Document:

EX-4.2

 

EXHIBIT
4.2

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of this
31st day of March, 2008 by and between AirNet Systems, Inc., an Ohio corporation
(together with any successor thereto, the “Company”), and AirNet Holdings, Inc., a Delaware
corporation (the “Stockholder”).

     WHEREAS, concurrently with the execution and delivery of this Agreement, the Company and the
Stockholder are entering into a Subscription Agreement pursuant to which the Stockholder is
purchasing from the Company, and the Company is issuing and selling to the Stockholder, Common
Shares of the Company;

     WHEREAS, concurrently with the execution and delivery of this Agreement, the Company, the
Stockholder and AirNet Acquisition, Inc., an Ohio corporation and a wholly owned subsidiary of the
Stockholder (“Merger Sub”), are entering into an Agreement and Plan of Merger (the
“Merger Agreement”) pursuant to which, among other things, Merger Sub will be merged with
and into the Company, with the Company being the surviving corporation, all upon the terms and
subject to the conditions set forth in the Merger Agreement; and

     WHEREAS, the Stockholder and the Company desire to set forth the circumstances under which the
Company shall register and maintain the effectiveness with the Commission of a registration
statement or statements for the public resale of the Registrable Securities.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:

     1. Certain Definitions. As used in this Agreement, the following terms shall have the
respective meanings set forth below:

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

          “Commission” means the United States Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act and the Exchange Act.

          “Common Shares” means the Company’s common shares, par value $0.01 per share.

          “Company” has the meaning set forth in the introduction to this Agreement.

          “Controlling Person” has the meaning set forth in Section 5(a) of this
Agreement.

          “Demand Registration” has the meaning set forth in Section 3(a) of this
Agreement.

          “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any similar successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

          “Holders” has the meaning set forth in Section 2 of this Agreement.

          “Inspector” has the meaning set forth in Section 4(h) of this Agreement.

 

 

          “Merger Agreement” has the meaning set forth in the recitals of this Agreement.

          “Merger Sub” has the meaning set forth in the recitals of this Agreement.

          “Person” means any individual, corporation, association, partnership, limited
liability company, joint venture, estate, trust, or unincorporated organization or any government
and any agency or political subdivision thereof.

          “Registrable Securities” means (i) any Common Shares held by the Stockholder, (ii) any
other Common Shares acquired by the Stockholder and (iii) any other securities issued or issuable
with respect to any such shares described in clauses (i) and (ii) above by way of a stock dividend
or stock split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization (it being understood that for purposes of this Agreement, a
Person will be deemed to be a holder of Registrable Securities whenever such Person has the right
to then acquire or obtain from the Company any Registrable Securities, whether or not such
acquisition has actually been effected).

          “Securities Act” shall mean the Securities Act of 1933, as amended from time to time,
or any similar successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

          “Selling Holder” has the meaning set forth in Section 5(a) of this Agreement.

          “Stockholder” has the meaning set forth in the introduction of this Agreement.

     2. Piggyback Registrations. If at any time or times after the date hereof the Company
shall seek to file a registration statement under the Securities Act with respect to an offering of
Common Shares to the public for its own account or for the account of others (except with respect
to registration statements on Form S-4 or Form S-8 or another form not available for registering
the Registrable Securities for sale to the public), the Company will promptly give written notice
thereof to all holders of Registrable Securities (the “Holders”). If within twenty (20)
days after their receipt of such notice, one or more Holders request the inclusion of some or all
of the Registrable Securities held by them in such registration statement, the Company will use its
commercially reasonable best efforts to include such securities in such registration statement. In
the case of any underwritten public offering, if the managing underwriter determines in good faith
that market conditions require a limitation on the number of Registrable Securities to be offered
under such registration statement, subject to the following sentence, the Company shall not be
required to include in such registration statement Registrable Securities of the Holders in excess
of the amount, if any, of Common Shares which the managing underwriter of such underwritten
offering shall reasonably and in good faith agree to include in such offering in addition to any
amount to be registered for the account of the Company. If any limitation of the number of shares
of Registrable Securities to be registered by the Holders is required pursuant to this Section
2, the number of such securities to be excluded from such registration statement shall be
determined in the following sequence: (i) first, securities held by any Persons not having any
contractual, incidental “piggyback” registration rights to include such securities in the
registration statement, (ii) second, securities held by any Persons (other than the Holders) having
contractual, incidental “piggyback” rights to include such securities in the registration statement
pursuant to an agreement which is not this Agreement and (iii) third, Registrable Securities to be
registered by the Holders as determined on a pro rata basis (based upon the relative number of
Registrable Securities held by such Holders requesting inclusion pursuant to
this Section 2).

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     3. Required Registrations.

          (a) Demand Registration. At any time after the termination of the Merger Agreement,
the holders of a majority of the then outstanding Registrable Securities may request that the
Company register under the Securities Act, on Form S-1 or Form S-3 (if the Company is then
eligible to use such form), all or a portion of the Registrable Securities held by such
requesting holders (a “Demand Registration”). Such request shall be in writing and shall
state the number of shares of Registrable Securities to be disposed of, the intended method of
disposition of such shares by such requesting Holders and whether such disposition shall be by
means of an underwritten public offering. The Holders shall only be entitled to request one (1)
Demand Registration pursuant to this Section 3(a). Notwithstanding anything to the
contrary contained herein, a registration will not count as a Demand Registration under this
Section 3(a) until the registration statement relating to all such Registrable Securities
requested to be so registered has been declared effective by the Commission at the request of the
requesting Holders and, if such method of disposition is a firm commitment underwritten public
offering, all of such shares shall have been sold pursuant thereto. In addition, a registration
will not count as a Demand Registration if, after it has become effective, the offering of
Registrable Securities is interfered with by a stop order, injunction or other order of the
Commission or other governmental agency or court.

          (b) Registration Requirements. Following receipt of a request for registration
pursuant to Section 3(a), the Company will promptly notify all of the other Holders of
such request and such Holders shall then have twenty (20) days to notify the Company of their
desire to participate in the registration. Thereupon, the Company will use its commercially
reasonable best efforts to cause such of the Registrable Securities as may be requested by the
Holders to be registered under the Securities Act in accordance with the terms of this
Section 3. If the request for registration contemplates an underwritten public offering,
the Company shall state such in the written notice and in such event the right of any Person to
participate in such registration shall be conditioned upon their participation in such
underwritten public offering and the inclusion of their securities in the underwritten public
offering to the extent provided herein.

          (c) Underwritten Offering. If a requested registration pursuant to Section
3(a) involves an underwritten public offering and the managing underwriter of such offering
determines in good faith that the number of securities sought to be offered should be limited due
to market conditions, then the number of securities to be included in such underwritten public
offering shall be reduced to a number deemed satisfactory by such managing underwriter;
provided that the shares to be excluded shall be determined in the following sequence:
(i) first, securities held by any Persons not having any contractual, incidental “piggyback”
registration rights to include such securities in the registration statement, (ii) second,
securities held by any Persons (other than the Holders) having contractual, incidental
“piggyback” rights to include such securities in the registration statement pursuant to an
agreement which is not this Agreement, (iii) third, securities to be registered by the Company
for its own account and (iv) fourth, Registrable Securities sought to be included by the Holders.
If there is a reduction of the number of Registrable Securities pursuant to clause (iv), such
reduction shall be made on a pro rata basis (based upon the relative number of Registrable
Securities held by the Holders requesting inclusion in such registration statement). With
respect to a request for registration pursuant to this Section 3 which is for an
underwritten public offering, the managing underwriter shall be chosen by a

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majority-in-interest of the Holders requesting such registration, subject to the approval of
the Company, which approval will not be unreasonably withheld. If the managing underwriter has
not limited the number of Registrable Securities or other securities to be underwritten, the
Company may include securities for its own account in such registration if the managing
underwriter so agrees and if the number of Registrable Securities which would otherwise have been
included in such registration and underwriting will not thereby be limited. If requested in good
faith by the managing underwriter, the Holders agree not to offer, sell, pledge, transfer or
otherwise dispose of any Common Shares not registered under the Securities Act for a period not
to exceed ninety (90) days following the effective date of the registration statement filed by
the Company.

          (d) Postponement. The Company may postpone the filing of any registration statement
required hereunder for a reasonable period of time, not to exceed ninety (90) days in the
aggregate during any twelve-month period, if the Company’s Board of Directors determines
reasonably and in good faith it would be seriously detrimental to the Company and its
stockholders for such registration to be effected at such time. The Company shall not be
required to cause a registration statement requested pursuant to this Section 3 to become
effective prior to ninety (90) days following the effective date of a registration statement on
Form S-1 or Form S-3 initiated by the Company, if the request for registration has been received
by the Company subsequent to the giving of written notice by the Company, made in good faith, to
Holders entitled to request demand registrations under this Section 3 that the Company is
commencing to prepare a Company-initiated registration statement (other than a registration
effected solely to implement an employee benefit plan or a transaction to which Rule 145, or any
other similar rule under the Securities Act, is applicable); provided, however,
that the Company shall use its commercially reasonable best efforts to achieve such effectiveness
promptly following such period.

     4. Further Obligations of the Company. Whenever the Company is required hereunder to
register any Registrable Securities, it agrees that it shall also do the following:

          (a) Pay all reasonable fees and expenses incident to the performance of, or compliance with,
this Agreement by the Company whether or not a Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to a Registration
Statement. The fees and expenses referred to in the foregoing sentence shall include, without
limitation, the following: (i) all registration and filing fees including, without limitation,
fees and expenses with respect to (x) filings required to be made with the securities exchange or
quotation system on which similar securities issued by the Company are then listed or quoted; (y)
compliance with federal and state securities or Blue Sky laws; (ii) printing expenses; (iii)
messenger, telephone and delivery expenses; (iv) fees and disbursements of counsel for the
Company; and (v) fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In no event, however,
shall the Company be responsible for any fees and expenses of the counsel or any other advisor to
the Holders or for any underwriting discounts or commissions with respect to Registrable
Securities sold by the Holders;

          (b) Use its commercially reasonable best efforts to diligently prepare and file with the
Commission a registration statement and such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective until the Holder or Holders have completed the distribution
described in the registration statement relating thereto and to comply with the

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provisions of the Securities Act with respect to the sale of securities covered by such
registration statement for such period;

          (c) Furnish to each selling Holder and underwriter such copies of each preliminary and final
prospectus and such other documents as such Holder or underwriter may reasonably request to
facilitate the public offering of its Registrable Securities;

          (d) Enter into any reasonable underwriting agreement required by the proposed underwriter,
if any, in such form and containing such terms as are customary; provided,
however, that no Holder shall be required to make any representations or warranties other
than with respect to its title to the Registrable Securities and with respect to any written
information concerning the Holder provided by the Holder to the Company;

          (e) Use its commercially reasonable best efforts to register or qualify the securities
covered by such registration statement under the securities or “blue sky” laws of such
jurisdictions as any selling Holder may reasonably request; provided, that, the
Company shall not for any such purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;

          (f) Immediately notify each selling Holder, at any time when a prospectus relating to his,
her or its Registrable Securities is required to be delivered under the Securities Act, of the
happening of any event as a result of which such prospectus contains an untrue statement of a
material fact or omits any material fact necessary to make the statements therein not misleading,
and at the request of any such selling Holder, prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities,
such prospectus will not contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not misleading;

          (g) Cause all such Registrable Securities to be listed on each securities exchange or
quotation system on which similar securities issued by the Company are then listed or quoted (or
if similar securities issued by the Company are not yet listed or quoted, then on such exchange
or quotation system as the Company shall determine);

          (h) Make available to each selling Holder, any underwriter participating in any disposition
pursuant to a registration statement and any attorney, accountant or other agent or
representative retained by any such selling Holder or underwriter (collectively, the
“Inspectors”), all financial and other records, pertinent corporate documents and
properties of the Company, as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company’s officers, directors and employees to supply all
information requested by any such Inspector in connection with such registration statement;
provided, however, that such Inspector shall agree to hold in confidence and
trust all information so provided;

          (i) Otherwise use its commercially reasonable best efforts to comply with the securities
laws of the United States and other applicable jurisdictions and all applicable rules and
regulations of the Commission and comparable governmental agencies in other applicable
jurisdictions and make generally available to the Holders, in each case as soon as practicable,
but not later than forty-five (45) days after the close of the period covered thereby, an
earnings statement of the Company which will satisfy the provisions of Section 11(a) of the
Securities Act; and

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          (j) Otherwise reasonably cooperate with the underwriter or underwriters, the Commission and
other regulatory agencies and take all actions and execute and deliver or cause to be executed
and delivered all documents reasonably necessary to effect the registration of any Registrable
Securities hereunder.

     5. Indemnification; Contribution.

          (a) Incident to any registration of any Registrable Securities pursuant to this Agreement,
the Company will indemnify, reimburse and hold harmless to the fullest extent permitted by law,
each underwriter, each Holder who offers or sells any such Registrable Securities in connection
with such registration statement (including its partners (including partners of partners and
stockholders of any such partners), directors, officers, employees, representatives and agents of
any of them) (each, a “Selling Holder”), and each person who controls any of them within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
“Controlling Person”), from and against any and all losses, claims, damages, expenses and
liabilities, joint or several (including any investigative, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted, as the same are incurred), to which they, or any of them, may become
subject under the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based on (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement (including any related preliminary or definitive
prospectus, or any amendment or supplement to such registration statement or prospectus), (ii)
any omission or alleged omission to state in such document a material fact required to be stated
in it or necessary to make the statements in it not misleading, (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act or any state statutory law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or any state
statutory law, (iv) any failure to register or qualify the Registrable Securities in any state
where the Company or its agents has affirmatively undertaken or agreed in writing that the
Company (the undertaking of any underwriter chosen by the Company being attributed to the
Company) will undertake such registration or qualification on the Selling Holder’s behalf
(provided that in such instance the Company shall not be so liable if it has undertaken its
commercially reasonable best efforts to so register or qualify the Registrable Securities), or
(v) any blue sky application or other document executed by the Company specifically for the
purpose or based upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under the securities
laws thereof; provided, however, that the Company will not be liable to the
extent that such loss, claim, damage, expense or liability arises from and is based on an untrue
statement or omission of a material fact contained in such registration statement or alleged
untrue statement or omission made in reliance on and in conformity with information furnished in
writing to the Company by such underwriter, Selling Holder or Controlling Person expressly for
use in such registration statement. With respect to such untrue statement or omission or alleged
untrue statement or omission in the information furnished in writing to the Company by such
Selling Holder expressly for use in such registration statement, such Selling Holder will
indemnify and hold harmless each underwriter, the Company (including its directors, officers,
employees, representatives and agents), each other Holder (including its partners (including
partners of partners and stockholders of such partners), directors, officers, employees,
representatives and agents of any of them, and each Controlling Person of any of them), from and
against any and all losses, claims, damages, expenses and liabilities, joint or several, to which
they, or any of them, may become subject under the Securities Act, the

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Exchange Act or other federal or state statutory law or regulation, at common law or
otherwise as a direct result of such untrue statement or omission or alleged untrue statement or
omission in the information furnished in writing to the Company by such Selling Holder expressly
for use in such registration statement, provided that the obligation of the Selling
Holder will be several and not joint and several. In no event, however, shall the liability of a
Selling Holder for indemnification under this Section 5(a) exceed the net proceeds
received by such Selling Holder from its sale of Registrable Securities under such registration
statement.

          (b) If the indemnification provided for in Section 5(a) above for any reason is held
by a court of competent jurisdiction to be unavailable to an indemnified party in respect of any
losses, claims, damages, expenses or liabilities referred to therein, then each indemnifying
party under this Section 5, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a result of such
losses, claims, damages, expenses or liabilities in such proportion as is appropriate to reflect
(i) the relative benefits received by the Company, the Selling Holders and the underwriters from
the offering of the Registrable Securities and (ii) the relative fault of the Company, the
Selling Holders and the underwriters in connection with the statements or omissions which
resulted in such losses, claims, damages, expenses or liabilities, as well as any other relevant
equitable considerations; provided, however, that in the event of a registration
statement filed in response to a demand for registration under Section 3(a) and in which
the Company does not register any shares of capital stock, the proportion of contribution by the
Company, the Selling Holders and the underwriters shall in all cases be governed solely by clause
(ii) above. The relative benefits received by the Company, the Selling Holders and the
underwriters shall be deemed to be in the same respective proportions that the net proceeds from
the offering (before deducting expenses) received by the Company and the Selling Holders and the
underwriting discount received by the underwriters, in each case as set forth in the table on the
cover page of the applicable prospectus, bear to the aggregate public offering price of the
Registrable Securities. The relative fault of the Company, the Selling Holders and the
underwriters shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the Selling Holders or the
underwriters and the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission.

          The Company and each Selling Holder agrees that it would not be just and equitable if
contribution pursuant to this Section 5(b) were determined by pro rata or per capita
allocation or by any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. In no event, however, shall a
Selling Holder be required to contribute any amount under this Section 5(b) in excess of
the net proceeds received by such Selling Holder from its sale of Registrable Securities under such
registration statement. No Person found guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was
not found guilty of such fraudulent misrepresentation. The Selling Holder’s obligations pursuant to
this Section 5(b) shall be several in proportion to the amount of Registrable Securities
registered by it and not joint and several.

          (c) The amount required to be paid by an indemnifying party or payable to an indemnified
party as a result of the losses, claims, damages and liabilities referred to in this Section
5 shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with investigating or
defending any such action or claim, payable as the same are incurred. The indemnification and

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contribution provided for in this Section 5 will remain in full force and effect
regardless of any investigation made by or on behalf of the indemnified parties or any officer,
director, employee, agent or Controlling Person of the indemnified parties. No indemnifying
party, in the defense of any such claim or litigation, shall enter into a consent of entry of any
judgment or enter into a settlement without the consent of the indemnified party, which consent
will not be unreasonably withheld.

     6. Rule 144 and Rule 144A Requirement. The Company shall use its commercially
reasonable best efforts to take all action as may be required as a condition to the availability of
Rule 144 or Rule 144A under the Securities Act (or any successor or similar exemptive rules
hereafter in effect). The Company shall furnish to any Holder, within fifteen (15) days of a
written request, a written statement verifying its compliance with the current public information
requirement of Rule 144 or Rule 144A or such successor rules.

     7. Transferability of Registration Rights. The registration rights set forth in this
Agreement are transferable to any transferee of the Registrable Securities. Each subsequent holder
of Registrable Securities must consent in writing to be bound by the terms and conditions of this
Agreement in order to acquire the rights of a Holder granted pursuant to this Agreement.

     8. Rights Which May Be Granted to Subsequent Investors. Other than transferees of
Registrable Securities under Section 7 hereof, the Company shall not, without the prior
written consent of the holders of a majority of the outstanding Registrable Securities, grant any
other registration rights to any third parties.

     9. Miscellaneous.

          (a) Amendments. For the purposes of this Agreement and all agreements executed
pursuant hereto, no course of dealing between the parties hereto and no delay on the part of
either party hereto in exercising any rights hereunder or thereunder shall operate as a waiver of
the rights hereof and thereof. This Agreement may be amended, modified or terminated and any
provision hereof may be waived by the joint written consent of the Company and the holders of not
less than a majority of the outstanding Registrable Securities; provided that no
amendment, modification or waiver may treat adversely one Holder in a manner different from the
Holders as a group without the consent of such Holder. Any amendment, modification, termination
or waiver effected in accordance with this Section 9(a) shall be binding upon all Holders
of Registrable Securities even if they do not execute such joint written consent.

