CREDIT AGREEMENT, dated as of June 23, 1999, between ENERGY SEARCH, INCORPORATED, as Borrower, and SOUTHERN PRODUCER SERVICES, L.P., as Lender.

Energy Search Credit Agreement Exhibit 10.21

EXHIBIT 10.21

U.S. $30,000,000

CREDIT AGREEMENT,

dated as of June 23, 1999,

between

ENERGY SEARCH, INCORPORATED, as Borrower,

and

SOUTHERN PRODUCER SERVICES, L.P., as Lender.

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1.

Defined Terms

SECTION 1.2.

Use of Defined Terms

SECTION 1.3.

Cross-References

SECTION 1.4.

Accounting and Financial Determinations

ARTICLE II

COMMITMENT, LOAN PROCEDURES AND NOTE

SECTION 2.1.

Commitment

SECTION 2.1.1.

Commitment To Make Loans

SECTION 2.2.

Commitment Amounts

SECTION 2.2.1.

Optional

SECTION 2.2.2.

Mandatory

SECTION 2.3.

Loan Procedure

SECTION 2.4.

Note

ARTICLE III

REPAYMENTS, PREPAYMENTS, INTEREST AND FEES

SECTION 3.1.

Repayments and Prepayments

SECTION 3.2.

Interest Provisions

SECTION 3.3.

Collateral Account

SECTION 3.4.

Closing Fee

ARTICLE IV

TAXES AND OTHER PROVISIONS

SECTION 4.1.

Taxes

SECTION 4.2.

Payments, Computations, etc

SECTION 4.3.

Setoff

SECTION 4.4.

Right of First Refusal - Proposed Undertakings

SECTION 4.5.

Right of First Refusal-Proposed Non-Subject

Interest Undertaking

SECTION 4.6.

Use of Proceeds

ARTICLE V

CONDITIONS TO LOANS

SECTION 5.1.

Initial Loan

SECTION 5.1.1.

Resolutions, etc

SECTION 5.1.2.

Delivery of Note

SECTION 5.1.3.

Override Conveyance

SECTION 5.1.4.

Mortgage

SECTION 5.1.5.

Pledge Agreements

SECTION 5.1.6.

Warrant

SECTION 5.1.7.

Broker's Fee

SECTION 5.1.8.

Memorandum of Purchase Contracts

SECTION 5.1.9.

ISDA Master Agreement

SECTION 5.1.10.

Opinion of Counsel

30 i

SECTION 5.1.11.

Development Plan and Schedules

SECTION 5.1.12.

Evidence of Insurance

SECTION 5.1.13.

[Intentionally omitted]

SECTION 5.1.14.

Consents

SECTION 5.1.15.

Compliance with Loan Documents

SECTION 5.1.16.

Approval

SECTION 5.1.17.

No Default

SECTION 5.1.18.

Engineering

SECTION 5.1.19.

Environmental

SECTION 5.1.20.

Financial Statements

SECTION 5.1.21.

Certified Copies of Various Agreements

SECTION 5.1.22.

Income Tax Returns

SECTION 5.1.23.

Partnership Information

SECTION 5.1.24.

Release of Liens

SECTION 5.1.25.

Collateral Account

SECTION 5.1.26.

Closing Fees, Expenses, etc

SECTION 5.1.27.

Other Legal Matters

SECTION 5.1.28.

Termination of Existing Credit Facilities

SECTION 5.2.

Conditions to Acquisition Loans

SECTION 5.2.1.

Override Conveyance

SECTION 5.2.2.

Mortgage

SECTION 5.2.3.

Memorandum of Purchase Contracts

SECTION 5.2.4.

Opinion of Counsel

SECTION 5.2.5.

Consents

SECTION 5.2.6.

Compliance with Loan Documents

SECTION 5.2.7.

Environmental

SECTION 5.2.8.

Joint Operating Agreements

SECTION 5.2.9.

Release of Liens

SECTION 5.2.10.

Contingency Hedge Agreements

SECTION 5.2.11.

Other Legal Matters

SECTION 5.3.

All Loans

SECTION 5.3.1.

Compliance with Warranties, No Default, etc

SECTION 5.3.2.

Loan Request

SECTION 5.3.3.

Satisfactory Legal Form

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

SECTION 6.1.

Organization, etc

SECTION 6.2.

Due Authorization, Non-Contravention, etc

SECTION 6.3.

Government Approval, Regulation, etc

SECTION 6.4.

Validity, etc

SECTION 6.5.

Financial Information

SECTION 6.6.

No Material Adverse Change

SECTION 6.7.

Litigation, Labor Controversies, etc

SECTION 6.8.

Subsidiaries

38 ii

SECTION 6.9.

Subject Interests

SECTION 6.10.

Oil and Gas Leases

SECTION 6.11.

Preferential Rights

SECTION 6.12.

Balancing and Take-or-Pay Contracts

SECTION 6.13.

Joint Operating Agreements

SECTION 6.14.

Production Requirements

SECTION 6.15.

Independent Reserve Report

SECTION 6.16.

Facilities

SECTION 6.17.

Broker's Fees

SECTION 6.18.

Taxes

SECTION 6.19.

Pension and Welfare Plans

SECTION 6.20.

Compliance with Laws

SECTION 6.21.

Environmental Warranties

SECTION 6.22.

Accuracy of Information

ARTICLE VII

COVENANTS

SECTION 7.1.

Affirmative Covenants

SECTION 7.1.1.

Financial Information, Reports, Notices, etc

SECTION 7.1.2.

Gathering and Transportation and Other Services

SECTION 7.1.3.

Collateral Coverage Deficiency or Collateral

Coverage Default

SECTION 7.1.4.

Use of Proceeds

SECTION 7.1.5.

Joint Operating Agreements

SECTION 7.1.6.

Compliance with Laws, etc

SECTION 7.1.7.

Production-Related Expenses and Taxes

SECTION 7.1.8.

Operation of Subject Interests

SECTION 7.1.9.

Development Plan

SECTION 7.1.10.

Marketing Rights

SECTION 7.1.11.

Key Employees

SECTION 7.1.12.

Insurance

SECTION 7.1.13.

Accounting Principles

SECTION 7.1.14.

Books and Records

SECTION 7.1.15.

Environmental Covenant

SECTION 7.1.16.

Board of Directors' Meetings

SECTION 7.1.17.

ISDA Master Agreement

SECTION 7.1.18.

Certified Copies of Leases

SECTION 7.1.19.

Winding-Up and Termination of Partnerships

SECTION 7.1.20.

Further Assurances

SECTION 7.2.

Negative Covenants

SECTION 7.2.1.

Business Activities

SECTION 7.2.2.

Indebtedness

SECTION 7.2.3.

Liens

SECTION 7.2.4.

Financial Condition

SECTION 7.2.5.

Restricted Payments, etc

51 iii

SECTION 7.2.6.

Capital Expenditures

SECTION 7.2.7.

Accounts Receivable

SECTION 7.2.8.

Rental Obligations

SECTION 7.2.9.

Take-or-Pay Contracts

SECTION 7.2.10.

Consolidation, Merger, etc

SECTION 7.2.11.

Asset Dispositions, etc

SECTION 7.2.12.

Abandonment of Wellbores or Conduct of Certain Operations

SECTION 7.2.13.

Mortgage or Transfer or Resignation as Operator

of any Subject Interest

SECTION 7.2.14.

Modification of Certain Agreements

SECTION 7.2.15.

Pension and Welfare Plans

SECTION 7.2.16.

Other Agreements

SECTION 7.2.17.

No Subsidiaries

SECTION 7.2.18.

No Other Hedging Agreements

SECTION 7.2.19.

Transactions with Affiliates

SECTION 7.2.20.

Dissemination of Information

SECTION 7.2.21.

Partnerships

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.1.

Listing of Events of Default

SECTION 8.1.1.

Non-Payment of Obligations

SECTION 8.1.2.

Breach of Warranty

SECTION 8.1.3.

Non-Performance of Certain Covenants and Obligations

SECTION 8.1.4.

Collateral Coverage Default

SECTION 8.1.5.

Default on Other Indebtedness

SECTION 8.1.6.

Judgments

SECTION 8.1.7.

Pension Plans

SECTION 8.1.8.

Control of Borrower

SECTION 8.1.9.

Bankruptcy, Insolvency, etc

SECTION 8.1.10.

Impairment of Security, etc

SECTION 8.1.11.

Cumulative Reimbursable Expenses Amount

SECTION 8.1.12.

Material Adverse Change

SECTION 8.1.13.

Dissemination of Information

SECTION 8.2.

Remedies of Lender

ARTICLE IX

HYDROCARBON PURCHASE TERMS AND PROVISIONS

SECTION 9.1.

General

SECTION 9.2.

Contracts for Natural Gas, Etc

SECTION 9.2.1.

Term

SECTION 9.2.2.

Quantity

SECTION 9.2.3.

Delivery Point and Price

SECTION 9.2.4.

Payment

SECTION 9.2.5.

Gas Nominations

SECTION 9.3.

Contracts for Crude Oil, Etc

61 iv

SECTION 9.3.1.

Term

SECTION 9.4.

Contracts for Natural Gas Liquids

SECTION 9.4.1.

Term

ARTICLE X

MISCELLANEOUS PROVISIONS

SECTION 10.1.

