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Adira Energy Corp. - Exhibit 4.10 - Filed by newsfilecorp.com

Exhibit 4.11 

AGREEMENT 

          THIS
  AGREEMENT ("Agreement"), dated as of November 26, 2010, is entered
  into by and between Adira Energy Ltd., a corporation governed by the federal
  laws of Canada (the "Company") and BRM Group Ltd. ("BRM").
  

          WITNESSETH:
  

          WHEREAS,
  BRM intends to subscribe for common shares (the "Subscribed Shares")
  in the capital of the Company (each common share in the capital of the Company
  a "Common Share"); 

          AND
  WHEREAS, the Company and BRM desire to undertake the actions and agreements
  contained herein. 

          NOW,
  THEREFORE, in consideration of the foregoing and the respective promises,
  representations, warranties, covenants and agreements of the parties contained
  herein and for other good and valuable consideration, the receipt and sufficiency
  of which are hereby acknowledged by each of the parties hereto, the parties
  hereto, intending to be legally bound hereby, agree as follows: 

ARTICLE 13 

  BOARD OF DIRECTORS 

13.1   Director Nominees 

          Having
  considered the request of BRM that upon completion of the purchase of the Subscribed
  Shares resulting in:

(i) BRM together with its Representatives
  (as defined below) being the beneficial owner of at least 10% of the outstanding
  Common Shares (the "10 Percent Threshold") that two persons nominated
  from time to time by BRM, initially being each of Messrs. Eli Barkat and Yael
  Reznick Cramer (the "10 Percent Nominees"); or

(ii) BRM together with its Representatives
  being the beneficial owner of less than the 10 Percent Threshold but equal to
  or greater than 7% of the outstanding Common Shares (the "7 Percent Threshold")
  that a person nominated from time to time by BRM, initially being that Messr.
  Eli Barkat (the "7 Percent Nominee", and together with the 10
  Percent Nominee, as the case may be, hereinafter the "Nominees"),

each of whom is or shall be an individual selected and proposed
  by BRM, be nominated by management of the Company ("Management") for
  election to the Company’s board of directors (the "Board") and having
  received the consent of each of the Nominees to act as a director, the Corporate
  Governance Committee of the Board (the "Governance Committee")
  shall review in good faith in the exercise of its duties and shall recommend
  the nomination of each of the Nominees as a director of the Company on the terms
  set out in this Agreement.

 Based upon such recommendation and the agreement of BRM hereunder,
  concurrently with the execution and delivery of this Agreement, the Board has
  as of this date increased the number of directors to eight on the understanding
  that the current incumbent members of the Board and the Nominees shall be named
  as Management’s nominees for election as directors in the Company’s
  management proxy circular at each annual meeting of shareholders of the Company
  (the "Annual Meetings"), and are to be nominated by Management to be
  elected as directors at the Annual Meetings and are expected to be elected or
  re-elected as the case may be at each of the Annual Meetings and to serve on
  the Board up to and including the date which:

(i) in the case of the 10 Percent Nominees,
  shall be the date on which the aggregate beneficial ownership of Common Shares
  of BRM and its Representatives falls below the 10 Percent Threshold; and

(ii) in the case of the 7 Percent Nominee,
  on the date on which the aggregate beneficial ownership of Common Shares of
  BRM and its Representatives falls below the 7 Percent Threshold (each of the
  dates referred to in(i) and (ii) hereinafter an "End Date").

The Nominees will be invited to join certain Committees of the
  Board upon and subject to their election as directors of the Company and the
  determination of the Board as to which Committees they will be invited to join.

13.2  Qualified Designees 

          Subject
  to applicable law and the rules of any stock exchange or quotation system on
  which any securities of the Company are listed and posted for trading or quoted,
  as applicable, at the relevant time (the "Exchange"), in the event that
  before the End Date a vacancy on the Board is created as a result of any Nominee’s
  death, resignation, disqualification (including, without limitation, as a result
  of failing to satisfy the Conditions (as defined below)), or removal (or that
  of any Qualified Designee (as defined below)), then BRM shall have thirty (30)
  days from the date it becomes aware of such event to select another individual
  who satisfies the Conditions to fill such vacancy by providing written notice
  to the Chair of the Corporate Governance Committee which notice shall identify
  the individual, and his or her qualifications and credentials to serve as a
  director of the Company, and to confirm that he or she satisfies the Conditions
  (each such individual being referred to as a "Qualified Designee").
  Following receipt of such notice, the members of the Governance Committee will
  review the qualifications and credentials of the Qualified Designee, in good
  faith in the exercise of their duties, and determine whether to recommend the
  appointment of the individual to the Board to fill the vacancy. In the event
  that: (i) the Governance Committee recommends the appointment of the individual
  to the Board, the Board accepts such recommendation and appoints such individual
  as a director, such individual shall serve on the Board as contemplated in Section
  1.1 above, or (ii) the Governance Committee determines not to recommend the
  appointment of the individual to the Board (or the Board determines to reject
  a positive recommendation of the Governance Committee), then the Board shall
  promptly notify BRM and allow BRM to select another individual who satisfies
  the Conditions who shall then be subject to approval in accordance with the
  procedures set out above, and so on as necessary until the vacancy shall be
  filled with a Qualified Designee. 

	13.3 	 BRM shall be entitled to appoint one member to the Board
        of Directors of each entity of which the Company is the controlling shareholder
        or the general partner.

	 	 
	13.4 	 Condition

	 	(a) 	 Notwithstanding anything to the contrary in
        this Agreement, each of the Nominees (and any Qualified Designee) shall,
        satisfy the following conditions (such conditions referred to as the "Conditions"):

	 	 	 	 
	 		(i) 	 co-operate with the Board to allow the Board to determine,
        that as of the date of this Agreement, that he is either "independent"
        or not "independent" as defined under applicable Canadian securities laws;

	 	 	 	 
	 		(ii) 	 at all times while serving on the Board, be qualified
        to serve as a director under the Canada Business Corporations Act, as
        amended (the "CBCA");

	 	 	 	 
	 		(iii) 	 confirm to the Board as of the date of this Agreement,
        that he has made all disclosures required by section 120 of the CBCA;
        and

	 	 	 	 
	 		(iv) 	 execute the Board’s standard confidentiality and
        non circumvent agreements in the form required to be executed by all directors
        of the Board.

	 	 	 	 
	 	(b) 	 BRM shall promptly advise the Chair of the
        Corporate Governance Committee in writing if BRM becomes aware that any
        of the Nominees (or any Qualified Designee) ceases to satisfy the Conditions.

	 	 	 	 
	 	(c) 	 Notwithstanding anything to the contrary in
        this Agreement, but subject to the right of BRM to select a Qualified
        Designee as provided in Section 1.2 hereof, if, at any time, any of the
        Nominees (or any Qualified Designee) ceases to satisfy the condition in
        Section 1.4(1)(b), upon the request of the Board to BRM, BRM shall promptly
        cause such Nominee (or Qualified Designee) to resign from the Board immediately
        and such Nominee (or Qualified Designee) shall deliver his or her written
        resignation to the Board forthwith.

ARTICLE 14 

  REPRESENTATIONS, WARRANTIES AND COVENANTS 

	14.1 	 Representations and Warranties of BRM

	 	 
		 BRM represents and warrants to the Company that:

	 	(i) 	 BRM is duly organized and validly existing under the
        laws of its jurisdiction of organization and has all requisite power and
        authority to execute and deliver this Agreement,

	 	 	 
	 	(ii) 	 this Agreement has been duly executed and delivered
        by BRM,

	 	(iii) 	 BRM has no reason to believe that any of the Nominees
        is not "independent" as defined under applicable Canadian securities laws;

	 	 	 
	 	(iv) 	 this Agreement constitutes the legal, valid and binding
        agreement of BRM, enforceable against BRM in accordance with its terms,
        except as may be limited by bankruptcy, insolvency, fraudulent conveyance,
        reorganization, moratorium, and similar laws relating to or affecting
        creditors’ rights generally and general equitable principles (whether
        considered in a proceeding in equity or at law), in each case now or hereafter
        in effect, and

	 	 	 
	 	(v) 	 to the best of BRM’s knowledge, each of the Nominees
        satisfies the Conditions.

	14.2 	 Representations and Warranties of the Company

	 	 
		 The Company represents and warrants to BRM that:

	 	(i) 	 the Company is duly organized and validly existing under
        the federal laws of Canada and has all requisite corporate power and authority
        to execute and deliver this Agreement,

	 	 	 
	 	(ii) 	 this Agreement has been duly executed and delivered
        by the Company,

	 	 	 
	 	(iii) 	 this Agreement constitutes the legal, valid and binding
        agreement of the Company, enforceable against the Company in accordance
        with its terms, except as may be limited by bankruptcy, insolvency, fraudulent
        conveyance, reorganization, moratorium, and similar laws relating to or
        affecting creditors’ rights generally and general equitable principles
        (whether considered in a proceeding in equity or at law), in each case
        now or hereafter in effect,

	 	 	 
	 	(iv) 	 the Company has not granted any other party any rights
        relating to appointing nominees to the Board or to any committees of the
        Board on terms that are more favourable than those same rights granted
        to BRM (including, without limitation, proportionate voting or the length
        of time of management support for such nominees), and the Company shall
        forthwith notify BRM in writing and shall give BRM the right to, in its
        sole discretion, amend the terms of this Agreement relating to such provisions
        to coincide with such other provisions. The Company shall promptly cause
        all such actions to take place as may be necessary to amend this Agreement
        to effect such changes; and

	 	 	 
	 	(v) 	 the Company's actions contemplated by this Agreement
        (including by Sections 1.1, 1.2 and 1.4 of this Agreement) have been duly
        and validly authorized by all necessary corporate action and expressly
        approved by the Board.

ARTICLE 15 

  TERMINATION 

	15.1 	 Termination

The provisions of this Agreement shall
  remain in full force and effect until the earliest of: 

	 	(i) 	 the date that BRM, together with any directly or indirectly
        controlled persons or persons in whom BRM beneficially owns and/or exercises
        control or direction over, directly or indirectly, securities carrying
        more than 50% of the voting rights of such Person (collectively, "Representatives")
        beneficially own and/or exercises control or direction over, directly
        or indirectly, less than seven percent (7%) of the outstanding Common
        Shares of the Company; and

	 	 	 
	 	(ii) 	 the date established by mutual written agreement of
        the Company and BRM.

15.2  Effect of Termination 

          Notwithstanding
  Section 3.1, the provisions of Article 4 shall survive the termination of any
  of the provisions this Agreement. No termination pursuant to Section 3.1 shall
  relieve any party hereto from liability for any breach of this Agreement prior
  to such termination. 

ARTICLE 16 

  GENERAL 

16.1  Notices 

          All
  notices, requests, claims, demands and other communications hereunder shall
  be in writing and shall be deemed to have been duly given to a party if delivered
  in person (providing proof of delivery) to the party at the following addresses
  (or at such other address for a party as shall be specified by like notice)
  on the date of delivery, if sent by mail seven (7) business days after mailing,
  or if by facsimile, upon confirmation of receipt: 

	 	(a) 	 If to the Company:

	 	 	 
	 		 Adira Energy Ltd.

	 		 Suite 1204, 120 Adelaide Street West 

        Toronto, Ontario, M5H 1T1

	 	 	 
	 		 Attention:      Alan Friedman,
        Vice President Corporate Development 

        Telephone: 

        Facsimile:     (416) 925-1404

	 	(b) 	 If to BRM and any of its Representatives:

	 	 	 
	 		 BRM Group Ltd.

	 		 Ackerstein Towers, Building B 

        11 Hamenofim Street 

        Herzliya Pituach 46725, Israel

	 	 	 
	 		 Attention:      Yael Reznik
        Cramer 

        Telephone:     +972-9-954-9555 

        Facsimile:      +972-9-954-9557

with a copy to, which copy shall not
  constitute notice hereunder: 

Aird & Berlis LLP 

  Brookfield Place, 181 Bay Street, Suite 1800 

  Toronto, Ontario M5J 2T9 

Attention:      Daniel N. Bloch 

  Telephone:    416-865-4739 

  Facsimile:      416-863-1515 

and 

Naschitz Brandes & Co. 

  5 Tuval St. 

  Tel-Aviv, Israel 

  Attention:      Sharon Amir 

  Telephone:    +972-3-623-5090 

  Facsimile:      +972-3-623-5106 

16.2  No Third-Party Beneficiaries 

          Nothing
  in this Agreement, whether express or implied, is intended to or shall confer
  any rights, benefits or remedies under or by reason of this Agreement on any
  persons other than the parties and their respective successors (or, in respect
  of the Nominee, his heirs, administrators, executors and personal representatives)
  and permitted assigns, nor is anything in this Agreement intended to relieve
  or discharge the obligation or liability of any third persons to any party,
  nor shall any provisions give any third persons any right or subrogation over
  or action against any party. 

16.3  Governing Law 

	 	(a) 	 This Agreement shall be governed by and construed and
        enforced in accordance with the laws of the State of Israel, without giving
        effect to the conflicts of law provisions thereof (except for such terms
        which under applicable securities and corporate laws must be governed
        by the laws of the Province of Ontario and the federal laws of Canada,
        which shall be governed by such laws of the Province of Ontario and the
        federal laws of Canada. Any disputes arising out of or in connection with
        this Agreement, shall be exclusively adjudicated in the courts of Tel-Aviv,
        Israel. Each party hereto irrevocably submits (and BRM shall cause the
        Representatives to submit) to the personal jurisdiction of such court
        for the purposes of any such suit, action, counterclaim or proceeding
        arising out of this Agreement (collectively, a "Suit").

	 		  Each of the parties hereto hereby waives and agrees
        not to assert by way of motion, as a defense or otherwise in any such
        Suit, any claim that it is not subject to jurisdiction of the above court,
        that such Suit is brought in an inconvenient forum, or the venue of such
        Suit is improper.

	 	 	 
	 	(b) 	 Each of the parties hereby agrees (and BRM shall cause
        the Representatives to accept) that service of all writs, process and
        summonses in any Suit may be made upon such party or Representative by
        mail to the address as provided in this Agreement. Nothing herein shall
        in anyway be deemed to limit the ability of any party to serve any such
        writs, process or summonses in any other matter permitted by applicable
        law.

16.4  Assignment; Successors 

          This
  Agreement shall be binding upon and inure to the benefit of and be enforceable
  by the parties and their respective successors (or, in respect of the Nominee,
  his heirs, administrators, executors and personal representatives) and permitted
  assigns. No party to this Agreement may assign its rights or delegate its obligations
  under this Agreement, whether by operation of law or otherwise. 

16.5  Amendments; Waivers 

          Subject
  to applicable law, this Agreement may only be amended pursuant to a written
  agreement executed by all the parties, and no waiver of compliance with any
  provision or condition of this Agreement and no consent provided for in this
  Agreement shall be effective unless evidenced by a written instrument executed
  by the party against whom such waiver or consent is to be effective. No waiver
  of any term or provision of this Agreement shall be construed as a further or
  continuing waiver of such term or provision or any other term or provision.

16.6  Entire Agreement 

          This
  Agreement constitutes the entire agreement of all the parties and supersedes
  any and all prior and contemporaneous agreements, memoranda, arrangements and
  understandings, both written and oral, between the parties, or any of them,
  with respect to the subject matter hereof. No representation, warranty, promise,
  inducement or statement of intention has been made by any party which is not
  contained in this Agreement and no party shall be bound by, or be liable for,
  any alleged representation, promise, inducement or statement of intention not
  contained herein or therein. The parties expressly disclaim reliance on any
  information, statements, representations or warranties regarding the subject
  matter of this Agreement other than the terms of this Agreement. 

16.7  Counterparts 

          To
  facilitate execution, this Agreement may be executed in any number of counterparts
  (including by facsimile transmission), each of which shall be deemed to be an
  original, but all of which together shall constitute one binding agreement on
  the parties, notwithstanding that not all parties are signatories to the same
  counterpart. 

16.8  Specific Performance 

          The
  parties agree that irreparable damage would occur in the event any of the provisions
  of this Agreement were not performed in accordance with the terms hereof and
  that the parties are entitled to an injunction or specific performance of the
  terms hereof in addition to any other remedies at law or in equity. 

[Signature Page Follows] 

          IN
  WITNESS WHEREOF, the parties have duly executed this Agreement as of the
  date first above written. 

ADIRA ENERGY LTD. 

 

	 	By: 	 
	 	 	Name: 
	 	 	Title: 

 

BRM GROUP LTD. 

 

	 	By: 	 
	 	 	Name: 
	 	 	Title:AMENDED AND RESTATED SENIOR SECURED, SUPER-PRIORITY

                      DEBTOR-IN-POSSESSION CREDIT AGREEMENT

                          DATED AS OF JANUARY 14, 2011

                                     between

                           Rancher ENERGY CORPORATION,

                                  AS BORROWER,

                                       AND

                     LINC ENERGY PETROLEUM (WYOMING), INC.,

                                       AS

                                     LENDER

<PAGE>

                    INDEX OF ANNEXES, SCHEDULES AND EXHIBITS

Annex A              --       Financial Reporting
Annex B              --       Lender Wire Transfer Instructions

Exhibit A            --       Form of Term Loan Note

Schedule 1.1         --       Permitted Liens
Schedule 10.2.1      --       Conditions Precedent
Schedule 10.2.8      --       Conditions Precedent
Schedule 11.2        --       Executive Offices; Corporate or Other Names; FEIN
Schedule 11.4        --       Property; Liens
Schedule 11.5        --       Restrictions; No Default
Schedule 11.6        --       Taxes
Schedule 11.7        --       ERISA
Schedule 11.8        --       No Litigation
Schedule 11.9        --       Brokers
Schedule 11.11       --       Environmental Matters
Schedule 11.13       --       Deposit and Disbursement Accounts
Schedule 11.14       --       Government Contracts
Schedule 11.15       --       Material Contracts
Schedule 13.1        --       Mergers, Subsidiaries, Etc.
Schedule 13.2        --       Indebtedness
Schedule 13.5        --       Guaranteed Indebtedness
Schedule 17.12       --       Authorized Signature

                                       i

<PAGE>

     AMENDED AND RESTATED  SENIOR SECURED,  SUPER-PRIORITY  DEBTOR-IN-POSSESSION
CREDIT  AGREEMENT,  dated  as  of  January  14,  2011,  between  RANCHER  ENERGY
CORPORATION,  a Nevada corporation  ("Borrower"),  as borrower,  and LINC ENERGY
PETROLEUM (WYOMING), INC., a Delaware corporation (together with its successors,
assigns and transferees,  the "Lender"),  as lender. Each of Lender and Borrower
is sometimes individually referred to in this Agreement as a "Party," and all of
them, together,  are sometimes referred to herein as the "Parties."  Capitalized
terms used herein are defined in Section 1 or in the text hereof.

                                    RECITALS

     A. On October 28, 2009 (the "Petition Date"), Borrower commenced Bankruptcy
Case No. 09-32943 MER (the "Bankruptcy Case") by filing a voluntary petition for
reorganization under Chapter 11 of Title 11 of the United States Code, 11 U.S.C.
101 et seq. (the "Bankruptcy Code"), with the United States Bankruptcy Court for
the District of Colorado (the "Bankruptcy Court"). Borrower continues to operate
its  business  and manage  its  properties  as debtor  and  debtor-in-possession
pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code.

     B. Borrower has  requested  that Lender  provide a credit  facility that is
senior  secured,  super-priority  as to  Borrower  in an  amount  not to  exceed
$14,700,000  to (a)  refinance  certain  debt of  Borrower,  (b) pay  certain ad
valorem taxes,  and (c) provide funds for the conclusion of the Bankruptcy  Case
in the event a successful reorganization of Borrower is not possible.

     C.  Lender is willing  to provide a credit  facility  to  Borrower  of such
amount upon the terms and conditions set forth herein.

     D.  Borrower  has  agreed to secure all of its  Obligations  under the Loan
Documents by, among other things, granting Lender a first-lien security interest
in, and lien upon, substantially all of its existing and after-acquired personal
and real property.

     E.  Unless  otherwise  indicated,  all  references  in  this  Agreement  to
sections,  subsections,  schedules, exhibits, and attachments shall refer to the
corresponding sections, subsections,  schedules, exhibits, and attachments of or
to this Agreement. All schedules,  annexes,  exhibits and attachments hereto, or
expressly  identified to this Agreement,  are incorporated  herein by reference,
and taken together,  shall constitute but a single  agreement.  Unless otherwise
expressly  set  forth  herein,  or in a  written  amendment  referring  to  such
schedules and annexes,  all  schedules and annexes  referred to herein means the
schedules and annexes as in effect as of the Closing Date.  These Recitals shall
be construed as part of this Agreement.

     NOW,  THEREFORE,  in  consideration  of the mutual  covenants,  agreements,
representations and warranties  contained in this Agreement,  and for other good
and  valuable  consideration,  the receipt and  sufficiency  of which hereby are
conclusively acknowledged, the Parties agree as follows.

Section 1.        Defined Terms.

     1.1 Definitions.  The following  terms, as used herein,  have the following
meanings:

     "Account  Debtor"  means any Person who may become  obligated  to  Borrower
under,  with respect to, or on account of, an Account,  Chattel Paper or General
Intangibles.

<PAGE>

     "Accounts" means,  with respect to any Person,  all "accounts" as such term
is defined in the Code,  now owned or  hereafter  acquired by such  Person,  and
shall include,  in any event, (a) all accounts  receivable,  other  receivables,
book debts and other  forms of  obligations  (other  than  forms of  obligations
evidenced by Chattel  Paper,  Documents or  Instruments)  now owned or hereafter
received or acquired by or belonging or owing to such  Person,  whether  arising
out of goods  sold or  services  rendered  by it or from any  other  transaction
(including  any such  obligations  which may be  characterized  as an account or
contract right under the Code), (b) all of such Person's rights in, to and under
all purchase orders or receipts now owned or hereafter  acquired by it for goods
or services,  (c) all of such Person's rights to any goods represented by any of
the foregoing  (including such Person's  unpaid rights of rescission,  replevin,
reclamation  and  stoppage  in transit  and  rights to  returned,  reclaimed  or
repossessed goods), (d) all monies due or to become due to such Person under all
purchase  orders and contracts for the sale or lease of goods or the performance
of services or both by such Person or in connection  with any other  transaction
(whether  or not yet earned by  performance  on the part of such  Person) now or
hereafter  in  existence,  including  the right to receive the  proceeds of said
purchase orders and contracts, and (e) all collateral security and guarantees of
any kind, now or hereafter in existence, given by any Person with respect to any
of the foregoing.

     "Advance" means an advance made to Borrower under the Term Loan.

     "Affiliate"  has the meaning  set forth in Rule 12b-2 of the General  Rules
and Regulations of the Securities Exchange Act of 1934, as amended,  and Section
101 of the Bankruptcy Code.

