2005
385
711
Hamilton
Laird, Patricia
River Oil & Gas LLC
2/11/2005
382
831
Hamilton
Lingle, JC Jr.
River Oil & Gas LLC
2/8/2005
382
115
Hamilton
Massingill, Mildred
River Oil & Gas LLC
2/7/2005
382
119
Hamilton
Mayfield, Elsie
River Oil & Gas LLC
1/31/2005
382
123
Hamilton
Oglesby, Joe Vern & James
River Oil & Gas LLC
2/15/2005
384
278
Hamilton
Petree, E, etal
River Oil & Gas LLC
10/26/2004
380
600
Hamilton
Pietzsch, J
Westside Energy Corporation
9/1/2004
376
818
Hamilton
Ragsdale, Garland
River Oil & Gas LLC
10/25/2004
379
906
Hamilton
Ragsdale, Etals
River Oil & Gas LLC
11/5/2004
378
881
Hamilton
Ray, Lewis
Westside Energy Corporation
9/15/2004
392
805
Hamilton
Swindle, Jim
River Oil & Gas LLC
3/8/2005
386
713
Hamilton
Tinsley, Kenny
Westside Energy Corporation
8/24/2004
377
157
Hamilton
Weiner Farmont
River Oil & Gas LLC
3/30/2005
386
167
Hamilton
Wilson, Mrs. Alton (Lurine)
River Oil & Gas LLC
1/14/2005
381
767
Hamilton
Wilson, Judy
River Oil & Gas LLC
12/29/2004
381
759
Hamilton
Wolf Trust
River Oil & Gas LLC
5/5/2005
386
174
Hill
Allen, Richard L. & Sandra L.
Associated Resources, Inc.
4/18/2006
1421
103
Hill
Amos, Rita
River Oil & Gas LLC
2/25/2005
1337
784
Hill
Bailey, George Jr. (et al)
Associated Resources, Inc.
1/24/2006
1415
19
Hill
Bailey, George, Jr.
Associated Resources, Inc.
1/24/2006
1415
16
Hill
Ball, Alice, etal
Westside Energy Corporation
8/6/2004
1302
571
Hill
Ball, Randell
Westside Energy Corporation
8/6/2004
1302
575
Hill
Bayless
Westside Energy Corporation
10/11/2004
1317
649
Hill
Bearden H
Westside Energy Corporation
8/6/2004
1304
325
Hill
Bearden, H & Robert
Westside Energy Corporation
8/6/2004
1302
563
Hill
Bearden, H, etal
Westside Energy Corporation
8/6/2004
1302
567
Hill
Blasor, June Gordon
Westside Energy Corporation
3/3/2004
1278
597
Hill
Bond, Bill & Ramsey, Susan
Associated Resources, Inc.
2/4/2006
1419
159
Hill
Bowman, D, etux
Westside Energy Corporation
8/18/2004
1302
599
Hill
Brent, Cindy
River Oil & Gas LLC
3/1/2005
1337
792
Hill
Bridges, Helen
Westside Energy Corporation
8/18/2004
1302
607
Hill
Brooks, Doris M.
Associated Resources, Inc.
9/24/2005
1421
43
Hill
Brown, Lucretia, etal
Westside Energy Corporation
5/18/2004
1287
297
Hill
Burris, Tommy Joe & Loretta Faye
Associated Resources, Inc.
9/17/2005
1415
40
Hill
Campbell, Raymond III & Sarah C.
Associated Resources, Inc.
8/31/2005
1419
168
Hill
Carter, Karl
Associated Resources, Inc.
2/22/2006
1422
37
Hill
Carter, Karl
Associated Resources, Inc.
2/22/2006
1422
35
Hill
Christian, LaVerne
Associated Resources, Inc.
3/9/2006
1419
162
Hill
Cockerham, E.A.
Westside Energy Corporation
8/18/2004
1302
595
Hill
Cockerham, Herman
Westside Energy Corporation
8/18/2004
1306
246
Hill
Cockerham, Herman
Westside Energy Corporation
8/24/2005
1373
250
Hill
Cockerham, J.T.
Westside Energy Corporation
8/18/2004
1306
236
Hill
Cockerham, K.G.
Westside Energy Corporation
9/2/2005
1371
569
Hill
Cole, Deborah Ann
Associated Resources, Inc.
11/20/2005
1415
49
Hill
Cole, Elizabeth A. Living Trust
Associated Resources, Inc.
11/20/2005
1415
47
Hill
Cole, Glenn Ray & Kelly
Associated Resources, Inc.
11/20/2005
1421
159
Hill
Cornerston Land, Ltd.
Associated Resources, Inc.