Waivers, Amendments, etc

SECTION 10.2.

Notices

SECTION 10.3.

Payment of Costs and Expenses

SECTION 10.4.

Indemnification

SECTION 10.5.

Survival

SECTION 10.6.

Reimbursable Expenses

SECTION 10.7.

Severability

SECTION 10.8.

Headings

SECTION 10.9.

Execution in Counterparts, Effectiveness, etc

SECTION 10.10.

Intentions of the Parties

SECTION 10.11.

Governing Law; Entire Agreement

SECTION 10.12.

Successors and Assigns

SECTION 10.13.

Maximum Interest

SECTION 10.14.

Other Transactions

SECTION 10.15.

Forum Selection and Consent to Jurisdiction

SECTION 10.16.

Waiver of Jury Trial

SECTION 10.17.

No Oral Agreements

66 v

SCHEDULES AND EXHIBITS

Schedule I-A

Description of Leases

Schedule I-B

Description of Existing ▇▇▇▇▇

Schedule I-C

Description of Planned ▇▇▇▇▇

Schedule II

Disclosure Schedule

Schedule III

Amortization Schedule

Schedule IV

Use of Proceeds

Schedule V

Insurance Requirements

Schedule VI

Preferential Rights

Schedule VII

Partnerships

Exhibit A

Form of Note

Exhibit B

Form of Loan Request

Exhibit C-1

Form of Opinion of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C.

Exhibit C-2

Form of Opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, special Ohio counsel to Borrower

Exhibit C-3

Form of Opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special West Virginia counsel to Borrower

Exhibit D-1

Form of Ohio Mortgage

Exhibit D-2

Form of West Virginia Mortgage

Exhibit E

Form of Pledge Agreement

Exhibit F

Form of Override Conveyance

Exhibit G

Form of Warrant

Exhibit H

[Intentionally omitted]

Exhibit I

Development Plan

Exhibit J

Form of Base Contract for Short-Term Sale and Purchase of Natural Gas

Exhibit K

ISDA Master Agreement vi

CREDIT AGREEMENT THIS CREDIT AGREEMENT, dated as of June 23, 1999, between ENERGY SEARCH, INCORPORATED, a Tennessee corporation ("Borrower"), and SOUTHERN PRODUCER SERVICES, L.P., a Delaware limited partnership ("Lender").

W I T N E S S E T H: WHEREAS, Borrower is engaged directly in the business of owning and operating certain oil and gas leasehold and other interests in the United States of America, including, without limitation, (i) Athens County, Ohio, (ii) Ashtubula County, Ohio, (iii) Meigs County, Ohio, (iv) ▇▇▇▇▇▇ County, Ohio, (v) ▇▇▇▇▇▇ County, Ohio, (vi) Tuscarawas County, Ohio, (vii) Washington County, Ohio, (viii)▇▇▇▇▇▇ County, West Virginia, (ix) Fayette County, West Virginia, (x) Raleigh County, West Virginia, (xi) ▇▇▇▇▇▇▇ County, West Virginia, and (xii) Wood County, West Virginia (each individually, a "Subject Property", and collectively, the "Subject Properties"); provided, however, that excluded from the term "Subject Properties" are the coalbed methane leasehold and other coalbed methane interests, located within the State of West Virginia (referred to as the "CBM Properties"); and WHEREAS, pursuant to certain other agreements ("Contingency Purchase Agreements"), between Borrower and various parties ("Contingency Sellers"), Borrower may purchase all of Contingency Sellers' working interest and net revenue interest in any Field or Unit located in the Appalachian Basin (the "Contingency Acquisitions"); and WHEREAS, Borrower desires to obtain a Commitment from Lender pursuant to which Loans, in a maximum aggregate principal amount of $30,000,000 and with a Commitment Amount as of the Effective Date not to exceed $16,500,000, will be made to Borrower from Lender prior to the Commitment Termination Date to develop the Subject Interests (as herein defined); and WHEREAS, Lender is willing, on the terms and subject to the conditions hereinafter set forth (including the terms and conditions set forth in Articles V and IX hereof), to extend such Commitment and to make such Loans to Borrower; and WHEREAS, the proceeds of such Loans will be used (a) to make payment in full, concurrently with the initial Loan hereunder of all Indebtedness under the Existing Credit Facility, (b) to develop the Subject Interests in accordance with the Development Plan, (c) to make Acquisitions of, and to develop additional properties located in the Appalachian Basin, as such may be agreed to by Lender in its sole discretion, (d) to pay the fees and out-of-pocket expenses in an aggregate amount not to exceed $115,000 (which amount already includes the $25,000 retainer for the payment of legal costs and expenses delivered to Lender prior to the Effective Date) of (i) counsel to Lender and of local counsel, if any, who may be retained by counsel to Lender and (ii) outside title counsel to Borrower which is acceptable to Lender, and (e) for general corporate purposes and working capital purposes of Borrower consistent with the Development Plan; 1

NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS SECTION I.1. Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Acceptable Proved Reserves" means Proved Reserves located in the Subject Interests that (i) have been evaluated by the Approved Independent Engineer and are included in the most recent Independent Engineering Report, (ii) are determined by Lender, in its sole and absolute discretion, to have satisfactory title, including, without limitation, recorded mortgages in favor of Lender and/or title opinions or other assurances of title satisfactory to Lender, (iii) are free of any Liens except for any Permitted Liens, and (iv) are covered by at least a Phase I environmental report which has been delivered to Lender and Lender has determined, in its sole and absolute discretion, that the results of such environmental report are satisfactory. "Acquisitions" means any Contingency Acquisitions and any other acquisition pursuant to a Purchase Agreement of a working interest or a net revenue interest in the Subject Properties. "Additional Development Program Option" has the meaning set forth in Section 4.4. "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power (a) to vote 10% or more of the securities (on a fully diluted basis) having ordinary voting power for the election of directors or managing general partners, or (b) to direct or cause the direction of the management and policies of such Person whether by contract or otherwise. "Agreement" means, on any date, this Credit Agreement as originally in effect on the Effective Date and as thereafter from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date. "Amortization Schedule" means amortization schedule attached hereto as Schedule III, as such schedule may be amended, supplemented or otherwise modified from time to time with the mutual consent of Borrower and Lender. "Approved Independent Engineer" means an independent petroleum engineer, including, without limitation, ▇▇▇▇▇▇ & Company, Inc., selected by Borrower and acceptable to Lender, in its sole discretion. 2

transportation, gathering and marketing-related expenses which either fall outside the above limitations or relate to an Acquisition which Borrower has not consummated shall be paid by Borrower and such third-party transportation, gathering and marketing-related expenses will not be included in Approved Third-Party Transportation, Gathering and Marketing Expenses. For purposes of this definition, amounts earned by ESI Pipeline Operating, L.P., a Tennessee limited partnership, on gas it purchases and markets for Borrower pursuant to the ESI Transportation Agreement shall be deemed an Approved Third-Party Transportation, Gathering and Marketing Expense provided that the ESI Transportation Agreement has not been amended, supplemented or otherwise modified without the prior written consent of Lender, in its sole and absolute discretion. "Authorized Officer" means, relative to Borrower, those of its officers whose signatures and incumbency shall have been certified to Lender pursuant to Section 5.1.1. "Borrower" has the meaning set forth in the preamble. "Borrower Group" has the meaning set forth in Section 4.5. "Broker's Fee" has the meaning set forth in Section 6.17. "Business Day" means any day which is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in Houston, Texas or Atlanta, Georgia. "Capital Expenditures" means, for any period, the sum of (a) the aggregate amount of all expenditures of Borrower for fixed or capital assets made during such period which, in accordance with GAAP, would be classified as capital expenditures, and (b) the aggregate amount of all Capitalized Lease Liabilities incurred during such period. "Capitalized Lease Liabilities" means all monetary obligations of Borrower under any leasing or similar arrangement which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Cash Flow from Override" means, for any period, 3% of Hydrocarbon Proceeds produced from that portion of the Subject Interests described as, and for the life of, (a) an Existing Well, (b) a well funded under this Agreement, (c) any well within a Subject Interest that Lender has not failed to exercise its Additional Development Program Option, and (d) any replacement or offset well within the Subject Interests that produces Hydrocarbons that may be deemed to have been recovered by a well funded under this Agreement; provided, however, in the event that Lender (i) does not exercise its Additional Development Program Option with respect to any Proposed Undertaking, and (ii) no Event of Default has occurred under any of the Loan Documents and is continuing, then the Cash Flow from Override with respect to, and only with respect to, the specific portion of the 4