     "Agreement" means this Amended and Restated Senior Secured,  Super-Priority
Debtor-in-Possession  Credit Agreement,  together with all exhibits, annexes and
schedules hereto, and as the same may be amended or restated from time to time.

     "Avoidance   Action"  means  that  certain  litigation  known  as  AP:  No.
10-01173-MER Rancher Energy Corp. v. GasRock Capital, LLC.

     "Bankruptcy Case" has the meaning given to it in the recitals.

     "Bankruptcy Code" has the meaning given to it in the recitals.

     "Bankruptcy Court" has the meaning given to it in the recitals.

     "Base Rate"  means (a) for the period  commencing  on the Closing  Date and
ending 60 days thereafter,  10%; (b) for the period  commencing on the 61st date
after the  Closing  Date and  ending 60 days  thereafter,  12%;  and (c) for the
period  commencing  on the  121st  day  after  the  Closing  Date and  until all
Obligations are repaid in full, 14%.

     "Borrower" has the meaning given to it in the first paragraph.

     "Breakup Fee" has the meaning given to it in Section 5.5.

     "Business  Day" means any day that is not a Saturday,  a Sunday or a day on
which banks are required or permitted to be closed in Denver, Colorado.

     "Capital  Expenditures"  means, with respect to any Person, all payments or
accruals  (including  Capital  Lease  Obligations)  of such Person for any fixed
assets or improvements or for replacements,  substitutions or additions thereto,
that are required to be capitalized under GAAP.

                                       2
<PAGE>

     "Capital  Lease"  means,  with  respect  to any  Person,  any  lease of any
property  (whether  real,  personal or mixed) by such Person as lessee that,  in
accordance  with GAAP,  either would be required to be classified  and accounted
for as a  capital  lease on a  balance  sheet of such  Person  or  otherwise  be
disclosed as such in a note to such balance sheet.

     "Capital Lease Obligation" means, with respect to any Person, the amount of
the  obligation  of such  Person as lessee  under any  Capital  Lease  that,  in
accordance with GAAP,  would appear on a balance sheet of such Person in respect
of such Capital Lease or otherwise be disclosed in a note to such balance sheet.

     "Carve-Out  Account"  means that certain  segregated  deposit  account that
holds only the Carve-Out Amount.

     "Carve-Out  Amount"  has  the  meaning  given  to it in  the  Final  Order;
provided,  however, that in no event shall the Carve-Out Amount exceed $100,000,
without the prior written consent of Lender.

     "Carve-Out Expenses" has the meaning given to it in the Final Order.

     "Cash Equivalents" means (a) securities with maturities of 180 days or less
from the date of acquisition 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,  (b)  certificates  of deposit,  eurodollar time deposits,
overnight bank deposits and bankers' acceptances of any domestic commercial bank
having capital and surplus in excess of  $500,000,000  having  maturities of one
year or less from the date of acquisition, and (c) commercial paper of an issuer
rated at least A-1 by Standard & Poor's  Corporation or P-1 by Moody's Investors
Services,  Inc.,  or carrying an  equivalent  rating by a nationally  recognized
rating agency if both of the two named rating agencies cease publishing  ratings
of  investments,  in each case, with maturities of not greater than 60 days from
the date acquired.

     "Charges" means, for Borrower, all Taxes or Other Taxes (including Taxes or
Other Taxes at the time due and payable),  Liens, claims or encumbrances upon or
relating to (a) the Collateral, (b) the Obligations, (c) the employees, payroll,
income or gross receipts of Borrower,  (d) Borrower's ownership or use of any of
its Property and (e) imposed upon Borrower's business.

     "Chattel  Paper" means all  "chattel  paper" as such term is defined in the
Code,  including  electronic  chattel paper, now owned or hereafter  acquired by
Borrower.

     "Claim" has the meaning given to it in Section 6.1.

     "Closing" has the meaning given to it in Section 10.1.

     "Closing Date" has the meaning given to it in Section 10.1.

     "Code"  means the  Uniform  Commercial  Code as the same may,  from time to
time,  be in effect in the State of  Colorado;  provided,  however,  that to the
extent the Code is used to define any term  herein or in any Loan  Document  and
such  term is  defined  differently  in  different  Articles  of the  Code,  the
definition of such term contained in Article 9 shall govern; provided,  further,
that in the event that, by reason of mandatory  provisions of law, any or all of

                                       3
<PAGE>

the attachment,  or remedies with respect to Lender's  security  interest in any
Collateral  is  governed  by the  Uniform  Commercial  Code  as in  effect  in a
jurisdiction other than the State of Colorado, the term "Code" means the Uniform
Commercial  Code as in effect in such other  jurisdiction  for  purposes  of the
provisions hereof relating to such attachment,  perfection, priority or remedies
and for purposes of definitions related to such provisions.

     "Collateral" has the meaning given to it in the Security Agreement.

     "Collateral Documents" means the Security Agreement,  Mortgages,  financing
statements, and all other instruments, waivers and agreements now or hereinafter
securing,  perfecting or causing  attachment,  in whole or in part in respect of
the Obligations.

     "Committee"  means the official  committee of unsecured  creditors  and any
other committee formed, appointed, or approved in the Bankruptcy Case.

     "Contracts"   means,  with  respect  to  any  Person,  all  the  contracts,
undertakings,  or  agreements  (other than rights  evidenced  by Chattel  Paper,
Documents  or  Instruments)  in or under which such Person may now or  hereafter
have any right, title or interest, including any agreement relating to the terms
of payment or the terms of performance of any Account.

     "Control" means,  with respect to any Person,  the possession,  directly or
indirectly,  of the  power to direct or cause  the  direction  of such  Person's
management or policies,  whether through the ownership of voting securities,  by
contract or otherwise,  and "Controlling"  and "Controlled"  shall have meanings
correlative thereto.

     "Copyrights"  means all of the following now owned or hereafter  adopted or
acquired by Borrower:  (a) all copyrights and General Intangibles of like nature
(whether registered or unregistered),  all registrations and recordings thereof,
and all  applications  in connection  therewith,  including  all  registrations,
recordings  and  applications  in the United States  Copyright  Office or in any
similar  office or  agency  of the  United  States,  and any state or  territory
thereof, or any other country or any political  subdivision thereof, and (b) all
reissues, extensions or renewals thereof.

     "Default Rate" has the meaning given to it in Section 3.2.

     "Deferred Taxes" means,  with respect to any Person at any date, the amount
of deferred  taxes of such  Person as shown on the balance  sheet of such Person
prepared in accordance with GAAP as of such date.

     "Deposit  Accounts" means all "deposit accounts" as such term is defined in
the Code, now or hereafter held in the name of Borrower.

     "Documents"  means any  "documents" as such term is defined in the Code and
shall include, in any event, any bills of lading, dock warrants,  dock receipts,
warehouse receipts, or other documents of title.

     "Environmental  Laws" means all  federal,  state and local laws,  statutes,
ordinances, orders and regulations, now or hereafter in effect, and in each case
as amended or  supplemented  from time to time, and any  applicable  judicial or
administrative  interpretation thereof relating to the regulation and protection
of human  health,  safety,  the  environment  and natural  resources  (including
ambient air, surface water,  groundwater,  wetlands,  land surface or subsurface
strata, wildlife,  aquatic species and vegetation).  Environmental Laws include,
but are not limited to, the Comprehensive Environmental Response,  Compensation,
and Liability Act of 1980, as amended (42  U.S.C.ss.ss.9601 et seq.) ("CERCLA");
the Hazardous Material  Transportation  Act, as amended (49  U.S.C.ss.ss.1801 et
seq.); the Federal  Insecticide,  Fungicide,  and Rodenticide Act, as amended (7
U.S.C.ss.ss.136 et seq.); the Resource Conservation and Recovery Act, as amended
(42  U.S.C.ss.ss.6901  et seq.) ("RCRA");  the Toxic  Substance  Control Act, as
amended  (15  U.S.C.ss.ss.2601  et  seq.);  the Clean Air Act,  as  amended  (42
U.S.C.ss.ss.740  et seq.);  the Federal Water Pollution  Control Act, as amended
(33  U.S.C.ss.ss.1251  et seq.);  the  Occupational  Safety and Health  Act,  as

                                       4
<PAGE>

amended (29 U.S.C.ss.ss.651 et seq.) ("OSHA");  and the Safe Drinking Water Act,
as  amended  (42  U.S.C.ss.ss.300(f)  et  seq.),  and any  and  all  regulations
promulgated  thereunder,  and all  analogous  state  and local  counterparts  or
equivalents and any transfer of ownership notification or approval statutes.

     "Environmental   Liabilities"  means,  with  respect  to  any  Person,  all
liabilities,  obligations,  responsibilities,  response,  remedial  and  removal
costs,  investigation  and  feasibility  study costs,  operation and maintenance
costs, losses,  damages,  punitive damages,  property damages,  natural resource
damages,  consequential  damages,  treble damages, costs and expenses (including
all  reasonable  fees,  disbursements  and  expenses  of  counsel,  experts  and
consultants),  fines, penalties,  sanctions and interest incurred as a result of
any claim,  suit,  action,  investigation,  proceeding  or demand by any Person,
whether based in contract, tort, implied or express warranty,  strict liability,
criminal or civil statute or common law,  including any arising under or related
to any  Environmental  Laws,  Environmental  Permits,  or in connection with any
Release or threatened  Release or the presence of a Hazardous  Material  whether
on, at, in,  under,  from or about or in the  vicinity  of any real or  personal
property.

     "Environmental  Permits"  means  all  permits,  licenses,   authorizations,
certificates,  approvals or registrations required by any Governmental Authority
under any Environmental Laws.

     "Equipment"  means any  "equipment" as such term is defined in the Code and
in any event shall include all machinery, equipment,  furnishings,  fixtures and
vehicles and any and all additions,  accessions,  substitutions and replacements
of any of the  foregoing,  wherever  located,  together  with  all  attachments,
components,  parts,  equipment  and  accessories  installed  thereon  or affixed
thereto.

     "ERISA" means the Employee  Retirement  Income Security Act of 1974 (or any
successor   legislation  thereto),  as  amended  from  time  to  time,  and  any
regulations promulgated thereunder.

     "ERISA Affiliate" means any trade or business (whether or not incorporated)
under common control with Borrower and which, together with Borrower, is treated
as a single employer  within the meaning of Section  414(b),  (c), (m) or (o) of
the IRC.

     "ERISA Event" means, with respect to Borrower or any ERISA Affiliate, (a) a
Reportable  Event with respect to a Title IV Plan or a  Multiemployer  Plan; (b)
the  withdrawal of Borrower or any ERISA  Affiliate from a Title IV Plan subject
to  Section  4063 of  ERISA  during a plan  year in  which it was a  substantial
employer,  as defined in Section  4001(a)(2)  of ERISA;  (c) the failure to make
required  contributions to a Qualified Plan; or (d) any other event or condition
which might  reasonably be expected to constitute  grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Title IV Plan or  Multiemployer  Plan or the  imposition of any liability  under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA.

     "Escrow  Account"  means the account  referred  to in the Escrow  Agreement
designated to hold the Escrow Amount.

     "Escrow  Agreement"  means an escrow  agreement  to be  entered  into among
GasRock,  Lender and Borrower, and escrow agent selected by Lender and agreed to
by Borrower and GasRock, such agreement not to be unreasonably withheld.

     "Escrow Amount" means $500,000.

                                       5
<PAGE>

     "Event of Default" has the meaning given to it in Section 15.1.

     "Fees" means,  subject to Section 5.6, all fees, costs,  expenses and other
amounts claimed by Lender pursuant to Section 5.

     "Final  Order"  means,  collectively,  the  order of the  Bankruptcy  Court
entered in the Bankruptcy Case which shall be in form and substance satisfactory
to Lender,  and from  which no appeal or motion to  reconsider  has been  timely
filed,  or if  timely  filed,  such  appeal or  motion  to  reconsider  has been
dismissed or denied (unless Lender waives such  requirement),  together with all
extensions, modifications and amendments thereto, which, among other matters but
not by way of limitation,  authorizes  Borrower on an interim and/or final basis
to obtain credit, incur (or guaranty)  Indebtedness,  and grant  super-priority,
priming, first priority Liens under this Agreement and the other Loan Documents,
as the case may be, and provides for the super-priority of Lender's claims.

     "Fiscal Month" means any calendar month.

     "Fiscal Quarter" means any calendar quarter.

     "Fiscal Year" means any 12 month period ending on March 31.

     "GAAP" means generally accepted accounting  principles in the United States
of America as in effect from time to time, consistently applied.

     "GasRock" means GasRock Capital, LLC, a Delaware limited liability company,
together with its successors and assigns.

     "GasRock Credit Agreement" means that certain Term Credit Agreement,  dated
October 16, 2007, between Borrower and GasRock, together with amendments thereto
and modifications thereof, and all schedules, exhibits, and annexes thereto.

     "GasRock  Debt" means all  indebtedness,  principal,  interest  and fees of
Borrower  arising  under  the  GasRock  Credit  Agreement,  and  all  documents,
instruments,  security agreements, pledges and financing statements contemplated
therein, as calculated in accordance with the Final Order.

     "GasRock Agreements" means, collectively, (a) the Conveyance of Net Profits
Interest,  dated June 3, 2009, made by Borrower,  doing business in the State of
Wyoming as Rancher Oil & Gas Corp., as grantor,  to and in favor of GasRock,  as
grantee,  recorded with the Converse County Clerk and Recorder on June 17, 2009,
as filing  number  951550,  at book  1362,  page 867 (the  interests  granted to
GasRock  thereunder  are the "10% NPI"),  (b)  Conveyance of Overriding  Royalty
Interest,  dated as of October 22, 2008, recorded with the Converse County Clerk
and Recorder on November 17, 2008, as filing number 954947,  at book 1349,  page
0069 (the interests  granted to GasRock  thereunder are the "1% ORRI"),  and (c)
the  Conveyance of Overriding  Royalty  Interest,  dated as of October 15, 2007,
made by  Borrower,  doing  business in the State of Wyoming as Rancher Oil & Gas
Corp.,  as grantor,  to and in favor of GasRock,  as grantee,  recorded with the
Converse County Clerk and Recorder on October 31, 2007, as filing number 941798,
at book 1321, page 0792 (the interests granted to GasRock thereunder are the "2%
ORRI").

     "General  Intangibles"  means,  with  respect to any Person,  all  "general
intangibles"  as such  term is  defined  in the  Code,  now  owned or  hereafter
acquired  by such  Person  and,  in any event,  including  all right,  title and
interest  which such Person may now or hereafter  have in or under any Contract,
all payment  intangibles,  all customer  lists,  Intellectual  Property  Rights,
interests  in  partnerships,  joint  ventures and other  business  associations,

                                       6
<PAGE>

permits,  proprietary or confidential  information,  inventions  (whether or not
patented or patentable), technical information,  procedures, designs, knowledge,
know-how, software,  databases, data, skill, expertise,  experience,  processes,
models,  drawings,  materials  and  records,  goodwill  (including  the goodwill
associated with any Intellectual  Property Rights),  all rights and claims in or
under  insurance  policies,  (including  insurance for fire,  damage,  loss, and
casualty, whether covering personal property, real property,  tangible rights or
intangible  rights,  all  liability,  life,  key man, and business  interruption
insurance,  and all unearned  premiums),  uncertificated  securities,  choses in
action,  and other  bank  accounts,  rights to  receive  tax  refunds  and other
payments,  rights to receive  dividends,  distributions,  cash,  Instruments and
other property, and rights of indemnification.

     "Governmental  Authority" means any (a) federal,  state, local,  municipal,
foreign or other government; (b) governmental or quasi-governmental authority of
any nature (including any governmental agency, branch, department,  official, or
entity and any court or other tribunal); or (c) body exercising,  or entitled to
exercise  any  administrative,   executive,   judicial,   legislative,   police,
regulatory,  or taxing authority or power of any nature,  including any arbitral
tribunal.

     "Guaranteed Indebtedness" means, with respect to any Person, any obligation
of  such  Person  guaranteeing  any  indebtedness,  lease,  dividend,  or  other
obligation  ("primary  obligations") of any other Person (the "primary obligor")
in any manner  including  any  obligation or  arrangement  of such Person (a) to
purchase or  repurchase  any such primary  obligation,  (b) to advance or supply
funds (i) for the purchase or payment of any such primary  obligation or (ii) to
maintain  working  capital or equity capital of the primary obligor or otherwise
to maintain  the net worth or solvency or any  balance  sheet  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) to
indemnify the owner of such primary obligation against loss in respect thereof.

     "Hazardous Material" means (a) any element,  material,  compound,  mixture,
solution, chemical,  substance, or pollutant within the definition of "hazardous
substance" under Section 101(14) of the  Comprehensive  Environmental  Response,
Compensation  and  Liability  Act,  42 U.S.C.  ss.  9601(14);  petroleum  or any
fraction,  byproduct or distillation product thereof; asbestos,  polychlorinated
biphenyls,  or any  radioactive  substances;  and any  material  regulated  as a
hazardous  substance by any  jurisdiction  in which Borrower owns or operates or
has owned or operated a facility; or (b) any element, pollutant,  contaminate or
discarded material (including any radioactive material) within the definition of
Section  103(6) of the Resource  Conservation  and Recovery  Act, 42 U.S.C.  ss.
6903(6);  and any material  regulated as hazardous waste by any  jurisdiction in
which Borrower owns or operates or has owned or operated a facility, or to which
Borrower sends material for treatment, storage or disposal as waste.

     "Indebtedness"  means, with respect to any Person,  (a) all indebtedness of
such Person for borrowed money or for the deferred purchase price of property or
services  (including  reimbursement  and all other  obligations  with respect to
surety  bonds,  letters  of credit  and  bankers'  acceptances,  whether  or not
matured,  but not  including  obligations  to trade  creditors  incurred  in the
ordinary  course of business  that are not unpaid for more than 90 days past the
stated  due date  therefor,  unless  being  contested  in good  faith),  (b) all
obligations  evidenced  by  notes,  bonds,  debentures  or  similar  instruments
(including,  without  limitation,  any Subordinated  Debt), (c) all indebtedness
created  or  arising  under  any  conditional  sale  or  other  title  retention
agreements  with  respect to property  acquired by such Person  (even though the
rights and remedies of the seller or lender under such  agreement in an event of
default  may be  limited  to  repossession  or sale of such  property),  (d) all

                                       7
<PAGE>

Capital Lease Obligations, (e) all Guaranteed Indebtedness,  (f) all obligations
of such  Person  under any  interest  rate  swap  agreement,  interest  rate cap
agreement,  interest  rate collar  agreement,  interest  rate  option  contract,
foreign exchange  contract,  currency swap agreement,  futures contract,  option
contract,  synthetic  cap,  commodity  purchase  or option  agreements  or other
similar   agreement  or  contract   designed  to  protect  such  Person  against
fluctuations in interest rates, currency values or commodity prices, as the case
may be, or other hedging or derivative agreements, (g) all Indebtedness referred
to in clause (a),  (b),  (c), (d), (e) or (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  contract
rights) owned by such Person,  even though such Person has not assumed or become
liable for the payment of such  Indebtedness,  (h) the Obligations,  and (i) all
liabilities under Title IV of ERISA.

     "Indemnified Liabilities" has the meaning given to it in Section 6.1.

     "Indemnified Person" has the meaning given to it in Section 6.1.

     "Initial Advance" has the meaning given to it in Section 2.2.1.

     "Instruments"  means, with respect to any Person, all "instruments" as such
term is defined in the Code,  now owned or  hereafter  acquired by such  Person,
wherever  located,  and in any event shall include all certificated  securities,
certificates of deposit and all notes and other evidences of indebtedness, other
than  instruments  that  constitute,  or are a part of a group of writings  that
constitute, Chattel Paper.

     "Intellectual   Property  Rights"  means,   with  respect  to  any  Person,
collectively,  all Trademarks, and the goodwill associated with such Trademarks,
all Patents, all Copyrights, all Internet Domain Names and all Licenses now held
or hereafter acquired by such Person,  together with all franchises,  tax refund
claims,  rights  of  indemnification,  payments  under  insurance,  indemnities,
warranties and guarantees payable with respect to the foregoing.

     "Internet Domain Names" means all rights in internet web sites and internet
domain names presently registered or used by Borrower.

     "Inventory" means, with respect to any Person, all "inventory" as such term
is defined in the Code, now owned or hereafter acquired by such Person, wherever
located, and in any event shall include inventory,  merchandise, goods and other
personal  property  which are held by or on behalf  of such  Person  for sale or
lease or are  furnished  or are to be  furnished  under a contract of service or
which constitute raw materials,  work in process, finished goods, returned goods
or materials or supplies of any kind,  nature or description used or consumed or
to be  used  or  consumed  in  such  Person's  business  or in  the  processing,
production,  packaging,  promotion,  delivery or shipping of the same, including
other  supplies,  and all accessions and additions  thereto and all documents of
title covering any of the foregoing.

     "Investment" means, with respect to any Person (a) the acquisition (whether
for cash, property, services,  securities or otherwise) of capital stock, bonds,
notes, debentures,  partnership or other ownership interests or other securities
of any  other  Person or any  agreement  to make any such  acquisition;  (b) the
making of any deposit  with, or advance,  loan or other  extension of credit to,
any other Person (including the purchase of property from another Person subject
to an  understanding  or  agreement,  contingent  or  otherwise,  to resell such
property  to  such  Person);  and  (c)  the  entering  into  of  any  Guaranteed
Indebtedness of, or other contingent obligation with respect to, Indebtedness or
other  liability  of any other  Person  and  (without  duplication)  any  amount
committed to be advanced, lent or extended to such Person.

     "Investment Property" means all investment property as such term is defined
in the Code now owned or  hereafter  acquired  by  Borrower,  wherever  located,
including (a) all securities whether  certificated or uncertificated,  including
stocks, bonds, interests in limited liability companies, partnerships interests,

                                       8
<PAGE>

treasuries,  certificates of deposit, and mutual fund shares; (b) all securities
entitlements of Borrower to any securities account and the financial assets held
by a securities  intermediary  with respect to that account;  (c) all securities
accounts of Borrower;  (d) all  commodity  contracts  of  Borrower;  and (e) all
commodity accounts held by Borrower.

     "IRC"  means  the  Internal  Revenue  Code of  1986,  as  amended,  and any
successor thereto.

     "IRS" means the Internal Revenue Service, or any successor thereto.

     "Law" means,  with respect to any Person,  all provisions of constitutions,
statutes,  rules,  regulations,   and  orders  of  all  governmental  bodies  or
regulatory agencies applicable to such Person, and all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.

     "Leases" means all of those leasehold estates in real property now owned or
hereafter acquired by Borrower, as lessee.