9/27/2005
1415
581
Hill
Cottingame, Florence
Westside Energy Corporation
2/23/2004
1278
602
Hill
Crawford, Bobby
River Oil & Gas LLC
2/25/2005
1333
671
Hill
Cunningham, Joe Richard & Mary Ann
Associated Resources, Inc.
9/16/2005
1415
579
Hill
Dido Trust No. 1
Associated Resources, Inc.
9/1/2005
1415
51
Hill
Duncan, Talmage A. & Lynda J.
Associated Resources, Inc.
8/17/2005
1420
848
Hill
Edwards, Betty Carroll Wills
Associated Resources, Inc.
11/13/2005
1422
16
Hill
Elliott, Gloria
Associated Resources, Inc.
2/18/2006
1420
846
Hill
Erickson, J. Bernard, etal
Westside Energy Corporation
3/16/2004
1278
566
Hill
Everett, Dianna
Associated Resources, Inc.
3/10/2006
1422
14
Hill
Everett, Jeannine
Associated Resources, Inc.
3/9/2006
1419
164
Hill
Ferguson, Ann Hollace
Associated Resources, Inc.
10/23/2005
1415
37
Hill
Galiga, P T, Est
Westside Energy Corporation
7/12/2004
1293
761
Hill
Gordon, Eric
Westside Energy Corporation
6/14/2004
1287
126
Hill
Gray, R B, Est
Westside Energy Corporation
8/18/2004
1302
591
Hill
Green, Jim
Westside Energy Corporation
3/12/2004
1278
591
Hill
Greenhill, James Donald
Associated Resources, Inc.
9/16/2005
1415
599
Hill
Greenhill, Travis Wayne
Associated Resources, Inc.
9/16/2005
1415
575
Hill
Greenhill, William David
Associated Resources, Inc.
9/16/2005
1415
573
Hill
Gregory, J.C. & Wilma
Associated Resources, Inc.
9/28/2005
1421
34
Hill
Hagan, Guy D. & Phyliss W.
Associated Resources, Inc.
4/20/2006
1421
112
Hill
Harris, Stephanie
Westside Energy Corporation
8/18/2004
1313
568
Hill
Hoelscher, Alan
Associated Resources, Inc.
2/27/2006
1422
26
Hill
Hoelscher, Albert, Jr.
Associated Resources, Inc.
2/23/2006
1420
850
Hill
Hoelscher, Phillip
Associated Resources, Inc.
3/1/2006
1419
186
Hill
Huegrich, James
Westside Energy Corporation
3/30/2004
1278
571
Hill
Hulen, Cathy
River Oil & Gas LLC
2/25/2005
1337
788
Hill
Johnson, Bryan
Westside Energy Corporation
3/6/2004
1278
561
Hill
Johnson, James
Westside Energy Corporation
3/31/2004
1278
576
Hill
Johnston, Marty
River Oil & Gas LLC
2/23/2005
1334
474
Hill
Jones, Gus G. Jr.
Associated Resources, Inc.
9/15/2005
1424
351
Hill
Jones, Gus G. Sr. & Gwendolyn
Associated Resources, Inc.
9/15/2005
1424
329
Hill
Jones, Gwendolyn E.
Associated Resources, Inc.
9/15/2005
1424
340
Hill
Key, Michael, etux
Westside Energy Corporation
6/29/2004
1293
582
Hill
Kimmel, James C. & Sue N.
Associated Resources, Inc.
9/28/2005
1421
63
Hill
Knott, W
Westside Energy Corporation
8/18/2004
1302
587
Hill
Lambert, Tony D.
Associated Resources, Inc.
4/24/2006
1419
166
Hill
Langford, Edward
Westside Energy Corporation
3/25/2004
1278
586
Hill
Lee, Samantha
Associated Resources, Inc.
2/18/2006
1415
35
Hill
Martin, Elizabeth
Associated Resources, Inc.
4/24/2006
1421
82
Hill
Martin, William B. (Trust)
Associated Resources, Inc.
9/14/2005
1421
6
Hill
McClure, David
Westside Energy Corporation
8/18/2004
1302
583
Hill
McCullars, James Roderic & R. Deene
Associated Resources, Inc.
9/16/2005
1415
577
Hill
Miller, Jana K. (Kubitza)
Westside Energy Corporation
10/15/2004
1318
447
Hill
Montgomery Petroleum, Inc.
Associated Resources, Inc.
3/6/2006
1421
1
Hill
Nelis, Gary L. & Karen J.
Associated Resources, Inc.