Subject Interests covered by such Proposed Undertaking shall equal 1.0% of Hydrocarbon Proceeds produced from such specific portion of the Subject Interests. "CBM Properties" has the meaning set forth in the first recital. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended. "CERCLIS" means the Comprehensive Environmental Response Compensation Liability Information System List. "Change in Control" means either (i) a change resulting when any Unrelated Person or any Unrelated Persons acting together which would constitute a Group together with any Affiliates or Related Persons thereof (in each case also constituting Unrelated Persons) shall at any time either (A) Beneficially Own more than 30% of the aggregate voting power of all classes of Voting Stock of the Borrower or (B) during any period of two consecutive years ending on or after the Effective Date, as determined as of the last day of each calendar quarter after the Effective Date, the individuals (the "Incumbent Directors") who at the beginning of such period constituted the Board of Directors of the Borrower (other than additions thereto or removals therefrom from time to time thereafter approved by a vote of the Board of Directors in accordance with the Borrower's by-laws) shall cease for any reason to constitute 51% or more of the Board of Directors of the Borrower or (ii) the failure for any reason of Borrower to be "general partner" under the ESI Partnership Agreement. As used herein (a) "Beneficially Own" means "beneficially own" as defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended, or any successor provision thereto; provided, however, that, for purposes of this definition, a Person shall not be deemed to Beneficially Own securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person's Affiliates until such tendered securities are accepted for purchase or exchange; (b) "Group" means a "group" for purposes of Section 13(d) of the Securities Exchange Act of 1934, as amended; (c) "Unrelated Person" means at any time any Person other than the Borrower or any Subsidiary and other than any trust for any employee benefit plan of the Borrower or any Subsidiary of the Borrower; (d) "Related Person" of any Person shall mean any other Person owning (1) 5% or more of the outstanding common stock of such Person or (2) 5% or more of the Voting Stock of such Person; and (e) "Voting Stock" of any Person shall mean capital stock of such Person which ordinarily has voting power for the election of directors (or persons performing similar functions) of such Person, whether at all times or only so long as no senior class of securities has such voting power by reason of any contingency. "CNG Index" means the First of the Month (FOM) index price for spot gas delivered to pipelines (per Mmbtu dry) as quoted by Inside F.E.R.C Gas Market Report for gas on CNG Transmission Corp. - Appalachia. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. 5

"Collateral Account" has the meaning set forth in Section 3.3. "Collateral Coverage Default" shall exist at all times when the Collateral Coverage Ratio of Borrower is less than 125%. "Collateral Coverage Deficiency" shall exist at all times when the Collateral Coverage Ratio of Borrower is less than 150% but greater than or equal to 125%. "Collateral Coverage Ratio" means, at any time, the ratio, expressed as a percentage, of (a) the sum of (i) Risked NPV10 plus (ii) Working Capital over (b) Lender's Adjusted Investment. "Collateral Coverage Test Date" means, while amounts are outstanding under the Loans, the date upon which the Collateral Coverage Ratio is to be calculated which will be the effective date of the most recently delivered Internal Reserve Report or Independent Reserve Report. "Commitment" means Lender's obligation to make Loans pursuant to Section 2.1.1. "Commitment Amount" means, on any date, $16,500,000, as such amount may be reduced or increased from time to time pursuant to Section 2.2. "Commitment Termination Date" means the earliest of (a) June 23, 2007, (b) the date set forth in the Amortization Schedule for the repayment of 100% of the Loans, (c) the date on which the Commitment Amount and the Maximum Commitment Amount are terminated in full or reduced to zero pursuant to Section 2.2, and (d) the date on which any Commitment Termination Event occurs. Upon the occurrence of any event described in clause (c) or (d), the Commitment shall terminate automatically and without any further action. "Commitment Termination Event" means (a) the occurrence of any Default described in Section 8.1.9, or (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to Section 8.2, or (ii) in the absence of such declaration, the giving of notice by Lender to Borrower that the Commitment has been terminated. "Contingency Acquisitions" has the meaning set forth in the second recital. "Contingency Hedge Agreement" shall have the meaning set forth in Section 5.2.10. "Contingency Purchase Agreements" has the meaning set forth in the second recital. "Contingency Sellers" has the meaning set forth in the second recital. "Contingent Liability" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, 6

obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "Controlled Group" means all members of a controlled group of corporations and all members of a controlled group of trades or businesses (whether or not incorporated) under common control which, together with Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA. "Default" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default. "Default Rate" has the meaning set forth in Section 3.2. "Development Plan" means either (i) the development plan for the one year period after the Effective Date delivered to Lender pursuant to Section 5.1.11 and attached as Exhibit I hereto which includes, without limitation, sections entitled "Capital Expenditures", "Lease Operating Expenses", "G&A Expenses", and "Third-Party Transportation, Gathering and Marketing Expenses", or (ii) the updated development plan for the one year period beginning on the date of delivery in substantially the same form as Exhibit I delivered to Lender and determined to be acceptable by Lender pursuant to Section 7.1.9 which includes, without limitation, sections entitled "Capital Expenditures", "Lease Operating Expenses", "G&A Expenses", and "Third-Party Transportation, Gathering and Marketing Expenses". "Direct Taxes" means (1) ad valorem taxes (or taxes imposed in lieu thereof) imposed or assessed upon the Subject Interests or any mortgage thereof, (2) severance, gross production, occupation, extraction, gathering, and other taxes and assessments of any kind (other than taxes on or measured by the income and other than franchise taxes) imposed or assessed with respect to or measured by or charged against the Subject Interests, and (3) all other taxes required by law to be deducted from the proceeds of the Subject Interests, with the exception of income taxes of any type. "Disbursement Request" has the meaning set forth in Section 3.3. "Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule II, as it may be amended, supplemented or otherwise modified from time to time by Borrower with the written consent of Lender . "Dollar" and the sign "$" mean lawful money of the United States. "Effective Date" means the date this Agreement becomes effective pursuant to Section 10.9. 7

"Environmental Laws" means all applicable federal, state or local statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment. "Equity Financial" means Equity Financial Corporation, a Tennessee corporation. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. References to sections of ERISA also refer to any successor sections. "ESI" means ESI Pipeline Operating, L.P., a Tennessee limited partnership. "ESI Partnership Agreement" means that certain Limited Partnership Agreement, dated January 7, 1993, between Borrower and Energy Search Natural Gas Pipeline Income, L.P. "ESI Transportation Agreement" means that certain Gas Servicing Agreement, dated January 5, 1993, between Borrower and ESI, as amended by that certain Amendment, Clarification and Assignment of Gas Servicing Agreement, dated as of June 23, 1999, between Borrower, ESI and Lender. "Event of Default" has the meaning set forth in Section 8.1. "Existing Burdens" means, for any period, the aggregate amounts payable in respect of mineral owner royalty interests as a result of production of Hydrocarbons from the Subject Interests. "Existing Credit Facility" means that certain Credit Agreement, dated as of September 30, 1996, by and among Borrower, Bank One, Texas, National Association, as agent, and each of the lenders which is or may from time to time become a signatory thereto, as such agreement from time to time may be amended, amended and restated, supplemented or otherwise modified. "Existing SunTrust Credit Facility" means that certain Loan and Security Agreement, dated as of November 20, 1998, by and among Borrower and SunTrust Bank, East Tennessee, N.A., and amended by that certain Amendment to Loan and Security Agreement, dated as of June 11, 1999, as such agreement from time to time may be amended, amended and restated, supplemented or otherwise modified. "Existing ▇▇▇▇▇" means all ▇▇▇▇▇ existing on the Effective Date within the Subject Properties as more completely described on Schedule I-B. "GAAP" has the meaning set forth in Section 1.4. "Hazardous Material" means (a) any "hazardous substance", as defined by CERCLA, (b) any "hazardous waste", as defined by the Resource Conservation and Recovery Act, as amended, (c) any petroleum product, or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, 8

material or substance within the meaning of any other applicable federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "Hedge Agreement" means any swap agreement, hedge agreement, floor agreement, collar agreement or other similar arrangement or agreement, including, without limitation, any such agreement entered into in connection with an International Security Dealers Association Master Agreement. "Hedge Agreements" means each of (i) the Initial Hedge Agreements and (ii) the Contingency Hedge Agreements, if any. "Hedging Obligations" means, with respect to any Person, all liabilities of such Person under swap agreements, cap agreements, floor agreements and collar agreements, and all other agreements or arrangements designed to protect such Person against fluctuations in interest rates, commodity prices or currency exchange rates. "herein", "hereof", "hereto", "hereunder" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "Hydrocarbon Proceeds" means the sum of all revenues and proceeds (i) from the sale of Hydrocarbons attributable to the Subject Interests and (ii) received (net of any amounts paid by Borrower) by Borrower from the settlement of any Hedge Agreement. "Hydrocarbons" means collectively oil, condensate and other liquid hydrocarbons, including natural gas or liquid products extracted from gas by means other than conventional field separation, and natural gas, casinghead gas, and other gaseous hydrocarbons. "Impermissible Qualification" means, relative to the opinion or certification of any independent public accountant as to any financial statement of Borrower, any qualification or exception to such opinion or certification (a) which is of a "going concern" or similar nature, (b) which relates to the limited scope of examination of matters relevant to such financial statement, or (c) which relates to the treatment or classification of any item in such financial statement and which, as a condition to its removal, would require an adjustment to such item the effect of which would be to cause Borrower to be in default of any of its obligations. "including" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that the rule of ejusdem generis shall not be applicable to limit a general statement, which is followed by or referable to an enumeration of specific matters, to matters similar to the matters specifically mentioned. 9