     "Lender" has the meaning given to it in the introduction.

     "Letter-of-Credit  Rights"  means  letter-of-credit  rights as such term is
defined in the Code,  now owned or  hereafter  acquired by  Borrower,  including
rights to  payment  or  performance  under a letter of  credit,  whether  or not
Borrower,  as  beneficiary,  has  demanded or is  entitled to demand  payment or
performance.

     "License" means, with respect to any Person, any Patent License,  Trademark
License or other license of rights or interests  now held or hereafter  acquired
by such Person.

     "Lien"  means any  mortgage,  deed of trust,  lien  (statutory  or  other),
pledge,  hypothecation,  assignment, claim, charge, security interest, easement,
encumbrance, deposit arrangement, preference, priority, preferential arrangement
or security agreement, of any nature or kind whatsoever,  whether or not choate,
vested,  or perfected  (including any conditional  sale or other title retention
agreement,  any  easement,  right of way or other  encumbrance  on title to real
property and any financing lease having  substantially  the same economic effect
as any of the foregoing,  and the filing of, or agreement to give, any financing
statement perfecting a security interest under the Code or comparable law of any
jurisdiction).

     "Loan Account" has the meaning given to it in Section 4.8.

     "Loan  Documents"  means this Agreement,  the Term Loan Notes (if any), the
Collateral  Documents  and the  Final  Order and all  other  pledges,  powers of
attorney, consents, assignments, Contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or
on behalf of Borrower,  or any employee of Borrower,  and delivered to Lender or
any Lender in connection  with this Agreement or the  transactions  contemplated
hereby.

     "Material  Adverse  Effect"  means a  material  adverse  effect  on (a) the
business,  Properties,  operations,  or financial  condition  of  Borrower,  (b)
Borrower's  ability to pay or perform its  Obligations  in  accordance  with the
terms  of the  Loan  Documents,  (c)  the  Collateral  or  Lender's  Lien on the
Collateral  or the  priority  or  perfection  of any such  Lien  except  as such
priority or perfection may be affected in accordance  with express terms of this
Agreement,  (d) the rights and remedies of Lender under this  Agreement  and the
other Loan  Documents,  and/or  (e)  Borrower's  ability  to perform  any of its
obligations or duties in accordance with the terms of the Purchase Agreement.

                                       9
<PAGE>

     "Material  Contracts"  means the contracts listed on Schedule 11.15 and any
other Contract of Borrower which, if cancelled or terminated,  could  reasonably
be expected to have or result in a Material Adverse Effect.

     "Material  Decision"  means any of the following to the extent the same may
affect the Collateral or the Business:  (a) entering into any contract involving
in excess of $10,000,  which  obligations  thereunder shall become due after the
Closing, (b) termination of any executory contract or lease that involves future
payments  in excess  of  $10,000,  (c)  material  amendment  or waiver of any of
Borrower's rights in respect of any executory contract or lease (for purposes of
clause (c), "material" shall mean a value to Borrower or a payable from Borrower
in excess of  $10,000),  (d) any action to respond to any  material  customer or
regulatory  complaint  outside  of  the  normal  course  of  business;  (e)  any
communication   with  customers  of  Borrower,   concerning   the   transactions
contemplated in the Purchase Agreement and/or the status of the operation of the
business,  or (f) any material change of any of Borrower's methods of collecting
accounts receivable or any making or agreeing to make any settlement  concerning
an account receivable in excess of $1,000.

     "Maturity  Date"  means the  earliest  date on which  any of the  following
occurs:  (a) the date that is 120 calendar days after the Closing Date,  (b) the
date a plan of reorganization confirmed in the Bankruptcy Case becomes effective
that does not  provide  for the  payment in full of all  amounts  owed to Lender
under this Agreement and the other Loan  Documents on such  effective  date, (c)
the date of the  closing  of a sale of all or  substantially  all of  Borrower's
Property  pursuant to Section 363 of the  Bankruptcy  Code, a confirmed  plan of
reorganization  or a liquidation  pursuant to Chapter 7 of the Bankruptcy  Code,
and (d) the effective  date of a plan of  reorganization  or  arrangement in the
Bankruptcy Case.

     "Maximum Lawful Rate" has the meaning assigned to it in Section 3.3.

     "Mortgages"  means the mortgages,  deeds of trust,  leasehold  mortgages or
other conveyance document acceptable to Lender, executed by Borrower in favor of
Lender,  by and which Borrower  grants and conveys to Lender as security for the
Obligations,  a Lien upon the Real  Property and  interests in Real  Property of
Borrower.

     "Multiemployer  Plan"  means a  "multiemployer  plan" as defined in Section
4001(a)(3) of ERISA, and to which Borrower or any ERISA Affiliate is making,  is
obligated to make, has made or been obligated to make,  contributions  on behalf
of participants who are or were employed by any of them.

     "Obligations" means all loans, advances, debts, liabilities and obligations
for the performance of covenants,  or duties or for payment of monetary  amounts
(whether or not such performance is then required or contingent,  or amounts are
liquidated or determinable)  owing by Borrower or any other obligor under any of
the Loan  Documents or the Purchase  Agreement to Lender,  and all covenants and
duties regarding such amounts, of any kind or nature, present or future, whether
or not evidenced by any note,  agreement or other instrument,  arising under any
of the Loan  Documents or the  Purchase  Agreement.  This term  includes (a) the
Breakup Fee and all  amounts  due and owing by Borrower  from time to time under
the Purchase Agreement,  (b) all amounts claimed by Lender and other Indemnified
Parties  pursuant to Section 6, and (c) all  principal  and interest  (including
interest which accrues after the commencement of any case or proceeding referred
to in Section 15.1 (including the Bankruptcy Case)), on the Term Loan, all Fees,
Charges,  expenses,  attorneys'  and  other  advisors'  fees and any  other  sum
chargeable to Borrower or any other obligor under any of the Loan Documents.

     "Operating  Lease" means any lease of real or personal  property,  or mixed
property, which is not a Capital Lease.

                                       10
<PAGE>

     "Other Taxes" has the meaning given to it in Section 8.2.

     "Patent  License"  means,  with  respect to any  Person,  rights  under any
written  agreement now owned or hereafter  acquired by such Person  granting any
right with respect to any invention on which a Patent is in existence.

     "Patents" means, with respect to any Person,  all of the following in which
such Person now holds or hereafter  acquires any right,  title or interest:  (a)
all letters  patent of the United  States of America or any other  country,  all
registrations and recordings thereof, and all applications for letters patent of
the  United  States of America or any other  country,  including  registrations,
recordings and  applications in the United States Patent and Trademark Office or
in any similar  office or agency of the United  States of America,  any State or
Territory  thereof,  or any  other  country,  and (b) all  reissues,  divisions,
continuations, continuations-in-part or extensions thereof.

     "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any  successor
thereto.

     "Pension  Plan"  means an  employee  pension  benefit  plan,  as defined in
Section 3(2) of ERISA,  which is not an  individual  account plan, as defined in
Section 3(34) of ERISA,  and which  Borrower or any ERISA  Affiliate  maintains,
contributes  to or has an obligation to contribute to on behalf of  participants
who are or were employed by any of them.

     "Permitted  Lien" means:  (a) Liens for Charges;  provided,  however,  that
payment  thereof shall not at the time be required  under Section 12.2 or to the
extent that  nonpayment  thereof is permitted  under the  Bankruptcy  Code;  (b)
deposits,  Liens or  pledges  of cash  collateral  to secure  obligations  under
workmen's  compensation,  unemployment  insurance,  social  security  or  public
liability laws or similar  legislation or other public or statutory  obligations
arising in the ordinary  course of business;  (c) deposits,  Liens or pledges of
cash collateral to secure the  performance of bids,  tenders,  contracts  (other
than  contracts  for the  payment of money),  obligations  of a tenant  under an
Operating Lease, or surety,  stay or appeal bonds or similar obligations arising
in the  ordinary  course of  business;  (d)  workers',  mechanics',  suppliers',
carriers',  warehousemen's  Liens or other similar Liens arising by operation of
law in the ordinary  course of business and securing sums which are not past due
or are  being  contested  by  Borrower  reasonably  and in good  faith;  (e) any
attachment or judgment Lien which does not  constitute an Event of Default under
Section  15.1.8,  unless the judgment it secures shall not, within 15 days after
the entry  thereof,  have been  discharged or execution  thereof  stayed pending
appeal, or shall not have been discharged within 15 days after the expiration of
any  such  stay;  (f)  zoning  restrictions,   easements,   licenses,  or  other
restrictions on the use of real property or other minor  irregularities in title
(including leasehold title) thereto, including without limitation those shown on
the title  policies  delivered  to Lender on the Closing  Date,  so long as such
restrictions  or  irregularities  do not materially  impair the use,  value,  or
marketability  of such real property,  leases or leasehold  estates as currently
used by  Borrower;  (g) Liens  created  by  statute  or  common  law in favor of
landlords  for unpaid  rent and related  amounts  that are not more than 15 days
past due or are being  contested by Borrower  reasonably and in good faith;  (h)
Liens of a banking  institution  encumbering  deposits (including setoff rights)
held by such banking institution incurred in the ordinary course of business and
which are within the general parameters  customary in the banking industry;  (i)
purchase money Liens or purchase  money security  interests upon or in Equipment
acquired by Borrower in the  ordinary  course of business to secure the purchase
price of such Equipment or to secure Capital Lease Obligations, in each case, as
permitted   herein  and  incurred  solely  for  the  purpose  of  financing  the
acquisition  of such  Equipment;  (j) cash  deposits  with utility  companies as
ordered by the  Bankruptcy  Court or as  otherwise  agreed to by Borrower  and a
utility company with the consent of the Lender; and (k) Liens listed on Schedule
1.1 which constitutes all Liens existing on and as of the Closing Date.

                                       11
<PAGE>

     "Person" means any  individual,  sole  proprietorship,  partnership,  joint
venture, trust, unincorporated organization,  association,  corporation, limited
liability company,  limited liability partnership,  institution,  public benefit
corporation,  entity  or  government  (whether  Federal,  state,  county,  city,
municipal or otherwise, including any instrumentality, division, agency, body or
department thereof).

     "Petition Date" has the meaning given to it in the recitals.

     "Plan" means, with respect to Borrower or any ERISA Affiliate, at any time,
an employee  benefit plan, as defined in Section 3(3) of ERISA,  which  Borrower
maintains,  contributes  to or has an  obligation  to contribute to on behalf of
participants who are or were employed by any of them.

     "Post-Petition"  means  the time  period  beginning  immediately  after the
filing of the Bankruptcy Case.

     "Pre-Petition" means the time period ending immediately prior to the filing
of the Bankruptcy Case.

     "Pre-Petition  Indebtedness" means all Indebtedness of Borrower outstanding
on the Petition Date immediately prior to the filing of the Bankruptcy Case.

     "Pre-Petition  Liens"  means all Liens  against the Property of Borrower on
the Petition Date immediately prior to the filing of the Bankruptcy Case.

     "Proceeds" means all "proceeds" as such term is defined in the Code and, in
any event,  shall include,  with respect to any Person: (a) any and all proceeds
of any insurance,  indemnity,  warranty or guaranty  payable to such Person from
time to time with  respect to any of its  property  or  assets;  (b) any and all
payments  (in any form  whatsoever)  made or due and payable to such Person from
time to time in connection  with any  requisition,  confiscation,  condemnation,
seizure or forfeiture of all or any part of such Person's  property or assets by
any governmental body,  authority,  bureau or agency (or any person acting under
color of  governmental  authority);  (c) any claim of such Person  against third
parties  (i) for past,  present or future  infringement  of any Patent or Patent
License,  or (ii) for past,  present or future  infringement  or dilution of any
Trademark or Trademark License or for injury to the goodwill associated with any
Trademark,  Trademark  registration  or Trademark  licensed  under any Trademark
License; (d) any recoveries by such Person against third parties with respect to
any litigation or dispute  concerning any of such Person's  Property,  including
claims arising out of the loss or nonconformity  of,  interference  with the use
of, defects in, or infringement  of rights in, or damage to, such Property;  (e)
all  amounts  collected  on, or  distributed  on account of,  other  Collateral,
including  dividends,  interest,  distributions  and Instruments with respect to
Investment Property and pledged Stock; and (f) any and all other amounts, rights
to payment or other property acquired upon the sale, lease, license, exchange or
other disposition of Collateral and all rights arising out of the Collateral.

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

     "Purchase  Agreement" means that certain Asset Purchase  Agreement  between
Borrower and Lender or Lender's designee, to be dated in or about December 2010,
together with all exhibits and schedules thereto, and as the same may be amended
or restated from time to time.

     "Qualified  Plan" means,  for Borrower an employee pension benefit plan, as
defined in Section 3(2) of ERISA,  which is intended to be  tax-qualified  under
IRC  Section  401(a),  and  which  Borrower  or any ERISA  Affiliate  maintains,

                                       12
<PAGE>

contributes  to or has an obligation to contribute to on behalf of  participants
who are or were employed by any of them.

     "Real Property" has the meaning given on Section 11.4.

     "Release" means,  with respect to any Person,  any release or any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching,  dumping,  disposing  or migration  of a Hazardous  Material  into the
indoor or outdoor environment by such Person (or by a person under such Person's
direction or Control), including the movement of a Hazardous Material through or
in the air, soil, surface water, ground water or property; but shall exclude any
release,  discharge,  emission or disposal  in material  compliance  with a then
effective permit, order, rule regulation or law of a Governmental Authority.

     "Reportable  Event"  means any of the events  described  in Section 4043 of
ERISA except those events for which the 30 day notice period has been waived.

     "Restricted Payment" means, with respect to any Person,  either directly or
indirectly,  (a) the declaration or payment of any dividend or the incurrence of
any  liability  to make  any  other  payment  or  distribution  of cash or other
Property in respect of such  Person's  Stock,  (b) any payment on account of the
purchase, redemption, defeasance or other retirement, or to obtain the surrender
of, such  Person's  Stock or any other payment or  distribution  made in respect
thereof,  (c) any payment,  loan,  contribution,  or other  transfer of funds or
other  Property to any  Stockholder  or  Affiliate  of such  Person,  other than
relating to salaries,  bonuses and other compensation to such Person's officers,
directors and employees in the ordinary course of business  consistent with past
practice,  (d)  any  payment,   purchase,   redemption,   retirement,  or  other
acquisition  for value or  setting  apart of any money for a  sinking,  or other
analogous  reserve  fund  for the  purchase,  redemption,  retirement  or  other
acquisition  of, or to obtain  the  surrender  of,  or any  payment  (scheduled,
voluntary or other) of principal of or interest on, or any other amount owing in
respect  of,  any  Subordinated  Debt,  or (e) any  payment  of a claim  for the
rescission of the purchase or sale of, or for material  damages arising from the
purchase or sale of any Stock of such Person, or of a claim for  indemnification
or  contribution  arising  out of or  relating  to any such claim for damages or
rescission.

     "Retiree  Welfare  Plan" means any Welfare Plan  providing  for  continuing
coverage or benefits for any  participant  or any  beneficiary  of a participant
after such  participant's  termination  of employment,  other than  continuation
coverage  provided  pursuant to IRC Section 4980B and at the sole expense of the
participant or the beneficiary of the participant.

     "Sale" means the sale of substantially all of Borrower's assets pursuant to
Section 363 of the Bankruptcy Code or a plan of reorganization.

     "Security  Agreement"  means  the  Security  Agreement,  dated of even date
herewith,  by  Borrower  in favor of Lender,  together  with all  schedules  and
exhibits thereto, and as the same may be amended or restated.

     "Software"  means all  "software" as such term is defined in the Code,  now
owned or hereafter  acquired by Borrower,  other than  software  embedded in any
category  of  goods,   including  all  computer   programs  and  all  supporting
information provided in connection with a transaction related to any program.

     "Stock" means all shares, options, warrants, general or limited partnership
interests, membership interests,  participation or other equivalents (regardless
of  how  designated)  of or in a  corporation,  partnership,  limited  liability
company or  equivalent  entity  whether  voting or nonvoting,  including  common

                                       13
<PAGE>

stock,  preferred stock, or any other "equity security" (as such term is defined
in  Rule  3a11-1  of  the  General  Rules  and  Regulations  promulgated  by the
Securities and Exchange Commission under the Securities Exchange Act of 1934, as
amended).

     "Stockholder" means each holder of Stock of Borrower.

     "Subordinated  Debt" means any  Indebtedness of Borrower which is expressly
and  contractually  subordinated  in right of payment,  to the  satisfaction  of
Lender and to the Obligations.

     "Subsidiary"  means,  with respect to any Person,  (a) any  corporation  of
which an  aggregate  of 50% or more of the  outstanding  Stock  having  ordinary
voting power to elect a majority of the board of  directors of such  corporation
(irrespective  of whether,  at the time,  Stock of any other class or classes of
such  corporation  shall  have or  might  have  voting  power by  reason  of the
happening of any  contingency)  is at the time,  directly or  indirectly,  owned
legally or beneficially by such Person,  or by one or more  Subsidiaries of such
Person,  or by both, with respect to which any such Person has the right to vote
or designate the vote of 50% or more of such Stock whether by proxy,  agreement,
operation of law or  otherwise,  and (b) any  partnership  or limited  liability
company in which such Person,  or one or more  Subsidiaries  of such Person,  or
both, shall have an interest  (whether in the form of voting or participation in
profits or capital contribution) of 50% or more or of which any such Person is a
general  partner or managing  member,  as the case may be, or may  exercise  the
powers of a general partner or managing member, as the case may be.

     "Tax" means (a) any tax,  levies,  imposts,  duties,  deductions,  Charges,
withholdings,  assessments,  fees or other charges  imposed by any  Governmental
Authority or other like assessment or charge of any kind  whatsoever  (including
withholding  on amounts paid to or by any Person),  together  with any interest,
penalty,  addition  to tax or  additional  amount  imposed  by any  Governmental
Authority (a "Taxing Authority")  responsible for the imposition of any such tax
(domestic or foreign),  or (b)  liability  for the payment of any amounts of the
type  described in clause (a) above as a result of being party to any  agreement
or any express or implied obligation to indemnify any other Person.

     "Term Loan" has the meaning given to it in Section 2.1.

     "Term Loan Note" has the meaning given to it in Section 2.2.2.

     "Termination  Date"  means the date upon  which all  Obligations  have been
irrevocably paid in full.

     "Title IV Plan"  means a Pension  Plan,  other than a  Multiemployer  Plan,
which is covered by Title IV of ERISA.

     "Trademark  License"  means,  with respect to any Person,  rights under any
written  agreement now owned or hereafter  acquired by such Person  granting any
right to use any Trademark or Trademark registration.

     "Trademarks"  means,  with respect to any Person,  all of the  following in
which such Person now holds or hereafter  acquires any interest:  (a) all common
law and statutory  trademarks,  trade names,  corporate  names,  business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing  have  appeared or appear,  designs and
general  intangibles  of like  nature,  now  existing  or  hereafter  adopted or
acquired,  all  registrations  and recordings  thereof,  and all applications in

                                       14
<PAGE>

connection therewith,  including  registrations,  recordings and applications in
the United States Patent and Trademark Office or in any similar office or agency
of the United States of America,  any State or Territory  thereof,  or any other
country or any political  subdivision thereof;  (b) all reissues,  extensions or
renewals thereof; and (c) all licenses thereunder and together with the goodwill
associated with and symbolized by such trademark.

     "U.S.  Trustee" means the United States Trustee appointed to the Bankruptcy
Case.

     "Welfare  Plans"  means any  welfare  plan,  as defined in Section  3(1) of
ERISA, which is maintained or contributed to by Borrower or any ERISA Affiliate.

     1.2  Certain  Matters  of  Construction.  Any  accounting  term used in the
Agreement or the other Loan Documents shall have, unless otherwise  specifically
provided  herein  or  therein,  the  meaning  customarily  given  such  term  in
accordance  with GAAP,  and all financial  computations  hereunder or thereunder
shall be computed,  unless otherwise specifically provided herein or therein, in
accordance with GAAP  consistently  applied.  That certain items or computations
are explicitly  modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the foregoing. All other undefined terms contained in this
Agreement  or the other  Loan  Documents  shall,  unless the  context  indicates
otherwise, have the meanings provided for by the Code to the extent the same are
used or defined herein or therein.  The words "herein," "hereof" and "hereunder"
or other words of similar  import refer to the  Agreement as a whole,  including
the exhibits and schedules hereto, as the same may from time to time be amended,
modified or  supplemented,  and not to any  particular  section,  subsection  or
clause contained in this Agreement.  Whenever any provision in any Loan Document
refers to the "knowledge" of any Person, such provision is intended to mean that
such  Person  has  actual  knowledge  or  awareness  of  a  particular  fact  or
circumstance,  or that such Person,  if it had exercised  reasonable  diligence,
should have known or been aware of such fact or  circumstance.  For  purposes of
this Agreement and the other Loan Documents,  the following  additional rules of
construction shall apply: (a) wherever from the context it appears  appropriate,
each term stated in either the singular or plural shall include the singular and
the plural,  and pronouns  stated in the  masculine,  feminine or neuter  gender
shall  include  the  masculine,  the  feminine  and the  neuter;  (b)  the  term
"including" shall not be limiting or exclusive, unless specifically indicated to
the  contrary;  (c) all  references  to statutes and related  regulations  shall
include any amendments thereto and any successor  statutes and regulations;  and
(d) all references to any instruments or agreements, including references to any
of the Loan  Documents,  shall include any and all  modifications  or amendments
thereto and any and all extensions or renewals  thereof,  in each case,  made in
accordance with the terms of the Loan Documents.

Section 2.        Amount and Terms of Credit.

     2.1 Term Loan.  Upon and subject to the terms and  conditions  hereof,  the
Lender agrees to make Advances to Borrower in an aggregate  principal  amount of
up to $14,700,000 (the "Term Loan").

     2.2 Advances.

        2.2.1  Advances  shall be made from the Closing Date  until the Termina-
tion Date. At least two Business  Days prior to the Closing Date,  Borrower will
deliver to Lender a certificate certifying (a) the total payoff amount under the
GasRock  Debt as of the Closing  Date,  and (b) the  amounts,  as of the Closing
Date, and payees of ad valorem taxes referenced in Section 2.3(c). The aggregate
amount  indicated  on such  certificate  plus the Escrow  Amount is the "Initial
Advance,"  and this Section 2.2.1  constitutes  Borrower's  written  request for
Lender to loan to Borrower an amount equal to the Initial Advance on the Closing
Date.