          (b) Notices and Demands. Any notice or demand which, by any provision of this
Agreement or any agreement, document or instrument executed pursuant hereto or thereto, except as
otherwise provided therein, is required or provided to be given shall be deemed to have been
sufficiently given or served and received for all purposes when delivered pursuant to the notice
provisions set forth in Section 8.3 of the Merger Agreement.

          (c) Remedies; Severability. It is specifically understood and agreed that any
breach of the provisions of this Agreement by any Person subject hereto will result in
irreparable injury to the other parties hereto, that the remedy at law alone will be an
inadequate remedy for such breach, and that, in addition to any other remedies which they may
have, such other parties may enforce their respective rights by actions for specific performance
(to the extent permitted by law). Whenever possible, each provision of this Agreement shall be
interpreted in such a manner

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as to be effective and valid under applicable law, but if any provision of this Agreement
shall be deemed prohibited or invalid under such applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, and such prohibition or invalidity
shall not invalidate the remainder of such provision or the other provisions of this Agreement.

          (d) Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the respective successors and permitted assigns of the parties hereto as
contemplated herein.

          (e) Counterparts. This Agreement may be signed in any number of counterparts, each
of which shall be deemed to be an original instrument, and all such counterparts shall together
constitute the same agreement.

          (f) Governing Law. This Agreement shall be construed in accordance with and
governed by the law of the State of Ohio without giving effect to the principles of conflicts of
laws thereof.

          (g) Integration. This Agreement, including the exhibits, documents and instruments
referred to herein or therein, constitutes the entire agreement, and supersedes all other prior
agreements and understandings, both written and oral, between the parties with respect to the
subject matter hereof.

[Signature page follows]

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     IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights Agreement to be
duly executed as of the date first set forth above.

	 	 	 	 	 	 	 	 	 	 	 
	COMPANY:	 	 	 	STOCKHOLDER:	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	AIRNET SYSTEMS, INC.	 	 	 	AIRNET HOLDINGS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By: 

Name:

	 	/s/ Bruce D. Parker
 

Bruce D. Parker
	 	 	 	By:

Name:
	 	/s/ John Caple
 

John Caple
	 	 
	Title:

	 	Chairman of the Board, Chief Executive
Officer and President	 	 	 	Title:

	 	Vice President and Treasurer	 	 	 
	 

	 	 	 	 	 	 	 	 
	 	 
	 

	 	 	 	 	 	 	 	 	 	 

[Signature
Page to Registration Rights Agreement]EX-10.1

 

Exhibit 10.1

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

among

RBS CITIZENS, N.A.,

d/b/a

CHARTER ONE

RICHARD M. OSBORNE,

and

JOHN D. OIL AND GAS COMPANY

As of March 28, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	1. GENERAL
	 	 	2	 
	1.1 Defined Terms
	 	 	2	 
	1.2 Accounting Terms
	 	 	14	 
	1.3 Use of Plural Form
	 	 	14	 
	1.4 Computation of Time Periods
	 	 	14	 
	2. CREDIT FACILITIES
	 	 	14	 
	2.1 Loans
	 	 	14	 
	2.2 All Advances to Constitute One Obligation
	 	 	19	 
	2.3 Excess Interest
	 	 	20	 
	2.4 Revival
	 	 	20	 
	2.5 Manner of Payments
	 	 	20	 
	2.6 Miscellaneous LIBOR Rate Loan Terms
	 	 	20	 
	2.7 Liability of Borrowers
	 	 	22	 
	3. LATE CHARGE; DEFAULT INTEREST RATE
	 	 	23	 
	3.1 Late Charge
	 	 	23	 
	3.2 Default Interest Rate
	 	 	23	 
	4. COLLATERAL; GENERAL TERMS
	 	 	23	 
	4.1 Grant of Security Interest
	 	 	23	 
	4.2 Perfection of Bank’s Security Interest in Collateral
	 	 	23	 
	4.3 Insurance
	 	 	23	 
	4.4 Protection of Collateral; Reimbursement
	 	 	24	 
	4.5 Inspection
	 	 	24	 
	4.6 Additional Mortgage
	 	 	24	 
	5. REPRESENTATIONS AND WARRANTIES OF BORROWERS
	 	 	25	 
	5.1 General Representations and Warranties
	 	 	25	 
	5.2 Reaffirmation
	 	 	30	 
	6. COVENANTS AND CONTINUING AGREEMENTS
	 	 	30	 
	6.1 Affirmative Covenants
	 	 	30	 
	6.2 Negative Covenants
	 	 	35	 
	6.3 Osborne Negative Pledge of John D Ownership Interests
	 	 	38	 
	6.4 Borrowers’ Negative Pledge of Kykuit Ownership Interests
	 	 	38	 
	6.5 Osborne Advance of Kykuit Contributions
	 	 	39	 
	6.6 Osborne Covenant Regarding Richard M. Osborne Trust
	 	 	39	 
	7. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT
	 	 	39	 
	8. CONDITIONS PRECEDENT TO BORROWINGS
	 	 	39	 
	8.1 Conditions
	 	 	39	 
	8.2 Waiver of Conditions Precedent
	 	 	42	 
	9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
	 	 	42	 
	9.1 Events of Default
	 	 	42	 
	9.2 Acceleration of the Obligations
	 	 	44	 
	9.3 Remedies
	 	 	44	 
	9.4 Application of Collateral; Termination of Financing
	 	 	46	 
	9.5 Remedies Cumulative
	 	 	46	 

i

 

	 	 	 	 	 
	 	 	Page
	10. APPOINTMENT OF BANK AS BORROWERS’ LAWFUL ATTORNEY
	 	 	46	 
	11. MISCELLANEOUS
	 	 	47	 
	11.1 Modification of Agreement; Sale of Interest
	 	 	47	 
	11.2 Attorneys’ Fees and Expenses
	 	 	47	 
	11.3 Waiver by Bank
	 	 	48	 
	11.4 Severability
	 	 	48	 
	11.5 Parties
	 	 	48	 
	11.6 Conflict of Terms
	 	 	48	 
	11.7 Waivers by Borrowers
	 	 	49	 
	11.8 Authorization
	 	 	49	 
	11.9 Governing Law
	 	 	49	 
	11.10 Notices
	 	 	50	 
	11.11 Section Titles
	 	 	50	 
	11.12 Effectiveness of Agreement
	 	 	50	 
	11.13 Effect of Amendment and Restatement
	 	 	51	 
	11.14 Warrant of Attorney
	 	 	51	 

SCHEDULES

	 	 	 
	Schedule 1.1-A

	 	Machinery and Equipment
	Schedule 1.1-A-1

	 	Drilling Rigs Involving Certificated Motor Vehicles
	Schedule 1.1-B

	 	Producing Wells
	Schedule 1.1-C

	 	Pipeline
	Schedule 1.1-D

	 	Undeveloped Oil and Gas Properties
	Schedule 1.1-E

	 	Sales Contracts
	Schedule 1.1-F

	 	Collateral Locations
	Schedule 5.1(c)

	 	Material Agreements
	Schedule 5.1(d)

	 	Related Persons
	Schedule 5.1(f)

	 	Litigation and Administrative Proceedings
	Schedule 5.1(o)

	 	Environmental
	Schedule 5.1(s)

	 	ERISA
	Schedule 5.1(u)(ii)

	 	Secured Indebtedness
	Schedule 5.1(u)(iii)

	 	Unsecured Indebtedness
	Schedule 5.1(u)(iv)

	 	Guaranties
	Schedule 6.2(c)(iii)

	 	Permitted Indebtedness
	Schedule 6.2(f)

	 	Permitted Liens
	Schedule 6.2(i)

	 	Principal Business Location
	Schedule 6.2(k)

	 	Names

ii

 

EXHIBITS

	 	 	 
	Exhibit A

	 	Form of Revolving Credit Note
	Exhibit B

	 	Form of Credit Request
	Exhibit C

	 	Form of Compliance Certificate
	Exhibit D

	 	Reserved
	Exhibit E

	 	Reserved
	Exhibit F

	 	Form of Continuing Subordination Agreement
	Exhibit G

	 	Form of Negative Covenant
	Exhibit H

	 	Form of Unlimited Guaranty

iii

 

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

     THIS FIRST AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (as amended, restated,
supplemented or otherwise modified from time to time, this “Agreement”) made and entered into as of
March 28, 2008, by and among RICHARD M. OSBORNE, an individual, and his heirs, administrators,
representatives, successors and assigns (“Osborne”), and JOHN D. OIL AND GAS COMPANY, a Maryland
corporation, and its successors and assigns (“John D”, together with Osborne, jointly and
severally, “Borrowers”), and RBS CITIZENS, N.A., d/b/a CHARTER ONE, and its successors and assigns
(“Bank”).

W I T N
E S S E T H

     WHEREAS, Bank established a revolving line of credit for Borrowers which by its original terms
was to mature on September 28, 2007, respecting which bank agreed to lend to Borrowers upon
Borrowers’ request, but subject to the terms and conditions set forth in various loan documents, of
up to Five Million Dollars ($5,000,000);

     WHEREAS, the revolving line of credit is evidenced by that certain Revolving Term Note, dated
September 28, 2006 by the Borrowers in favor of the Bank (the “Existing Note”);

     WHEREAS, pursuant to one or more previous amendments, modifications or supplements the maximum
principal amount of the revolving loan was changed to Nine Million Five Hundred Thousand Dollars
($9,500,000);

     WHEREAS, in connection with the revolving line of credit, Borrowers entered into that certain
Loan Agreement, dated September 28, 2006 (as previously amended, modified or supplemented, the
“Existing Loan Agreement”);

     WHEREAS, in connection with the revolving line of credit, John D entered into that certain
Security Agreement, dated February 20, 2007 (as previously amended, modified or supplemented, the
“Existing Security Agreement”);

     WHEREAS, pursuant to the Existing Security Agreement, John D granted Bank a first priority
security interest in and lien on the personal property described therein;

     WHEREAS, The Existing Loan Agreement, the Existing Security Agreement and Existing Note and
all other documents, instruments, amendments, modifications and supplements executed in connection
with or relating to the Loan are referred to herein, collectively, as the “Existing Loan
Documents”.

     WHEREAS, the Borrowers and the Bank have agreed to modify the revolving line of credit and the
Existing Loan Documents in accordance with the terms of this Agreement.

     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Bank and the Borrowers mutually agree that, as of the

 

 

Effective Date, the Existing Loan Agreement and the Existing Security Agreement shall be
amended and restated in their entirety as follows and the Existing Note shall be amended and
restated to conform to Exhibit A attached hereto:

     1. GENERAL

     1.1 Defined Terms. When used in this Agreement, the following terms shall have the
following meanings:

     “Accounts” means all of John D’s now owned or hereafter acquired accounts (as such item is
defined in the Uniform Commercial Code), accounts receivable, contract rights, Chattel Paper,
Instruments and Documents, including, without limitation, any right to payment for goods sold or
leased or for services rendered, whether or not earned by performance and whether or not evidenced
by contracts, or any agreement, instruments or other documents, and all rights of rescission,
replevin, reclamation and stoppage in transit and rights to returned, reclaimed or repossessed
goods in respect of any such goods so sold or leased and any other right of any Borrower to payment
for goods sold or leased or for services rendered and all proceeds of the foregoing.

     “Additional Mortgage means the Open-End Mortgage Deed and Security Agreement dated of even
date herewith with respect to certain properties owned by the Richard M. Osborne Trust (or such
other properties as Bank and Borrowers may agree).

     “Adjusted LIBOR Rate” means, relative to any LIBOR Rate Loan to be made, continued or
maintained as, or converted into, a LIBOR Rate Loan for any LIBOR Interest Period, a rate per annum
determined by dividing (x) the LIBOR Rate for such LIBOR Interest Period by (y) a percentage equal
to one hundred percent (100%) minus the LIBOR Reserve Percentage.

     “Advance” means a Borrowing requested by a Borrower and made by Bank under a Revolving Credit
Loan.

     “Anti-Terrorism Law” means any laws relating to terrorism or money laundering, including
Executive Order No. 13224 and the USA PATRIOT Act.

     “Authorized Representative” means the President or Chief Financial Officer of John D or any
person appointed as an authorized representative by John D as evidenced by certified company
resolutions that are delivered to Bank.

     “Bankruptcy Laws” means all applicable statutes, rules, regulations, and other forms of law,
federal, state, or otherwise including, but not limited to, the provisions of Title 11 of the
United States Code, in each instance as in effect from time to time, relating to the bankruptcy,
insolvency, or liquidation of Persons or the modification or alteration of the rights of creditors.

     “Blocked Persons” has the meaning set forth in Section 5.1(v) hereof.

     “Borrowing” means a loan made by Bank to Borrowers hereunder.

2

 

     “Business” means the exploration for, production of and marketing of petroleum products in
Ohio and Pennsylvania.

     “Business Day” means:

     (a) any day which is neither a Saturday or Sunday nor a legal holiday on which
commercial banks are authorized or required to be closed in Cleveland;

     (b) when such term is used to describe a day on which a borrowing, payment, prepaying,
or repaying is to be made in respect of any LIBOR Rate Loan, any day which is: (i) neither a
Saturday or Sunday nor a legal holiday on which commercial banks are authorized or required
to be closed in New York City; and (ii) a London Banking Day; and

     (c) when such term is used to describe a day on which an interest rate determination is
to be made in respect of any LIBOR Rate Loan, any day which is a London Banking Day.

     “Capital Lease” means, with respect to John D, any lease of property (whether real, personal
or mixed) by John D as lessee that would, in accordance with GAAP, be required to be classified and
accounted for as a capital lease on a balance sheet of such Borrower.

     “Chattel Paper” means all chattel paper (as such term is defined in the Uniform Commercial
Code), any other writing or writings which evidence(s) both a monetary obligation and a security
interest in or a lease of specific goods, and in the case of a transaction evidenced both by such
an agreement for security or a lease and by an Instrument or a series of Instruments, such group of
writings taken together.

     “Closing Fee” has the meaning set forth in Section 2.1(e) hereof.

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

     “Collateral” means the following property of John D and its Subsidiaries whether now owned or
existing and hereafter acquired or arising and wheresoever located:

     (a) Accounts, Inventory, Fixed Collateral (including, but not limited to, the machinery
and equipment identified on Schedule 1.1-A, including, but not limited to, the
producing wells identified on Schedule 1.1-B, including, but not limited to, the
pipeline identified on Schedule 1.1-C, including, but not limited to, the
undeveloped Oil and Gas Properties identified on Schedule 1.1-D, and including, but
not limited to, the sales contracts identified on Schedule 1.1-E), General
Intangibles and all other Property of such Borrower including the Premises;

     (b) all deposits or other sums at any time credited by or due from Bank to such
Borrower, whether in a Depository Account or other account, together with any and all
instruments, documents, policies and certificates of insurance, securities, goods, Accounts,
choses in action, General Intangibles, Chattel Paper, cash or other Property, and the
proceeds of each of the foregoing, to the extent owned by such Borrower or in which such
Borrower has an interest and which now or hereafter are at any time in the

3

 

possession or control of Bank or in transit by mail or carrier to or from Bank or in
the possession of any Person acting in Bank’s behalf, without regard to whether Bank
received the same in pledge, for safekeeping, as agent for collection or transmission or
otherwise or whether Bank had conditionally released the same, and any and all balances,
sums, proceeds and credits of such Borrower with, and any claims of such Borrower against,
Bank;

     (c) all accessions to, substitutions for, and any replacements, products, and proceeds
of the Property described in Subsections (a) and (b) of this definition including, but not
limited to, proceeds of insurance policies insuring such Property; and

     (d) all books, records and other property (including, but not limited to, credit files,
programs, printouts, computer software, programs, and disks, magnetic tape and other
magnetic media, and other materials and records) of such Borrower pertaining to any of the
Property described in Subsections (a), (b) or (c) of this definition.

     Notwithstanding the foregoing, “Collateral” does not include any motor vehicle requiring a
certificate of title, except to the extent, if any, that any drilling rig constitutes or includes
such a motor vehicle. Schedule 1.1-A-1 identifies specifically all drilling rigs in which
John D has any interest that constitutes or includes a motor vehicle.

     “Collateral Locations” means John D’s principal business locations, and all other locations of
Collateral as of the date hereof, including, but not limited to, the locations identified on
Schedule 1.1-F to this Agreement.

     “Commitment Sublimit” has the meaning provided in Section 2.1.a (i)(A).

     “Commitment Sublimit Report” means a report in the form of Schedule A to Exhibit B attached to
this Agreement, as the same may be modified or amended from time to time.

     “Control” means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of Voting
Securities, by contract, or otherwise.

     “Credit Documents” means this Agreement, the Notes, the Mortgage, the Additional Mortgage, any
Guarantee of obligations under any Credit Documents, the Hedging Contracts, if any, and all other
agreements, instruments, and documents (including, but not limited to, all assignments, security
agreements, pledges, lien waivers, subordinations, guarantees, powers of attorney, and consents, if
any), heretofore, now, or hereafter delivered to Bank with respect to the transactions contemplated
by this Agreement, in each instance as the foregoing may be amended, restated, supplemented or
otherwise modified from time to time.

     “Credit Request” has the meaning set forth in Section 2.1 hereof.

     “Current Maturities of Capital Leases” means payments with respect to Capital Leases due
within the period of the calculation.

4

 

     “Current Maturities of Long Term Debt” means payments with respect to Long Term Debt due
within the period of the calculation.

     “Current Producing Reserve Value” means the net present value (using a discount rate of ten
percent (10%)) of all producing oil and gas properties of John D (but only to the extent such
properties are included on Exhibit A to the Mortgage) as most recently determined by Schlumberger
Limited or an appropriate Subsidiary thereof (collectively, “Schlumberger”) unless both Bank and
John D determine not to use Schlumberger, in which case the value shall be determined by a duly
licensed petroleum engineer designated by Bank and approved by John D, whose approval may not be
unreasonably withheld, which net present value shall be set forth in a report in form and substance
satisfactory to Bank and addressed to Bank or accompanied by a reliance letter in form and
substance acceptable to Bank.

     “Debt Instruments” means any contract, agreement, instrument, or other document or arrangement
under which a Borrower has (a) any indebtedness, obligation, or liability (including, but not
limited to, any contingent liability under any guaranty) for borrowed money or for the deferred
portion of the purchase price of any capital asset or for other capital financing, or (b) the right
or obligation to incur any such indebtedness, obligation, or liability.

     “Deemed Credit Request” has the meaning set forth in Section 2.1 hereof.

     “Default” means any event which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default.

     “Default Rate” means, as to each Loan, a rate of interest equal to four percentage points
(4.0%) above the interest rate applicable to that Loan in the absence of an Event of Default.

     “Depository Accounts” means all bank accounts, cash accounts, deposit accounts, certificates
of deposit and all similar depository arrangements under or pursuant to which monies, checks or
remittances of, or payable to, a Borrower are held by, or on deposit with, a financial institution
for the account of such Borrower.

     “Document” means any (a) document (as such term is defined in the Uniform Commercial Code),
(b) document of title, including a bill of lading, dock warrant, dock receipt, warehouse receipt or
order for the delivery of goods, and any other document which in the regular course of business or
financing is treated as adequately evidencing that the Person in possession of it is entitled to
receive, hold, and dispose of the document and the goods it covers, and (c) receipt covering goods
stored under a statute requiring a bond against withdrawal or a license for the issuance of
receipts in the nature of warehouse receipts even though issued by a Person who is the owner of the
goods and is not a warehouseman.

     “Dollar” and the sign “$” each means lawful money of the United States.