"Indebtedness" of any Person means, without duplication: (a) all obligations of such Person for borrowed money and all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments, (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person, (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) all other items which, in accordance with GAAP, would be included as liabilities on the liability side of the balance sheet of such Person as of the date at which Indebtedness is to be determined, (e) net liabilities of such Person under all Hedging Obligations, (f) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services, and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse, and (g) all Contingent Liabilities of such Person in respect of any of the foregoing. For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer. "Indemnified Liabilities" has the meaning set forth in Section 10.4. "Indemnified Parties" has the meaning set forth in Section 10.4. "Independent Accountant" has the meaning set forth in Section 7.1(b). "Independent Reserve Report" has the meaning set forth in Section 7.1(n). "Initial Amortization Date" means the first date set forth in the Amortization Schedule for the payment of the Minimum Monthly Principal Payment. "Initial Drilling Program" means the development well drilling program for 59 ▇▇▇▇▇ on the Subject Interests located in the States of Ohio and West Virginia set forth in the Development Plan. "Initial Hedge Agreement" has the meaning set forth in Section 5.1.9. "Interest Rate" means, on any date and with respect to the Loans, a fixed rate of interest equal to 11% per annum (based on a year of 360 days). "Internal Reserve Report" has the meaning set forth in Section 7.1(o). "ISDA Master Agreement" means the ISDA Master Agreement executed and delivered pursuant to Section 7.1.17, substantially in the form of Exhibit K hereto, as amended, supplemented, restated or otherwise modified from time to time. "Joint Operating Agreements" has the meaning set forth in Section 6.13. 10

"Lease Use Hydrocarbons" means any Hydrocarbons which are lost in the production thereof or used by Borrower or the operator of the Subject Interests for the purpose of producing Hydrocarbons from the Subject Interests, but only for so long as and to the extent such Hydrocarbons are so used. "Lender" has the meaning set forth in the preamble. "Lender's Adjusted Investment" means, at any time, the sum of (i) the then outstanding principal balance of the Note plus (ii) any accrued and unpaid interest under the Loan Documents plus (iii) any accrued and unpaid Override plus (iv) any unpaid Reimbursable Expenses of Lender which are more than fifteen (15) days past due plus (v) the aggregate amount of royalties that remain unpaid for 30 days beyond the terms contained in the applicable Oil and Gas Leases and for which no designated cash reserves exists plus (vi) the amount by which (A) the sum of capital expenditures and drilling, workover and recompletion accounts payable of Borrower aggregating $10,000 or more exceeds (B) cash on hand or eligible accounts receivable held by Borrower that is solely earmarked and dedicated to the prompt payment of such costs and expenses. "Lien" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever. "Life of each well" has the meaning set forth in Section 9.2.1. "Loan" has the meaning set forth in Section 2.1.1. "Loan Document" means this Agreement, the Note, the Mortgages, the Override Conveyance, the Pledge Agreement, the Warrant, the Hedge Agreements, the Purchase Agreements and each Memorandum of Agreement relating to the Purchase of Hydrocarbons, together with all exhibits, certificates, schedules and attachments thereto, and all other agreements, documents, certificates, financing statements and instruments from time to time executed and delivered pursuant to or in connection with any of the foregoing. "Loan Request" means a loan request and certificate duly executed by an Authorized Officer of Borrower, substantially in the form of Exhibit B hereto. "Maximum Commitment Amount" means, on any date, $30,000,000, as such amount may be reduced from time to time pursuant to Section 2.2. "Minimum Commitment Amount" means, on any date, $16,500,000, as referred to in Section 2.2. "Minimum Monthly Principal Payment" means, for each specified date, an amount equal to the product of (i) the aggregate principal amount of the Loans then outstanding multiplied by (ii) the 11

percentage set forth on the Amortization Schedule for such specified period; provided, however, that in the event that additional Loans are advanced after the Initial Amortization Date, then the percentages set forth on the Amortization Schedule for the periods occurring after such additional Loan shall be proportionately adjusted such that the then outstanding aggregate amount of Loans shall be amortized to zero on the Stated Maturity Date. "Mortgage" means the West Virginia Mortgage and the Ohio Mortgage, as amended, supplemented, restated or otherwise modified from time to time. "Mortgaged Property" has the meaning set forth in the Mortgage. "Natural Gas Purchase Terms" has the meaning set forth in Section 9.1. "Net Cash Flow" means, for any period, the sum of (a) Hydrocarbon Proceeds received by Borrower for such period and any other gross revenues of Borrower (excluding cash flow from the sale or refinancing of the Notes) minus (b) Direct Taxes for such period minus (c) Existing Burdens for such period minus (d) Cash Flow from Override for such period minus (e) interest on the Note accrued at the Interest Rate during such period minus (f) all Obligations under the Loan Documents related to the enforcement and maintenance of the Loan Documents, including, without limitation, Reimbursable Expenses minus (g) Approved Lease Operating Expenses actually paid by Borrower for such Period minus (h) Approved Third-Party Transportation, Gathering and Marketing Expenses actually paid by Borrower for such period minus (i) Approved Capital Expenditures actually paid by Borrower for such period minus (j) Approved G&A Expenses. "9% Convertible Preferred Stock" means the 175,547 shares of 9% redeemable convertible preferred stock issued and outstanding at an issue price of $5.50 per share, as further described in Note F of Borrower's Notes to Consolidated Financial Statements for December 31, 1998 and 1999. "Non-Consent Hydrocarbons" means those Hydrocarbons produced from a well during the applicable period of recoupment or reimbursement pursuant to a non-consent provision covering the relevant well or ▇▇▇▇▇, which Hydrocarbons have been relinquished to the consenting party or participating party under the terms of such non-consent provision as the result of the election by Borrower not to participate in the particular operation, provided such election by Borrower has been made in good faith and as a prudent operator. "Note" means a promissory note of Borrower payable to Lender, delivered pursuant to Section 5.1.2 in substantially the form of Exhibit A hereto (as such promissory note may be amended, endorsed or otherwise modified from time to time), evidencing the aggregate Indebtedness of Borrower to Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Obligations" means all obligations (monetary or otherwise) of Borrower arising under or in connection with this Agreement, the Note and each other Loan Document. 12

"Ohio Mortgage" means the Mortgage, Deed of Trust, Assignment, Security Agreement and Financing Statement executed and delivered pursuant to Section 5.1.4, substantially in the form of Exhibit D hereto, as amended, supplemented, restated or otherwise modified from time to time. "Oil and Gas Leases" means all oil, gas, mineral and other leases and includes any subleases and assignments of operating rights, including without limitation the oil and gas leases described on Schedule I-A . "Organic Document" means, relative to Borrower, its certificate of incorporation or formation, its by-laws and all shareholder or partnership agreements, voting trusts and similar arrangements applicable to any of its authorized shares of capital stock or partnership interests. "Override" means an overriding royalty interest in the Subject Interests granted pursuant to the Override Conveyance. "Override Conveyance" means the Assignment and Conveyance of Overriding Royalty Interest executed and delivered pursuant to Section 5.1.3, substantially in the form of Exhibit F hereto, as such may be amended, supplemented, restated or otherwise modified from time to time. "Override Hydrocarbons" means the Hydrocarbons conveyed to Lender pursuant to the Override Conveyance. "Partnerships" means any general or limited partnership of which Borrower is a general partner or a limited partner listed on Schedule VII hereto. "Payment Date" means the fifth (5th) day following the end of each calendar month or, if any such day is not a Business Day, the next succeeding Business Day. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Pension Plan" means a "pension plan", as such term is defined in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which Borrower or any corporation, trade or business that is, along with Borrower, a member of a Controlled Group, may have liability, including any liability by reason of having been a substantial employer within the meaning of section 4063 of ERISA at any time during the preceding five years, or by reason of being deemed to be a contributing sponsor under section 4069 of ERISA. "Permitted Liens" means (1) taxes constituting a lien but not yet due and payable or which are being contested diligently, in good faith, (2) defects or irregularities in title, and liens, charges or encumbrances, which are not such as to interfere materially with the development, operation or value of the Subject Interests and not such as materially to impair title thereto, (3) any lien or encumbrance created as a consequence of the execution and delivery of the Override Conveyance, 13

(4) operators liens and materialmen's and mechanic's liens not arising out of normal operation of the Subject Interests, securing amounts which are not more than 60 days past due provided the Persons entitled to the benefits of such liens are not exercising remedies in respect thereof other than the making of demands or the giving or filing of notices required to perfect such liens or suing for payment of the amounts secured thereby, (5) royalty burdens and similar encumbrances on the Subject Interests in existence on the Effective Date, and which are reflected in the net revenue interests listed on Schedule I, (6) liens being contested by Borrower in good faith in such manner as not to jeopardize Lender's rights in and to the Override and the Override Hydrocarbons provided the Persons entitled to the benefits of such liens are not executing on such liens or any judgments in respect thereof, (7) those liens consented to in writing by Lender, (8) Liens securing payment of the Obligations granted pursuant to any Loan Document, (9) Liens permitted by any other Loan Document, and (10) any liens described on the Disclosure Schedule. "Person" means any natural person, corporation, partnership, company, firm, association, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" means any Pension Plan or Welfare Plan. "Planned ▇▇▇▇▇" means all ▇▇▇▇▇ planned to be developed within the Subject Properties in conformity with the Development Plane as more completely described on Schedule I-C, including, without limitation, the ▇▇▇▇▇ planned within the Initial Drilling Program. "Pledge Agreement" means the Pledge Agreement executed and delivered pursuant to Section 5.1.5 by Borrower, substantially in the form of Exhibit E hereto, as amended, supplemented, restated or otherwise modified from time to time. "Possible Reserves" means those Hydrocarbon reserves that are not Proved Reserves and are speculative reserves estimated beyond Proved and Probable Reserves where geological and engineering data suggest the presence of additional reserves, but where the risk is relatively high. "Probable Reserves" means those Hydrocarbons reserves which are not Proved Reserves and which analysis of geological and engineering data suggests are more likely than not to be recoverable, but where some element of risk or insignificant data prevent classification as proved. "Production Sale Contracts" means contracts for the sale of Subject Hydrocarbons now in effect or hereafter entered into by Borrower with Lender's written consent. "Proposed Non-Subject Interest Undertaking" has the meaning set forth in Section 4.5. "Proposed Undertaking" has the meaning set forth in Section 4.4. "Proved Developed Non-Producing Reserves" means (1) those Proved Reserves expected to be produced from existing completion intervals in existing ▇▇▇▇▇ for which capacity is planned 14