                                       15
<PAGE>

        2.2.2  Each  Advance under the Term Loan may be, upon request of Lender,
evidenced  by  a  promissory   note  issued  by  Borrower  in  favor  of  Lender
substantially  in the form of Exhibit A, dated the  Closing  Date or the date of
the relevant Advance,  as applicable,  payable to Lender in the principal amount
equal to the amount of such Advance and otherwise duly completed  (each, a "Term
Loan Note", and together the "Term Loan Notes").

        2.2.3 On the date  of  the  Initial  Advance,  Lender  shall deposit the
Escrow Amount  directly  into the Escrow  Account for the benefit of the parties
signatory to the Escrow Agreement,  and such deposit shall be deemed part of the
Initial  Advance;  provided,  however,  that pursuant to Section 3.1, the Escrow
Amount shall not bear interest.

     2.3 Use of Proceeds.  Borrower shall utilize proceeds of the Term Loan (net
of any  amounts  used on the  Closing  Date to pay Fees) for only the  following
limited  purposes:  (a)  paying the  GasRock  Debt,  in full;  (b)  holding  the
Carve-Out  Amount in the  Carve-Out  Account  until  the close of the Sale;  (c)
paying  pre-petition  ad valorem taxes with respect to Real Property  located in
Wyoming;  (d) funding the Escrow Amount into an interest  bearing  account to be
maintained  and  disbursed  pursuant to the terms and  conditions  of the Escrow
Agreement;  and (e) other purposes with the prior written consent of Lender,  in
its sole  and  absolute  discretion.  Without  limiting  the  generality  of the
foregoing,  other than as may be expressly permitted in the Final Order, without
the prior written  consent of Lender and other than the Escrow Amount,  Borrower
shall not be permitted  to use the proceeds of the Term Loan or the  Collateral:
(i)  to  finance  in  any  way  any  action,  suit,   arbitration,   proceeding,
application,  motion or other litigation of any type adverse to the interests of
Lender or its rights and remedies under this Agreement, the other Loan Documents
or the Final Order; (ii) to make any payment in settlement of any claim,  action
or proceeding before any Governmental  Authority; or (iii) for any purpose other
than as set forth in clauses (a), (b), (c) (d) or (e) of this Section 2.3.

     2.4 Escrow Amount.  The Escrow Agreement will provide,  among other things,
that:

        2.4.1  The  Escrow Amount  will be held in the  Escrow Account until the
earlier to occur of the entry of a final  order of the  Bankruptcy  Court in the
Avoidance Action or in another Bankruptcy Court proceeding, determining that:

                (a) some or  all of the fees and costs  incurred  by GasRock  in
connection  with the  Avoidance  Action  are  obligations  payable  by  Borrower
pursuant to the GasRock Credit  Agreement,  in which case the escrow agent shall
deliver to GasRock  that  portion of the Escrow  Amount as provided  for in such
order, and shall deliver the remainder of the Escrow Amount, if any, to Borrower
(if the Sale to Lender  has  closed as of such  date) or Lender  (if the Sale to
Lender has not closed as of such date);

                (b) that the fees and costs  incurred by  GasRock in  connection
with the Avoidance  Action are not obligations  payable by Borrower  pursuant to
the GasRock Credit  Agreement,  in which case the escrow agent shall deliver the
Escrow  Amount to Borrower (if the Sale to Lender has closed as of such date) or
Lender (if the Sale to Lender has not closed as of such date); and

                (c) the  parties have fully settled and resolved GasRock's claim
with respect to the fees and costs  incurred by GasRock in  connection  with the
Avoidance  Action,  in which case the escrow agent shall deliver to GasRock that
portion of the Escrow  Amount to GasRock as provided for in such  settlement  as
approved, if necessary, by the Bankruptcy Court, and shall deliver the remainder
of the Escrow  Amount,  if any, to Borrower (if the Sale to Lender has closed as
of such date) or Lender (if the Sale to Lender has not closed as of such date);

        2.4.2 All interest earned  on  the  Escrow Amount  shall  be  payable to
Lender;

                                       16
<PAGE>

        2.4.3 All fees and costs  charged by  the escrow  agent  will  be shared
equally by Borrower and GasRock; and

        2.4.4 The Escrow Agreement shall contain such other terms and provisions
as are customary and standard for transactions of this nature, type and size.

Section 3.        Interest on Term Loan.

     3.1 Rate of Interest.  Interest shall accrue on the principal amount of the
Obligations  outstanding at the end of each day at a per annum rate equal to the
Base  Rate in effect  as of the  opening  of  business  on each  day;  provided,
however, that at any time interest at the Default Rate is accruing,  Section 3.2
shall  apply and this  Section  3.1 shall not  apply.  Notwithstanding  anything
herein to the contrary, while the Escrow Amount shall constitute Obligations for
all  purposes  hereof,  interest  shall not accrue on any  portion of the Escrow
Amount.

     3.2 Default Interest.  Upon and after the occurrence of an Event of Default
(other than an Event of Default that results under Section 15.1.1 solely because
the  Obligations are not repaid on or before the 120th day following the Closing
Date)  and  during  the  continuation  thereof,  interest  shall  accrue  on the
principal amount of the Obligations  outstanding at the end of each day at a per
annum rate equal to the Base Rate in effect as of the  opening  of  business  on
each day plus 4% (the "Default Rate").

     3.3 Maximum Interest. Notwithstanding anything to the contrary set forth in
this  Section 3.3, if, at any time prior to the  Termination  Date,  the rate of
interest  payable to Lender  hereunder  exceeds  the  highest  rate of  interest
permissible  under any law which a court of competent  jurisdiction  shall, in a
final determination, deem applicable hereto (the "Maximum Lawful Rate"), then in
such event and so long as the Maximum Lawful Rate would be so exceeded, the rate
of interest  payable  hereunder to Lender  shall be equal to the Maximum  Lawful
Rate;  provided,  however,  that if at any time  thereafter the rate of interest
payable hereunder is less than the Maximum Lawful Rate,  Borrower shall continue
to pay interest  hereunder to Lender at the Maximum  Lawful Rate until such time
as the  total  interest  received  by  Lender  from the  making of the Term Loan
hereunder is equal to the total  interest  which Lender would have  received had
the  interest  rate  payable  hereunder  been  (but  for the  operation  of this
paragraph)  the  interest  rate  payable  since the  Closing  Date as  otherwise
provided in this  Agreement.  Thereafter,  the  interest  rate payable to Lender
hereunder  shall be the rate of interest  provided  in  Sections  3.1 or 3.2, as
applicable,  unless and until the rate of  interest  again  exceeds  the Maximum
Lawful Rate, in which event this paragraph  shall again apply. In no event shall
the total  interest  received by Lender  pursuant to the terms hereof exceed the
amount which Lender could  lawfully have received had the interest due hereunder
been  calculated  for the full term hereof at the Maximum  Lawful  Rate.  In the
event the Maximum  Lawful Rate is calculated  pursuant to this  paragraph,  such
interest  shall be calculated  at a daily rate equal to the Maximum  Lawful Rate
divided by the number of days in the year in which such  calculation is made. In
the event that a court of competent jurisdiction, notwithstanding the provisions
of this Section 3.3, shall make a final  determination  that Lender has received
interest  hereunder or under any of the Loan  Documents in excess of the Maximum
Lawful Rate,  Lender shall, to the extent permitted by Law,  promptly apply such
excess first to any lawful interest due and not yet paid hereunder,  then to the
outstanding  principal  of the  Obligations,  then to Fees and any other  unpaid
Obligations and thereafter  shall promptly refund any excess to Borrower or as a
court of competent jurisdiction may otherwise order.

     3.4 Computation of Interest.  Interest shall be calculated  daily and shall
be computed  based on the actual number of days elapsed over a year of 360 days.
For the purpose of computing interest  hereunder,  all items of payment received
by Lender  shall be deemed  applied  by Lender  on  account  of the  Obligations
(subject to final payment of the  Obligations) one Business Day after receipt by
Lender.

                                       17
<PAGE>

Section 4.        Payments.

     4.1 Payment of  Obligations.  Borrower hereby promises to pay to Lender the
entire  outstanding  principal  amount of the Term Loan,  all accrued and unpaid
interest and all other outstanding Obligations (other than Fees) immediately, in
cash,  upon the earliest to occur of: (a) the Maturity  Date, (b) the occurrence
of an Event of Default in  consequence  of which Lender elects to accelerate the
maturing  and  payment  of the  Obligations,  and (c)  immediately  prior to the
Closing  Date  (as that  term is  defined  in the  Purchase  Agreement).  If any
principal,  interest  or other  payment  under this  Agreement  becomes  due and
payable  on a day other than a  Business  Day,  the  maturity  thereof  shall be
extended to the next  succeeding  Business Day and,  with respect to payments of
principal,  interest  thereon  shall be payable at the then  applicable  rate of
interest during such extension.

     4.2 Acceleration. Notwithstanding anything to the contrary contained herein
or in any other Loan  Document,  upon the effective  date of any  termination of
this  Agreement  pursuant to Section 15, the entire  outstanding  balance of the
Term Loan and all other  Obligations  (including all accrued and unpaid interest
on the Term Loan and other Obligations) shall be immediately due and payable.

     4.3  Payment  of Fees.  Notwithstanding  anything  herein to the  contrary,
Borrower  hereby promises to pay to Lender all Fees as and when provided in this
Agreement,  the other Loan  Documents,  or upon  receipt of written  demand from
Lender.

     4.4  Voluntary  Prepayment.  Borrower may, at its option from time to time,
prepay principal or accrued interest due under the Term Loan; provided, however,
that Borrower shall provide Lender with 10 days prior written notice of the date
and amount of such  prepayment.  Such  prepayments  shall be without  premium or
penalty.

     4.5 Mandatory  Prepayment.  If Borrower sells any of its Properties,  or if
any of its Properties are lost or destroyed or taken by  condemnation,  Borrower
shall pay to Lender for  application  to the Term Loan as and when  received  by
Borrower a sum equal to 100% of the  proceeds  received  by  Borrower  from such
sale, loss, destruction or condemnation;  provided,  however, that if a Property
or Collateral is the subject of an insured loss, damage or destruction, Borrower
shall (a)  within  one  Business  Day of such loss,  provide  written  notice to
Lender,  setting  forth  a  description  of  such  Property,  and  the  cost  of
replacement or repair, and (b) not, without the prior written consent of Lender,
notify  any  insurance  provider,  broker  or  carrier,  or file any  claim  for
recovery, of such loss, damage or destruction.

     4.6 Receipt of  Payments.  All items of payment  received by Lender by 1:00
p.m. (Denver time) on any Business Day shall be deemed received on that Business
Day. All items of payment  received by Lender after 1:00 p.m.  (Denver  time) on
any  Business  Day shall be  deemed  received  on the  following  Business  Day.
Borrower  shall make all items of payment  due under this  Agreement  on the day
when due in dollars in immediately  available funds to the account designated on
Annex B or otherwise designated in writing by Lender.

     4.7 Application and Allocation of Payments. Borrower irrevocably waives the
right to direct the  application  of any and all  payments  at any time or times
hereafter received by Lender from or on behalf of Borrower.  Notwithstanding the
foregoing,  in the absence of a specific  determination  by Lender with  respect
thereto,  or if an Event of Default shall have occurred and be continuing,  such
payments shall be applied in the following  order:  (a) first,  to pay any Fees,
indemnities,  or expense  reimbursements  then due to Lender; (b) second, to pay
interest then due and payable by Borrower; (c) third, to pay or prepay principal
outstanding  under the Term Loan; and (d) fourth,  to pay all other  Obligations
outstanding.

                                       18
<PAGE>

     4.8  Accounting.  Lender shall maintain a loan account (the "Loan Account")
on its books to record all payments  made by Borrower,  and all other debits and
credits as  provided  in this  Agreement  with  respect to the Term Loan and any
other  Obligations.  All entries in the Loan Account shall be made in accordance
with Lender's customary accounting practices as in effect from time to time. The
balance in the Loan  Account,  as recorded on Lender's  most recent  printout or
other written statement and provided to Borrower,  shall,  absent manifest error
and  following a 30 day period  during  which  Borrower may object in writing to
such statement,  be presumptive  evidence of the amounts due and owing to Lender
by Borrower; provided, however, that any failure to so record or any error in so
recording  shall  not  limit  or  otherwise  affect  Borrower's  duty to pay the
Obligations.

Section 5.        Fees and Expenses.

     5.1 Borrower agrees to pay on demand all reasonable out-of-pocket costs and
expenses  (including  fees and  expenses  of counsel and of other  advisors)  of
Lender in connection with the  preparation,  negotiation,  approval,  execution,
delivery,  administration,  modification,  amendment,  waiver, enforcement,  and
defense (whether through  negotiations,  legal  proceedings or otherwise) of the
Loan Documents,  and commitments relating thereto, and the other documents to be
delivered  hereunder or thereunder and the transactions  contemplated hereby and
thereby and the  fulfillment or attempted  fulfillment  of conditions  precedent
hereunder,  including: (a) any amendment,  modification or waiver of, or consent
with  respect to, any of the Loan  Documents  or advice in  connection  with the
administration  of the advances made pursuant hereto or its rights  hereunder or
thereunder; (b) any litigation,  arbitration, contest, dispute, suit, proceeding
or action  (whether  instituted by Lender,  Borrower or any other Person) in any
way  relating  to the  Collateral,  any  of  the  Loan  Documents  or any  other
agreements  to be executed or  delivered  in  connection  therewith or herewith,
whether as party, witness, or otherwise, including any litigation,  arbitration,
contest,  dispute,  suit, case,  proceeding or action,  and any appeal or review
thereof,  in  connection  with a case  commenced (i) in good faith by or against
Borrower or any other  Person that may be  obligated  to Lender by virtue of the
Loan  Documents,  or (ii)  under the  Bankruptcy  Code,  as now  constituted  or
hereafter amended, or any other applicable federal,  state or foreign bankruptcy
or  similar  insolvency  law;  provided,  however,  that  Borrower  shall not be
required  to  pay  any  out-of-pocket  costs  and  expenses  of  Lender  in  any
litigation,  contest,  dispute, suit, proceeding or action resulting solely from
Lender's  gross  negligence  or  willful  misconduct  as  determined  by a final
judgment of a court of  competent  jurisdiction;  (c) any attempt to enforce any
rights of Lender  against  Borrower or any other Person that may be obligated to
Lender by virtue of any of the Loan Documents;  (d) any Event of Default; or (e)
any  effort  to (A)  monitor  the Loans and the Loan  Documents,  (B)  evaluate,
observe,  assess  Borrower or its  affairs,  or (C) verify,  protect,  evaluate,
assess,  appraise,   collect,  sell,  liquidate  or  otherwise  dispose  of  the
Collateral.  Lender  shall  charge  Borrower the costs of not more than one such
examination or audit per fiscal quarter,  so long as an Event of Default has not
previously  occurred,  and Lender's  reimbursement  for such field  examinations
shall  not  exceed  $10,000  per  audit so long as an Event of  Default  has not
previously occurred (plus all reasonable out-of-pocket costs and expenses).

     5.2 Borrower agrees to pay on demand all reasonable out-of-pocket costs and
expenses  (including  fees and expenses of counsel) of Lender in connection with
any Event of Default and any  enforcement  or collection  proceedings  resulting
therefrom or any amendment,  modification  or waiver of, or consent with respect
to, any of the Loan Documents in connection with any Event of Default.

     5.3  Borrower  agrees  to pay on  demand  all  reasonable  fees,  costs and
expenses  (including  the fees and  expenses  of all of its  counsel,  advisors,
consultants and auditors) incurred in connection with the preparation and review
of  pleadings,  documents  and reports  related to the  Bankruptcy  Case and any
subsequent case under Chapter 7 of the Bankruptcy Code,  attendance at meetings,
court hearings or conferences  related to the Bankruptcy Case and any subsequent

                                       19
<PAGE>

case under  Chapter 7 of the  Bankruptcy  Code,  and general  monitoring  of the
Bankruptcy Case and any subsequent case under Chapter 7 of the Bankruptcy Code.

     5.4 Without limiting the generality of the foregoing, Borrower's obligation
to  reimburse  Lender for  out-of-pocket  costs and expenses  shall  include the
reasonable fees and expenses of counsel (and local,  foreign or special counsel,
advisors,  consultants  and auditors  retained by such counsel),  as well as the
reasonable fees and expenses of accountants, environmental advisors, appraisers,
investment bankers, management and other consultants and paralegals; court costs
and expenses;  photocopying and duplicating expenses; court reporter fees, costs
and expenses;  long distance  telephone charges;  air express charges;  telegram
charges;  secretarial overtime charges;  expenses for travel,  lodging and food;
and all other  reasonable  out-of-pocket  costs and  expenses  of every type and
nature paid or  incurred in  connection  with the  performance  of such legal or
other advisory services.

     5.5 Upon the  consummation  of a sale of all or a portion of the  Purchased
Assets (as that term is defined in the Sale  Documents) to any Person other than
Lender,  Borrower  agrees to pay to  Lender  an  amount  equal to the sum of the
following:  (a) 3% of the sum of the Purchase  Price (as that term is defined in
the Purchase Agreement,  calculated as of the date of consummation of such sale)
plus all  liabilities  assumed by such  purchaser  (calculated as of the date of
consummation of such sale)  (collectively,  the "Breakup Fee").  Notwithstanding
the foregoing, the Breakup Fee (i) shall be treated as an administrative expense
claim in the Bankruptcy  Case, and (ii) shall be paid without notice or an order
of the  Bankruptcy  Court to Lender  within three  Business  Days  following the
closing of such sale to the third party.

     5.6 Notwithstanding anything herein to the contrary, Fees in this Section 5
shall not include legal fees of Ballard Spahr LLP,  counsel to Lender,  incurred
solely  in  connection  with  the  drafting  and  negotiation  of  the  Purchase
Agreement,  the  Bill  of Sale  (as  defined  in the  Purchase  Agreement),  the
Assignment  and  Assumption  Agreement  (as defined in the Purchase  Agreement),
and/or the  Litigation  Agreement  (as defined in the Purchase  Agreement),  and
Borrower shall not be obligated to pay or reimburse such fees to Lender.

Section 6.        Indemnity.

     6.1 Borrower shall  indemnify and hold harmless  Lender and its Affiliates,
and its officers, directors,  employees, attorneys and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims,  damages,   losses,   liabilities  and  expenses  (including  reasonable
attorneys' fees and  disbursements and other costs of investigations or defense,
including  those  incurred  upon any  appeal)  (each,  a  "Claim")  which may be
instituted or asserted against or incurred by any such Indemnified Person as the
result of credit  having  been  extended,  suspended  or  terminated  under this
Agreement and any other Loan Document and the administration of such credit, and
in connection with or arising out of the transactions contemplated hereunder and
thereunder,  and  any  actions  or  failures  to  act in  connection  therewith,
including  any and all  Environmental  Liabilities  and legal costs and expenses
arising out of or  incurred in  connection  with  disputes  between or among the
Parties to any of the Loan Documents (collectively,  "Indemnified Liabilities");
provided,  however, that Borrower shall not be liable for any indemnification to
an  Indemnified  Person to the extent  that any such suit,  action,  proceeding,
claim,  damage,  loss, liability or expense results solely from that Indemnified
Person's gross negligence or willful misconduct as finally determined by a court
of competent jurisdiction.  NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR LIABLE
TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR,  ASSIGNEE OR THIRD PARTY

                                       20
<PAGE>

BENEFICIARY  OF SUCH PERSON OR ANY OTHER PERSON  ASSERTING  CLAIMS  DERIVATIVELY
THROUGH SUCH PARTY, FOR INDIRECT,  PUNITIVE,  EXEMPLARY OR CONSEQUENTIAL DAMAGES
WHICH MAY BE ALLEGED AS A RESULT OF CREDIT  HAVING BEEN  EXTENDED,  SUSPENDED OR
TERMINATED  UNDER ANY LOAN  DOCUMENT  OR AS A RESULT  OF ANY  OTHER  TRANSACTION
CONTEMPLATED HEREUNDER OR THEREUNDER.

     6.2  Borrower  hereby  acknowledges  and agrees that Lender (as of the date
hereof) is not now nor has ever been in control of any  Property  or the affairs
or operations of Borrower.

Section 7.        Access.

     7.1 Continuing Access.  Borrower shall, and shall cause each and all of its
officers,  employees,  attorneys and other agents to: (a) provide  access during
normal business hours to Lender and any of its officers, employees and agents as
frequently as Lender determines to be appropriate upon reasonable advance notice
to Borrower  (unless an Event of Default shall have occurred and be  continuing,
in which event no such notice  shall be required and such access shall be at any
and all times) to the properties  and facilities of Borrower;  (b) permit Lender
and  any  of its  officers,  employees  and  agents,  as  frequently  as  Lender
determines to be  appropriate,  to inspect,  audit and make extracts from all of
Borrower's  non-privileged  records,  files and books of account upon reasonable
advance  notice to Borrower  (unless an Event of Default shall have occurred and
be  continuing,  in which event no such notice shall be required and such access
shall be at any and all times);  and (c) permit  Lender and any of its officers,
employees and agents, as frequently as Lender determines to be appropriate, upon
reasonable  advance  notice to Borrower  (unless an Event of Default  shall have
occurred and be continuing,  in which event no such notice shall be required and
such  access  shall be at any and all times) to conduct  audits and to  inspect,
review and evaluate the Collateral,  in each case subject to any confidentiality
agreements  binding  Borrower,  and  Borrower  agrees  to  render  to  Lender at
Borrower's  cost and  expense  such  clerical  and  other  assistance  as may be
reasonably requested with regard thereto.

     7.2 Books and  Records.  Borrower  shall make  available  to Lender and its
counsel, as quickly as practicable under the circumstances,  originals or copies
of  all  books,   records,   board  minutes,   contracts,   insurance  policies,
environmental  audits,  business plans, files,  financial statements (actual and
pro forma),  filings with federal,  state and local regulatory  agencies,  other
instruments and documents in the custody or control or otherwise belonging to or
property  of  Borrower  and  key  personnel  for  interviews  which  Lender  may
reasonably request. Borrower shall deliver any document or instrument reasonably
necessary  for Lender,  as it may from time to time request,  to obtain  records
from any service  bureau or other Person which  maintains  records for Borrower,
and shall  maintain  duplicate  records or  supporting  documentation  on media,
including  computer  tapes and discs  owned by  Borrower.  Borrower  shall  make
available  to Lender,  upon its  reasonable  request,  information  and  records
prepared by its certified public accountants and its banking and other financial
institutions.

     7.3  Periodic  Reports.  Borrower  shall  make  weekly  reports  to  Lender
regarding Borrower's operations and management of its business, and shall timely
deliver to Lender true, correct and complete copies of the reports and financial
information  set forth on Annex A. Borrower shall be required to obtain Lender's
written  approval (which may be withheld in Lender's sole  discretion)  prior to
Borrower  engaging in any contemplated  activity outside of Borrower's  ordinary
course of business.