     “EBITDA” shall mean, for any cumulative period, the sum of (a) the Net Income of a Person for
such period plus (b) Interest Expense of a Person for such period plus (c) income taxes of a Person
for such period plus (d) depreciation expense of a Person for such period plus (e) amortization
expense of a Person for such period to the extent such Interest Expense, income

5

 

taxes, depreciation expense and amortization expense are deducted in the determination of Net
Income.

     “Effective Date” means the date on which all conditions precedent to the making of an Advance
under this Agreement as set forth in Section 8 have been satisfied or waived in writing by Bank.

     “Environmental Law(s)” means all laws, codes, ordinances, rules, regulations, orders, decrees
and directives issued by any federal, state, local, foreign or other governmental or
quasi-governmental authority or body (or any agency, instrumentality or political subdivision
thereof) pertaining to Hazardous Materials, including without limitation, any hazardous materials
or wastes, toxic substances, flammable, explosive or radioactive materials, asbestos, and/or other
similar materials; any so-called “superfund” or “superlien” law, pertaining to Hazardous Materials
on or about the Premises, or any other property at any time owned, leased or otherwise used by
Borrower or any portion thereof including, without limitation, those relating to soil, surface,
subsurface ground water conditions and the condition of the ambient air; and any other federal,
state, foreign or local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct concerning, any hazardous,
toxic, radioactive, flammable or dangerous waste, substance or material, as now or at any time
hereafter in effect.

     “ERISA” means The Employee Retirement Income Security Act of 1974, as amended from time to
time, and all rules and regulations from time to time promulgated thereunder.

     “Event of Default” has the meaning set forth in Section 9.1 hereof.

     “Exhibits” means the exhibits and schedules attached to this Agreement.

     “Fiscal Month” means each of the monthly fiscal accounting periods of Borrowers.

     “Fiscal Quarter” means any of the four consecutive three-month fiscal accounting periods of a
Person ending on March 31, June 30, September 30 and December 31 of each Fiscal Year.

     “Fiscal Year” means a Person’s regular annual calendar accounting period ending on December
31.

     “Fixed Charge Coverage Ratio” means the ratio resulting from dividing (a) EBITDA plus
Operating Lease Payments minus dividends and distributions, by (b) Interest Expense plus Current
Maturities of Long Term Debt scheduled for such period (but not including Borrowings) plus Current
Maturities of Capital Leases scheduled for such period plus Operating Lease Payments paid during
such period.

     “Fixed Collateral” means a John D’s fixed assets including, but not limited to, all equipment
(as such term is defined in the Uniform Commercial Code), machinery, furniture, furnishings,
fixtures (as such term is defined in the Uniform Commercial Code), tools, dies, molds, parts,
material handling equipment, supplies, and motor vehicles (titled and untitled) of every kind and
description, and Oil and Gas Properties now or hereafter owned by John D, or in

6

 

which John D may have or may now or hereafter acquire any interest, wheresoever located, and
all proceeds of the foregoing.

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

     “General Intangibles” means all general intangibles (as such term is defined in the Uniform
Commercial Code) and other intangible personal property of a Borrower of every kind and nature
(other than Accounts, contract rights, Chattel Paper, Documents and Instruments) including, without
limitation, all governmental licenses, permits and registrations, all choses in action, tax refund
claims, customer lists, customer repayment and credit histories, other corporate and business
records, computer programs, franchises, goodwill of any nature, and any guarantee claims, security
interests or other security held by or granted to such Borrower to secure payment of any monies
payable to such Borrower or the performance of any other obligations and all rights of
indemnification.

     “Governmental Authority” means any foreign, federal, state, local political subdivision or
other government, governmental, statutory or administrative authority, regulatory body or
commission or any court, tribunal or judicial or arbitral body, or any department or agency
thereof.

     “Guarantor” means a Person who pledges his credit or property in any manner for the payment or
other performance of Indebtedness, agreements or other obligations of another Person including,
without limitation, any guarantor (whether of collection or payment), any obligor in respect of a
standby letter of credit or surety bond issued for the account of another Person, any surety,
co-maker, any endorser, and any Person who agrees conditionally or otherwise to make any loan,
purchase or investment in order thereby to enable another Person to prevent or correct a default of
any kind or otherwise to assure a creditor against any loss in respect of Indebtedness, agreements
or obligations, including, but not limited to, the Richard M. Osborne Trust.

     “Guaranty” means the obligation of a Guarantor, including, but not limited to, the Unlimited
Guaranty dated of even date herewith executed by the Richard M. Osborne Trust in favor of Bank, as
the same may be amended, amended and restated, or modified from time to time.

     “Hazardous Material” means and includes (a) any asbestos or other material composed of or
containing asbestos which is, or may become, even if properly managed, friable, (b) petroleum and
any petroleum product, including crude oil or any fraction thereof, and natural gas or synthetic
natural gas liquids or mixtures thereof, (c) any hazardous, toxic or dangerous waste, substance or
material defined as such in, or for purposes of, any Environmental Laws, (d) brine, cuttings, or
other waste substance arising from the drilling, completion, production or abandonment of wells,
and (e) any other substance whose generation, handling, transportation, treatment or disposal is
regulated pursuant to any Environmental Laws.

     “Hedging Contracts” means, interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements, or any other agreements or arrangements entered into

7

 

between Borrowers and Bank and designed to protect Borrowers against fluctuations in interest
rates or currency exchange rates.

     “Hedging Obligations” means, with respect to Borrowers, all liabilities of Borrowers to Bank
under Hedging Contracts.

     “Indebtedness” means, with respect to a Person, present and future obligations, liabilities,
debts, claims, and indebtedness, contingent, fixed, or otherwise, however evidenced, created,
incurred, acquired, owing, or arising (whether under written or oral agreement, by operation of
law, or otherwise) for (a) loans, (b) any obligations or liabilities of such Person which are
secured by any Lien (other than Permitted Liens) upon Property of such Person even though such
Person has not assumed or otherwise become liable for the payment thereof, (c) any obligations or
liabilities created or arising under any Capital Lease or under any conditional sales contract or
other title retention agreement with respect to Property used or acquired by such Person, even
though the rights and remedies of the lessor, seller, or lender are limited to repossession, (d)
any obligations or liabilities arising under any lease or other contractual arrangement relating to
security deposits, advance payments by customers, or other prepaid funds in the hands of or held by
such Person subject to return or refund to such Person, or (e) all unfunded pension fund
obligations and liabilities and all deferred taxes of any nature each of which are required to be
disclosed on such Person’s balance sheet, all in accordance with GAAP.

     “Instrument” means (a) any instrument (as defined in the Uniform Commercial Code) (including,
without limitation, drafts, checks, acceptances, certificates of deposit, and notes), (b) any
investment property (as defined in the Uniform Commercial Code) and (c) any other writing which (i)
evidences a right to the payment of money, (ii) is not itself a security agreement or lease and
(iii) is of a type which in the ordinary course of business is transferred by delivery with any
necessary endorsement or assignment.

     “Interest Expense” means, with respect to a Person, for any period, the net amount of interest
expense for such period on the aggregate principal amount of the Indebtedness of such Person plus
any capitalized interest of the Person that accrued during such period, each as determined in
accordance with GAAP.

     “Interest Payment Date” means (a) each Business Day which is one month, or a whole multiple
thereof, after the first day of such Interest Period and (b) the last day of such Interest Period.

     “Inventory” means all inventory now owned or hereafter acquired by the Borrower (including,
but not limited to, all goods (as such term is defined in the Uniform Commercial Code),
merchandise, work-in-process, raw materials, finished goods, and inventory held for renting to
other Persons), all other materials, supplies, and tangible personal property of any kind, nature,
or description held for sale or lease or for display or demonstration, or furnished or to be
furnished under contracts of service, or which are or which might be used or consumed in connection
with the manufacturing, packing, shipping, advertising, selling, leasing, or furnishing of such
goods, merchandise, or other personal property, all documents of title or other documents
pertaining thereto, and all proceeds of the foregoing.

8

 

     “John D SEC Filing” means each report, schedule, proxy statement and other document filed or
otherwise submitted to the United States Securities and Exchange Commission by John D by reason of
any of its securities being registered pursuant to acts administered by the Commission.

     “Kykuit” means Kykuit Resource, LLC, an Ohio limited liability company, and its successors and
assigns.

     “LIBOR Breakage Fee” has the meaning referenced in the context of Section 2.1(a)(ii)(c).

     “LIBOR Interest Period” means, relative to any LIBOR Rate Loan, initially, the period
beginning on (and including) the date on which such LIBOR Rate Loan is made or continued as a LIBOR
Rate Loan and ending on (but excluding) the day which numerically corresponds to such date one,
three or six months thereafter (or, if such month has no numerically corresponding day, on the last
Business Day of such month), in each case as the Borrower may select in its notice pursuant to
Section 2.1(a)(iii); and thereafter, each period commencing on the last day of the next preceding
LIBOR Interest Period applicable to such LIBOR Rate Loan and ending one, three or six months
thereafter, as selected by the Borrower by irrevocable notice to the Bank pursuant to Section
2.1(c) hereof; provided, however, that

     (a) at no time may there be more than four (4) LIBOR Interest Periods in effect with
respect to the LIBOR Rate Loans;

     (b) LIBOR Interest Periods commencing on the same date for LIBOR Rate Loans comprising
part of the same advance under this agreement shall be of the same duration;

     (3) LIBOR Interest Periods for LIBOR Rate Loans in connection with which the Borrower
has or may incur Hedging Obligations with the Bank shall be of the same duration as the
relevant periods set under the applicable Hedging Contracts;

if such LIBOR Interest Period would otherwise end on a day which is not a Business Day, such LIBOR
Interest Period shall end on the next following Business Day unless such day falls in the next
calendar month, in which case such LIBOR Interest Period shall end on the first preceding Business
Day; and no LIBOR Interest Period may end later than the termination of this Agreement.

     “LIBOR Rate” means, relative to any LIBOR Interest Period, the offered rate for deposits of
U.S. Dollars in an amount approximately equal to the amount of the requested LIBOR Rate Loan for a
term coextensive with the designated LIBOR Interest Period which the British Bankers’ Association
fixes as its LIBOR rate as of 11:00 a.m. London time on the day which is two London Banking Days
prior to the beginning of such LIBOR Interest Period. If such day is not a London Banking Day, the
LIBOR Rate shall be determined on the next preceding day which is a London Banking Day. If for any
reason the Bank cannot determine such offered rate by the British Bankers’ Association, the Bank
may, in its discretion, select a replacement index

9

 

based on the arithmetic mean of the quotations, if any, of the interbank offered rate by first
class banks in London or New York for deposits in comparable amounts and maturities.

     “LIBOR Rate Loan” means any Loan priced with reference to the LIBOR Rate.

     “LIBOR Rate Margin” means one and three-quarters percent (1.75%) per annum.

     “LIBOR Reserve Percentage” means, relative to any day of any LIBOR Interest Period, the
maximum aggregate (without duplication) of the rates (expressed as a decimal fraction) of reserve
requirements (including all basic, emergency, supplemental, marginal and other reserves and taking
into account any transitional adjustments or other scheduled changes in reserve requirements) under
any regulations of the Board of Governors of the Federal Reserve System (the “Board”) or other
governmental authority having jurisdiction with respect thereto as issued from time to time then
applicable to assets or liabilities consisting of “Eurocurrency Liabilities”, as currently defined
in Regulation D of the Board, having a term approximately equal or comparable to such LIBOR
Interest Period.

     “Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person
other than the owner of the Property, whether such interest is based on the common law, statute, or
contract including, but not limited to, the security interest or lien arising from a security
agreement, mortgage, encumbrance, pledge, conditional sale, trust receipt, assignment, lease,
consignment, or bailment for security purposes.

     “Loan” means each of the Revolving Credit Loans hereunder.

     “London Banking Day” means a day on which dealings in U.S. dollar deposits are transacted in
the London interbank market.

     “Long Term Debt” means Indebtedness, the final principal amount of which is due more than
twelve (12) months from the date the Indebtedness is incurred by John D.

     “Material Adverse Effect” means any event, occurrence, or condition, if the result thereof,
either singly or in the aggregate, could have a material and adverse effect on (a) the Property,
business, operations, prospects, profitability or condition (financial or otherwise) of a Borrower
(and its Subsidiaries) in the aggregate, (b) the ability of a Borrower or a Guarantor to repay the
Obligations, or (c) Bank’s Lien on any Collateral or the priority thereof.

     “Material Agreements” means any (a) Debt Instrument, (b) security agreement, mortgage, deed of
trust, pledge, assignment, or other document or arrangement whereby any Lien upon any of John D’s
Property exists in favor of any Person other than Bank, (c) lease (capital, operating or
otherwise), whether as lessee or lessor thereunder involving payments in excess of $25,000 per
annum (d) contract, commitment, agreement, or other arrangement involving the purchase or sale of
any Inventory by John D, not entered into in the ordinary course of business, (e) contract,
commitment, agreement, or other arrangement with any Related Person of John D and any Governmental
Authority, (f) management or employment contract or contract for personal services with any Related
Person of John D that is not otherwise terminable at will or on less than ninety (90) days notice
without liability, (g) collective bargaining agreement, or (h) other

10

 

contract, agreement, understanding, or arrangement which, if individually or in the aggregate,
if violated, breached, or terminated for any reason, could have a Material Adverse Effect.

     “Maturity Date” shall mean August 1, 2009, unless accelerated sooner pursuant to the terms
hereof.

     “Mortgage” means the Open-End Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production dated of even date herewith, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

     “Net Income” means, with respect to a Person, for any period, net income (or loss) of such
Person for such period, determined in accordance with GAAP, except, that, (a) all gains realized
upon the sale or other disposition (including, without limitation, pursuant to a sale and leaseback
transactions) of property or assets that are not sold or otherwise disposed of in the ordinary
course of business, or pursuant to the sale of any capital stock of such Person, shall be excluded,
(b) all items of gain that are properly classified as extraordinary in accordance with GAAP shall
be excluded, (c) all items that are properly classified in accordance with GAAP as cumulative
effects of accounting changes shall be excluded.

     “Notes” means the First Amended and Restated Revolving Credit Note and any other promissory
note or other instrument evidencing Borrowers’ obligation to pay any Loans.

     “Obligations” means all debts, liabilities, and obligations of Borrowers and any Guarantor to
Bank under this Agreement and the Credit Documents and also any and all other debts, liabilities,
and obligations of Borrowers to Bank of every kind and description, direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, including, but not limited to,
any reimbursement obligations of Borrowers to Bank, letters of credit issued by Bank on behalf of
Borrowers and any other debt, liability, Hedging Obligation, or obligation of Borrowers to Bank
under any Guaranty or to any other Person that Bank may have obtained by assignment or otherwise
and all interest, fees, charges, and expenses which at any time may be payable by Borrowers to Bank
pursuant to the provisions hereof or any of the other Credit Documents or otherwise, and all costs
and expenses (including reasonable attorneys’ fees and disbursements) arising from or relating to
claims or causes of action made or filed against Bank by third parties as a result of Borrowers’
actions or inactions.

     “Oil and Gas Properties” means all leasehold interests, mineral interests, and property rights
of every kind relating to the right to explore for, develop, produce, transport or store oil and
gas, including but not limited to, oil and gas leaseholds and pipeline easements and related
equipment, including but not limited to downhole equipment, wellhead equipment, storage facilities,
pipeline, pumping and other fixed transportation equipment.

     “Operating Account” means an account or each subaccount of an account maintained by and in the
same name of John D at Bank for the purposes of disbursing the proceeds of the Revolving Credit
Loans made to Borrowers hereunder, neither of which account or subaccount shall in any case be a
payroll account.

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     “Operating Lease” means, with respect to John D, any lease of property (whether real, personal
or mixed) by John D as lessee that would, in accordance with GAAP, be required to be classified and
accounted for as an operating lease on an income statement of such Borrower.

     “Operating Lease Payments” means payments made by John D with respect to Operating Leases.

     “Osborne Liquid Assets” means cash and the current market value of publicly traded securities,
owned individually by Osborne or by the Richard M. Osborne Trust. Osborne Liquid Assets shall not
include the current market value of publicly traded securities that are issued by John D.

     “PBGC” shall mean the Pension Benefit Guaranty Corporation or any person succeeding to the
present powers and/or function of said corporation.

     “Permitted Indebtedness” has the meaning set forth in Section 6.2(c) hereof.

     “Permitted Liens” has the meaning set forth in Section 6.2(f) hereof.

     “Person” means any individual, partnership, joint venture, corporation, trust, limited
liability company or unincorporated organization, or a government or agency or political
subdivision thereof.

     “Permitted Subordinated Debt” means debt of the Borrowers to a Related Person to the extent
that such debt is subject to a Subordination Agreement in substantially the form attached hereto as
Exhibit F.

     “Premises” means those certain real properties leased, owned or otherwise occupied by John D,
including, but not limited to, those set forth in Section 8.1(d)(xiii).

     “Property” means any kind of property or asset, whether real, personal, or mixed, or tangible
or intangible, or any interest including, but not limited to, any leasehold interest held in any
such properties or assets.

     “Registered Accounting Firm” means a public accounting firm duly and currently registered with
the Public Company Accounting Oversight Board.

     “Related Person” means with respect to a Borrower, any:

     (a) Person:

     (i) that directly, or indirectly through one or more intermediaries Controls,
is Controlled by, or is under common Control with, such Borrower;

     (ii) that owns or Controls, on an aggregate basis, including all beneficial
ownership and ownership or Control as a trustee, guardian, or other fiduciary, at
least five percent (5%) or more of the equity of such Borrower; or

12

 

     (iii) five percent (5%) or more of the Voting Stock (or in the case of a Person
which is not a corporation, five percent (5%) or more of the equity interest) of
which is beneficially owned or held by such Borrower;

     (b) Subsidiary of such Borrower; and

     (c) executive officer, director, trustee or member of such Borrower.

     For avoidance of doubt, Borrowers stipulate that Great Plains Exploration, LLC and Oz Gas,
Ltd. are Related Persons of each Borrower.

     “Restricted Investment” has the meaning set forth in Section 6.2(m) hereof.

     “Revolving Credit Account” has the meaning set forth in Section 2.1(a)(iii)(D) hereof.

     “Revolving Credit Commitment” means an amount equal to Nine Million Five Hundred Thousand
Dollars ($9,500,000).

     “Revolving Credit Loan” has the meaning set forth in Section 2.1(a) hereof.

     “Revolving Credit Note” means the Revolving Credit Note to be executed by Borrowers to
evidence the Revolving Credit Loans made by Bank to Borrowers pursuant to Section 2.1 hereof in
substantially the form attached to this Agreement as Exhibit A (with such changes or
modifications, if any, to which Bank and Borrowers may agree), together with all amendments thereto
and all notes issued in substitution therefor or replacement thereof.

     “Richard M. Osborne Trust” means the Richard M. Osborne Trust, under the Third Amendment and
Restatement of the Richard M. Osborne Trust Agreement dated April 25, 2005, as amended by a Fourth
Amendment to the Richard M. Osborne Trust Agreement dated August 22, 2006, as the same may be
amended or amended and restated from time to time.

     “Senior Funded Indebtedness” means, with respect to a Person, all Indebtedness for borrowed
money, including, but not limited to, the current portion of any long-term indebtedness.