or available pursuant to an approved Development Plan, but due to pending pipeline connections or other mechanical or contractual requirements hydrocarbon sales have not yet commenced, and (2) other non-producing Proved Reserves which exist behind the casing of existing ▇▇▇▇▇, or at minor depths below the present bottom of such ▇▇▇▇▇, which are expected to be produced through these ▇▇▇▇▇ in the predictable future, where the cost of making such Hydrocarbons available for production should be relatively small compared to the cost of a new well and for which capacity is planned or available pursuant to an approved Development Plan. "Proved Developed Producing Reserves" means those Proved Reserves which are recoverable from existing completion intervals in existing ▇▇▇▇▇ currently open and producing to market at the time of the estimate. "Proved Reserves" means those recoverable hydrocarbons which have been proved to a high degree of certainty by reason of existing production, adequate testing, or in certain cases by adequate core data and other engineering and geologic information on zones which are present in existing ▇▇▇▇▇ or in known reservoirs which are recoverable under existing economic and operating conditions. Reserves that can be produced economically through the application of established improved recovery techniques are included in the proved classification when (a) successful testing by a pilot project or the operation of any installed program in that reservoir or one in the immediate area with similar rock and fluid properties provides support for the engineering analysis on which the project or program was based, and (b) it is reasonably certain the project will proceed. Reserves to be recovered by improved recovery techniques that have yet to be established through repeated economically successful applications are included in the proved category only after successful testing by a pilot project or after the operation of an installed program in the reservoir provides support for the engineering analysis on which the project or program was based. Improved recovery includes all methods for supplementing natural reservoir forces and energy, or otherwise increasing ultimate recovery from a reservoir, including (1) pressure maintenance, (2) cycling, and (3) secondary recovery in its original sense. Improved recovery also includes the enhanced recovery methods of thermal, chemical flooding, and the use of miscible and immiscible displacement fluids. "Proved Undeveloped Reserves" means those Proved Reserves which are expected to be recovered from (1) new ▇▇▇▇▇ on undrilled acreage, (2) the deepening of existing ▇▇▇▇▇ where a relatively major expenditure is required for completion, or (3) an existing well where a relatively large expenditure is required to recomplete an existing completion interval or install production or transportation facilities for a primary or improved recovery project. Proved Undeveloped Reserves on undrilled acreage are limited to those drilling units offsetting productive units that are reasonably certain of production when drilled. "Purchase Agreements" means the Contingency Purchase Agreements and any other agreement, whether now or hereinafter entered into, by Borrower to acquire any working interest or net revenue interest in the Subject Properties. "Reimbursable Expenses" means all expenses paid or incurred by Lender which consist of, or are incidental to (1) any production-related expense or production-related tax reasonably incurred 15

by Lender in paying or performing any obligations on behalf of Borrower under any of the Loan Documents, (2) any costs, expenses or other amounts reasonably incurred by Lender in paying or performing any obligations on behalf of Borrower under any of the Loan Documents, (3) costs associated with cancellation of hedging and futures contracts of Borrower with Lender or any Affiliate of Lender, including brokers fees, exchange expenses, document expenses and related charges incurred by Lender as a result of contracts entered into during the term of this Agreement, (4) the Indemnified Liabilities that become owing to any Indemnified Party under this Agreement which have not previously been paid by Borrower, and (5) the Tax Amount. "Release" means a "release", as such term is defined in CERCLA. "Residual Hydrocarbons" means for any period of time the volume of all Hydrocarbons produced from the Subject Interests other than Override Hydrocarbons during the same period of time. "Resource Conservation and Recovery Act" means the Resource Conservation and Recovery Act, 42 U.S.C. Section 690, et seq., as in effect from time to time. "Risked NPV10" means, at any time, the calculation by Lender, in its sole and absolute discretion, using Lender's customary standards for evaluating reserves, of the present value of future cash flows (discounted at a nominal rate of ten percent (10%) per annum) from the Subject Interests (as adjusted) based upon the Independent Reserve Report or the Internal Reserve Report using Lender's customary standards for commodity prices, reserve risking, well concentration limitations and Proved Developed Producing Reserves immaturity adjustment and which is adjusted from the date of the most recent Independent Reserve Report to the determination date for such calculation. In determining Risked NPV10, Proved Developed Non-Producing Reserves and Proved Undeveloped Reserves shall include only those reserves for which (i) capital improvements (as reflected in the most recent Independent Reserve Report) have been scheduled and which are reasonably expected to be available from either Lender or Net Cash Flow, as approved by Lender, and (ii) equipment and services are reasonably expected to be available. "Scheduled Payment" means an amount equal to the greater of (a) the unpaid and accrued interest on the aggregate unpaid principal amounts of the Loans and (b) 100% of Net Cash Flow. "Stated Maturity Date" means June 23, 2007. "Subject Hydrocarbons" means all Hydrocarbons in and under, and which may be produced and saved from, and which shall accrue or be attributable to the Subject Interests and which are produced after the Effective Date (other than Lease Use Hydrocarbons and Non-Consent Hydrocarbons where Borrower is the non-consenting party) and shall be deemed to include the proceeds of such Hydrocarbons. "Subject Interests" means (i) all right, title and interest of Borrower in and to the Subject Properties, (ii) all right, title and interest of Borrower in and to the Existing ▇▇▇▇▇, (iii) all right, title 16

and interest of Borrower in and to the Planned ▇▇▇▇▇, (iv) all right, title and interest of Borrower in and to any and all Oil and Gas Leases and leasehold working interests, including, without limitation, the Oil and Gas Leases and leasehold working interests described in Schedule I-A hereto, but specifically excluding any coalbed methane properties or interests of Borrower in the State of West Virginia, together with all Hydrocarbons severed while Obligations continue to exist which are attributable to such leases and interests together with Borrower's right, title and interest, if any, in, to and under, or derived from, all of the valid Subject Hydrocarbons unitization and pooling agreements which are described in such Schedule I or which relate to any of the properties and interests described in such Schedule I, and (v) all of Borrower's right, title and interest in, and to, the interests acquired or purported to be acquired in any Contingent Acquisition, if any. The term "Subject Interest", when used with reference to any particular Subject Interest, shall mean and include (a) such Subject Interest as the same may be enlarged or diminished by the provisions of any contract or other instrument described in Schedule I, or by the removal of any charges or encumbrances to which such Subject Interest is subject, (b) any and all renewals, replacements and extensions of such Subject Interest, or other interests in the Hydrocarbons in, under and that may be produced from lands comprising a portion of the Subject Interests acquired by Borrower during the term hereof, (c) all contracts supplemental to or amendatory of or in substitution for the contracts described above insofar as the same relate to such Subject Interest, and (d) all rights, titles and interests accruing or attributable to such Subject Interest by virtue of its being included in any unit. "Subject Property" and "Subject Properties" have the meanings set forth in the first recital. "Subsidiary" means, with respect to any Person, (a) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, by such Person and one or more other Subsidiaries of such Person, or by one or more other Subsidiaries of such Person; (b) any partnership of which such Person, such Person and one or more other Subsidiaries of such Person, or one or more other Subsidiaries of such Person is a general partner, (c) any limited liability company in which such Person, such Person and one or more other Subsidiaries of such Person, or one or more other Subsidiaries of such Person is a member or manager with ownership interest in excess of 50% of all outstanding ownership interests, or (d) any other entity in which such Person, such Person and one or more other Subsidiaries of such Person, or one or more other Subsidiaries of such Person has an ownership interest in excess of 50% of all outstanding ownership interests. "Tax Amount" means an amount equal to the aggregate of all amounts, including interest and penalties, if any, relating thereto, paid by Lender in such month, and which have not been paid by Borrower pursuant to the provisions of this Agreement, on account of (1) Direct Taxes, (2) any excise tax imposed on or assessed with respect to or measured by or charged against the Override or Subject Hydrocarbons, or (3) any sales or gross receipts taxes, which are imposed on Lender by any state or federal governmental unit, or any political subdivision thereof, in which any of the Subject Interests are located, and which are payable on account of Lender's ownership of the Override or receipt of the Subject Hydrocarbons, provided however, that the Tax Amount shall not 17