Section 8.        Taxes.

     8.1 Any and all payments by or on behalf of Borrower under this  Agreement,
any Term Loan Note or any other Loan Document shall be made, in accordance  with
this  Section  8, free and clear of,  and  without  deduction  for,  any and all
present or future  Taxes.  If  Borrower  shall be  required by law to deduct any
Taxes  from or in respect of any sum  payable  hereunder  or under the Term Loan
Note or other Loan Document,  (a) the sum payable shall be increased as shall be
necessary  so that after making all required  deductions  (including  deductions

                                       21
<PAGE>

applicable to additional  sums payable under this Section 8), Lender receives an
amount equal to the sum it would have received had no such deductions been made,
(b) Borrower  shall make such  deductions,  and (c) Borrower  shall pay the full
amount  deducted to the relevant  taxing or other  authority in accordance  with
Law.

     8.2 In  addition,  Borrower  agrees to pay any  present or future  stamp or
documentary  taxes or any other  excise or  property  taxes,  charges or similar
levies  that  arise  from any  payment  made  hereunder  or from the  execution,
delivery or  registration  of, or  otherwise  with  respect  to, this  Agreement
("Other Taxes").

     8.3 Borrower shall  indemnify and, within 10 days of demand  therefor,  pay
Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any  jurisdiction on amounts payable under this Section 8) paid
by Lender and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted.

     8.4  Within 30 days  after the date of any such  payment  of Taxes or Other
Taxes  described in Sections 8.1, 8.2 or 8.3,  Borrower  shall furnish to Lender
the  original or a certified  copy of a receipt  evidencing  payment  thereof or
other evidence of payment satisfactory to Lender.

Section 9.        Super-Priority Nature of Obligations and Lender's Liens.

     9.1 Priority.  The priority of Lender's Liens on the Collateral shall be as
set forth in the Final Order. Subject to Final Order, no filings,  recordings or
other  actions  shall be necessary to perfect and  maintain the  perfection  and
status of such Liens.

     9.2 Administrative Expense.

        9.2.1 All  Obligations  of Borrower under this Agreement  and  the other
Loan  Documents  shall  constitute  administrative  expenses  of Borrower in the
Bankruptcy Case, with  administrative  priority and senior-secured  status under
Section 364(c) of the  Bankruptcy  Code.  Subject only to the Carve-Out  Amount,
such administrative  claim shall have priority over all other costs and expenses
of the kinds specified in, or ordered  pursuant to, Sections 105, 326, 330, 331,
503(b),  506(c),  507(a),  507(b),  726 or any other provision of the Bankruptcy
Code and  shall at all times be senior  to the  rights of  Borrower,  Borrower's
estate,  and any successor  trustee or estate  representative  in the Bankruptcy
Case or any subsequent  proceeding or case under the Bankruptcy  Code. The Liens
granted to Lender in and against the Collateral,  and the priorities accorded to
the Obligations,  shall have the priority and senior-secured  status afforded by
Sections  364(c) of the  Bankruptcy  Code (all as more  fully set forth in Final
Order) senior to all claims and interests,  other than the Carve-Out Expenses up
to the Carve-Out Amount and the Carve-Out Account.

        9.2.2 Lender's Liens and its  administrative  claim under Section 364(c)
(1) of the  Bankruptcy  Code afforded the  Obligations  shall also have priority
over any claims arising under Section 506(c) of the Bankruptcy Code, subject and
subordinate only to (a) the Carve-Out  Expenses up to the Carve-Out Amount,  and
(b) the right of Lender and any other  party-in-interest  to object to the award
of such fees and expenses in  accordance  with any  applicable  local or federal
bankruptcy rule or, if applicable, order of the Bankruptcy Court relating to the
approval of fees and expenses and objections thereto;  provided,  however,  that

                                       22
<PAGE>

Carve-Out  Expenses  shall not include,  and the  Carve-Out  Amount shall not be
available  to pay,  any fees or  disbursements  related to the  commencement  or
prosecution  of any  claims  or  proceedings  against  Lender  or its  claims or
security  interests  in,  or Liens  upon,  the  Collateral  whether  under  this
Agreement or any other Loan Document.  In the event of any  inconsistency in the
definition of "Carve-Out  Amount"  between the  provisions of this Agreement and
the Final Order, the provisions of the Final Order shall govern.

     9.3 No Superior  Claims.  Except as set forth herein or in the Final Order,
no other  claim  having a priority  superior  or pari  passu to that  granted to
Lender by the Final Order shall be granted or approved while any  Obligations of
Borrower under this Agreement or any other Loan Documents remain outstanding.

     9.4 No  Discharge;  Survival  of  Claims.  Borrower  agrees,  to the extent
applicable,  that (a) the  Obligations  hereunder shall not be discharged by the
entry of an order  confirming a plan of  reorganization  in the Bankruptcy  Case
(and Borrower,  pursuant to Section  1141(d)(4) of the Bankruptcy  Code,  hereby
waives any such  discharge),  and (b) any  super-priority  administrative  claim
granted to Lender  pursuant  to any order  described  in this  Section 9 and the
Liens granted to Lender  pursuant to any order described in this Section 9 shall
not be  affected  in any  manner by the entry of an order  confirming  a plan of
reorganization in the Bankruptcy Case.

     9.5 Waiver of Any Priming  Rights.  Upon the Closing Date, and on behalf of
itself and its estate,  and for so long as any Obligation  shall be outstanding,
Borrower hereby irrevocably waives any right, pursuant to Sections 364(c) of the
Bankruptcy  Code or  otherwise,  to grant any Lien of equal or greater  priority
than the  Liens  securing  the  Obligations,  or to  approve a claim of equal or
greater priority than the Obligations.

Section 10.       Closing; Conditions Precedent to Closing and Each Advance.

     10.1 Closing.  Unless  otherwise agreed to in writing by each of Lender and
Borrower,  the closing (the "Closing") of the Initial  Advance,  all as provided
for in this  Agreement,  shall take place at the  offices of Ballard  Spahr LLP,
1225 17th Street,  Suite 2300,  Denver,  Colorado  80202, on the date all of the
conditions  set  forth  in this  Section  10 have  occurred  (other  than  those
requiring a delivery,  or taking of other action, at the Closing).  For purposes
of this Agreement, the term "Closing Date" means the date upon which the Closing
actually occurs; provided,  however, that the Closing Date shall occur not later
than the third  Business  Day after the date on which the Final Order is entered
by the Bankruptcy Court.

     10.2  Conditions  Precedent.  Notwithstanding  any other  provision of this
Agreement  and without  affecting  in any manner the rights of Lender under this
Agreement or any of the Loan Documents, Borrower shall have no rights under this
Agreement (but shall have all  Obligations  hereunder),  and Lender shall not be
obligated to make any Advances, or to take, fulfill, or perform any other action
hereunder,   until  the  following   conditions   have  been  fulfilled  to  the
satisfaction of Lender:

        10.2.1  Lender  shall have received duly  executed  counterparts of this
Agreement  and the other  Loan  Documents  from  Borrower,  and such  documents,
instruments,  certificates, and agreements as Lender shall reasonably request in
connection  with the  transactions  contemplated by this Agreement and the other
Loan  Documents,  including all  documents,  instruments,  agreements  and other
materials listed on Schedule 10.2.1, each in form and substance  satisfactory to
Lender;

        10.2.2 Lender  shall  have received  evidence  satisfactory  to  it that
Borrower has obtained consents and acknowledgments of all Persons whose consents
and  acknowledgments  may be  required,  including,  but  not  limited  to,  all
requisite  Governmental  Authorities,  to the  terms  and to the  execution  and
delivery of this Agreement and the other Loan Documents and the  consummation of
the transactions contemplated hereby and thereby;

                                       23
<PAGE>

        10.2.3  Borrower  shall  have filed  with  the  Bankruptcy Court  in the
Bankruptcy  Case a  motion  and  form  of  order,  each in  form  and  substance
acceptable to Lender, in its sole discretion, seeking an order of the Bankruptcy
Court, to approve the Purchase Agreement and each other Sale Document (including
but not limited to the  Litigation  Agreement),  all of the terms and conditions
thereof,  and to approve and authorize  Borrower to consummate the  transactions
contemplated in the Sale Documents,  pursuant to and in accordance with Sections
363 and 365 of the Bankruptcy Code;

        10.2.4 Payment and  satisfaction  of  the  GasRock  Debt to  the  extent
necessary  for  Borrower  to obtain a release  of all Liens  held by  GasRock in
connection with the GasRock Credit Agreement shall occur simultaneously with the
Closing of the Initial Advance,  and immediately  following the Initial Advance,
Lender shall have received written evidence satisfactory to it that Borrower has
paid and satisfied the GasRock Debt as set forth in this Section 10.2.4,and such
written  evidence shall include an unqualified  statement by GasRock  confirming
that on the Closing Date, GasRock irrevocably  releases and terminates all Liens
held by GasRock or may be entitled to assert against Borrower or its Property;

        10.2.5 On the date of any  Advance,  Lender  shall  be satisfied  in its
sole discretion that Lender has a valid and continuing first priority  perfected
security interest in all assets of Borrower,  including all of Borrower's rights
under and to all of its personal Property and Real Property;

        10.2.6  Lender   shall  have   received  certificates  of  property  and
liability  insurance  of Borrower  showing loss  payable or  additional  insured
clauses or endorsements,  or both, as appropriate,  in favor of Lender,  in form
and substance satisfactory to Lender;

        10.2.7 No action,  proceeding,  investigation, regulation or legislation
shall have been instituted or threatened before any Governmental Authority as of
the date of any Advance to enjoin, restrain or prohibit, or to obtain damages in
respect of, or which is related to or arises out of this Agreement or any of the
other Loan Documents or the consummation of the transactions contemplated hereby
and thereby and which,  in Lender's sole judgment,  would make it inadvisable to
consummate the  transactions  contemplated by this Agreement or any of the other
Loan Documents;

        10.2.8  Other than the  Bankruptcy Case and as is  disclosed on Schedule
10.2.8,  none of the  following  shall have occurred and be continuing as of the
date of any Advance:  (a) a Material Adverse Effect;  (b) a material increase in
liabilities,  liquidated  or  contingent  (net  of any  offsetting  increase  in
assets), or a material decrease in assets of Borrower;  or (c) any litigation or
other  proceeding which could reasonably be expected to be successful is pending
or threatened  which,  if successful,  could,  individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect; and

        10.2.9 Lender shall have received all financial  information  and finan-
cial  statements  requested of Borrower in form and  substance  satisfactory  to
Lender.

Section 11.       Representations and Warranties of Borrower.

     To induce  Lender  to enter  into this  Agreement  and make the Term  Loan,
Borrower  makes the following  representations  and  warranties to Lender on the
date of each Advance (and each such  representation  and warranty  shall survive
the execution and delivery of this Agreement) that:

     11.1 Corporate Existence;  Compliance with Law. Borrower:  (a) is an entity
duly  organized or formed,  validly  existing  and,  where  applicable,  in good
standing  under  the  laws  of the  jurisdiction  of its  formation  and is duly
qualified to do business  and is validly  existing or in good  standing,  as the
case may be, in each other jurisdiction where its ownership or lease of Property
or the conduct of its business requires such  qualification;  (b) subject to the
entry of the Final Order by the Bankruptcy  Court,  has the requisite  power and

                                       24
<PAGE>

authority and the legal right to own, pledge, mortgage or otherwise encumber and
operate its  Properties,  to lease the Property it operates under lease,  and to
conduct its business as now,  heretofore  and proposed to be conducted;  (c) has
all material licenses,  permits,  consents or approvals from or by, and has made
all  filings  with,  and has given all  material  notices  to, all  Governmental
Authorities  having  jurisdiction,  to the extent  required for such  ownership,
operation  and  conduct;   (d)  is  in  compliance   with  its   certificate  of
incorporation and bylaws; and (e) is in compliance in all material respects with
all Law,  except  to the  extent  that (i) such  compliance  is  excused  by the
Bankruptcy Code or by an applicable order of the Bankruptcy Court, and (ii) such
non-compliance  would  neither have nor could  reasonably  be expected to have a
Material Adverse Effect.

     11.2  Executive  Offices;  Corporate  or Other  Names;  FEIN.  The  current
locations  of  Borrower's  executive  offices,   principal  place  of  business,
corporate  offices,  all warehouses and premises  within which any Collateral is
stored or located,  and the  locations  of  Borrower's  records  concerning  the
Collateral  are set forth on Schedule 11.2 and,  except as set forth on Schedule
11.2,  such  locations  have not  changed  during the  preceding  12 months.  In
addition,  the federal  employer  identification  number of Borrower is shown on
Schedule  11.2.  During the prior five  years,  except as set forth on  Schedule
11.2, Borrower has not been known as or used any corporate,  fictitious or trade
name.

     11.3 Corporate  Power;  Authorization;  Enforceable  Obligations.  Upon the
entry of the Final Order by the Bankruptcy  Court,  the execution,  delivery and
performance  by Borrower of this Agreement and the other Loan Documents to which
it is a party and all other  instruments  and  documents  to be  delivered by it
hereunder and thereunder to the extent it is a party thereto and the creation of
all Liens  provided  for herein and therein:  (a) are within its  organizational
power;  (b) have been duly  authorized by all necessary  action;  (c) are not in
contravention  of any provision of its certificate of  incorporation,  bylaws or
other  organizational  documents;  (d) will not violate any Law, or any order or
decree of any court or  Governmental  Authority;  (e) will not conflict  with or
result in the breach or termination of, constitute a default under or accelerate
any performance  required by, any material indenture,  mortgage,  deed of trust,
lease,  agreement or other  instrument  to which it is a party or by which it or
any of its  material  Property is bound;  (f) will not result in the creation or
imposition of any Lien upon any of the Property of Borrower  other than those in
favor of Lender pursuant to this Agreement and the other Loan Documents; and (g)
do not require the consent or  approval  of any  Governmental  Authority  or any
other Person,  all of which will have been duly obtained,  made or complied with
prior to the Closing Date and which are in full force and effect. At or prior to
the Closing Date,  each of the Loan Documents to which Borrower is a party shall
have been duly  executed  and  delivered  to Lender by Borrower  and shall then,
assuming due execution and delivery by the other parties thereto, subject to the
entry of the Final Order by the Bankruptcy Court,  constitute a legal, valid and
binding obligation of Borrower to the extent it is a party thereto,  enforceable
against it in accordance with its terms.

     11.4 Property; Liens. The real Property listed on Schedule 11.4 constitutes
all of the real  Property  owned,  leased or used by Borrower  or in  Borrower's
business (the "Real Property"). Borrower has either good and marketable title or
valid  leasehold  interests  in all of its  Properties  and the  Real  Property.
Borrower  does not own any Real  Property  or have any Real  Property  interests
other  than as set  forth  on  Schedule  11.4.  None of the  Properties  or Real
Properties of Borrower are subject to any Liens, except (a) Permitted Liens, (b)
the  Pre-Petition  Liens,  and (c) from and after the Closing Date,  the Lien in
favor of Lender pursuant to the Collateral Documents.  Borrower has received all
deeds,  assignments,  waivers,  consents,  non-disturbance  and  recognition  or
similar  material  agreements,  bills  of sale  and  other  documents,  and duly
effected  all  recordings,  filings  and other  material  actions  necessary  to
establish,  protect and perfect  Borrower's right,  title and interest in and to
all personal  Property and Real  Property  owned and used by Borrower.  Borrower
does not own,  hold or is  obligated  under or a party to, any option,  right of

                                       25
<PAGE>

first refusal or any other contractual right to purchase,  acquire, sell, assign
or dispose of any personal  Property or Real Property owned or used by Borrower.
No material  portion of any personal  Property or Real Property owned or used by
Borrower has suffered any material  damage by fire or other  casualty loss which
has not heretofore been completely repaired and restored to its condition before
the casualty.  All permits required to have been issued or appropriate to enable
the personal Property and Real Property to be lawfully occupied and used for all
of the  purposes  for  which  they are  currently  occupied  and used  have been
lawfully issued and are, as of the date hereof, in full force and effect.

     11.5  Restrictions;  No Default.  Except as set forth on Schedule  11.5, no
Contract, lease, agreement,  Instrument or other Document to which Borrower is a
party or by  which it or any of its  Properties  is  bound  or  affected  and no
provision of any charter, corporate restriction, Law or governmental regulation,
individually or in the aggregate,  has had a Material Adverse Effect in the five
year period prior to the date hereof.  Borrower is not in default,  and no third
party is in default,  under or with respect to any Contract,  lease,  agreement,
Instrument  or other  Documents to which  Borrower is a party,  which default or
defaults, individually or in the aggregate, could reasonably be expected to have
or result in a Material Adverse Effect.  No Event of Default has occurred and is
continuing.

     11.6 Taxes. All federal, state, local and foreign tax returns,  reports and
statements,  including  information returns required to be filed with respect to
Borrower have been timely filed,  all such tax returns,  reports and  statements
are  correct and  complete in all  material  respects,  and except as  otherwise
prohibited by the  Bankruptcy  Case, all Charges and other  impositions  due and
payable with respect to Borrower  (whether or not shown on any such tax returns,
reports  and  statements)  have been  paid  prior to the date on which any fine,
penalty,  interest or late charge may be added thereto for  nonpayment  thereof,
other  than  the ad  valorem  taxes  described  in  Section  2.3.  Borrower  has
adequately  provided  for in its books and records all unpaid  Charges and other
impositions,  being those not yet due and payable.  Proper and accurate  amounts
have been withheld by Borrower from their  employees and other third parties for
all  periods  and such  withholdings  have been  timely  paid to the  respective
Governmental Authorities. Schedule 11.6 sets forth those taxable years for which
any of the tax returns of Borrower are currently being audited by the IRS or any
other  applicable  Governmental  Authority,   and  any  currently,   pending  or
threatened  assessments,  actions,  disputes or claims with respect to taxes are
listed thereon. There are no liens on any of the assets of Borrower with respect
to Taxes except for Permitted Liens. Borrower has not executed or filed with the
IRS  or any  other  Governmental  Authority  any  agreement  or  other  document
extending,  or having the effect of  extending,  the  period for  assessment  or
collection of any Charges or the filing of any tax return.  None of the Property
owned by Borrower  is  property  which it is required to treat as being owned by
any other  Person  pursuant to the  provisions  of IRC Section  168(f)(8) of the
Internal Revenue Code of 1954, as amended,  and in effect  immediately  prior to
the  enactment  of the Tax Reform Act of 1986 or is  "tax-exempt  use  property"
within  the  meaning  of IRC  Section  168(h).  Borrower  has not agreed or been
requested to make any adjustment  under IRC Section 481(a) by reason of a change
in  accounting  method  or  otherwise.  Borrower  has no  obligation  under  any
tax-sharing  agreement or  arrangement,  or liability for Charges or impositions
for any other  Person under Law, as  transferee  or  successor,  or by Contract,
except as described on Schedule 11.8.

     11.7 ERISA.  Schedule 11.7 lists all Plans  maintained or contributed to by
Borrower and all  Qualified  Plans,  Pension  Plans,  Retiree  Welfare  Plans or
Welfare Plans maintained or contributed to by any ERISA Affiliate. Except as set
forth on  Schedule  11.7,  none of  Borrower  or any  current  or  former  ERISA
Affiliate  sponsors (or has sponsored),  contributes to (or has contributed to),
or is (or was) required to  contribute  to or has any liability  with respect to
any Title IV Plan,  any Plan subject to IRC Section 412 or ERISA Section 302, or
any Retiree Welfare Plan. Except as set forth on Schedule 11.7, none of Borrower
or any current or former ERISA Affiliate  contributes to (or has contributed to)

                                       26
<PAGE>

or  is  (or  was)  required  to  contribute  to  any  Multiemployer   Plan.  IRS
determination  letters  regarding the qualified  status under IRC Section 401 of
each  Qualified Plan have been received as of the dates listed on Schedule 11.7.
Each of the  Qualified  Plans has been amended to comply with the Tax Reform Act
of 1986 and to make other changes  required under the IRC or ERISA,  and if such
required  amendments are not subject to the  determination  letters described in
the previous  sentence,  each Qualified Plan so amended will be submitted to the
IRS for a determination  letter as to the ongoing  qualified  status of the Plan
under the IRC  within the  applicable  IRC  Section  401(b)  remedial  amendment
period; and each such Plan shall be amended,  including retroactive  amendments,
as required during such  determination  letter process to maintain the qualified
status of such Plans.  To the  knowledge of  Borrower,  the  Qualified  Plans as
amended  continue to qualify  under  Section 401 of the IRC, the trusts  created
thereunder  continue to be exempt from tax under the  provisions  of IRC Section
501(a),   and  nothing  has  occurred   which  would  cause  the  loss  of  such
qualification or tax-exempt  status.  Except as set forth on Schedule 11.7, each
Plan is in compliance in all material respects with the applicable provisions of
ERISA and the IRC, including the filing of all reports required under the IRC or
ERISA  which  are  true  and  correct  as of the date  filed,  and all  required
contributions  and benefits have been paid in accordance  with the provisions of
each such Plan. Borrower has not engaged in a prohibited transaction, as defined
in IRC Section 4975 or Section 406 of ERISA,  in connection  with any Plan which
would  subject any such  Person  (after  giving  effect to any  exemption)  to a
material tax on prohibited transactions imposed by IRC Section 4975 or any other
material  liability.  Except as set  forth on  Schedule  11.7:  (a) there are no
pending, or to the knowledge of Borrower, threatened claims, actions or lawsuits
(other than claims for benefits in the normal  course),  asserted or  instituted
against (i) any Plan or its assets,  or (ii) any  fiduciary  with respect to any
Plan or (iii)  Borrower or any ERISA  Affiliate  with  respect to any Plan;  (b)
Borrower and each ERISA Affiliate have complied with the notice and continuation
coverage requirements of IRC Section 4980B and the proposed or final regulations
thereunder;  and (c) no liability  under any Plan has been funded,  nor has such
obligation  been  satisfied  with,  the purchase of a contract from an insurance
company  that is not A rated  by A.M.  Best  and the  equivalent  by each  other
nationally recognized rating agency.

     11.8 No Litigation.  Other than the Bankruptcy Case and except as set forth
on  Schedule  11.8  as  of  the  Closing  Date,  no  litigation,  action,  suit,
arbitration,  investigation  or  other  proceeding  is now  pending  or,  to the
knowledge of Borrower,  threatened  against it, at law, in equity or  otherwise;
and no such matter  (whether  shown on Schedule  11.8 as of the Closing  Date or
subsequently  arising)  (a)  challenges  any  such  Person's  right,  power,  or
competence  to enter  into or  perform  any of its  obligations  under  the Loan
Documents,  or the validity or enforceability of any Loan Document or any action
taken thereunder or any Liens granted to Lender, or (b) if determined  adversely
and if it could be reasonably expected to be determined adversely,  individually
or in the  aggregate,  could  reasonably  be  expected  to have or  result  in a
Material Adverse Effect.  To the knowledge of Borrower other than the Bankruptcy
Case and except as set forth on Schedule 11.8 as of the Closing Date, there does
not exist a state of facts  which could  reasonably  be expected to give rise to
any such litigation,  action, suit, claim,  arbitration,  investigation or other
proceeding.