     “Solvent” means, with respect to any Person, on any date of determination, that on such date
(a) fair value of the property of the Person is greater than the total amount of liabilities
(including contingent liabilities) of the Person, (b) the present fair salable value of the assets
of the Person is not less than the amount that will be required to pay the probable liability of
the Person on its debts as they become absolute and matured, (c) the Person is able to pay all
liabilities of the Person as those liabilities mature, and (d) the Person does not have
unreasonably small capital for the business in which it is engaged or for any business or
transaction in which it is about to engage. In computing the amount of contingent liabilities at
any time, it is intended that they be computed at the amount that, in light of all the facts and
circumstances existing at the time, represents the amount that can be reasonably be expected to
become an actual or matured liability.

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     “Subsidiary” means any entity of which fifty percent (50%) or more of the Voting Securities is
at any time, directly or indirectly, owned by John D and/or one or more of its Subsidiaries. For
avoidance of doubt, Borrowers stipulate that John D is the sole general partner of LSS I Limited
Partnership, and, for purposes of this Agreement, LSS I Limited Partnership is considered a
Subsidiary of John D.

     “Uniform Commercial Code” means The Uniform Commercial Code as adopted and in force in the
State of Ohio as from time to time in effect.

     “Voting Securities” means stock, membership interests, or other interests or securities of any
class or classes of an entity which, at the time of reference thereto, entitles the holders to
elect a majority of the directors, managing members, or persons performing similar functions.

     1.2 Accounting Terms. Any accounting terms used in this Agreement which are not
otherwise specifically defined shall have the meanings customarily given them in accordance with
GAAP.

     1.3 Use of Plural Form. All definitions shall be equally applicable to both the
singular and plural forms of the defined terms.

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

     2. CREDIT FACILITIES

     Subject to the terms and provisions of this Agreement and each of the other Credit Documents,
including, but not limited to, those provisions hereof or the Credit Documents that provide that no
loan advances need be made by Bank if, at the date of request for loan advances, a Default or an
Event of Default then exists, Bank shall provide the credit facilities described in this Section 2
to or for the account of Borrowers.

     2.1 Loans.

     (a) Revolving Credit Loan.

     (i) Commitment. Subject to the terms and conditions set forth in this
Agreement, Bank agrees to make, or continue to make, the following loans requested
by Borrowers:

     (A) from time to time on and after the Effective Date until the
Cleveland Banking Day immediately preceding the Maturity Date, Advances to
or for the account of Borrowers on a revolving credit basis
(each, a “Revolving Credit Loan”) in an amount such that the
outstanding principal amount of Revolving Credit Loans made by Bank to
Borrowers does not at any time exceed the lesser of (i) the amount of the
Revolving Credit Commitment for Borrowers in effect at such time, or (ii)
the Commitment Sublimit. The Commitment Sublimit is an amount equal to

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65% of the Current Producing Reserve Value. Notwithstanding the foregoing,
until February 28, 2009, the Commitment Sublimit shall be an amount equal to
(x) 65% of the Current Producing Reserve Value plus (y) an amount not to
exceed Three Million Five Hundred Thousand Dollars ($3,500,000). After, and
only after the outstanding principal amount of the Revolving Credit Loans is
less than 65% of the Current Producing Reserve Value, as shown on two (2)
consecutive Commitment Sublimit Reports, Borrowers may then borrow, prepay
and reborrow Revolving Credit Loans.

     (B) Borrowers expressly acknowledge that as of, and prior to the date
of execution of this First Amended and Restated Loan Agreement, Bank has not
waived any of its rights under the Agreement and that the execution of this
First Amended and Restated Loan and Security Agreement shall not constitute
a waiver of, and shall not preclude the exercise of, any right, power or
remedy granted to Bank or provided by law, except to the extent expressly
provided herein. No previous modification, extension, or compromise entered
into with respect to any indebtedness of Borrowers or any of the Guarantors
to Bank shall constitute a course of dealing or be inferred or construed as
constituting an express or implied understanding to enter into any future
modification, extension or compromise. No delay on the part of Bank in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice Bank’s rights, powers or remedies.

The Revolving Credit Loans shall be classified as LIBOR Rate Revolving Loans and
interest shall accrue by reference to the LIBOR Rate.

     (ii) Repayments, Prepayments and Interest. Borrowers shall repay the
Revolving Credit Loans to Bank in the following manner:

     (A) LIBOR Rate Loans shall mature and become payable in full on the
last day of the LIBOR Interest Period relating to such LIBOR Rate Loan.
Upon maturity, a LIBOR Rate Loan may be continued for an additional LIBOR
Interest Period.

     (B) Without in any way limiting Bank’s right at any time to demand
payment of the entire principal of any Revolving Credit Loans and all
interest accrued thereon upon the occurrence of an Event of Default, which
right is absolute and unconditional, the entire principal amount of the
Revolving Credit Loans, together with all interest accrued thereon, shall
become due and payable in full on the Maturity Date,
without notice, presentment, demand, notice of dishonor, or any notice
of any kind.

     (C) LIBOR Rate Loans may be prepaid upon the terms and conditions set
forth herein. For LIBOR Rate Loans in connection with

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which Borrowers have
or may incur Hedging Obligations, additional obligations may be associated
with prepayment, in accordance with the terms and conditions of the
applicable Hedging Contracts. Borrowers shall give the Bank, no later than
10:00 a.m., New York City time, at least four (4) Business Days notice of
any proposed prepayment of any LIBOR Rate Loans, specifying the proposed
date of payment of such LIBOR Rate Loans, and the principal amount to be
paid. Each partial prepayment of the principal amount of LIBOR Rate Loans
shall be in an integral multiple of One Hundred Thousand ($100,000) and
accompanied by the payment of all charges outstanding on such LIBOR Rate
Loans (including the LIBOR Breakage Fee) and of all accrued interest on the
principal repaid to the date of payment.

     (D) At any time Bank determines that outstanding Advances exceed the
Commitment Sublimit, it shall so notify Borrowers, and not later than the
thirtieth (30th) Business Day after Bank gives such notice, Borrowers shall
repay all Advances in excess of the Commitment Sublimit.

     (E) Interest on the outstanding principal amount of each loan shall
accrue during each LIBOR Interest Period at a rate per annum equal to the
sum of the Adjusted LIBOR Rate for such LIBOR Interest Period plus the LIBOR
Rate Margin, and be due and payable on each Interest Payment Date and on the
Maturity Date.

(iii) Credit Requests Executed by Borrowers.

     (A) By delivering a borrowing request to Bank on or before 10:00 a.m.,
New York time, on a Business Day, Borrowers may from time to time
irrevocably request, on not less than two nor more than five Business Days’
notice, that a LIBOR Rate Loan be made in a minimum amount of Five Hundred
Thousand ($500,000) and integral multiples of One Hundred Thousand
($100,000). On the terms and subject to the conditions of this agreement,
each LIBOR Rate Loan shall be made available to the Borrower no later than
11:00 a.m. New York time on the first day of the applicable LIBOR Interest
Period by deposit to the account of the Borrower as shall have been
specified in its borrowing request.

     (B) Except as otherwise provided herein with respect to telephonic
requests, each such request (a “Credit Request”) for a Revolving Credit Loan
shall be in writing, signed by an Authorized Representative of John D and
transmitted by Borrowers to Bank by
telecopier, telex or cable (in the case of telex or cable, confirmed in
writing prior to the date of the requested Borrowing), in substantially the
form of Exhibit B attached hereto. Each Credit Request by Borrowers
shall specify (1) the requested date of the Revolving Credit Loan and (2)
the amount of the Revolving Credit Loan comprising the Borrowing and

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(3) the
requested LIBOR Interest Period. Each Credit Request by Borrowers shall be
irrevocable and binding on Borrowers. An Authorized Representative of John
D may give a Credit Request telephonically so long as: (I) a written Credit
Request confirmation is received by Bank by 10:00 a.m. (Cleveland, Ohio
time) on the same day such telephonic Credit Request was given and (II) the
other requirements of this Section 2.1(a) are complied with. Bank may rely
on such telephonic Credit Request to the same extent that Bank may rely on a
written Credit Request. Borrowers shall bear all risks related to the
giving of a Credit Request by Borrowers whether given telephonically or by
such other method of transmission as Borrowers shall elect.

     (C) In addition to all other conditions set forth in this Agreement,
each Credit Request by Borrowers for funds to be advanced under the
Revolving Credit Loans also shall be subject to the following specific
conditions:

     (1) no Default or Event of Default shall then exist or,
immediately after the making of any Advance under the Revolving
Credit Loan, would exist;

     (2) all provisions or covenants contained in Section 8.1 hereof
shall have been complied with or performed or shall have been duly
waived in writing by Bank;

     (3) all of the Credit Documents shall be in full force and
effect;

     (4) Bank shall not have made demand for the payment of the
Obligations or otherwise terminated the availability of any portion
of the Revolving Credit Loan; and

     (5) each Credit Request shall specify in reasonable detail the
use of proceeds thereof.

     (D) Whenever Borrowers obtain a Revolving Credit Loan, Bank shall
endorse an appropriate entry on the Revolving Note executed by Borrowers or
make an appropriate entry in a loan account (the “Revolving Credit Account”)
maintained in Bank’s books and records, or both, to evidence the Revolving
Credit Loan to Borrowers. The Revolving Credit Account shall evidence (1)
accrued interest on the Revolving Credit Loans, (2) all other amounts due to
Bank in respect of
such Revolving Credit Loans to Borrowers and (3) all payments made by
Borrowers and received by Bank for application to such Revolving Credit
Loans. Each entry on the Revolving Credit Note or in Bank’s books and
records or Revolving Credit Account shall be, absent manifest error, prima
facie evidence of the data entered. Such entries by Bank shall not be a

17

 

condition to Borrowers’ obligation to pay, but, in the absence of a
Revolving Credit Note, shall be evidenced by Bank’s records of disbursements
and repayments.

     (E) The proceeds of all Revolving Credit Loans pursuant to this
Agreement are to be funded by Bank by credit to the Operating Account
established by Borrowers or such other account of Borrowers as Bank and
Borrowers shall have agreed upon from time to time.

     (b) Continuation and Conversion Elections. By delivering a conversion notice
to the Bank on or before 10:00 a.m., New York time, on a Business Day, the Borrower may from
time to time irrevocably elect, on not less than two nor more than five Business Days’
notice, that all or any portion of any LIBOR Rate Loan, in an aggregate minimum amount of
Five Hundred Thousand ($500,000) and integral multiples of One Hundred Thousand ($100,000),
be converted on the last day of a LIBOR Interest Period into a LIBOR Rate Loan with a
different LIBOR Interest Period; provided, however, that no portion of the outstanding
principal amount of any LIBOR Rate Loan may be converted to LIBOR Rate Loan of a different
duration if such LIBOR Rate Loan relates to any Hedging Obligation. In the absence of
delivery of a conversion notice with respect to any LIBOR Rate Loan at least two Business
Days before the last day of the then current LIBOR Interest Period with respect thereto,
such LIBOR Rate Loan shall, on such last day, automatically continue as a LIBOR Rate Loan
with the same LIBOR Interest Period.

     (c) Notes. Borrowers shall execute and deliver to Bank a Revolving Credit Note
payable to the order of Bank and in a principal amount equal to the Revolving Credit
Commitment. In the event of an assignment under Section 11.1 hereof, Borrowers shall, upon
surrender of a Note, issue a new Note to reflect the interests of Bank and the Person to
which interests are to be assigned.

     (d) [Reserved].

     (e) Closing Fee. As additional consideration for the financing being made
available to Borrowers under this Agreement, Borrowers shall pay to Bank on or before the
Effective Date a closing fee of $2,000 (the “Closing Fee”), which is fully earned upon the
execution of this Agreement by Borrowers and Bank, and shall not be refundable regardless of
whether any Advances are made under this Agreement and shall not be subject to
proration or rebate upon any prepayment of the Loans or termination of this Agreement
for any reason.

     (f) Deemed Credit Requests. In the event any interest, fee or other payment
Obligation hereunder becomes due without payment by or on behalf of Borrowers, Borrowers
shall be deemed to have made a credit request (each, a “Deemed Credit Request”) for a
Revolving Credit Loan in an amount equal to the amount necessary to pay such interest, fee
or payment Obligation and which request shall be deemed to be irrevocable.

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     2.2 All Advances to Constitute One Obligation. The Revolving Credit Loans and all
other amounts owed by Borrowers to Bank under this Agreement, whether or not evidenced by any of
the Notes shall constitute one obligation of Borrowers (the “Credit”), secured by Bank’s Lien on
and security interest in all of the Collateral. Each Borrower hereby, jointly and severally,
unconditionally agrees to pay, and otherwise guarantees the full and prompt payment of, all of the
Obligations, taken as a whole, when due, whether at maturity or earlier by reason of acceleration
or otherwise, and at all times thereafter. The aforesaid liability of each Borrower for the
repayment of all of the Obligations is unconditional and shall not be impaired by:

     (a) the invalidity or unenforceability of any Note or other document evidencing all or
any part of such Obligations as related to the other Borrower;

     (b) the absence of any attempt by Bank to (i) collect any Obligations from the other
Borrower or any guarantor or (ii) pursue any other remedy to enforce such collection,
including recourse to the Collateral of such other Borrower;

     (c) the waiver or consent by Bank with respect to any provision of this Agreement or
any agreement or instrument otherwise evidencing Obligations as related to the other
Borrower;

     (d) Bank’s election, in any proceeding instituted under Chapter 11 of the Bankruptcy
Code respecting the other Borrower, of the application of Section 1111(b)(2) of the
Bankruptcy Code;

     (e) any borrowing or grant of a security interest by the other Borrower under Section
364 of the Bankruptcy Code;

     (f) any modification, supplement, extension or amendment of any contract or agreement
upon which the other Borrower and Bank may agree or any modification, release or other
alteration of any of Obligations as related to the other Borrower or of any security
therefor;

     (g) any agreements or arrangements whatever by Bank with any other Person;

     (h) any failure by Bank to perfect any security interest in, or preserve its rights to,
any Collateral; or

     (i) any other circumstance which might otherwise constitute a legal or equitable
discharge or defense to such liability, including, without limitation, the absence of any
notice or demand upon such Borrower.

     The liability of each Borrower in respect of the Obligations may be enforced without requiring
Bank first to resort to any other right, remedy or security. No Borrower shall have any right of
subrogation, reimbursement or indemnity whatsoever, nor any right of recourse to security for the
Obligations, unless and until all of the Obligations have been fully paid. Nothing shall discharge
or satisfy the liability of any Borrower in respect of the Obligations except the full payment and
performance thereof.

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     2.3 Excess Interest. In no contingency or event whatsoever shall the interest rate
charged pursuant to the provisions of this Agreement exceed the highest rate permissible under any
law which a court of competent jurisdiction shall, in a final determination, deem applicable
hereto. In the event that such a court determines that Bank has received interest under this
Agreement in excess of the highest applicable rate, such excess interest shall first be applied to
any unpaid principal balance owed by Borrowers and, if the then remaining excess interest is
greater than the unpaid principal balance, Bank promptly shall refund such excess interest to
Borrowers. Notwithstanding anything to the contrary contained in this Agreement or any of the
Notes, if the rate of interest payable on any of the Notes is ever reduced as a result of this
Section 2.3 and at any time thereafter the maximum rate permitted by applicable law shall exceed
the rate of interest provided for in such Note, then the rate provided for in such Note shall be
increased to the maximum rate permitted by applicable law for such period as is required so that
the total amount of interest received by Bank is that which would have been received by Bank but
for the operation of this Section 2.3.

     2.4 Revival. To the extent that Borrowers make a payment or payments to Bank or to
the extent Bank receives any payment or proceeds of the Collateral for Borrowers’ benefit, which
payment or proceeds or any part thereof is subsequently invalidated, declared to be fraudulent or
preferential, set aside, and/or required to be repaid to a trustee, receiver or any other party
under any Bankruptcy Law, state or federal law, common law or equitable cause, then, to the extent
of such payment or proceeds received by Bank, the Obligations or part thereof intended to be
satisfied shall be revived and shall continue in full force and effect as if such payment or
proceeds had not been received by Bank.

     2.5 Manner of Payments. On or before the date they become due, Borrowers shall make
payments to Bank in immediately available funds, even if Borrowers contest any statements rendered
by Bank; provided, however, that if any statement is subsequently proved to be incorrect, Bank, at
the option of Borrowers, promptly shall (i) refund any overpaid amount to Borrowers or (ii) grant a
credit against amounts due for the following period in the appropriate amount. As to
Obligations which become due and payable other than on a fixed date by their terms or as a result
of demand for payment and/or acceleration on account of an Event of Default, Borrowers immediately
shall pay to Bank such Obligations in immediately available funds. Whenever any payment to be made
under this Agreement including, but not limited to, any payment to be made on any of the Notes, is
stated to be due on a day which is not a Business Day, such payment may be made on the next
succeeding Business Day and such extension of time in each such case shall be included in the
computation of the interest payable on such Note or such other Obligation. Unless otherwise
provided in this Agreement, all payments or prepayments made or due under this Agreement shall be
made in immediately available funds to Bank prior to 2:00 p.m., Cleveland, Ohio, time, on the date
when due. Payments received by Bank after 2:00 p.m., Cleveland, Ohio, time, shall be deemed to
have been made on the next following Business Day.

     2.6 Miscellaneous LIBOR Rate Loan Terms.

     (a) LIBOR Rate Lending Unlawful. If Bank shall determine (which determination
shall, upon notice thereof to Borrowers be conclusive and binding on Borrowers) that the
introduction of or any change in or in the interpretation of any law,

20

 

rule, regulation or
guideline, (whether or not having the force of law) makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for Bank to make, continue or
maintain any LIBOR Rate Loan as, or to convert any loan into, a LIBOR Rate Loan of a certain
duration, the obligations of Bank to make, continue, maintain or convert into any such LIBOR
Rate Loans shall, upon such determination, forthwith be suspended until the Bank shall
notify Borrowers that the circumstances causing such suspension no longer exist.

     (b) Unavailability of LIBOR Rate. In the event that Borrowers shall have
requested a LIBOR Rate Loan and Bank, in its sole discretion, shall have determined that
U.S. dollar deposits in the relevant amount and for the relevant LIBOR Interest Period are
not available to Bank in the London interbank market; or by reason of circumstances
affecting Bank in the London interbank market, adequate and reasonable means do not exist
for ascertaining the LIBOR Rate applicable to the relevant LIBOR Interest Period; or the
LIBOR Rate no longer adequately and fairly reflects Bank’s cost of funding loans; upon
notice from Bank to Borrowers, the obligations of Bank to make or continue any loans as, or
to convert any loans into, LIBOR Rate Loans of such duration shall forthwith be suspended
until Bank shall notify Borrowers that the circumstances causing such suspension no longer
exist.

     (c) Increased Costs. If, on or after the date hereof, the adoption of any
applicable law, rule or regulation or guideline (whether or not having the force of law), or
any change therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Bank with any request or directive (whether or not
having the
force of law) of any such authority, central bank or comparable agency: (a) shall
impose, modify or deem applicable any reserve, special deposit or similar requirement
(including, without limitation, any such requirement imposed by the Board of Governors of
the Federal Reserve System of the United States) against assets of, deposits with or for the
account of, or credit extended by, Bank or shall impose on Bank or on the London interbank
market any other condition affecting its LIBOR Rate Loans or its obligation to make LIBOR
Rate Loans; or (b) shall impose on Bank any other condition affecting its LIBOR Rate Loans
or its obligation to make LIBOR Rate Loans, and the result of any of the foregoing is to
increase the cost to Bank of making or maintaining any LIBOR Rate Loan, or to reduce the
amount of any sum received or receivable by Bank under this Agreement with respect thereto,
by an amount deemed by Bank to be material, then, within 15 days after demand by Bank,
Borrowers shall pay to Bank such additional amount or amounts as will compensate Bank for
such increased cost or reduction.