include any severance taxes attributable to the Override and provided further, however, that the Tax Amount shall not include any taxes associated with the handling, transportation, refining, purchase or sale of Subject Hydrocarbons after they have been delivered to the credit of Lender. "Taxes" has the meaning set forth in Section 4.1. "TCO Index" means the First of the Month (FOM) index price for spot gas delivered to pipelines (per Mmbtu dry) as quoted by Inside F.E.R.C Gas Market Report for gas on Columbia Gas Transmission Corp. - Appalachia (▇.▇▇., Ohio, Ky.). "Transportation Agreements" means (i) the ESI Transportation Agreement, (ii) that certain Gas Gathering Line Rental Agreement, dated February 1, 1996, between ▇▇▇▇▇▇ & ▇▇▇▇▇ Corporation and Viking Resources, Inc., as amended, supplemented, restated or otherwise modified from time to time, and (iii) that certain Gas Gathering Agreement, dated March 9, 1995, between Gonzoil, Inc. and Viking Resources, Inc., as amended, supplemented, restated or otherwise modified from time to time, and (iv) that certain Gas Transportation and Compression Agreement, dated October 19, 1992, between Mid-Atlantic Oil Company and Viking Resources, Inc., as amended, supplemented, restated or otherwise modified from time to time, and (v) that certain Purchase and Sale Agreement, dated June 25, 1998, between Viking Resources, Inc. and Energy Search, Incorporated, as amended, supplemented, restated or otherwise modified from time to time, and (vi) that certain Gas Servicing Agreement, dated January 5, 1993, between ESI Pipeline Operating LP and Energy Search, Incorporated, as amended, supplemented, restated or otherwise modified from time to time, and (vii) any other contract or agreement entered into from time to time by Borrower relating to the transportation of Hydrocarbons, as any such agreement or contract may be amended, supplemented, restated or otherwise modified from time to time. "United States" or "U.S." means the United States of America, its fifty States and the District of Columbia. "Warrant" means that certain Warrant to acquire up to 100,000 shares (subject to adjustment) of Borrower to be issued to Lender pursuant to Section 5.1.6 hereof, of even date herewith, in substantially in the form of Exhibit G as such may be amended, supplemented, restated or otherwise modified from time to time. "Welfare Plan" means a "welfare plan", as such term is defined in section 3(1) of ERISA. "West Virginia Mortgage" means the Creditline Deed of Trust, Assignment of Production, Security Agreement and Financing Statement executed and delivered pursuant to Section 5.1.4, substantially in the form of Exhibit D-2 hereto, as amended, supplemented, restated or otherwise modified from time to time. "Working Capital" means, at any time, the excess of (a) consolidated current assets of the Borrower minus (b) consolidated current liabilities of the Borrower. 18

SECTION I.2. Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and the Note and in each Loan Request, Loan Document, notice and other communication delivered from time to time in connection with this Agreement or any other Loan Document. SECTION I.3. Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. SECTION I.4. Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles ("GAAP"), consistently applied, which were applied in the preparation of the financial statements referred to in Section 6.5.

ARTICLE II COMMITMENT, LOAN PROCEDURES AND NOTE SECTION II.1. Commitment. On the terms and subject to the conditions of this Agreement (including Articles V and IX), Lender agrees to make Loans pursuant to the Commitment described in this Section 2.1. SECTION II.1.1. Commitment To Make Loans. From time to time on any Business Day occurring prior to the Commitment Termination Date, upon delivery of a Loan Request by Borrower to Lender, Lender, in its sole and absolute discretion, may make loans (its "Loans") to Borrower equal to the aggregate amount of the Loan requested by Borrower to be made on such day; provided, however, that if (i) no Default has occurred and (ii) Borrower is in compliance with all requirements of the Development Plan and this Agreement, Lender agrees to make Loans in the amount requested by Borrower to be made on such date in the aggregate amount for all Loans up to the Minimum Commitment Amount. The commitment of Lender described in this Section 2.1.1 is herein referred to as its "Commitment". Lender shall not be permitted or required to make any Loan if, after giving effect thereto, the aggregate outstanding principal amount of all Loans would exceed the lesser of (a) the Commitment Amount or (b) the Maximum Commitment Amount. Borrower may not borrow, prepay and reborrow Loans. SECTION II.2. Commitment Amounts. The Maximum Commitment Amount is subject to reduction from time to time pursuant to this Section 2.2. The Commitment Amount is subject to increase or reduction from time to time pursuant to this Section 2.2. The Minimum Commitment Amount shall not be subject to reduction provided that no Default has occurred and is continuing under this Agreement. 19

SECTION II.2.1. Optional. (a) Borrower may, from time to time on any Business Day after June 23, 2000, voluntarily reduce the Commitment Amount and/or the Maximum Commitment Amount; provided, however, that all such reductions shall require at least three (3) Business Days' prior notice to Lender and be permanent, and any partial reduction of either the Commitment Amount or the Maximum Commitment Amount shall be in a minimum amount of $100,000 and in an integral multiple of $50,000. (b) Lender, in its sole and absolute discretion, may, from time to time, increase or reduce the Commitment Amount; provided, however, that (i) the Commitment Amount may never exceed the Maximum Commitment Amount and, if as a result of a reduction in the Maximum Commitment Amount the Commitment Amount exceeds the Maximum Commitment Amount at any time, the Commitment Amount shall automatically be reduced to an amount equal to the Maximum Commitment Amount and (ii) if (A) no Default has occurred and (B) Borrower is in compliance with all requirements of the Development Plan and this Agreement, the Commitment Amount may never be reduced below the Minimum Commitment Amount. SECTION II.2.2. Mandatory. The Commitment Amount and the Maximum Commitment Amount each shall, without any further action, automatically and permanently be reduced on each date, and in the amount, set forth on the Amortization Schedule; provided, however, that on the Commitment Termination Date, the Commitment Amount, the Maximum Commitment Amount and the Minimum Commitment Amount shall be zero. SECTION II.3. Loan Procedure. By delivering a Loan Request to Lender on or before 10:00 a.m., Houston time, on a Business Day, Borrower may from time to time irrevocably request, on not less than three (3) nor more than five (5) Business Days' notice, that a Loan be made in a minimum amount of $50,000 and an integral multiple of $10,000, or in the unused amount of the Commitment. On the terms and subject to the conditions of this Agreement, each Loan may, in the sole and absolute discretion of Lender, be made on the Business Day specified in such Loan Request. If Lender elects to make the requested Loan, Lender shall make funds in an amount equal to the requested Loan available to Borrower by wire transfer or account entry to Collateral Account on or before 11:00 a.m., Houston time, on such Business Day. SECTION II.4. Note. Lender's Loans under its Commitment shall be evidenced by the Note payable to the order of Lender in a maximum principal amount equal to the original Maximum Commitment Amount. Borrower hereby irrevocably authorizes Lender to make (or cause to be made) appropriate notations on the grid attached to Lender's Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date and the outstanding principal amount of the Loans evidenced thereby. Such notations shall be conclusive and binding on Borrower absent manifest error; provided, however, that the failure of Lender to make any such notations shall not limit or otherwise affect any Obligations of Borrower. Lender shall provide Borrower with information with respect to payment of principal and/or interest applied to the outstanding Loans for the preceding calendar month within ten (10) days after the last day of such calendar month during the term of this Agreement. 20

ARTICLE III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION III.1. Repayments and Prepayments. Borrower shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date therefor. Prior thereto, Borrower

(a may, from time to time on any Business Day after June 23, 2000, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of any Loans; provided, however, that all such voluntary prepayments shall require at least three (3) but no more than five (5) Business Days' prior written notice to Lender, provided, however, that Borrower may make a voluntary prepayment as required by Sections 7.1.3 or 8.2(a)(iv) at any time;

(b shall, on each Payment Date, make a mandatory prepayment in the amount of the Scheduled Payment;

(c shall, on the date of any sale of all or a portion of the Subject Interests approved by Lender, make a mandatory prepayment in the amount of the proceeds from such sale of the Subject Interests;

(d shall, on each date when any reduction in the Commitment Amount or the Maximum Commitment Amount shall become effective, including pursuant to Section 2.2, make a mandatory prepayment of all Loans equal to the excess, if any, of the aggregate, outstanding principal amount of all Loans over the Commitment Amount as so reduced; and

(e shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.2, repay all Loans, unless only a portion of all Loans is so accelerated. Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty. All prepayments received by Lender pursuant hereto shall be applied immediately on the first Business Day thereafter as follows:

FIRST: To the payment and satisfaction of all costs and expenses incurred in connection with the collection of such payments and proceeds;

SECOND: To the payment of any accrued interest on the Loans pursuant to this Agreement and each other Loan Document;