     11.9  Brokers.  Except as set forth on Schedule  11.9, no broker or finder,
investment banker or other intermediary of any kind acting on behalf of Borrower
brought about the obtaining,  making or closing of the credit extended  pursuant
to this Agreement or the  transactions  contemplated by the Loan Documents,  and
Borrower has no obligation  to any Person in respect of any finder's,  brokerage
investment banking,  placement or other fees or amounts (including expenses) due
in connection therewith.

     11.10 Full  Disclosure.  No information  contained in this  Agreement,  the
other Loan Documents,  Borrower's financial statements and papers or any written
statement  furnished  by or on behalf of Borrower  pursuant to the terms of this
Agreement or any other Loan  Document,  which has  previously  been delivered to
Lender,  contains any untrue  statement  of a material  fact or omits to state a
material fact necessary to make the statements  contained  herein or therein not
misleading in light of the circumstances under which they were made.

                                       27
<PAGE>

     11.11 Environmental  Matters.  Except for existing  environmental  reports,
reviews and audits set forth on Schedule 11.11 and for routine operations in the
ordinary course of business in compliance with applicable  permits issued by, or
Law of, a Governmental  Authority,  all of Borrower's Properties are free of any
Hazardous  Material  (except those not in violation of  Environmental  Laws) and
Borrower  has not caused or suffered to occur any  Release at,  under,  above or
within any of Borrower's Property,  which violated any Environmental Law. Except
as set forth on Schedule 11.11, there are no existing or potential Environmental
Liabilities for Borrower of which it has knowledge.  Borrower is not involved in
operations  which are  reasonably  likely to  result in  material  Environmental
Liabilities on it, or any owner of any premises  which it occupies,  or any Lien
securing the same under any  Environmental  Law. Borrower has provided to Lender
copies of all and all  written  information  pertaining  to actual or  potential
Environmental  Liabilities  relating  to  or  affecting  Borrower's  Properties.
Borrower hereby  acknowledges and agrees that Lender (a) is not now, and has not
ever been, in control of any of the Property or Borrower's affairs, and (b) does
not have the capacity through the provisions of this Agreement or the other Loan
Documents  or  otherwise  to  influence  Borrower's  conduct with respect to the
ownership, operation or management of any of the Property or compliance (or not)
with Environmental Laws.

     11.12 Insurance Policies.  Borrower's  insurance is reasonable and standard
for Borrower's industry and geographic location.

     11.13 Deposit and Disbursement Accounts. Schedule 11.13 lists all banks and
other financial  institutions at which Borrower maintains deposits,  investments
or  other  accounts  or post  office  lock  boxes  and such  Schedule  correctly
identifies the name, address and telephone number of each institution,  the name
in which the account is held, a description  of the purpose of the account,  and
the complete account number.  Borrower has delivered to Lender true, correct and
complete copies of all agreements,  instruments and other documents  relating to
any credit card programs, arrangements or agreements to which it is a party.

     11.14 Government Contracts. Except as set forth on Schedule 11.14, Borrower
is not party to any contract or agreement  with the federal  government and none
of Borrower's  Accounts are subject to the Federal  Assignment of Claims Act (31
U.S.C. 3727).

11.15  Agreements  and Other  Documents.  As of the Closing  Date,  Borrower has
provided  Lender  accurate  and  complete  copies (or  summaries)  of all of the
following  agreements  or documents  (in addition to the Material  Contracts) to
which  Borrower is subject and each of which are listed on Schedule  11.15:  (a)
supply  agreements and purchase  agreements not terminable by Borrower within 60
days following  written notice issued by Borrower and involving  transactions in
excess of $100,000 per annum; (b) any lease of Equipment having a remaining term
of one year or longer  and  requiring  aggregate  rental and other  payments  in
excess of $50,000 per annum;  (c) licenses  and permits  held by  Borrower,  the
absence of which could be reasonably  likely to have a Material  Adverse Effect;
and (d)  instruments or documents  evidencing  Indebtedness  of Borrower and any
security interest granted by Borrower with respect thereto.

     11.16 Bankruptcy Matters.

        11.16.1  The  Bankruptcy Case  was  commenced on  the  Petition Date  in
accordance  with  applicable  Law and proper notice thereof and proper notice of
the hearing for the approval of the Final Order has been given.

        11.16.2  Pursuant to and to the extent permitted in the Final Order, the
Obligations  will  constitute  allowed  administrative  expense  claims  in  the
Bankruptcy  Case having  priority  over all  administrative  expense  claims and
unsecured claims against Borrower now existing or hereafter arising, of any kind

                                       28
<PAGE>

whatsoever,  including, without limitation, all administrative expense claims of
the kind specified in Sections 326, 330, 331, 503(b),  506(c),  507(a),  507(b),
546(c),  726, or any other  provision of the Bankruptcy  Code, as provided under
Section 364(c)(1) of the Bankruptcy Code,  subject,  as to priority only, to the
Carve-Out Amount.

     11.16.3  Pursuant  to and to the extent  provided in the Final  Order,  the
Obligations  will be secured by a valid and perfected first priority Lien in and
against all of the Collateral.

     11.16.4  The  Final  Order is in full  force  and  effect  and has not been
reversed, stayed, modified or amended (except as may be modified or amended with
Lender's express written consent).

Section 12.       Affirmative Covenants.

     Borrower  covenants and agrees that,  unless Lender shall otherwise consent
in  writing,  from and after the date  hereof  and until the  Termination  Date,
Borrower shall comply with the following affirmative covenants:

     12.1 Maintenance of Existence and Conduct of Business. Except as occasioned
by the  Bankruptcy  Case,  (a) do or cause to be done all  things  necessary  to
preserve and keep in full force and effect its statutory existence and corporate
franchises;  (b) preserve intact the business  organizations  and  relationships
with third parties (including suppliers and customers); (c) conduct its business
substantially  as now  conducted  consistent  with  the  best  practices  of the
industry;  (d) keep  available  the  services  of the present  employees  of the
business; (e) perform and pay, as and when due, all Post-Petition obligations of
Borrower;  (f) maintain,  preserve and protect all of its material  Intellectual
Property  Rights,  and preserve all the  remainder  of its  Property,  in use or
useful in the conduct of its business and keep the same in good repair,  working
order and condition (taking into consideration  ordinary wear and tear) and from
time to time make, or cause to be made,  all necessary or  appropriate  repairs,
replacements and improvements  thereto  consistent with industry  practices,  so
that the  business  carried  on in  connection  therewith  may be  properly  and
advantageously  conducted  at all times,  provided  that nothing in this Section
12.1 shall  prevent  Borrower  from  discontinuing  the use or  operation of any
Property  if  such  discontinuance,  in the  judgment  of  Borrower's  Board  of
Directors,  is  desirable  in the  conduct  of its  business;  and (g)  transact
business only under the names set forth in Schedule 11.2.

     12.2 Payment of Charges and Claims.  To the extent permitted  hereunder and
to the extent applicable in the Bankruptcy Case, pay and discharge,  or cause to
be paid and  discharged in accordance  with the terms  thereof,  (a) all Charges
imposed  upon  it or its  income  and  profits,  or any of its  Property  (real,
personal or mixed) prior to the date on which penalties attach thereto,  and (b)
all lawful  claims for labor,  materials,  supplies and  services or  otherwise,
which,  if  unpaid,  might or could  become  a Lien on its  property;  provided,
however,  that  Borrower  shall not be  required to pay any such Charge or claim
which is being  contested in good faith by proper legal actions or  proceedings,
so long as at the time of  commencement  of any such  action or  proceeding  and
during the pendency  thereof (i) reserves with respect  thereto are  established
and are  maintained  in  accordance  with GAAP,  (ii) such  contest  operates to
suspend  collection  of the contested  Charges or claims and is  maintained  and
prosecuted  continuously  with diligence,  (iii) none of the Collateral would be
subject to forfeiture or loss by reason of the  institution  or  prosecution  of
such contest,  (iv) no Liens  securing an aggregate  amount in excess of $25,000
shall  exist  for such  Charges  or claims  during  such  action  or  proceeding
(excluding  Liens securing  obligations  fully covered by insurance or otherwise
bonded to the satisfaction of Lender),  and (v) if such contest is terminated or
discontinued  adversely to Borrower,  Borrower  shall  promptly pay or discharge
such  contested  Charges and all  additional  charges,  interest  penalties  and
expenses,  if any, and shall deliver to Lender evidence reasonably acceptable to
Lender of such compliance,  payment or discharge,  if such contest is terminated
or discontinued adversely to Borrower.

                                       29
<PAGE>

     12.3 Books and  Records.  Keep  adequate  records and books of account with
respect to its business activities,  in which proper entries,  reflecting all of
its  consolidated  and  consolidating  financial   transactions,   are  made  in
accordance with GAAP and on a basis consistent with the Financial  Statements in
all material respects.

     12.4 Litigation.  Notify Lender in writing, promptly upon learning thereof,
of any litigation,  action,  suit,  claim,  investigation,  arbitration or other
proceeding  commenced or threatened,  at law, in equity or otherwise against it,
and of the institution against it of any suit or administrative proceeding which
(a) could  reasonably  be  expected  to  involve  an amount in excess of $25,000
individually or in the aggregate,  or (b) if adversely determined,  individually
or in the  aggregate,  could  reasonably  be  expected  to have or  result  in a
Material Adverse Effect.

     12.5 Insurance.

        12.5.1 At its sole cost and  expense, maintain or cause to be maintained
policies of  insurance  of such type and in such  amounts as is  reasonable  and
standard in Borrower's  industry and geographic  location and as is satisfactory
to Lender and with  insurers  recognized as adequate by Lender.  Borrower  shall
notify  Lender  promptly of any adverse  occurrence  causing a material  loss or
material decline in value of any real or personal property and the estimated (or
actual, if available)  amount of such loss or material decline.  Borrower hereby
directs  all  present  and  future  insurers  under its "All Risk"  policies  of
insurance to pay all proceeds payable  thereunder  directly to Lender.  Borrower
irrevocably makes, constitutes and appoints Lender (and all officers,  employees
or agents  designated  by  Lender)  as its true and  lawful  agent and  attorney
in-fact for the purpose of, upon the occurrence and during the continuance of an
Event of Default,  making,  settling and  adjusting  claims under the "All Risk"
policies of insurance,  endorsing  the name of such Person on any check,  draft,
instrument or other item of payment for the proceeds of such "All Risk" policies
of insurance,  and for making all  determinations  and decisions with respect to
such "All Risk"  policies  of  insurance.  In the event  Borrower at any time or
times  hereafter  shall  fail to  obtain  or  maintain  (or  fail to cause to be
obtained or  maintained)  any of the policies of insurance  required above or to
pay any premium in whole or in part relating thereto, Lender, without waiving or
releasing  any  Obligations  or Event of Default  hereunder,  may at any time or
times  thereafter  (but shall not be  obligated  to) obtain  and  maintain  such
policies  of  insurance  and pay such  premium  and take any other  action  with
respect thereto which Lender deems advisable.  All sums so disbursed,  including
reasonable attorneys' fees, court costs and other charges related thereto, shall
be payable, on demand, by Borrower to Lender and shall be additional Obligations
hereunder secured by the Collateral.

        12.5.2  Lender reserves the right at any time, upon review of Borrower's
risk profile,  to reasonably require additional forms and limits of insurance to
adequately  protect  Lender's  interests.  Borrower  shall,  if so  requested by
Lender,  deliver to Lender, as often as Lender may reasonably  request, a report
of a reputable  insurance broker reasonably  satisfactory to Lender with respect
to its insurance policies.

        12.5.3 Name  Lender, or cause Lender to be named, as a loss payee on all
insurance  policies  maintained  by Borrower with respect to the Business or the
Collateral.

     12.6 Compliance with Laws.  Comply in all material  respects with all Laws,
permits and regulations applicable to it, including those relating to licensing,
environmental, ERISA and labor matters.

     12.7  Agreements;  Leases.  (a) Perform,  within all required  time periods
(after  giving  effect to any  applicable  grace  periods),  all of its material
obligations (except where Borrower is contesting such obligation  reasonably and
in good faith or where  performance is excused by the  Bankruptcy  Code or by an
applicable order of the Bankruptcy Court and such  non-compliance  would neither

                                       30
<PAGE>

have nor could be  reasonably  expected  to have a  Material  Adverse  Effect on
Borrower's  business or assets or upon any of the rights,  remedies or interests
of Lender) and (b) enforce all of its  material  rights  under each  Contract or
other document or instrument to which it is a party.  Borrower shall perform and
comply in all  material  respects  with all  obligations  in  respect of Chattel
Paper, Instruments,  Contracts, Licenses, and Documents and all other agreements
constituting  or giving rise to  Collateral,  except to the extent that (i) such
compliance is excused by the  Bankruptcy  Code or by an applicable  order of the
Bankruptcy Court as to Borrower and (ii) such non-compliance  would neither have
nor could reasonably be expected to have a Material Adverse Effect on Borrower's
business or assets or upon any of the rights, remedies or interests of Lender.

     12.8  Environmental   Matters.   Except  as  otherwise  prohibited  by  the
Bankruptcy Case, (a) comply in all material respects with all Environmental Laws
and permits  applicable to it, (b) notify Lender promptly after Borrower becomes
aware of any Release upon any Property which,  individually or in the aggregate,
could reasonably be expected to have or result in a Material Adverse Effect, and
(c) promptly forward to Lender a copy of any order, notice, permit, application,
or any  communication  or  report  by any  Governmental  Authority  received  by
Borrower in connection with any such Release or any other matter relating to the
Environmental  Laws that may affect any Property or Borrower.  The provisions of
this  Section  12.8  shall  apply  whether or not the  Environmental  Protection
Agency, any other federal agency or any state or local environmental  agency has
taken or threatened any action in connection with any Release or the presence of
any Hazardous Materials.

     12.9  Application  of  Proceeds.  Use the proceeds of the Term Loan only as
provided in Section 2.3.

     12.10 Fiscal Year. Maintain as its Fiscal Year the year ending March 31.

     12.11 Subsidiaries. Not form or acquire any Subsidiary.

     12.12  Appraisals.  Allow  Lender  and its  designees  from time to time as
Lender shall  direct,  to perform,  and shall assist Lender and its designees in
performing,  appraisals of Borrower's Inventory,  Equipment, accounts receivable
and  Property.  So long as no Event of Default has occurred  and is  continuing,
Lender  agrees to provide to  Borrower  upon the  request of  Borrower  any such
appraisal prepared by a third party unaffiliated with Lender which has consented
to Lender so providing such appraisal.  In furtherance of the foregoing,  Lender
agrees to use reasonable efforts to obtain any such consent.  Borrower agrees to
pay all  reasonable  out-of-pocket  costs  and  expenses  incurred  by Lender in
connection  with such  appraisals  conducted after the occurrence of an Event of
Default.

     12.13  Intellectual  Property  Rights.  Conduct  its  business  and affairs
without infringement of or interference with any Intellectual Property Rights of
any other Person.

     12.14  Notices.  Promptly  notify Lender of (a) any notice or other written
communication from any Person alleging that the consent of such Person is or may
be required in connection with the sale,  disposition,  assignment,  transfer or
conveyance  of any of its  Properties;  (b) any written  communication  from any
Governmental  Authority in connection  with or relating to any of its Properties
or the  Business;  and (c) the  commencement  or threat of  commencement  of any
actions,  suits,  investigations or proceedings relating to Borrower, any of its
Properties or the Business.

     12.15  Further  Assurances.  At its sole cost and expense,  upon request of
Lender, duly execute and deliver, or cause to be duly executed and delivered, to
Lender such further  instruments  and documents and do and cause to be done such
further acts as may be necessary or proper in the  reasonable  opinion of Lender

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<PAGE>

to carry out more  effectively  the provisions and purposes of this Agreement or
any other Loan Document.

Section 13.       Negative Covenants.

         Borrower  covenants  and agrees that,  unless  Lender  shall  otherwise
consent in  writing,  from and after the date  hereof and until the  Termination
Date, Borrower shall not do any of the following:

     13.1  Mergers,  Subsidiaries,  Etc.  Except as set forth on Schedule  13.1,
directly or indirectly, by operation of law or otherwise,  merge, consolidate or
otherwise combine with any Person or acquire or hold all or substantially all of
the  assets  or  capital  stock  of any  Person,  or form,  acquire  or hold any
Subsidiary.

     13.2  Indebtedness.   Create,   incur,   assume  or  permit  to  exist  any
Indebtedness, except: (a) the Obligations; (b) Deferred Taxes; (c) Capital Lease
Obligations  and  Indebtedness  secured by purchase money Liens  permitted under
Section 13.5;  (d)  Guaranteed  Indebtedness  permitted  under Section 13.5; (e)
Indebtedness  existing on the Closing Date and set forth on Schedule  13.2;  and
(e) pre-petition Indebtedness in existence, in such amount and subject solely to
the terms and conditions in effect, as of the Petition Date.

     13.3 Affiliate and Employee Transactions. Except as set for the on Schedule
13.3,  except as expressly  permitted  hereunder,  enter into or be party to any
lending,  borrowing or other  commercial  transaction or arrangement with any of
its  Affiliates,  officers,  directors or  employees,  including  payment of any
management,  consulting,  advisory,  service  or  similar  fee or  any  deferred
compensation  (excluding  salaries,   bonuses  and  other  compensation  to  its
officers, directors and employees in the ordinary course of business, consistent
with past practices).

     13.4 Capital  Structure and Business.  (a) Make any changes in its business
operations which,  individually or in the aggregate,  could adversely affect the
repayment of the  Obligations  or  reasonably be expected to have or result in a
Material Adverse Effect; (b) make any Material  Decision,  except with the prior
express written consent of Lender;  (c) make any change in its capital structure
or issue of any Stock or make any revision of the terms of its outstanding Stock
or amend or modify any shareholders,  voting or similar agreement to which it is
a party or enter  into any such  agreement,  in each  case,  without  the  prior
written  consent of Lender;  (d) amend its articles or certificate of formation,
charter,  by-laws  or  other  organizational  documents;  or (e)  engage  in any
business other than the  businesses  engaged in as of the Closing Date and other
business directly related thereto.

     13.5 Guaranteed Indebtedness.  Create, incur, assume or permit to exist any
Guaranteed Indebtedness except for the Obligations under the Loan Documents and:
(a)  endorsements  of  Instruments  or items of  payment  for  deposit to a bank
account of Borrower;  (b) performance  bonds or indemnities  entered into in the
ordinary course of business,  consistent with past practices; and (c) Guaranteed
Indebtedness outstanding on the Closing Date and listed on Schedule 13.5.

     13.6  Liens.  Create or permit to exist any Lien on any of its  Properties,
except for:  (a)  presently  existing  or  hereafter  created  Liens in favor of
Lender,  to secure the  Obligations,  and (b) Permitted  Liens.  The prohibition
provided for in this Section 13.6 specifically includes, without limitation, any
effort  by  Borrower,  any  Committee,  or any  other  party-in-interest  in the
Bankruptcy  Case to prime or create  pari  passu to any  claims or  interest  of
Lender any Lien  (other  than for the  Carve-Out  Expenses  up to the  Carve-Out
Amount  and the  Carve-Out  Account)  irrespective  of  whether  such  claims or
interests may be "adequately protected."

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<PAGE>

     13.7  Sale of  Assets.  Other  than the  consummation  of the  transactions
contemplated in the Sale Documents,  sell, transfer, convey, assign or otherwise
dispose  of any  of its  assets  or  properties,  including  any  Collateral  or
Purchased Assets (as that term is defined in the Purchase Agreement);  provided,
however,  that the  foregoing  shall not  prohibit  the sale of Inventory in the
ordinary course of business.

     13.8 Acquisition of Assets.  Acquire more than $25,000.00 of assets, rights
or properties (by original cost), in the aggregate,  from any Person or Persons,
in a single or  multiple  transactions,  other than  inventory  in the  ordinary
course of business and pursuant to foreclosure proceedings against Obo, Inc.

     13.9  Confidential  Information.  Provide  confidential  information to any
Person that has not signed and delivered a confidentiality agreement to Borrower
in form and substance  acceptable to Lender in its sole  discretion,  and Lender
shall be deemed to have  approved the delivery of  confidential  information  to
Borrower's legal, accounting, and investment banker professionals.

     13.10  ERISA.  Acquire any new ERISA  Affiliate  that  maintains  or has an
obligation  to  contribute  to a Pension  Plan that has  either an  "accumulated
funding deficiency," as defined in Section 302 of ERISA, or any "unfunded vested
benefits," as defined in Section  4006(a)(3)(E)(iii) of ERISA in the case of any
Pension Plan other than a Multiemployer Plan and in Section 4211 of ERISA in the
case of a Multiemployer Plan. Additionally,  no Borrower nor any ERISA Affiliate
shall:  (a) permit or suffer any  condition set forth in Section 11.7 (ERISA) to
cease to be met and  satisfied  at any  time,  other  than  permitting  an ERISA
Affiliate  acquired  after the Closing  Date to sponsor a Title IV Plan,  a Plan
subject to IRC Section 412 or ERISA Section 302, or a Retiree  Welfare Plan; (b)
terminate  any  Title  IV  Plan  where  such  termination  could  reasonably  be
anticipated  to result in  liability  to  Borrower;  (c) permit any  accumulated
funding  deficiency,  as defined in Section  302(a)(2) of ERISA,  to be incurred
with respect to any Pension Plan; (d) fail to make any  contributions or fail to
pay any  amounts  due and owing as required by the terms of any Plan before such
contributions  or amounts  become  delinquent;  (e) make a  complete  or partial
withdrawal  (within the meaning of Section 4201 of ERISA) from any Multiemployer
Plan prior;  (f) fail to provide  Lender with  copies of any Plan  documents  or
governmental  reports or filings, if reasonably requested by Lender; (g) fail to
make any  contribution  or pay any amount due as  required by IRC Section 412 or
Section 302 of ERISA;  (h) allow any ERISA Event or event  described  in Section
4062(e)  of ERISA to  occur  with  respect  to any  Title IV Plan;  and (i) with
respect  to all  Retiree  Welfare  Plans,  allow  the  present  value of  future
anticipated expenses to increase by $500,000.

     13.11 Restricted Payments; Use of Proceeds. (a) Make any Restricted Payment
to any Person; provided, however, that any such payments which are in the nature
of loans are evidenced by intercompany notes, repayment of which is subordinated
to repayment of the Obligations,  and which notes shall be collaterally assigned
to Lender,  to secure the  Obligations;  or (b) utilize the  Collateral  and the
proceeds  of the Term Loan  other  than for the  limited  purposes  set forth in
Section 2.3.

     13.12  Hazardous  Materials.  (a) Cause or permit a  Release  of  Hazardous
Material on, under, in or about any Property in breach of any Environmental Law;
(b) use, store,  generate,  treat or dispose of Hazardous  Materials,  except in
compliance  in  all  material  respects  with  the  Environmental  Laws;  or (c)
transport any Hazardous Materials to or from any Property,  except in compliance
in all material respects with the Environmental Laws.

     13.13  Sale-Leasebacks.  Engage in any  sale-leaseback,  synthetic lease or
similar transaction involving any of its property or assets.

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<PAGE>

     13.14 Cancellation of Indebtedness.  Cancel any claim or Indebtedness owing
to  it,  except  for  adequate  consideration  negotiated  in  an  arm's  length
transaction  and in the ordinary  course of its business,  consistent  with past
practices.

     13.15 Bank  Accounts.  Maintain  any  deposit,  operating  or other bank or
investment accounts except for those accounts identified in Schedule 11.13.

     13.16  Limitation on Negative Pledge Clauses.  Directly or indirectly enter
into any  agreement  (other  than  the Loan  Documents)  with any  Person  which
prohibits or limits the ability of Borrower to create,  incur,  assume or suffer
to exist any Lien upon any of its  property,  assets or  revenues,  whether  now
owned or hereafter acquired.

     13.17  Material  Contracts.  (a) Cancel or terminate any Material  Contract
unless, in the discretion of the Board of Directors of Borrower, there occurs an
event of default by any other party to such contract;  and (b) waive any default
or breach any Material  Contract,  or materially  amend or otherwise  modify any
Material Contract or take (or omit to take) any other material adverse action in
connection with any Material Contract.

     13.18 Leases. (a) Renew (by amendment, modification or otherwise) any Lease
or similar  agreements other than renewals of existing Leases upon substantially
the same  terms  (other  than  reasonable  increases  in rent  based  on  market
conditions)  as are in effect on the  Closing  Date,  or (b) enter  into any new
Lease or similar agreements,  other than office space to replace the premises at
999 18th Street,  Denver,  Colorado,  80202,  with the prior written  consent of
Lender.

     13.19 New Premises.  Enter into,  or become a lessee  under,  any Operating
Lease of real property without the prior written consent of Lender.

     13.20   Repayment  of   Indebtedness.   Except   pursuant  to  a  confirmed
reorganization plan and except as specifically permitted hereunder,  without the
express  prior  written  consent  of  Lender  or  pursuant  to an  order  of the
Bankruptcy  Court after  notice and hearing,  make any payment or transfer  with
respect to any Pre-Petition Lien or Pre-Petition Indebtedness that is subject to
the automatic stay provisions of the Bankruptcy Code whether by way of "adequate
protection" under the Bankruptcy Code or otherwise.

     13.21 Chapter 11 Claims.  Incur, create,  assume, suffer to exist or permit
any other super-priority administrative claim which is pari passu with or senior
to the claims of Lender against Borrower.

Section 14.       Term.

     14.1 Duration.  The financing  arrangement  contemplated hereby shall be in
effect until the Maturity Date, unless terminated  earlier pursuant to the terms
of this  Agreement.  On the earlier to occur of the Maturity  Date and such time
payment  becomes due  pursuant to Section 4.1 or Section  4.2, the Term Loan and
all other Obligations shall immediately become due and payable in full, in cash.

     14.2 Survival of Obligations. Except as otherwise expressly provided for in
the Loan  Documents,  no  termination  or  cancellation  (regardless of cause or
procedure) of any financing  arrangement  under this Agreement  shall in any way
affect or impair  the  Obligations,  duties,  indemnities,  and  liabilities  of
Borrower  or other  obligor  under any of the Loan  Documents,  or the rights of
Lender relating to any Obligations,  due or not due,  liquidated,  contingent or

                                       34
<PAGE>

unliquidated or any transaction or event occurring prior to such termination, or
any  transaction or event,  the performance of which is not required until after
the Maturity Date. Except as otherwise expressly provided herein or in any other
Loan  Document,  all  undertakings,   agreements,   covenants,   warranties  and
representations  of or binding upon  Borrower or other  obligor under any of the
Loan  Documents,  and  all  rights  of  Lender,  all as  contained  in the  Loan
Documents,  shall not  terminate  or  expire,  but  rather  shall  survive  such
termination  or  cancellation  and shall continue in full force and effect until
the Termination Date on which date they shall cease.

Section 15.       Events of Default; Rights and Remedies.

     15.1 Events of Default.  Notwithstanding  the  provisions of Section 362 of
the Bankruptcy Code and without application or motion to the Bankruptcy Court or
any  notice to  Borrower,  the  occurrence  of any one or more of the  following
events  (regardless  of the  reason  therefor)  shall  constitute  an  "Event of
Default":

        15.1.1  Borrower  shall  fail  to  make  any payment in  respect  of any
Obligations  hereunder  or under any of the other  Loan  Documents  when due and
payable or declared due and payable,  including  any payment of principal of, or
interest  on,  the Term  Loan or  reimburse  Lender  for any Fee,  or any  other
liabilities or other payment,  fee, charge or expense  provided for hereunder or
under the Sale Documents when due; or

        15.1.2 Borrower shall fail or neglect to perform, keep or observe any of
the  provisions  of Section 12.2 (Payment of Charges and Claims) or Section 12.5
(Insurance),  within 10 days from the date such  performance  is due,  or at any
time any of  Section  2.3 (Use of  Proceeds)  or any  subsection  of  Section  7
(Access),  Section 12 (Affirmative Covenants),  Section 13 (Negative Covenants),
including any of the provisions set forth in Annex A; or

        15.1.3 Borrower shall fail or neglect  to perform,  keep or  observe any
term or  provision  of this  Agreement  (other  than any such term or  provision
referred to in Sections  15.1.1 or 15.1.2),  or Borrower  under any of the other
Loan  Documents  or  contained in any other  agreement  or  arrangement,  now or
hereafter  entered into between Borrower and Lender relating to the Obligations,
shall fail or neglect to perform,  keep or observe any term or  provision of any
other Loan Document, and the same shall remain unremedied for a period ending on
the third day after Borrower shall become aware of such event or default; or

        15.1.4 Borrower shall file,  support or fail to oppose a motion seeking,
or  the  Bankruptcy   Court  shall  enter,  an  order  in  the  Bankruptcy  Case
authorizing,  or Borrower  shall  consummate,  a sale of all or a portion of the
Purchased  Assets (as that term is defined in the Sale  Documents) to any Person
other than Lender; or

        15.1.5 Borrower shall fail or  neglect to perform,  keep  or observe any
term or provision of the Purchase  Agreement or any other Sale Document,  or any
other agreement or arrangement,  now or hereafter  entered into between Borrower
and Lender  relating to the  transactions  contemplated  in the Sale  Documents,
shall fail or neglect to perform,  keep or observe any term or  provision of any
Sale Document; or

        15.1.6 Any representation, warranty or other statement made or furnished
to Lender by or on behalf of Borrower in any Loan Document or any Sale Document,
or any instrument,  certificate or financial  statement  furnished in compliance
with,  or in reference  thereto,  proves to have been false or misleading in any
material respect when made or furnished or when reaffirmed,  pursuant to Section
10; or

        15.1.7 Except for defaults  occasioned by the filing  of  the Bankruptcy
Case  and  defaults  resulting  from  Obligations  with  respect  to  which  the
Bankruptcy  Code prohibits  Borrower from  complying or permits  Borrower not to
comply, a default or breach occurs under any other material agreement,  document

                                       35
<PAGE>

or instrument  entered into either (a)  Pre-Petition and which is affirmed after
the Petition Date or (b) Post-Petition, to which Borrower is a party or by which
Borrower or its Property is bound,  and such default (i) involves the failure to
make any payment (after  expiration of any applicable grace period),  whether of
principal,  interest or otherwise, due (whether by scheduled maturity,  required
prepayment, acceleration, demand or otherwise) in respect of any Indebtedness of
Borrower  in  an  aggregate  amount  exceeding   $30,000  or  (ii)  causes  such
Indebtedness,  or a portion thereof in an aggregate amount exceeding $30,000, to
become  due prior to its stated  maturity  or prior to its  regularly  scheduled
dates of payment; or

        15.1.8 any judgments  which are in the aggregate in excess of $10,000 as
to any  Post-Petition  obligation  shall be rendered  against  Borrower  and the
enforcement  thereof shall not be stayed (by court ordered stay or by consent of
the party litigants); or there shall be rendered against Borrower a non-monetary
judgment with respect to a Post-Petition event which, in either event, causes or
would  reasonably be expected to cause a material  adverse  change or a material
adverse effect on the ability of Borrower to perform its  obligations  under the
Loan Documents; or

        15.1.9 this Agreement or any other Loan  Document  ceases to  be in full
force and effect  (other than by reason of a release of Collateral in accordance
with the terms hereof or thereof or the  satisfaction in full of the Obligations
in accordance with the terms hereof) or shall be declared null and void; or

        15.1.10 Lender shall not have or shall cease to have a valid and perfect
-ed Lien in any Collateral  purported to be covered by the Collateral  Documents
with the priority required by the relevant Collateral Document, in each case for
any  reason  other  than the  failure  of Lender to take any  action  within its
control; or

        15.1.11 Borrower shall contest the validity or enforceability  of any of
the  Loan  Documents  in  writing  or deny in  writing  that it has any  further
liability,  including with respect to future advances by Lender,  under any Loan
Document to which it is a party or shall  contest the validity or  perfection of
any Lien in any Collateral purported to be covered by the Collateral  Documents;
or

        15.1.12 an event or condition  specified in Section 13.10 shall occur or
exist with  respect to any Plan or  Multiemployer  Plan and, as a result of such
event or condition, together with all other such events or conditions,  Borrower
or any  ERISA  Affiliate  shall  cause  or in the  opinion  of  Lender  shall be
reasonably likely to cause liability to a Plan, a Multiemployer Plan or PBGC (or
any combination of the foregoing) to increase by $500,000; or

        15.1.13 The occurrence of any of the following in the Bankruptcy Case:

                (a) the bringing of a motion, taking of any action or the filing
of any plan of reorganization or disclosure  statement attendant thereto in each
case by Borrower in the  Bankruptcy  Case:  (i) to obtain  additional  financing
under  Section  364(c) or (d) of the  Bankruptcy  Code not  otherwise  permitted
pursuant to this  Agreement;  (ii) to grant any Lien other than Permitted  Liens
upon or affecting any  Collateral;  (iii) except as provided in the Final Order,
as the case may be, to use cash collateral of Lender under Section 363(c) of the
Bankruptcy Code without the prior written  consent of Lender;  or (iv) any other
action  or  actions  directly  adverse  to  Lender or its  rights  and  remedies
hereunder or its interest in the Collateral; or

                                       36
<PAGE>

                (b) the  filing  of any  plan of  reorganization  or  disclosure
statement attendant thereto by Borrower or any other Person to which Lender does
not consent or otherwise agree to the treatment of its claims; or

                (c) the  entry of an  order in the  Bankruptcy Case confirming a
plan of reorganization  that does not contain a provision for termination of the
Term Loan and  repayment  in full in cash of all of the  Obligations  under this
Agreement on or before the effective date of such plan; or

                (d) the  entry of  an order  amending,  supplementing,  staying,
vacating or otherwise  modifying  the Loan  Documents or the Final Order without
the written consent of Lender or the filing of a motion for reconsideration with
respect to the Final Order; or

                (e) other than payments  permitted pursuant to this Agreement or
the Final Order, as applicable,  Borrower shall make any payment (whether by way
of adequate  protection  or  otherwise) of principal or interest or otherwise on
account of any Indebtedness incurred prior to the Petition Date; or

                (f) the payment of, or application  for  authority  to  pay, any
Pre-Petition  claim without  Lender's  prior  written  consent or pursuant to an
order  of the  Bankruptcy  Court  after  notice  and  hearing  unless  otherwise
permitted under this Agreement; or

                (g) the allowance of any claim or claims under Section 506(c) of
the  Bankruptcy  Code  against  or  with  respect  to any of the  Collateral  or
Pre-Petition  Collateral,  other than for the Carve-Out  Expenses and subject to
the Carve-Out Amount; or

                (h) Borrower shall file, support or fail to oppose a motion seek
-ing,  or the  Bankruptcy  Court shall enter,  an order in the  Bankruptcy  Case
appointing (i) a trustee under Chapter 7 or Chapter 11 of the  Bankruptcy  Code,
(ii) a  responsible  officer or (iii) an  examiner,  in each case with  enlarged
powers relating to the operation of the business  (powers beyond those set forth
in  subclauses  (3) and (4) of Section  1106(a) of the  Bankruptcy  Code)  under
Section 1106(b) of the Bankruptcy Code in the Bankruptcy Case; or

                (i) entry by the  Bankruptcy Court of an order under Section 363
or 365 of the Bankruptcy Code authorizing or approving the sale or assignment of
a  material  portion  of any of  Borrower's  assets,  or  procedures  in respect
thereof,  or Borrower shall seek, support, or fail to contest in good faith, the
entry of such an order in the  Bankruptcy  Case,  other  than the Sale Order (as
that term is defined in the Purchase Agreement); or

                (j)  the dismissal of the Bankruptcy  Case, or the conversion of
the  Bankruptcy  Case from one under  Chapter  11 to one under  Chapter 7 of the
Bankruptcy  Code or Borrower shall file a motion or other  pleading  seeking the
dismissal of the Bankruptcy  Case under Section 1112 of the  Bankruptcy  Code or
otherwise; or

                (k) the  Bankruptcy  Court  shall enter an order granting relief
from the  automatic  stay to any  creditor  or party in  interest  (i) to permit
foreclosure  (or the granting of a deed in lieu of  foreclosure  or the like) on
any  Property  of  Borrower or (ii) to permit  other  actions  that would have a
material adverse affect on Borrower or the Chapter 11 estate; or

                (l) the  commencement by Borrower or any officer of  employee of
Borrower  or by any  committee  in the  Bankruptcy  Case,  or any other party in
interest in the Bankruptcy  Case, of a suit,  action or contested matter against
Lender or affecting the Collateral  which,  in the case only of the Committee or

                                       37
<PAGE>

other party of interest  sets forth (a) a claim in excess of  $100,000,  (b) any
claim or legal or equitable remedy which seeks reduction,  setoff, subordination
or any  recharacterization  of the claim or Lien of Lender;  or (c) a claim that
would otherwise have a Material  Adverse Effect or a material  adverse effect on
the rights and  remedies of Lender  under any Loan and related  documents or the
collectability of all or any portion of the Obligations; or

                (m) the entry of an order in the  Bankruptcy  Case  avoiding  or
requiring  repayment  of any  portion  of the  payments  made on  account of the
Obligations owing under this Agreement; or

                (n) (i) Borrower  shall fail to  comply  with  the  terms of the
Final  Order  in any  material  respect,  (ii)  such  order  shall  be  amended,
supplemented,  stayed,  reversed,  vacated or  otherwise  modified  without  the
written  consent of  Lender,  or (iii) any of  Borrower  shall file a motion for
reconsideration  with respect to the Final Order,  or (iv) the right of Borrower
to  borrow  under  this  Agreement  is  terminated  by an order  entered  by the
Bankruptcy Court; or

                (o) Borrower shall file, support or fail to oppose a motion seek
-ing, or the Bankruptcy  Court shall enter,  an order in the Bankruptcy Case (i)
approving  additional  financing  under Section  364(c) or (d) of the Bankruptcy
Code not otherwise  permitted  pursuant to this Agreement unless the proceeds of
such financing  will be sufficient and will be used to repay the  Obligations in
full,  (ii)  granting  any Lien  (other  than  Permitted  Liens  or other  Liens
expressly  permitted in the Final Order) upon or affecting any Collateral  which
are pari  passu or  senior to the Liens on the  Collateral  in favor of  Lender,
(iii)  granting  any claim  priority  senior to or pari passu with the claims of
Lender under the Loan  Documents or any other claim having  priority over any or
all  administrative  expenses of the kind specified in Section 503(b) or Section
507(b) of the  Bankruptcy  Code,  and (iv)  granting  any other  relief  that is
adverse to Lender's interests under any Loan Document or its rights and remedies
hereunder or their interest in the Collateral.

     15.2  Remedies.  From and after entry of the Final  Order,  if any Event of
Default shall have occurred and be continuing  Lender may,  notwithstanding  the
provisions  of Section 362 of the  Bankruptcy  Code,  without  any  application,
motion or notice to or order from, the Bankruptcy  Court,  without prior notice,
take any one or more of the following actions: (a) declare all or any portion of
the Obligations to be forthwith due and payable whereupon such Obligations shall
become and be due and  payable;  and/or  (b)  exercise  any rights and  remedies
provided to Lender under the Loan  Documents or at law or equity,  including all
remedies  provided under the Bankruptcy Code; and,  pursuant to the Final Order,
the automatic stay of Section 362 of the  Bankruptcy  Code shall be modified and
vacated to permit Lender to exercise its remedies  under this  Agreement and the
Loan  Documents,  without  further  application or motion to, or order from, the
Bankruptcy Court; provided,  however,  notwithstanding  anything to the contrary
contained herein, Lender shall be permitted to exercise any remedy in the nature
of a  liquidation  of, or  foreclosure  on,  any  interest  of  Borrower  in the
Collateral  only upon five  Business  Days' prior  written  notice to  Borrower,
counsel for Borrower,  the United  States  Trustee for the District of Colorado,
and any counsel retained and approved by the Bankruptcy Court for the Committee,
if any. Upon the occurrence of an Event of Default and the exercise by Lender of
its  rights and  remedies  under this  Agreement  and the other Loan  Documents,
Borrower  shall assist Lender to the extent  practicable  in effecting a sale or
other  disposition of the Collateral upon such terms as are designed to maximize
the proceeds obtainable from such sale or other disposition.

     15.3  Waivers  by  Borrower.  Except  as  otherwise  provided  for in  this
Agreement and applicable Law to the fullest extent  permitted by applicable Law,
Borrower waives (a)  presentment,  demand and protest and notice of presentment,
dishonor,  notice of  intent to  accelerate,  notice of  acceleration,  protest,

                                       38
<PAGE>

default,  nonpayment,  maturity, release, compromise,  settlement,  extension or
renewal  of  any or all  Loan  Documents,  notes,  commercial  paper,  accounts,
contract  rights,  documents,  instruments,  chattel paper and guaranties at any
time held by Lender on which  Borrower  may in any way be liable,  and  Borrower
hereby  ratifies and  confirms  whatever  Lender may do in this regard,  (b) all
rights to notice and a hearing  prior to Lender's  taking  possession or control
of, or to Lender's replevy,  attachment or levy upon, the Collateral or any bond
or security  which  might be  required by any court prior to allowing  Lender to
exercise any of its remedies, and (c) the benefit of any right of redemption and
all valuation,  appraisal and exemption laws. Borrower  acknowledges that it has
been advised by counsel of its choices with respect to this Agreement, the other
Loan Documents and the transactions contemplated by this Agreement and the other
Loan Documents, and makes the foregoing waivers knowingly and voluntarily.

Section 16.       Successors and Assigns.

     16.1  Successors  and Assigns.  This Agreement and the other Loan Documents
shall be binding on and shall  inure to the  benefit of  Borrower,  Lender,  and
their respective  successors and permitted assigns,  including,  with respect to
Borrower,  its estate, any trustee or  successor-in-interest  of Borrower in its
Bankruptcy  Case  or  any  subsequent  case  commenced  under  Chapter  7 of the
Bankruptcy Code,  except as otherwise  provided herein or therein.  Borrower may
not assign,  delegate,  transfer,  hypothecate  or otherwise  convey its rights,
benefits,  obligations  or duties  hereunder or under any of the Loan  Documents
without  the  prior  express  written  consent  of  Lender.  Any such  purported
assignment, transfer, hypothecation or other conveyance by Borrower without such
prior express  written  consent shall be void.  The terms and provisions of this
Agreement  and the other Loan  Documents  are for the  purpose of  defining  the
relative  rights and  obligations  of Borrower  and Lender  with  respect to the
transactions contemplated hereby and there shall be no third party beneficiaries
of any of the terms and  provisions  of this  Agreement or any of the other Loan
Documents.

Section 17.       Miscellaneous.

     17.1  Amendments;  Severability.  Neither this Agreement nor any other Loan
Document nor any terms hereof or thereof may be changed,  waived,  discharged or
terminated  unless such change,  waiver,  discharge or termination is in writing
and signed by Lender and approved by the Bankruptcy  Court, if required.  If any
provision  of  this  Agreement  or  the  application  thereof  to any  Party  or
circumstances shall for any reason be held invalid, illegal, or unenforceable in
any respect, such invalidity,  illegality,  or unenforceability shall not affect
any other  provisions of this Agreement and this Agreement shall be construed as
if such invalid, illegal, or unenforceable provision had never been part of this
Agreement.  Furthermore, in lieu of each such illegal, invalid, or unenforceable
provision,  there  shall  be added  automatically  as part of this  Agreement  a
provision  as  similar  in  terms to such  illegal,  invalid,  or  unenforceable
provision as may be possible and be legal, valid, and enforceable.

     17.2 Notices.  Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication  shall or may be given to or served  upon either of the parties by
the other party, or whenever either of the parties desires to give or serve upon
the other party any  communication  with  respect to this  Agreement,  each such
notice, demand, request, consent,  approval,  declaration or other communication
shall be in writing and shall be deemed to have been  validly  served,  given or
delivered (a) upon the earlier of actual receipt and three days after deposit in
the United States Mail,  registered or certified mail, return receipt requested,
with proper  postage  prepaid,  (b) upon  transmission,  when sent by  facsimile
transmission  or  electronic  mail,  (c) one Business  Day after  deposit with a
reputable  overnight courier with all charges prepaid or (d) when delivered,  if
hand-delivered by messenger,  all of which shall be addressed to the party to be
notified and sent to the address or facsimile  number indicated below or to such
other address (or  facsimile  number) as may be  substituted  by notice given as
herein  provided.  The giving of any notice required  hereunder may be waived in

                                       39
<PAGE>

writing  by the party  entitled  to  receive  such  notice.  Failure or delay in
delivering copies of any notice, demand, request, consent, approval, declaration
or other  communication to any Person (other than Borrower or Lender) designated
below to receive copies shall in no way adversely  affect the  effectiveness  of
such  notice,  demand,  request,   consent,   approval,   declaration  or  other
communication.