     (d) Increased Capital Costs. If any change in, or the introduction, adoption,
effectiveness, interpretation, reinterpretation or phase-in of, any law or regulation,
directive, guideline, decision or request (whether or not having the force of law) of any
court, central bank, regulator or other governmental authority affects or would affect the
amount of capital required or expected to be maintained by Bank, or person controlling Bank,
and Bank determines (in its sole and absolute discretion) that the rate of return on its or
such controlling person’s capital as a consequence of its commitments or the loans

21

 

made by
Bank is reduced to a level below that which Bank or such controlling person could have
achieved but for the occurrence of any such circumstance, then, in any such case upon notice
from time to time by Bank to Borrowers, Borrowers shall immediately pay directly to Bank
additional amounts sufficient to compensate Bank or such controlling person for such
reduction in rate of return. A statement of Bank as to any such additional amount or
amounts (including calculations thereof in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on Borrowers. In determining such amount, Bank
may use any method of averaging and attribution that it (in its sole and absolute
discretion) shall deem applicable.

     (e) Taxes. All payments by Borrowers of principal of, and interest on, LIBOR
Rate Loans and all other amounts payable hereunder shall be made free and clear of and
without deduction for any present or future income, excise, stamp or franchise taxes and
other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding franchise taxes and taxes imposed on or measured by
Bank’s net income or receipts (such non-excluded items being called “Taxes”). In the event
that any withholding or deduction from any payment to be made by Borrowers hereunder is
required in respect of any Taxes pursuant to any applicable law, rule or regulation, then
Borrowers will

     (i) pay directly to the relevant authority the full amount required to be so
withheld or deducted;

     (ii) promptly forward to Bank an official receipt or other documentation
satisfactory to Bank evidencing such payment to such authority; and

     (iii) pay to Bank such additional amount or amounts as is necessary to ensure
that the net amount actually received by Bank will equal the full amount Bank would
have received had no such withholding or deduction been required.

     Moreover, if any Taxes are directly asserted against Bank with respect to any payment
received by Bank hereunder, Bank may pay such Taxes and the Borrowers will promptly pay such
additional amount (including any penalties, interest or expenses) as is necessary in order
that the net amount received by Bank after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount Bank would have received had not such Taxes
been asserted.

     If Borrowers fail to pay any Taxes when due to the appropriate taxing authority or
fails to remit to Bank the required receipts or other required documentary evidence,
Borrowers shall indemnify Bank for any incremental Taxes, interest or penalties that may
become payable by Bank as a result of any such failure.

     2.7 Liability of Borrowers. Borrowers each acknowledge and agree that each Borrower
is and shall remain fully liable, jointly and severally, for payment in full of the entire unpaid
balance of the Obligations outstanding at any time.

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     3. LATE CHARGE; DEFAULT INTEREST RATE

     3.1 Late Charge. Any installment or other payment not made within ten (10) days of
the date such payment or installment is due shall be subject to a late charge equal to five percent
(5%) of the amount of the installment or payment.

     3.2 Default Interest Rate. Upon and after the occurrence of an Event of Default, and
during the continuation thereof, the Loans shall bear interest at the Default Rate.

     4. COLLATERAL; GENERAL TERMS

     4.1 Grant of Security Interest. To secure the prompt payment and performance of the
Obligations, and in addition to any other collateral or Lien securing the Obligations, John D
grants to Bank a continuing security interest in and to all of the Collateral.

     4.2 Perfection
of Bank’s Security Interest in Collateral. Borrowers shall each execute such financing statements provided for by applicable law, and
execute mortgages, leasehold mortgages and related documents, and otherwise take such other action
and execute such assignments or other instruments or documents, in each case as Bank may reasonably
request, to evidence, perfect, or record Bank’s security interest in the Collateral. Each Borrower
hereby authorizes Bank to execute and file (or file without execution) any such financing statement
or continuation statement on such Borrower’s behalf to the extent permitted by applicable law.

     4.3 Insurance. Borrowers shall maintain, at Borrowers’ expense, insurance, including,
but not limited to, insurance upon all tangible Collateral wherever located, in storage or in
transit in vehicles including goods evidenced by documents, covering casualty, hazards, public
liability, business interruption, and such other risks in such amounts and with such insurance
companies as shall in each instance be reasonably satisfactory to Bank. Borrowers shall deliver
copies of such policies or insurance binders thereof to Bank with satisfactory endorsements naming
Bank as an additional insured, lender’s loss payee and mortgagee as its interest may appear. Each
policy of insurance or endorsement shall contain a provision requiring at least ten (10) days
advance written notice to Bank in the event of cancellation of the policy for non-payment of
premiums and thirty (30) days advance notice to Bank in the event of cancellation for any other
reason or any modification changing the limits, risks insured against, or deductibles thereto and a
clause that the interest of Bank shall not be impaired or invalidated by any act or neglect of
Borrowers or other owner of the Property nor by the occupation of the premises for purposes more
hazardous than are permitted by such policy. Each insurance policy may contain loss deductible
provisions not to exceed Ten Thousand Dollars ($10,000). Borrowers shall promptly deliver to Bank
true copies of all claims and loss reports made to insurance companies and will furnish copies of
all such other reports as may be requested by Bank. Upon the occurrence of an Event of Default,
Borrowers hereby irrevocably make, constitute, and appoint Bank (and all officers, employees, or
agents designated by Bank) as Borrowers’ true and lawful attorney-in-fact and agent, with full
power of substitution, such that Bank shall have the right and authority to make and adjust claims
under such policies of insurance, receive and endorse the name of Borrowers on, any check, draft,
instrument or other item of payment for the proceeds of such policies of insurance and make all
determinations and decisions with respect to such policies of insurance or to pay any premium in
whole or in part relating thereto. Without waiving or releasing any obligation or default by
Borrowers under this Agreement, Bank may (but shall not be required to) at any time or times
thereafter maintain such

23

 

action with respect thereto which Bank deems advisable. All sums
disbursed by Bank in connection therewith (including, but not limited to, reasonable attorneys’ and
paralegals’ fees and disbursements, court costs, expenses and other charges relating thereto) shall
be payable on demand, and until paid by Borrowers to Bank, with interest thereon at the current
interest rate under Section 2.1 of this Agreement or the Default Rate, whichever is then in effect,
and shall be additional Obligations under this Agreement secured by the Collateral.

     4.4 Protection of Collateral; Reimbursement. All insurance expenses and all expenses
of protecting, storing, warehousing, insuring, handling, maintaining, and shipping any Collateral,
any and all excise, property, sales, use,
severance or other taxes imposed by any state, Federal, or local authority on any of the
Collateral, or in respect of the sale thereof, or otherwise in respect of Borrowers’ business
operations which, if unpaid, could result in the imposition of any Lien upon the Collateral, shall
be borne and paid by Borrowers. If Borrowers fail to pay promptly any portion thereof when due,
except as may otherwise be permitted under this Agreement or under any of the other Credit
Documents, Bank, at its option, may, but shall not be required to, pay the same. All sums so paid
or incurred by Bank for any of the foregoing and any and all other sums for which Borrowers may
become liable under this Agreement and all costs and expenses (including reasonable attorneys’ fees
and paralegals’ fees, legal expenses, and court costs, expenses and other charges related thereto)
which Bank may incur in enforcing or protecting its Liens on or rights and interests in the
Collateral or any of its rights or remedies under any Credit Document or any other agreement
between the parties to this Agreement or in respect of any of the transactions to be had under this
Agreement or any of the Obligations shall be repayable on demand and, until paid by Borrowers to
Bank with interest thereon at the highest interest rate then applicable to any Loan shall be
additional Obligations under this Agreement secured by the Collateral. Unless otherwise provided
by law, Bank shall not be liable or responsible in any way for the safekeeping of any of the
Collateral or for any loss or damage thereto or for any diminution in the value thereof, or for any
act or default of any warehouseman, carrier, forwarding agency, or other Person whomsoever.

     4.5 Inspection. During regular business hours and upon forty-eight (48) hours prior
written notice, Bank (by any of its officers, employees, agents or representatives) shall have the
right to inspect the Collateral, all books, records, journals, orders, receipts, or other
correspondence related thereto (and to make extracts or copies thereof as Bank may desire) and the
premises upon which any of the Collateral is located for the purpose of verifying the amount,
quality, quantity, value, and condition of, or any other matter relating to, the Collateral;
provided, however, that upon the occurrence of a Default or Event of Default, Bank may exercise
such access and other rights at any time Bank deems such action necessary or desirable at the sole
expense of Borrowers.

     4.6 Additional Mortgage. Further, to secure the prompt payment and performance of the
Obligations, and in addition to any other Collateral or lien securing the Obligations, the
Additional Mortgage has been or will be executed and delivered to Bank. Bank will release the
Additional Mortgage promptly following written request by Borrowers at any time after the
calculation evidenced by two (2) consecutive Commitment Sublimit Reports (dated six (6) months
apart) demonstrates that the Outstanding Revolving Loans are less than the Eligible Current
Producing Reserve Value as shown on the Commitment Sublimit Report. In addition, Bank will release
one or more properties subject to the Additional Mortgage upon receipt of: (a)

24

 

a fully executed
purchase agreement; and (b) payment of the Release Price (as defined in the Additional Mortgage)
with respect to the particular properties.

     5. REPRESENTATIONS AND WARRANTIES OF BORROWERS

     5.1
General Representations and Warranties. As an inducement to Bank to make advances under this Agreement, Borrowers each, jointly and
severally, warrant and represent to Bank each of the following:

     (a) Existence; Foreign Qualification John D is a corporation duly organized,
validly existing and in good standing under the laws of Maryland and is duly qualified and
authorized to do business and is in good standing as a foreign corporation in each of the
states or jurisdictions where the character of its Property or its business activities makes
such qualification necessary, except where the failure to so qualify will not cause or
result in a Material Adverse Effect.

     (b) Authority. Each Borrower has the right and power and is duly authorized
and empowered to enter into, execute, deliver, and perform this Agreement and each of the
other Credit Documents to which it is a party. This Agreement and each of the other Credit
Documents to which either Borrower is a party have been duly authorized and approved by all
necessary actions of each Borrower, and are the valid and binding obligations of each
Borrower, enforceable against each Borrower in accordance with their respective terms. The
execution, delivery, and performance of this Agreement and each of the other Credit
Documents to which either Borrower is a party will not conflict with nor result in any
breach in any of the provisions of, or constitute a default under, or result in the creation
of any Lien (other than Permitted Liens) upon any Property of such Borrower under the
provisions of any company governance instruments or any Material Agreement.

     (c) Material Agreements. Except as disclosed on Schedule 5.1(c)
attached to this Agreement, John D is not a party to any Material Agreement.

     (d) Other Related Persons. Except as set forth in Schedule 5.1(d)
attached to this Agreement, each Borrower (i) has no Subsidiaries, (ii) has not been the
survivor of any merger or consolidation during the preceding five (5) years, or (iii) has
not been known as or operated under or otherwise used any other business or fictitious name,
trade name, or trade style during the preceding five (5) years.

     (e) Compliance With Laws. John D (i) holds all permits, certificates,
licenses, orders, registrations, franchises, authorizations, and other approvals from all
Federal, state, local, and foreign governmental and regulatory bodies necessary for the
conduct of its business; (ii) is in compliance with all Federal, state, local, or foreign
applicable statutes, rules, regulations, orders and permits including, but not limited to,
those relating to occupational safety and health, equal employment practices, the drilling
and operation of wells, the transportation of natural gas, and the marketing of production
(iii) is not in violation of or in default
under any Material Agreement, and (iv) has not received any notice to the effect that
it is not in full compliance with any of the requirements of

25

 

ERISA, except, with respect to
each of subparagraphs (i) through (iv), to the extent such failure or occurrence, as the
case may be, would not have or would not be reasonably expected to have a Material Adverse
Effect. John D is not a regulated public utility under any applicable law.

     (f) Litigation and Administrative Proceedings. Except as disclosed on
Schedule 5.1(f) attached to this Agreement, to the best of either Borrower’s
knowledge, there are (i) no lawsuits, actions, investigations, or other proceedings pending
or threatened against either Borrower, or in respect of which either Borrower may have any
material liability, in any court or before any governmental authority, arbitration board, or
other tribunal, (ii) no grievances, disputes, or controversies outstanding with any union or
other organization of the employees of John D or involving Osborne, or threats of work
stoppage, strike, or pending demands for collective bargaining, which as to subparagraphs
(i) and (ii) above would have or would be reasonably expected to have a Material Adverse
Effect. Except as disclosed on Schedule 5.1(f) attached to this Agreement, there are no
orders, writs, injunctions, judgments, or decrees of any court or government agency or
instrumentality to which either Borrower is a party or by which either Borrower’s Property
is bound.

     (g) Use of Proceeds. All Advances made by Bank pursuant to this Agreement
shall be made solely to John D and solely and strictly for the following purposes: (i)
investment by John D in equipment, drilling and exploration in the Business and (ii) general
working capital purposes of John D in the Business. These uses of proceeds are, and will
continue to be, legal and proper uses, duly authorized by such Borrower, and such uses are
currently consistent with all applicable laws and statutes currently in effect. None of the
proceeds of any Advances shall be used, directly or indirectly, for loans to Osborne
personally. Neither Borrower is engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock (within the meaning of any regulation of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any Loans will be
used to purchase or carry (or refinance any borrowing, the proceeds of which were used to
purchase or carry) any margin stock, or to extend credit to others for the purpose of
purchasing or carrying margin stock. Borrowers shall not use, directly or indirectly, any
proceeds of Advances to pay obligations of John D to the Richard M. Osborne Trust.

     (h) Intellectual Property. John D owns, possesses, or has the right to use all
the patents, patent applications, trademarks, service marks, copyrights, licenses, and
rights with respect to the foregoing necessary for the conduct of its business, without any
known conflict with the rights of others.

     (i)
Location of Collateral. All of the Collateral (other than Oil and Gas Properties) is located at a Collateral
Location identified on Schedule 1.1-F.

     (j) Title to Assets. John D has good title to and ownership of all Property it
purports to own, which is free and clear of all Liens, except those in favor of Bank and any
Permitted Liens.

26

 

     (k) Financial Statements. All financial statements furnished by either
Borrower have been prepared in accordance with and in conformity with such Person’s normal
accounting practices, policies, and principles which conform to GAAP, have been consistently
applied and fairly present in all material respects the financial position of such Person at
such date and the results of operations of such Borrower for such period. There has not
been any change in the condition, financial or otherwise, of either Borrower as shown on
their most recent interim financial statements except changes in the ordinary course of
business, none of which individually or in the aggregate will have a Material Adverse
Effect. Any and all additional financial statements to be delivered by Borrowers to Bank
(including but not limited to, the financial statements of each Borrower) in accordance with
the provisions of this Agreement shall be prepared in accordance with GAAP and in conformity
with that Person’s normal accounting practices, policies, and principles which will be
consistently applied and which will fairly present in all material respects the financial
position of each Borrower at such dates and the results of operations of each Borrower for
such periods.

     (l) Accurate and Complete Statements. Neither this Agreement nor any written
statement made by either Borrower in connection with this Agreement contains any untrue
statement of a material fact or omits a material fact necessary to make the statements
contained therein or in this Agreement not misleading. After due inquiry by each Borrower,
there is no known fact that either Borrower has not disclosed to Bank and/or that may have a
Material Adverse Effect.

     (m) Tax Returns. All Federal, state, and local tax returns and other reports
required by law to be filed in respect of the income, business, properties, and employees of
Borrower have been filed, and all taxes, assessments, fees and other governmental charges
which are due and payable have been paid, except as otherwise permitted in this Agreement or
where the failure to do so does not and will not cause or result in a Material Adverse
Effect or unless the payment of any such taxes or the filing of any such reports is being
contested in good faith by Borrower. The provision for taxes on the books of Borrower is
adequate for all years not closed by applicable statutes and for the current fiscal year
except where the failure to do so does not and will not cause or result in a Material
Adverse Effect.

     (n) Margin
Requirements. Borrowers’ execution and delivery of this Agreement and each of the other Credit
Documents will not directly or indirectly violate or result in a violation of Section 7 of
the Securities Exchange Act of 1934, as amended, the provisions of Regulations T, U, or X or
any other Regulation of the Board of Governors of the Federal Reserve System of the United
States of America, or any regulations issued pursuant thereto.

     (o) Environmental Laws. Except as disclosed on Schedule 5.1(o)
attached to this Agreement, (i) the Collateral Locations and all other real property owned
or leased by John D, and all improvements, equipment, or other Property located thereon or
used therein and all business operations conducted thereupon, have been operated or
maintained and are in compliance in all material respects with Environmental Laws,
including, without limitation, (A) the provisions of the Federal Occupational Safety and

27

 

Health Act, the National Environmental Protection Act, the Resource Conservation and
Recovery Act, and all rules and regulations thereunder and all similar Federal, state and
local laws, rules, and regulations, and (B) all applicable Federal, state, and local laws,
rules, and regulations relating to air emissions, water discharge, noise emissions, solid or
liquid waste disposal, hazardous waste or materials, or other environmental, health, or
safety matters, and (ii) there are no outstanding citations, notices, or orders of
non-compliance issued to John D, or relating to the respective businesses, assets, property,
leaseholds, or equipment of John D under any such laws, rules, or regulations. Borrowers
shall indemnify and hold Bank harmless from and against any liability, loss, damage, suit,
action, or proceeding pertaining to Hazardous Materials discovered at or relating to
Borrowers’ business operations or the locations where Borrowers previously did, presently
do, or in the future do, operate their business, including, but not limited to, claims of
any Federal, state, or municipal government or quasi-governmental agency, or any third
person, whether arising under the Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980, as amended, the Resource Conservation and Recovery Act, as amended,
or any other Federal, state, or municipal law or regulation, or tort, contract, or common
law.

     (p) Continued Business. There exists no actual, pending, or, to the best of
Borrowers’ knowledge, any threatened termination, cancellation, or limitation of, or any
modification or change in the business relationship of John D and any customer or supplier,
or any group of customers or suppliers whose purchases or supplies, individually or in the
aggregate, are material to the business of John D, and, to the best of Borrowers’ knowledge,
there exists no present condition or state of facts or circumstances which would materially
affect adversely John D in any respect or prevent John D from conducting such business or
the transactions contemplated by this Agreement in substantially the same manner which it
was heretofore conducted.

     (q)
Maintenance of Fixed Collateral. All Fixed Collateral necessary to conduct John D’s business is in good operating
condition, ordinary wear and tear and normal repair and maintenance excepted, and has been
maintained in accordance with prevailing industry practices.

     (r) Solvency. John D has received fair consideration and reasonably equivalent
value for the Obligations incurred by it under the Credit Documents. Each Borrower is, and
after giving effect to the Loans and granting of Liens related thereto will be, Solvent.

     (s) ERISA. Except as identified on Schedule 5.1(s) attached to this
Agreement, John D does not maintain or contribute to any employee benefit plan subject to
Title IV of ERISA. Furthermore, John D has not incurred any accumulated funding deficiency
within the meaning of ERISA or incurred any liability to the PBGC in connection with any
employee benefit plan established or maintained by Borrower and no reportable event or
prohibited transaction, as defined in ERISA, has occurred with respect to such plans.

28

 

     (t) No Investment Company. Neither John D nor any of its Subsidiaries is an
“investment company” within the meaning of the Investment Company Act of 1940.

     (u) Indebtedness. John D has no outstanding Indebtedness or any commitment at
the date hereof to incur, create, assume or become liable in respect of any Indebtedness,
other than the Indebtedness represented by (i) the Notes, (ii) the secured Indebtedness
identified on Schedule 5.1(u)(ii) attached to this Agreement or (iii) the unsecured
Indebtedness identified on Schedule 5.1(u)(iii) attached to this Agreement. Except
as expressly identified on Schedule 5.1(u)(iv) attached to this Agreement, neither
Borrower has directly or indirectly given a Guaranty of the Indebtedness of any other
Person.

     (v) Anti-Terrorism Laws.

     (i) Neither Borrower nor any Related Person of either Borrower is in violation
of any Anti-Terrorism Law or engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts to
evade or avoid, any of the prohibitions set forth in any Anti-Terrorism Law.

     (ii) Neither Borrower nor any Related Person of either Borrower is any of the
following (each a “Blocked Person”): (A) a Person that is listed in the annex to, or
is otherwise subject to the provisions of, Executive Order No. 13224; (B) a Person
owned or controlled by, or acting for or on behalf of, any Person that is listed in
the annex to, or is otherwise subject to the provisions of, Executive Order No.
13224; (C) a Person with which any bank or other financial institution
is prohibited from dealing or otherwise engaging in any transaction by any
Anti-Terrorism Law; (D) a Person that commits, threatens or conspires to commit or
supports “terrorism” as defined in Executive Order No. 13224; (E) a Person that is
named as a “specially designated national” on the most current list published by the
U.S. Treasury Department Office of Foreign Asset Control at its official website or
any replacement website or other replacement official publication of such list; or
(F) a Person who is a Related Person of a Person listed above.

     (iii) Neither Borrower nor any Related Person of either Borrower (A) conducts
any business or engages in making or receiving any contribution of funds, goods or
services to or for the benefit of any Blocked Person or (B) deals in, or otherwise
engages in any transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224.

     (w) Interests in Wells. John D is the direct owner (beneficially and of
record) of the interests indicated on Schedule 1.1-B in the respective producing wells.
Each such percentage described as “total interest” reflects John D’s percentage share of the
total production of the well, and the percentage described as “working interest” reflects
John D’s interest expressed as a percentage of all of the interests burdened by costs of
production.

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     (x) Indebtedness to Related Persons. Except for Permitted Subordinated Debt,
John D has no outstanding Indebtedness or commitment to incur, create, assume or become
liable on any Indebtedness, to any Related Person, other than Permitted Subordinated
Indebtedness.

     (y) No Assets Outside Ohio. John D does not currently hold any ownership
interest in any assets outside of the State of Ohio. John D is a member of Kykuit. Kykuit
has ownership interests in assets in the State of Montana.

     5.2 Reaffirmation. Each Credit Request for an Advance made by a Borrower pursuant to
this Agreement shall constitute, unless Bank is otherwise notified in writing prior to the time of
such Advance, (i) an automatic representation and warranty by each Borrower to Bank that there does
not then exist a Default or an Event of Default and (ii) a reaffirmation as of the date of such
request that all of the representations and warranties of each Borrower contained in this Agreement
or any of the other Credit Documents are true, correct, and complete in all material respects,
except to the extent such representations relate to a specified date, and all covenants have been
complied with. With respect to the Exhibits, Borrowers shall provide to Bank information necessary
to update the Exhibits upon the occurrence of events or conditions that have or would reasonably be
expected to have a Material Adverse Effect and changes or additions to the information on the
Exhibits as otherwise required by this Agreement.

     6. COVENANTS AND CONTINUING AGREEMENTS

     6.1 Affirmative Covenants. So long as any Obligations remain unsatisfied, Borrowers
covenant jointly and severally that, unless otherwise consented to by Bank in writing, Borrowers
will undertake each of the following:

     (a) Transaction Fees. Pay to Bank, on demand, any and all fees, costs, or
expenses that Bank pays to a bank or other similar institution arising out of or in
connection with (i) the forwarding by Bank to Borrower or any other Person on behalf of
Borrower of any proceeds of loans made by Bank pursuant to this Agreement, or (ii) the
depositing for collection, by Bank, of any check or item of payment received and/or
delivered to Bank on account of the Obligations.

     (b) Payments. Make all payments as and when required by the Credit Documents.

     (c) Existence. John D will preserve and maintain its separate legal existence,
and all rights, privileges, and franchises in connection therewith, and maintain its
qualification and good standing in all states in which such qualification is necessary in
order for John D to conduct its business in such states except where the failure to so
qualify would not have a Material Adverse Effect.

     (d) Tax Returns and Payment of Taxes. File all Federal, state, and local tax
returns and other reports that Borrowers are required by law to file, maintain adequate
reserves for the payment of all taxes, assessments, governmental charges, and levies imposed
upon it, its income, or its profits, or upon any Property belonging to it, and pay and
discharge all such taxes, assessments, governmental charges, and levies prior to the

30

 

date on
which penalties attach thereto, except where the same are being contested in good faith by
appropriate proceedings and adequate book reserves have been established with respect to
each such claim being contested.

     (e) Maintenance of Property. Maintain the Property necessary to conduct the
business of John D in good condition, ordinary wear and tear excepted, and make all
renewals, repairs, replacements, additions and improvements thereto necessary to operate the
business of John D in the ordinary course of business.

     (f)
Compliance with Laws. Comply with all laws, ordinances, governmental rules and regulations to which it is
subject (including, without limitation, Environmental Laws) and obtain all licenses,
permits, franchises, or other governmental authorizations necessary to the ownership of its
Properties or to the conduct of its business which, if not complied with or obtained or
which, if violated, might result in a Material Adverse Effect.

     (g) Field Collateral Exams and Audits. Assist Bank from time to time and at
any time during the term of this Agreement with field exams and audits of the Property of
John D and its Subsidiaries.

     (h) Licenses and Permits. Maintain all licenses and permits required to
operate the Business pursuant to all applicable state, federal and regulatory laws.

     (i) Books and Records. Keep adequate records and books of account with respect
to its business activities in which proper entries are made in accordance with GAAP
reflecting all its financial transactions.

     (j) Financial Information. Cause to be prepared and furnished to Bank the
following financial information (which in the case of any financial statements shall consist
of a balance sheet, income statement, and statement of cash flows and, except as provided
otherwise below, all relevant footnotes) in accordance with GAAP:

     (i) On or before ninety (90) days after the end of each Fiscal Year, the
audited consolidated annual financial statements of John D, including a statement of
financial position, income statement, statement of cash flows and statement of
shareholders’ equity, for the Fiscal Year, prepared in accordance with GAAP and
accompanied by a favorable audit report thereon of a Registered Accounting Firm of
recognized standing acceptable to Bank (which report shall not contain a
qualification or explanatory paragraph), together with a management letter, if any,
of such Registered Accounting Firm;

     (ii) on or before forty-five (45) days after the end of each Fiscal Quarter
other than the Fiscal Quarter ending the Fiscal Year, the consolidated interim
financial statements of John D, including a statement of financial position, income
statement, statement of cash flows and statement of shareholders’ equity, as of the
end of the preceding Fiscal Quarter and of the portion of John D’s Fiscal Year then
elapsed, of John D as prepared in accordance with GAAP and fairly presenting the
financial position and results of operations of John D for such accounting period;

31

 

     (iii) concurrently with the delivery of each of the financial statements
described in Subparagraphs (i) and (ii), a fully and properly completed compliance
certificate in substantially the form of Exhibit C;

     (iv) on or before twenty (20) days of the end of each quarter, quarterly
statements of Osborne and/or the Richard M. Osborne Trust evidencing the Liquidity
of Osborne as set forth in Section 9.1(m); and

     (v) as soon as practical, but in no event later than October 31 of each year,
true, complete and accurate personal federal tax returns and reports and financial
statements of Osborne with respect to the prior calendar year in a form and with
information acceptable to Bank in its sole discretion, including marketable
securities. Osborne’s financial statements shall include and identify separately
the assets and liabilities and income and expenses of the Richard M. Osborne Trust.

     (k) Reserve Reports. On or before thirty (30) days after written request
therefor (which request shall not be made more often than twice in the same calendar year),
Borrowers shall provide to Bank or to its designated agents, in writing, all information
necessary or appropriate for the preparation of a reserve evaluation of the proved,
producing reserves included in the Oil and Gas Properties of John D, to be performed by an
independent registered petroleum geologist or engineer. All such information shall be
complete and accurate and shall conform to the request therefor. Any exceptions to the
request desired by Borrowers shall be stated in writing in detail to the Bank or its
designated agents.

     (l) Notification of Certain Events. Notify Bank in writing of each of the
following occurrences:

     (i) promptly upon learning thereof, of the institution of any suit, action, or
administrative proceeding against any Borrower or relating to any of its Property,
whether or not the claim is considered by such Borrower to be covered by insurance,
for the payment of money in excess of $100,000 individually or $250,000 in the
aggregate or where it would reasonably be expected to have or result in a Material
Adverse Effect;

     (ii) at least thirty (30) days prior thereto, of John D’s opening or closing of
any office or place of business;

     (iii) promptly upon learning thereof, of any labor dispute to which John D may
become a party, any strikes or walkouts relating to any of its facilities, and the
expiration of any labor contract to which a Borrower is a party or by which it is
bound and where it would reasonably be expected to have a Material Adverse Effect;

     (iv) within five (5) business days after learning of the occurrence thereof, of
any default by a Borrower or any other Person under any Material Agreement;

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     (v) promptly upon learning of the occurrence thereof, of any default by any
obligor under any note or other evidence of debt payable in excess of $50,000, other
than Accounts, to a Borrower;

     (vi) promptly upon the occurrence thereof, of any Default or Event of Default;
and

     (vii) at least ten (10) days prior to John D’s borrowing of amounts, or
acceptance of the extension of credit in any form, from any Related Person.

     (m) Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio
greater than or equal to 1.10 to 1.00, calculated as of the last day of each Fiscal Quarter,
commencing March 31, 2008, determined as set out below:

	 	 	 
	Compliance Date	 	Measurement Period
	March 31, 2008
	 	Quarter Ended March 31, 2008
	June 30, 2008
	 	Six Months Ended June 30, 2008
	September 30, 2008
	 	Nine Months Ended September 30, 2008
	December 31, 2008 and each Fiscal Quarter
	 	Rolling four Quarters then ended
	end thereafter	 	 

     (n) Reserved.

     (o) Insurance. In addition to such other requirements as may be set forth in
any of the Credit Documents, maintain insurance coverage on the physical assets of John D
and its Subsidiaries and against other business risks in such amounts and of such types as
are customarily carried by companies similar in size and nature, and in the event of
acquisition of additional property, real or personal, or of incurrence of additional risks
of any nature, increase such insurance coverage in such manner and to such extent as prudent
business judgment and present practice would dictate; and in the case of all policies
covering property subject to Credit Documents or property in which Bank shall have a
security interest of any kind whatsoever, other than those policies protecting against
casualty liabilities to strangers, all such insurance policies shall provide that (i) no
modification thereof shall be made except upon at least thirty (30) days advance written
notice to Bank and (ii) the loss payable thereunder shall be payable to Borrower (or the
applicable owner thereof) and Bank, in accordance with mortgagee/loss payable clauses
reasonably satisfactory to Bank.

     (p) Further Assurances. Furnish to Bank at the expense of Borrowers, upon Bank’s reasonable request and in
form reasonably satisfactory to Bank (and execute and deliver or cause to be executed and
delivered), such pledges, assignments, mortgages, lien instruments or other security
instruments, consents, acknowledgments, waivers, subordinations and financing statements
covering any or all of the Collateral pledged, assigned, mortgaged or encumbered pursuant to
the Credit Documents of every nature and description, whether now owned or hereafter
acquired by Borrowers or any party providing such Collateral, including, without limitation,
within ten (10) Business Days after Bank’s written request, Borrowers shall cause each
lessor or warehouseman, as

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applicable, for each leased Collateral Location, to execute and
deliver to Bank a landlord waiver, together with such other documents or instruments as Bank
may require to effectuate more fully the purposes of this Agreement or any of the Credit
Documents.

     (q) Bank Accounts. John D and its Subsidiaries shall maintain their primary
concentration bank accounts with Bank and shall use Bank as their primary banking
depository.

     (r) Inspections. Permit Bank, one time each calendar year, through its
authorized attorneys, accountants and representatives to, at reasonable times and intervals
during normal business hours, and upon forty-eight (48) hours prior written notice and, with
respect to John D, in the presence of an officer of John D, and so long as the same would
not unreasonably interfere with the business operations of Borrowers, (i) visit all offices
of Borrowers and discuss all financial matters pertinent to Borrowers with their respective
officers, directors and accountants, (ii) examine, and make extracts of, the books,
accounts, records, ledgers and assets and properties of every kind and description of
Borrowers, wherever located, upon oral or written request of Bank and (iii) make such
inspections and audits, and obtain such confirmations or other information, with respect to
any of the Collateral, as Bank determines appropriate; provided, however, that upon the
occurrence of a Default or Event of Default, Bank may exercise such access and other rights
at any time Bank deems such action necessary or desirable at the sole expense of Borrowers;
provided, further, that such inspections shall be conducted in accordance with applicable
laws prohibiting access to certain classes of persons and related to security clearance
requirements.

     (s) Indemnification. Except to the extent arising out of the gross negligence
or willful misconduct of Bank, indemnify and save Bank harmless from all loss, cost, damage,
liability or expenses, including attorneys’ fees, incurred by Bank by reason of defending or
protecting the security interests or other Liens granted hereby or under any of the Credit
Documents or the priority thereof or enforcing the obligations of Borrowers or any other
party under this Agreement or the other Credit Documents or in the prosecution or defense of
any action or proceeding concerning any matter growing out of or connected with this
Agreement or any of the Credit Documents.

     (t) Interest Rate Protection. Borrowers may enter into Hedging Contracts with
Bank at Closing or thereafter for a variable-to-fixed rate swap to fix the rate on a stated
portion of the unpaid principal of the Loans. Borrowers shall promptly furnish copies of
all Hedging Contracts to Bank promptly upon execution thereof.

     (u) John D Reserve Reports. In addition to the information regarding reserve
reports noted in Section 6.1(k) above, on or before the last day of August and the last day
of February of each year, Borrowers shall provide to Bank or to its designated agents, a
reserve evaluation of the proved, producing reserves included in the Oil and Gas Properties
of John D. Such reserve evaluations shall be complete and accurate in every respect and
shall be accompanied by a completed Commitment Sublimit Report in the form attached as
Schedule A to Exhibit B (Form of Credit Request).

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     (v) Modifications to Mortgage. In connection with the John D Reserve Reports
noted in Section 6.1(u), and at such other times as Bank requests, Borrowers shall deliver
to Bank such information and documents as Bank deems necessary to enable Bank to prepare and
record from time to time such modifications to the Mortgage in the form Bank deems
appropriate in its sole and absolute discretion.

     (w) Delivery of Information to Calculate Current Producing Reserve Value on New
Wells. John D shall deliver to Bank copies of the certificates of title and related
documents regarding wells not previously included in the John D reserve reports described in
Section 6.1(u) and on Exhibit A to the Mortgage. Said documents shall be delivered to Bank
contemporaneous with John D’s delivery of information to Schlumberger (or its successor)
regarding such wells.

     6.2 Negative Covenants. So long as any Obligations remain unsatisfied, Borrowers
jointly and severally covenant that, unless Bank has first consented thereto in writing, John D
will not cause to occur or undertake any of the following:

     (a) Mergers and Acquisitions; Sale of Assets. Merge, consolidate, or acquire
all or any substantial portion of the assets or capital stock of any Person, or sell, lease
or otherwise dispose of any assets of any Person other than in the ordinary course of
business.

     (b) Loans and Advances. Make any loans or other advances of money, or grant extensions of credit to any
Person including, but not limited to, its Related Persons, Subsidiaries, officers, employees
and shareholders or members, other than normal extensions of trade credit and travel
advances, provided the aggregate amount of such loans or advances during a Fiscal Year does
not exceed $100,000.

     (c) Indebtedness. Create, incur, assume, or suffer to exist any Indebtedness
or operating leases except (i) the Obligations and (ii) the following (herein referred to as
“Permitted Indebtedness”):

     (i) trade payables and any other liabilities incurred in the ordinary course of
business;

     (ii) Indebtedness secured by (and only by) the specific property financed
thereby, provided the aggregate amount of such Indebtedness does not exceed
$500,000;

     (iii) the Indebtedness described on Schedule 6.2(c)(iii) attached to
this Agreement (including any refinancing or replacement thereto on terms no less
favorable to John D) or as approved by Bank in writing; and

     (iv) notes payable by John D to Great Plains Exploration, LLC or Oz Gas, Ltd.
and pledged to Bank in accordance with credit arrangements between Great Plains
Exploration, LLC and Oz Gas, Ltd. and Bank.

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     (d) Related Person Transactions. Enter into, or be a party to, any transaction
with any Related Person of either one or both of Borrowers, except (i) transactions in the
ordinary course of, and pursuant to the reasonable requirements of, John D’s business and
upon fair and reasonable terms which are fully disclosed to Bank and are no less favorable
to John D than it would obtain in a comparable arm’s-length transaction with a Person not a
Related Person of John D, and (ii) advances from Great Plains Exploration, LLC and/or Oz
Gas, Ltd. as provided in Section 6.2(c)(iv).

     (e) Guarantees. Become or be liable with respect to any Guaranty except by
endorsement of instruments or items of payment in the ordinary course of business for
deposit or collection and Permitted Indebtedness.

     (f) Permitted Liens. Permit or suffer to exist any Lien in or upon any of the
Collateral, or grant a negative covenant with respect to the Collateral to any Person,
except the following (herein referred to as “Permitted Liens”):

     (i) those security interests granted in favor of Bank pursuant to this
Agreement and the other Credit Documents;

     (ii) Liens securing taxes, assessments, or governmental charges or levies, or
the claims or demands of materialmen, mechanics, carriers, warehouseman, landlords,
and other like Persons, provided the payment thereof is not at the time required;

     (iii) leases of property that would be capitalized in accordance with GAAP and
constitute Permitted Indebtedness; and

     (iv) the Liens identified on Schedule 6.2(f) attached to this
Agreement; and

     (v) interests disclosed on the certificates of title delivered to Bank by
John D as of the date hereof with respect to the Oil and Gas Properties; and

     (vi) Permitted Exceptions as defined in the Additional Mortgage.

     (g) Capital Distributions and Transactions. John D shall not pay dividends or
make any distributions in cash or otherwise or effect any redemption or other distribution
of property to any stockholders of John D or sell, pledge, encumber or transfer any of its
capital stock. Notwithstanding the foregoing, so long as there is no Default or Event of
Default, John D may pay only regularly accruing dividends on not more than Two Million
Dollars ($2,000,000) in aggregate Face Amount of the Series A Convertible Preferred Stock of
John D as authorized as of the Effective Date.

     (h) Divestitures. Divest itself of any material assets or business theretofore
conducted by transferring the same to any Related Person of either Borrower or any
partnership, joint venture, or similar arrangement, or subcontract any operations to any
Related Person of either Borrower.

36

 

     (i) Principal Business Location. John D shall not move its executive office to
any location other than a principal business location identified on Schedule 6.2(i) attached
to this Agreement, except upon providing Bank with thirty (30) days prior written notice
thereof.

     (j) Deposits and Withdrawals. Except with respect to transactions otherwise
permitted under this Agreement, make deposits to or withdrawals from any of its deposit
accounts for the benefit of any of its Related Persons.

     (k) Names. Use any business name (other than its own) or any fictitious name,
trade name, trade style, or “d/b/a” except for the names disclosed on Schedule 6.2(k)
attached to this Agreement, unless John D provides Bank with thirty (30) days prior written
notice thereof.

     (l) Margin Securities. Own, purchase, or acquire (or enter into any contract
to purchase or acquire) any “margin security” as defined by any regulation of the Federal
Reserve Board as now in effect or as the same may hereafter be in effect unless, prior to
any such purchase or acquisition or entering into any such contract, Bank shall have
received an opinion of counsel satisfactory to Bank to the effect that such purchase or
acquisition will not cause this Agreement or the Notes to violate Regulation U, X or any
other regulation of the Federal Reserve Board then in effect.

     (m) Restricted Investments. Make or have any “Restricted Investment,” which
for purposes of this Agreement shall mean any investment of cash, or by delivery of
Property, to any Person, whether by acquisition of stock, indebtedness or other obligation,
or by loan, advance or capital contribution, or otherwise, in any Property except the
following:

     (i) Property to be used in the ordinary course of business;

     (ii) current assets arising from the sale of goods and services in the ordinary
course of business of John D;

     (iii) investments in direct obligations of the United States of America, or any
agency thereof or obligations guaranteed by the United States of America, provided
that such obligations mature within one (1) year from the date of acquisition
thereof;

     (iv) investments in commercial paper given the highest rating by a national
credit rating agency and maturing not more than two hundred seventy (270) days from
the date of creation thereof; and

     (v) investments in money market accounts and certificates of deposit.

     (n) Lease/Sale of Property. John D shall not enter into any arrangement with
any Person providing for the leasing by John D of Property which has been or is to be sold
or transferred by John D to such Person if funds have been or are to be advanced by

37

 

such Person on the security of such Property or rental obligations of John D, except for
Permitted Indebtedness.

     (o) Other Businesses. Engage in any business other than the Business.

     (p) Governmental Contracts. Unless John D provides Bank at least sixty (60)
days prior written notice, enter into, or be a party to, any transaction with any
Governmental Authority, except for transactions in the ordinary course of business.

     (q) Anti-Terrorism Laws. (i) Conduct any business or engage in any transaction
dealing with any Blocked Person, including the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Blocked Person, (ii) deal in, or
otherwise engage in any transaction relating to, any property or interests in property
blocked pursuant to Executive Order No. 13224, or (iii) engage in or conspire to engage in
any transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or the
USA PATRIOT Act. Borrower shall deliver to Bank any certification or other evidence
requested from time to time and at any time by Bank, in its sole discretion, confirming
Borrower’s compliance with this Section 6.2(q).

     (r) Indebtedness to Related Persons. Permit to exist any indebtedness,
liability or other obligation of John D to any Related Person other than Permitted
Subordinated Debt and indebtedness to Great Plains Exploration Ltd. and/or Oz Gas, Ltd. The
amount of Permitted Subordinated Debt on the date hereof is zero (0).

     6.3 Osborne Negative Pledge of John D Ownership Interests. Osborne shall not pledge
or cause to be pledged or permit to exist any Lien, other than to Bank, on any ownership interests
in John D from time to time owned of record or beneficially by Osborne, and Osborne shall not offer
for sale, sell, assign, or transfer (with or without consideration) any interest in any ownership
interest in John D now or hereafter owned of record or beneficially by Osborne, nor shall Osborne
grant or otherwise permit to exist any Lien thereon without prior written notice to Bank. Said
notice shall include the terms of any offer to purchase or sell, terms of sale and terms of any
assignment or transfer. For purposes of this Section 6.3, Osborne shall be deemed to own
beneficially all ownership interests in John D (a) held by the Richard M. Osborne Trust and (b)
that are beneficially owned by any person who is considered the same “person” (as defined in Rule
144 of the United States Securities and Exchange Commission) as Osborne. Beneficial ownership
shall include any interest that is beneficially owned within the meaning of either paragraph (a)(1)
or paragraph (a)(2) of Rule 16a-1 of the United States Securities and Exchange Commission.

     6.4 Borrowers’ Negative Pledge of Kykuit Ownership Interests. Borrowers shall not
pledge or cause to be pledged or permit to exist any Lien, other than to Bank, on any ownership
interests in Kykuit from time to time owned of record or
beneficially by Borrowers. Borrowers shall not offer for sale, sell, assign, or transfer
(with or without consideration) any interest in any ownership interest in Kykuit now or hereafter
owned of record or beneficially by both or either of them, without prior written notice to Bank.
Said notice shall include the terms of any offer to purchase or sell, terms of sale, and terms of
any assignment or transfer. For purposes of this

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Section 6.4, Borrowers shall be deemed to own
beneficially all ownership interests in Kykuit (a) held by the Richard M. Osborne Trust and (b)
that are beneficially owned by any person who is considered the same “person” (as defined in Rule
144 of the United States Securities and Exchange Commission) as Borrowers. Beneficial ownership
shall include any interest that is beneficially owned within the meaning of either paragraph (a)(1)
or paragraph (a)(2) of Rule 16a-1 of the United States Securities and Exchange Commission.

     6.5
Osborne Advance of Kykuit Contributions. Osborne and/or the Richard M. Osborne Trust shall
advance any amounts required to be paid by John D pursuant to the terms of the operating agreement
of Kykuit, or otherwise. Said advances shall be loans from Osborne and/or the Richard M. Osborne
Trust to John D and will be subject to a Subordination Agreement in substantially the form attached
hereto as Exhibit F.

     6.6 Osborne Covenant Regarding Richard M. Osborne Trust. Osborne will not amend,
amend and restate, replace, terminate, dissolve, or transfer substantially all the assets of the
Richard M. Osborne Trust without the prior written consent of Bank, which consent may be withheld
by Bank in Bank’s sole and absolute discretion. Notwithstanding anything hereinabove contained to
the contrary, Osborne shall be permitted to amend, restate, or otherwise modify only the Trust
provisions pertaining to the disposition of Trust Assets upon his death to any designated
beneficiary, beneficiaries, other Trusts, or Foundations, as Osborne, as the Settlor, may determine
in his sole and absolute discretion. Further, Osborne covenants and agrees that the Richard M.
Osborne Trust is authorized and directed to pay the Obligations of Osborne and of the Richard M.
Osborne Trust evidenced by the Credit Documents.

     7. SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT

     Except as otherwise expressly provided for in this Agreement and in any of the other Credit
Documents, no termination or cancellation (regardless of cause or procedure) of this Agreement or
any of the other Credit Documents shall in any way affect or impair the powers, obligations,
duties, rights, and liabilities of Borrowers or Bank in any way or respect relating to (i) any
transaction or event occurring prior to such termination or cancellation or (ii) any of the
undertakings, agreements, covenants, warranties and representations of Borrowers or Bank contained
in this Agreement or the other Credit Documents. Once all Obligations of Borrowers to Bank have
been fully and permanently paid and satisfied and this Agreement is terminated, then all such
undertakings, agreements, covenants, warranties, and representations shall be terminated and
canceled and Bank shall terminate its Lien on the Collateral and have no further rights and
remedies.

     8. CONDITIONS PRECEDENT TO BORROWINGS

     8.1 Conditions. Notwithstanding any other provision of this Agreement or any of the
other Credit Documents, and without affecting in any manner the rights of Bank under the other
Sections of this Agreement, it is understood and agreed that Bank shall have no obligation to
advance, or continue to lend, funds under this Agreement to Borrowers unless and until each of the
following conditions have been satisfied before or currently with those Borrowings, all in form and
substance satisfactory to Bank and its counsel:

39

 

     (a) Absence of Legal Actions. No legal action, proceeding, investigation,
regulation, or legislation shall have been instituted, threatened, or proposed before any
court, governmental agency, or legislative body to enjoin, restrain, or prohibit, or to
obtain damages in respect of, this Agreement or any of the other Credit Documents or the
consummation of the transactions contemplated hereby or thereby.

     (b) Representations and Warranties. The representations and warranties of
Borrowers in this Agreement are true and correct in all material respects and no Default or
Event of Default then exists.

     (c) Other Material Events. No event, occurrence, or condition shall then exist
which may have a Material Adverse Effect.

     (d) Delivery of Documents. Bank shall have received the following duly executed
original documents, each to be in form and substance satisfactory to Bank and its counsel:

     (i) an Amended and Restated Revolving Credit Note, in substantially the form
attached hereto as Exhibit A;

     (ii) receipt and satisfactory review of a certified Compliance Certificate, in
substantially the form attached hereto as Exhibit C;

     (iii) an evaluation, satisfactory to Bank, of the productivity of the Oil and
Gas Properties of Borrowers performed by Schlumberger;

     (iv) copies of all filing receipts or acknowledgments or other oral or written
evidence issued by any governmental authority to evidence any filing or recordation
necessary to perfect the Liens of Bank in the Collateral described in the Credit
Documents;

     (v) certificates for each Borrower’s insurance policies evidencing the
existence of the insurance coverage required pursuant to the Credit Documents,
together with all appropriate endorsements thereto naming Bank as a lender’s
loss payee and additional insured;

     (vi) a Certificate of the Secretary or an Assistant Secretary (or the
equivalent company officer) of John D, dated as of the date of this Agreement,
certifying (A) that attached thereto is a true, correct and complete copy of the
Certificate of Incorporation in effect at all relevant times, including the date of
such certification, (B) that attached thereto is a true, correct, and complete copy
of the bylaws of John D in effect at all relevant times, including the date of such
certification, (C) that attached hereto is a true, correct and complete copy of
resolutions adopted by the Board of Directors of John D authorizing the execution,
delivery, and performance of this Agreement and each of the other Credit Documents
and the consummation of the transactions contemplated hereby and thereby, and (D) as
to the incumbency and genuineness of the signature of

40

 

each officer of John D executing this Agreement and the other Credit Documents to which John D is a party;

     (vii) good standing certificates for John D issued by the Secretary of State of
Maryland and each jurisdiction of John D’s qualification as required under this
Agreement;

     (viii) a certificate signed by Osborne and the Authorized Representative of
John D and dated as of the Effective Date, stating that on and as of that date (A)
the representations and warranties set forth in Section 5 hereof are true and
correct, (B) Borrowers are in compliance with all terms and provisions set forth in
this Agreement, and (C) no Default or Event of Default exists;

     (ix) a written opinion of counsel to Borrowers and to the Richard M. Osborne
Trust as to the transactions contemplated by this Agreement, covering such matters,
and subject only to exceptions and qualifications, as may be satisfactory to Bank
and its counsel;

     (x) Reserved;

     (xi) Reserved;

     (xii) a duly executed Continuing Subordination Agreement in substantially the
form attached hereto as Exhibit F executed by Osborne and the Richard M.
Osborne Trust;

     (xiii) a Negative Covenant duly executed by John D in substantially the form
attached hereto as Exhibit G with respect to the real property located in
Painesville, Ohio, and including the following property identified by permanent
parcel number and related address:

Parcel 15C0010000180, 61 East Washington Street;

Parcel 15C0010000060, 72 South Park Place;

Parcel 15C0010000070, 60 South Park Place;

Parcel 15C0010000170, 61 E. Washington Street;

Parcel 15C0010000190, 61 East Washington Street;

Parcel 15C0010000380, 60 South Park Place; and

     (xiv) Unlimited Guaranty in substantially the form attached hereto as
Exhibit H;

     (xv) Open-End Mortgage, Indenture, Security Agreement, Financing Statement and
Assignment of Production in form satisfactory to Bank; and

     (xvi) Open-End Mortgage Deed and Security Agreement in form satisfactory to
Bank; and

41

 

     (xvii) duly executed copies of all other Credit Documents and such other
agreements, instruments, and documents including, but not limited to, assignments,
security agreements, pledges, guaranties, and consents which Bank may require to be
executed in connection with this Agreement.

     (e) Closing Fee. Borrowers shall have paid to Bank the Closing Fee and all
other fees, costs, expenses and taxes, including attorneys’ fees, then payable by Borrowers
as provided herein.:

     8.2 Waiver of Conditions Precedent. If Bank executes this Agreement prior to the
fulfillment of any of the conditions precedent set forth in Section 8.1 hereof, the making of
initial loans or continued extension of existing loans under this Agreement shall constitute only
an extension of time for the fulfillment of such conditions and not a waiver thereof unless
expressly stated in a writing signed by Bank, and each Borrower shall thereafter use its best
efforts to fulfill each such condition promptly.

     9. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT

     9.1 Events of Default. The occurrence of any one or more of the following events
shall constitute an “Event of Default”:

     (a) Payment of Debt Service. Failure by Borrowers to make payment of interest
or principal on any of the Notes on or within five (5) days after the due date thereof;
provided, however, a misapplication by Bank (as determined in the sole discretion of Bank)
of any payment made by Borrowers shall not be deemed an Event of Default under this
Agreement.

     (b) Representations and Warranties. Any warranty, representation, or other
statement made or furnished to Bank by or on behalf of Borrowers pursuant to Section 5
hereof, or in any instrument furnished in compliance with or in reference to this Agreement
proves to have been false or inaccurate in any material respect when made or furnished
whether by reaffirmation or otherwise. For this purpose, all John D SEC Filings shall be
deemed to be statements furnished to Bank by or on behalf of Borrowers in reference to this
Agreement.

     (c) Other Provisions. Other than as provided in Section 9.1(a) and 9.1(b)
hereof, failure or neglect of Borrowers to perform, keep or observe any term, provision,
condition, covenant, warranty, or representation contained in this Agreement or in any of
the other Credit Documents which is required to be performed, kept, or observed by Borrowers
or any Guarantor, other than in the case of Sections 6.1(i) 6.1(j), and 6.1(m) hereof for
which there shall be no cure period, such failure or neglect continues for a period of
thirty (30) days, after written notice thereof by Bank to Borrowers.

     (d) Cross-Default. Upon the occurrence of (i) any default by any Borrower (A)
under any Obligation not arising out of this Agreement, or any other agreement entered into
by and between Bank and any Borrower or (B) under any other Indebtedness of either Borrower
where the amount of such Indebtedness exceeds $100,000 in the aggregate, and (ii) default
under any Material Agreement.

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     (e) False or Misleading Reports. The making or delivering to Bank by any
Borrower, or any of Borrowers’ officers, employees, or agents, of any statement, report,
financial statement, or certificate which is not true and correct in any material respect
when made.

     (f) Destruction of Collateral; Sale of Assets. The loss, theft, damage or
destruction of any material portion of the Collateral to the extent not adequately covered
by insurance in an amount equal to at least its replacement value (as required by this
Agreement and subject to deductibles not greater than $50,000 per occurrence and $100,000 in
the aggregate), or the sale, lease, encumbrance, or other disposition of a material portion
of the Collateral except in all cases as may be specifically permitted by other provisions
of this Agreement.

     (g) Value of Collateral; Financial Condition of Borrowers. Any Material
Adverse Effect on the value of the Collateral taken as a whole, or the financial condition
or the business of a Borrower.

     (h) Termination of Existence. The dissolution, termination of existence,
failure to be Solvent or business failure of a Borrower (not including the death of
Osborne).

     (i) Bankruptcy. The commencement of any proceedings under any Bankruptcy Laws
(i) by Borrowers or either of them, or (ii) against Borrowers or either of them to the
extent such proceedings are not dismissed within sixty (60) days after the filing thereof,
the making by Borrowers or either of them of any offer of settlement, extension, or
composition to its unsecured creditors generally or the appointment of a receiver, trustee,
custodian, or similar fiduciary for Borrowers or either of them, or the assignment for the
benefit of the creditors of Borrowers or either of them to the extent such assignment or
appointment continues for longer than sixty (60) days.

     (j) Ceases to Conduct Business. Except for the sale of Property as permitted
by this Agreement, a Borrower ceases to conduct all or any material part of its business or
is enjoined, restrained, or in any way prevented by court, governmental, or administrative
order from conducting all or any material part of its business affairs.

     (k) Judgment Entries. The entry by a court of any judgment in excess of
$500,000 requiring the payment of money against any or all of Borrowers, which judgment is
not discharged, stayed, bonded, vacated, or set side within thirty (30) days of its entry,
or a notice of any material Lien, levy, attachment or assessment in excess of $500,000 is
filed of record with respect to all or any of the Collateral by any Person including, but
not limited to, the United States, any department, agency, or instrumentality thereof, or by
any state, county, municipal, or other governmental agency, or if any material taxes or
assessments owing at any time or times hereafter becomes a Lien upon the Collateral or any
other assets of Borrower and, except Permitted Liens or as otherwise permitted by Bank, the
same are not effectively stayed, bonded, or released within thirty (30) days after they
become a Lien, or in the case of ad valorem taxes, on or within thirty (30) days after the
last date when payment may be made without penalty.

43

 

     (l) Insurance of Collateral. Subject to the provisions of this Agreement,
failure on the part of John D to keep the Collateral or any goods evidenced by chattel paper
or documents insured against loss by fire or otherwise for insurable value thereof in
companies with coverages (including Bank’s Loss Payment Endorsement) and in amounts set
forth in Section 4.3 hereof and make the loss, if any, payable to and deposit the policies
with Bank within thirty (30) days after such policies are received by John D, all premiums
on such policies to be paid by John D.

     (m) Liquidity of Osborne. Osborne (A) fails to maintain Osborne Liquid Assets
with a market value (net of the amount of any lien or encumbrance, including, but not
limited to, any margin debts) of greater than or equal to Two Million Dollars ($2,000,000),
or (B) fails to provide quarterly statements to Bank within twenty (20) days of the end of
each quarter evidencing such liquidity.

     (n) Change in Control. Osborne ceases to exercise Control over John D or
ceases to own beneficially at least thirty percent (30%) of the Voting Securities of John D,
other than solely by reason of the death of Osborne.

     9.2
Acceleration of the Obligations. Except upon the occurrence of an Event of Default described above in Section 9.1(h) hereof
(which shall give Bank the right to accelerate all Obligations without notice to Borrowers), or an
Event of Default described above in Section 9.1(i) hereof (which shall result in automatic
acceleration of all Obligations without notice to Borrowers or any other action on the part of
Bank), upon the occurrence of an Event of Default and upon notice by Bank to Borrowers in the
manner set forth in Section 11.10 hereof, all of the Obligations due or to become due from
Borrowers to Bank, whether under this Agreement, the Notes, or otherwise, at the option of Bank
immediately shall become due and payable, anything in the Notes or other evidence of the
Obligations or in any of the other Credit Documents to the contrary notwithstanding.

     9.3 Remedies. Upon and after the occurrence of an Event of Default, to the extent
permitted by applicable law and in addition to any other right or remedy provided for in this
Agreement, Bank shall have each of the following rights and remedies:

     (a) General Rights and Remedies. All of the rights and remedies of a secured
party under the Uniform Commercial Code or under other applicable law, and all other legal
and equitable rights to which Bank may be entitled, all of which rights and remedies shall
be cumulative, and none of which shall be exclusive, to the extent permitted by law, in
addition to any other rights or remedies contained in this Agreement or in any of the other
Credit Documents.

     (b) Possession of Collateral. The right to take immediate possession of the
Collateral and all proceeds relating to such Collateral and (i) require John D, at John D’s
expense, to assemble the Collateral and make it available to Bank at John D’s principal
places of business, or (ii) enter the Premises or other premises of John D or wherever any
Collateral shall be located and to keep and store the same on such premises until sold. The
right to remove Collateral from the premises, regardless of whether any portion of the
Collateral constitutes fixtures and cannot be removed without physical altercation of

44

 

the premises. If the premises on which the Collateral is located is owned or leased by John D,
then John D shall not charge Bank for storage of such Collateral on such premises for a
period of at least one hundred twenty (120) days after sale or disposition of the
Collateral. Bank is hereby granted a non-exclusive license or other right to use, without
charge, John D’s labels, patents, copyrights, rights of use of any name or trade secrets, as
it pertains to the Collateral, in advertising for sale and selling any Collateral and
John D’s rights under all licenses and all franchise agreements shall inure to Bank’s
benefit. In exercising all of its rights hereunder, Bank shall comply with all applicable
laws prohibiting access to certain classes of persons and related to security clearance
requirements.

     (c) Foreclosure of Liens. The right to foreclose the Liens created under this
Agreement and each of the other Credit Documents or under any other agreement relating to
the Collateral.

     (d) Disposition of Collateral. The right to sell or to otherwise dispose of
all or any Collateral in its then condition, or after any further manufacturing, processing,
equipping, or completion thereof, at public or private sale or sales, wholesale
dispositions, or sales pursuant to one or more contracts, with such notice as may be
required by law, in lots or in bulk, for cash or on credit, all as Bank, in its discretion,
may deem advisable. Each Borrower acknowledges and covenants that fourteen (14) Business
Days written notice to John D of any public or private sale or other disposition of
Collateral shall be reasonable notice thereof, and such sale shall be at such Borrower’s
premises or at such other locations where the Collateral then is located, or as otherwise
determined by Bank. Bank shall have the right to conduct such sales on such Borrower’s
premises, without charge therefor, and such sales may be adjourned from time to time in
accordance with applicable law without further requirement of notice to John D. Bank shall
have the right to bid or credit bid at any such sale on its own behalf.

     (e) Set-off. The right to sell, lease, or otherwise dispose of the Collateral,
or any part thereof, for cash, credit, or any combination thereof, and, to the extent
permitted by applicable law, Bank may purchase all or any part of the Collateral at public
or private sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The right to set off any item described in
paragraph (b) of the definition of Collateral, including, without limitation, all funds in
all deposit accounts (whether time or demand, general or special, provisionally credited or
finally credited, or otherwise) now or hereafter maintained by Borrowers with Bank. Subject
to the rights of the holders of any Permitted Lien having priority over the Liens of Bank,
if any, the proceeds realized from the sale of any Collateral shall be applied first to the
costs, expenses, and attorneys’ and paralegals’ fees and expenses incurred by Bank for
collection and for acquisition, completion, protection, removal, storage, repair and
restoration, sale, and delivery of the Collateral; second, to interest due upon any of the
Obligations; and third, to the principal of the Obligations. If any deficiency shall arise,
Borrowers shall remain jointly and severally liable to Bank therefor. In the event of any
surplus, it shall be paid to John D.

45

 

     (f) Notification of Debtors. Bank shall have the right to notify any Person
indebted to John D of Bank’s interest in any such amounts payable to John D and to instruct
such Person to remit such amounts directly to Bank, and, upon collection of the same,
deposit into an account for the benefit of Bank all funds arising therefrom (less any costs
of collection and other charges or expenses incurred in connection therewith as hereinafter
provided) in cleared Federal funds, the same being subject to application to the
Obligations.

     9.4
Application of Collateral; Termination of Financing. Upon the occurrence of any Event of Default, Bank, with or without proceeding with sale or
foreclosure or demanding payment of the Obligations, without notice, may also terminate Bank’s
further performance under this Agreement or any other agreement or agreements between Bank and a
Borrower, without further liability or obligation by Bank and, at any time, may also appropriate
and apply on any Obligations any and all Collateral in the possession of Bank. No such termination
shall absolve, release, or otherwise affect the liability of a Borrower in respect of transactions
had prior to such termination or affect any of the Liens, rights, powers, and remedies of Bank, but
they shall, in all events, continue until all Obligations of Borrowers to Bank are satisfied.

     9.5 Remedies Cumulative. All covenants, conditions, provisions, warranties,
guaranties, indemnities, and other undertakings of Borrowers contained in this Agreement, each of
the other Credit Documents, or in any document referred to in this Agreement or the other Credit
Documents or contained in any agreement supplementary hereto or thereto, or in any schedule or
report given to Bank or contained in any other agreement between Bank and Borrowers heretofore,
concurrently, or hereafter entered into or delivered, shall be deemed cumulative to and not in
derogation or substitution of any of the terms, covenants, conditions, or agreements of Borrowers
contained in this Agreement.

     10. APPOINTMENT OF BANK AS BORROWERS’ LAWFUL ATTORNEY

     Borrowers hereby irrevocably designate, make, constitute, and appoint Bank (and all persons
designated by Bank) as Borrowers’ true and lawful attorney (and agent-in-fact) for the purposes
designated in Subparagraphs (a) through (o) of this Section 10 and, upon the occurrence of an Event
of Default and for so long as it remains uncured, Bank, or its representative, in Borrowers’ or
Bank’s name, may: (a) demand payment of the Accounts, (b) enforce payment of the Accounts, by legal
proceedings or otherwise, (c) exercise all of Borrowers’ rights and remedies with respect to the
collection of the Accounts and any other Collateral, (d) settle, adjust, compromise, extend, or
renew the Accounts, (e) settle, adjust, or compromise any legal proceedings brought to collect the
Accounts, (f) if permitted by applicable law, sell or assign the Accounts and other Collateral upon
such terms, for such amounts, and at such time or times as Bank deems advisable, (g) discharge and
release the Accounts and any other Collateral, (h) take control, in any manner, of any item of
payment or proceeds relating to any Collateral, (i) prepare, file, and sign Borrowers’ names on a
proof of claim in bankruptcy or similar document against any account debtor, (j) prepare, file, and
sign Borrowers’ names on any notice of Lien, assignment, or satisfaction of Lien or similar
document in connection with the Accounts, (k) do all acts and things necessary, in Bank’s
reasonable discretion, to fulfill Borrowers’ obligations under this Agreement, (l) endorse the name
of Borrowers upon any of the items of payment or proceeds relating to any Collateral and deposit
the same to the account of

46

 

Bank on account of the Obligations, (m) endorse the name of Borrowers
upon any chattel paper document, instrument, invoice, freight bill, bill of lading, or similar
document or agreement relating to the Accounts, Inventory and any other Collateral, (n) use
Borrowers’ stationery and sign the name of Borrowers to verifications of the Accounts and notices
thereof to account debtors, (o) and use the information recorded on or contained in any data
processing equipment
and computer hardware and software relating to the Accounts, Inventory, and any other
Collateral to which Borrowers have access.

     11. MISCELLANEOUS

     11.1 Modification of Agreement; Sale of Interest. This Agreement, the Notes, and each
of the other Credit Documents may not be modified, altered, or amended except by an agreement in
writing signed by Borrowers and Bank. Borrowers may not sell, assign, or transfer this Agreement
or any of the other Credit Documents or any portion thereof including, but not limited to, such
Borrower’s rights, title, interests, remedies, powers, and/or duties hereunder or thereunder. Each
Borrower hereby consents to Bank’s participation, sale, assignment, transfer, or other disposition
of this Agreement or any of the other Credit Documents, or of any portion hereof or thereof
including, but not limited to, Bank’s rights, title, interests, remedies, powers, and/or duties
hereunder or thereunder, at any time or times hereafter.

     11.2 Attorneys’ Fees and Expenses. If at any time or times whether prior or
subsequent to the date of this Agreement, and regardless of the existence of an Event of Default,
Bank employs counsel for advice or other representation or incurs legal and/or other costs and
expenses in connection with each of the following:

     (a) Loan Documents. The preparation of this Agreement and all of the other
Credit Documents or any amendment of or modification of this Agreement or any of the other
Credit Documents;

     (b) Loan Administration. The administration of this Agreement and each of the
other Credit Documents and the transactions contemplated hereby and thereby;

     (c) Litigation. Any litigation, contest, dispute, suit, proceeding or action
(whether instituted by Bank, Borrowers, or any other Person) in any way relating to the
Collateral, this Agreement, any of the other Credit Documents, or Borrowers’ affairs,
including any litigation between a Borrower and Bank as adverse parties unless otherwise
prohibited by law in connection with any judgment awarded in favor of Bank;

     (d) Enforcement of Bank’s Rights. Any attempt to enforce any rights of Bank
against any Person, other than a Borrower, which may be obligated to Bank by virtue of this
Agreement or any of the other Credit Documents including, but not limited to, any guarantor
of the Obligations and any debtors on Accounts;

     (e) Protection of Collateral. Any attempt to inspect, verify, protect,
collect, sell, liquidate, or otherwise dispose of the Collateral; or

     (f) Filings. The filing and recording of all documents required by Bank to
perfect and maintain the perfection of Bank’s Liens in the Collateral including, but not

47

 

limited to, any documentary stamp tax or any other taxes incurred because of such filing or
recording; the reasonable attorneys’ and paralegals’ fees arising from such services and all
reasonably incurred expenses, costs, charges, and other fees of such counsel or of Bank or
relating to any of the events or actions described in this Section 11.2 shall be payable, on
demand, by Borrowers to Bank and shall be additional Obligations under this Agreement
secured by the Collateral. Without limiting the generality of the foregoing, such expenses,
costs, charges, and fees may include accountants’ fees, costs, and expenses; court costs and
expenses; photocopying and duplicating expenses; court reporter fees, costs, and expenses;
long distance telephone charges; air express charges; telegraph charges; secretarial
overtime charges; and expenses for travel, lodging and food paid or incurred in connection
with the performance of such legal services. Additionally, if any taxes (other than Federal
or state income taxes payable by Bank) shall be payable on account of the execution or
delivery of this Agreement, or the execution, delivery, issuance, or recording of any of the
other Credit Documents, or the creation of any of the Obligations under this Agreement by
reason of any existing or hereafter enacted Federal or state statute, Borrowers shall pay
all such taxes including, but not limited to, any interest and/or penalty thereon, and shall
indemnify and hold Bank harmless from and against liability in connection therewith.

     11.3 Waiver by Bank. Bank’s failure at any time or times hereafter to require strict
performance by Borrowers of any provision of this Agreement or by Borrowers or any Person of any of
the other Credit Documents shall not waive, affect, or diminish any right of Bank thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by Bank of an Event
of Default by Borrowers under this Agreement or by Borrowers or any Person of any of the other
Credit Documents shall not suspend, waive, or affect any other Event of Default by Borrowers (or
either of them) or any Person under this Agreement or any of the other Credit Documents, 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 Borrowers contained in
this Agreement or any of the other Credit Documents nor any Event of Default by Borrowers or any
Person under this Agreement or any of the other Credit Documents shall be deemed to have been
suspended or waived by Bank, unless such suspension or waiver is by an instrument in writing
specifying such suspension or waiver and is signed by a duly authorized representative of Bank and
directed to Borrowers.

     11.4
Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as
to be effective and valid under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.

     11.5 Parties. This Agreement and the other Credit Documents shall be binding upon and
inure to the benefit of the successors and assigns of Borrowers and Bank. This provision, however,
shall not be deemed to modify Section 11.1 hereof.

     11.6 Conflict of Terms. The provisions of each of the other Credit Documents and each
Exhibit to this Agreement are incorporated in this Agreement by this reference thereto. Except as
otherwise provided in this Agreement and except as otherwise provided in any of the

48

 

other Credit
Documents by specific reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in conflict with, or inconsistent with, any provision in any of the
other Credit Documents, the provision contained in this Agreement shall govern and control.

     11.7 Waivers by Borrowers. Except as otherwise provided for in this Agreement or as
required by applicable law, Borrowers jointly and severally waive (i) presentment, demand, and
protest, and notice of presentment, demand, protest, default, nonpayment, maturity, release,
compromise, settlement, extension, or renewal of any or all commercial paper, accounts, contract
rights, documents, instruments, chattel paper, and guaranties at any time held by Bank on which
Borrowers may in any way be liable, and (ii) notice prior to taking possession or control of the
Collateral which might be required by any court prior to allowing Bank to exercise any of its
remedies, and (iii) AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ENTER INTO THIS AGREEMENT
AND EXTEND CREDIT OR CONTINUE TO EXTEND CREDIT TO BORROWERS, BORROWERS, GUARANTORS, PERSONS PARTY
TO OTHER CREDIT DOCUMENTS AND BANK EACH WAIVES TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM,
SUIT, OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, THE CREDIT DOCUMENTS AND/OR THE
CONDUCT OF THE RELATIONSHIP BETWEEN BANK AND BORROWERS OR GUARANTORS OR SUCH PERSONS.

     11.8 Authorization. Bank is authorized to make or continue loans under the provisions
of this Agreement upon the request, either written or oral, in the name of Borrowers by an
Authorized Representative, and all loans made by Bank to Borrowers or for its account under this
Agreement are and shall be conclusively deemed to have been authorized by a Borrowers and to have
been made pursuant to duly authorized requests therefor.

     11.9
Governing Law. THIS AGREEMENT HAS BEEN ACCEPTED BY BANK AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT
CLEVELAND, OHIO. THE LOANS PROVIDED FOR IN THIS AGREEMENT HAVE BEEN AND ARE TO BE FUNDED AND
REPAID TO BANK AT CLEVELAND, OHIO (OR SUCH OTHER PLACE AS DESIGNATED TO BORROWERS (OR EITHER OF
THEM) BY BANK). THIS AGREEMENT SHALL BE INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
TO THIS AGREEMENT DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO. AS PART OF THE
CONSIDERATION FOR EXISTING AND NEW VALUE RECEIVED, BORROWERS HEREBY CONSENT TO THE JURISDICTION OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF OHIO AND CONSENT THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY REGISTERED OR CERTIFIED MAIL DIRECTED TO BORROWERS (OR EITHER OF THEM) AT THE
ADDRESS STATED IN SECTION 11.10 BELOW AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED UPON
ACTUAL RECEIPT THEREOF. BORROWERS WAIVE ANY OBJECTION TO JURISDICTION AND VENUE OF ANY ACTION
INSTITUTED UNDER THIS AGREEMENT AND AGREE NOT TO ASSERT ANY DEFENSE BASED ON LACK OF JURISDICTION
OR IMPROPER VENUE. NOTHING CONTAINED IN THIS AGREEMENT SHALL AFFECT THE RIGHT OF BANK TO SERVE
LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF BANK TO BRING ANY

49

 

ACTION
OR PROCEEDING AGAINST A BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.

     11.10 Notices. Except as otherwise provided in this Agreement, any notice required
under this Agreement shall be in writing, and shall be deemed to have been validly served, given,
or delivered upon deposit in the United States mail, with proper postage prepaid, and addressed to
the party to be notified as follows:

	 	 	 	 	 
	 

	 	If to Bank, at:
	 	RBS Citizens, N.A., d/b/a Charter One
	 

	 	 	 	1215 Superior Avenue
	 

	 	 	 	Cleveland, Ohio 44114
	 

	 	 	 	Attn: Robert G. Dracon, Jr., Vice-President
	 
	 	 	 	 
	 

	 	With copies to:
	 	RBS Citizens, N.A., d/b/a Charter One
	 

	 	 	 	1215 Superior Avenue
	 

	 	 	 	Cleveland, Ohio 44114
	 

	 	 	 	Attn: Michelle Lyles
	 
	 	 	 	 
	 

	 	 	 	and
	 
	 	 	 	 
	 

	 	 	 	Tucker Ellis & West LLP
	 

	 	 	 	925 Euclid Avenue
	 

	 	 	 	1150 Huntington Building
	 

	 	 	 	Cleveland, Ohio 44115
	 

	 	 	 	Attn: Glenn E. Morrical
	 
	 	 	 	 
	 

	 	If to Borrowers, at:
	 	John D. Oil and Gas Company
	 

	 	 	 	8500 Station Street
	 

	 	 	 	Suite 345
	 

	 	 	 	Mentor, Ohio 44060
	 

	 	 	 	Attn: Gregory J. Osborne
	 
	 	 	 	 
	 

	 	With a copy to:
	 	Melvyn E. Resnick
	 

	 	 	 	Dworken & Bernstein Co., L.P.A.
	 

	 	 	 	60 South Park Place
	 

	 	 	 	Painesville, Ohio 44077

or to such other address as each party may designate for itself by like notice given in accordance
with this Section 11.10.

     11.11 Section Titles. The section titles and table of contents contained in this
Agreement are and shall be without substantive meaning and content of any kind whatsoever and are
not a part of the agreement between the parties to this Agreement.

     11.12 Effectiveness of Agreement. This Agreement shall be effective only upon Bank’s
written acceptance of this Agreement.

50

 

     11.13 Effect of Amendment and Restatement The amendment and restatement reflected in
this First Amended and Restated Loan and Security Agreement is not a novation but merely a
restatement of the obligation of Borrowers to pay the Bank all Obligations. All security interests
granted under the Existing Loan, the Existing Security Agreement, the Agreement or any other Credit
Documents are hereby confirmed and ratified and shall continue to secure all obligations of
Borrowers to Bank and its successors and assigns.

     11.14 Warrant of Attorney. Borrowers and each of them authorize any attorney-at-law
to appear in any court of record in the State of Ohio or in any other state or territory of the
United States at any time after this Agreement becomes due, whether at stated maturity, accelerated
maturity or otherwise, to waive the issuing and service of process and to enter an appearance and
to confess judgment against Borrowers or either of them in favor of Bank or the holder hereof for
the amount due, together with interest, expenses, the costs of suit and reasonable counsel fees,
and thereupon to release and waive all errors, rights of appeal and stays of execution. This
warrant of attorney shall survive the dissolution or death of a Borrower. Such authority shall not
be exhausted by one exercise, but judgment may be confessed from time to time as any sums and/or
costs, expenses or reasonable counsel fees shall be due as if a prior judgment is vacated, by
filing an original or a photostatic copy of this Agreement. Borrowers jointly and severally agree
that the attorney for Bank may confess judgment pursuant to this warrant of attorney and receive a
fee from Bank for the same, and Borrowers jointly and severally expressly consent to the same and
waive any conflict of interest arising therefrom.

[Balance of Page Intentionally Blank]

51

 

     IN WITNESS WHEREOF, the undersigned have executed this First Amended and Restated Loan and
Security Agreement as of the date first written above.

	 	 	 	 	 
	 	RBS CITIZENS, N.A., d/b/a CHARTER ONE

 	 
	 	By:  	/s/ Anne M. Graham
 	 
	 	 	     Anne M. Graham, Vice-President 	 
	 	 	 	 
	 

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT
PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.

	 	 	 	 	 	 	 	 	 	 
	JOHN D. OIL AND GAS COMPANY	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 
	 	By:
	 	/s/ Richard M. Osborne	 	 	 	/s/ Richard M. Osborne	 	 
	 
	 	 	
 
Richard M. Osborne,	 	 	 	
 

     Richard M. Osborne,	 	 
	 
	 	 	Chief Executive Officer	 	 	 	     Individually	 	 
	 	 
	 	(Duly Authorized)	 	 	 	 	 	 

WARNING — BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT
PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS
OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE
CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE
AGREEMENT, OR ANY OTHER CAUSE.

52

 

EXHIBIT A

TO

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Form of Revolving Credit Note

A-1

 

EXHIBIT B

TO

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Form of Credit Request

B-1

 

EXHIBIT C

TO

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Form of Compliance Certificate

C-1

 

EXHIBIT D

RESERVED

D-1

 

EXHIBIT E

RESERVED

E-1

 

EXHIBIT F

TO

FIRST AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

Form of Continuing Subordination Agreement

F-1

 

EXHIBIT G

Form of Negative Covenant

G-2

 

EXHIBIT H

Form of Unlimited Guaranty

H-1

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