THIRD: To the payment of the outstanding principal under the Note in inverse order of maturity. In the event that all or any portion of any Acquisition is rescinded pursuant to the provisions of the applicable Purchase Agreement, Borrower shall on the date of such rescission make a mandatory 21

prepayment on the aggregate outstanding principal amount of the Note in an amount equal to the amount paid to Borrower for the purchase of that portion of such Acquisition which is rescinded pursuant to the applicable provisions of such Purchase Agreement. The prepayment of any Loans shall in no manner or form impact the effectiveness of the Override Conveyance or the rights of Lender with respect thereto. SECTION III.2. Interest Provisions. Interest on the outstanding principal amount of Loans shall accrue at the Interest Rate. After the date any principal amount of any Loan is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise), or after any other monetary Obligation of Borrower shall have become due and payable, Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to the Interest Rate plus a margin of four percent (4%) ("Default Rate"); provided that once all such amounts and accrued interest are paid in full, that interest shall accrue at the Interest Rate. Interest accrued on each Loan shall be payable, without duplication, (a) on the Stated Maturity Date therefor, (b) on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan; (c) on each Payment Date occurring after the Effective Date; and (d) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2, immediately upon such acceleration. Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand. SECTION III.3. Collateral Account. Borrower shall cause all Hydrocarbon Proceeds to be delivered to an account (the "Collateral Account") which is maintained by Lender and is in all respects satisfactory to Lender. No funds, other than Hydrocarbon Proceeds and amounts from any Loans, will be paid to the Collateral Account. Borrower agrees not to open any new account, or terminate the existing Collateral Account, without the prior written consent of Lender. All Hydrocarbon Proceeds received by Borrower shall be delivered in kind to the Lender for deposit into the Collateral Account and Borrower shall not commingle any such proceeds, and shall hold separate and apart from all other property, all such proceeds in express trust for the benefit of Lender until delivery thereof is made to the Collateral Account. No more than two times a month, Borrower may request in writing (a "Disbursement Request"), delivered three business days prior to the date of any requested disbursement and executed by an Authorized Officer, that Lender reimburse Borrower or pay directly, as appropriate, out of funds in the Collateral Account, (i) Direct Taxes for such period, (ii) Existing Burdens for such period, (iii) Cash Flow from Override for such period (provided that such amounts will be paid directly to Lender), (iv) interest on the Note accrued at the Interest Rate or the Default Rate during such period, (v) all Obligations under the Loan Documents related to the enforcement and maintenance of the Loan Documents, (vi) all unpaid Scheduled Payments, (vii) Approved Lease Operating Expenses actually paid by Borrower for such period, (viii) Approved Third-Party Transportation, Gathering and Marketing Expenses actually paid by Borrower for such period, (ix) Approved Capital Expenditures actually paid by Borrower for such period, (x) Approved G&A Expenses actually paid by Borrower for such period, and (xi) any other amounts approved by Lender 22

in its sole and absolute discretion. Such Disbursement Request shall set forth in detail the calculation of each such item requested to be paid and shall otherwise contain any information required pursuant to this Section. Lender shall be protected in all instances in paying the foregoing amounts based upon such Disbursement Request without any need whatsoever to independently verify such requested amounts. In addition, and notwithstanding the information provided by Borrower, Lender shall have the right (it being hereby agreed that Lender is not obligated to make such payment, is not responsible to Borrower or any other Person for making or failing to make any such payment and is not responsible for seeing to the application of any such payment) to apply any amount, in its sole discretion, from time to time in the Collateral Account to the payment of any of the previously specified payment items in the priority order in which such specified payment items are listed. After receipt of a Disbursement Request by Borrower setting forth in reasonable detail the proposed use of such funds, Lender may transfer to an account designated by Borrower on the requested date for such disbursement (which date must be at least three (3) Business Days after receipt by Lender of the Disbursement Request) any or all of the funds in the Collateral Account. Borrower hereby authorizes Lender in Lender's sole discretion to pay amounts either to Borrower or to the applicable vendors directly. Upon submission of a Disbursement Request relating to Approved Lease Operating Expenses, Approved Third-Party Transportation, Gathering and Marketing Expenses and Approved Capital Expenditures, and upon Lender's satisfaction, in its sole discretion, that such requested disbursement is to be made in satisfaction of Approved Lease Operating Expenses, Approved Third-Party Transportation, Gathering and Marketing Expenses, Approved Capital Expenditures or Approved G&A Expenses, and subject to the other provisions hereof and in accordance with applicable laws, Lender may make the disbursement subject to the conditions in this Agreement and the order of priority set forth in the second paragraph of this Section providing that the foregoing shall not be required. Lender shall have no obligation to make any payment from the Collateral Account in respect of any amount provided in this Section to the extent there are not sufficient funds in the Collateral Account to make any such payment. SECTION III.4. Closing Fee. Borrower agrees to pay to Lender a non-refundable closing fee in an amount equal to $25,000, payable on the Effective Date.

ARTICLE IV TAXES AND OTHER PROVISIONS SECTION IV.1. Taxes. All payments by Borrower of principal of, and interest on, the 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 other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, other than franchise taxes and taxes imposed on or measured by Lender'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 Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, Borrower will (a) pay directly to the relevant authority the full amount required to be so withheld or deducted, (b) promptly forward to Lender an official receipt or other documentation 23

satisfactory to Lender evidencing such payment to such authority, and (c) pay to Lender such additional amount or amounts as is necessary to ensure that the net amount actually received by Lender will equal the full amount Lender would have received had no such withholding or deduction been required. Moreover, if any Taxes are directly asserted against Lender with respect to any payment received by Lender hereunder, Lender may pay such Taxes and Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by such person after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount such person would have received had not such Taxes been asserted. If Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to Lender the required receipts or other required documentary evidence, Borrower shall indemnify Lender for any incremental Taxes, interest or penalties that may become payable by Lender as a result of any such failure. SECTION IV.2. Payments, Computations, etc. All payments by Borrower pursuant to this Agreement, the Note or any other Loan Document shall be made by Borrower to Lender, without setoff, deduction or counterclaim, not later than 11:00 a.m., Houston time, on the date due, in same day or immediately available funds, to such account as Lender shall specify from time to time by notice to Borrower. Funds received after that time shall be deemed to have been received by Lender on the next succeeding Business Day. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. SECTION IV.3. Setoff. In addition to any rights and remedies of Lender provided by law, if an Event of Default has occurred and is continuing or the Obligations have been accelerated, Lender is authorized at any time and from time to time, without prior notice to Borrower, any such notice being waived by Borrower to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, Lender or any of its Affiliates, including, without limitation, amounts pursuant to any preferential right to purchase or market Hydrocarbons and any Hedge Agreements to or for the credit or the account of Borrower, against any and all Obligations owing to Lender and any of its Affiliates, now or hereafter existing, irrespective of whether or not Lender shall have made demand under this Agreement or any Loan Document and although such Obligations may be contingent or unmatured, and, as security for such Obligations, Borrower hereby grants to Lender and any of its Affiliates a continuing security interest in, any and all balances, credits, deposits, accounts or moneys of Borrower then or thereafter maintained with Lender. Lender agrees promptly to notify Borrower after any such setoff and application made by Lender; provided, however, that the failure to give such notice shall not affect the validity of such setoff and application. The rights of Lender and its Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff under applicable law or otherwise) which Lender and its Affiliates may have. 24

applicable until the termination of this Agreement and the full and final satisfaction of all outstanding Obligations. SECTION IV.6. Use of Proceeds. Borrower shall apply the proceeds of each Loan in accordance with (i) the fifth recital, and (ii) Schedule IV.

ARTICLE V CONDITIONS TO LOANS SECTION V.1. Initial Loan. The obligation of Lender to fund the initial Loan shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section. SECTION V.1.1. Resolutions, etc. Lender shall have received from Borrower a certificate, dated the date of the initial Loan, of its Secretary or Assistant Secretary, as applicable, as to (a) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of this Agreement, the Notes and each other Loan Document to be executed by it; (b) the Organic Documents for Borrower, (c) the incumbency and signatures of those of its officers authorized to act with respect to this Agreement, the Notes and each other Loan Document executed by it, upon which certificate Lender may conclusively rely until it shall have received a further certificate of an officer of Borrower canceling or amending such prior certificate, and (d) that the Borrower is in compliance with all of the covenants and agreements contained in this Agreement or any other Loan Document. Lender shall have received from Borrower certificates of existence and good standing provided by the appropriate governmental officer in its jurisdiction of incorporation or formation and, in the case of certificates of good standing, in each jurisdiction in which its business is conducted. SECTION V.1.2. Delivery of Note. Lender shall have received its Note duly executed and delivered by Borrower. SECTION V.1.3. Override Conveyance. Lender shall have received counterparts of the Override Conveyance, dated as of the date hereof, duly executed by Borrower, together with:

(a evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of the Override Conveyance as may be necessary or, in the reasonable opinion of Lender, desirable to convey the properties purported to be covered thereby;

(b acknowledgment copies of properly filed Uniform Commercial Code financing statements (Form UCC-1), dated a date reasonably near to the date of the initial Loan, or such other evidence of filing as may be acceptable to Lender, naming Borrower as "debtor" and Lender as "secured party", or other similar instruments or documents, filed under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the 27

opinion of Lender, desirable to perfect the interest of Lender pursuant to the Override Conveyance;

(c executed copies of proper Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens and other rights of any Person in any collateral described in the Override Conveyance, together with such other Uniform Commercial Code Form UCC-3 termination statements as Lender may reasonably request from Borrower;

(d certified copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11), or a similar search report certified by a party acceptable to Lender, dated a date reasonably near to the date of the initial Loan, listing all effective financing statements which name Borrower (under its present name and any previous names) as "debtor" and which are filed in the jurisdictions in which filings were made pursuant to clause (a) above, together with copies of such financing statements (none of which (other than those described in clause (b), if such Form UCC-11 or search report, as the case may be, is current enough to list such financing statements described in clause (b)) shall cover any interest conveyed in the Override Conveyance);