                        If to Lender, at:  Linc Energy Petroleum (Wyoming), Inc.
                                           c/o Linc Energy Operations, Inc.
                                           1200 17th Street, Suite 2100
                                           Denver, Colorado 80202
                                           Attention: Don Schofield
                                           Facsimile: (303) 623-0547
                                           Telephone:  (303) 623-0510

                        And:               Linc Energy Petroleum (Wyoming), Inc.
                                           c/o Linc Energy Operations, Inc.
                                           1200 17th Street, Suite 2100
                                           Denver, Colorado 80202
                                           Attention: Gerry Agronoff
                                           Facsimile: (303) 623-0547
                                           Telephone: (303) 623-0510

                        With copies to:    Ballard Spahr LLP
                                           1225 17th Street, Suite 2300
                                           Denver, Colorado 80202
                                           Attention: Carl A. Eklund, Esq.
                                           Facsimile: (303) 296-3956
                                           Telephone: (303) 292-2400

                        and                Ballard Spahr LLP
                                           1225 17th Street, Suite 2300
                                           Denver, Colorado 80202
                                           Attn: Michele J. Rowland, Esq.
                                           Facsimile: (303) 296-3956
                                           Telephone: (303) 292-2400

                      If to Borrower, at:  Rancher Energy Corporation
                                           999 18th St., Suite 3400
                                           Denver, CO 80202
                                           Attention: Jon C. Nicolaysen
                                           Facsimile: (720) 904-5698
                                           Telephone: (303) 629-1122

                        With a copy to:    Onsager, Staelin & Guyerson LLC
                                           1873 S. Bellaire St., Suite 1401
                                           Denver, Colorado 80222
                                           Attention: Christian C. Onsager, Esq.
                                           Facsimile: (303) 512-1129
                                           Telephone: (303) 512-1123

                                       40
<PAGE>

                        And:               Overton & Associates, LLC
                                           6950 E. Belleview Ave., Suite 202
                                           Greenwood Village, Colorado 80111
                                           Attention: Mark Overton, Esq.
                                           Facsimile: (303) 779-6006
                                           Telephone: (303) 779-5900

     17.3 No Waiver.  No failure on the part of Lender, at any time or times, to
require  strict  performance  by Borrower of any provision of this Agreement and
any of the other Loan  Documents  shall  waive,  affect or diminish any right of
Lender  thereafter to demand strict  compliance and performance  therewith.  Any
suspension or waiver of an Event of Default  shall not suspend,  waive or affect
any other Event of Default  whether the same is prior or subsequent  thereto and
whether  of  the  same  or  of a  different  type.  None  of  the  undertakings,
agreements,  warranties,  covenants and representations of Borrower contained in
this  Agreement  or any of the other Loan  Documents  and no Event of Default by
Borrower  shall be deemed to have been suspended or waived by Lender unless such
waiver or suspension  is by an instrument in writing  signed by an officer of or
other authorized employee of Lender.

     17.4  Assignment.  This  Agreement  shall be binding  upon and inure to the
benefit and burden of the  Parties,  their  successors  and  assigns.  Except as
otherwise  provided  herein  this  Agreement  may not be  assigned  by any Party
without the express  written  consent of the other Party,  which  consent may be
withheld in the sole  discretion of the Party  granting such consent;  provided,
however,  that Lender may assign its rights and obligations under this Agreement
to any of its Affiliates without the need for any such consent.

     17.5  Headings.  The  section  and  paragraph  headings  contained  in this
Agreement  are for  reference  purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

     17.6 Counterparts and Facsimiles.  This Agreement may be executed in one or
more  counterparts,  each of which shall be deemed an original  but all of which
together shall constitute one and the same  instrument.  The Parties may execute
the Loan  Documents by facsimile or electronic pdf  signature,  which  signature
shall be deemed an original signature;  provided,  however, that at the Closing,
the Parties shall deliver original signatures to all Loan Documents that require
original  signatures in order to be valid or  enforceable  or to record with any
Governmental  Authority,  in the opinion of Lender's counsel,  including but not
limited to promissory notes.

     17.7 Entire Agreement.  This Agreement and the other Loan Documents and the
Purchase  Agreements  and other  Sale  Documents  (as  defined  in the  Purchase
Agreement),  together  with the  schedules,  exhibits and other  documents to be
delivered  pursuant hereto and thereto,  constitute the entire agreement between
the Parties,  and there are no agreements,  representations  or warranties which
are not set forth herein. All prior negotiations,  agreements and understandings
are superseded hereby.

     17.8 Remedies. The rights and remedies of Lender under this Agreement shall
be cumulative and nonexclusive of any other rights and remedies which Lender may
have under any other  agreement,  including the Loan Documents,  by operation of
law or otherwise. Recourse to the Collateral shall not be required.

     17.9 Conflict of Terms.  Except as otherwise  provided in this Agreement or
any  of the  other  Loan  Documents  by  specific  reference  to the  applicable
provisions of this Agreement, if any provision contained in this Agreement is in
conflict  with,  or  inconsistent  with,  any provision in any of the other Loan
Documents, the provisions contained in this Agreement shall govern and control.

                                       41
<PAGE>

     17.10 Right of Setoff.  Upon the occurrence  and during the  continuance of
any Event of Default, Lender is hereby authorized,  at any time and from time to
time,  to the fullest  extent  permitted by law, to setoff and apply any and all
deposits (general or special, time or demand,  provisional or final) at any time
held and other  indebtedness at any time owing by Lender to or for the credit or
the account of Borrower  against any and all of the Obligations now or hereafter
existing  irrespective of whether or not Lender shall have made any demand under
this Agreement or any other Loan Document and although such  Obligations  may be
unmatured.   Lender  agrees  to  notify  Borrower  after  any  such  setoff  and
application  made by Lender;  provided,  however,  that the failure to give such
notice shall not affect the validity of such setoff and application.  The rights
of Lender  under this  Section  17.10 are in  addition  to the other  rights and
remedies (including other rights of setoff) which Lender may have.

     17.11  Schedules.  From  time to time  during  the term of this  Agreement,
Borrower  shall  promptly  supplement  the Schedules  hereto with respect to any
matter  hereafter  arising or any information  obtained after the date hereof of
which,  if  existing,  occurring  or  known  at or  prior  to the  date  of this
Agreement,  would  have  been  required  to be set  forth  or  described  in the
Schedules,  or which is necessary to complete or correct any information in such
schedule  or in any  representation  and  warranty  of  Borrower  which has been
rendered inaccurate thereby. For purposes of determining the satisfaction of the
conditions set forth in Section 10.2 or Section  15.1.6,  no such  supplement or
amendment shall be considered.

     17.12 Authorized  Signature.  Until Lender shall be notified by Borrower to
the contrary,  the signature upon any document or instrument  delivered pursuant
hereto  and  reasonably  believed  by  Lender  or any of  Lender's  officers  or
employees to be that of an officer or duly authorized representative of Borrower
listed in  Schedule  17.12  shall bind  Borrower  and be deemed to be the act of
Borrower  affixed pursuant to and in accordance with resolutions duly adopted by
Borrower's  Board of  Directors,  and  Lender  shall be  entitled  to assume the
authority of each signature and authority of the Person whose signature it is or
reasonably appears to be.

     17.13 Time of the  Essence.  Time is of the essence of this  Agreement  and
each of the other Loan Documents.

     17.14 GOVERNING LAW. EXCEPT AS OTHERWISE  EXPRESSLY  PROVIDED IN ANY OF THE
LOAN DOCUMENTS, IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY
AND PERFORMANCE,  THIS AGREEMENT AND THE OBLIGATIONS  ARISING HEREUNDER SHALL BE
GOVERNED BY, AND  CONSTRUED  AND ENFORCED IN  ACCORDANCE  WITH,  THE LAWS OF THE
STATE OF COLORADO, APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, AND
ANY APPLICABLE  LAWS.  BORROWER  HEREBY  CONSENTS AND AGREES THAT THE BANKRUPTCY
COURT HAS  EXCLUSIVE  JURISDICTION  TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES
PERTAINING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY MATTER
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS,
PROVIDED,  HOWEVER,  THAT LENDER AND BORROWER  ACKNOWLEDGE THAT ANY APPEALS FROM
THE  BANKRUPTCY  COURT MAY HAVE TO BE HEARD BY A COURT OTHER THAN THE BANKRUPTCY
COURT AND, PROVIDED,  FURTHER, THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR
OPERATE TO PRECLUDE  LENDER FROM  BRINGING  SUIT OR TAKING OTHER LEGAL ACTION IN
ANY OTHER JURISDICTION TO COLLECT THE OBLIGATIONS,  TO REALIZE ON THE COLLATERAL
OR ANY OTHER  SECURITY  FOR THE  OBLIGATIONS,  OR TO ENFORCE A JUDGMENT OR OTHER

                                       42
<PAGE>

COURT  ORDER IN FAVOR OF LENDER.  BORROWER  EXPRESSLY  SUBMITS  AND  CONSENTS IN
ADVANCE TO SUCH  JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND BORROWER HEREBY WAIVES ANY OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK
OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS.

     17.15 WAIVER OF JURY TRIAL.  BECAUSE  DISPUTES  ARISING IN CONNECTION  WITH
COMPLEX FINANCIAL  TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN
EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE  STATE AND FEDERAL
LAWS TO APPLY (RATHER THAN  ARBITRATION  RULES),  THE PARTIES  DESIRE THAT THEIR
DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH  APPLICABLE  LAWS.  THEREFORE,  TO
ACHIEVE  THE BEST  COMBINATION  OF THE  BENEFITS OF THE  JUDICIAL  SYSTEM AND OF
ARBITRATION,  THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE,  WHETHER IN CONTRACT,  TORT,
OR OTHERWISE ARISING OUT OF, CONNECTED WITH,  RELATED TO, OR INCIDENTAL TO, THIS
AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS OR THE  TRANSACTIONS  CONTEMPLATED
HEREBY OR THEREBY.

     17.16 Publicity.  Borrower will not, and will not permit its Affiliates, if
any, to,  disclose the name of Lender or any of its  Affiliates or refer to this
Agreement  or the other Loan  Documents  in any press  release  or other  public
disclosure or in any  prospectus,  proxy statement or other materials filed with
any  Governmental  Authority  without  Lender's  prior  written  consent  unless
Borrower or any of its Affiliates is required to do so under applicable Law, and
then, in any event, Borrower or such Affiliate will consult with Lender prior to
such disclosure.  Borrower  consents to Lender publishing a tombstone or similar
advertising material relating to the financing transaction  contemplated by this
Agreement.  Lender  consents to  Borrower's  orally  disclosing  to its vendors,
landlords and prospective  landlords,  and other third parties, who need to know
in the reasonable  judgment of Borrower,  only the name of Lender, the amount of
Term Loan  (including  loan  balances  and any  other  information  required  to
terminate or replace the Term Loan), and the Maturity Date. Nothing herein shall
restrict  Lender's  ability  to  disclose  this  Agreement  and the  other  Loan
Documents, and the transactions described herein and therein, to any Person.

     17.17  Parties  Including  Trustees;  Bankruptcy  Court  Proceedings.  This
Agreement,  the other Loan  Documents,  and all Liens created hereby or pursuant
hereto or to any other Loan Document shall be binding upon Borrower,  the estate
of  Borrower,  and any  trustee or  successor  in  interest  of  Borrower in the
Bankruptcy  Case  or  any  subsequent  case  commenced  under  Chapter  7 of the
Bankruptcy Code, and shall not be subject to Section 365 of the Bankruptcy Code.
This Agreement and the other Loan Documents  shall be binding upon, and inure to
the benefit of, the successors of Lender and its transferees and endorsees.  The
Liens created by this Agreement and the other Loan Documents shall be and remain
valid and perfected in the event of the conversion of the Bankruptcy Case or any
other  bankruptcy  case of Borrower to a case under Chapter 7 of the  Bankruptcy
Code or in the event of dismissal of the  Bankruptcy  Case or the release of any
Collateral from the jurisdiction of the Bankruptcy Court for any reason, without
the necessity  that Lender file  financing  statements or otherwise  perfect its
security interests or Liens under applicable Law.

            [The remainder of this page is left blank intentionally.]

                                       43
<PAGE>

     IN WITNESS  WHEREOF,  this  Agreement has been duly executed as of the date
first written above.

                               Borrower:

                                             RANCHER ENERGY CORPORATION,
                                             a Nevada corporation

                                        By:
                                            ----------------------------------
                                            Name:
                                            Title:

                                Lender:

                                             LINC ENERGY PETROLEUM (WYOMING),
                                             INC., a Delaware corporation

                                        By:
                                            ------------------------------------
                                            Name:
                                            Title:

      SIGNATURE PAGE TO AMENDED AND RESTATED SENIOR SECURED, SUPER-PRIORITY
                      DEBTOR-IN-POSSESSION CREDIT AGREEMENT

<PAGE>

                                   ANNEX A to
                                CREDIT AGREEMENT

                        FINANCIAL STATEMENTS AND NOTICES

     1. Financials.

             (a) By no later the 20th day after the end  of  each  fiscal month,
internally  prepared  balance sheet and income statement as of the close of such
fiscal month and that portion of the current  Fiscal Year ending as of the close
of such fiscal month, in each case which financial and other  information  shall
provide  comparisons to the prior year's  equivalent  period,  on a year-to-date
basis;

             (b) By no later than the 90th day after each Fiscal  Year,  audited
annual financial statements, including a balance sheet, the related statement of
profit  and loss and  stockholders'  equity  and a  statement  of cash  flow for
Borrower and its subsidiaries; and

             (c) Together with each of the financial  statements  delivered pur-
suant to clauses (a) and (b) above,  a  certification  of Borrower that all such
financial  statements  are complete and correct and present fairly the financial
position,  the  results of  operations  of Borrower as at the end of such fiscal
month or Fiscal  Year,  and for the period then  ended,  that all rent and other
obligations  of Borrower  with respect to their  Leases were paid in  accordance
with the terms thereof  (without  giving effect to any grace  periods) as at the
end of such fiscal month or Fiscal Year and setting forth the  aggregate  amount
so paid or specifying  those instances when rent or such other  obligations were
not so paid together with a detailed  explanation of the reasons for the failure
of Borrower to make such payments and the aggregate  amount of such payments not
made,  and that there was no Event of Default  in  existence  as of such time or
specifying those Event of Defaults of which he or she was aware.

     2. Management  Letters.  Within five Business Days after receipt thereof by
Borrower, copies of all management letters, exception reports or similar letters
or  reports   received  by  Borrower  from  its  independent   certified  public
accountants.

     3. Bankruptcy Matters. Copies of all monthly reports,  projections or other
information  respecting  Borrower's business or financial condition or prospects
as well as all pleadings,  motions,  applications and judicial information filed
by or on behalf of Borrower with the  Bankruptcy  Court or provided by or to the
U.S.  Trustee  (or any monitor or interim  receiver,  if any,  appointed  in the
Bankruptcy  Case) or the Committee,  at the time such document is filed with the
Bankruptcy  Court,  or  provided  by or, to the U.S.  Trustee (or any monitor or
interim receiver, if any, appointed in any Bankruptcy Case) or the Committee.

     4. Notice of Event of  Default.  As soon as  practicable,  but in any event
within five Business Days after  Borrower  becomes aware of the existence of any
Event of Default, or any development or other information that,  individually or
in the aggregate,  could  reasonably be expected to have or result in a Material
Adverse Effect, including without limitation any notice received from any holder
of Subordinated  Debt concerning a default  thereunder,  telephonic or facsimile
notice  specifying  the  nature  of such  Event of  Default  or  development  or
information,  including the anticipated  effect  thereof,  which notice shall be
promptly confirmed in writing within four Business Days.

     5. Tax Returns. Upon Lender's request,  copies of all federal, state, local
and foreign tax returns,  information  returns and reports in respect of income,
franchise or other taxes on or measured by income  (excluding sales, use or like
taxes) filed by Borrower.

                                   Annex A-1

<PAGE>

     6. SEC  Documents.  Promptly upon their becoming  available,  copies of any
final registration statements and the regular,  periodic and special reports, if
any, which Borrower shall have filed with the Securities and Exchange Commission
(or any Governmental  Authority substituted therefor) or any national securities
exchange.

     7.  Documents to  Stockholders.  Promptly  upon the mailing  thereof to the
stockholders of Borrower generally, copies of all financial statements,  reports
and proxy statements so mailed.

     8. Lease  Documents.  Promptly upon entering  into,  renewing,  amending or
modifying  any  Lease,  a  copy  of  such  Lease,  amendment  or  other  related
documentation.

     9. ERISA  Documents.  As soon as possible,  and in any event within 10 days
after  Borrower  knows  or has  reason  to  believe  that any of the  events  or
conditions  specified below with respect to any Plan or  Multiemployer  Plan has
occurred  or  exists,  a  statement  signed by the Chief  Financial  Officer  of
Borrower  setting  forth  details  respecting  such event or  condition  and the
action,  it any,  that  Borrower  or any ERISA  Affiliate  proposes to take with
respect thereto (and a copy of any report or notice required to be filed with or
given to PBGC by Borrower or any ERISA  Affiliate  with respect to such event or
condition):

             (a) any Reportable Event with  respect to  a Plan occurs (provided,
however,  that a failure to meet the minimum funding  standard of Section 412 of
the IRC or Section 302 of ERISA shall be a reportable  event  regardless  of the
issuance of any waivers in accordance with Section 412(d) of the IRC);

             (b) the filing under Section 4041 of ERISA of a notice of intent to
terminate any Plan or the termination of any Plan;

             (c) the institution by PBGC  of proceedings  under  Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan,  or the  receipt by  Borrower  or any ERISA  Affiliate  of a notice from a
Multiemployer  Plan that such action has been taken by PBGC with respect to such
Multiemployer Plan;

             (d) the complete  or partial  withdrawal  by Borrower or  any ERISA
Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer  Plan, or the
receipt by Borrower or any ERISA Affiliate of notice from a  Multiemployer  Plan
that it is in reorganization  or insolvency  pursuant to Section 4241 or 4245 of
ERISA or that it intends to terminate or has  terminated  under Section 4041A of
ERISA; and

             (e) the  institution of a proceeding  by a fiduciary of any  Multi-
employer Plan against  Borrower or any ERISA Affiliate to enforce Section 515 of
ERISA, which proceeding is not dismissed within 30 days.

     10.  Other  Reports.  Such other  reports and  information  respecting  the
business, financial condition or prospects of Borrower, as Lender may, from time
to time, reasonably request.  Simultaneously with the transmission thereof, each
daily and weekly report  reviewed by management  relating to the performance and
operations  of  Borrower's  business,  including  with  respect to  activations,
deactivations and shipments.

                                    * * * * *

                                   Annex A-2

<PAGE>

                                   ANNEX B to
                                CREDIT AGREEMENT

Lender's Wire and Bank Account Information:

Linc Energy Petroleum (Wyoming), Inc.
Account #8453631635
ABA 121000248
Wells Fargo Bank N.A.
7375 W 52nd Ave
Arvada, CO  80002

<PAGE>

                                  EXHIBIT A to
                                CREDIT AGREEMENT

                                 TERM LOAN NOTE

$[________________]                                 Dated: [_____________], 2011
                                                                Denver, Colorado

                  FOR VALUE RECEIVED, RANCHER ENERGY CORP., a Nevada corporation
("Borrower"),  unconditionally  promises  to pay to the  order  of  LINC  ENERGY
PETROLEUM (WYOMING),  INC., a Delaware corporation ("Lender"),  on or before the
Maturity Date, the principal  amount of  $[_____________]  or so much thereof as
may then be outstanding  under this Term Loan Note,  together with interest,  in
accordance with the Agreement (as defined below).

                  This Term Loan Note has been executed and delivered under; and
is subject to the terms of, that certain  Amended and Restated  Senior  Secured,
Super-Priority  Debtor-In-Possession  Credit Agreement,  dated as of January 14,
2011,  between Lender and Borrower (as amended,  restated or  supplemented  from
time to time,  the  "Agreement"),  and is a "Term Loan Note"  referred to in the
Agreement.  Unless  defined  in this Term Loan  Note,  or the  context  requires
otherwise, capitalized terms used in this Term Loan Note have the meanings given
them in the Agreement.

                  Reference is made to the  Agreement for  provisions  affecting
this Term Loan Note regarding applicable interest rates,  principal and interest
payment dates, final maturity, voluntary and mandatory prepayments, acceleration
of maturity,  exercise of rights,  payment of attorneys'  fees,  court costs and
other  costs of  collection,  certain  waivers  by  Borrower  and  others now or
hereafter  obligated for payment of any sums due under this Term Loan Note,  and
security  for the  payment  of this  Term  Loan  Note.  This Term Loan Note is a
Collateral Document, as defined in the Agreement.

                  This Term Loan Note is secured by the Security  Agreement  and
the Loan  Documents,  as  defined in the  Agreement,  including  those  executed
simultaneously  with the execution of the Agreement,  those executed  heretofore
and  those  hereafter  executed.  Borrower  and  all  sureties,   endorsers  and
guarantors of this Term Loan Note waive demand,  presentment for payment, notice
of  nonpayment,  protest,  notice of  protest,  notice  of intent to  accelerate
maturity,  notice of acceleration of maturity, and all other notices,  filing of
suit and  diligence in  collecting  this Term Loan Note or enforcing  any of the
security  therefore,  and agree to any substitution,  exchange or release of any
such security or the release of any party primarily or secondarily liable hereon
and further agrees that it will not be necessary for Lender, in order to enforce
payment of this Term Loan Note by them, to first  institute  suit or exhaust its
remedies  against any  Borrower or others  liable  hereunder,  or to enforce its
rights against any security herefor, and consent to anyone or more extensions or
postponements  of time of  payment  of this  Term  Loan Note on any terms or any
other  indulgences  with respect hereto,  without notice thereof to any of them.
Lender  may  transfer  this Term Loan Note in  accordance  with the terms of the
Agreement,  and the rights and  privileges  of Lender  under this Term Loan Note
shall inure to the benefit of Lender's representatives, successors or assigns.

                  The  obligations  of Borrower under this Term Loan Note are to
be  performed in the State of Colorado and this Term Loan Note shall be governed
by and construed in accordance  with the laws of the State of Colorado,  without
giving effect to its principles of conflicts of laws.

            [The remainder of this page is left blank intentionally.]

<PAGE>

                  IN WITNESS  WHEREOF,  this Agreement has been duly executed as
of the date first written above.

                                    Borrower:

                                    RANCHER ENERGY CORPORATION, a
                                    Nevada corporation

                                    By:
                                        ----------------------------------------
                                        Name:
                                        Title:

                        SIGNATURE PAGE TO TERM LOAN NOTE

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