9/18/2005
1424
317
Hill
Ott, Reba Nell
Associated Resources, Inc.
3/6/2006
1420
844
Hill
Parvin, Judy (sulivan)
Westside Energy Corporation
2/23/2005
1333
666
Hill
Petty, Wynelle
River Oil & Gas LLC
2/23/2005
1333
670
Hill
Pharris, Miriam
Westside Energy Corporation
3/22/2004
1278
609
Hill
Primula Inv, Ltd
Westside Energy Corporation
1/17/2005
1355
720
Hill
Primula Inv, Ltd
Westside Energy Corporation
7/8/2005
1385
414
Hill
Ramsaur, Carol
Associated Resources, Inc.
9/29/2005
1415
601
Hill
Reece, Ruth
Westside Energy Corporation
6/23/2004
1291
748
Hill
Richardson, Ronnie E. & Bobbie S.
Associated Resources, Inc.
4/12/2006
1421
150
Hill
Seedorf, Arthur & Edna
Associated Resources, Inc.
9/30/2005
1421
22
Hill
Sellars, Dean Turner
Associated Resources, Inc.
3/27/2006
1424
302
Hill
Sellars, John Patrick
Associated Resources, Inc.
2/9/2006
1421
72
Hill
Sellars, William A., Jr.
Associated Resources, Inc.
2/24/2006
1421
92
Hill
Shephard, Victoria
Westside Energy Corporation
4/29/2004
1341
803
Hill
Showers, James A. & Smith, Stephen N.
Associated Resources, Inc.
9/14/2005
1421
9
Hill
Siddons, Julia, etal
Westside Energy Corporation
4/29/2004
1284
511
Hill
Slowiak, Lenard
Westside Energy Corporation
5/4/2004
1285
528
Hill
Smith, Jodi S.
Associated Resources, Inc.
2/9/2006
1424
304
Hill
Snider, Roger
Westside Energy Corporation
6/29/2004
1294
206
Hill
Spriggs, William A.
Associated Resources, Inc.
9/24/2005
1421
53
Hill
Sumner, Charles
Associated Resources, Inc.
1/23/2006
1421
140
Hill
Tharpe, Louie G. & Annie C.
Associated Resources, Inc.
9/20/2005
1415
38
Hill
Tyra, Michael W.
Associated Resources, Inc.
4/24/2006
1421
121
Hill
Underwood, Wanda
Associated Resources, Inc.
2/18/2006
1415
33
Hill
Wakefield, Claude
Westside Energy Corporation
8/18/2004
1302
603
Hill
Walker, Brian
Associated Resources, Inc.
5/9/2006
1424
306
Hill
Walker, Tommy & Anne
Associated Resources, Inc.
5/9/2006
1422
41
Hill
Ward, Donald (et al)
Westside Energy Corporation
8/18/2004
1306
241
Hill
Watson, William L.
Associated Resources, Inc.
8/30/2005
1115
30
Hill
Webb, Sydney P.
Associated Resources, Inc.
3/27/2006
1420
842
Hill
Williford, Tony
Westside Energy Corporation
4/6/2004
1278
581
Hill
Wilson, Joe
Westside Energy Corporation
8/18/2004
1302
579
Hill
Wood, Kim & Brice
Westside Energy Corporation
9/30/2005
1385
1407
Hill
Wood, Sandra Lynn
Associated Resources, Inc.
2/28/2006
1415
28
Lampasas
Clary, Harold
River Oil & Gas, LLC
2/1/2005
408
58
Lampasas
Day, Billie
River Oil & Gas, LLC
3/24/2005
409
504
Lampasas
Kennedy, Donald
River Oil & Gas, LLC
3/5/2005
408
139
Lampasas
Lee, Alvis P.
River Oil & Gas, LLC
4/18/2005
409
131
Mills
Bufe, Marla
River Oil & Gas, LLC
3/10/2005
269
874
Mills
Casbeer, Lula
River Oil & Gas, LLC
3/23/2005
269
902
Mills
Circle T Trust
River Oil & Gas, LLC
3/17/2005
269
870
Mills
Clary, Frances D.
River Oil & Gas, LLC
3/22/2005
269
886
Mills
Conner, Ruby
River Oil & Gas, LLC
4/27/2005
271
549
Mills
Cox, EJ
River Oil & Gas, LLC
3/19/2005
270
214
Mills
Cox, James
River Oil & Gas, LLC
3/19/2005
270
222
Mills
Cox, James Daniel
River Oil & Gas, LLC
3/19/2005
274
966
Mills
Day, Billie
River Oil & Gas, LLC
3/24/2005
270
441
Mills
Duncan, Dale
River Oil & Gas, LLC
3/22/2005
270
137
Mills
Daniel, B.F.
River Oil & Gas, LLC
3/27/2005
270
717
Mills
Daniel, F.B.
River Oil & Gas, LLC
5/9/2005
271
149
Mills
Demoss, Donald
River Oil & Gas, LLC
3/19/2005
270
445
Mills
Eilers, Melvin
River Oil & Gas, LLC
3/4/2005
270
424
Mills
Elliot, Dorothy
River Oil & Gas, LLC
3/19/2005
269
898
Mills
Ellsworth, Barbara
River Oil & Gas, LLC
3/31/2005
270
459
Mills
Ellsworth, Barbara and John
River Oil & Gas, LLC
3/31/2005
270
449
Mills
Ethridge, James
River Oil & Gas, LLC
3/22/2005
271
50
Mills
Gault, Cheryl
River Oil & Gas, LLC
4/28/2005
271
371
Mills
Gibbard, William P.
River Oil & Gas, LLC
5/10/2005
271
54
Mills
Goulart, Dixie
River Oil & Gas, LLC
4/28/2005
271
29
Mills
Grelle, C.W.
River Oil & Gas, LLC
3/4/2005
269
583
Mills
Guill, Darla and William
River Oil & Gas, LLC
4/28/2005
271
40
Mills
Hamilton, Jack
River Oil & Gas, LLC
3/24/2005
270
988
Mills
Harper Family Trust
River Oil & Gas, LLC
3/23/2005
269
894
Mills
Harper, Karry
River Oil & Gas, LLC
3/23/2005
269
890
Mills
Harris, Mary Ann Priddy
River Oil & Gas, LLC
3/8/2005
269
858
Mills
Hopper, Craig and Melinda
River Oil & Gas, LLC
3/10/2005
269
878
Mills
Hopper, W.J.
River Oil & Gas, LLC
3/10/2005
269
882
Mills
Hoyer Family Living Trust
River Oil & Gas, LLC
3/29/2005
270
967
Mills
Hoyer, Thomas and Marjorie
River Oil & Gas LLC
3/23/2005
270
975
Mills
Hunt, J.D.
River Oil & Gas LLC
4/21/2005
270
721
Mills
Hunt, Michael
River Oil & Gas LLC
4/19/2005
271
45
Mills
Lee, Alvis P.
River Oil & Gas, LLC
4/18/2005
270
708
Mills
Mann, John
River Oil & Gas LLC
3/15/2005
270
713
Mills
McCasland, Virgina
River Oil & Gas LLC
4/5/2005
270
979
Mills
Meier, Milton
River Oil & Gas LLC
3/22/2005
270
133
Mills
Miles, Barry
River Oil & Gas LLC
3/24/2005
270
399
Mills
Miles, Charles
River Oil & Gas LLC
3/24/2005
270
403
Mills
Miles, Charles & Barry
River Oil & Gas LLC
3/24/2005
270
407
Mills
Miles, Ruby
River Oil & Gas LLC
3/24/2005
270
411
Mills
Norwood, E.E.
River Oil & Gas LLC
4/5/2005
270
395
Mills
Owens, Gail & Davis
River Oil & Gas LLC
4/14/2005
270
454
Mills
Owens, Lee
River Oil & Gas LLC
4/14/2005
270
419
Mills
Partin, J.C.
River Oil & Gas LLC
3/27/2005
270
218
Mills
Pax, Melvin
River Oil & Gas LLC
3/29/2005
270
428
Mills
Priddy, Jerry
River Oil & Gas LLC
3/8/2005
269
866
Mills
Roberts, George and Carolyn
River Oil & Gas LLC
3/11/2005
269
862
Mills
Schwartz, Paul
River Oil & Gas LLC
3/22/2005
270
415
Mills
Seilheimer, Dawn
River Oil & Gas LLC
3/4/2005
269
587
Mills
Seilheimer, Dawn
River Oil & Gas LLC
3/4/2005
269
600
Mills
Seilheimer, Dawn
River Oil & Gas LLC
3/4/2005
269
592
Mills
Seilheimer, Oliver
River Oil & Gas LLC
3/4/2005
269
596
Mills
Shelton, H. Lynn
River Oil & Gas, LLC
3/12/2005
270
151
Mills
Shelton, Marlene
River Oil & Gas, LLC
3/12/2005
270
142
Mills
Shelton, Tammy L.
River Oil & Gas, LLC
3/12/2005
270
147
Mills
Soules, Bobbie Jeane
River Oil & Gas LLC
3/24/2005
269
910
Mills
Stahnke, Clyde
River Oil & Gas LLC
5/10/2005
271
154
Mills
Stahnke, Robert
River Oil & Gas LLC
4/19/2005
270
983
Mills
Stanley, Nina Ernestine
River Oil & Gas LLC
4/7/2005
270
432
Mills
Usrey,R W
River Oil & Gas LLC
3/5/2005
269
604
Mills
Wadkins, Terry
River Oil & Gas LLC
4/27/2005
271
35

 
  Appendix II -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

APPENDIX III - NORTH PROPERTIES

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

This Appendix III is attached to and made a part of the Credit Agreement. All
capitalized terms not otherwise defined in this Appendix III are defined in the
Credit Agreement.

COUNTY
LESSOR
LESSEE
DATE
VOLUME
PAGE
           
Cooke
Block, Richard and Susan
Zebra Investments, Inc.
7/12/2005
1391
457
Cooke
Christian, Fred (Executor)
Kelly K. Buster
6/17/2005
1381
567
Cooke
Elam, Lois M.
Kelly K. Buster
4/25/2005
1372
691
Cooke
Gribble, Jay (et ux)
Vicars Oil & Gas, LLC
6/27/2000
1111
123
Cooke
Kirby, Vernon J., Jr. (et ux)
Kelly K. Buster
11/29/2004
1346
315
Cooke
Rosson, Arthur and Gwendolyn
Walter Exploration
7/12/2000
1103
136
Cooke
Smith, Ruth Malcolm
Walter Exploration
5/16/2000
1096
12
Cooke
Wilson, Bonnie (et al)
Walter Exploration
7/12/2000
1103
132
Denton
Fortenberry, Blake
Kelly K. Buster
9/15/2003
#2003-185338
 
Denton
Fortenberry, Charlotte Marie
Kelly K. Buster
9/15/2003
#2003-185333
 
Denton
Fortenberry, Leslie
Kelly K. Buster
9/15/2003
#2003-185337
 
Denton
Fortenberry, Leslie
Kelly K. Buster
9/15/2003
#2003-185336
 
Denton
Richardson, Rebecca Long
Kelly K. Buster
9/15/2003
#2003-185335
 
Denton
Richardson, Rebecca Long
Kelly K. Buster
9/15/2003
#2003-185334
 
Denton
Frye, William L. Frye (et ux)
Superior P&E, LLC
9/20/2001
4994
2982
Denton
JJP Gas Venture
Enexco, Inc.
4/18/2002
5146
961
Denton
Marsden, John Michale (et ux)
Argyle Resources, Inc.
4/25/2001
4845
943
Denton
Monroe, Mary Ann
Superior P&E, LLC
9/20/2001
4994
2989
Denton
Pruett, Edwin
Westside Energy, LP
6/3/2003
Doc #2004-33441
Denton
Rhoades, Joe W.
Mark Jaehne, Trustee
10/22/2003
Doc #2003-192861
Montague
Barcus, Bill J.
V.W. Hutson
3/9/2005
313
453
Montague
Barcus, Netha Ann
V.W. Hutson
3/9/2005
313
447
Montague
Beaver, Judy
V.W. Hutson
2/4/2005
310
698
Montague
Bledsoe, Billie Ruth
V.W. Hutson
4/13/2005
317
709
Montague
Bradford, Nancy H.
V.W. Hutson
3/8/2005
317
695
Montague
Braswell, Paul B.
Kelly K. Buster
7/8/2004
291
179
Montague
Bower, Betty Jean
V.W. Hutson
2/4/2005
309
900
Montague
Christian, Fred (Executor)
Kelly K. Buster
6/17/2005
310
751
Montague
Dunn, Clarence H.
V.W. Hutson
7/6/2004
291
323
Montague
Elam, Lois M.
Kelly K. Buster
4/25/2005
320
368
Montague
Five Ns, Ltd. d/b/a Running N Ranch
EBS Partners Production Co., LP
9/14/2005
331
653
Montague
Five Ns, Ltd. d/b/a Running N Ranch
Joe Bob Smith
1/14/2004
274
621
Montague
Gray, Glenn W. and Ava H.
D and J Resources, Inc.
3/31/2005
314
436
Montague
Gulledge, Robin Lea
V.W. Hutson
2/4/2005
309
891
Montague
Hawk, Carolyn and Joel
Kelly K. Buster
2/15/2005
320
356
Montague
Hayden, Betty Lou
V.W. Hutson
3/3/2005
318
111
Montague
Hood, Hugh
V.W. Hutson
3/3/2005
318
109
Montague
Howard, Phil and Andra
Jacob Warnock
7/22/2005
322
711
Montague
Howell, Ralph H.
V.W. Hutson
3/8/2005
313
455
Montague
Huff, John N., II
V.W. Hutson
3/8/2005
312
751
Montague
Little, Carol
Kelly K. Buster
2/15/2005
320
364
Montague
Littell, H. Arthur (Trustee)
Kelly K. Buster
4/29/2004
289
232
Montague
Littell, Linda
Kelly K. Buster
2/15/2005
320
360
Montague
Mann, Hoyt A.
Kelly K. Buster
5/21/2005
286
936
Montague
Maxwell, Johnny Ray (et ux)
V.W. Hutson
12/23/2004
307
514
Montague
McKinzie, Birt Leana
Kelly K. Buster
6/27/2005
328
688
Montague
Mitchell, Daile Mitchell (et ux)
V.W. Hutson
1/24/2005
310
751
Montague
Morton, Mari-Kathryn
Kelly K. Buster
7/8/2004
291
183
Montague
Moss, Bill L.
V.W. Hutson
2/4/2005
311
513
Montague
Moss, James R.
V.W. Hutson
2/4/2005
309
889
Montague
Nunneley, Jerry Dale and Raenell
Jacob Warnock
6/22/2005
322
708
Montague
Nunneley, Jerry Dale and Raenell
Jacob Warnock
6/22/2005
322
714
Montague
Pettigrew, Susan Lynette
V.W. Hutson
2/4/2005
310
205
Montague
Reed, Norma Ellen
V.W. Hutson
2/4/2005
311
901
Montague
Reeves, Dixie
Kelly K. Buster
9/25/2004
299
11
Montague
Rudy, George F.
V.W. Hutson
2/4/2005
309
903
Montague
Seay, Glenn
Kelly K. Buster
6/27/2005
328
696
Montague
Seay, Hardy Lee, Jr.
Kelly K. Buster
6/27/2005
328
692
Montague
Steed, Jerri
V.W. Hutson
3/9/2005
314
704
Montague
Stedco Partnership
Kelly K. Buster
6/22/2004
289
229
Montague
Summers, Stanley M. (et ux)
V.W. Hutson
1/14/2005
307
546
Montague
Wells, J.M.
Kelly K. Buster
10/13/2004
299
872
Montague
Whittington, Roberta W.
EBS Partners Production Co., LP
11/30/2005
341
20
Montague
Whittington, Roberta W. (et al)
EBS Partners Production Co., LP
11/30/2005
341
21
Montague
Winborn, Mary Ellen
V.W. Hutson
3/3/2005
318
107
Shelby
Allar Company Corporation
L. Lee Kidd
7/29/2002
950
608
Shelby
BGS Foundation, Inc.
Trant L. Kidd
7/30/2002
950
622
Shelby
Barbe, Bobbie Ann
L. Lee Kidd
1/11/2000
875
329
Shelby
Bentsen, Mary Margaret
Trant L. Kidd
12/2/2002
953
279
Shelby
Borders, Gene
L. Lee Kidd
1/11/2000
875
308
Shelby
Bradshaw, Edward Lee and Curtis
L. Lee Kidd
1/11/2000
875
333
Shelby
Bradshaw, J.T.
L. Lee Kidd
1/11/2000
875
337
Shelby
Bradshaw, K.P.
L. Lee Kidd
1/11/2000
875
321
Shelby
Bradshaw, Opal (et al)
L. Lee Kidd
1/14/2000
875
356
Shelby
Bradshaw, Paul Jefferson
L. Lee Kidd
1/11/2000
875
340
Shelby
Bradshaw, Walter Eugene
L. Lee Kidd
1/11/2000
875
325
Shelby
Cochran, Julia J.
L. Lee Kidd
1/15/2000
875
347
Shelby
Fountain, Bobby Joe and Iletha
L. Lee Kidd
1/11/2000
875
312
Shelby
Harris, H.B., Jr.
Trant L. Kidd
12/10/2002
953
275
Shelby
Harris, L.M., Jr.
Trant L. Kidd
7/31/2002
947
278
Shelby
Haley, Mary Elizabeth
L. Lee Kidd
1/13/2000
875
350
Shelby
Johnson, Joan
Trant L. Kidd
8/2/2002
950
282
Shelby
Jones, Dalton S.
L. Lee Kidd
1/13/2000
875
315
Shelby
Jones, Joe L.
L. Lee Kidd
1/13/2000
875
318
Shelby
Kimbro, Bill
Trant L. Kidd
8/2/2002
954
177
Shelby
Kimbro, Curtis
Trant L. Kidd
8/2/2002
947
282
Shelby
Kimbro, Kate
Trant L. Kidd
8/2/2002
947
285
Shelby
McLean, Carroll Rather
Trant L. Kidd
7/25/2002
950
618
Shelby
Ralph, Ann
Trant L. Kidd
12/2/2002
953
270
Shelby
Rather, Gordon S.
Trant L. Kidd
7/25/2002
950
620
Shelby
Rector, Jo Ruth
Trant L. Kidd
7/25/2002
950
612
Shelby
Sanders, Daliah
L. Lee Kidd
1/20/2000
875
344
Shelby
Watson, Mittie B. and Billy M.
L. Lee Kidd
1/13/2000
875
353
Wise
Balthrop, Maggie Sue
EBS Oil & Gas Partners, LLC
7/21/2003
1309
129
Wise
Barnes, Kim Cassity
EBS Oil & Gas Partners, LLC
6/30/2003
1308
156
Wise
Barnett, Patricia Joyce
Kelly K. Buster
6/17/2004
1442
503
Wise
Cassity, Gary
EBS Oil & Gas Partners, LLC
6/30/2003
1308
148
Wise
Cassity, Glenn
EBS Oil & Gas Partners, LLC
6/30/2003
1308
152
Wise
Forman, Elbert Ray
Kelly K. Buster
11/15/2003
1367
675
Wise
Forman, Kathleen B.
Kelly K. Buster
11/15/2003
1367
661
Wise
Fortenberry, Henry
Kelly K. Buster
9/1/2003
1356
853
Wise
Fortenberry, Janet
Kelly K. Buster
9/1/2003
1355
441
Wise
Fortenberry, Jim B. (et al)
EBS Oil & Gas Partners, LLC
8/15/2003
1321
380
Wise
Johnston, Joye
EBS Oil & Gas Partners, LLC
1/15/2004
1389
658
Wise
Knight, Randy Jack
EBS Oil & Gas Partners, LLC
1/15/2004
1391
573
Wise
Knox, Martha R. (et vir)
EBS Oil & Gas Partners, LLC
10/8/2003
1352
131
Wise
Lindley, Bobbylea Fortenberry
EBS Oil & Gas Partners, LLC
8/15/2003
1321
370
Wise
Morris, Virginia Mae
EBS Oil & Gas Partners, LLC
1/15/2004
1387
651
Wise
Pruett, Harold Ray
Kelly K. Buster
11/15/2003
1367
654
Wise
Skinner, Dwight D. (et al)
EBS Oil & Gas Partners, LLC
9/2/2003
1331
52
Wise
Swingler, Anna Forman
Kelly K. Buster
11/15/2003
1367
668
Wise
Woodruff, Carl (et ux)
EBS Oil & Gas Partners, LLC
10/18/2003
1348
873

 
WELLS:
   
Cooke
Christian #1A
 
56.00% Working Interest
 
43.12% Net Revenue Interest
 
3.00% Overriding Royalty Interest
   
Cooke
Elam #1
 
73.00% Working Interest
 
56.21% Net Revenue Interest
 
1.00% Overriding Royalty Interest
   
Cooke
Gribble #1
 
16.00% Working Interest
 
12.48% Net Revenue Interest
   
Cooke
Kirby #1
 
56.00% Working Interest
 
43.12% Net Revenue Interest
 
1.00% Overriding Royalty Interest
   
Cooke
Smith #1
 
47.50% Working Interest
 
38.00% Net Revenue Interest

   
Denton
C. Fortenberry #1, #2, #3, #4, #5,
 
#6, #7 and #8
 
2.00% Overriding Royalty Interest
   
Denton
Lucille Pruett #1
 
75.00% Working Interest
 
60.00% Net Revenue Interest
   
Denton
Lucille Pruett #2H and #3
 
100.00% Working Interest
 
80.00% Net Revenue Interest
   
Denton
Marsden #1
 
19.25% Working Interest
 
14.0150% Net Revenue Interest
   
Denton
Monroe #1
 
30.00% Working Interest
 
23.8944% Net Revenue Interest

Montague
Arthur Littell #1
 
27.00% Working Interest
 
21.60% Net Revenue Interest
   
Montague
Christian #1A
 
56.00% Working Interest
 
43.12% Net Revenue Interest
 
3.00% Overriding Royalty Interest
   
Montague
Dunn #1
 
14.00% Working Interest
 
10.78% Net Revenue Interest
   
Montague
Elam #1
 
73.00% Working Interest
 
56.21% Net Revenue Interest
 
1.00% Overriding Royalty Interest
   
Montague
Hawk-Littell #1
 
41.67% Working Interest
 
33.336% Net Revenue Interest
   
Montague
Mitchell #1
 
59.00% Working Interest
 
44.84% Net Revenue Interest
 
1.00% Overriding Royalty Interest
   
Montague
Nunneley #1
 
52.00% Working Interest
 
39.52% Net Revenue Interest
 
2.00% Overriding Royalty Interest
   
Montague
Phillips #1
 
12.00% Working Interest
 
9.24% Net Revenue Interest
   
Montague
Summers #1
 
52.00% Working Interest
 
39.52% Net Revenue Interest
 
1.00% Overriding Royalty Interest
   
Montague
Whittington #1
 
47.00% Working Interest
 
35.72% Net Revenue Interest
 
2.00% Overriding Royalty Interest
   
Montague
Williams Estate #1
 
64.00% Working Interest
 
48.64% Net Revenue Interest
 
2.00% Overriding Royalty Interest

Shelby
Gene Borders #1
 
19.813% Working Interest
 
14.860% Net Revenue Interest

Wise
Balthrop #1
 
12.5% Working Interest
 
10.00% Net Revenue Interest
   
Wise
Balthrop #2
 
15.50% Working Interest
 
12.40% Net Revenue Interest
   
Wise
Barnett (Patricia) #1
 
17.00% Working Interest
 
13.60% Net Revenue Interest
   
Wise
Cassity #1
 
12.50% Working Interest
 
10.00% Net Revenue Interest
   
Wise
Foreman #1
 
22.50% Working Interest
 
17.775% Net Revenue Interest
   
Wise
Fortenberry #1
 
13.50% Working Interest
 
10.53% Net Revenue Interest
   
Wise
Henry Fortenberry #1
 
3.125% Working Interest
 
2.34375% Net Revenue Interest
 
2.00% Overriding Royalty Interest
   
Wise
Henry Fortenberry #2, #3, #4, #5, #6
 
2.00% Overriding Royalty Interest
   
Wise
Janet Fortenberry #1 and #2
 
3.125% Working Interest
 
2.34375% Net Revenue Interest
 
2.00% Overriding Royalty Interest
   
Wise
Janet Fortenberry #3, #4, #5, #6, #7
 
2.00% Overriding Royalty Interest
   
Wise
Knight #1
 
6.458% Working Interest
 
5.344% Net Revenue Interest
   
Wise
Knight #2, #3 and #4
 
5.00% Working Interest
 
3.75% Net Revenue Interest
 
.05% Overriding Royalty Interest
   
Wise
Knight #5, #6 and #7
 
.05% Overriding Royalty Interest
   
Wise
Lindley #1 and #2
 
20.00% Working Interest
 
15.60% Net Revenue Interest
   
Wise
Pruett #1 and #2
 
14.00% Working Interest
 
10.92% Net Revenue Interest
   
Wise
Skinner #1
 
18.00% Working Interest
 
14.22% Net Revenue Interest
   
Wise
Woodruff #1
 
18.50% Working Interest
 
14.80% Net Revenue Interest

 
  Appendix III -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE I - SECURITY DOCUMENTS

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

1. Oil and Gas Properties

 
A.
Deed of Trust, Mortgage, Security Agreement, Assignment of Production, Fixture
Filing and Financing Statement covering Borrowers’ Oil and Gas Properties
located in:

County     State

Brown     Texas
Comanche    Texas
Coryell     Texas
Ellis     Texas
Hamilton    Texas
Hill     Texas
Lampasas    Texas
Mills     Texas

2. Financing Statements

For Westside Production:
 
Jurisdiction:  Secretary of State of Texas

 

 
  Schedule I -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE II - [RESERVED]

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

 
  Schedule II -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 5.06 - LITIGATION

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

None.

 
  Schedule 5.06 -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 5.12 - HYDROCARBON INTERESTS

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

Primula #1H

50.00% Working Interest

38.75% Net Revenue Interest

 
  Schedule 5.12 -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 5.20 - CORPORATE STRUCTURE

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

WESTSIDE ENERGY CORPORATION
WESTSIDE ENERGY
CORPORATION
(NEVADA)
CORPORATE STRUCTURE
 

WESTSIDE ENERGY CORPORATION (NEVADA)
 
WESTSIDE ENERGY GP LLC (TEXAS) (100% OWNED)
 
WESTSIDE ENERGY PRODUCTION COMPANY, LP (TEXAS) (F/K/A EBS) (99.9% LP
    INTEREST OWNED BY PARENT; 0.1% GP INTEREST OWNED BY WEGP)
 
WESTSIDE ENERGY OPERATING COMPANY, LP (TEXAS) (F/K/A EBS) (99.9% LP     
          INTEREST OWNED BY PARENT; 0.1% GP INTEREST OWNED BY WEGP)
 
 
 
 
 
WESTSIDE LEASES JOA
 

 
  Schedule 5.20 -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 5.30 - PRODUCTION MATTERS

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

None.

 
  Schedule 5.30 -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 7.01 - LIENS

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

Deed of Trust, Mortgage, Security Agreement, Financing Statement, and Assignment
of Production and Revenues, dated as of March 23, 2007, by and among, Westside
Energy Production Company, LP, as Mortgagor and KeyBank National Association, as
Mortgagee.

 
  Schedule 7.01 -- Credit Agreement
Westside Energy Production Company, LP & Westside Energy Operating Company, LP  
Page 

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

SCHEDULE 7.06 - TRANSACTIONS WITH AFFILIATES

CREDIT AGREEMENT

dated as of March 23, 2007
between Spindrift Partners, L.P. (the “Administrative Agent”),
the Lenders party thereto,
Westside Energy Production Company, LP
and
Westside Energy Operating Company, LP (“Borrowers”)

None.