(e a title opinion in favor of Lender in form and substance and issued by counsel, satisfactory to Lender, in its sole discretion, with respect to the interests purported to be covered by the Override Conveyance, stating that title to such property is marketable and that the interests conveyed by the Override Conveyance are free and clear of all defects and encumbrances other than as approved by Lender, and such other matters as Lender shall request; and

(f such other approvals, opinions, or documents as Lender may reasonably request. SECTION V.1.4. Mortgage. Lender shall have received counterparts of the Mortgage, dated as of the date hereof, duly executed by Borrower, together with:

(a evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of the Mortgage as may be necessary or, in the reasonable opinion of Lender, desirable effectively to create a valid, perfected first priority Lien against the properties purported to be covered thereby;

(c executed copies of proper Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens and other rights of any Person in any collateral described in the Mortgage, together with such other Uniform Commercial Code Form UCC-3 termination statements as Lender may reasonably request from Borrower;

(e a title opinion in favor of Lender in form and substance and issued by counsel, satisfactory to Lender, in its sole discretion, with respect to the property purported to be covered by the Mortgage, stating that title to such property is marketable and that the interests created by the Mortgage constitute valid first Liens thereon free and clear of all defects and encumbrances other than as approved by Lender, and such opinion shall also include such other matters as Lender shall request; and

(f such other approvals, opinions, or documents as Lender may reasonably request. SECTION V.1.5. Pledge Agreements. Lender shall have received executed counterparts of the Pledge Agreement, dated as of the date hereof, duly executed by Borrower and ESI, together with the certificates, if any, evidencing the general partnership and limited partnership interests pledged pursuant to the Pledge Agreement, which certificates shall in each case be accompanied by undated powers of attorney duly executed in blank, or, if any securities pledged pursuant to the Pledge Agreement are uncertificated securities, confirmation and evidence satisfactory to Lender that the security interest in such uncertificated securities has been transferred to and perfected by Lender in accordance with the Uniform Commercial Code, as in effect in the State of Texas. SECTION V.1.6. Warrant. Lender shall have received each of the Warrant, each dated the date hereof, duly executed by Borrower. SECTION V.1.7. Broker's Fee. Lender shall have received evidence, in form and substance satisfactory to Lender, in its sole discretion, of the payment of the Broker's Fee. SECTION V.1.8. Memorandum of Purchase Contracts. Lender shall have received any requested memorandum of agreement relating to the purchase of Hydrocarbons executed by Borrower, in form and substance satisfactory to Lender in its sole discretion. 29

SECTION V.1.9. ISDA Master Agreement. Borrower shall have entered into the ISDA Master Agreement, substantially in the form of Exhibit K hereto, and one or more swap, hedge, floor, collar or other similar agreements on an International Security Dealers Association form (each a "Initial Hedge Agreement") which are with Lender or an Affiliate of Lender and satisfactory to Lender. SECTION V.1.10. Opinion of Counsel. Lender shall have received the following, each dated the date hereof or such other date acceptable to Lender and addressed to Lender (a) from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, P.C., counsel to the Borrower, substantially in the form of Exhibit C-1 hereto, (b) from ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, special Ohio counsel to the Borrower, substantially in the form of Exhibit C-2 hereto, (c) from ▇▇▇▇▇▇ & ▇▇▇▇▇▇, special West Virginia counsel to the Borrower, substantially in the form of Exhibit C-3 hereto, and (d) title opinions or mortgagee title policies and other title information, including, without limitation, applicable surveys, covering the properties purported to be covered by the Mortgage, all in form and substance and from counsel and title companies satisfactory to the Agent. SECTION V.1.11. Development Plan and Schedules. Lender shall have received (i) a Development Plan covering the Subject Interests, in substantially the form set forth in Exhibit I and in substance acceptable to Lender, (ii) a description of Subject Interests, in substantially the form set forth in Schedules I-A, I-B and I-C in form and substance acceptable to Lender in its sole discretion, and (iii) a Use of Proceeds schedule, in substantially the form set forth in Schedule IV and in form and substance acceptable to Lender in its sole discretion. SECTION V.1.12. Evidence of Insurance. Lender shall have received certificates of insurance satisfactory to it evidencing the existence of all insurance required to be maintained by Borrower by this Agreement and the other Loan Documents, which insurance shall list Lender as additional insured and sole loss payee and be satisfactory to Lender. The deductible of each such insurance policy shall be in an amount not to exceed $25,000 per occurrence. SECTION V.1.13. [Intentionally omitted]. SECTION V.1.14. Consents. Borrower shall have obtained all necessary consents, approvals and permits from all federal and state regulatory agencies, governmental authorities and from any other Persons relating to the Subject Interests and the Subject Hydrocarbons, in form and substance satisfactory to Lender in its sole discretion, Lender shall have received copies of all such consents, approvals and permits, and such consents, approvals and permits shall be in full force and effect on the Effective Date, and Lender shall have received a certificate to that effect signed by an Authorized Officer of Borrower. SECTION V.1.15. Compliance with Loan Documents. Borrower shall have performed all agreements and covenants required by this Agreement and by the other Loan Documents to be performed by Borrower, and all representations and warranties herein and in the other Loan Documents made by Borrower shall be true and correct as of the Effective Date, and Lender shall have received a certificate to that effect signed by an Authorized Officer of Borrower. 30

SECTION V.1.23. Partnership Information. Lender shall have received (i) a listing of all bank accounts maintained in connection with, the balance thereof as of the Effective Date and the location thereof each Partnership, (ii) a listing of the number of investors, the capital invested by the investors and the number of units outstanding with respect to each Partnership, (iii) a listing of the assets of each Partnership (including a specific list of any ▇▇▇▇▇ and leases owned by such Partnership and the Partnership's working interest and net revenue interest with respect to such ▇▇▇▇▇), in form and substance acceptable to Lender, and (iv) a copy of the partnership agreements, joint development and operating agreements, transportation agreements relating and any other material agreements of the Partnerships, each duly certified by an Authorized Officer of Borrower as being true, correct and complete, and such agreements shall be in form and substance satisfactory to Lender. SECTION V.1.24. Release of Liens. Lender shall have received evidence, in form and substance satisfactory to Lender, in its sole discretion, of the release of any and all Liens, including, without limitation, mechanic's liens, materialmen's liens and other similar liens or encumbrances and Liens relating to the Existing Credit Facility, which encumber the Subject Interests. SECTION V.1.25. Collateral Account. Lender shall have received evidence of the creation of the Collateral Account, in form and substance satisfactory to Lender, in its sole discretion. SECTION V.1.26. Closing Fees, Expenses, etc. Lender shall have received all fees, costs and expenses due and payable pursuant to Sections 3.4 and 10.3, if then invoiced. SECTION V.1.27. Other Legal Matters. All legal matters in connection with the title to the Subject Interests and the Subject Hydrocarbons shall be approved by Lender, and there shall have been furnished to Lender by Borrower, at Borrower's expense, such title opinions, agreements, other opinions of counsel, and other records and information, including, without limitation, evidence of any ratification documents, participation agreements, letter of understanding from any interest owner, as it may reasonably have requested for that purpose, in form and substance satisfactory to Lender, in its sole discretion. SECTION V.1.28. Termination of Existing Credit Facilities. Lender shall have received evidence satisfactory to it that all obligations under the Existing Credit Facility have been paid, fulfilled or satisfied in full or otherwise terminated. SECTION V.2. Conditions to Acquisition Loans. The obligation of Lender to fund a Loan for use in connection with any Acquisition shall be subject to all requirements set forth in this Agreement as well as the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section. SECTION V.2.1. Override Conveyance. Lender shall have received appropriate amendments to the Override Conveyance duly executed by Borrower, together with: 32

(a evidence of the completion (or satisfactory arrangements for the completion) of all recordings and filings of all such amendments to the Override Conveyance as may be necessary or, in the reasonable opinion of Lender, desirable to convey the properties purported to be covered thereby;

(b acknowledgment copies of properly filed Uniform Commercial Code financing statements (Form UCC-1), dated a date reasonably near to the date of such amendments, or such other evidence of filing as may be acceptable to Lender, naming Borrower as "debtor" and Lender as "secured party", or other similar instruments or documents, filed under the Uniform Commercial Code of all jurisdictions as may be necessary or, in the opinion of Lender, desirable to perfect the interest of Lender pursuant to the Override Conveyance;

(c executed copies of proper Uniform Commercial Code Form UCC-3 termination statements, if any, necessary to release all Liens and other rights of any Person in any collateral described in such amendments to the Override Conveyance previously granted by any Person, together with such other Uniform Commercial Code Form UCC-3 termination statements as Lender may reasonably request from Borrower;

(e a title opinion in favor of Lender in form and substance and issued by counsel, satisfactory to Lender, in its sole discretion, with respect to the interests purported to be covered by such amendments to the Override Conveyance, stating that title to such property is marketable and that the interests conveyed by the Override Conveyance are free and clear of all defects and encumbrances other than as approved by Lender, and such other matters as Lender shall request; and

(f such other approvals, opinions, or documents as Lender may reasonably request. SECTION V.2.2. Mortgage. Lender shall have received counterparts of amendments to the Mortgage duly executed by Borrower, together with: